AMENDED AND RESTATED
CUSTODIAN AGREEMENT
Between
Bull & Bear Funds II, Inc.
and
INVESTORS BANK & TRUST COMPANY
1. Bank Appointed Custodian..................................................4
2. Definitions...............................................................4
2.1 Authorized Person.......................................................4
2.2 Security................................................................4
2.3 Portfolio Security......................................................5
2.4 Officers' Certificate...................................................5
2.5 Book-Entry System.......................................................5
2.6 Depository..............................................................5
2.7 Proper Instructions.....................................................5
3. Separate Accounts.........................................................6
4. Certification as to Authorized Persons....................................6
5. Custody of Cash...........................................................6
5.1 Purchase of Securities..................................................6
5.3 Distributions and Expenses of Fund......................................7
5.4 Payment in Respect of Securities........................................7
5.5 Repayment of Loans......................................................7
5.6 Repayment of Cash.......................................................7
5.8 Other Authorized Payments...............................................7
5.9 Termination.............................................................8
6. Securities................................................................8
6.1 Segregation and Registration............................................8
6.2 Voting and Proxies......................................................8
6.3 Book-Entry System.......................................................8
6.4 Use of a Depository....................................................10
6.5 Use of Book-Entry System for Commercial Paper..........................11
6.6 Use of Immobilization Programs.........................................12
6.7 Eurodollar CDs.........................................................12
6.8 Options and Futures Transactions.......................................12
6.9 Segregated Account.....................................................13
6.10 Interest Bearing Call or Time Deposits................................14
6.11 Transfer of Securities................................................15
7. Redemptions..............................................................16
8. Merger. Dissolution. etc. of Fund........................................17
9. Actions of Bank Without Prior Authorization..............................17
10. Collections and Defaults................................................18
11. Maintenance of Records and Accounting Services...........................18
12. Fund Evaluation..........................................................18
13. Concerning the Bank......................................................19
13.1 Performance of Duties and Standard of Care.............................19
13.2 Agents and Subcustodians with Respect to Property of the Fund
Held in the United States..............................................20
13.3 Duties of the Bank with Respect to Property of the Fund Held
Outside of the United States................................................21
(a) Appointment of Foreign Sub-Custodians..........................21
(b) Foreign Securities Depositories................................21
(c) Segregation of Securities......................................21
(d) Agreements with Foreign Banking Institutions...................21
(e) Access of Independent Accountants of the Fund..................22
(f) Reports by Bank................................................22
(g) Transactions in Foreign Custody Account........................22
(h) Liability of Selected Foreign Sub-Custodians...................23
(i) Liability of Bank..............................................23
(j) Monitoring Responsibilities....................................23
(k) Tax Law........................................................24
13.4 Insurance..............................................................24
13.5. Fees and Expenses of Bank.............................................24
13.6 Advances by Bank.......................................................24
14. Termination..............................................................25
15. Confidentiality..........................................................25
16. Notices..................................................................26
17. Amendments...............................................................26
18. Parties..................................................................26
19. Governing Law............................................................26
20. Counterparts.............................................................26
CUSTODIAN AGREEMENT
AGREEMENT made as of this day of August, 1995, between Bull & Bear Funds
II, Inc., a corporation (the "Fund") and INVESTORS BANK & TRUST COMPANY (the
"Bank").
WHEREAS, the Fund is an open-end management investment company, and the
Bank has at least the minimum qualifications required by Section 17(f)(1) of the
Investment Company Act of 1940 (the "1940 Act") to act as custodian of the
portfolio securities and cash of the Fund; and
WHEREAS, the Fund and the Bank now desire to enter into this Custodian
Agreement hereby referred to herein as the "Agreement";
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Fund hereby appoints the Bank as custodian
of the Fund's portfolio securities and cash delivered to the Bank as hereinafter
described and the Bank agrees to act as such upon the terms and conditions
hereinafter set forth.
2. Definitions. Whenever used herein, the terms listed below will have the
following meaning:
2.1 Authorized Person. Authorized Person will mean any of the persons
duly authorized to give Proper Instructions or otherwise act on behalf of
the Fund by appropriate resolution of its Board of Directors or the Board
of Trustees ("the Board"), and set forth in a certificate as required by
Section 4 hereof.
2.2 Security. The term security as used herein will have the same
meaning as when such term is used in the Securities Act of 1933, as
amended, including, without
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limitation, any note, stock, treasury stock, bond, debenture, evidence
of indebtedness, certificate of interest or participation in any profit
sharing agreement, collateral-trust certificate, preorganization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security, certificate of deposit, or
group or index of securities (including any interest therein or based on
the value thereof), or any put, call, straddle, option, or privilege
entered into on a national securities exchange relating to a foreign
currency, or, in general, any interest or instrument commonly known as a
"security", or any certificate of interest or participation in, temporary
or interim certificate for, receipt for, guarantee of, or warrant or right
to subscribe to, or option contract to purchase or sell any of the
foregoing, and futures, forward contracts and options thereon.
2.3 Portfolio Security. Portfolio Security will mean any security
owned by the Fund.
2.4 Officers' Certificate. Officers' Certificate will mean, unless
other- wise indicated, any request, direction, instruction, or
certification in writing signed by any two Authorized Persons of the Fund.
2.5 Book-Entry System. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank,
its successor or successors and its nominee or nominees.
2.6 Depository. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934
("Exchange Act"), its successor or successors and its nominee or nominees.
The term "Depository" shall further mean and include any other person
authorized to act as a depository under the 1940 Act, its successor or
successors and its nominee or nominees, specifically identified in a
certified copy of a resolution of the Board.
2.7 Proper Instructions. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized
Person as shall have been designated in an Officers' Certificate, such
instructions to be given in such form and manner as the Bank and the Fund
shall agree upon from time to time, and (ii) instructions (which may be
continuing instructions) regarding other matters signed or initialed by
such two or more persons from time to time designated in an Officers'
Certificate as having been authorized by the Board. Oral instructions will
be considered Proper Instructions if the Bank reasonably believes them to
have been given by a person authorized to give such instructions with
respect to the transaction involved. The Fund shall cause all oral
instructions to be promptly
5
confirmed in writing. The Bank shall act upon and comply with any
subsequent Proper Instruction which modifies a prior instruction and the
sole obligation of the Bank with respect to any follow-up or confirmatory
instruction shall be to make reasonable efforts to detect any discrepancy
between the original instruction and such confirmation and to report such
discrepancy to the Fund. The Fund shall be responsible, at the Fund's
expense, for taking any action, including any reprocessing, necessary to
correct any such discrepancy or error, and to the extent such action
requires the Bank to act the Fund shall give the Bank specific Proper
Instructions as to the action required. Upon receipt of an Officers'
Certificate as to the authorization by the Board accompanied by a detailed
description of procedures approved by the Fund, Proper Instructions may
include communication effected directly between electro-mechanical or
electronic devices provided that the Board and the Bank are satisfied that
such procedures afford adequate safeguards for the Fund's assets.
3. Separate Accounts. If the Fund has more than one series or portfolio,
the Bank will segregate the assets of each series or portfolio to which this
Agreement relates into a separate account for each such series or portfolio
containing the assets of such series or portfolio (and all investment earnings
thereon).
4. Certification as to Authorized Persons. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with the Bank his or
her certification to the Bank, in such form as may be acceptable to the Bank, of
(i) the names and signatures of the Authorized Persons and (ii) the names of the
Board, it being understood that upon the occurrence of any change in the
information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Fund, will sign a new or amended certification setting forth
the change and the new, additional or omitted names or signatures. The Bank will
be entitled to rely and act upon any Officers' Certificate given to it by the
Fund which has been signed by Authorized Persons named in the most recent
certification.
5. Custody of Cash. As custodian for the Fund, the Bank will open and
maintain a separate account or accounts in the name of the Fund or in the name
of the Bank, as Custodian of the Fund, and will deposit to the account of the
Fund all of the cash of the Fund, except for cash held by a subcustodian
appointed pursuant to Section 13.2 hereof, including borrowed funds, delivered
to the Bank, subject only to draft or order by the Bank acting pursuant to the
terms of this Agreement. Upon receipt by the Bank of Proper Instructions (which
may be continuing instructions) or in the case of payments for redemptions and
repurchases of outstanding shares of common stock of the Fund, notification from
the Fund's transfer agent as provided in Section 7, requesting such payment,
designating the payee or the account or accounts to which the Bank will release
funds for deposit, and stating that it is for a purpose permitted under the
terms of this Section 5, specifying the applicable subsection, the Bank will
make payments of cash held for the accounts of the Fund, insofar as funds are
available for that purpose, only as permitted in subsections 5.1-5.9 below.
5.1 Purchase of Securities. Upon the purchase of securities for the
Fund,
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against contemporaneous receipt of such securities by the Bank or,
against delivery of such securities to the Bank in accordance with
generally accepted settlement practices and customs in the jurisdiction or
market in which the transaction occurs, registered in the name of the Fund
or in the name of, or properly endorsed and in form for transfer to, the
Bank, or a nominee of the Bank, or receipt for the account of the Bank
pursuant to the provisions of Section 6 below, each such payment to be made
at the purchase price shown on a broker's confirmation (or transaction
report in the case of Book Entry Paper) of purchase of the securities
received by the Bank before such payment is made, as confirmed in the
Proper Instructions received by the Bank before such payment is made.
5.2 Redemptions. In such amount as may be necessary for the repurchase
or redemption of common shares of the Fund offered for repurchase or
redemption in accordance with Section 7 of this Agreement.
5.3 Distributions and Expenses of Fund. For the payment on the account
of the Fund of dividends or other distributions to shareholders as may from
time to time be declared by the Board, interest, taxes, management or
supervisory fees, distribution fees, fees of the Bank for its services
hereunder and reimbursement of the expenses and liabilities of the Bank as
provided hereunder, fees of any transfer agent, fees for legal, accounting,
and auditing services, or other operating expenses of the Fund.
5.4 Payment in Respect of Securities. For payments in connection with
the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Fund held by or to be delivered to the Bank.
5.5 Repayment of Loans. To repay loans of money made to the Fund, but,
in the case of final payment, only upon redelivery to the Bank of any
Portfolio Securities pledged or hypothecated therefor and upon surrender of
documents evidencing the loan;
5.6 Repayment of Cash. To repay the cash delivered to the Fund for the
purpose of collateralizing the obligation to return to the Fund
certificates borrowed from the Fund representing Portfolio Securities, but
only upon redelivery to the Bank of such borrowed certificates.
5.7 Foreign Exchange Transactions. For payments in connection with
foreign exchange contracts or options to purchase and sell foreign
currencies for spot and future delivery which may be entered into by the
Bank on behalf of the Fund upon the receipt of Proper Instructions, such
Proper Instructions to specify the currency broker or banking institution
(which may be the Bank, or any other subcustodian or agent hereunder,
acting as principal) with which the contract or option is made, and the
Bank shall have no duty with respect to the selection of such currency
brokers or banking institutions with which the Fund deals or for their
failure to comply with the terms of any contract or option.
5.8 Other Authorized Payments. For other authorized transactions of
the Fund, or other obligations of the Fund incurred for proper Fund
purposes;
7
provided that before making any such payment the Bank will also
receive a certified copy of a resolution of the Board signed by an
Authorized Person (other than the Person certifying such resolution) and
certified by its Secretary or Assistant Secretary, naming the person or
persons to whom such payment is to be made, and either describing the
transaction for which payment is to be made and declaring it to be an
authorized transaction of the Fund, or specifying the amount of the
obligation for which payment is to be made, setting forth the purpose for
which such obligation was incurred and declaring such purpose to be a
proper corporate purpose.
5.9 Termination: upon the termination of this Agreement as hereinafter
set forth pursuant to Section 8 and Section 14 of this Agreement.
6. Securities.
6.1 Segregation and Registration. Except as otherwise provided herein,
and except for securities to be delivered to any subcustodian appointed
pursuant to Section 13.2 hereof, the Bank as custodian, will receive and
hold pursuant to the provisions hereof, in a separate account or accounts
and physically segregated at all times from those of other persons, any and
all Portfolio Securities which may now or hereafter be delivered to it by
or for the account of the Fund. All such Portfolio Securities will be held
or disposed of by the Bank for, and subject at all times to, the
instructions of the Fund pursuant to the terms of this Agreement. Subject
to the specific provisions herein relating to Portfolio Securities that are
not physically held by the Bank, the Bank will register all Portfolio
Securities (unless otherwise directed by Proper Instructions or an
Officers' Certificate), in the name of a registered nominee of the Bank as
defined in the Internal Revenue Code and any Regulations of the Treasury
Department issued thereunder, and will execute and deliver all such
certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state. The Fund will from time to time
furnish to the Bank appropriate instruments to enable it to hold or deliver
in proper form for transfer, or to register in the name of its registered
nominee, any Portfolio Securities which may from time to time be registered
inthe name of the Fund.
6.2 Voting and Proxies. Neither the Bank nor any nominee of the Bank
will vote any of the Portfolio Securities held hereunder, except in
accordance with Proper Instructions or an Officers' Certificate. The Bank
will execute and deliver, or cause to be executed and delivered, to the
Fund all notices, proxies and proxy soliciting materials with respect to
such Securities, such proxies to be executed by the registered holder of
such Securities (if registered otherwise than in the name of the Fund), but
without indicating the manner in which such proxies are to be voted.
6.3 Book-Entry System. Provided (i) the Bank has received a certified
copy of a resolution of the Board specifically approving deposits of Fund
assets
8
in the Book-Entry System, and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the Book-Entry
System provided that such Portfolio Securities are represented in an
account ("Account") of the Bank (or its agent) in such System which
shall not include any assets of the Bank (or such agent) other than
assets held as a fiduciary, custodian, or otherwise for customers;
(b) The records of the Bank (and any such agent) with respect to
the Fund's participation in the Book-Entry System through the Bank (or
any such agent) will identify by book entry Portfolio Securities which
are included with other securities deposited in the Account and shall
at all times during the regular business hours of the Bank (or such
agent) be open for inspection by duly authorized officers, employees
or agents of the Fund. Where securities are transferred to the Fund's
account, the Bank shall also, by book entry or otherwise, identify as
belonging to the Fund a quantity of securities in fungible bulk of
securities (i) registered in the name of the Bank or its nominee, or
(ii) shown on the Bank's account on the books of the Federal Reserve
Bank;
(c) The Bank (or its agent) shall pay for securities purchased
for the account of the Fund or shall pay cash collateral against the
return of Portfolio Securities loaned by the Fund upon (i) receipt of
advice from the Book-Entry System that such Securities have been
transferred to the Account, and (ii) the making of an entry on the
records of the Bank (or its agent) to reflect such payment and
transfer for the account of the Fund. The Bank (or its agent) shall
transfer securities sold or loaned for the account of the Fund upon
(i) receipt of advice from the Book-Entry System that
payment for securities sold or payment of the initial cash
collateral against the delivery of securities loaned by the Fund
has been transferred to the Account; and
(ii) the making of an entry on the records of the Bank (or
its agent) to reflect such transfer and payment for the account
of the Fund. Copies of all advices from the Book-Entry System of
transfers of securities for the account of the Fund shall
identify the Fund, be maintained for the Fund by the Bank and
shall be provided to the Fund at its request. The Bank shall send
the Fund a confirmation, as defined by Rule 17f-4 of the 1940
Act, of any transfers to or from the account of the Fund;
(d) The Bank will promptly provide the Fund with any report
obtained by the Bank or its agent on the Book-Entry System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the Book-Entry System. The Bank
will provide the Fund and cause any such agent to provide, 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, including
Securities deposited in the Book-Entry System, relating to the
services provided by the
9
Bank or such agent under the Agreement;
(e) The Bank shall be liable to the Fund for any loss or damage
to the Fund resulting from use of the Book-Entry System by reason of
any negligence, willful misfeasance or bad faith of the Bank or any of
its agents or of any of its or their employees or from any reckless
disregard by the Bank or any such agent of its duty to use its best
efforts to enforce such rights as it may have against the Book-Entry
System; at the election of the Fund, it shall be entitled to be
subrogated for the Bank in any claim against the Book-Entry System or
any other person which the Bank or its agent may have as a consequence
of any such loss or damage if and to the extent that the Fund has not
been made whole for any loss or damage;
6.4 Use of a Depository. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits
in DTC or other such Depository and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio Securities
including stock dividends, rights and other items of like nature, and
to receive and remit to the Bank on behalf of the Fund all income and
other payments thereon and to take all steps necessary and proper in
connection with the collection thereof;
(b) Registration of Portfolio Securities may be made in the name
of any nominee or nominees used by such Depository;
(c) Payment for securities purchased and sold may be made through
the clearing medium employed by such Depository for transactions of
participants acting through it. Upon any purchase of Portfolio
Securities, payment will be made only upon delivery of the securities
to or for the account of the Fund and the Bank shall pay cash
collateral from the account of the Fund against the return of
Portfolio Securities loaned bythe Fund only upon delivery of the
Securities to or for the account of the Fund; and upon any sale of
Portfolio Securities, delivery of the Securities will be made only
against payment thereof or, in the event Portfolio Securities are
loaned, delivery of Securities will be made only against receipt of
the initial cash collateral to or for the account of the Fund; and
(d) The Bank shall be subject to the same liability and duty to
the Fund and its shareholders with respect to all securities of the
Fund, and all cash, stock dividends, rights and items of like nature
to which the Fund is entitled, held or received by a central
securities system as agent for the Bank, pursuant to the foregoing
authorization, as if the same were held or received by the Bank at its
own offices. In this connection, with respect to the use of the
Depository by the Bank but without limiting the foregoing duty or
liability, the Bank, without cost to the Fund, shall ensure that:
10
(i) The Depository obtains replacement of any certificated
Portfolio Security deposited with it in the event such Security
is lost, destroyed, wrongfully taken or otherwise not available
to be returned to the Bank upon its request;
(ii) Any proxy materials received by a Depository with
respect to Portfolio Securities deposited with such Depository
are forwarded immediately to the Bank for prompt transmittal to
the Fund;
(iii) Such Depository immediately forwards to the Bank
confirmation of any purchase or sale of Portfolio Securities and
of the appropriate book entry made by such Depository to the
Fund's account;
(iv) Such Depository prepares and delivers to the Bank such
records with respect to the performance of the Bank's obligations
and duties hereunder as may be necessary for the Fund to comply
with the recordkeeping requirements of Section 31 (a) of the 1940
Act and Rule 3 l(a) thereunder; and
(v) Such Depository delivers to the Bank and the Fund all
internal accounting control reports, whether or not audited by an
independent public accountant, as well as such other reports as
the Fund may reasonably request in order to verify the Portfolio
Securities held by such Depository.
6.5 Use of Book-Entry System for Commercial Paper. Provided (i) the
Bank has received a certified copy of a resolution of the Board
specifically approving participation in a system maintained by the Bank for
the holding of commercial paper in book-entry form ("Book-Entry Paper") and
(ii) for each year following such approval the Board has received and
approved the arrangements, upon receipt of Proper Instructions and upon
receipt of confirmation from an Issuer (as defined below) that the Fund has
purchased such Issuer's Book-entry Paper, the Bank shall issue and hold in
book-entry form, on behalf of the Fund, commercial paper issued by issuers
with whom the Bank has entered into a book-entry agreement (the "Issuers").
In maintaining its Book-entry Paper System, the Bank agrees that:
(a) the Bank will maintain all Book-Entry Paper held by the Fund
in an account of the Bank that includes only assets held by it for
customers;
(b) the records of the Bank with respect to the Fund's purchase
of Book-entry Paper through the Bank will identify, by book-entry,
Commercial Paper belonging to the Fund which is included in the
Book-entry Paper System and shall at all times during the regular
business hours of the Bank be open for inspection by duly authorized
officers, employees or agents of the Fund;
(c) the Bank shall pay for Book-Entry Paper purchased for the
account
11
of the Fund upon contemporaneous (i) receipt of advice from the
Issuer that such sale of Book-Entry Paper has been effected, and (ii)
the making of an entry on the records of the Bank to reflect such
payment and transfer for the account of the Fund;
(d) the Bank shall cancel such Book-Entry Paper obligation upon
the maturity thereof upon contemporaneous (i) receipt of advice that
payment for such Book-Entry Paper has been transferred to the Fund,
and (ii) the making of an entry on the records of the Bank to reflect
such payment for the account of the Fund;
(e) the Bank shall transmit to the Fund a transaction journal
confirming each transaction in Book-Entry Paper for the account of the
Fund on the next business day following the transaction; and
(f) the Bank will send to the Fund such reports on its system of
internal accounting control with respect to the Book-Entry Paper
System as the Fund may reasonably request from time to time.
6.6 Use of Immobilization Programs. Provided (i) the Bank has received
a certified copy of a resolution of the Board specifically approving the
maintenance of Portfolio Securities in an immobilization program operated
by a bank which meets the requirements of the 1940 Act, and (ii) for each
year following such approval the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter
into such immobilization program with such bank acting as a subcustodian
hereunder.
6.7 Eurodollar CDs. Any Portfolio Securities which are Eurodollar CDs
may be physically held by the European branch of the U.S. banking
institution that is the issuer of such Eurodollar CD (a "European Branch"),
provided that such Securities are identified on the books of the Bank as
belonging to the Fund and that the books of the Bank identify the European
Branch holding such Securities. Notwithstanding any other provision of this
Agreement to the contrary, except as stated in the first sentence of this
subsection 6.7, the Bank shall be under no other duty with respect to such
Eurodollar CDs belonging to the Fund, and shall have no liability to the
Fund or its shareholders with respect to the actions, inactions, whether
negligent or otherwise of such European Branch in connection with such
Eurodollar CDs, except for any loss or damage to the Fund resulting from
the Bank's own negligence, willful misfeasance or bad faith in the
performance of its duties hereunder.
6.8 Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter.
1. Upon receipt of Proper Instructions the Bank shall take action
12
as to put options ("puts") and call options ("calls") purchased or
sold (written) by the Fund regarding escrow or other arrangements (i) in
accordance with the provisions of any agreement entered into between the
Bank, any broker-dealer registered under the Exchange Act and a member of
the National Association of Securities Dealers, Inc. (the "NASD"), and, if
necessary, the Fund relating to the compliance with the rules of the
Options Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations.
2. Unless another agreement requires it to do so, the Bank shall be
under no duty or obligation to see that the Fund has deposited or is
maintaining adequate margin, if required, with any broker in connection
with any option, nor shall the Bank be under duty or obligation to present
such option to the broker for exercise unless it receives Proper
Instructions from the Fund. The Bank shall have no responsibility for the
legality of any put or call purchased or sold on behalf of the Fund, the
propriety of any such purchase or sale, or the adequacy of any collateral
delivered to a broker in connection with an option or deposited to or
withdrawn from a Segregated Account (as defined in subsection 6.9 below).
The Bank specifically, but not by way of limitation, shall not be under any
duty or obligation to: (i) periodically check or notify the Fund that the
amount of such collateral held by a broker or held in a Segregated Account
is sufficient to protect such broker of the Fund against any loss; (ii)
effect the return of any collateral delivered to a broker; or (iii) advise
the Fund that any option it holds, has or is about to expire. Such duties
or obligations shall be the sole responsibility of the Fund.
(b) Puts, Calls and Futures Traded on Commodities Exchanges
1. Upon receipt of Proper Instructions, the Bank shall take action as
to puts, calls and futures contracts ("Futures") purchased or sold by the
Fund in accordance with the provisions of any agreement among the Fund, the
Bank 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 Fund.
2. The responsibilities and liabilities of the Bank as to futures,
puts and calls traded on commodities exchanges, any Futures Commission
Merchant account and the Segregated Account shall be limited as set forth
in subparagraph (a)(2) of this Section 6.8 as if such subparagraph referred
to Futures Commission Merchants rather than brokers, and Futures and puts
and calls thereon instead of options.
6.9 Segregated Account. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for
and on behalf of the Fund, into which Account or Accounts may be
transferred upon receipt of Proper Instructions cash and/or Portfolio
Securities:
13
(a) in accordance with the provisions of any agreement among the
Fund, the Bank 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
organizations regarding escrow or other arrangements in connection
with transactions by the Fund;
(b) for the purpose of segregating cash or securities in
connection with options purchased or written by the Fund or commodity
futures purchased or written by the Fund,
(c) for the deposit of liquid assets, such as cash, U.S.
Government securities or other high grade debt obligations, having a
market value (marked to market on a daily basis) at all times equal to
not less than the aggregate purchase price due on the settlement dates
of all the Fund's then outstanding forward commitment or "when-issued"
agreements relating to the purchase of Portfolio Securities and all
the Fund's then outstanding commitments under reverse repurchase
agreements entered into with broker-dealer firms;
(d) for the deposit of any Portfolio Securities which the Fund
has agreed to sell on a forward commitment basis, and; .
(e) for other proper corporate purposes, but only n the case of
this clause (f), upon receipt of, in addition to Proper Instructions,
a certified copy of a resolution of the Board, or of the Executive
Committee signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such Segregated Account and declaring such purposes to be
proper corporate purposes.
(f) Segregated accounts established and maintained hereunder
shall comply with the procedures required by Investment Company Act,
including Release No. 10666, or any subsequent release or releases of
the Securities and Exchange Commission relating to the maintenance of
Segregated Accounts by registered investment companies;
(g) Assets may be withdrawn from the Segregated Account pursuant
to Proper Instructions only
(i) in accordance with the provisions of any agreements
referenced in (a) or (b) above;
(ii) for sale or delivery to meet the Fund's obligations under
outstanding firm commitment or when-issued agreements for
the purchase of Portfolio Securities and under reverse
repurchase agreements;
(iii) for exchange for other liquid assets of equal or
14
greater value deposited in the Segregated Account;
(iv) to the extent that the Fund's outstanding forward commitment
or when-issued agreements for the purchase of portfolio securities or
reverse repurchase agreements are sold to other parties or the Fund's
obligations thereunder are met from assets of the Fund other than those
in the Segregated Account; or
(v) for delivery upon settlement of a forward commitment agreement
for the sale of Portfolio Securities.
6.10 Interest Bearing Call or Time Deposits. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by the Fund of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated
in such Proper Instructions. The Bank shall include in its records with
respect to the assets of the Fund appropriate notation as to the amount of
each such deposit, the banking institution with which such deposit is made
(the "Deposit Bank"), and shall retain such forms of advice or receipt
evidencing the deposit, if any, as may be forwarded to the Bank by the
Deposit Bank. Such deposits shall be deemed Portfolio Securities of the
Fund and the responsibility of the Bank therefore shall be the same as and
no greater than the Bank's responsibility in respect of other Portfolio
Securities of the Fund.
6.11 Transfer of Securities. The Bank will transfer, exchange, deliver
or release Portfolio Securities held by it hereunder, insofar as such
Securities are available for such purpose, provided that before making any
transfer, exchange, delivery or release under this Section the Bank will
receive Proper Instructions requesting such transfer, exchange or delivery
stating that it is for a purpose permitted under the terms of this Section
6.11, specifying the applicable subsection, or describing the purpose of
the transaction with sufficient particularity to permit the Bank to
ascertain the applicable subsection, only
(a) upon sales of Portfolio Securities for the account of the
Fund, against contemporaneous receipt by the Bank of payment therefor
in full, or, against payment to the Bank in accordance with generally
accepted settlement practices and customs in the jurisdiction or
market in which the transaction occurs, each such payment to be in the
amount of the sale price shown in a broker's confirmation of sale of
the Portfolio Securities received by the Bank before such payment is
made, as confirmed in the Proper Instructions received by the Bank
before such payment is made;
(b) in exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of
subscription, purchase or sale or other similar rights represented by
such Portfolio Securities, or for the purpose of tendering shares in
the event of a tender offer therefor, provided
15
however that in the event of an offer of exchange, tender offer,
or other exercise of rights requiring the physical tender or delivery
of Portfolio Securities, the Bank shall have no liability for failure
to so tender in a timely manner unless such Proper Instructions are
received by the Bank at least two business days prior to the date
required for tender, and unless the Bank (or its agent or subcustodian
hereunder) has actual possession of such Security at least two
business days prior to the date of tender;
(c) upon conversion of Portfolio Securities pursuant to their
terms into other securities;
(d) for the purpose of redeeming in kind shares of the Fund upon
authorization from the Fund;
(e) in the case of option contracts owned by the Fund, for
presentation to the endorsing broker;
(f) when such Portfolio Securities are called, redeemed or
retired or otherwise become payable;
(g) for the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to
the Fund by any bank, including the Bank; provided, however, that such
Portfolio Securities will be released only upon payment to the Bank
for the account of the Fund of the moneys borrowed, except that in
cases where additional collateral is required to secure a borrowing
already made, and such fact is made to appear in the Proper
Instructions, further Portfolio Securities may be released for that
purpose without any such payment. In the event that any such pledged
Portfolio Securities are held by the Bank, they will be so held for
the account of the lender, and after notice to the Fund from the
lender in accordance with the normal procedures of the lender, that an
event of deficiency or default on the loan has occurred, the Bank may
deliver such pledged Portfolio Securities to or for the account of the
lender;
(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of
the fair market value of such security, as set forth in the Proper
Instructions received by the Bank before such payment is made;
(i) for the purpose of delivering portfolio securities lent by
the Fund to a bank or broker dealer, but only against receipt in
accordance with street delivery custom as set forth in Proper
Instructions and subject to as may be otherwise provided herein, of
adequate collateral as agreed upon from time to time by the Fund and
the Bank, and upon receipt of payment in connection with any
repurchase agreement relating to such portfolio securities entered
into by the Fund;
(j) for other authorized transactions of the Fund or for other
proper corporate purposes; provided that before making such transfer,
the Bank will also receive a certified copy of resolutions of the
Board, signed by an authorized officer of the Fund (other than the
officer certifying such resolution) and certified by its Secretary or
Assistant Secretary, specifying
16
the Portfolio Securities to be delivered, setting forth the
transaction in or purpose for which such delivery is to be made,
declaring such transaction to be an authorized transaction of the Fund
or such purpose to be a proper corporate purpose, and naming the
person or persons to whom delivery of such portfolio securities shall
be made; and
(k) upon termination of this Agreement as hereinafter set forth
pursuant to Section 8 and Section 14 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b), (c),
(e), (f), (g), (h) and (i) securities or cash receivable in exchange therefor
shall be delivered to the Bank.
7. Redemptions. In the case of payment of assets of the Fund held by the
Bank in connection with redemptions and repurchases by the Fund of its
outstanding common shares, the Bank will rely on notification by the Fund's
transfer agent of receipt of a request for redemption and certificates, if
issued, in proper form for redemption before such payment is made. Payment shall
be made in accordance with the Articles and By-laws of the Fund, from assets
available for said purpose.
8. Merger. Dissolution. etc. of Fund. In the case of the following
transactions, not in the ordinary course of business, namely, the merger of the
Fund into or the consolidation of the Fund with another investment company where
the Fund is not the surviving entity, the sale by the Fund of all, or
substantially all, of its assets to another investment company, or the
liquidation or dissolution of the Fund and distribution of its assets, the Bank
will deliver the Portfolio Securities held by it under this Agreement and
disburse cash only upon the order of the Fund set forth in an Officers'
Certificate, accompanied by a certified copy of a resolution of the Board
authorizing any of the foregoing transactions. Upon completion of such delivery
and disbursement and the payment of the fees, disbursements and expenses of the
Bank, this Agreement will terminate.
9. Actions of Bank Without Prior Authorization. Notwithstanding anything
herein to the contrary, unless and until the Bank receives an Officers'
Certificate to the contrary, it will without prior authorization or instruction
of the Fund or the transfer agent:
9.1 Endorse for collection and collect on behalf of and in the name of
the Fund all checks, drafts, or other negotiable or transferable
instruments or other orders for the payment of money received by it for the
account of the Fund and hold for the account of the Fund all income,
dividends, interest and other payments or distribution of cash with respect
to the Portfolio Securities held thereunder;
9.2 Present for payment all coupons and other income items held by it
17
for the account of the Fund which call for payment upon presentation
and hold the cash received by it upon such payment for the account of the
Fund;
9.3 Receive and hold for the account of the Fund all securities
received as a distribution on Portfolio Securities as a result of a stock
dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder.
9.4 Execute as agent on behalf of the Fund all necessary ownership and
other certificates and affidavits required by the Internal Revenue Code or
the regulations of the Treasury Department issued thereunder, or by the
laws of any state, now or hereafter in effect, inserting the Fund's name on
such certificates as the owner of the securities covered thereby, to the
extent it may lawfully do so and as may be required to obtain payment in
respect thereof The Bank will execute and deliver such certificates in
connection with Portfolio Securities delivered to it or by it under this
Agreement as may be required under the provisions of the Internal Revenue
Code and any Regulations of the Treasury Department issued thereunder, or
under the laws of any state;
9.5 Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it
upon payment for the account of the Fund; and
9.6 Exchange interim receipts or temporary securities for definitive
securities.
10. Collections and Defaults. The Bank will use all reasonable efforts to
collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Fund notice actually received by it of any call for redemption,
offer of exchange, right of subscription, reorganization or other proceedings
affecting such Securities. If Portfolio Securities upon which such income is
payable are in default or payment is refused after due demand or presentation,
the Bank will notify the Fund in writing of any default or refusal to pay within
two business days from the day on which it receives knowledge of such default or
refusal. In addition, the Bank will send the Fund a written report once each
month showing any income on any Portfolio Security held by it which is more than
ten days overdue on the date of such report and which has not previously been
reported.
11. Maintenance of Records and Accounting Services. The Bank will maintain
records with respect to transactions for which the Bank is responsible pursuant
to the terms and conditions of this Agreement, and in compliance with the
applicable rules and regulations of the 1940 Act and will furnish the Fund daily
with a statement of condition of the Fund. The Bank will furnish to the Fund at
the end of every month, and at the close of each quarter of the Fund's fiscal
year, a list of the Portfolio Securities and the aggregate amount of cash held
by it for the Fund. The books and records of the Bank pertaining to its actions
under this Agreement and reports by the Bank or its independent accountants
18
concerning its accounting system, procedures for safeguarding securities and
internal accounting controls will be open to inspection and audit at reasonable
times by officers of or auditors employed by the Fund and will be preserved by
the Bank in the manner and in accordance with the applicable rules and
regulations under the 1940 Act.
The Bank shall keep the books of account and render statements or copies
from time to time as reasonably requested by the Treasurer or any executive
officer of the Fund.
The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
12. Fund Evaluation. The Bank shall compute and, unless otherwise directed
by the Board, determine as of the close of business on the New York Stock
Exchange on each day on which said Exchange is open for unrestricted trading and
as of such other hours, if any, as may be authorized by the Board the net asset
value and the public offering price of a share of capital stock of the Fund,
such determination to be made in accordance with the provisions of the Articles
and By-laws of the Fund and Prospectus and Statement of Additional Information
relating to the Fund, as they may from time to time be amended, and any
applicable resolutions of the Board at the time in force and applicable; and
promptly to notify the Fund, the proper exchange and the NASD or such other
persons as the Fund may request of the results of such computation and
determination.
The Bank shall use reasonable care in computing the net asset value
hereunder, and the Bank shall be liable and shall hold the fund harmless for any
losses to the Fund occasioned by the Bank's own negligence in the performance of
its duties under this paragraph, provided however that the Bank may rely in good
faith upon information furnished to it by any Authorized Person in respect of
(i) the manner of accrual of the liabilities of the Fund and in respect of
liabilities of the Fund not appearing on its books of account kept by the Bank,
(ii) reserves, if any, authorized by the Board of Directors or that no such
reserves have been authorized, (iii) the source of the quotations to be used in
computing the net asset value, (iv) the value to be assigned to any security for
which no price quotations are available, and (v) the method of computation of
the public offering price on the basis of the net asset value of the shares, and
the Bank shall not be responsible for any loss occasioned by such reliance or
for any good faith reliance on any source pursuant to (iii) above, provided the
Bank has timely supplied the Fund with such variance reports as are specifically
set forth on Schedule B annexed hereto.
13. Concerning the Bank.
13.1 Performance of Duties and Standard of Care.
In performing its duties hereunder and any other duties listed on any
Schedule hereto, if any, the Bank will be entitled to receive and act upon the
advice of independent counsel of its own selection, which may be counsel for the
Fund, and will be without liability for any action taken or thing done or
omitted to be done in accordance with this Agreement in good faith in conformity
19
with such advice. Except as otherwise expressly provided in Section 12, in
the performance of its duties hereunder, the Bank will be protected and not be
liable, and will be indemnified and held harmless for any action taken or
omitted to be taken by it in good faith reliance upon the terms of this
Agreement, any Officers' Certificate, Proper Instructions, resolution of the
Board, telegram, notice, request, certificate or other instrument reasonably
believed by the Bank to be genuine and for any other loss to the Fund except in
the case of its negligence, willful misfeasance or bad faith in the performance
of its duties or reckless disregard of its obligations and duties hereunder.
The Bank will be under no duty or obligation to inquire into and will not
be liable for:
(a) the validity of the issue of any Portfolio Securities purchased by
or for the Fund, the legality of the purchases thereof or the propriety of
the price incurred therefor;
(b) the legality of any sale of any Portfolio Securities by or for the
Fund or the propriety of the amount for which the same are sold;
(c) the legality of an issue or sale of any common shares of the Fund
or the sufficiency of the amount to be received therefor except to the
extent provided in Section 12;
(d) the legality of the repurchase of any common shares of the Fund or
the propriety of the amount to be paid therefor except to the extent
provided in Section 12;
(e) the legality of the declaration of any dividend by the Fund or
the legality of the distribution of any Portfolio Securities as payment in
kind of such dividend; and
(f) any property or moneys of the Fund unless and until received by
it, and any such property or moneys delivered or paid by it pursuant to the
terms hereof.
Moreover, the Bank will not be under any duty or obligation to ascertain
whether any Portfolio Securities at any time delivered to or held by it for the
account of the Fund are such as may properly be held by the Fund under the
provisions of its Articles, By-laws, any federal or state statutes or any rule
or regulation of any governmental agency.
Notwithstanding anything in this Agreement to the contrary, in no event shall
the Bank be liable hereunder or to any third party:
(a) for any losses or damages of any kind resulting from acts of God,
earthquakes, fires, floods, storms or other disturbances of nature, epidemics,
strikes, riots, nationalization, expropriation, currency restrictions, acts of
war, civil war or terrorism, insurrection, nuclear fusion, fission or radiation,
the interruption, loss or malfunction of utilities, transportation, the
unavailability of energy sources and other similar happenings or events except
as results from the Bank's own gross negligence; or
20
(b) for special, punitive or consequential damages arising from the
provision of services hereunder, even if the Bank has been advised of the
possibility of such damages.
13.2 Agents and Subcustodians with Respect to Property of the Fund Held in
the United States. The Bank may employ agents in the performance of its duties
hereunder and shall be responsible for the acts and omissions of such agents as
if performed by the Bank hereunder.
Upon receipt of Proper Instructions, the Bank may employ Subcustodians,
provided that any such subcustodian meets at least the minimum qualifications
required by Section 17(f)(1) of the 1940 Act to act as a custodian of the Fund's
assets with respect to property of the Fund held in the United States. The Bank
shall have no liability to the Fund or any other person by reason of any act or
omission of any such subcustodian and the Fund shall indemnify the Bank and hold
it harmless from and against any and all actions, suits and claims, arising
directly or indirectly out of the performance of any such subcustodian. Upon
request of the Bank, the Fund shall assume the entire defense of any action,
suit, or claim subject to the foregoing indemnity. The Fund shall pay all fees
and expenses of any subcustodian.
13.3 Duties of the Bank with Respect to Property of the Fund Held
Outside of the United States.
(a) Appointment of Foreign Sub-Custodians. The Fund hereby authorizes
and instructs the Bank to employ as sub-custodians for the Fund's Portfolio
Securities and other assets maintained outside the United States the foreign
banking institutions and foreign securities depositories designated on the
Schedule attached hereto (each, a "Selected Foreign Sub-Custodian"). Upon
receipt of Proper Instructions, together with a certified resolution of the
Fund's Board of Trustees, the Bank and the Fund may agree to designate
additional foreign banking institutions and foreign securities depositories to
act as Selected Foreign Sub-Custodians hereunder. Upon receipt of Proper
Instructions, the Fund may instruct the Bank to cease the employment of any one
or more such Selected Foreign Sub-Custodians for maintaining custody of the
Fund's assets, and the Bank shall so cease to employ such sub-custodian as soon
as alternate custodial arrangements have been implemented.
(b) Foreign Securities Depositories. Except as may otherwise be agreed
upon in writing by the Bank and the Fund, assets of the Fund shall be maintained
in foreign securities depositories only through arrangements implemented by the
foreign banking institutions serving as Selected Foreign Sub-Custodians pursuant
to the terms hereof. Where possible, such arrangements shall include entry into
agreements containing the provisions set forth in subparagraph (d) hereof.
Notwithstanding the foregoing, except as may otherwise be agreed upon in writing
by the Bank and the Fund, the Fund authorizes the deposit in Euroclear, the
securities clearance and depository facilities operated by Xxxxxx Guaranty Trust
Company of New York in Brussels, Belgium, of Foreign Portfolio Securities
21
eligible for deposit therein and to utilize such securities depository in
connection with settlements of purchases and sales of securities and deliveries
and returns of securities, until notified to the contrary pursuant to
subparagraph (a) hereunder.
(c) Segregation of Securities. The Bank shall identify on its books as
belonging to the Fund the Foreign Portfolio Securities held by each Selected
Foreign Sub-Custodian. Each agreement pursuant to which the Bank employs a
foreign banking institution shall require that such institution establish a
custody account for the Bank and hold in that account, Foreign Portfolio
Securities and other assets of the Fund, and, in the event that such institution
deposits Foreign Portfolio Securities in a foreign securities depository, that
it shall identify on its books as belonging to the Bank the securities so
deposited.
(d) Agreements with Foreign Banking Institutions. Each of the agreements
pursuant to which a foreign banking institution holds assets of the Fund (each,
a "Foreign Sub-Custodian Agreement") shall be substantially in the form
previously made available to the Fund and shall provide that: (a) the Fund'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
(including, without limitation, any fees or taxes payable upon transfers or
reregistration of securities); (b) beneficial ownership of the Fund's assets
will be freely transferable without the payment of money or value other than for
custody or administration (including, without limitation, any fees or taxes
payable upon transfers or reregistration of securities); (c) adequate records
will be maintained identifying the assets as belonging to Bank; (d) officers of
or auditors employed by, or other representatives of the Bank, including to the
extent permitted under applicable law, the independent public accountants for
the Fund, will be given access to the books and records of the foreign banking
institution relating to its actions under its agreement with the Bank; and (e)
assets of the Fund held by the Selected Foreign Sub-Custodian will be subject
only to the instructions of the Bank or its agents.
(e) Access of Independent Accountants of the Fund. Upon request of the
Fund, the Bank will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of any
foreign banking institution employed as a Selected Foreign Sub-Custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its Foreign Sub-Custodian Agreement.
(f) Reports by Bank. The Bank will supply to the Fund from time to time, as
mutually agreed upon, statements in respect of the securities and other assets
of the Fund held by Selected Foreign Sub-Custodians, including but not limited
to an identification of entities having possession of the Foreign Portfolio
Securities and other assets of the Fund.
(g) Transactions in Foreign Custody Account. Transactions with respect
22
to the assets of the Fund held by a Selected Foreign Sub-Custodian shall be
effected pursuant to Proper Instructions from the Fund to the Bank and shall be
effected in accordance with the applicable Foreign Sub-Custodian Agreement. If
at any time any Foreign Portfolio Securities shall be registered in the name of
the nominee of the Selected Foreign Sub-Custodian, the Fund agrees to hold any
such nominee harmless from any liability by reason of the registration of such
securities in the name of such nominee.
Notwithstanding any provision of this Agreement to the contrary, settlement
and payment for Foreign Portfolio Securities received for the account of the
Fund and delivery of Foreign Portfolio Securities maintained for the account of
the Fund 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.
In connection with any action to be taken with respect to the Foreign
Portfolio Securities held hereunder, including, without limitation, the exercise
of any voting rights, subscription rights, redemption rights, exchange rights,
conversion rights or tender rights, or any other action in connection with any
other right, interest or privilege with respect to such Securities
(collectively, the "Rights"), the Bank shall promptly transmit to the Fund such
information in connection therewith as is made available to the Bank by the
Foreign Sub-Custodian, and shall promptly forward to the applicable Foreign
Sub-Custodian any instructions, forms or certifications with respect to such
Rights, and any instructions relating to the actions to be taken in connection
therewith, as the Bank shall receive from the Fund pursuant to Proper
Instructions. Notwithstanding the foregoing, the Bank shall have no further duty
or obligation with respect to such Rights, including, without limitation, the
determination of whether the Fund is entitled to participate in such Rights
under applicable U.S. and foreign laws, or the determination of whether any
action proposed to be taken with respect to such Rights by the Fund or by the
applicable Foreign Sub-Custodian will comply with all applicable terms and
conditions of any such Rights or any applicable laws or regulations, or market
practices within the market in which such action is to be taken or omitted.
(h) Liability of Selected Foreign Sub-Custodians. Each Foreign
Sub-Custodian Agreement with a foreign banking institution shall require the
institution to exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Bank and each Fund from and against certain
losses, damages, costs, expenses, liabilities or claims arising out of or in
connection with the institution's performance of such obligations, all as set
forth in the applicable Foreign Sub-Custodian Agreement. The Fund acknowledges
that the Bank, as a participant in Euroclear, is subject to the Terms and
Conditions Governing the Euroclear System, a copy of which has been made
available to the Fund. The Fund acknowledges that pursuant to such Terms and
Conditions, Xxxxxx Guaranty Brussels shall have the sole right to exercise or
23
assert any and all rights or claims in respect of actions or omissions of,
or the bankruptcy or insolvency of, any other depository, clearance system or
custodian utilized by Euroclear in connection with the Fund's securities and
other assets.
(i) Liability of Bank. The Bank shall have no more or less responsibility
or liability on account of the acts or omissions of any Selected Foreign
Sub-Custodian employed hereunder than any such Selected Foreign Sub-Custodian
has to the Bank and, without limiting the foregoing, the Bank 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, political risk (including, but not limited to, exchange control
restrictions, confiscation, insurrection, civil strife or armed hostilities)
other losses due to Acts of God, nuclear incident or any loss where the Selected
Foreign Sub-Custodian has otherwise exercised reasonable care.
(j) Monitoring Responsibilities. The Bank shall furnish annually to the
Fund, information concerning the Selected Foreign Sub-Custodians employed
hereunder for use by the Fund in evaluating such Selected Foreign Sub-Custodians
to ensure compliance with the requirements of Rule 17f-5 of the Act. In
addition, the Bank will promptly inform the Fund in the event that the Bank is
notified by a Selected 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) or any other capital adequacy
test applicable to it by exemptive order, or if the Bank has actual knowledge of
any material loss of the assets of the Fund held by a Foreign Sub-Custodian.
(k) Tax Law. The Bank shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Bank as custodian of the
Fund by the tax laws of any jurisdiction, and it shall be the responsibility of
the Fund to notify the Bank of the obligations imposed on the Fund or the Bank
as the custodian of the Fund by the tax law of any non-U.S. jurisdiction,
including responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Fund with respect to any claim for exemption or
refund under the tax law of jurisdictions for which the Fund has provided such
information.
13.4 Insurance. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Fund held by it as it uses
in respect of its own similar property and will maintain insurance in accordance
with industry practice but it need not maintain any special insurance for the
benefit of the Fund.
13.5. Fees and Expenses of Bank. The Fund will pay or reimburse the Bank
from time to time for any transfer taxes payable upon transfer of Portfolio
Securities made hereunder, and for all necessary proper disbursements, expenses
24
and charges made or incurred by the Bank in the performance of this
Agreement (including any duties listed on any Schedule hereto, if any) including
any indemnities for any loss, liabilities or expense to the Bank as provided
above. For the services rendered by the Bank hereunder, the Fund will pay to the
Bank such compensation or fees at such rate and at such times as shall be agreed
upon in writing by the parties from time to time. The Bank will also be entitled
to reimbursement by the Fund for all reasonable out of pocket expenses incurred
in conjunction with termination of this Agreement by the Fund.
13.6 Advances by Bank. The Bank may, in its sole discretion, advance funds
on behalf of the Fund to make any payment permitted by this Agreement upon
receipt of any Proper Authorization for such payments by the Fund. Should such a
payment or payments, with advanced funds, result in an overdraft (due to
insufficiencies of the Fund's account with the Bank, or for any other reason)
this Agreement deems any such overdraft or related indebtedness, a loan made by
the Bank to the Fund payable on demand and bearing interest at the current rate
charged by the Bank for such loans unless the Fund shall provide the Bank with
agreed upon compensating balances. The Fund agrees that the Bank shall have a
continuing lien and security interest to the extent of any overdraft or
indebtedness, in and to any property at any time held by it for the Fund's
benefit or in which the Fund has an interest and which is then in the Bank's
possession or control (or in the possession or control of any third party acting
on the Bank's behalf). The Fund authorizes the Bank, in its sole discretion, at
any time to charge any overdraft or indebtedness, together with interest due
thereon against any balance of account standing to the credit of the Fund on the
Bank's books.
14. Termination.
14.1 This Agreement may be terminated at any time without penalty upon
sixty days written notice delivered by either party to the other by means of
registered mail, and upon the expiration of such sixty days this Agreement will
terminate; provided, however, that the effective date of such termination may be
postponed to a date not more than ninety days from the date of delivery of such
notice (i) by the Bank in order to prepare for the transfer by the Bank of all
of the assets of the Fund held hereunder, and (ii) by the Fund in order to give
the Fund an opportunity to make suitable arrangements for a successor custodian.
At any time after the termination of this Agreement, the Fund will, at its
request, have access to the records of the Bank relating to the performance of
its duties as custodian.
14.2 In the event of the termination of this Agreement, the Bank will
immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duly endorsed and all records
maintained under Section 11 to the successor custodian when appointed by the
Fund. The obligation of the Bank to deliver and transfer over the assets of the
25
Fund held by it directly to such successor custodian will commence as soon
as such successor is appointed and will continue until completed as aforesaid.
If the Fund does not select a successor custodian within ninety (90) days from
the date of delivery of notice of termination the Bank may, subject to the
provisions of subsection (14.3), deliver the Portfolio Securities and cash of
the Fund held by the Bank to a bank or trust company of its own selection which
meets the requirements of Section 17(f)(1) of the 1940 Act and has a reported
capital, surplus and undivided profits aggregating not less than $2,000,000, to
be held as the property of the Fund under terms similar to those on which they
were held by the Bank, whereupon such bank or trust company so selected by the
Bank will become the successor custodian of such assets of the Fund with the
same effect as though selected by the Board.
14.3 Prior to the expiration of ninety (90) days after notice of
termination has been given, the Fund may furnish the Bank with an order of the
Fund advising that a successor custodian cannot be found willing and able to act
upon reasonable and customary terms and that there has been submitted to the
shareholders of the Fund the question of whether the Fund will be liquidated or
will function without a custodian for the assets of the Fund held by the Bank.
In that event the Bank will deliver the Portfolio Securities and cash of the
Fund held by it, subject as aforesaid, in accordance with one of such
alternatives which may be approved by the requisite vote of shareholders, upon
receipt by the Bank of a copy of the minutes of the meeting of shareholders at
which action was taken, certified by the Fund's Secretary and an opinion of
counsel to the Fund in form and content satisfactory to the Bank.
15. Confidentiality. Both parties hereto agree than any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person without the consent of the other party,
except as may be required by applicable law or at the request of a governmental
agency. The parties further agree that a breach of this provision would
irreparably damage the other party and accordingly agree that each of them is
entitled, without bond or other security, to an injunction or injunctions to
prevent breaches of this provision.
16. Notices. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below; namely:
(a) In the case of notices sent to the Fund to:
Bull & Bear Funds II, Inc.
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: President
26
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
or at such other place as such party may from time to time designate in
writing.
17. Amendments. This Agreement may not be altered or amended, except by an
instrument in writing, executed by both parties, and in the case of the Fund,
such alteration or amendment will be authorized and approved by its Board.
18. Parties. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of the Bank or by the Bank without the written
consent of the Fund, authorized and approved by the Board; and provided further
that termination proceedings pursuant to Section 14 hereof will not be deemed to
be an assignment within the meaning of this provision.
19. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts. 20. Counterparts. his
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but such counterparts shall, together, constitute only
one instrument.
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
Bull & Bear Funds II, Inc.
By:_____________________________
Name:
Title:
ATTEST:
-----------------------------
Investors Bank & Trust Company
By:_____________________________
Name:
Title:
ATTEST:
-----------------------------
DATE: _______________________
28
Foreign Subcustodian Network
Securities Depository /
Country Subcustodian Clearing Agency
Argentina Citibank, N. A., Buenos Aires Caja de Valores
Citibank New York Agreement November 15, 1990
Australia National Australia Bank Limited Austraclear
Agreement December 1990 CHESS
RITS
Austria Euroclear / Creditanstalt Bankverein OEKB
Euroclear Agreement May 1, 1990
Bangladesh Standard Chartered Bank, Dhaka None
Standard Chartered Regional Agreement July 23, 0000
Xxxxxxx Euroclear / General de Banque CIK
Euroclear Agreement May 1, 1990 Banque
Nationale
de Belge
Botswana Barclays Bank PLC/Barclays Bank of Botswana Ltd. None
Barclays Regional Agreement November 21, 0000
Xxxxxx Banco de Boston, Sao Paulo BOVESPA
Agreement BVRJ
Canada Euroclear / Royal Bank of Canada CDS
Euroclear Agreement May 1, 1990
Canada Royal Trust Corporation of Canada CDS
Agreement October 22,1991
China Standard Chartered Bank, Shanghai SSCCRC
Standard Chartered Regional Agreement July 23, 1992
China Standard Chartered Bank, Shenzhen Shenzen
Central
Standard Chartered Regional Agreement July 23, 1992
Registrars Co.
Colombia Cititrust Colombia S. A. Sociedad Fiduciaria, Bogota None
Citibank New York Agreement November 15, 1990
Czech Republic Chase Manhattan, N. A. / Ceskoslovenska Obchodni Banka
SCP
Chase New York Agreement Xxxxx 0, 0000
Xxxxxxx Euroclear / Den Danske Bank
Vardipapercentralen
Euroclear Agreement May 1, 1990
29
Egypt Chase Manhattan, N. A. / National Bank of Egypt None
Chase New York Agreement Xxxxx 0, 0000
Xxxxxxx Euroclear / Kansallis-Osake-Pankki Central Share
Registry
Euroclear Agreement May 1, 1990 Helsinki Money
Market
France Euroclear / Xxxxxx Guaranty Paris, Societe Generale
Sicovam
Euroclear Agreement May 1, 1990 Banque de
France
Germany Euroclear / Deutsche Bank A. G. Kassenverein
Euroclear Agreement May 1, 1990
Ghana Barclays Bank PLC / Barclays Bank of Ghana Ltd. None
Barclays Regional Agreement November 21,1994
Greece Citibank, N. A., Athens CSD
Citibank New York Agreement November 15, 1990
Hong Kong Standard Chartered Bank, Hong Kong CCASS
Standard Chartered Regional Agreement July 23, 1992
Hungary Citibank, Rt., Budapest Keler
Citibank New York Agreement November 15, 1990
Indonesia Standard Chartered Bank, Jakarta PT Klering
Dep Efek
Standard Charterd Regional Agreement July 23, 1992
Ireland Bank of Ireland Securities Services Gilts Settlement
Of fice
Agreement February 22, 1995
Xxxxxx Xxxxx Manhattan, N.A. / Bank Leumi le-Israel The Stock
Exchange
Chase New York Agreement March 1, 1994 Clearing
House Ltd.
Italy Citibank, N. A., Milan Monte Titoli
Citibank New York Agreement Xxxxxxxx 00, 0000 Xxxxx
x'Xxxxxx
Xxxxx Euroclear / Credito Italiano Xxxxx x'Xxxxxx
XxxxxxxxxXxxxxxxxxXxx 0, 0000
Xxxxx Standard Chartered Bank, Tokyo JASDEC
Standard Chartered Regional Agreement July 23, 1992 Bank of
Japan
Jordan Citibank, N. A., Amman None
Citibank New York Agreement November 15,1990
30
Korea Standard Chartered Bank, Seoul KSD
Standard Chartered Regional Agreement July 23, 1992
Luxembourg Euroclear / Banque et Caisse d'Epargne de l'Etat None
Euroclear Agreement May 1, 1990
Malaysia Standard Chartered Bank Malaysia Berhad, Kuala Lumpur
MCD
Standard Chartered Regional Agreement July 23, 0000
Xxxxxxxxx Xxxxx Xxxxxxxxx, X. A. / Hongkong Shanghai Banking Corp.
None
Chase New York Agreement Xxxxx 0, 0000
Xxxxxx Bancomer, S. A. S. D. Indeval
Agreement October 7,1994 Banco de Mexico
Morocco Chase Manhattan, N. A. / Banque Commercial du Maroc
None
Chase New York Agreement Xxxxx 0, 0000
Xxxxxxxxxxx Euroclear / ABN Amro Bank NECIGEF
Euroclear Agreement May 0, 0000 Xx
Xxxxxxxxxxxxx Xxxx
Xxx Xxxxxxx National Australia Bank Austraclear
AgreementDecember, 1990
Norway Euroclear I Christiania Bank VPS
Euroclear Agreement May 1, 1990
Pakistan Standard Chartered Bank, Karachi None
Standard Chartered Regional Agreement July 23, 0000
Xxxx Citibank, N. A., Lima CAVAL
Citibank New York Agreement November 15, 0000
Xxxxxxxxxxx Standard Chartered Bank, Manila None
Standard Chartered Regional Agreement July 23, 1992
Poland Citibank (Poland), S.A., Warsaw National
Depository of
Citibank New York Agreement November 15, 1990 Securities
Portugal Citibank Portugal S. A., Lisbon Central de
Valores
Citibank New York Agreement November 15,1990
Mobiliarios
Portugal Euroclear / Banco Comercial Portugues Central de
Valores
Euroclear Agreement May 1,1990 Mobiliarios
00
Xxxxxxxxx Xxxxxxxx Xxxxxxxxx Xxxx, Xxxxxxxxx CDS
Standard Chartered Regional Agreement July 23, 0000
Xxxxx Xxxxxx Chase Manhattan N. A. / Standard Bank of South Africa None
Chase New York Agreement Xxxxx 0, 0000
Xxxxx Euroclear I Banco Santander SCLV
Euroclear Agreement May 0, 0000 Xxxxx xx Xxxxxx
Xxx Xxxxx Standard Chartered Bank, Colombo Central
Depository
Standard Chartered Regional Agreement July 23,1992 System
Sweden Euroclear I Skandinaviska Enskilda Banken
Vardepapperscentralen
Euroclear Agreement May 0, 0000
Xxxxxxxxxxx Xxxxxxxx (Xxxxxxxxxxx), Zurich SEGA
Citibank New York Agreement November 15, 0000
Xxxxxxxxxxx Euroclear I Credit Xxxxxx XXXX
XxxxxxxxxXxxxxxxxxXxx 0, 0000
Xxxxxx Standard Chartered Bank, Taipei Taiwan
Securities
Standard Chartered Regional Agreement July 23, 1992
Depository
Thailand Standard Chartered Bank, Bangkok SDC
Standard Chartered Regional Agreement July 23,1992
Turkey Chase Manhattan N. A., Istanbul IMKB
Chase New York Agreement March 1, 1994
Transnational Investors Bank & Trust Company Euroclear
United Kingdom Barclays Bank PLC CGO
Barclays Bank Regionl Agreement November 21,1994 CMO
Venezuela Citibank, N. A., Caracas None
Citibank New York Agreement November 15, 1990
Zambia Barclays Bank PLC None
Barclays Bank Regional Agreement November 21, 1994
Zimbabwe Barclays Bank PLC None
Barclays Bank Regional Agreement November 21,1994
