CUSTODIAN AGREEMENT
This Agreement, dated as of March 5, 1992 (and restated as of December 31,
1993), is between State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx, 00000 ("State Street" or the "Custodian"), and First Variable
Rate Fund for Government Income, a Massachusetts business trust (the "Fund"),
having its principal place of business at 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000X,
Xxxxxxxx, Xxxxxxxx, 00000. In consideration of the mutual covenants and
agreements contained in this Agreement, the parties agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs State Street as the custodian of assets, including
securities, of the Fund's portfolios ("Portfolios"). The Portfolios agree to
deliver to the Custodian all securities and cash now or hereafter owned or
acquired, and all payments of income, principal or capital distributions
received by them on securities owned at any given time, and the cash
consideration received for shares of the Portfolios. The Custodian will not be
responsible for any property held or received by any Portfolio and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (as defined in Section 4), the Custodian
will employ one or more subcustodians located in the United States, but only in
accordance with an applicable vote by the Board of Trustees of the Fund, and
provided that the Custodian will have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any subcustodian
so employed than any such subcustodian has to the Custodian, and further
provided that the Custodian will not release the subcustodian from any
responsibility or liability unless mutually agreed on by the parties in writing.
All duties undertaken by the Custodian will be performed in a timely manner.
What constitutes timeliness in connection with a particular action will be
determined by the standards of the industry as they apply to the specific type
of transaction in question and taking into account relevant facts.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND
2.1 HOLDING SECURITIES. The Custodian will hold and physically segregate for the
account of each Portfolio all non-cash property other than (a) securities
maintained in a clearing agency acting as a securities depository or in a
book-entry system authorized by the U.S. Department of the Treasury
(collectively referred to as "Securities System;" see Section 2.10), 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 (see Section 2.11).
2.2 DELIVERY OF SECURITIES. The Custodian will release and deliver Portfolio
securities 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, which may be
continuing instructions when deemed appropriate by mutual agreement of the
parties, and only in the following cases:
1) Sale. Upon the sale of and receipt of payment for a Portfolio's securities;
2) Repurchase Agreements. Upon receipt of payment in connection with any
repurchase agreement entered into by the Fund related to the securities being
held;
3) Securities System. In the case of a sale effected through a Securities
System, in accordance with the provisions of Section 2.10;
4) Tender Offer. To the depository agent or other receiving agent in connection
with tender or other similar offers for a Portfolio's securities;
5) Redemption by issuer. To the issuer or its agent when a Portfolio's
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) Transfer to Issuer, Nominee; Exchange. To the issuer or its agent for
transfer into the name of a 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 this Agreement or into the name or nominee name of any
subcustodian appointed pursuant to Section 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same aggregate
face amount or number of units and bearing the same interest rate, maturity date
and call provisions, if any; provided that, in any such case, the new securities
are to be delivered to the Custodian;
7) Sale to Broker or Dealer. Upon the sale of a Portfolio's securities to the
broker or its clearing agent or dealer, against a receipt, for examination in
accordance with "street delivery" custom; provided that the Custodian will 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 failure to act in accordance with its duties as set forth
in this Agreement.
8) Exchange or Conversion. For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization, split-up of shares,
change of par value 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) Warrants, Rights. 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) Loans of Securities. For delivery in connection with any loans of securities
made by a Portfolio, made only against receipt of adequate collateral as agreed
on from time to time by the Custodian and the Fund on behalf of the Portfolio.
Loans may be in the form of cash, obligations issued by the United States
government, its agencies or instrumentalities, or such other property as
mutually agreed by the parties, 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, unless the Custodian fails to
act in accordance with its duties set forth in this Agreement;
11) Borrowings. For delivery as security in connection with any borrowings by a
Portfolio requiring a pledge of assets by the Portfolio, made only against
receipt of amounts borrowed; except, where additional collateral is required to
secure a borrowing already made, further securities may be released for that
purpose, subject to Proper Instructions;
12) Options. For delivery in accordance with the provisions of any agreement
among the Fund, 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, any registered
national securities exchange, any similar organization or organizations, or the
Investment Company Act of 1940, regarding escrow or other arrangements in
connection with transactions by the Fund;
13) Futures. For delivery in accordance with the provisions of any agreement
among the Fund, 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, any similar
organization or organizations, or the Investment Company Act of 1940, regarding
account deposits in connection with transactions by the Fund;
14) In-Kind Distributions. Upon receipt of instructions from the Fund's transfer
agent, for delivery to the transfer agent or to the holders of shares in
connection with distributions in kind, as may be described from time to time in
the Portfolio's currently effective prospectus and statement of additional
information, in satisfaction of shareholder requests for repurchase or
redemption;
15) Miscellaneous. For any other proper corporate purpose, made only upon
receipt of, in addition to Proper Instructions, a certified copy of a resolution
of the Board of Trustees signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, specifying the securities to be delivered,
setting forth the purpose for which such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or persons to
whom delivery of the securities will be made.
In all cases, payments to the Portfolio will be made in cash, by a certified
check or a treasurer's or cashier's check of a bank, by effective bank wire
transfer through the Federal Reserve Wire System or, if appropriate, outside of
the Federal Reserve Wire System and subsequent credit to the Fund's Custodial
account, or, in case of delivery through a stock clearing company, by book-entry
credit by the stock clearing company in accordance with the then current street
custom, or such other form of payment as may be mutually agreed on by the
parties, in all such cases collected funds to be promptly credited to the Fund.
2.3 REGISTRATION OF SECURITIES. Securities held by the Custodian (other than
bearer securities) will be registered (a) in the name of the Portfolio or (b) in
the name of any nominee of the Portfolio or of any nominee of the Custodian
assigned exclusively to the Portfolio, unless the Fund 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 any of the
Portfolios, or in the name or nominee name of any agent appointed pursuant to
Section 2.9 or in the name or nominee name of any subcustodian appointed
pursuant to Section 1. All securities accepted by the Custodian on behalf of a
Portfolio under the terms of this Agreement will be in "street name" or other
good delivery form.
2.4 BANK ACCOUNTS. The Custodian will open and maintain a separate bank account
or accounts in the name of each Portfolio, subject only to draft or order by the
Custodian acting pursuant to the terms of this Agreement. The Custodian will
hold in the account(s), in accordance with the provisions of this Agreement, all
cash received by it from or for the account of the Fund, other than cash
maintained by the Fund 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 for the Portfolio's credit in the bank
affiliate of the Custodian or in such other banks or trust companies as the
Custodian may in its discretion deem necessary or desirable; provided, however,
that every such bank or trust company must be qualified to act as a custodian
under the Investment Company Act of 1940. Funds will be deposited by the
Custodian in its capacity as Custodian and will be withdrawable by the Custodian
only in that capacity.
2.5 SALE OF SHARES AND AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement
between the Fund and the Custodian, the Custodian will, upon the receipt of
Proper Instructions, make federal funds available to the Portfolios as of
specified times agreed upon from time to time by the Fund and the Custodian in
the amount of checks received in payment for shares of the Portfolio which are
deposited into the Portfolio's account.
2.6 COLLECTION OF INCOME, DIVIDENDS. The Custodian will collect on a timely
basis all income and other payments with respect to registered securities held
to which the Portfolios are entitled either by law or pursuant to custom in the
securities business. The Custodian will also collect on a timely basis all
income and other payments with respect to bearer securities if, on the date of
payment by the issuer, the securities are held by the Custodian or its agent.
The Custodian will credit a Portfolio's account with all income or other
payments on securities held in a domestic depository, on the contractual payment
date, in Clearinghouse Funds or Federal Funds as the case may be, regardless of
whether the Custodian succeeds in collecting the item on a timely basis. This
credit is subject to the Custodian's right to reverse the credit in the event of
a default in the issuer's payment of such income. Without limiting the
generality of the foregoing, the Custodian will detach and present for payment
all coupons and other income items requiring presentation as and when they
become due and will collect interest when due on securities held pursuant to
this Agreement. The Custodian will also receive and collect all stock dividends,
rights and other items of like nature as and when they become due or payable.
Income due the Portfolio on securities loaned
pursuant to the provisions of Section 2.2(10) will be the responsibility of the
Portfolio; the Custodian will have no duty or responsibility in connection with
loaned securities 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 Fund is properly entitled.
2.7 PAYMENT OF PORTFOLIO MONIES. Upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by mutual agreement of the
parties, the Custodian will pay out monies of a Portfolio in the following cases
only:
1) Purchases. Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of the Portfolio but
only (a) against the delivery of such securities, or 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 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 in accordance with Section 2.9 of this Agreement) registered in the
name of the Portfolio or in the name of a nominee of the Portfolio or of the
Custodian referred to in Section 2.3 of this Agreement, or in other 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 2.10 of this
Agreement; (c) in the case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section 2.11; or (d) in the case of
repurchase agreements entered into between the Fund 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 Fund of securities
owned by the Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from the Fund. All coupon bonds accepted
by the Custodian must have the coupons attached or must be accompanied by a due
xxxx or a check payable on coupon payable date for the interest due on that
date. Payment may be made for purchases in advance of receipt of securities when
the Custodian receives authorization to do so on a case-by-case basis; however,
the Custodian will be absolutely liable to the Portfolio for such payment in the
absence of specific written instructions to make the payment.
2) Exchanges. In connection with conversion, exchange or surrender of securities
owned by the Fund as set forth in Section 2.2 hereof;
3) Redemptions. For the redemption or repurchase of shares issued by the Fund as
set forth in this Agreement;
4) Expense and Liability. For the payment of any expense or liability incurred
by the Fund, including but not limited to the following payments for the account
of the Fund: interest, taxes, management, accounting, transfer agent and legal
fees, and operating expenses of the Fund whether or not such expenses are to be
in whole or part capitalized or treated as deferred expenses;
5) Dividends. For the payment of any dividends or other distributions to
shareholders declared by the Fund;
6) Short Sale Dividend. For payment of the amount of dividends received in
respect of securities sold short;
7) Loan. For repayment of a loan upon redelivery of pledged securities and upon
surrender of the note(s), if any, evidencing the loan;
8) Miscellaneous. For any other proper purpose upon receipt of, in addition to
Proper Instructions, a certified copy of a resolution of the Board of Trustees
signed by an officer of the Fund and certified by its Secretary or an Assistant
Secretary, 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.
2.8 APPOINTMENT OF AGENTS. At its discretion, the Custodian may at any time
appoint (and may at any time remove) any other bank or trust company qualified
to act as a custodian under the Investment Company Act of 1940 as its
agent to carry out such of the provisions of this Section 2 as the Custodian may
from time to time direct; provided, however, that the appointment of any agent
will not relieve the Custodian of its responsibilities or liabilities under this
Agreement.
2.9 DEPOSIT OF SECURITIES IN SECURITIES SYSTEMS. The Custodian may deposit
and/or maintain a Portfolio's securities in a Securities System in accordance
with applicable Federal Reserve Board and Securities and Exchange Commission
rules and regulations, if any, and subject to the following provisions:
1) Account of Custodian. The Custodian may keep a Portfolio's securities in a
Securities System provided that such securities are represented in an account of
the Custodian in the Securities System that does not include any assets of the
Custodian other than assets held as a fiduciary, custodian or otherwise for
customers;
2) Records. The Custodian's records, with respect to a Portfolio's securities
maintained in a Securities System, must identify by book entry those securities
belonging to the Portfolio;
3) Payment/Delivery.
(a) Subject to Section 2.7 (Payment of Fund Monies), the Custodian will pay for
a Portfolio's securities upon (i) receipt of advice from the Securities System
that such securities 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;
(b) Subject to Section 2.2 (Delivery of Securities), the Custodian will transfer
a Portfolio's securities 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;
(c) Copies of all advices from the Securities System of transfers of a
Portfolio's securities will identify the Portfolio, be maintained for the
Portfolio by the Custodian and be provided to the Portfolio at its request. The
Custodian will furnish daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the Portfolio.
4) Reports. The Custodian will provide 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, and further agrees to provide the Portfolio with copies of any
documentation it has relating to its arrangements with the Securities Systems as
set forth in this Agreement or as otherwise required by the Securities and
Exchange Commission or any other regulatory agency or organization;
5) Liability. Anything to the contrary in this Agreement notwithstanding, the
Custodian will be liable to the Portfolio for any loss or expense, which may
include reasonable attorneys fees, or damage to the Portfolio resulting from use
of the Securities System by reason of any negligence, misfeasance or misconduct
of the Custodian, its agents, or any employee or agent of the Custodian or
agent, 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
Portfolio, it will be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the Securities System or any other person that
the Custodian may have as a consequence of any such loss, expense or damage if
and to the extent that the Portfolio has not been made whole for any such loss,
expense or damage.
2.10 FUND 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;
2) The Custodian may keep securities of a Portfolio in the Direct Paper System
only if such securities are represented in an account of the Custodian in the
Direct Paper System that does 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 a Portfolio, that
are maintained in the Direct Paper System will identify by book entry those
securities belonging to the Portfolio;
4) The Custodian will pay for securities purchased for the account of a
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 will transfer securities sold for the account of the Fund 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 Fund;
5) The Custodian will furnish each Portfolio confirmation of every transfer to
or from its account, in the form of a written advice or notice, of Direct Paper
on the next business day following such transfer and will furnish to the
Portfolio copies of daily transaction sheets reflecting each day's transaction
in the Securities System for its account;
6) The Custodian will provide each 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 will, upon receipt of Proper
Instructions, establish and maintain a segregated account or accounts for and on
behalf of each Portfolio, into which may be transferred cash and/or securities,
including securities maintained in an account by the Custodian pursuant to
Section 2.9 of this Agreement: (i) in accordance with the provisions of any
agreement among the Fund, 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 a
Portfolio, (ii) for purposes of segregating cash or government securities in
connection with options purchased, sold or written by a Portfolio or commodity
futures contracts or options purchased or sold by the Portfolio, (iii) for the
purposes of compliance by the Fund with the procedures required by Investment
Company Act Release No. 10666, or any subsequent release, rule or policy 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, a certified copy of a resolution of the Board of Trustees
setting forth the purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
2.12 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian will execute
ownership and other certificates and affidavits for all federal and state tax
purposes in connection with receipt of income or other payments for a
Portfolio's securities and in connection with transfers of such securities.
2.13 PROXIES. If the securities are registered other than in the name of a
Portfolio or a nominee of the Portfolio, the Custodian will cause all proxies
promptly to be executed by the registered holder of such securities, without
indication of the manner in which such proxies are to be voted, and will
promptly deliver to the Portfolio all proxy soliciting materials and all notices
relating to such securities.
2.14 COMMUNICATIONS RELATING TO FUND SECURITIES. The Custodian will transmit
promptly to each Portfolio all written information (including, without
limitation, pendency of calls and maturities of domestic securities 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 Portfolio's securities by the Custodian, an agent appointed under Section
2.9, or subcustodian appointed under Section 1. With respect to tender or
exchange offers, the Custodian will transmit promptly to the Portfolio all
written information received by the Custodian, an agent appointed under Section
2.9, or subcustodian appointed under Section 1 from issuers of the securities
whose tender or exchange is sought and from the party (or its agents) making the
tender or exchange offer. If a Portfolio desires to take action with respect to
any tender offer, exchange
offer or any other similar transaction, the Portfolio will notify the Custodian
of such desired action at least three business days prior to the time such
action must be taken under the terms of the tender, exchange offer, or other
similar transaction, and it will be the responsibility of the Custodian to
timely transmit to the appropriate person(s) the Portfolio's notice. Where the
Portfolio does not notify the Custodian of its desired action within the three
business day period, the Custodian will use its best efforts to timely transmit
the Portfolio's notice to the appropriate person.
2.15 REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS. At the request of the
Fund, the Custodian will provide the Fund, for the benefit of each of its
Portfolios, with audited annual reports. The Custodian will further provide the
Fund, at such times as the Fund 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 will be of sufficient scope and in sufficient
detail, as may reasonably be required by the Fund to provide reasonable
assurance that any material inadequacies existing or arising since the prior
examination would be disclosed by such examination. The reports must describe
any material inadequacies disclosed and, if there are no such inadequacies, the
reports will so state.
3. PAYMENTS FOR REDEMPTIONS OF SHARES OF A PORTFOLIO
From such funds as may be available for the purpose but subject to the
limitations of the Governing Documents of the Fund and any applicable votes of
the Board of Trustees of the Fund pursuant to those Documents, the Custodian
will, 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 of their shares. In connection with the redemption 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 shareholder.
The Custodian will receive payments for a Portfolio's shares issued or sold from
the distributor for the Portfolio's shares or from the Transfer Agent of the
Portfolio and deposit as received into the Portfolio's account such payments as
are received for shares of the Portfolio issued or sold from time to time by the
Portfolio. The Custodian will provide timely notification to the Portfolio and
the Transfer Agent of any receipt by it of payments for shares of the Portfolio.
4. PROPER INSTRUCTIONS
"Proper Instructions" means a writing signed or initialed by one or more persons
authorized by the Board of Trustees. Each such writing must set forth the
specific transaction or type of transaction involved, including a statement of
the purpose for which such action is requested, and may be a blanket instruction
authorizing specific transactions of a routine nature or occurring repeatedly.
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 Fund will 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 Fund, accompanied by a detailed description of procedures
approved by the Board of Trustees, Proper Instructions may include
communications effected directly between electromechanical or electronic devices
provided that the Board of Trustees and the Custodian are satisfied that such
procedures afford adequate safeguards for the Fund's assets.
5. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
In its discretion the Custodian may, without express authority from the Fund:
1) surrender securities in temporary form for securities in definitive form;
2) endorse for collection, in the name of a Portfolio, checks, drafts and other
negotiable instruments on the same day as received: and
3) in general, attend to all nondiscretionary details in connection with the
sale, exchange, substitution, purchase, transfer and other dealings with the
securities and property of a Portfolio except as otherwise directed by the Board
of Trustees of the Fund.
6. EVIDENCE OF AUTHORITY, RELIANCE ON DOCUMENTS
The Custodian will not be liable for actions taken pursuant to instructions,
notice, request, consent, certificate or other instrument or paper reasonably
and in good faith believed by it to be genuine and to have been properly
executed by or on behalf of the Fund or a Portfolio in accordance with Proper
Instructions as defined in Section 4 of this Agreement. The Custodian may
receive and accept a certified copy of a vote of the Board of Trustees of the
Fund 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 Governing Documents of the Fund 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. So long as and to
the extent that it is in the exercise of the standard of care set forth in
Section 10 of this Agreement, the Custodian will not be responsible for the
title, validity or genuineness of any property or evidence of title received by
it or delivered by it pursuant to this Agreement and will 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.
7. RECORDS, INVENTORY
The Custodian will create and maintain all records relating to its activities
and obligations under this Agreement in such manner as will meet the obligations
of the Fund under the Investment Company Act of 1940, with particular attention
to Section 31 and Rules 31a-1 and 31a-2 thereunder. All such records will be the
property of the Fund and will at all times during the regular business hours of
the Custodian be open for inspection and audit by duly authorized officers,
employees or agents of the Fund and employees and agents of the Securities and
Exchange Commission, and, in the event of termination of this Agreement, will be
delivered in accordance with Section 12 of this Agreement. The Custodian will,
at the Fund's request, supply the Fund with a tabulation of securities owned by
any Portfolio and held by the Custodian and will, when requested to do so by the
Fund and for such compensation as is agreed on by the Portfolio and the
Custodian, include certificate numbers in such tabulations. The Custodian will
conduct a periodic inventory of all securities and other property subject to
this Agreement and provide to the Fund a periodic reconciliation of the vaulted
position of each Portfolio to the appraised position of the Portfolio. The
Custodian will promptly report to the Fund the results of the reconciliation,
indicating any shortages or discrepancies uncovered thereby, and take
appropriate action to remedy any such shortages or discrepancies.
8. OPINION OF THE FUND'S INDEPENDENT ACCOUNTANT
The Custodian will cooperate with the Fund's independent public accountants in
connection with the annual and other audits of the books and records of the Fund
and take all reasonable action, as the Fund may from time to time request, to
provide the necessary information to such accountants for the expression of
their opinion without any qualification as to the scope of their examination,
including but not limited to, any opinion in connection with the preparation of
the Fund's Form N-1A, and Form N-SAR or other reports to the Securities and
Exchange Commission or state regulatory agency and with respect to any other
legal requirements.
9. COMPENSATION OF CUSTODIAN
The Custodian will be entitled to reasonable compensation for its services and
expenses as Custodian, as detailed in the attached Addendum.
10. RESPONSIBILITY OF CUSTODIAN - INDEMNIFICATION
Reasonable Care - Notwithstanding anything to the contrary in this Agreement,
the Custodian will be held to the exercise of reasonable care in carrying out
the provisions of this Agreement, but will be kept indemnified by and will be
without liability to the Fund for any action taken or omitted by it in good
faith without negligence.
Notice to Fund - in order for the indemnification provision contained in this
Section to apply, it is understood that if in any case the Fund may be asked to
indemnify or hold the Custodian harmless, the Fund will be fully and promptly
advised of all pertinent facts concerning the situation in question, and it is
further understood that the Custodian will use all reasonable care to identify
and notify the Fund promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Fund.
Defense of Custodian - The Fund will have the option to defend the Custodian
against any claim which may he the subject of this indemnification, and in the
event that the Fund so elects, it will so notify the Custodian, and thereupon
the Fund will take over complete defense of the claim and the Custodian will in
such situation initiate no further legal or other expenses for which it will
seek indemnification under this Section. The Custodian will in no case confess
any claim or make any compromise in any case in which the Fund will be asked to
indemnify the Custodian except with the Fund's prior written consent. Nothing in
this Section will be construed to limit any right or cause of action on the part
of the Custodian under this Agreement which is independent of any right or cause
of action on the part of the Fund. The Custodian will be entitled to rely on and
may act upon advice of counsel (who may be counsel for the Fund or such other
counsel as may be agreed to by the parties) on all matters, and will be without
liability for any action reasonably taken or omitted pursuant to such advice.
If the Fund requires the Custodian to take any action with respect to securities
that involves the payment of money, or that may, in the opinion of the
Custodian, result in the Custodian or its nominee assigned to the Fund being
liable for the payment of money or incurring liability of some other form, the
Fund, as a prerequisite to requiring the Custodian to take such action, will
indemnify the Custodian in an amount and form satisfactory to it.
If a Portfolio requires the Custodian to advance cash or securities for any
purpose or in the event that the Custodian or its nominee incurs or is assessed
any taxes, charges, expenses, assessments, claims or liabilities in connection
with the performance of this Agreement, except as may arise from the Custodian's
or its agent's negligent action or omission, or willful misconduct, any property
held for the account of the Portfolio will serve as security. If the Portfolio
fails to repay the Custodian promptly, the Custodian will be entitled to use
available cash and to dispose of the Portfolio's assets to the extent necessary
for reimbursement. If the Custodian exercises this option, it must give the
Portfolio reasonable notice so as to enable the Portfolio to repay the cash or
securities advanced. Such notice will not preclude the Custodian from asserting
any lien under this provision.
11. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Agreement will become effective as of its execution, provided that the
Custodian will have received proof of initial approval of a particular
Securities System pursuant to Rule 17f-4 under the Investment Company Act of
1940 (see Section 2.9 of this Agreement) or of the Direct Paper System (see
Section 2.10 of this Agreement). The Portfolio will provide proof of annual
approval to the Custodian. This Agreement will continue in force until
terminated as provided in this Section. It may be amended at any time by mutual
agreement of the parties, and may be terminated by either party with 60 days
written notice. The Fund may, by action of the Fund's Board of Trustees,
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
a like event at the direction of an appropriate regulatory agency or court of
competent jurisdiction.
In the event the Agreement terminates, the Fund will pay the Custodian whatever
compensation is due as of the date of the termination, and will reimburse the
Custodian for costs, expenses and disbursements incurred in connection with
termination, but only to the extent the Fund gives prior approval for the
expenditures. Approval will not be unreasonably withheld.
12. SUCCESSOR CUSTODIAN
If a successor Custodian is appointed by the Board of Trustees of the Fund, the
Custodian will, upon termination, deliver to the successor custodian at the
office of the Custodian, duly endorsed and in the form for transfer, all
securities, funds and other properties then held by it pursuant to this
Agreement, and will transfer to an account of the successor custodian all of
each Portfolio's securities held in a Securities System. The Custodian will
cooperate in assisting the successor Custodian so that it may continue any
subcustodian agreement entered into by the Custodian and any subcustodian on
behalf of the Fund.
If no successor is to be appointed, the Custodian will make the securities,
funds and other properties available as above to the Fund upon receipt of a
certified copy of a vote of the Board of Trustees of the Fund.
If no written order designating a successor Custodian or certified copy of a
vote of the Board of Trustees is delivered to the Custodian on or before the
effective date of the termination, the Custodian will have the right to make
delivery to a bank (as defined in the Investment Company Act of 1940) or trust
company of its own selection having aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not less than $50,000,000,
which will become the successor custodian under this Agreement.
In the event the securities, funds and other properties remain in the possession
of the Custodian after the termination date due to failure by the Fund to
procure the certified copy of the appropriate vote of the Board of Trustees, the
Custodian will be entitled to fair compensation for its services during the
period during which it retains possession of the property, and the provisions of
this Agreement relating to the duties and obligations of the Custodian will
remain in full force.
If during the term of this Agreement any Portfolio is liquidated pursuant to
law, the Custodian will distribute the remaining assets of the Portfolio after
satisfying all expenses and liabilities of that Portfolio. Such distributions
will be pro rata among the Portfolio's shareholders as certified by the Transfer
Agent, and will be in cash or, if the Portfolio so orders, in portfolio
securities. Section 10 (Responsibility of Custodian - Indemnification) will
survive any termination of this Agreement.
13. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Agreement, the Custodian and the Fund
may from time to time agree on such provisions interpretive of or in addition to
the provisions of this Agreement as may in their joint opinion be consistent
with the general tenor of this Agreement. Any such interpretive or additional
provisions will be in a writing signed by both parties and will be annexed to
this Agreement. No interpretive or additional provisions will contravene any
applicable federal or state regulations or any provision of the Governing
Documents of the Fund, nor will they be deemed amendments to this Agreement.
14. NOTICE
Notice will be considered sufficient if sent by registered or certified mail, or
by such other means as the parties agree, to the other party at the address set
forth above or at any other address specified in writing and delivered to the
other party.
15. BOND
The Custodian will, at all times, maintain a bond issued by a reputable fidelity
insurance company authorized to do business in the place where the bond is
issued. The bond will be issued against larceny and embezzlement, and will cover
each officer and employee of the Custodian who may, singly or jointly with
others, have access to securities or funds of the Fund, either directly or
through authority to receive and carry out any certificate instruction, order
request, note or other instrument required or permitted by this Agreement. The
Custodian agrees that it will not cancel, terminate or modify the bond so as to
affect adversely the Fund, except after written notice to the Fund not less than
10 days prior to the effective date of such cancellation, termination or
modification. At the request of the Fund, the Custodian will furnish to the Fund
a copy of each such bond and each amendment thereto.
16. CONFIDENTIALITY
The Custodian agrees to treat all records and other information relative to the
Portfolios and their prior, present or future shareholders as confidential, and
the Custodian, on behalf of itself and its employees, agrees to keep
confidential all such information except when requested to divulge such
information by duly constituted authorities, or when so requested by the Fund.
If requested to divulge confidential information to anyone other than persons
normally authorized by the Fund to receive information, such as the Fund's
auditors or attorneys, the Custodian will not release the information until it
notifies the Fund in writing and receives approval in writing from the Fund,
unless required by law to do otherwise. Approval by the Fund will not be
unreasonably withheld and may not be withheld where the Custodian may be exposed
to civil or criminal contempt proceedings for failure to comply.
17. EXEMPTION FROM LIENS
Except as provided in Section 10 of this Agreement, the securities and other
assets held by the Custodian for a Portfolio will be subject to no lien or
charge of any kind in favor of the Custodian or any person claiming through the
Custodian. but nothing herein will be deemed to deprive the Custodian of its
right to invoke any and all remedies available at law or equity to collect
amounts due it under this Agreement. Neither the Custodian nor any subcustodian
appointed pursuant to Section 1 of this Agreement will have any power or
authority to assign, hypothecate, pledge or otherwise dispose of any securities
held by it for the Portfolio, except upon the direction of the Fund, duly given
as herein provided, and only for the account of the Portfolio.
18. MASSACHUSETTS LAW TO APPLY
This Agreement will be construed and the provisions thereof interpreted under
and in accordance with laws of the Commonwealth of Massachusetts.
19. GOVERNING DOCUMENTS
The term "Governing Documents" refers to the Fund's Articles of Incorporation,
Bylaws and Registration Statement filed under the Securities Act of 1933, as
amended from time to time.
20. TRUSTEES AND SHAREHOLDERS
Neither the holders of shares in the Portfolios nor any Trustees of the Fund
will be personally liable under this Agreement.
21. SUCCESSORS OF PARTIES
This Contract will he binding on and will inure to the benefit of the Fund and
the Custodian and their respective successors.
22. INTEGRATION CLAUSE
The parties agree that all aspects of their agreement are contained in this
document, its Addendum, supplemental agreements and all amendments thereto, and
that any disputes arising in connection with this Agreement will be decided with
reference to those documents.
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 affixed hereunder as of the dates indicated below.
FIRST VARIABLE RATE FUND FOR GOVERNMENT INCOME
By: /s/ Xxxxxxx X. Xxxxxxxxx
Date: 3/7/94
Attest:/s/ Xxxx-xxx Xxxx
Date: 0/0/00
XXXXX XXXXXX BANK AND TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxx
Date: 3/16/94
Attest: /s/ X.X. Xxxxxx
Date: 3/16/94
LETTER AGREEMENT BETWEEN
FIRST VARIABLE RATE FUND FOR GOVERNMENT INCOME AND
STATE STREET BANK AND TRUST COMPANY
SUPPLEMENTING THE CUSTODIAN AGREEMENT
DATED AS OF MARCH 5, 1992
The following items supplement the Custodian Agreement ("Agreement")
dated March 5, 1992, and are considered part of the Agreement:
1. The initial Addendum to the Agreement, dated as of March 5, 1992, will
remain in effect for a minimum of three years; that is, until at least March 5,
1995, unless mutually agreed by the parties.
2. The Fund is entitled to pay fees to the Custodian by analysis on collected
funds, which will earn the rate stated in the Addendum to the Agreement.
