EXHIBIT (g)
CUSTODIAN AGREEMENT
This Agreement between GENERAL AMERICAN CAPITAL COMPANY, an
open-ended diversified management investment company incorporated under the
laws of Maryland (the "FUND"), and STATE STREET BANK and TRUST COMPANY, a
Massachusetts trust company (the "CUSTODIAN"),
WITNESSETH:
WHEREAS, the Fund 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 Fund intends that this Agreement be applicable to the
series listed on Appendix 1 hereto (such series together with all other
series subsequently established by the Fund and made subject to this
Agreement in accordance with Section 18, be referred to herein as the
"PORTFOLIO(S)");
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
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The Fund hereby employs the Custodian as the custodian of the assets of the
Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio, 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 Fund, on behalf of the
Portfolio(s), agrees to deliver to the Custodian all securities and cash of
the Portfolios, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the
Portfolio(s) from time to time, and the cash consideration received by it
for such new or treasury shares of beneficial interest of the Fund
representing interests in the Portfolios ("SHARES") as may be issued or sold
from time to time. The Custodian shall not be responsible for any property
of a Portfolio held or received by the Portfolio and not delivered to the
Custodian.
Upon receipt of "PROPER INSTRUCTIONS" (as such term is defined in Section 6
hereof), the Custodian shall on behalf of the applicable Portfolio(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 Fund (the "BOARD") on behalf of the applicable Portfolio(s). The
Custodian may employ as sub-custodian for the Fund's foreign securities on
behalf of the applicable Portfolio(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.
SECTION 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE
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FUND HELD BY THE CUSTODIAN IN THE UNITED STATES
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SECTION 2.1 HOLDING SECURITIES. The Custodian shall hold and
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physically segregate for the account of each Portfolio all non-cash
property, to be held by it in the United States, including all domestic
securities owned by such Portfolio other than securities which are
maintained pursuant to Section 2.8 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
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deliver domestic securities owned by a Portfolio 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 Portfolio, 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 Portfolio
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 Portfolio;
3) In the case of a sale effected through a U.S. Securities
System, in accordance with the provisions of Section 2.8
hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
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 Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name
of any agent appointed pursuant to Section 2.7 or into the
name or nominee name of any sub-custodian appointed
pursuant to Section 1; or for exchange for a different
number of bonds, certificates or other evidence
representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities
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are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street
delivery" custom; provided that in any such case, the
Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities
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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 Portfolio, but only against receipt of
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adequate collateral as agreed upon from time to time by
the Custodian and the Fund on behalf of the Portfolio,
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 Portfolio prior to the receipt of
such collateral;
11) For delivery as security in connection with any borrowing
by the Fund on behalf of the Portfolio requiring a pledge
of assets by the Fund on behalf of the Portfolio, but only
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against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, 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
Portfolio of the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission
("CFTC") and/or any contract market, or any similar
organization or organizations, regarding account deposits
in connection with transactions by the Portfolio of the
Fund;
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14) Upon receipt of instructions from the transfer agent for
the Fund (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 currently effective prospectus and
statement of additional information of the Fund related to
the Portfolio (the "PROSPECTUS"), in satisfaction of
requests by holders of Shares for repurchase or
redemption; and
15) For any other proper purpose, but only upon receipt of, in
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addition to Proper Instructions from the Fund on behalf of
the applicable Portfolio, a certified copy of a resolution
of the Board or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of the
Portfolio to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purpose
to be a proper purpose, 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
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the Custodian (other than bearer securities) shall be registered in the name
of the Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be assigned
exclusively to the Portfolio, unless the Fund has authorized in writing the
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appointment of a nominee to be used in common with other registered
investment companies having the same investment advisor as the Portfolio, or
in the name or nominee name of any agent appointed pursuant to Section 2.7
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
Portfolio under the terms of this Agreement shall be in "street name" or
other good delivery form. If, however, the Fund directs the Custodian to
maintain securities in "street name", the Custodian shall utilize its best
efforts only to timely collect income due the Fund on such securities and to
notify the Fund 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
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separate bank account or accounts in the United States in the name of each
Portfolio of the Fund, 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 Portfolio, other than cash maintained by
the Portfolio in a bank account established and used in accordance with Rule
17f-3 under the Investment Company Act of 1940, as amended (the "1940 ACT").
Funds held by the Custodian for a Portfolio may be deposited by it to its
credit as Custodian in the banking department of the Custodian or in such
other banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company shall be
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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 Portfolio be approved by vote of
a majority of the Board. Such funds shall be deposited by the Custodian in
its capacity as Custodian and shall be withdrawable by the Custodian only in
that capacity.
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SECTION 2.5 COLLECTION OF INCOME. Subject to the provisions of
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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 Portfolio 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
Portfolio's custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all coupons
and other income items requiring presentation as and when they become due
and shall collect interest when due on securities held hereunder. Income due
each Portfolio on securities loaned pursuant to the provisions of Section
2.2 (10) shall be the responsibility of the Fund. The Custodian will have no
duty or responsibility in connection therewith, other than to provide the
Fund with such information or data as may be necessary to assist the Fund in
arranging for the timely delivery to the Custodian of the income to which
the Portfolio is properly entitled.
SECTION 2.6 PAYMENT OF FUND MONIES. Upon receipt of Proper
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Instructions on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall pay
out monies of a Portfolio 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 Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian
(or any bank, banking firm or trust company doing business
in the United States or abroad which is qualified under
the 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 Portfolio or in the name of a nominee
of the Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a purchase
effected through a U.S. Securities System, in accordance
with the conditions set forth in Section 2.8 hereof; (c)
in the case of repurchase agreements entered into between
the Fund on behalf of the Portfolio 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 Portfolio of securities owned
by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities
from the Portfolio; or (d) for transfer to a time deposit
account of the Fund 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
but only pursuant to Proper Instructions from the Fund as
defined herein;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in
Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued as set
forth in Section 5 hereof;
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4) For the payment of any expense or liability incurred by
the Portfolio, including but not limited to the following
payments for the account of the Portfolio: interest,
taxes, management, accounting, transfer agent and legal
fees, and operating expenses of the Fund 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 Fund;
6) For payment of the amount of dividends received in respect
of securities sold short; and
7) For any other proper purpose, but only upon receipt of, in
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addition to Proper Instructions from the Fund on behalf of
the Portfolio, a certified copy of a resolution of the
Board or of the Executive Committee of the Fund signed by
an officer of the Fund and certified by its Secretary or
an Assistant Secretary, specifying the amount of such
payment, setting forth the purpose for which such payment
is to be made, declaring such purpose to be a proper
purpose, and naming the person or persons to whom delivery
of such payment is to be made.
SECTION 2.7 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF
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SECURITIES PURCHASED. Except as specifically stated otherwise in this
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Agreement, in any and every case where payment for purchase of domestic
securities for the account of a Portfolio is made by the custodian in
advance of receipt of the securities purchased in the absence of specific
written instructions from the Fund on behalf of such Portfolio to so pay in
advance, the Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been received by the
Custodian.
SECTION 2.8 APPOINTMENT OF AGENTS. The Custodian may at any time or
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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
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appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
SECTION 2.9 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. The
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Custodian may deposit and/or maintain securities owned by a Portfolio in a
U.S. Securities System subject to the following provisions:
1) The Custodian may keep securities of the Portfolio 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;
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2) The records of the Custodian with respect to securities of
the Portfolio which are maintained in a U.S. Securities
System shall identify by book-entry those securities
belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio 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 Portfolio. The Custodian shall transfer
securities sold for the account of the Portfolio 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 Portfolio.
Copies of all advices from the U.S. Securities System of
transfers of securities for the account of the Portfolio
shall identify the Portfolio, be maintained for the
Portfolio by the Custodian and be provided to the Fund at
its request. Upon request, the Custodian shall furnish the
Fund on behalf of the Portfolio confirmation of each
transfer to or from the account of the Portfolio in the
form of a written advice or notice and shall furnish to
the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transactions in
the U.S. Securities System for the account of the
Portfolio;
4) The Custodian shall provide the Fund 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 Fund for the benefit
of the Portfolio for any loss or damage to the Portfolio
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
Fund, 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 Portfolio has not
been made whole for any such loss or damage.
SECTION 2.10 SEGREGATED ACCOUNT. The Custodian shall upon receipt
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of Proper Instructions on behalf of each applicable Portfolio establish and
maintain a segregated account or accounts for and on behalf of each such
Portfolio, 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 Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Exchange
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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 Portfolio, (ii) for purposes of
segregating cash or government securities in connection with options
purchased, sold or written by the Portfolio or commodity futures contracts
or options thereon purchased or sold by the Portfolio, (iii) for the
purposes of compliance by the Portfolio with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release of the
U.S. Securities and Exchange Commission (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 proper
purpose, but only, in the case of clause (iv) above, upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the applicable
Portfolio, a certified copy of a resolution of the Board or of the Executive
Committee signed by an officer of the Fund and certified by the Secretary or
an Assistant Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper purposes.
SECTION 2.11 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian
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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 Portfolio held by it
and in connection with transfers of securities.
SECTION 2.12 PROXIES. The Custodian shall, with respect to the
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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 Portfolio or a nominee of the Portfolio,
all proxies, without indication of the manner in which such proxies are to
be voted, and shall promptly deliver to the Portfolio such proxies, all
proxy soliciting materials and all notices relating to such securities.
SECTION 2.13 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES.
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Subject to the provisions of Section 2.3, the Custodian shall transmit
promptly to the Fund for each Portfolio all written information (including,
without limitation, pendency of calls and maturities of domestic securities
and expirations of rights in connection therewith and notices of exercise of
call and put options written by the Fund on behalf of the Portfolio and the
maturity of futures contracts purchased or sold by the Portfolio) received
by the Custodian from issuers of the securities being held for the
Portfolio. With respect to tender or exchange offers, the Custodian shall
transmit promptly to the Portfolio all written information received by the
Custodian from issuers of the securities whose tender or exchange is sought
and from the party (or its agents) making the tender or exchange offer. If
the Portfolio desires to take action with respect to any tender offer,
exchange offer or any other similar transaction, the Portfolio shall notify
the Custodian at least three business days prior to the date on which the
Custodian is to take such action.
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SECTION 3. PROVISIONS RELATING TO RULES 17F-5 AND 17F-7
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SECTION 3.1 DEFINITIONS. As used throughout this Agreement, the
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capitalized terms set forth below shall have the indicated 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 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 Portfolios' 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
Portfolios' transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(3) 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.
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3.2.1 DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY
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MANAGER. The Fund, by resolution adopted by its Board, hereby delegates to
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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
Portfolios held outside the United States, and the Custodian hereby accepts
such delegation as Foreign Custody Manager with respect to the Portfolios.
3.2.2 COUNTRIES COVERED. The Foreign Custody Manager shall
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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 Agreement, which list of countries may
be amended from time to time by the Fund with the agreement of the Foreign
Custody Manager. The Foreign Custody Manager shall list on Schedule A the
Eligible Foreign Custodians selected by the Foreign Custody Manager to
maintain the assets of the Portfolios, which list of Eligible Foreign
Custodians may be amended from time to time in the sole
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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 Fund, on behalf of the Portfolios,
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 Portfolios responsibility as Foreign Custody Manager with
respect to that country and to have accepted such delegation. Execution of
this Agreement by the Fund 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 Agreement.
Following the receipt of Proper Instructions directing the Foreign Custody
Manager to close the account of a Portfolio with the Eligible Foreign
Custodian selected by the Foreign Custody Manager in a designated country,
the delegation by the Board on behalf of the Portfolios 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 Portfolios with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written notice to
the Fund. Sixty days (or such longer period to which the parties agree in
writing) after receipt of any such notice by the Fund, the Custodian shall
have no further responsibility in its capacity as Foreign Custody Manager to
the Fund with respect to the country as to which the Custodian's acceptance
of delegation is withdrawn.
3.2.3 SCOPE OF DELEGATED RESPONSIBILITIES:
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(a) SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the
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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
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Manager shall determine that the contract governing the foreign custody
arrangements with 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
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maintains Foreign Assets with an Eligible Foreign Custodian selected by the
Foreign Custody Manager, the
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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 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.
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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 Portfolios.
3.2.5 REPORTING REQUIREMENTS. The Foreign Custody Manager
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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.
The Foreign Custody Manager shall make written reports notifying the Board
of any other material change in the foreign custody arrangements of the
Portfolios 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
------------------------------------------------
PORTFOLIO. 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 Fund that it is a U.S. Bank as
defined in section (a)(7) of Rule 17f-5. The Fund 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 Agreement to the Custodian as the Foreign Custody Manager of the
Portfolios.
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 Portfolios 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 thirty (30) days after receipt by the
non-terminating party of such notice. The provisions of Section 3.2.2 hereof
shall govern the delegation to and termination of the Custodian as Foreign
Custody Manager of the Portfolios with respect to designated countries.
11
SECTION 3.3 ELIGIBLE SECURITIES DEPOSITORIES.
--------------------------------
3.3.1 ANALYSIS AND MONITORING. The Custodian shall (a)
-----------------------
provide the Fund (or its duly-authorized investment manager or investment
advisor) 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 Fund (or
its duly-authorized investment manager or investment advisor) 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
-------------------------------------------------------
PORTFOLIOS HELD OUTSIDE THE UNITED STATES
-----------------------------------------
SECTION 4.1 DEFINITIONS. As used throughout this Agreement, the
-----------
capitalized terms set forth below shall have the indicated 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 Portfolios 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 Portfolios, 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
Portfolios which are maintained in such account shall identify those
securities as belonging to the Portfolios 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.
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
Portfolios held by the Custodian or such Foreign Sub-Custodian, or in a
Foreign Securities System account, only upon receipt of
12
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 Portfolio
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 Portfolios;
(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;
(ix) for delivery as security in connection with any borrowing
by the Portfolios requiring a pledge of assets by the
Portfolios;
(x) in connection with trading in options and futures
contracts, including delivery as original margin and
variation margin;
13
(xi) in connection with the lending of foreign securities; and
(xii) for any other proper purpose, but only upon receipt of
Proper Instructions specifying the foreign securities to
be delivered, setting forth the purpose for which delivery
is to be made declaring such purpose to be a proper
purpose and naming the person or persons to whom delivery
of such securities shall be made.
4.4.2 PAYMENT OF PORTFOLIO 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 Portfolio in the following cases only:
(i) upon the purchase of foreign securities for the Portfolio,
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 Portfolio;
(iii) for the payment of any expense or liability of the
Portfolio, including but not limited to the following
payments: interest, taxes, investment advisory fees,
transfer agency fees, fees under this Agreement, legal
fees, accounting fees, and other operating expenses;
(iv) for the purchase or sale of foreign exchange or foreign
exchange contracts for the Portfolio, 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
(viii) for any other proper purpose, but only upon receipt of
Proper Instructions specifying the amount of such payment,
setting forth the purpose for which such payment is to be
made, declaring such purpose to be a proper purpose and
naming the person or persons to whom such payment is to be
made.
14
4.4.3 MARKET CONDITIONS. Notwithstanding any provision of
-----------------
this Agreement to the contrary, settlement and payment for Foreign Assets
received for the account of the Portfolios and delivery of Foreign Assets
maintained for the account of the Portfolios 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 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
Portfolio 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 the Fund
on behalf of such Portfolio 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 Portfolio under the terms of this Agreement 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 Fund 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 Portfolio 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 Portfolio. 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 Portfolios shall
be entitled and shall credit such income, as collected, to the applicable
Portfolio. In the event that extraordinary measures are required to collect
such income, the Fund and the Custodian shall consult as to such measures
and as to the compensation and expenses of the Custodian relating to such
measures.
15
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 Fund 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 Fund to exercise
shareholder rights.
SECTION 4.9 COMMUNICATIONS RELATING TO FOREIGN SECURITIES. The
---------------------------------------------
Custodian shall transmit promptly to the Fund 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 Portfolios (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 Fund 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. 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 Portfolios 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 Fund's election, the
Portfolios 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 Portfolios 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 Fund, the
Portfolios or the Custodian as custodian of the Portfolios by the tax law of
the United States or of any state or political subdivision thereof. It shall
be the responsibility of the Fund to notify the Custodian of the obligations
imposed on the Fund with respect to the Portfolios or the Custodian as
custodian of the Portfolios by the tax law of countries other than those
mentioned in the above sentence, including responsibility for withholding
and other taxes, assessments or other governmental charges, certifications
and governmental reporting. The sole responsibility of the Custodian with
regard to such tax law shall be to use reasonable efforts to assist the Fund
with respect to any claim for exemption or refund under the tax law of
countries for which the Fund has provided such information.
16
SECTION 4.12 LIABILITY OF CUSTODIAN. 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 Agreement 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.
The Custodian shall be without liability to the Fund and the Portfolios for
any loss, liability, claim or expense resulting from or caused by anything
which is part of Country Risk (as defined in Section 3 hereof), including
without limitation nationalization, expropriation, currency restrictions, or
acts of war, revolution, riots or terrorism.
SECTION 5. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES
----------------------------------------------------------
The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent and deposit into the account of the appropriate Portfolio
such payments as are received for Shares thereof issued or sold from time to
time by the Fund. The Custodian will provide timely notification to the Fund
on behalf of each such Portfolio and the Transfer Agent of any receipt by it
of payments for Shares of such Portfolio.
From such funds as may be available for the purpose and subject to any
applicable votes of the Board which have been previously provided in writing
to the Custodian, the Custodian shall, upon receipt of instructions from the
Transfer Agent, make funds available for payment to holders of Shares who
have delivered to the Transfer Agent a request for redemption or repurchase
of their Shares. In connection with the redemption or repurchase of Shares,
the Custodian is authorized upon receipt of instructions from the Transfer
Agent to wire funds to or through a commercial bank designated by the
redeeming shareholders. In connection with the redemption or repurchase of
Shares, the Custodian shall honor checks drawn on the Custodian by a holder
of Shares, which checks have been furnished by the Fund to the holder of
Shares, when presented to the Custodian in accordance with such procedures
and controls as are mutually agreed upon from time to time between the Fund
and the Custodian.
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 Fund 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 Fund and the Custodian agree to security
procedures, including but not limited to, the security
17
procedures selected by the Fund 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 2.10.
SECTION 7. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
-------------------------------------------
The Custodian may in its discretion, without express authority from the Fund
on behalf of each applicable Portfolio:
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 Fund on behalf of
the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio,
checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the securities
and property of the Portfolio except as otherwise directed
by the Board.
SECTION 8. EVIDENCE OF AUTHORITY
---------------------
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed by or on
behalf of the Fund. The Custodian may receive and accept a copy of a
resolution certified by the Secretary or an Assistant Secretary of the Fund
("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
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 AND NET INCOME
---------------------------------------------
The Custodian shall keep the books of account of each Portfolio and compute
the net asset value per Share of the outstanding Shares. The Custodian shall
also calculate daily the net income of the Portfolio as described in the
Prospectus and shall advise the Fund and the Transfer Agent daily of the
total amounts of such net income and, if instructed in writing by an officer
of the Fund 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 Portfolio
shall be made at the time or times described from time to time in the
Prospectus.
18
SECTION 10. RECORDS
-------
The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Agreement in
such manner as will meet the obligations of the Fund under the 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 Fund 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 Fund and
employees and agents of the SEC. The Custodian shall, at the Fund's request,
supply the Fund with a tabulation of securities owned by each Portfolio and
held by the Custodian and shall, when requested to do so by the Fund and for
such compensation as shall be agreed upon between the Fund and the
Custodian, include certificate numbers in such tabulations.
SECTION 11. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
----------------------------------------
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Fund's independent accountants with
respect to its activities hereunder in connection with the preparation of
the Fund's Form N-1A, and Form N-SAR or other annual reports to the SEC and
with respect to any other requirements thereof.
SECTION 12. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
-------------------------------------------------
The Custodian shall provide the Fund, on behalf of each of the Portfolios at
such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on
futures contracts, including securities deposited and/or maintained in a
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 Fund 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 Fund
on behalf of each applicable Portfolio 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
19
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 Fund for any action taken or omitted by it
in good faith without negligence, willful misconduct or reckless disregard
of its duties and obligations under this Agreement, including, without
limitation, acting in accordance with any Proper Instruction. It shall be
entitled to rely on and may act upon advice of counsel (who may be counsel
for the Fund) 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 bad faith, negligence, willful
misconduct or reckless disregard of its duties and obligations hereunder, or
the bad faith, negligence, willful misconduct or reckless disregard of the
duties and obligations of a sub-custodian or agent, the Custodian shall be
without liability to the Fund 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, 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 Fund or its duly-authorized investment manager or 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 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 Fund, 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.
If the Fund on behalf of a Portfolio 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 Fund or the Portfolio being liable
for the payment of money or incurring liability of some other form, the Fund
on behalf of the Portfolio, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an amount and
form satisfactory to it.
20
If the Fund 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 Portfolio shall be security therefor and should the Fund fail to
repay the Custodian promptly, the Custodian shall be entitled to utilize
available cash and to dispose of such Portfolio's assets to the extent
necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
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 sixty (60) days after the date of such delivery or mailing;
provided, however, that the Fund shall not amend or terminate this Agreement
--------
in contravention of any applicable federal or state regulations, or any
provision of the Fund's Declaration of Trust, and further provided, that the
Fund on behalf of one or more of the Portfolios 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.
Upon termination of the Agreement, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of
the date of such termination and shall likewise reimburse the Custodian for
its costs, expenses and disbursements.
SECTION 16. SUCCESSOR CUSTODIAN
-------------------
If a successor custodian for one or more Portfolios 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 Portfolio then held by it
hereunder and shall transfer to an account of the successor custodian all of
the securities of each such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a Certified Resolution, deliver at the office
of the Custodian and transfer such securities, funds and other properties in
accordance with such resolution.
21
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 $25,000,000, all securities, funds and other properties held
by the Custodian on behalf of each applicable Portfolio and all instruments
held by the Custodian relative thereto and all other property held by it
under this Agreement on behalf of each applicable Portfolio, and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio 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 Fund 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
Fund on behalf of each of the Portfolios, 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 Fund'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 Fund establishes one or more series of Shares in
addition to the series listed on Appendix 1 hereto 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 Portfolio 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.
22
SECTION 20. PRIOR AGREEMENTS
----------------
This Agreement supersedes and terminates, as of the date hereof, all prior
Agreements between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund'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 Fund: GENERAL AMERICAN CAPITAL COMPANY
000 Xxxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Attention: Xxxxxxx X. XxXxxxxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
To the Custodian: STATE STREET BANK AND TRUST COMPANY
Xxx Xxxxxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
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 enlargement, facsimile or further reproduction of such reproduction
shall likewise be admissible in evidence.
23
SECTION 23. REMOTE ACCESS SERVICES ADDENDUM
-------------------------------
The Custodian and the Fund agree to be bound by the terms of the Remote
Access Services Addendum attached hereto.
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 Fund to indicate whether it authorizes the Custodian to
provide the Fund's name, address, and share position to requesting companies
whose securities the Fund owns. If the Fund tells the Custodian "no", the
Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below,
the Custodian is required by the rule to treat the Fund as consenting to
disclosure of this information for all securities owned by the Fund or any
funds or accounts established by the Fund. For the Fund's protection, the
Rule prohibits the requesting company from using the Fund's name and address
for any purpose other than corporate communications. Please indicate below
whether the Fund consents or objects by checking one of the alternatives
below.
YES [ ] The Custodian is authorized to release the Fund's name, address, and
share positions.
NO [X] The Custodian is not authorized to release the Fund's name, address,
and share positions.
SECTION 25. LIMITATION OF LIABILITY
-----------------------
No Trustee, officer, shareholder, employee or agent of the Fund shall be
held to any personal liability nor shall resort be had to such person's
private property for the satisfaction of a claim against the Fund, but the
Fund only shall be liable.
[Remainder of page intentionally left blank.]
24
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 November , 2001.
--
GENERAL AMERICAN CAPITAL COMPANY FUND SIGNATURE ATTESTED TO BY:
BY: BY:
------------------------------- ----------------------------
Name: Name:
------------------------------- ----------------------------
Title: Title: *[secretary/ass't secretary]
------------------------------- ----------------------------
STATE STREET BANK AND TRUST COMPANY SIGNATURE ATTESTED TO BY:
BY: BY:
------------------------------- ----------------------------
Name: Xxxxxx X. Xxxxxx Name:
------------------------------- ----------------------------
Title: Executive Vice President Title:
------------------------------- ----------------------------
25
