CUSTODIAN AGREEMENT
AGREEMENT made as of this 17th day of March, 1999, between Touchstone
Series Trust, a Massachusetts business trust (the "Fund"), and Investors Bank &
Trust Company, a Massachusetts trust company (the "Bank").
The Fund, on behalf of the portfolios/series listed on Appendix A
hereto (as such Appendix A may be amended from time to time) (each a "Portfolio"
and collectively, the "Portfolios"), desires to place and maintain all of its
portfolio securities and cash in the custody of the Bank. The Bank has at least
the minimum qualifications required by Section 17(f)(1) of the Investment
Company Act of 1940 (the "1940 Act") to act as custodian of the portfolio
securities and cash of the Fund, and has indicated its willingness to so act,
subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Fund hereby appoints the Bank as
custodian of its portfolio securities and cash delivered to the Bank
as hereinafter described and the Bank agrees to act as such upon the
terms and conditions hereinafter set forth. For the services rendered
pursuant to this Agreement the Fund agrees to pay to the Bank the fees
set forth on Appendix B hereto.
2. Definitions. Whenever used herein, the terms listed below will have
the following meaning:
2.1 Authorized Person. Authorized Person will mean any of the persons
duly authorized to give Proper Instructions or otherwise act on
behalf of the Fund by appropriate resolution of its Board, and
set forth in a certificate as required by Section 4 hereof.
2.2 Board. Board will mean the Board of Directors or the Board of
Trustees of the Fund, as the case may be.
2.3 Security. The term security as used herein will have the same
meaning assigned to such term in the Securities Act of 1933, as
amended, including, without limitation, any note, stock, treasury
stock, bond, debenture, evidence of indebtedness, certificate of
interest or participation in any profit sharing agreement,
collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security,
fractional undivided interest in oil, gas, or other mineral
rights, any put, call, straddle, option, or privilege on any
security, certificate of deposit, or group or index of securities
(including any interest therein or based on the value thereof),
or any put, call, straddle, option, or privilege entered into on
a national securities exchange relating to a foreign currency,
or, in general, any interest or instrument commonly known as a
"security", or any certificate of interest or participation in,
temporary or interim certificate for, receipt for, guarantee of,
or warrant or right to subscribe to, or option contract to
purchase or sell any of the foregoing, and futures, forward
contracts and options thereon.
2.4 Portfolio Security. Portfolio Security will mean any security
owned by the Fund.
2.5 Officers' Certificate. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or
certification in writing signed by any two Authorized Persons of
the Fund.
2.6 Book-Entry System. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States
government, instrumentality and agency securities operated by the
Federal Reserve Bank, its successor or successors and its nominee
or nominees.
2.7 Depository. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange
Act of 1934 ("Exchange Act"), its successor or successors and its
nominee or nominees. The term "Depository" shall further mean and
include any other person authorized to act as a depository under
the 1940 Act, its successor or successors and its nominee or
nominees, specifically identified in a certified copy of a
resolution of the Board.
2.8 Proper Instructions. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of Portfolio
Securities, and payments and deliveries in connection therewith,
given by an Authorized Person, such instructions to be given in
such form and manner as the Bank and the Fund shall agree upon
from time to time, and (ii) instructions (which may be continuing
instructions) regarding other matters signed or initialed by an
Authorized Person. Oral instructions will be considered Proper
Instructions if the Bank reasonably believes them to have been
given by an Authorized Person. The Fund shall cause all oral
instructions to be promptly confirmed in writing. The Bank shall
act upon and comply with any subsequent Proper Instruction which
modifies a prior instruction and the sole obligation of the Bank
with respect to any follow-up or confirmatory instruction shall
be to make reasonable efforts to detect any discrepancy between
the original instruction and such confirmation and to report such
discrepancy to the Fund. The Fund shall be responsible, at the
Fund's expense, for taking any action, including any
reprocessing, necessary to correct any such discrepancy or error,
and to the extent such action requires the Bank to act, the Fund
shall give the Bank specific Proper Instructions as to the action
required. Upon receipt by the Bank of an Officers' Certificate as
to the authorization by the Board accompanied by a detailed
description of procedures approved by the Fund, Proper
Instructions may include communication effected directly between
electro-mechanical or electronic devices provided that the Board
and the Bank agree in writing that such procedures afford
adequate safeguards for the Fund's assets.
3. Separate Accounts. If the Fund has more than one series or portfolio,
the Bank will segregate the assets of each series or portfolio to
which this Agreement relates into a separate account for each such
series or portfolio containing the assets of such series or portfolio
(and all investment earnings thereon). Unless the context otherwise
requires, any reference in this Agreement to any actions to be taken
by the Fund shall be deemed to refer to the Fund acting on behalf of
one or more of its series, any reference in this Agreement to any
assets of the Fund, including, without limitation, any portfolio
securities and cash and earnings thereon, shall be deemed to refer
only to assets of the applicable series, any duty or obligation of the
Bank hereunder to the Fund shall be deemed to refer to duties and
obligations with respect to such individual series and any obligation
or liability of the Fund hereunder shall be binding only with respect
to such individual series, and shall be discharged only out of the
assets of such series.
4. Certification as to Authorized Persons. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with the Bank
his or her certification to the Bank, in such form as may be
acceptable to the Bank, of (i) the names and signatures of the
Authorized Persons and (ii) the names of the members of the Board, it
being understood that upon the occurrence of any change in the
information set forth in the most recent certification on file
(including without limitation any person named in the most recent
certification who is no longer an Authorized Person as designated
therein), the Secretary or Assistant Secretary of the Fund will sign a
new or amended certification setting forth the change and the new,
additional or omitted names or signatures. The Bank will be entitled
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to rely and act upon any Officers' Certificate given to it by the Fund
which has been signed by Authorized Persons named in the most recent
certification received by the Bank.
5. Custody of Cash. As custodian for the Fund, the Bank will open and
maintain a separate account or accounts in the name of the Fund or in
the name of the Bank, as Custodian of the Fund, and will deposit to
the account of the Fund all of the cash of the Fund, except for cash
held by a subcustodian appointed pursuant to Sections 14.2 or 14.3
hereof, including borrowed funds, delivered to the Bank, subject only
to draft or order by the Bank acting pursuant to the terms of this
Agreement. Pursuant to the Bank's internal policies regarding the
management of cash accounts, the Bank may segregate certain portions
of the cash of the Fund into a separate savings deposit account upon
which the Bank reserves the right to require seven (7) days notice
prior to withdrawal of cash from such an account. Upon receipt by the
Bank of Proper Instructions (which may be continuing instructions) or
in the case of payments for redemptions and repurchases of outstanding
shares of common stock of the Fund, notification from the Fund's
transfer agent as provided in Section 7, requesting such payment,
designating the payee or the account or accounts to which the Bank
will release funds for deposit, and stating that it is for a purpose
permitted under the terms of this Section 5, specifying the applicable
subsection, the Bank will make payments of cash held for the accounts
of the Fund, insofar as funds are available for that purpose, only as
permitted in subsections 5.1-5.9 below.
5.1 Purchase of Securities. Upon the purchase of securities for the
Fund, against contemporaneous receipt of such securities by the
Bank or against delivery of such securities to the Bank in
accordance with generally accepted settlement practices and
customs in the jurisdiction or market in which the transaction
occurs registered in the name of the Fund or in the name of, or
properly endorsed and in form for transfer to, the Bank, or a
nominee of the Bank, or receipt for the account of the Bank
pursuant to the provisions of Section 6 below, each such payment
to be made at the purchase price shown on a broker's confirmation
(or transaction report in the case of Book Entry Paper (as that
term is defined in Section 6.6 hereof)) of purchase of the
securities received by the Bank before such payment is made, as
confirmed in the Proper Instructions received by the Bank before
such payment is made.
5.2 Redemptions. In such amount as may be necessary for the
repurchase or redemption of common shares of the Fund offered for
repurchase or redemption in accordance with Section 7 of this
Agreement.
5.3 Distributions and Expenses of Fund. For the payment on the
account of the Fund of dividends or other distributions to
shareholders as may from time to time be declared by the Board,
interest, taxes, management or supervisory fees, distribution
fees, fees of the Bank for its services hereunder and
reimbursement of the expenses and liabilities of the Bank as
provided hereunder, fees of any transfer agent, fees for legal,
accounting, and auditing services, or other operating expenses of
the Fund.
5.4 Payment in Respect of Securities. For payments in connection with
the conversion, exchange or surrender of Portfolio Securities or
securities subscribed to by the Fund held by or to be delivered
to the Bank.
5.5 Repayment of Loans. To repay loans of money made to the Fund,
but, in the case of final payment, only upon redelivery to the
Bank of any Portfolio Securities pledged or hypothecated therefor
and upon surrender of documents evidencing the loan;
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5.6 Repayment of Cash. To repay the cash delivered to the Fund for
the purpose of collateralizing the obligation to return to the
Fund certificates borrowed from the Fund representing Portfolio
Securities, but only upon redelivery to the Bank of such borrowed
certificates.
5.7 Foreign Exchange Transactions.
(a) For payments in connection with foreign exchange contracts
or options to purchase and sell foreign currencies for spot
and future delivery (collectively, "Foreign Exchange
Agreements")which may be entered into by the Bank on behalf
of the Fund upon the receipt of Proper Instructions, such
Proper Instructions to specify the currency broker or
banking institution (which may be the Bank, or any other
subcustodian or agent hereunder, acting as principal) with
which the contract or option is made, and the Bank shall
have no duty with respect to the selection of such currency
brokers or banking institutions with which the Fund deals or
for their failure to comply with the terms of any contract
or option.
(b) In order to secure any payments in connection with Foreign
Exchange Agreements which may be entered into by the Bank
pursuant to Proper Instructions, the Fund agrees that the
Bank shall have a continuing lien and security interest, to
the extent of any payment due under any Foreign Exchange
Agreement, in and to any property at any time held by the
Bank for the Fund's benefit or in which the Fund has an
interest and which is then in the Bank's possession or
control (or in the possession or control of any third party
acting on the Bank's behalf). The Fund authorizes the Bank,
in the Bank's sole discretion, at any time to charge any
such payment due under any Foreign Exchange Agreement
against any balance of account standing to the credit of the
Fund on the Bank's books.
5.8 Other Authorized Payments. For other authorized transactions of
the Fund, or other obligations of the Fund incurred for proper
Fund purposes; provided that before making any such payment the
Bank will also receive a certified copy of a resolution of the
Board signed by an Authorized Person (other than the Person
certifying such resolution) and certified by its Secretary or
Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for
which payment is to be made and declaring it to be an authorized
transaction of the Fund, or specifying the amount of the
obligation for which payment is to be made, setting forth the
purpose for which such obligation was incurred and declaring such
purpose to be a proper corporate purpose.
5.9 Termination: Upon the termination of this Agreement as
hereinafter set forth pursuant to Section 8 and Section 16 of
this Agreement.
6. Securities.
6.1 Segregation and Registration. Except as otherwise provided
herein, and except for securities to be delivered to any
subcustodian appointed pursuant to Sections 14.2 or 14.3 hereof,
the Bank as custodian will receive and hold pursuant to the
provisions hereof, in a separate account or accounts and
physically segregated at all times from those of other persons,
any and all Portfolio Securities which may now or hereafter be
delivered to it by or for the account of the Fund. All such
Portfolio Securities will be held or disposed of by the Bank for,
and subject at all times to, the instructions of the Fund
pursuant to the terms of this Agreement. Subject to the specific
provisions herein relating to Portfolio Securities that are not
physically held by the Bank, the Bank will register all Portfolio
Securities (unless otherwise directed by Proper Instructions or
an Officers' Certificate), in the name of a registered nominee of
the Bank as defined in the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, and
will execute and deliver all such certificates in connection
therewith as may be required by such laws or regulations or under
the laws of any state.
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The Fund will from time to time furnish to the Bank appropriate
instruments to enable it to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee, any Portfolio Securities which
may from time to time be registered in the name of the Fund.
6.2 Voting and Proxies. Neither the Bank nor any nominee of the Bank
will vote any of the Portfolio Securities held hereunder, except
in accordance with Proper Instructions or an Officers'
Certificate. The Bank will execute and deliver, or cause to be
executed and delivered, to the Fund all notices, proxies and
proxy soliciting materials delivered to the Bank with respect to
such Securities, such proxies to be executed by the registered
holder of such Securities (if registered otherwise than in the
name of the Fund), but without indicating the manner in which
such proxies are to be voted.
6.3 Corporate Action. If at any time the Bank is notified that an
issuer of any Portfolio Security has taken or intends to take a
corporate action (a "Corporate Action") that affects the rights,
privileges, powers, preferences, qualifications or ownership of a
Portfolio Security, including without limitation, liquidation,
consolidation, merger, recapitalization, reorganization,
reclassification, subdivision, combination, stock split or stock
dividend, which Corporate Action requires an affirmative response
or action on the part of the holder of such Portfolio Security (a
"Response"), the Bank shall notify the Fund promptly of the
Corporate Action, the Response required in connection with the
Corporate Action and the Bank's deadline for receipt from the
Fund of Proper Instructions regarding the Response (the "Response
Deadline"). The Bank shall forward to the Fund via telecopier
and/or overnight courier all notices, information statements or
other materials relating to the Corporate Action promptly after
receipt of such materials by the Bank.
(a) The Bank shall act upon a required Response only after
receipt by the Bank of Proper Instructions from the Fund no
later than 5:00 p.m. on the date specified as the Response
Deadline and only if the Bank (or its agent or subcustodian
hereunder) has actual possession of all necessary
Securities, consents and other materials no later than 5:00
p.m. on the date specified as the Response Deadline.
(b) The Bank shall have no duty to act upon a required Response
if Proper Instructions relating to such Response and all
necessary Securities, consents and other materials are not
received by and in the possession of the Bank no later than
5:00 p.m. on the date specified as the Response Deadline.
Notwithstanding, the Bank may, in its sole discretion, use
its best efforts to act upon a Response for which Proper
Instructions and/or necessary Securities, consents or other
materials are received by the Bank after 5:00 p.m. on the
date specified as the Response Deadline, it being
acknowledged and agreed by the parties that any undertaking
by the Bank to use its best efforts in such circumstances
shall in no way create any duty upon the Bank to complete
such Response prior to its expiration.
(c) In the event that the Fund notifies the Bank of a Corporate
Action requiring a Response and the Bank has received no
other notice of such Corporate Action, the Response Deadline
shall be 48 hours prior to the Response expiration time set
by the depository processing such Corporate Action.
(d) Section 14.3(e) of this Agreement shall govern any Corporate
Action involving Foreign Portfolio Securities held by a
Selected Foreign Sub-Custodian.
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6.4 Book-Entry System. Provided (i) the Bank has received a certified
copy of a resolution of the Board specifically approving deposits
of Fund assets in the Book-Entry System, and (ii) for any
subsequent changes to such arrangements following such approval,
the Board has reviewed and approved the arrangement and has not
delivered an Officer's Certificate to the Bank indicating that
the Board has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the Book-Entry
System provided that such Portfolio Securities are
represented in an account ("Account") of the Bank (or its
agent) in such System which shall not include any assets of
the Bank (or such agent) other than assets held as a
fiduciary, custodian, or otherwise for customers;
(b) The records of the Bank (and any such agent) with respect to
the Fund's participation in the Book-Entry System through
the Bank (or any such agent) will identify by book entry the
Portfolio Securities which are included with other
securities deposited in the Account and shall at all times
during the regular business hours of the Bank (or such
agent) be open for inspection by duly authorized officers,
employees or agents of the Fund. Where securities are
transferred to the Fund's account, the Bank shall also, by
book entry or otherwise, identify as belonging to the Fund a
quantity of securities in a fungible bulk of securities (i)
registered in the name of the Bank or its nominee, or (ii)
shown on the Bank's account on the books of the Federal
Reserve Bank;
(c) The Bank (or its agent) shall pay for securities purchased
for the account of the Fund or shall pay cash collateral
against the return of Portfolio Securities loaned by the
Fund upon (i) receipt of advice from the Book-Entry System
that such Securities have been transferred to the Account,
and (ii) the making of an entry on the records of the Bank
(or its agent) to reflect such payment and transfer for the
account of the Fund. The Bank (or its agent) shall transfer
securities sold or loaned for the account of the Fund upon
(i) receipt of advice from the Book-Entry System that
payment for securities sold or payment of the initial
cash collateral against the delivery of securities
loaned by the Fund has been transferred to the Account;
and
(ii) the making of an entry on the records of the Bank (or
its agent) to reflect such transfer and payment for the
account of the Fund. Copies of all advices from the
Book-Entry System of transfers of securities for the
account of the Fund shall identify the Fund, be
maintained for the Fund by the Bank and shall be
provided to the Fund at its request. The Bank shall
send the Fund a confirmation, as defined by Rule 17f-4
of the 1940 Act, of any transfers to or from the
account of the Fund;
(d) The Bank will promptly provide the Fund with any report
obtained by the Bank or its agent on the Book-Entry System's
accounting system, internal accounting control and
procedures for safeguarding securities deposited in the
Book-Entry System;
6.5 Use of a Depository. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically
approving deposits in DTC or other such Depository and (ii) for
any subsequent changes to such arrangements following such
approval, the Board has reviewed and approved the arrangement and
has not delivered an Officer's Certificate to the Bank indicating
that the Board has withdrawn its approval:
(a) The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio
Securities including stock dividends, rights and other items
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of like nature, and to receive and remit to the Bank on
behalf of the Fund all income and other payments thereon and
to take all steps necessary and proper in connection with
the collection thereof;
(b) Registration of Portfolio Securities may be made in the name
of any nominee or nominees used by such Depository;
(c) Payment for securities purchased and sold may be made
through the clearing medium employed by such Depository for
transactions of participants acting through it. Upon any
purchase of Portfolio Securities, payment will be made only
upon delivery of the securities to or for the account of the
Fund and the Fund shall pay cash collateral against the
return of Portfolio Securities loaned by the Fund only upon
delivery of the Securities to or for the account of the
Fund; and upon any sale of Portfolio Securities, delivery of
the Securities will be made only against payment therefor
or, in the event Portfolio Securities are loaned, delivery
of Securities will be made only against receipt of the
initial cash collateral to or for the account of the Fund;
and
(d) The Bank shall use its best efforts to provide that:
(i) The Depository obtains replacement of any certificated
Portfolio Security deposited with it in the event such
Security is lost, destroyed, wrongfully taken or
otherwise not available to be returned to the Bank upon
its request;
(ii) Proxy materials received by a Depository with respect
to Portfolio Securities deposited with such Depository
are forwarded immediately to the Bank for prompt
transmittal to the Fund;
(iii) Such Depository promptly forwards to the Bank
confirmation of any purchase or sale of Portfolio
Securities and of the appropriate book entry made by
such Depository to the Fund's account;
(iv) Such Depository prepares and delivers to the Bank such
records with respect to the performance of the Bank's
obligations and duties hereunder as may be necessary
for the Fund to comply with the recordkeeping
requirements of Section 31(a) of the 1940 Act and Rule
31(a) thereunder; and
(v) Such Depository delivers to the Bank all internal
accounting control reports, whether or not audited by
an independent public accountant, as well as such other
reports as the Fund may reasonably request in order to
verify the Portfolio Securities held by such
Depository.
6.6 Use of Book-Entry System for Commercial Paper. Provided (i) the
Bank has received a certified copy of a resolution of the Board
specifically approving participation in a system maintained by
the Bank for the holding of commercial paper in book-entry form
("Book-Entry Paper") and (ii) for each year following such
approval the Board has received and approved the arrangements,
upon receipt of Proper Instructions and upon receipt of
confirmation from an Issuer (as defined below) that the Fund has
purchased such Issuer's Book-Entry Paper, the Bank shall issue
and hold in book-entry form, on behalf of the Fund, commercial
paper issued by issuers with whom the Bank has entered into a
book-entry agreement (the "Issuers"). In maintaining procedures
for Book-Entry Paper, the Bank agrees that:
(a) The Bank will maintain all Book-Entry Paper held by the Fund
in an account of the Bank that includes only assets held by
it for customers;
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(b) The records of the Bank with respect to the Fund's purchase
of Book-Entry Paper through the Bank will identify, by
book-entry, commercial paper belonging to the Fund which is
included in the Book-Entry System and shall at all times
during the regular business hours of the Bank be open for
inspection by duly authorized officers, employees or agents
of the Fund;
(c) The Bank shall pay for Book-Entry Paper purchased for the
account of the Fund upon contemporaneous (i) receipt of
advice from the Issuer that such sale of Book-Entry Paper
has been effected, and (ii) the making of an entry on the
records of the Bank to reflect such payment and transfer for
the account of the Fund;
(d) The Bank shall cancel such Book-Entry Paper obligation upon
the maturity thereof upon contemporaneous (i) receipt of
advice that payment for such Book-Entry Paper has been
transferred to the Fund, and (ii) the making of an entry on
the records of the Bank to reflect such payment for the
account of the Fund; and
(e) The Bank will send to the Fund such reports on its system of
internal accounting control with respect to the Book-Entry
Paper as the Fund may reasonably request from time to time.
6.7 Use of Immobilization Programs. Provided (i) the Bank has
received a certified copy of a resolution of the Board
specifically approving the maintenance of Portfolio Securities in
an immobilization program operated by a bank which meets the
requirements of Section 26(a)(1) of the 1940 Act, and (ii) for
each year following such approval the Board has reviewed and
approved the arrangement and has not delivered an Officer's
Certificate to the Bank indicating that the Board has withdrawn
its approval, the Bank shall enter into such immobilization
program with such bank acting as a subcustodian hereunder.
6.8 Eurodollar CDs. Any Portfolio Securities which are Eurodollar CDs
may be physically held by the European branch of the U.S. banking
institution that is the issuer of such Eurodollar CD (a "European
Branch"), provided that such Portfolio Securities are identified
on the books of the Bank as belonging to the Fund and that the
books of the Bank identify the European Branch holding such
Portfolio Securities. Notwithstanding any other provision of this
Agreement to the contrary, except as stated in the first sentence
of this subsection 6.8, the Bank shall be under no other duty
with respect to such Eurodollar CDs belonging to the Fund.
6.9 Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter.
(i) The Bank shall take action as to put options ("puts")
and call options ("calls") purchased or sold (written)
by the Fund regarding escrow or other arrangements (i)
in accordance with the provisions of any agreement
entered into upon receipt of Proper Instructions among
the Bank, any broker-dealer registered with the
National Association of Securities Dealers, Inc. (the
"NASD"), and, if necessary, the Fund, relating to the
compliance with the rules of the Options Clearing
Corporation and of any registered national securities
exchange, or of any similar organization or
organizations.
(ii) Unless another agreement requires it to do so, the Bank
shall be under no duty or obligation to see that the
Fund has deposited or is maintaining adequate margin,
if required, with any broker in connection with any
option, nor shall the Bank be under duty or obligation
to present such option to the broker for exercise
unless it receives Proper Instructions from the Fund.
The Bank shall have no responsibility for the legality
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of any put or call purchased or sold on behalf of the
Fund, the propriety of any such purchase or sale, or
the adequacy of any collateral delivered to a broker in
connection with an option or deposited to or withdrawn
from a Segregated Account (as defined in subsection
6.10 below). The Bank specifically, but not by way of
limitation, shall not be under any duty or obligation
to: (i) periodically check or notify the Fund that the
amount of such collateral held by a broker or held in a
Segregated Account is sufficient to protect such broker
or the Fund against any loss; (ii) effect the return of
any collateral delivered to a broker; or (iii) advise
the Fund that any option it holds, has or is about to
expire. Such duties or obligations shall be the sole
responsibility of the Fund.
(b) Puts, Calls and Futures Traded on Commodities Exchanges
(i) The Bank shall take action as to puts, calls and
futures contracts ("Futures") purchased or sold by the
Fund in accordance with the provisions of any agreement
entered into upon the receipt of Proper Instructions
among the Fund, the Bank and a Futures Commission
Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract Market,
or any similar organization or organizations, regarding
account deposits in connection with transactions by the
Fund.
(ii) The responsibilities of the Bank as to futures, puts
and calls traded on commodities exchanges, any Futures
Commission Merchant account and the Segregated Account
shall be limited as set forth in subparagraph (a)(ii)
of this Section 6.9 as if such subparagraph referred to
Futures Commission Merchants rather than brokers, and
Futures and puts and calls thereon instead of options.
6.10 Segregated Account. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or
Accounts for and on behalf of the Fund.
(a) Cash and/or Portfolio Securities may be transferred into a
Segregated Account upon receipt of Proper Instructions in
the following circumstances:
(i) in accordance with the provisions of any agreement
among the Fund, the Bank and a broker-dealer registered
under the Exchange Act and a member of the NASD or any
Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the
rules of the Options Clearing Corporation and of any
registered national securities exchange or the
Commodity Futures Trading Commission or any registered
Contract Market, or of any similar organizations
regarding escrow or other arrangements in connection
with transactions by the Fund;
(ii) for the purpose of segregating cash or securities in
connection with options purchased or written by the
Fund or commodity futures purchased or written by the
Fund;
(iii) for the deposit of liquid assets, such as cash, U.S.
Government securities or other high grade debt
obligations, having a market value (marked to market on
a daily basis) at all times equal to not less than the
aggregate purchase price due on the settlement dates of
all the Fund's then outstanding forward commitment or
"when-issued" agreements relating to the purchase of
Portfolio Securities and all the Fund's then
outstanding commitments under reverse repurchase
agreements entered into with broker-dealer firms;
(iv) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the
Securities and Exchange Commission relating to the
maintenance of Segregated Accounts by registered
investment companies;
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(v) for other proper corporate purposes, but only, in the
case of this clause (v), upon receipt of, in addition
to Proper Instructions, a certified copy of a
resolution of the Board, or of the executive committee
of the Board signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such
Segregated Account and declaring such purposes to be
proper corporate purposes.
(b) Cash and/or Portfolio Securities may be withdrawn from a
Segregated Account pursuant to Proper Instructions in the
following circumstances:
(i) with respect to assets deposited in accordance with the
provisions of any agreements referenced in (a)(i) or
(a)(ii) above, in accordance with the provisions of
such agreements;
(ii) with respect to assets deposited pursuant to (a)(iii)
or (a)(iv) above, for sale or delivery to meet the
Fund's obligations under outstanding forward commitment
or when-issued agreements for the purchase of Portfolio
Securities and under reverse repurchase agreements;
(iii) for exchange for other liquid assets of equal or
greater value deposited in the Segregated Account;
(iv) to the extent that the Fund's outstanding forward
commitment or when-issued agreements for the purchase
of portfolio securities or reverse repurchase
agreements are sold to other parties or the Fund's
obligations thereunder are met from assets of the Fund
other than those in the Segregated Account;
(v) for delivery upon settlement of a forward commitment or
when-issued agreement for the sale of Portfolio
Securities; or
(vi) with respect to assets deposited pursuant to (a)(v)
above, in accordance with the purposes of such account
as set forth in Proper Instructions.
6.11 Interest Bearing Call or Time Deposits. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by the
Fund of interest-bearing fixed-term and call deposits, transfer
cash, by wire or otherwise, in such amounts and to such bank or
banks as shall be indicated in such Proper Instructions. The Bank
shall include in its records with respect to the assets of the
Fund appropriate notation as to the amount of each such deposit,
the banking institution with which such deposit is made (the
"Deposit Bank"), and shall retain such forms of advice or receipt
evidencing the deposit, if any, as may be forwarded to the Bank
by the Deposit Bank. Such deposits shall be deemed Portfolio
Securities of the Fund and the responsibility of the Bank
therefore shall be the same as and no greater than the Bank's
responsibility in respect of other Portfolio Securities of the
Fund.
6.12 Transfer of Securities. The Bank will transfer, exchange, deliver
or release Portfolio Securities held by it hereunder, insofar as
such Securities are available for such purpose, provided that
before making any transfer, exchange, delivery or release under
this Section only upon receipt of Proper Instructions. The Proper
Instructions shall state that such transfer, exchange or delivery
is for a purpose permitted under the terms of this Section 6.12,
and shall specify the applicable subsection, or describe the
purpose of the transaction with sufficient particularity to
permit the Bank to ascertain the applicable subsection. After
receipt of such Proper Instructions, the Bank will transfer,
exchange, deliver or release Portfolio Securities only in the
following circumstances:
10
(a) Upon sales of Portfolio Securities for the account of the
Fund, against contemporaneous receipt by the Bank of payment
therefor in full, or against payment to the Bank in
accordance with generally accepted settlement practices and
customs in the jurisdiction or market in which the
transaction occurs, each such payment to be in the amount of
the sale price shown in a broker's confirmation of sale
received by the Bank before such payment is made, as
confirmed in the Proper Instructions received by the Bank
before such payment is made;
(b) In exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of
merger, consolidation, reorganization, share split-up,
change in par value, recapitalization or readjustment or
otherwise, upon exercise of subscription, purchase or sale
or other similar rights represented by such Portfolio
Securities, or for the purpose of tendering shares in the
event of a tender offer therefor, provided, however, that in
the event of an offer of exchange, tender offer, or other
exercise of rights requiring the physical tender or delivery
of Portfolio Securities, the Bank shall have no liability
for failure to so tender in a timely manner unless such
Proper Instructions are received by the Bank at least two
business days prior to the date required for tender, and
unless the Bank (or its agent or subcustodian hereunder) has
actual possession of such Security at least two business
days prior to the date of tender;
(c) Upon conversion of Portfolio Securities pursuant to their
terms into other securities;
(d) For the purpose of redeeming in-kind shares of the Fund upon
authorization from the Fund;
(e) In the case of option contracts owned by the Fund, for
presentation to the endorsing broker;
(f) When such Portfolio Securities are called, redeemed or
retired or otherwise become payable;
(g) For the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans
made to the Fund by any bank, including the Bank; provided,
however, that such Portfolio Securities will be released
only upon payment to the Bank for the account of the Fund of
the moneys borrowed, provided further, however, that in
cases where additional collateral is required to secure a
borrowing already made, and such fact is made to appear in
the Proper Instructions, Portfolio Securities may be
released for that purpose without any such payment. In the
event that any pledged Portfolio Securities are held by the
Bank, they will be so held for the account of the lender,
and after notice to the Fund from the lender in accordance
with the normal procedures of the lender and any loan
agreement between the fund and the lender that an event of
deficiency or default on the loan has occurred, the Bank may
deliver such pledged Portfolio Securities to or for the
account of the lender;
(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the
Bank of the fair market value of such security, as set forth
in the Proper Instructions received by the Bank before such
payment is made;
(i) for the purpose of delivering securities lent by the Fund to
a bank or broker dealer, but only against receipt in
accordance with street delivery custom except as otherwise
provided herein, of adequate collateral as agreed upon from
time to time by the Fund and the Bank, and upon receipt of
payment in connection with any repurchase agreement relating
to such securities entered into by the Fund;
11
(j) for other authorized transactions of the Fund or for other
proper corporate purposes; provided that before making such
transfer, the Bank will also receive a certified copy of
resolutions of the Board, signed by an authorized officer of
the Fund (other than the officer certifying such resolution)
and certified by its Secretary or Assistant Secretary,
specifying the Portfolio Securities to be delivered, setting
forth the transaction in or purpose for which such delivery
is to be made, declaring such transaction to be an
authorized transaction of the Fund or such purpose to be a
proper corporate purpose, and naming the person or persons
to whom delivery of such securities shall be made; and
(k) upon termination of this Agreement as hereinafter set forth
pursuant to Section 8 and Section 16 of this Agreement.
As to any deliveries made by the Bank pursuant to this Section 6.12,
securities or cash receivable in exchange therefor shall be delivered to the
Bank.
7. Redemptions. In the case of payment of assets of the Fund held by the
Bank in connection with redemptions and repurchases by the Fund of
outstanding common shares, the Bank will rely on notification by the
Fund's transfer agent of receipt of a request for redemption and
certificates, if issued, in proper form for redemption before such
payment is made. Payment shall be made in accordance with the Articles
of Incorporation or Declaration of Trust and By-laws of the Fund (the
"Articles"), from assets available for said purpose.
8. Merger, Dissolution, etc. of Fund. In the case of the following
transactions, not in the ordinary course of business, namely, the
merger of the Fund into or the consolidation of the Fund with another
investment company, the sale by the Fund of all, or substantially all,
of its assets to another investment company, or the liquidation or
dissolution of the Fund and distribution of its assets, the Bank will
deliver the Portfolio Securities held by it under this Agreement and
disburse cash only upon the order of the Fund set forth in an
Officers' Certificate, accompanied by a certified copy of a resolution
of the Board authorizing any of the foregoing transactions. Upon
completion of such delivery and disbursement and the payment of the
fees through the end of the then current term of this Agreement,
disbursements and expenses of the Bank, this Agreement will terminate
and the Bank shall be released from any and all obligations hereunder.
9. Actions of Bank Without Prior Authorization. Notwithstanding anything
herein to the contrary, unless and until the Bank receives an
Officers' Certificate to the contrary, the Bank will take the
following actions without prior authorization or instruction of the
Fund or the transfer agent:
9.1 Endorse for collection and collect on behalf of and in the name
of the Fund all checks, drafts, or other negotiable or
transferable instruments or other orders for the payment of money
received by it for the account of the Fund and hold for the
account of the Fund all income, dividends, interest and other
payments or distributions of cash with respect to the Portfolio
Securities held thereunder;
9.2 Present for payment all coupons and other income items held by it
for the account of the Fund which call for payment upon
presentation and hold the cash received by it upon such payment
for the account of the Fund;
12
9.3 Receive and hold for the account of the Fund all securities
received as a distribution on Portfolio Securities as a result of
a stock dividend, share split-up, reorganization,
recapitalization, merger, consolidation, readjustment,
distribution of rights and similar securities issued with respect
to any Portfolio Securities held by it hereunder.
9.4 Execute as agent on behalf of the Fund all necessary ownership
and other certificates and affidavits required by the Internal
Revenue Code or the regulations of the Treasury Department issued
thereunder, or by the laws of any state, now or hereafter in
effect, inserting the Fund's name on such certificates as the
owner of the securities covered thereby, to the extent it may
lawfully do so and as may be required to obtain payment in
respect thereof. The Bank will execute and deliver such
certificates in connection with Portfolio Securities delivered to
it or by it under this Agreement as may be required under the
provisions of the Internal Revenue Code and any Regulations of
the Treasury Department issued thereunder, or under the laws of
any State;
9.5 Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash
received by it upon payment for the account of the Fund; and
9.6 Exchange interim receipts or temporary securities for definitive
securities.
10. Collections and Defaults. The Bank will use reasonable efforts to
collect any funds which may to its knowledge become collectible
arising from Portfolio Securities, including dividends, interest and
other income, and to transmit to the Fund notice actually received by
it of any call for redemption, offer of exchange, right of
subscription, reorganization or other proceedings affecting such
Securities. If Portfolio Securities upon which such income is payable
are in default or payment is refused after due demand or presentation,
the Bank will notify the Fund in writing of any default or refusal to
pay within two business days from the day on which it receives
knowledge of such default or refusal.
11. Maintenance of Records and Accounting Services. The Bank will maintain
records with respect to transactions for which the Bank is responsible
pursuant to the terms and conditions of this Agreement, and in
compliance with the applicable rules and regulations of the 1940 Act.
The books and records of the Bank pertaining to its actions under this
Agreement and reports by the Bank or its independent accountants
concerning its accounting system, procedures for safeguarding
securities and internal accounting controls will be open to inspection
and audit at reasonable times by officers of or auditors employed by
the Fund and will be preserved by the Bank in the manner and in
accordance with the applicable rules and regulations under the 1940
Act.
The Bank shall perform fund accounting and shall keep the books of
account and render statements or copies from time to time as reasonably
requested by the Treasurer or any executive officer of the Fund.
The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
12. Fund Evaluation and Yield Calculation
12.1 Fund Evaluation. The Bank shall compute and, unless otherwise
directed by the Board, determine as of the close of regular
trading on the New York Stock Exchange on each day on which said
Exchange is open for unrestricted trading and as of such other
days, or hours, if any, as may be authorized by the Board, the
net asset value and the public offering price of a share of
capital stock of the Fund, such determination to be made in
accordance with the provisions of the Articles and By-laws of the
13
Fund and the Prospectus and Statement of Additional Information
relating to the Fund, as they may from time to time be amended,
and any applicable resolutions of the Board at the time in force
and applicable; and promptly to notify the Fund, the proper
exchange and the NASD or such other persons as the Fund may
request of the results of such computation and determination. In
computing the net asset value hereunder, the Bank may rely in
good faith upon information furnished to it by any Authorized
Person in respect of (i) the manner of accrual of the liabilities
of the Fund and in respect of liabilities of the Fund not
appearing on its books of account kept by the Bank, (ii)
reserves, if any, authorized by the Board or that no such
reserves have been authorized, (iii) the source of the quotations
to be used in computing the net asset value, (iv) the value to be
assigned to any security for which no price quotations are
available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares,
and the Bank shall not be responsible for any loss occasioned by
such reliance or for any good faith reliance on any quotations
received from a source pursuant to (iii) above.
12.2. Yield Calculation. The Bank will compute the performance results
of the Fund (the "Yield Calculation") in accordance with the
provisions of Release No. 33-6753 and Release No. IC-16245
(February 2, 1988) (the "Releases") promulgated by the Securities
and Exchange Commission, and any subsequent amendments to,
published interpretations of or general conventions accepted by
the staff of the Securities and Exchange Commission with respect
to such releases or the subject matter thereof ("Subsequent Staff
Positions"), subject to the terms set forth below:
(a) The Bank shall compute the Yield Calculation for the Fund
for the stated periods of time as shall be mutually agreed
upon, and communicate in a timely manner the result of such
computation to the Fund.
(b) In performing the Yield Calculation, the Bank will derive
the items of data necessary for the computation from the
records it generates and maintains for the Fund pursuant
Section 11 hereof. The Bank shall have no responsibility to
review, confirm, or otherwise assume any duty or liability
with respect to the accuracy or correctness of any such data
supplied to it by the Fund, any of the Fund's designated
agents or any of the Fund's designated third party
providers.
(c) At the request of the Bank, the Fund shall provide, and the
Bank shall be entitled to rely on, written standards and
guidelines to be followed by the Bank in interpreting and
applying the computation methods set forth in the Releases
or any Subsequent Staff Positions as they specifically apply
to the Fund. In the event that the computation methods in
the Releases or the Subsequent Staff Positions or the
application to the Fund of a standard or guideline is not
free from doubt or in the event there is any question of
interpretation as to the characterization of a particular
security or any aspect of a security or a payment with
respect thereto (e.g., original issue discount,
participating debt security, income or return of capital,
etc.) or otherwise or as to any other element of the
computation which is pertinent to the Fund, the Fund or its
designated agent shall have the full responsibility for
making the determination of how the security or payment is
to be treated for purposes of the computation and how the
computation is to be made and shall inform the Bank thereof
on a timely basis. The Bank shall have no responsibility to
make independent determinations with respect to any item
which is covered by this Section, and shall not be
responsible for its computations made in accordance with
such determinations so long as such computations are
mathematically correct.
(d) The Fund shall keep the Bank informed of all publicly
available information and of any non-public advice, or
information obtained by the Fund from its independent
auditors or by its personnel or the personnel of its
investment adviser, or Subsequent Staff Positions related to
the computations to be undertaken by the Bank pursuant to
this Agreement and the Bank shall not be deemed to have
14
knowledge of such information (except as contained in the
Releases) unless it has been furnished to the Bank in
writing.
13. Additional Services. The Bank shall perform the additional services
for the Fund as are set forth on Appendix C hereto. Appendix C may be
amended from time to time upon agreement of the parties to include
further additional services to be provided by the Bank to the Fund, at
which time the fees set forth in Appendix B shall be appropriately
increased.
14. Duties of the Bank.
14.1 Performance of Duties and Standard of Care. In performing its
duties hereunder and any other duties listed on any Schedule
hereto, if any, the Bank will be entitled to receive and act upon
the advice of independent counsel of its own selection, which may
be counsel for the Fund, and will be without liability for any
action taken or thing done or omitted to be done in accordance
with this Agreement in good faith in conformity with such advice.
The Bank will be under no duty or obligation to inquire into and
will not be liable for:
(a) the validity of the issue of any Portfolio Securities
purchased by or for the Fund, the legality of the purchases
thereof or the propriety of the price incurred therefor;
(b) the legality of any sale of any Portfolio Securities by or
for the Fund or the propriety of the amount for which the
same are sold;
(c) the legality of an issue or sale of any common shares of the
Fund or the sufficiency of the amount to be received
therefor;
(d) the legality of the repurchase of any common shares of the
Fund or the propriety of the amount to be paid therefor;
(e) the legality of the declaration of any dividend by the Fund
or the legality of the distribution of any Portfolio
Securities as payment in kind of such dividend; and
(f) any property or moneys of the Fund unless and until received
by it, and any such property or moneys delivered or paid by
it pursuant to the terms hereof.
Moreover, the Bank will not be under any duty or obligation to
ascertain whether any Portfolio Securities at any time delivered to or held by
it for the account of the Fund are such as may properly be held by the Fund
under the provisions of its Articles, By-laws, any federal or state statutes or
any rule or regulation of any governmental agency.
14.2 Agents and Subcustodians with Respect to Property of the Fund
Held in the United States. The Bank may employ agents of its own
selection in the performance of its duties hereunder and shall be
responsible for the acts and omissions of such agents as if
performed by the Bank hereunder. Without limiting the foregoing,
certain duties of the Bank hereunder may be performed by one or
more affiliates of the Bank.
Upon receipt of Proper Instructions, the Bank may employ subcustodians
selected by or at the direction of the Fund, provided that any such subcustodian
meets at least the minimum qualifications required by Section 17(f)(1) of the
1940 Act to act as a custodian of the Fund's assets with respect to property of
15
the Fund held in the United States. The Bank shall have no liability to the Fund
or any other person by reason of any act or omission of any such subcustodian
and the Fund shall indemnify the Bank and hold it harmless from and against any
and all actions, suits and claims, arising directly or indirectly out of the
performance of any subcustodian. Upon request of the Bank, the Fund shall assume
the entire defense of any action, suit, or claim subject to the foregoing
indemnity. The Fund shall pay all fees and expenses of any subcustodian.
14.3 Duties of the Bank with Respect to Property of the Fund Held
Outside of the United States.
(a) Appointment of Foreign Custody Manager.
(i) If the Fund has appointed the Bank Foreign Custody
Manager (as that term is defined in Rule 17f-5 under
the 1940 Act), the Bank's duties and obligations with
respect to the Fund's Portfolio Securities and other
assets maintained outside the United States shall be,
to the extent not set forth herein, as set forth in the
Delegation Agreement between the Fund and the Bank (the
"Delegation Agreement").
(ii) If the Fund has appointed any other person or entity
Foreign Custody Manager, the Bank shall act only upon
Proper Instructions from the Fund with regard to any of
the Fund's Portfolio Securities or other assets held or
to be held outside of the United States, and the Bank
shall be without liability for any Claim (as that term
is defined in Section 15 hereof) arising out of
maintenance of the Fund's Portfolio Securities or other
assets outside of the United States. The Fund also
agrees that it shall enter into a written agreement
with such Foreign Custody Manager that shall obligate
such Foreign Custody Manager to provide to the Bank in
a timely manner all information required by the Bank in
order to complete its obligations hereunder. The Bank
shall not be liable for any Claim arising out of the
failure of such Foreign Custody Manager to provide such
information to the Bank.
(b) Segregation of Securities. The Bank shall identify on its
books as belonging to the Fund the Foreign Portfolio
Securities held by each foreign sub-custodian (each an
"Eligible Foreign Custodian") selected by the Foreign
Custody Manager, subject to receipt by the Bank of the
necessary information from such Eligible Foreign Custodian
if the Foreign Custody Manager is not the Bank.
(c) Access of Independent Accountants of the Fund. If the Bank
is the Fund's Foreign Custody Manager, upon request of the
Fund, the Bank will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to
the books and records of any foreign banking institution
employed as an Eligible Foreign Custodian insofar as such
books and records relate to the performance of such foreign
banking institution with regard to the Fund's Portfolio
Securities and other assets.
(d) Reports by Bank. If the Bank is the Fund's Foreign Custody
Manager, the Bank will supply to the Fund the reports
required under the Delegation Agreement.
(e) Transactions in Foreign Custody Account. Transactions with
respect to the assets of the Fund held by an Eligible
Foreign Custodian shall be effected pursuant to Proper
Instructions from the Fund to the Bank and shall be effected
in accordance with the applicable agreement between the
Foreign Custody Manager and such Eligible Foreign Custodian.
If at any time any Foreign Portfolio Securities shall be
registered in the name of the nominee of the Eligible
Foreign Custodian, the Fund agrees to hold any such nominee
16
harmless from any liability by reason of the registration of
such securities in the name of such nominee.
Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for Foreign Portfolio Securities received for the account
of the Fund and delivery of Foreign Portfolio Securities maintained for the
account of the Fund may be effected in accordance with the customary established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such purchaser
or dealer.
In connection with any action to be taken with respect to the Foreign
Portfolio Securities held hereunder, including, without limitation, the exercise
of any voting rights, subscription rights, redemption rights, exchange rights,
conversion rights or tender rights, or any other action in connection with any
other right, interest or privilege with respect to such Securities
(collectively, the "Rights"), the Bank shall promptly transmit to the Fund such
information in connection therewith as is made available to the Bank by the
Eligible Foreign Custodian, and shall promptly forward to the applicable
Eligible Foreign Custodian any instructions, forms or certifications with
respect to such Rights, and any instructions relating to the actions to be taken
in connection therewith, as the Bank shall receive from the Fund pursuant to
Proper Instructions. Notwithstanding the foregoing, the Bank shall have no
further duty or obligation with respect to such Rights, including, without
limitation, the determination of whether the Fund is entitled to participate in
such Rights under applicable U.S. and foreign laws, or the determination of
whether any action proposed to be taken with respect to such Rights by the Fund
or by the applicable Eligible Foreign Custodian will comply with all applicable
terms and conditions of any such Rights or any applicable laws or regulations,
or market practices within the market in which such action is to be taken or
omitted.
(f) Tax Law. The Bank shall have no responsibility or liability
for any obligations now or hereafter imposed on the Fund or
the Bank as custodian of the Fund by the tax laws of any
jurisdiction, and it shall be the responsibility of the Fund
to notify the Bank of the obligations imposed on the Fund or
the Bank as the custodian of the Fund by the tax law of any
non-U.S. jurisdiction, including responsibility for
withholding and other taxes, assessments or other
governmental charges, certifications and governmental
reporting. The sole responsibility of the Eligible Foreign
Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Fund with respect to any
claim for exemption or refund under the tax law of
jurisdictions for which the Fund has provided such
information.
14.4 Insurance. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Fund held by
it as it uses in respect of its own similar property but it need
not maintain any special insurance for the benefit of the Fund.
14.5. Fees and Expenses of the Bank. The Fund will pay or reimburse
the Bank from time to time for any transfer taxes payable upon
transfer of Portfolio Securities made hereunder, and for all
necessary proper disbursements, expenses and charges made or
incurred by the Bank in the performance of this Agreement
(including any duties listed on any Schedule hereto, if any)
including any indemnities for any loss, liabilities or expense to
the Bank as provided above. For the services rendered by the Bank
hereunder, the Fund will pay to the Bank such compensation or
fees at such rate and at such times as shall be agreed upon in
writing by the parties from time to time. The Bank will also be
entitled to reimbursement by the Fund for all reasonable expenses
incurred in conjunction with termination of this Agreement.
17
14.6 Advances by the Bank. The Bank may, in its sole discretion,
advance funds on behalf of the Fund to make any payment permitted
by this Agreement upon receipt of any proper authorization
required by this Agreement for such payments by the Fund. Should
such a payment or payments, with advanced funds, result in an
overdraft (due to insufficiencies of the Fund's account with the
Bank, or for any other reason) this Agreement deems any such
overdraft or related indebtedness a loan made by the Bank to the
Fund payable on demand. Such overdraft shall bear interest at the
current rate charged by the Bank for such loans unless the Fund
shall provide the Bank with agreed upon compensating balances.
The Fund agrees that the Bank shall have a continuing lien and
security interest to the extent of any overdraft or indebtedness
and to the extent required by law, in and to any property at any
time held by it for the Fund's benefit or in which the Fund has
an interest and which is then in the Bank's possession or control
(or in the possession or control of any third party acting on the
Bank's behalf). The Fund authorizes the Bank, in the Bank's sole
discretion, at any time to charge any overdraft or indebtedness,
together with interest due thereon, against any balance of
account standing to the credit of the Fund on the Bank's books.
15. Limitation of Liability.
15.1 Notwithstanding anything in this Agreement to the contrary, in no
event shall the Bank or any of its officers, directors, employees
or agents (collectively, the "Indemnified Parties") be liable to
the Fund or any third party, and the Fund shall indemnify and
hold the Bank and the Indemnified Parties harmless from and
against any and all loss, damage, liability, actions, suits,
claims, costs and expenses, including legal fees, (a "Claim")
arising as a result of any act or omission of the Bank or any
Indemnified Party under this Agreement, except for any Claim
resulting solely from the negligence, willful misfeasance or bad
faith of the Bank or any Indemnified Party. Without limiting the
foregoing, neither the Bank nor the Indemnified Parties shall be
liable for, and the Bank and the Indemnified Parties shall be
indemnified against, any Claim arising as a result of:
(a) Any act or omission by the Bank or any Indemnified Party in
good faith reliance upon the terms of this Agreement, any
Officer's Certificate, Proper Instructions, resolution of
the Board, telegram, telecopier, notice, request,
certificate or other instrument reasonably believed by the
Bank to genuine;
(b) Any act or omission of any subcustodian selected by or at
the direction of the Fund;
(c) Any act or omission of any Foreign Custody Manager other
than the Bank or any act or ommission of any Eligible
Foreign Custodian if the Bank is not the Foreign Custody
Manager;
(d) Any Corporate Action, distribution or other event related to
Portfolio Securities which, at the direction of the Fund,
have not been registered in the name of the Bank or its
nominee;
(e) Any Corporate Action requiring a Response for which the Bank
has not received Proper Instructions or obtained actual
possession of all necessary Securities, consents or other
materials by 5:00 p.m. on the date specified as the Response
Deadline;
(f) Any act or omission of any European Branch of a U.S. banking
institution that is the issuer of Eurodollar CDs in
connection with any Eurodollar CDs held by such European
Branch;
18
(g) Information relied on in good faith by the Bank and supplied
by any Authorized Person in connection with the calculation
of (i) the net asset value and public offering price of the
shares of capital stock of the Fund or (ii) the Yield
Calculation; or
(h) Any acts of God, earthquakes, fires, floods, storms or other
disturbances of nature, epidemics, strikes, riots,
nationalization, expropriation, currency restrictions, acts
of war, civil war or terrorism, insurrection, nuclear
fusion, fission or radiation, the interruption, loss or
malfunction of utilities, transportation or computers
(hardware or software) and computer facilities, the
unavailability of energy sources and other similar
happenings or events.
15.2 The Bank agrees to indemnify the Fund, its trustees, officers,
employees and agents against and hold them harmless from any
Claim arising from the willful misfeasance, bad faith or
negligence of the Bank in the performance of its duties and
obligations under this Agreement.
15.3 Notwithstanding anything to the contrary in this Agreement, in no
event shall the Bank or the Indemnified Parties be liable to the
Fund or any third party for lost profits or lost revenues or any
special, consequential, punitive or incidental damages of any
kind whatsoever in connection with this Agreement or any
activities hereunder.
16. Termination.
16.1 The term of this Agreement shall be three years commencing upon
the date hereof (the "Initial Term"), unless earlier terminated
as provided herein. After the expiration of the Initial Term, the
term of this Agreement shall automatically renew for successive
three-year terms (each a "Renewal Term") unless notice of
non-renewal is delivered by the non-renewing party to the other
party no later than ninety days prior to the expiration of the
Initial Term or any Renewal Term, as the case may be.
Either party hereto may terminate this Agreement prior to the
expiration of the Initial Term or any Renewal Term in the event the other party
violates any material provision of this Agreement, provided that the
non-violating party gives written notice of such violation to the violating
party and the violating party does not cure such violation within 90 days of
receipt of such notice.
16.2 In the event of the termination of this Agreement, the Bank will
immediately upon receipt or transmittal, as the case may be, of
notice of termination, commence and prosecute diligently to
completion the transfer of all cash and the delivery of all
Portfolio Securities duly endorsed and all records maintained
under Section 11 to the successor custodian when appointed by the
Fund. The obligation of the Bank to deliver and transfer over the
assets of the Fund held by it directly to such successor
custodian will commence as soon as such successor is appointed
and will continue until completed as aforesaid. If the Fund does
not select a successor custodian within ninety (90) days from the
date of delivery of notice of termination the Bank may, subject
to the provisions of subsection 16.3, deliver the Portfolio
Securities and cash of the Fund held by the Bank to a bank or
trust company of the Bank's own selection which meets the
requirements of Section 17(f)(1) of the 1940 Act and has a
reported capital, surplus and undivided profits aggregating not
less than $2,000,000, to be held as the property of the Fund
under terms similar to those on which they were held by the Bank,
whereupon such bank or trust company so selected by the Bank will
become the successor custodian of such assets of the Fund with
the same effect as though selected by the Board. Thereafter, the
Bank shall be released from any and all obligations under this
Agreement.
16.3 Prior to the expiration of ninety (90) days after notice of
termination has been given, the Fund may furnish the Bank with an
order of the Fund advising that a successor custodian cannot be
found willing and able to act upon reasonable and customary terms
19
and that there has been submitted to the shareholders of the Fund
the question of whether the Fund will be liquidated or will
function without a custodian for the assets of the Fund held by
the Bank. In that event the Bank will deliver the Portfolio
Securities and cash of the Fund held by it, subject as aforesaid,
in accordance with one of such alternatives which may be approved
by the requisite vote of shareholders, upon receipt by the Bank
of a copy of the minutes of the meeting of shareholders at which
action was taken, certified by the Fund's Secretary and an
opinion of counsel to the Fund in form and content satisfactory
to the Bank. Thereafter, the Bank shall be released from any and
all obligations under this Agreement.
16.4 The Fund shall reimburse the Bank for any reasonable expenses
incurred by the Bank in connection with the termination of this
Agreement.
16.5 At any time after the termination of this Agreement, the Fund
may, upon written request, have reasonable access to the records
of the Bank relating to its performance of its duties as
custodian.
17. Confidentiality. Both parties hereto agree than any non-public
information obtained hereunder concerning the other party is
confidential and may not be disclosed without the consent of the other
party, except as may be required by applicable law or at the request
of a governmental agency. The parties further agree that a breach of
this provision would irreparably damage the other party and
accordingly agree that each of them is entitled, in addition to all
other remedies at law or in equity to an injunction or injunctions
without bond or other security to prevent breaches of this provision.
18. Notices. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and delivered via (I)
United States Postal Service registered mail, (ii) telecopier with
written confirmation, (iii) hand delivery with signature to such party
at its office at the address set forth below, namely:
(a) In the case of notices sent to the Fund to:
Touchstone Series Trust
000 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn:
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
000 Xxxxxxxxx Xxxxxx, X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxx Xxxx, Director - Client Management
With a copy to: Xxxx X. Xxxxx, General Counsel
or at such other place as such party may from time to time designate in
writing.
19. Amendments. This Agreement may not be altered or amended, except by an
instrument in writing, executed by both parties.
20. Parties. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement will not be assignable
by the Fund without the written consent of the Bank or by the Bank
20
without the written consent of the Fund, authorized and approved by
its Board; and provided further that termination proceedings pursuant
to Section 16 hereof will not be deemed to be an assignment within the
meaning of this provision.
21. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts, without
regard to conflict of laws provisions.
22. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but
such counterparts shall, together, constitute only one instrument.
23. Entire Agreement. This Agreement, together with its Appendices,
constitutes the sole and entire agreement between the parties relating
to the subject matter herein and does not operate as an acceptance of
any conflicting terms or provisions of any other instrument and
terminates and supersedes any and all prior agreements and
undertakings between the parties relating to the subject matter
herein.
24. Limitation of Liability. The Bank agrees that the obligations assumed
by the Fund hereunder shall be limited in all cases to the assets of
the Fund and that the Bank shall not seek satisfaction of any such
obligation from the officers, agents, employees, trustees, or
shareholders of the Fund.
[Remainder of Page Intentionally Left Blank]
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
TOUCHSTONE SERIES TRUST
By:_______________________________
Name:
Title:
Investors Bank & Trust Company
By:_______________________________
Name:
Title:
22
Appendices
Appendix A............................ Portfolios
Appendix B............................ Fee Schedule
Appendix C............................ Additional Services
23
Appendix A
Portfolios
----------
Touchstone Emerging Growth Fund
Touchstone International Equity Fund
Touchstone Income Opportunity Fund
Touchstone Value Plus Fund
Touchstone Growth & Income Fund
Touchstone Balanced Fund
Touchstone Bond Fund
Touchstone Standby Income Fund
24
Appendix C
Additional Services
None
25
