CUSTODIAN AGREEMENT
This Agreement is made as of August 19, 2002 by and between FRESCO'sm'
INDEX SHARES FUNDS, a business trust organized and existing under the laws of
The Commonwealth of Massachusetts (the "Trust"), and STATE STREET BANK and TRUST
COMPANY, a Massachusetts trust company (the "Custodian"),
WITNESSETH:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Trust initially intends that this Agreement be applicable
to two (2) series, Fresco'sm' Dow Xxxxx STOXX 50'sm' Fund and Fresco'sm' Dow
Xxxxx EURO STOXX 50'sm' Fund (such series together with all other series
subsequently established by the Trust and made subject to this Agreement in
accordance with Section 18, be referred to herein as the "Fund(s)"; and
WHEREAS, the Trust will issue and redeem shares of each Fund only in
aggregations of shares known as "Creation Units" principally in kind for
portfolio securities of the respective Fund, as more fully described in the
prospectus and statement of additional information of the Trust (together, the
"Prospectus") included in its registration statement on Form N-1A (Reg. Nos.
333-92109 and 811-21145);
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Trust hereby employs the Custodian as the custodian of the assets of the
Funds of the Trust, including securities which the Trust, on behalf of the
applicable Fund desires to be held in places within the United States ("domestic
securities") and securities it desires to be held outside the United States
("foreign securities"). The Trust on behalf of the Fund(s) agrees to deliver to
the Custodian all securities and cash of the Funds, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Fund(s) from time to time, and the cash
consideration received by it for such new or treasury shares of beneficial
interest of the Trust representing interests in the Funds ("Shares"), as may be
issued or sold from time to time. The Custodian shall not be responsible for any
property of a Fund held or received by the Fund and not delivered to the
Custodian.
Upon receipt of "Proper Instruction" (as such term is defined in Section 6
hereof), the Custodian shall on behalf of the applicable Fund(s) from time to
time employ one or more
sub-custodians located in the United States, but only in accordance with an
applicable vote by the Board of Trustees of the Trust (the "Board") on behalf of
the applicable Fund(s). The Custodian may employ as sub-custodian for the
Trust's foreign securities on behalf of the applicable Fund(s) the foreign
banking institutions and foreign securities depositories designated in Schedules
A and B hereto but only in accordance with the applicable provisions of Sections
3 and 4. The Custodian shall have no more or less responsibility or liability to
the Trust on account of any actions or omissions of any sub-custodian so
employed than any such sub-custodian has to the Custodian.
SECTION 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE TRUST HELD
BY THE CUSTODIAN IN THE UNITED STATES
SECTION 2.1 HOLDING SECURITIES. The Custodian shall hold and physically
segregate for the account of each Fund all non-cash property, to be held by it
in the United States, including all domestic securities owned by such Fund other
than securities which are maintained pursuant to Section 2.9 in a clearing
agency which acts as a securities depository or in a book-entry system
authorized by the U.S. Department of the Treasury (each, a "U.S. Securities
System").
SECTION 2.2 DELIVERY OF SECURITIES. The Custodian shall release and
deliver domestic securities owned by a Fund held by the Custodian or in a U.S.
Securities System account of the Custodian only upon receipt of Proper
Instructions on behalf of the applicable Fund, which may be continuing
instructions when deemed appropriate by the parties, and only in the following
cases:
1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a U.S. Securities System,
in accordance with the provisions of Section 2.9 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Fund;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name
of the Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.8 or into the name or nominee name of any
sub-custodian appointed pursuant to Section 1;
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or for exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new
securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Fund, to
the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom; provided
that in any such case, the Custodian shall have no responsibility
or liability for any loss arising from the delivery of such
securities prior to receiving payment for such securities except
as may arise from the Custodian's own negligence or willful
misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of securities made by
the Fund, but only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Trust on
behalf of the Fund, which may be in the form of cash or
obligations issued by the United States government, its agencies
or instrumentalities, except that in connection with any loans
for which collateral is to be credited to the Custodian's account
in the book-entry system authorized by the U.S. Department of the
Treasury, the Custodian will not be held liable or responsible
for the delivery of securities owned by the Fund prior to the
receipt of such collateral;
11) For delivery as security in connection with any borrowing by the
Trust on behalf of the Fund requiring a pledge of assets by the
Trust on behalf of the Fund, but only against receipt of amounts
borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Trust on behalf of the 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 and
of any registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund of the
Trust;
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13) For delivery in accordance with the provisions of any agreement
among the Trust on behalf of 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 ("CFTC") and/or any contract
market, or any similar organization or organizations, regarding
account deposits in connection with transactions by the Fund of
the Trust;
14) Upon receipt of instructions from the transfer agent for the
Trust (the "Transfer Agent") for delivery to such Transfer Agent
or to the holders of Shares in connection with distributions in
kind, as may be described from time to time in the Prospectus, in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
15) For any other purpose, but only upon receipt of Proper
Instructions from the Trust on behalf of the applicable Fund
specifying the securities of the Fund to be delivered, and naming
the person or persons to whom delivery of such securities shall
be made.
SECTION 2.3 REGISTRATION OF SECURITIES. Domestic securities held by the
Custodian (other than bearer securities) shall be registered in the name of the
Fund or in the name of any nominee of the Trust on behalf of the Fund or of any
nominee of the Custodian which nominee shall be assigned exclusively to the
Fund, unless the Trust has authorized in writing the appointment of a nominee to
be used in common with other registered investment companies having the same
investment adviser as the Fund, or in the name or nominee name of any agent
appointed pursuant to Section 2.8 or in the name or nominee name of any
sub-custodian appointed pursuant to Section 1. All securities accepted by the
Custodian on behalf of the Fund under the terms of this Agreement shall be in
"street name" or other good delivery form. If, however, the Trust directs the
Custodian to maintain securities in "street name", the Custodian shall utilize
its best efforts only to timely collect income due the Trust on such securities
and to notify the Trust on a best efforts basis only of relevant corporate
actions including, without limitation, pendency of calls, maturities, tender or
exchange offers.
SECTION 2.4 BANK ACCOUNTS. The Custodian shall open and maintain a
separate bank account or accounts in the United States in the name of each Fund
of the Trust, subject only to draft or order by the Custodian acting pursuant to
the terms of this Agreement, and shall hold in such account or accounts, subject
to the provisions hereof, all cash received by it from or for the account of the
Fund, other than cash maintained by the Fund in a bank account established and
used in accordance with Rule 17f-3 under the 1940 Act. Funds held by the
Custodian for a Fund may be deposited by it to its credit as Custodian in the
banking department of the Custodian or in such other banks or trust companies as
it may in its discretion deem necessary or desirable; provided, however, that
every such bank or trust company shall be qualified to act as a custodian under
the 1940 Act and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of each
applicable Fund be approved by vote of a majority of the Board. Such
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funds shall be deposited by the Custodian in its capacity as Custodian and shall
be withdrawable by the Custodian only in that capacity.
SECTION 2.5 DETERMINATION OF FUND DEPOSIT, ETC. Subject to and in
accordance with the directions of the investment adviser for the Funds, the
Custodian shall determine for each Fund after the end of each trading day on the
New York Stock Exchange (the "NYSE"), in accordance with the respective Fund's
policies as adopted from time to time by the Board and in accordance with the
procedures set forth in the Prospectus, (i) the identity and weighting of the
securities in the Deposit Securities and the Fund Securities and (ii) the Cash
Component required for the issuance or redemption, as the case may be, of Shares
in Creation Unit aggregations of such Fund for the next following trading day of
such Fund. The Custodian shall provide or cause to be provided this information
to the Funds' distributor and other persons according to the policy established
by the Board and shall disseminate such information, including through the
facilities of the National Securities Clearing Corporation, prior to the opening
of trading on the NYSE for the next following trading day of such Fund that the
NYSE is open.
SECTION 2.6 COLLECTION OF INCOME. Subject to the provisions of Section
2.3, the Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which each Fund
shall be entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and other payments with
respect to bearer domestic securities if, on the date of payment by the issuer,
such securities are held by the Custodian or its agent thereof and shall credit
such income, as collected, to such Fund's custodian account. Without limiting
the generality of the foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring presentation as and when
they become due and shall collect interest when due on securities held
hereunder. Income due each Fund on securities loaned pursuant to the provisions
of Section 2.2 (10) shall be the responsibility of the Trust. The Custodian will
have no duty or responsibility in connection therewith, other than to provide
the Trust with such information or data as may be necessary to assist the Trust
in arranging for the timely delivery to the Custodian of the income to which the
Fund is properly entitled.
SECTION 2.7 PAYMENT OF TRUST MONIES. Upon receipt of Proper
Instructions on behalf of the applicable Fund, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall pay out
monies of a Fund in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of the
Fund 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 1940 Act to act as a custodian and
has been designated by the Custodian as its agent for this
purpose) registered in the name of the Fund or in the name of a
nominee of the Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a purchase
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effected through a U.S. Securities System, in accordance with the
conditions set forth in Section 2.9 hereof; (c) in the case of
repurchase agreements entered into between the Trust on behalf of
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; or (d) for transfer to
a time deposit account of the Trust in any bank, whether domestic
or foreign; such transfer may be effected prior to receipt of a
confirmation from a broker and/or the applicable bank pursuant to
Proper Instructions from the Trust as defined herein;
2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued as set forth in
Section 5 hereof;
4) 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
Trust whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares declared pursuant to
the governing documents of the Trust;
6) For payment of the amount of dividends received in respect of
securities sold short; and
7) For any other purpose, but only upon receipt of Proper
Instructions from the Trust on behalf of the Fund specifying the
amount of such payment and naming the person or persons to whom
such payment is to be made.
SECTION 2.8 APPOINTMENT OF AGENTS. The Custodian may at any time or
times in its discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the 1940 Act to act as a
custodian, 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 shall not relieve the Custodian of its responsibilities
or liabilities hereunder.
SECTION 2.9 DEPOSIT OF TRUST ASSETS IN U.S. SECURITIES SYSTEMS. The
Custodian may deposit and/or maintain securities owned by a Fund in a U.S.
Securities System subject to the following provisions:
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1) The Custodian may keep securities of the Fund in a U.S.
Securities System provided that such securities are represented
in an account of the Custodian in the U.S. Securities System (the
"U.S. Securities System Account") which account shall not include
any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of the
Fund which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Fund;
3) The Custodian shall pay for securities purchased for the account
of the Fund upon (i) receipt of advice from the U.S. Securities
System that such securities have been transferred to the U.S.
Securities System 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 Fund. The Custodian shall transfer securities
sold for the account of the Fund upon (i) receipt of advice from
the U.S. Securities System that payment for such securities has
been transferred to the U.S. Securities System 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 Fund. Copies of
all advices from the U.S. Securities System of transfers of
securities for the account of the Fund shall identify the Fund,
be maintained for the Fund by the Custodian and be provided to
the Trust at its request. Upon request, the Custodian shall
furnish the Trust on behalf of the Fund confirmation of each
transfer to or from the account of the Fund in the form of a
written advice or notice and shall furnish to the Trust on behalf
of the Fund copies of daily transaction sheets reflecting each
day's transactions in the U.S. Securities System for the account
of the Fund;
4) The Custodian shall provide the Trust with any report obtained by
the Custodian on the U.S. Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the U.S. Securities System;
5) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Trust for the benefit of the
Fund for any loss or damage to the Fund resulting from use of the
U.S. Securities System by reason of any negligence, misfeasance
or misconduct of the Custodian or any of its agents or of any of
its or their employees or from failure of the Custodian or any
such agent to enforce effectively such rights as it may have
against the U.S. Securities System; at the election of the Trust,
it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claim against the U.S. Securities
System or any other person which the Custodian may have as a
consequence of any such loss or damage if and to the extent that
the Fund has not been made whole for any such loss or damage.
7.
SECTION 2.10 SEGREGATED ACCOUNT. The Custodian shall upon receipt of
Proper Instructions on behalf of each applicable Fund establish and maintain a
segregated account or accounts for and on behalf of each such Fund, into which
account or accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant to Section 2.9
hereof, (i) in accordance with the provisions of any agreement among the Trust
on behalf of 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 CFTC or any registered contract market), or of any
similar organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Fund, (ii) for purposes of segregating cash
or government securities in connection with options purchased, sold or written
by the Fund or commodity futures contracts or options thereon purchased or sold
by the Fund, (iii) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release of the SEC, or interpretative opinion of the staff of the
SEC, relating to the maintenance of segregated accounts by registered investment
companies, and (iv) for any other purpose, but only, in the case of clause (iv),
upon receipt of Proper Instructions from the Trust on behalf of the applicable
Fund.
SECTION 2.11 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian
shall execute ownership and other certificates and affidavits for all federal
and state tax purposes in connection with receipt of income or other payments
with respect to domestic securities of each Fund held by it and in connection
with transfers of securities.
SECTION 2.12 PROXIES. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed by the registered
holder of such securities, if the securities are registered otherwise than in
the name of the Fund or a nominee of the Fund, all proxies, without indication
of the manner in which such proxies are to be voted, and shall promptly deliver
to the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.
SECTION 2.13 COMMUNICATIONS RELATING TO FUND SECURITIES. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to the Trust
for each Fund 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 Trust on behalf of the Fund and the maturity of futures contracts purchased
or sold by the Fund) received by the Custodian from issuers of the securities
being held for the Fund. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Fund all written information received
by the Custodian 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 the Fund desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, the Fund shall notify the Custodian at
least three business days prior to the date on which the Custodian is to take
such action.
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SECTION 3. PROVISIONS RELATING TO RULES 17F-5 AND 17F-7
SECTION 3.1 DEFINITIONS. Capitalized terms in this Section 3 shall have
the following meanings:
"Country Risk" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country including, but not limited to,
such country's political environment, economic and financial infrastructure
(including any Eligible Securities Depository operating in the country),
prevailing or developing custody and settlement practices, and laws and
regulations applicable to the safekeeping and recovery of Foreign Assets held in
custody in that country.
"Eligible Foreign Custodian' has the meaning set forth in section (a)(1) of Rule
17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as
defined in Rule 17f-5), a bank holding company meeting the requirements of an
Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate
action of the U.S. Securities and Exchange Commission (the "SEC")), or a foreign
branch of a Bank (as defined in Section 2(a)(5) of the 0000 Xxx) meeting the
requirements of a custodian under Section 17(f) of the 1940 Act; the term does
not include any Eligible Securities Depository.
"Eligible Securities Depository" has the meaning set forth in section (b)(1) of
Rule 17f-7.
"Foreign Assets" means any of the Funds' investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Funds'
transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2) of Rule
17f-5.
"Rule 17f-5" means Rule 17f-5 promulgated under the 1940 Act.
"Rule 17f-7" means Rule 17f-7 promulgated under the 1940 Act.
SECTION 3.2. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
3.2.1 DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
The Trust, by resolution adopted by its Board, hereby delegates to the
Custodian, subject to Section (b) of Rule 17f-5, the responsibilities set forth
in this Section 3.2 with respect to Foreign Assets of the Funds held outside the
United States, and the Custodian hereby accepts such delegation as Foreign
Custody Manager with respect to the Funds.
3.2.2 COUNTRIES COVERED. The Foreign Custody Manager shall be
responsible for performing the delegated responsibilities defined below only
with respect to the countries and custody arrangements for each such country
listed on Schedule A to this Contract, which list of countries may be amended
from time to time by the Trust with the agreement of the Foreign Custody
Manager. The Foreign Custody Manager shall list on
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Schedule A the Eligible Foreign Custodians selected by the Foreign Custody
Manager to maintain the assets of the Funds, which list of Eligible Foreign
Custodians may be amended from time to time in the sole discretion of the
Foreign Custody Manager. The Foreign Custody Manager will provide amended
versions of Schedule A in accordance with Section 3.2.5 hereof.
Upon the receipt by the Foreign Custody Manager of Proper Instructions to open
an account or to place or maintain Foreign Assets in a country listed on
Schedule A, and the fulfillment by the Trust, on behalf of the Funds, of the
applicable account opening requirements for such country, the Foreign Custody
Manager shall be deemed to have been delegated by the Board on behalf of the
Funds responsibility as Foreign Custody Manager with respect to that country and
to have accepted such delegation. Execution of this Amendment by the Trust shall
be deemed to be a Proper Instruction to open an account, or to place or maintain
Foreign Assets, in each country listed on Schedule A in which the Custodian has
previously placed or currently maintains Foreign Assets pursuant to the terms of
the Contract. Following the receipt of Proper Instructions directing the Foreign
Custody Manager to close the account of a Fund with the Eligible Foreign
Custodian selected by the Foreign Custody Manager in a designated country, the
delegation by the Board on behalf of the Funds to the Custodian as Foreign
Custody Manager for that country shall be deemed to have been withdrawn and the
Custodian shall immediately cease to be the Foreign Custody Manager of the Funds
with respect to that country.
In the event that the Foreign Custody Manager determines that no Eligible
Foreign Custodian in the designated market satisfies the requirements of Rule
17f-5 or for such other reason as the Foreign Custody Manager may reasonably
determine and communicate to the Trust, the Foreign Custody Manager may withdraw
its acceptance of delegated responsibilities with respect to a designated
country upon written notice to the Trust. Sixty days (or such longer period to
which the parties agree in writing) after receipt of any such notice by the
Trust, the Custodian shall have no further responsibility as Foreign Custody
Manager to the Trust with respect to the country as to which the Custodian's
acceptance of delegation is withdrawn.
3.2.3 SCOPE OF DELEGATED RESPONSIBILITIES:
(a) SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the provisions
of this Section 3.2, the Foreign Custody Manager may place and maintain the
Foreign Assets in the care of the Eligible Foreign Custodian selected by the
Foreign Custody Manager in each country listed on Schedule A, as amended from
time to time. In performing its delegated responsibilities as Foreign Custody
Manager to place or maintain Foreign Assets with an Eligible Foreign Custodian,
the Foreign Custody Manager shall determine that the Foreign Assets will be
subject to reasonable care, based on the standards applicable to custodians in
the country in which the Foreign Assets will be held by that Eligible Foreign
Custodian, after considering all factors relevant to the safekeeping of such
assets, including, without limitation the factors specified in Rule 17f-5(c)(1).
(b) CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS. The Foreign Custody
Manager shall determine that the contract governing the foreign custody
arrangements with
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each Eligible Foreign Custodian selected by the Foreign Custody Manager will
satisfy the requirements of Rule 17f-5(c)(2).
(c) MONITORING. In each case in which the Foreign Custody Manager
maintains Foreign Assets with an Eligible Foreign Custodian selected by the
Foreign Custody Manager, the Foreign Custody Manager shall establish a system to
monitor (i) the appropriateness of maintaining the Foreign Assets with such
Eligible Foreign Custodian and (ii) the performance of the contract governing
the custody arrangements established by the Foreign Custody Manager with the
Eligible Foreign Custodian. In the event the Foreign Custody Manager determines
that the custody arrangements with an Eligible Foreign Custodian it has selected
are no longer appropriate, the Foreign Custody Manager shall notify the Board in
accordance with Section 3.2.5 hereunder.
3.2.4 GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For
purposes of this Section 3.2, the Board shall be deemed to have considered and
determined to accept such Country Risk as is incurred by placing and maintaining
the Foreign Assets in each country for which the Custodian is serving as Foreign
Custody Manager of the Funds.
3.2.5 REPORTING REQUIREMENTS. The Foreign Custody Manager shall
report the withdrawal of the Foreign Assets from an Eligible Foreign Custodian
and the placement of such Foreign Assets with another Eligible Foreign Custodian
by providing to the Board an amended Schedule A at the end of the calendar
quarter in which an amendment to such Schedule has occurred. At least annually,
and more frequently as the Board deems reasonable and appropriate based on the
circumstances (and so communicates to the Foreign Custody Manager), The Foreign
Custody Manager shall make written reports notifying the Board of any other
material change in the foreign custody arrangements of the Funds described in
this Section 3.2 after the occurrence of the material change.
3.2.6 STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF A FUND.
In performing the responsibilities delegated to it, the Foreign Custody Manager
agrees to exercise reasonable care, prudence and diligence such as a person
having responsibility for the safekeeping of assets of management investment
companies registered under the 1940 Act would exercise.
3.2.7 REPRESENTATIONS WITH RESPECT TO RULE 17F-5. The Foreign
Custody Manager represents to the Trust that it is a U.S. Bank as defined in
section (a)(7) of Rule 17f-5. The Trust represents to the Custodian that the
Board has determined that it is reasonable for the Board to rely on the
Custodian to perform the responsibilities delegated pursuant to this Contract to
the Custodian as the Foreign Custody Manager of the Funds.
3.2.8 EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS FOREIGN
CUSTODY MANAGER. The Board's delegation to the Custodian as Foreign Custody
Manager of the Funds shall be effective as of the date hereof and shall remain
in effect until terminated at any time, without penalty, by written notice from
the terminating party to the non-terminating party. Termination will become
effective sixty (60) days after receipt by the non-terminating party of such
notice. The provisions of Section 3.2.2 hereof shall govern the
11.
delegation to and termination of the Custodian as Foreign Custody Manager of the
Funds with respect to designated countries.
SECTION 3.3 ELIGIBLE SECURITIES DEPOSITORIES.
3.3.1 ANALYSIS AND MONITORING. The Custodian shall (a) provide
the Trust (or its duly-authorized investment manager or investment adviser) with
an analysis of the custody risks associated with maintaining assets with the
Eligible Securities Depositories set forth on Schedule B hereto in accordance
with section (a)(1)(i)(A) of Rule 17f-7, and (b) monitor such risks on a
continuing basis, and promptly notify the Trust (or its duly-authorized
investment manager or investment adviser) of any material change in such risks,
in accordance with section (a)(1)(i)(B) of Rule 17f-7.
3.3.2 STANDARD OF CARE. The Custodian agrees to exercise
reasonable care, prudence and diligence in performing the duties set forth in
Section 3.3.1.
SECTION 4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUNDS HELD
OUTSIDE THE UNITED STATES
SECTION 4.1 DEFINITIONS. Capitalized terms in this Section 4 shall have
the following meanings:
"Foreign Securities System" means an Eligible Securities Depository listed on
Schedule B hereto.
"Foreign Sub-Custodian" means a foreign banking institution serving as an
Eligible Foreign Custodian.
SECTION 4.2 HOLDING SECURITIES. The Custodian shall identify on its
books as belonging to the Funds the foreign securities held by each Foreign
Sub-Custodian or Foreign Securities System. The Custodian may hold foreign
securities for all of its customers, including the Funds, with any Foreign
Sub-Custodian in an account that is identified as belonging to the Custodian for
the benefit of its customers, provided however, that (i) the records of the
Custodian with respect to foreign securities of the Funds which are maintained
in such account shall identify those securities as belonging to the Funds and
(ii), to the extent permitted and customary in the market in which the account
is maintained, the Custodian shall require that securities so held by the
Foreign Sub-Custodian be held separately from any assets of such Foreign
Sub-Custodian or of other customers of such Foreign Sub-Custodian.
SECTION 4.3 FOREIGN SECURITIES SYSTEMS. Foreign securities shall be
maintained in a Foreign Securities System in a designated country through
arrangements implemented by the Custodian or a Foreign Sub-Custodian, as
applicable, in such country.
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SECTION 4.4 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1 DELIVERY OF FOREIGN ASSETS. The Custodian or a Foreign
Sub-Custodian shall release and deliver foreign securities of the Funds held by
the Custodian or such Foreign Sub-Custodian, or in a Foreign Securities System
account, only upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, and only in the following
cases:
(i) upon the sale of such foreign securities for the Fund in
accordance with commercially reasonable market practice in the
country where such foreign securities are held or traded,
including, without limitation: (A) delivery against expectation
of receiving later payment; or (B) in the case of a sale
effected through a Foreign Securities System, in accordance with
the rules governing the operation of the Foreign Securities
System;
(ii) in connection with any repurchase agreement related to foreign
securities;
(iii) to the depository agent in connection with tender or other
similar offers for foreign securities of the Funds;
(iv) to the issuer thereof or its agent when such foreign securities
are called, redeemed, retired or otherwise become payable;
(v) to the issuer thereof, or its agent, for transfer into the name
of the Custodian (or the name of the respective Foreign
Sub-Custodian or of any nominee of the Custodian or such Foreign
Sub-Custodian) or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate
face amount or number of units;
(vi) to brokers, clearing banks or other clearing agents for
examination or trade execution in accordance with market custom;
provided that in any such case the Foreign Sub-Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for
such securities except as may arise from the Foreign
Sub-Custodian's own negligence or willful misconduct;
(vii) for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement;
(viii) in the case of warrants, rights or similar foreign 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;
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(ix) for delivery as security in connection with any borrowing by the
Funds requiring a pledge of assets by the Funds;
(x) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii) for any other purpose, but only upon receipt of Proper
Instructions specifying the foreign securities to be delivered
and naming the person or persons to whom delivery of such
securities shall be made.
4.4.2 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out, or direct the respective Foreign Sub-Custodian or the
respective Foreign Securities System to pay out, monies of a Fund in the
following cases only:
(i) upon the purchase of foreign securities for the Fund, unless
otherwise directed by Proper Instructions, by (A) delivering
money to the seller thereof or to a dealer therefor (or an agent
for such seller or dealer) against expectation of receiving
later delivery of such foreign securities; or (B) in the case of
a purchase effected through a Foreign Securities System, in
accordance with the rules governing the operation of such
Foreign Securities System;
(ii) in connection with the conversion, exchange or surrender of
foreign securities of the Fund;
(iii) for the payment of any expense or liability of the Fund,
including but not limited to the following payments: interest,
taxes, investment advisory fees, transfer agency fees, fees
under this Contract, legal fees, accounting fees, and other
operating expenses;
(iv) for the purchase or sale of foreign exchange or foreign exchange
contracts for the Fund, including transactions executed with or
through the Custodian or its Foreign Sub-Custodians;
(v) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(vi) for payment of part or all of the dividends received in respect
of securities sold short;
(vii) in connection with the borrowing or lending of foreign
securities; and
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(viii) for any other purpose, but only upon receipt of Proper
Instructions specifying the amount of such payment and naming
the person or persons to whom such payment is to be made.
4.4.3 MARKET CONDITIONS. Notwithstanding any provision of this
Contract to the contrary, settlement and payment for Foreign Assets received for
the account of the Funds and delivery of Foreign Assets maintained for the
account of the Funds may be effected in accordance with the customary
established securities trading or processing practices and procedures in the
country or market in which the transaction occurs, including, without
limitation, delivering Foreign Assets to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) with the expectation of
receiving later payment for such Foreign Assets from such purchaser or dealer.
The Custodian shall provide to the Board the information with respect to custody
and settlement practices in countries in which the Custodian employs a Foreign
Sub-Custodian, including without limitation information relating to Foreign
Securities Systems, described on Schedule C hereto at the time or times set
forth on such Schedule. The Custodian may revise Schedule C from time to time,
provided that no such revision shall result in the Board being provided with
substantively less information than had been previously provided hereunder.
SECTION 4.5 REGISTRATION OF FOREIGN SECURITIES. The foreign securities
maintained in the custody of a Foreign Sub-Custodian (other than bearer
securities) shall be registered in the name of the applicable Fund or in the
name of the Custodian or in the name of any Foreign Sub-Custodian or in the name
of any nominee of the foregoing and, provided that a nominee does not act
negligently, the Trust on behalf of such Fund agrees to hold any such nominee
harmless from any liability as a holder of record of such foreign securities.
The Custodian or a Foreign Sub-Custodian shall not be obligated to accept
securities on behalf of a Fund under the terms of this Contract unless the form
of such securities and the manner in which they are delivered are in accordance
with reasonable market practice.
SECTION 4.6 BANK ACCOUNTS. The Custodian shall identify on its books as
belonging to the Trust cash (including cash denominated in foreign currencies)
deposited with the Custodian. Where the Custodian is unable to maintain, or
market practice does not facilitate the maintenance of, cash on the books of the
Custodian, a bank account or bank accounts shall be opened and maintained
outside the United States on behalf of a Fund with a Foreign Sub-Custodian. All
accounts referred to in this Section shall be subject only to draft or order by
the Custodian (or, if applicable, such Foreign Sub-Custodian) acting pursuant to
the terms of this Agreement to hold cash received by or from or for the account
of the Fund. Cash maintained on the books of the Custodian (including its
branches, subsidiaries and affiliates), regardless of currency denomination, is
maintained in bank accounts established under, and subject to the laws of, The
Commonwealth of Massachusetts.
SECTION 4.7 COLLECTION OF INCOME. The Custodian shall use reasonable
commercial efforts to collect all income and other payments with respect to the
Foreign Assets held hereunder to which the Funds shall be entitled and shall
credit such income, as collected, to the applicable Fund. In the event that
extraordinary measures are required to
15.
collect such income, the Trust and the Custodian shall consult as to such
measures and as to the compensation and expenses of the Custodian relating to
such measures.
SECTION 4.8 SHAREHOLDER RIGHTS. With respect to the foreign securities
held pursuant to this Section 4, the Custodian will use reasonable commercial
efforts to facilitate the exercise of voting and other shareholder rights,
subject always to the laws, regulations and practical constraints that may exist
in the country where such securities are issued. The Trust acknowledges that
local conditions, including lack of regulation, onerous procedural obligations,
lack of notice and other factors may have the effect of severely limiting the
ability of the Trust to exercise shareholder rights.
SECTION 4.9 COMMUNICATIONS RELATING TO FOREIGN SECURITIES. The
Custodian shall transmit promptly to the Trust written information with respect
to materials received by the Custodian via the Foreign Sub-Custodians from
issuers of the foreign securities being held for the account of the Funds
(including, without limitation, pendency of calls and maturities of foreign
securities and expirations of rights in connection therewith). With respect to
tender or exchange offers, the Custodian shall transmit promptly to the Trust
written information with respect to materials so received by the Custodian from
issuers of the foreign securities whose tender or exchange is sought or from the
party (or its agents) making the tender or exchange offer. Absent negligence on
the part of the Custodian, the Custodian shall not be liable for any untimely
exercise of any tender, exchange or other right or power in connection with
foreign securities or other property of the Funds at any time held by it unless
(i) the Custodian or the respective Foreign Sub-Custodian is in actual
possession of such foreign securities or property and (ii) the Custodian
receives Proper Instructions with regard to the exercise of any such right or
power, and both (i) and (ii) occur at least three business days prior to the
date on which the Custodian is to take action to exercise such right or power.
SECTION 4.10 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement
pursuant to which the Custodian employs a Foreign Sub-Custodian shall, to the
extent possible, require the Foreign Sub-Custodian to exercise reasonable care
in the performance of its duties, and to indemnify, and hold harmless, the
Custodian from and against any loss, damage, cost, expense, liability or claim
arising out of or in connection with the Foreign Sub-Custodian's performance of
such obligations. At the Trust's election, the Funds shall be entitled to be
subrogated to the rights of the Custodian with respect to any claims against a
Foreign Sub-Custodian as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Funds have not been made whole
for any such loss, damage, cost, expense, liability or claim.
SECTION 4.11 TAX LAW. The Custodian shall have no responsibility or
liability for any obligations now or hereafter imposed on the Trust, the Funds
or the Custodian as custodian of the Funds by the tax law of the United States
or of any state or political subdivision thereof. It shall be the responsibility
of the Custodian to use reasonable efforts and due care to (a) perform such
ministerial steps as are required to collect any tax refund, (b) ascertain the
appropriate rate of tax withholding, and (c) provide such documents as may be
required to enable the Trust to receive appropriate tax treatment under
applicable tax laws
16.
and any applicable treaty provisions. Unless otherwise informed by the Trust,
the Custodian, in performance of its duties under this Section, shall be
entitled to apply categorical treatment of the Trust according to the
nationality of the Trust, the particulars of its organization and other relevant
details that shall be supplied by the Trust. The Custodian shall be entitled to
rely on any information supplied by the Trust on behalf of a Fund. The Custodian
my engage reasonable professional advisors disclosed to the Trust by the
Custodian, which may include attorneys, accountants or financial institutions in
the regular business of investment administration and may rely upon advice
received therefrom.
It shall be the duty of the Trust to inform the Custodian of any
change in the organization, domicile or other relevant fact concerning tax
treatment of the Trust and further, to inform the Custodian if the Trust is or
becomes the beneficiary of any special ruling or treatment not applicable to the
general nationality and category or entity of which the Trust is a part under
general laws and treaty provisions.
SECTION 4.12 LIABILITY OF CUSTODIAN. Except as may arise from the
Custodian's own negligence or willful misconduct or the negligence or willful
misconduct of a Sub-Custodian, the Custodian shall be without liability to the
Trust and the Funds for any loss, liability, claim or expense resulting from or
caused by anything which is part of Country Risk.
The Custodian shall be liable for the acts or omissions of a Foreign
Sub-Custodian to the same extent as set forth with respect to sub-custodians
generally in the Contract and, regardless of whether assets are maintained in
the custody of a Foreign Sub-Custodian or a Foreign Securities System, the
Custodian shall not be liable for any loss, damage, cost, expense, liability or
claim resulting from nationalization, expropriation, currency restrictions, or
acts of war or terrorism, or any other loss where the Sub-Custodian has
otherwise acted with reasonable care.
SECTION 4.13 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE TRUST. Upon
request of the Trust, the Custodian will use commercially reasonable efforts to
arrange for the independent accountants of the Trust to be afforded access to
the books and records of any Foreign Sub-Custodian insofar as such books and
records relate to (i) the performance of such Foreign Sub-Custodian under its
agreement with the Custodian and (ii) the Trust's assets.
SECTION 5. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES
The Custodian shall receive from the distributor for the Shares, the applicable
Eligible Foreign Custodian or from the Transfer Agent, as the case may be, and
deposit into the account of the appropriate Fund such payments of funds and
securities as are received for Shares, in Creation Unit aggregations, thereof
issued or sold from time to time by the Trust. The Custodian will provide timely
notification to the Trust on behalf of each such Fund and the Transfer Agent of
any receipt by it of payments for Shares of such Fund.
From such funds and securities as may be available for the purpose, the
Custodian shall, upon receipt of instructions from the Transfer Agent, make
funds and securities available for
17.
payment to, or in accordance with the instructions of, Authorized Participants
(as defined in the Prospectus) who have delivered to the Transfer Agent proper
instructions for the redemption or repurchase of their Shares, in Creation Unit
aggregations, which shall have been accepted by the Transfer Agent, the
applicable Fund Securities (as defined in the Prospectus) (or such securities in
lieu thereof as may be designated by the investment adviser of the Fund in
accordance with the Prospectus) for such Portfolio and the Cash Redemption
Amount (as defined in the Prospectus), if applicable, less any applicable
Redemption Transaction Fee (as defined in the Prospectus). The Custodian will
transfer the applicable Fund Securities to or on the order of the Authorized
Participant. Any cash redemption payment (less any applicable Redemption
Transaction Fee) due to the Authorized Participant on redemption shall be
effected through the DTC (as defined in the Prospectus) system or through wire
transfer in the case of redemptions effected outside of the DTC system.
18.
SECTION 6. PROPER INSTRUCTIONS
Proper Instructions as used throughout this Agreement means a writing signed or
initialed by one or more person or persons as the Board shall have from time to
time authorized. Each such writing shall set forth the specific transaction or
type of transaction involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Trust shall cause all oral instructions to be confirmed in
writing. Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Trust and the
Custodian agree to security procedures, including but not limited to, the
security procedures selected by the Trust in the Funds Transfer Addendum
attached hereto. For purposes of this Section, Proper Instructions shall include
instructions received by the Custodian pursuant to any three-party agreement
which requires a segregated asset account in accordance with Section 2.11.
SECTION 7. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from the Trust on
behalf of each applicable Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Agreement, provided that all such payments shall be
accounted for to the Trust on behalf of the Fund;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of the Fund
except as otherwise directed by the Board.
SECTION 8. EVIDENCE OF AUTHORITY
Absent negligence on the part of the Custodian, the Custodian shall be protected
in acting upon any instructions, notice, request, consent, certificate or other
instrument or paper reasonably believed by it to be genuine and to have been
properly executed by or on behalf of the Trust. The Custodian may receive and
accept a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Trust ("Certified Resolution") as conclusive evidence (a) of
the authority of any person to act in accordance with such resolution or (b) of
any determination or of any action by the Board as described in such resolution,
and such
19.
resolution may be considered as in full force and effect until receipt by the
Custodian of written notice to the contrary.
SECTION 9. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE, NET INCOME AND OTHER INFORMATION
The Custodian shall keep the books of account of each Fund and compute the net
asset value per Share of the outstanding Shares. The Custodian shall transmit
the net asset value per share of each Fund to the Transfer Agent, the
Distributor, the NYSE and such other entities as directed in writing by the
Trust. If directed in writing by the Trust to do so, the Custodian shall also
calculate daily the net income of the Fund as described in the Prospectus and
shall advise the Trust, the Distributor and the Transfer Agent daily of the
total amounts of such net income and, if instructed in writing by an officer of
the Trust to do so, shall advise the Transfer Agent periodically of the division
of such net income among its various components. The calculations of the net
asset value per Share and the daily income of each Fund shall be made at the
time or times described from time to time in the Prospectus. The Custodian shall
on each day a Fund is open for the purchase or redemption of Shares of such Fund
compute the number of Shares of each Deposit Security (as defined in the
Prospectus) to be included in the current Fund Deposit (as defined in the
Prospectus) and the Fund Securities (as defined in the Prospectus) and shall
transmit such information to the NYSE.
SECTION 10. RECORDS
The Custodian shall with respect to each Fund create and maintain all records
relating to its activities and obligations under this Agreement in such manner
as will meet the obligations of the Trust under the 1940 Act, with particular
attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such
records shall be the property of the Trust and shall at all times during the
regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Trust and employees and agents
of the SEC. The Custodian shall, at the Trust's request, supply the Trust with a
tabulation of securities owned by each Fund and held by the Custodian and shall,
when requested to do so by the Trust and for such compensation as shall be
agreed upon between the Trust and the Custodian, include certificate numbers in
such tabulations.
SECTION 11. OPINION OF TRUST'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Trust on behalf of each
applicable Fund may from time to time request, to obtain from year to year
favorable opinions from the Trust's independent accountants with respect to its
activities hereunder in connection with the preparation of the Trust's Form
N-1A, and Form N-SAR or other annual reports to the SEC and with respect to any
other requirements thereof.
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SECTION 12. REPORTS TO TRUST BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Trust, on behalf of each of the Funds at such
times as the Trust may reasonably require, with reports by independent public
accountants on the accounting system, internal accounting control and procedures
for safeguarding securities, futures contracts and options on futures contracts,
including securities deposited and/or maintained in a U.S. Securities System or
a Foreign Securities System, relating to the services provided by the Custodian
under this Agreement; such reports, shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Trust to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so state.
SECTION 13. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its services and
expenses as Custodian, as agreed upon from time to time between the Trust and
the Custodian.
SECTION 14. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable care, the
Custodian shall not be responsible for the title, validity or genuineness of any
property or evidence of title thereto received by it or delivered by it pursuant
to this Agreement and shall be held harmless in acting upon any notice, request,
consent, certificate or other instrument reasonably believed by it to be genuine
and to be signed by the proper party or parties, including any futures
commission merchant acting pursuant to the terms of a three-party futures or
options agreement. The Custodian shall be held to the exercise of reasonable
care in carrying out the provisions of this Agreement, but shall be kept
indemnified by and shall be without liability to the Trust for any action taken
or omitted by it in good faith without negligence. The Custodian shall be
entitled to rely on and may act upon the written advice of counsel (who may be
counsel for the Trust and who may also be- outside counsel chosen by the
Custodian with the consent of the Trust, which consent shall not be unreasonably
withheld) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice. Except as may arise from
the Custodian's own negligence or willful misconduct or the negligence or
willful misconduct of a sub-custodian or agent, the Custodian shall be without
liability to the Trust for any loss, liability, claim or expense resulting from
or caused by; (i) events or circumstances beyond the reasonable control of the
Custodian or any sub-custodian or Securities System or any agent or nominee of
any of the foregoing, including, without limitation, nationalization,
expropriation, currency restrictions, or acts of war, revolution, riots or
terrorism, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, work
stoppages, natural disasters, or other similar events or acts; (ii) errors by
the Trust or the Investment Advisor in their instructions to the Custodian
provided such instructions have been in accordance with this Agreement; (iii)
the insolvency of or acts or omissions by a
21.
Securities System; (iv) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent payment or clearing
system to deliver to the Custodian's sub-custodian or agent securities purchased
or in the remittance or payment made in connection with securities sold; (v) any
delay or failure of any company, corporation, or other body in charge of
registering or transferring securities in the name of the Custodian, the Trust,
the Custodian's sub-custodians, nominees or agents or any consequential losses
arising out of such delay or failure to transfer such securities including
non-receipt of bonus, dividends and rights and other accretions or benefits;
(vi) delays or inability to perform its duties due to any disorder in market
infrastructure with respect to any particular security or Securities System; and
(vii) any provision of any present or future law or regulation or order of the
United States of America, or any state thereof, or any other country, or
political subdivision thereof or of any court of competent jurisdiction.
The Custodian shall be liable for the acts or omissions of a Foreign
Sub-Custodian (as defined in Section 4 hereof) to the same extent as set forth
with respect to sub-custodians generally in this Agreement.
If the Trust on behalf of a Fund requires the Custodian to take any action with
respect to securities, which action involves the payment of money or which
action may, in the opinion of the Custodian, result in the Custodian or its
nominee assigned to the Trust or the Fund being liable for the payment of money
or incurring liability of some other form, the Trust on behalf of the Fund, as a
prerequisite to requiring the Custodian to take such action, shall provide
indemnity to the Custodian in an amount and form satisfactory to it.
If the Trust requires the Custodian, its affiliates, subsidiaries or agents, to
advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Agreement, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable Fund shall be
security therefor and should the Trust fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of such
Fund's assets to the extent necessary to obtain reimbursement. In such event,
and not as a precondition to any exercise of the Custodian's rights under this
Agreement or otherwise, the Custodian shall endeavor to simultaneously, or as
soon as practicable thereafter, advise the Trust of any such cash utilization or
asset disposition.
In no event shall the Custodian be liable for indirect, special or consequential
damages.
22.
SECTION 15. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Agreement shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than ninety (90)
days after the date of such delivery or mailing; provided, however, that the
Trust shall not amend or terminate this Agreement in contravention of any
applicable federal or state regulations, or any provision of the Trust's
Declaration of Trust, and further provided, that the Trust on behalf of one or
more of the Funds may at any time by action of its Board (i) substitute another
bank or trust company for the Custodian by giving notice as described above to
the Custodian, or (ii) 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 upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
For the avoidance of doubt, either party may terminate this Agreement with
respect to any one or more particular Fund(s) pursuant to this Section 15 and in
such event, all terms and conditions of this Agreement shall survive such
termination with regard to any remaining Funds that have not so terminated or
been terminated.
Upon termination of this Agreement, the Trust on behalf of each applicable Fund
shall pay to the Custodian such compensation as may be due as of the date of
such termination and shall likewise reimburse the Custodian for its costs,
expenses and disbursements, all in accordance with the last compensation
schedule in effect regarding the Custodian's services under this Agreement.
SECTION 16. SUCCESSOR CUSTODIAN
If a successor custodian for one or more Funds shall be appointed by the Board,
the Custodian shall, upon termination, deliver to such successor custodian at
the office of the Custodian, duly endorsed and in the form for transfer, all
securities of each applicable Fund then held by it hereunder and shall transfer
to an account of the successor custodian all of the securities of each such Fund
held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in like
manner, upon receipt of a Certified Resolution, deliver at the office of the
Custodian and transfer such securities, funds and other properties in accordance
with such resolution.
In the event that no written order designating a successor custodian or
Certified Resolution shall have been delivered to the Custodian on or before the
date when such termination shall become effective, then the Custodian shall have
the right to deliver to a bank or trust company, which is a "bank" as defined in
the 1940 Act, doing business in Boston, Massachusetts, or New York, New York, of
its own selection, having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than
23.
$25,000,000, all securities, funds and other properties held by the Custodian on
behalf of each applicable Fund and all instruments held by the Custodian
relative thereto and all other property held by it under this Agreement on
behalf of each applicable Fund, and to transfer to an account of such successor
custodian all of the securities of each such Fund held in any Securities System.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Agreement.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Trust to procure the Certified Resolution to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of such securities, funds
and other properties and the provisions of this Agreement relating to the duties
and obligations of the Custodian shall remain in full force and effect.
SECTION 17. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Agreement, the Custodian and the Trust
on behalf of each of the Funds, 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 shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Trust's Declaration of Trust. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Agreement.
SECTION 18. ADDITIONAL FUNDS
In the event that the Trust establishes one or more series of Shares in addition
to Fresco'sm' Dow Xxxxx STOXX 50'sm' Fund and Fresco'sm' Dow Xxxxx EURO STOXX
50'sm' Fund with respect to which it desires to have the Custodian render
services as custodian under the terms hereof, it shall so notify the Custodian
in writing, and if the Custodian agrees in writing to provide such services,
such series of Shares shall become a Fund hereunder.
SECTION 19. MASSACHUSETTS LAW TO APPLY
This Agreement shall be construed and the provisions thereof interpreted under
and in accordance with laws of The Commonwealth of Massachusetts not giving
effect to the conflicts of laws provisions thereof.
24.
SECTION 20. PRIOR AGREEMENTS
This Agreement supersedes and terminates, as of the date hereof, all prior
Agreements between the Trust on behalf of each of the Funds and the Custodian
relating to the custody of the Trust's assets.
SECTION 21. NOTICES.
Any notice, instruction or other instrument required to be given hereunder may
be delivered in person to the offices of the parties as set forth herein during
normal business hours or delivered prepaid registered mail or by telex, cable or
telecopy to the parties at the following addresses or such other addresses as
may be notified by any party from time to time.
To the Trust: FRESCO INDEX SHARES FUNDS
c/o UBS Global Asset Management (US) Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: General Counsel
Telephone: 000-000-0000
Telecopy: 000-000-0000
To the Custodian: STATE STREET BANK AND TRUST COMPANY
Xxx Xxxxxxx Xxxxxx - XX0-0
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Vice President
Telephone: 000-000-0000
Telecopy: 000-000-0000
Such notice, instruction or other instrument shall be deemed to have been served
in the case of a registered letter at the expiration of five business days after
posting, in the case of cable twenty-four hours after dispatch and, in the case
of telex, immediately on dispatch and if delivered outside normal business hours
it shall be deemed to have been received at the next time after delivery when
normal business hours commence and in the case of cable, telex or telecopy on
the business day after the receipt thereof. Evidence that the notice was
properly addressed, stamped and put into the post shall be conclusive evidence
of posting.
SECTION 22. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, addenda, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any
25.
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
SECTION 23. REMOTE ACCESS SERVICES ADDENDUM
The Custodian and the Trust agree to be bound by the terms of the Addendum
hereto relating to remote access services.
SECTION 24. SHAREHOLDER COMMUNICATIONS ELECTION
SEC Rule 14b-2 requires banks which hold securities for the account of customers
to respond to requests by issuers of securities for the names, addresses and
holdings of beneficial owners of securities of that issuer held by the bank
unless the beneficial owner has expressly objected to disclosure of this
information. In order to comply with the rule, the Custodian needs the Trust to
indicate whether it authorizes the Custodian to provide the Trust's name,
address, and share position to requesting companies whose securities the Trust
owns. If the Trust tells the Custodian "no", the Custodian will not provide this
information to requesting companies. If the Trust tells the Custodian "yes" or
does not check either "yes" or "no" below, the Custodian is required by the rule
to treat the Trust as consenting to disclosure of this information for all
securities owned by the Trust or any funds or accounts established by the Trust.
For the Trust's protection, the Rule prohibits the requesting company from using
the Trust's name and address for any purpose other than corporate
communications. Please indicate below whether the Trust consents or objects by
checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Trust's name, address, and
share positions.
NO [X] The Custodian is not authorized to release the Trust's name, address,
and share positions.
SECTION 25. REPRESENTATIONS AND WARRANTIES
SECTION 25.1 TRUST'S REPRESENTATIONS AND WARRANTIES. The Trust
represents and warrants that:
1) the execution, delivery and performance of this Agreement are
within the Trust's power and authority and have been duly
authorized by all requisite action (corporate or otherwise) of
the Trust, and the Trust has all necessary regulatory
authorizations to perform its functions under this Agreement; and
2) this Agreement shall at all times constitute a legal, valid and
binding obligation of the Trust enforceable against the Trust,
except as may be limited by bankruptcy, insolvency, or other
similar laws affecting the enforcement of creditors' rights in
26.
general and subject to the effect of general principles of
equity (regardless of whether considered in a proceeding in
equity or at law).
SECTION 25.2 CUSTODIAN'S REPRESENTATIONS AND WARRANTIES. The Custodian
represents and warrants that:
1) the execution, delivery and performance of this Agreement are
within the Custodian's power and authority and have been duly
authorized by all requisite action (corporate or otherwise) of
the Custodian, and the Custodian has all necessary regulatory
authorizations to perform its functions under this Agreement; and
2) this Agreement constitutes a legal valid and binding obligation
of the Custodian enforceable against the Custodian, except as may
be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights in general and
subject to the effect of general principles of equity (regardless
of whether considered in a proceeding in equity or at law).
SECTION 26. DISCLOSURES OF MASSACHUSETTS BUSINESS TRUST
It is expressly acknowledged and agreed that the obligations of the Trust
hereunder shall not be binding upon any of the shareholders, Trustees, officers,
employees or agents of the Trust personally, but shall bind only the trust
property of the Trust, as provided in its Declaration of Trust. The execution
and delivery of this Agreement have been authorized by the Trustees of the Trust
and signed by an authorized officer of the Trust, acting as such, and neither
such authorization by such Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on them personally, but shall bind only the property of the
Trust as provided in its Declaration of Trust.
With respect to any obligations of the Trust on behalf of any particular Fund
arising hereunder, Custodian shall look for payment or satisfaction of any such
obligation solely to the assets attributable to such Fund and assets of the
Trust to which such obligation related as though that Fund had separately
contracted with Custodian by separate written agreement with respect to such
assets held by the Custodian. The rights and benefits to which the Trust on
behalf of any particular Fund is entitled hereunder shall be solely those of the
Trust on behalf of the particular Fund and no other Fund shall receive such
benefits. There shall be no right of set-off between Funds and no assets
relating to one Fund shall be used to meet the obligations of any other Fund in
relation thereto or of any other customers of the Custodian.
SECTION 27. ASSIGNMENT
This Agreement may not be assigned by either party hereto without the prior
written consent of the other.
27.
SECTION 28. CONFIDENTIALITY
The Custodian agrees to treat confidentially all non-public records and other
information obtained by, or provided to, it during the term of this Agreement
and relating to the Trust and each Fund, except where (a ) required to be
disclosed by law or regulatory authority or agency, (b) the Custodian has
determined that disclosure is necessary for the protection of its interests, or
(c) the Custodian has received the prior written consent of the Trust to
disclose, which consent shall not be unreasonably withheld. In the event of any
disclosure by Custodian pursuant to either of clause (a) or (b) in the
immediately preceding sentence, and not as a precondition to any such
disclosure, the Custodian shall, to the extent practicable based on the
circumstances, endeavor to advise the Trust of such disclosure. Notwithstanding
the foregoing, the Custodian may aggregate Trust or Fund data with similar data
of other customers of the Custodian ("Aggregated Data") and may use Aggregated
Data for the purposes of constructing statistical models so long as such
Aggregated Data represents such a sufficiently large sample that neither the
Trust nor any Fund data can be identified either directly or by inference or
implication.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
28.
SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the date first above-written.
FRESCO'sm' INDEX SHARES FUNDS TRUST SIGNATURE ATTESTED TO BY:
By: /s/ Xxxxx X. Xxxxxxxxxx By: /s/ Xxxxxxx Xx Xxxxxxxx
------------------------------ ---------------------------
Name: Xxxxx X. Xxxxxxxxxx Name: Xxxxxxx Xx Xxxxxxxx
------------------------------ ---------------------------
Title: Secretary Title: Assistant Secretary
------------------------------ ---------------------------
STATE STREET BANK AND TRUST COMPANY SIGNATURE ATTESTED TO BY:
By: /s/ Xxxxxx X. Xxxxxx /s/ Xxxxxxxxx X. Poster
--------------------------------- ----------------------------------
Xxxxxx X. Xxxxxx, Xxxxxxxxx X. Poster,
Executive Vice President Vice President
29.
[STATE STREET LOGO]
FUNDS TRANSFER ADDENDUM
OPERATING GUIDELINES
1. OBLIGATION OF THE SENDER: State Street is authorized to promptly debit
Client's account(s) upon the receipt of a payment order in compliance with the
selected Security Procedure chosen for funds transfer and in the amount of money
that State Street has been instructed to transfer. State Street shall execute
payment orders in compliance with the Security Procedure and with the Client's
instructions on the execution date provided that such payment order is received
by the customary deadline for processing such a request, unless the payment
order specifies a later time. All payment orders and communications received
after this time will be deemed to have been received on the next business day.
2. SECURITY PROCEDURE: The Client acknowledges that the Security Procedure it
has designated on the Selection Form was selected by the Client from Security
Procedures offered by State Street. The Client agrees that the Security
Procedures are reasonable and adequate for its wire transfer transactions and
agrees to be bound by any payment orders, amendments and cancellations, whether
or not authorized, issued in its name and accepted by State Street after being
confirmed by any of the selected Security Procedures. The Client also agrees to
be bound by any other valid and authorized payment order accepted by State
Street. The Client shall restrict access to confidential information relating to
the Security Procedure to authorized persons as communicated in writing to State
Street. The Client must notify State Street immediately if it has reason to
believe unauthorized persons may have obtained access to such information or of
any change in the Client's authorized personnel. State Street shall verify the
authenticity of all instructions according to the Security Procedure.
3. ACCOUNT NUMBERS: State Street shall process all payment orders on the basis
of the account number contained in the payment order. In the event of a
discrepancy between any name indicated on the payment order and the account
number, the account number shall take precedence and govern. Financial
institutions that receive payment orders initiated by State Street at the
instruction of the Client may also process payment orders on the basis of
account numbers, regardless of any name included in the payment order. State
Street will also rely on any financial institution identification numbers
included in any payment order, regardless of any financial institution name
included in the payment order.
4. REJECTION: State Street reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance in
the account to be charged at the time of State Street's receipt of such payment
order; (b) if initiating such payment order would cause State Street, in State
Street's sole judgment, to exceed any volume, aggregate dollar, network, time,
credit or similar limits upon wire transfers which are applicable to State
Street; or (c) if State Street, in good faith, is unable to satisfy itself that
the transaction has been properly authorized.
5. CANCELLATION OR AMENDMENT: State Street shall use reasonable efforts to act
on all authorized requests to cancel or amend payment orders received in
compliance with the Security Procedure provided that such requests are received
in a timely manner affording State Street reasonable opportunity to act.
However, State Street assumes no liability if the request for amendment or
cancellation cannot be satisfied.
6. ERRORS: State Street shall assume no responsibility for failure to detect any
erroneous payment order provided that State Street complies with the payment
order instructions as received and State Street complies with the Security
Procedure. The Security Procedure is established for the purpose of
authenticating payment orders only and not for the detection of errors in
payment orders.
7. INTEREST AND LIABILITY LIMITS: State Street shall assume no responsibility
for lost interest with respect to the refundable amount of any unauthorized
payment order, unless State Street is notified of the unauthorized payment order
within thirty (30) days of notification by State Street of the acceptance of
such payment order. In no event shall State Street be liable for special,
indirect or consequential damages, even if advised of the possibility of such
damages and even for failure to execute a payment order.
8. AUTOMATED CLEARING HOUSE ("ACH") CREDIT ENTRIES/PROVISIONAL PAYMENTS: When a
Client initiates or receives ACH credit and debit entries pursuant to these
Guidelines and the rules of the National Automated Clearing House Association
and the New England Clearing House Association, State Street will act as an
Originating Depository Financial Institution and/or Receiving Depository
Institution, as the case may be, with respect to such entries. Credits given by
State Street with respect to an ACH credit entry are provisional until State
Street receives final settlement for such entry from the Federal Reserve Bank.
If State Street does not receive such final settlement, the Client agrees that
State Street shall receive a refund of the amount credited to the Client in
connection with such entry, and the party making payment to the Client via such
entry shall not be deemed to have paid the amount of the entry.
9. CONFIRMATION STATEMENTS: Confirmation of State Street's execution of payment
orders shall ordinarily be provided within 24 hours. Notice may be delivered
through State Street's proprietary information systems, such as, but not limited
to Horizon and GlobalQuest'r', account statements, advices, or by facsimile or
callback. The Client must report any objections to the execution of a payment
order within 30 days.
[STATE STREET LOGO]
FUNDS TRANSFER ADDENDUM
10. LIABILITY ON FOREIGN ACCOUNTS: State Street shall not be required to repay
any deposit made at a non-U.S. branch of State Street, or any deposit made with
State Street and denominated in a non-U.S. dollar currency, if repayment of such
deposit or the use of assets denominated in the non-U.S. dollar currency is
prevented, prohibited or otherwise blocked due to: (a) an act of war,
insurrection or civil strife; (b) any action by a non-U.S. government or
instrumentality or authority asserting governmental, military or police power of
any kind, whether such authority be recognized as a defacto or a dejure
government, or by any entity, political or revolutionary movement or otherwise
that usurps, supervenes or otherwise materially impairs the normal operation of
civil authority; or(c) the closure of a non-U.S. branch of State Street in order
to prevent, in the reasonable judgment of State Street, harm to the employees or
property of State Street. The obligation to repay any such deposit shall not be
transferred to and may not be enforced against any other branch of State Street.
The foregoing provisions constitute the disclosure required by Massachusetts
General Laws, Chapter 167D, Section 36.
While State Street is not obligated to repay any deposit made at a non-U.S.
branch or any deposit denominated in a non-U.S. currency during the period in
which its repayment has been prevented, prohibited or otherwise blocked, State
Street will repay such deposit when and if all circumstances preventing,
prohibiting or otherwise blocking repayment cease to exist.
11. MISCELLANEOUS: State Street and the Client agree to cooperate to attempt to
recover any funds erroneously paid to the wrong party or parties, regardless of
any fault of State Street or the Client, but the party responsible for the
erroneous payment shall bear all costs and expenses incurred in trying to effect
such recovery. These Guidelines may not be amended except by a written agreement
signed by the parties.
[STATE STREET LOGO]
FUNDS TRANSFER ADDENDUM
Security Procedure(s) Selection Form
Please select one or more of the funds transfer security procedures indicated
below.
X[ ]SWIFT
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a
cooperative society owned and operated by member financial institutions that
provides telecommunication services for its membership. Participation is limited
to securities brokers and dealers, clearing and depository institutions,
recognized exchanges for securities, and investment management institutions.
SWIFT provides a number of security features through encryption and
authentication to protect against unauthorized access, loss or wrong delivery of
messages, transmission errors, loss of confidentiality and fraudulent changes to
messages. SWIFT is considered to be one of the most secure and efficient
networks for the delivery of funds transfer instructions.
Selection of this security procedure would be most appropriate for existing
SWIFT members.
[ ]Standing Instructions
Standing Instructions may be used where funds are transferred to a broker on the
Client's established list of brokers with which it engages in foreign exchange
transactions. Only the date, the currency and the currency amount are variable.
In order to establish this procedure, State Street will send to the Client a
list of the brokers that State Street has determined are used by the Client. The
Client will confirm the list in writing, and State Street will verify the
written confirmation by telephone. Standing Instructions will be subject to a
mutually agreed upon limit. If the payment order exceeds the established limit,
the Standing Instruction will be confirmed by telephone prior to execution.
[ ]Remote Batch Transmission
Wire transfer instructions are delivered via Computer-to-Computer (CPU-CPU) data
communications between the Client and State Street. Security procedures include
encryption and or the use of a test key by those individuals authorized as
Automated Batch Verifiers.
Clients selecting this option should have an existing facility for completing
CPU-CPU transmissions. This delivery mechanism is typically used for high-volume
business.
[ ]Global Horizon Interchange'sm' Funds Transfer Service
Global Horizon Interchange Funds Transfer Service (FTS) is a State Street
proprietary microcomputer-based wire initiation system. FTS enables Clients to
electronically transmit authenticated Fedwire, CHIPS or internal book transfer
instructions to State Street.
This delivery mechanism is most appropriate for Clients with a low-to-medium
number of transactions (5-75 per day), allowing Clients to enter, batch, and
review wire transfer instructions on their PC prior to release to State Street.
[ ]Telephone Confirmation (Callback)
Telephone confirmation will be used to verify all non-repetitive funds transfer
instructions received via untested facsimile or phone. This procedure requires
Clients to designate individuals as authorized initiators and authorized
verifiers. State Street will verify that the instruction contains the signature
of an authorized person and prior to execution, will contact someone other than
the originator at the Client's location to authenticate the instruction.
Selection of this alternative is appropriate for Clients who do not have the
capability to use other security procedures.
[ ]Repetitive Wires
For situations where funds are transferred periodically (minimum of one
instruction per calendar quarter) from an existing authorized account to the
same payee (destination bank and account number) and only the date and currency
amount are variable, a repetitive wire may be implemented. Repetitive wires will
be subject to a mutually agreed upon limit. If the payment order exceeds the
established limit, the instruction will be confirmed by telephone prior to
execution. Telephone confirmation is used to establish this process. Repetitive
wire instructions must be reconfirmed annually.
This alternative is recommended whenever funds are frequently transferred
between the same two accounts.
[ ]Transfers Initiated by Facsimile
The Client faxes wire transfer instructions directly to State Street Mutual Fund
Services. Standard security procedure requires the use of a random number test
key for all transfers. Every six months the Client receives test key logs from
State Street. The test key contains alpha-numeric characters, which the Client
puts on each document faxed to State Street. This procedure ensures all wire
instructions received via fax are authorized by the Client.
We provide this option for Clients who wish to batch wire instructions and
transmit these as a group to State Street Mutual Fund Services once or several
times a day.
[STATE STREET LOGO]
FUNDS TRANSFER ADDENDUM
[ ]Automated Clearing House (ACH)
State Street receives an automated transmission or a magnetic tape from a Client
for the initiation of payment (credit) or collection (debit) transactions
through the ACH network. The transactions contained on each transmission or tape
must be authenticated by the Client. Clients using ACH must select one or more
of the following delivery options:
[ ]Global Horizon Interchange Automated Clearing House Service
Transactions are created on a microcomputer, assembled into batches and
delivered to State Street via fully authenticated electronic transmissions in
standard NACHA formats.
[ ]Transmission from Client PC to State Street Mainframe with Telephone Callback
[ ]Transmission from Client Mainframe to State Street Mainframe with
Telephone Callback
[ ]Transmission from DST Systems to State Street Mainframe with Encryption
[ ]Magnetic Tape Delivered to State Street with Telephone Callback
State Street is hereby instructed to accept funds transfer instructions only via
the delivery methods and security procedures indicated. The selected delivery
methods and security procedure(s) will be effective _______________________ for
payment orders initiated by our organization.
Key Contact Information
Whom shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT ALTERNATE CONTACT
Xxxx Xxxxxxxx Xxxxxxx Xxxxxxx
-------------------------------------- --------------------------------------
Name Name
00 Xxxx 00xx Xxxxxx 00 Xxxx 00xx Xxxxxx
-------------------------------------- --------------------------------------
Xxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
-------------------------------------- --------------------------------------
City/State/Zip Code City/State/Zip Code
000-000-0000 000-000-0000
-------------------------------------- --------------------------------------
Telephone Number Telephone Number
000-000-0000
-------------------------------------- --------------------------------------
Facsimile Number Facsimile Number
--------------------------------------
SWIFT Number
--------------------------------------
Telex Number
REMOTE ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT
ADDENDUM to that certain Custodian Agreement dated as of August 19,
2002 (the "Custodian Agreement") between Fresco Index Shares Funds (the
"Customer") and State Street Bank and Trust Company, including its subsidiaries
and affiliates ("State Street").
State Street has developed and utilizes proprietary accounting and
other systems in conjunction with the custodian services which State Street
provides to the Customer. In this regard, State Street maintains certain
information in databases under its control and ownership which it makes
available to its customers (the "Remote Access Services").
The Services
State Street agrees to provide the Customer, and its designated investment
advisors, consultants or other third parties authorized by State Street
("Authorized Designees") with access to In~Sight'sm' as described in Exhibit A
or such other systems as may be offered from time to time (the "System") on a
remote basis.
Security Procedures
The Customer agrees to comply, and to cause its Authorized Designees to comply,
with remote access operating standards and procedures and with user
identification or other password control requirements and other security
procedures as may be issued from time to time by State Street for use of the
System and access to the Remote Access Services. The Customer agrees to advise
State Street immediately in the event that it learns or has reason to believe
that any person to whom it has given access to the System or the Remote Access
Services has violated or intends to violate the terms of this Addendum and the
Customer will cooperate with State Street in seeking injunctive or other
equitable relief. The Customer agrees to discontinue use of the System and
Remote Access Services, if requested, for any security reasons cited by State
Street.
Fees
Fees and charges for the use of the System and the Remote Access Services and
related payment terms shall be as set forth in the custody fee schedule in
effect from time to time between the parties. The Customer shall be responsible
for any tariffs, duties or taxes imposed or levied by any government or
governmental agency by reason of the transactions contemplated by this Addendum,
including, without limitation, federal, state and local taxes, use, value added
and personal property taxes (other than income, franchise or similar taxes which
may be imposed or assessed against State Street). Any claimed exemption from
such tariffs, duties or taxes shall be supported by proper documentary evidence
delivered to State Street.
Proprietary Information/Injunctive Relief
The System and Remote Access Services described herein and the databases,
computer programs, screen formats, report formats, interactive design
techniques, formulae, processes, systems, software, know-how, algorithms,
programs, training aids, printed materials, methods, books, records, files,
documentation and other information made available to the Customer by State
Street as part of the Remote Access Services and through the use of the
System and all copyrights, patents, trade secrets and other proprietary
rights of State Street related thereto are the exclusive, valuable and
confidential property of State Street and its relevant licensors (the
"Proprietary Information"). The Customer agrees on behalf of itself and its
Authorized Designees to keep the Proprietary Information confidential and
to limit access to its employees and Authorized Designees (under a similar
duty of confidentiality) who require access to the System for the purposes
intended. The foregoing shall not apply to Proprietary Information in the
public domain or required by law to be made public.
The Customer agrees to use the Remote Access Services only in connection with
the proper purposes of this Addendum. The Customer will not, and will cause its
employees and Authorized Designees not to, (i) permit
i
any third party to use the System or the Remote Access Services, (ii) sell,
rent, license or otherwise use the System or the Remote Access Services in the
operation of a service bureau or for any purpose other than as expressly
authorized under this Addendum, (iii) use the System or the Remote Access
Services for any fund, trust or other investment vehicle without the prior
written consent of State Street, or (iv) allow or cause any information
transmitted from State Street's databases, including data from third party
sources, available through use of the System or the Remote Access Services, to
be published, redistributed or retransmitted for other than use for or on behalf
of the Customer, as State Street's customer.
The Customer agrees that neither it nor its Authorized Designees will modify the
System in any way; enhance or otherwise create derivative works based upon the
System, nor will your or your Authorized Designees reverse engineer, decompile
or otherwise attempt to secure the source code for all or any part of the
System.
The Customer acknowledges that the disclosure of any Proprietary
Information, or of any information which at law or equity ought to remain
confidential, will immediately give rise to continuing irreparable injury
to State Street inadequately compensable in damages at law and that State
Street shall be entitled to obtain immediate injunctive relief against the
breach or threatened breach of any of the foregoing undertakings, in
addition to any other legal remedies which may be available.
Limited Warranties
State Street represents and warrants that it is the owner of and has the right
to grant access to the System and to provide the Remote Access Services
contemplated herein. Because of the nature of computer information technology
including, but not limited to, the use of the Internet, and the necessity of
relying upon third party sources, and data and pricing information obtained from
third parties, the System and Remote Access Services are provided "AS IS", and
the Customer and its Authorized Designees shall be solely responsible for the
investment decisions, results obtained, regulatory reports and statements
produced using the Remote Access Services. State Street and its relevant
licensors will not be liable to the Customer or its Authorized Designees for any
direct or indirect, special, incidental, punitive or consequential damages
arising out of or in any way connected with the System or the Remote Access
Services, nor shall either party be responsible for delays or nonperformance
under this Addendum arising out of any cause or event beyond such party's
control.
State Street will take reasonable steps to ensure that its products
(and those of its third-party suppliers) reflect the available state
of the art technology to offer products that are Year 2000 compliant,
including, but not limited to, century recognition of dates,
calculations that correctly compute same century and multi century
formulas and date values, and interface values that reflect the date
issues arising between now and December 31, 2099, and if any changes
are required, State Street will make the changes to its products at no
cost to you and in a commercially reasonable time frame and will
require third-party suppliers to do likewise. The Customer will do
likewise for its systems.
EXCEPT AS EXPRESSLY SET FORTH IN THIS ADDENDUM, STATE STREET, FOR
ITSELF AND ITS RELEVANT LICENSORS, EXPRESSLY DISCLAIMS ANY AND ALL
WARRANTIES CONCERNING THE SYSTEM AND THE SERVICES TO BE RENDERED
HEREUNDER, WHETHER EXPRESS OR IMPLIED INCLUDING, WITHOUT LIMITATION,
ANY WARRANTY OF MERCHANTIBILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Infringement
State Street will defend or, at our option, settle any claim or action brought
against the Customer to the extent
ii
that it is based upon an assertion that access to the System or use of the
Remote Access Services by the Customer under this Addendum constitutes direct
infringement of any patent or copyright or misappropriation of a trade secret,
provided that the Customer notifies State Street promptly in writing of any such
claim or proceeding and cooperates with State Street in the defense of such
claim or proceeding. Should the System or the Remote Access Services or any part
thereof become, or in State Street's opinion be likely to become, the subject of
a claim of infringement or the like under any applicable patent or copyright or
trade secret laws, State Street shall have the right, at State Street's sole
option, to (i) procure for the Customer the right to continue using the System
or the Remote Access Services, (ii) replace or modify the System or the Remote
Access Services so that the System or the Remote Access Services becomes
noninfringing, or (iii) terminate this Addendum without further obligation.
Termination
Either party to the Custodian Agreement may terminate this Addendum (i) for any
reason by giving the other party at least one-hundred and eighty (180) days
prior written notice in the case of notice of termination by State Street to the
Customer or thirty (30) days notice in the case of notice from the Customer to
State Street of termination, or (ii) immediately for failure of the other party
to comply with any material term and condition of the Addendum by giving the
other party written notice of termination. This Addendum shall in any event
terminate within ninety (90) days after the termination of the Custodian
Agreement. In the event of termination, the Customer will return to State Street
all copies of documentation and other confidential information in its possession
or in the possession of its Authorized Designees. The foregoing provisions with
respect to confidentiality and infringement will survive termination for a
period of three (3) years.
Miscellaneous
This Addendum and the exhibit hereto constitute the entire understanding of the
parties to the Custodian Agreement with respect to access to the System and the
Remote Access Services. This Addendum cannot be modified or altered except in a
writing duly executed by each of State Street and the Customer and shall be
governed by and construed in accordance with the laws of The Commonwealth of
Massachusetts.
By its execution of the Custodian Agreement, the Customer (a) confirms to State
Street that it informs all Authorized Designees of the terms of this Addendum;
(b) accepts responsibility for its and its Authorized Designees' compliance with
the terms of this Addendum; and (c) indemnifies and holds State Street harmless
from and against any and all costs, expenses, losses, damages, charges, counsel
fees, payments and liabilities arising from any failure of the Customer or any
of its Authorized Designees to abide by the terms of this Addendum.
iii
EXHIBIT A
to
REMOTE ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT
IN-SIGHT'sm'
System Product Description
In-Sight'sm' provides bilateral information delivery, interoperability, and
on-line access to State Street. In-Sight'sm' allows users a single point of
entry into State Street's diverse systems and applications. Reports and data
from systems such as Investment Policy Monitor'sm', Multicurrency Horizon'sm',
Securities Lending, Performance & Analytics and Electronic Trade Delivery can
be accessed through In-Sight'sm'. This Internet-enabled application is designed
to run from a Web browser and perform across low-speed data lines or corporate
high-speed backbones. In-Sight'sm' also offers users a flexible toolset,
including an ad-hoc query function, a custom graphics package, a report
designer, and a scheduling capability. Data and reports offered through
In-Sight'sm' will continue to increase in direct proportion with the customer
roll out, as it is viewed as the information delivery system will grow with
State Street's customers.
iv
