Exhibit g (II)(1)
MASTER CUSTODIAN AGREEMENT
AGREEMENT made as of the 30th day of June, 2005, between each Fund listed
on Appendix A (each a Fund and collectively "the Funds"), and INVESTORS BANK &
TRUST COMPANY, a Massachusetts trust company (the "Bank").
Each Fund, an open-end management investment company on behalf of its
respective 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 meets the qualifications required by
Section 17(f)(1) of the Investment Company Act of 1940, as amended (the "1940
Act"), to act as custodian of the portfolio securities and cash of each 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. Each 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, each Fund agrees to pay to the Bank fees as may be agreed to from
time to time in writing between the parties.
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 each 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 1940 Act, including, without limitation, any note,
stock, treasury stock, security future, 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 (including a certificate of deposit) or on any 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 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 purchase, any of the foregoing.
2.4 Portfolio Security. Portfolio Security will mean any security owned by
a 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 a 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, as amended
("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. Unless otherwise provided in this agreement, the
Bank shall act only upon 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 a Fund
shall agree upon from time to time, and (ii) instructions (which may be
continuing instructions) regarding other matters signed 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. Each Fund shall cause
all oral instructions to be promptly confirmed in writing by an Authorized
Person. 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 confirming 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 Authorized Persons
of the Fund. Each 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 a 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.
3.1 Separate Accounts. Since each Fund has more than one Portfolio, the
Bank will segregate the assets of each Portfolio to which this Agreement relates
into a separate account for each such Portfolio containing the assets of such
Portfolio (and all investment earnings thereon). Unless the context otherwise
requires, any reference in this Agreement to any actions to be taken by a Fund
shall be deemed to refer to the Fund acting on behalf of one or more of its
Portfolios. 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 Portfolio,
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 Portfolio and
any obligation or liability of the Fund hereunder shall be binding only with
respect to such individual Portfolio, and shall be discharged only out of the
assets of such Portfolio.
3.2 Reports. The Bank shall make available to each Fund each business day
as soon as practicable, typically by 7:00 p.m. EST, all transaction activity
posted on each separate account of the Funds for their respective Portfolios,
either hereunder or with any sub-custodian appointed in accordance with this
Agreement during said day, together with historical transaction activity for
such Fund. At least monthly and from time to time, the Bank will furnish each
Fund with a detailed statement, on a per Portfolio basis, of the Securities and
moneys held by the Bank for the Fund.
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4. Certification as to Authorized Persons. The Secretary or Assistant
Secretary of each 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 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.
5.1 Custody of Cash. As custodian for the Funds, the Bank will open and
maintain a separate account or accounts in the name of each Fund and each
Portfolio thereof 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 13.2 or 13.3 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 a 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 (a) through (g) below.
(a) Purchase of Securities. Upon the purchase of securities for a 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 a nominee 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;
(b) Redemptions. In such amount as may be necessary for the repurchase or
redemption of common shares of each Fund offered for repurchase or redemption in
accordance with Section 7 of this Agreement;
(c) Distributions and Expenses of Fund. For the payment on the account of
a 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, fees of any transfer agent, fees
for legal, accounting, and auditing services, or other operating expenses of the
Fund;
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(d) Payment in Respect of Securities. For payments in connection with the
conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by a Fund held by or to be delivered to the Bank;
(e) 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;
(f) Repayment of Cash. To repay the cash delivered to a 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;
(g) Foreign Exchange Transactions.
(i) 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 a 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.
(ii) In order to secure any payments in connection with Foreign
Exchange Agreements which may be entered into by the Bank pursuant to Proper
Instructions, each 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 with respect to a Portfolio, in and to any property at any time held
by the Bank for the Portfolio's benefit or in which the Portfolio 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). Such
payment liability and the concomitant liens and security interests are not
permitted to exceed a value equal to 33-1/3% of a Portfolio's total assets. Each
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;
(h) Other Authorized Payments. For other authorized transactions of a
Fund, or other obligations of a 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; or
(i) Termination. Upon the termination of this Agreement as hereinafter set
forth pursuant to Section 8 and Section 15 of this Agreement.
5.2 Pledge or Encumbrance of Securities or Cash. Except as provided in
this Agreement, the Bank may not pledge, assign, hypothecate or otherwise
encumber securities or cash of the Fund held in the Fund's account without the
Fund's prior written consent.
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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 13.2 or 13.3 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 a Fund or in the name of its nominee. 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
for the benefit of the Fund, 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.
Each 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 that
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 promptly execute
and deliver, or cause to be executed and delivered, to the Fund or its agent for
purposes of voting proxies all notices, proxies and proxy soliciting materials
delivered to the Bank with respect to such Securities, such proxies to be
executed by a Fund, its agent or 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 and Class Action Notices. If at any time the Bank is
notified that (a) a Fund may be eligible to participate in an class action
lawsuit involving any Portfolio Security or (b) an issuer of any Portfolio
Security has taken or intends to take 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 (collectively, a "Corporate Action"),
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
appropriate Fund or its agent for purposes of responding to Corporate Actions
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 or its agent 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
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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 will 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 or its agent 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 13.3(e) of this Agreement shall govern any Corporate
Action involving Foreign Portfolio Securities held by a Selected Foreign
Sub-Custodian.
(e) The Bank provides the ability for Funds to respond to Corporate
Actions through electronic means using either (i) the Bank's InvestCaps function
or (ii) appropriate SWIFT messaging. In the event any Fund or its agent provides
a Corporate Action Response other than by the aforementioned electronic means,
the Bank shall not be responsible for any delay or failure to process such
Response in a timely manner. In addition, the Bank may assess additional
processing fees to cover the cost of manually processing Corporate Actions
Responses provided to the Bank other than by the aforementioned electronic
means.
6.4 Book-Entry System.
(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 a
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 a Fund. Where securities are
transferred to a 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 a 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
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(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 each 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 under the 1940 Act, of any
transfers to or from the account of the Fund;
(d) The Bank will promptly provide each Fund with any report
obtained by the Bank or its agent on the Book-Entry System's accounting system
and its internal accounting control and procedures for safeguarding securities
deposited in the Book-Entry System;
(e) Anything to the contrary notwithstanding, the Bank shall be
liable to a Fund for any loss or damage to the Fund to the extent resulting from
any negligence, willful misfeasance, bad faith or reckless disregard of its
duties on the part of the Bank or any of its agents or any of its or their
employees in connection with its or their use of the Book-Entry System.
6.5 Use of a Depository.
(a) The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio Securities including
stock dividends, rights and other items of like nature, and to receive and remit
to the Bank on behalf of a 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 a 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;
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(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. The Bank may maintain a
system for the holding of commercial paper in book-entry form ("Book-Entry
Paper"). Upon receipt of Proper Instructions and upon receipt of confirmation
from an Issuer (as defined below) that each 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 as a fiduciary or
custodian for its customers;
(b) The records of the Bank with respect to the Fund's purchase of
Book-Entry Paper through the Bank will identify, by book-entry, commercial paper
belonging to the Fund which is included in the Book-Entry 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 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 6.7, the
Bank shall be under no other duty with respect to such Eurodollar CDs belonging
to the Fund.
6.8 Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter.
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(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, a 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 of any put or call
purchased or sold on behalf of the Fund, the propriety of any such purchase or
sale, or the adequacy of any collateral delivered to a broker in connection with
an option or deposited to or withdrawn from a Segregated Account (as defined in
subsection 6.9 below). The Bank specifically, but not by way of limitation,
shall not be under any duty or obligation to: (i) periodically check or notify
the Fund that the amount of such collateral held by a broker or held in a
Segregated Account is sufficient to protect such broker 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 any 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 6.8 as if such subparagraph referred to Futures Commission
Merchants rather than brokers, and Futures and puts and calls thereon instead of
options.
6.9 Segregated Account. The Bank shall upon receipt of Proper Instructions
establish and maintain a Segregated Account or Accounts for and on behalf of
each 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;
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(iii) for the deposit of liquid assets, such as cash, U.S.
Government securities or other high grade debt obligations, or liquid equity
securities 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 of 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;
(v) for other proper Fund 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 Fund 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.
6.10 Interest Bearing Call or Time Deposits. The Bank shall, upon receipt
of Proper Instructions relating to the purchase by the Fund of interest-bearing
fixed-term and call deposits, transfer cash, by wire or otherwise, in such
amounts and to such bank or banks as shall be indicated in such Proper
Instructions. The Bank shall include in its records with respect to the assets
of a 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
10
may be forwarded to the Bank by the Deposit Bank. Such deposits shall be deemed
Portfolio Securities of the Fund and the responsibility of the Bank therefore
shall be the same as and no greater than the Bank's responsibility in respect of
other Portfolio Securities of the Fund.
6.11 Transfer of Securities. The Bank will transfer, exchange, deliver or
release Portfolio Securities held by it hereunder, insofar as such Securities
are available for such purpose, provided that the Bank will allow 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 6.11, 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:
(a) Upon sales of Portfolio Securities for the account of a 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
11
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;
(j) for other authorized transactions of the Fund or for other
proper Fund 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 Fund
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 15 of this Agreement.
As to any deliveries made by the Bank pursuant to this Section 6.11,
securities or cash receivable in exchange therefor shall be delivered to the
Bank.
7. Redemptions. In the case of payment of assets of a 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 (the
"Articles"), By-laws and the prospectuses and statements of additional
information of the Fund from assets available for said purpose.
8. Merger, Dissolution, etc. of Fund. In the case of the following
transactions, not in the ordinary course of business, namely, the merger of a
Fund or Portfolio into, the consolidation of a Fund or Portfolio with, or the
sale by a Fund or Portfolio of all, or substantially all, of its assets to
another investment company, or the liquidation or dissolution of a Fund or
Portfolio and the distribution of its assets, upon the payment of the fees,
disbursements and expenses of the Bank through the end of the then current term
of this Agreement with respect to the Fund, 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 all such
fees, disbursements and expenses of the Bank, this Agreement will terminate and
the Bank shall be released from any and all obligations hereunder, except for
obligations of the Bank arising prior to the date of such termination and those
obligations under Section 14.
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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;
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 appropriate 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 appropriate 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 prepare
and 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 pertaining to a Fund that are in possession of the Bank shall be the
property of the Fund. The books and records of the Bank pertaining to its
actions under this Agreement and reports by the Bank or its independent
accountants concerning its accounting system, procedures for safeguarding
securities and internal accounting controls will be open to inspection and audit
at all times during the Bank's normal business hours, upon reasonable notice, by
officers of or auditors employed by the appropriate Fund. Such books and records
shall include reports of sufficient scope and in sufficient
13
detail as may reasonably be required by a Fund to provide reasonable assurance
that any material compliance inadequacies would be disclosed by the inspection
or audit, and, if there are no such inadequacies, the appropriate reports shall
so state. The books and records relating to a Fund 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 surrender these books and records to the Fund
promptly upon request. Upon reasonable request of the Fund, the Bank shall,
during the term of this agreement, provide copies of any books and records to
the Fund or the Fund's authorized representative at the Fund's expense.
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. Additional Services. The Bank shall perform the additional services
for a Fund as are set forth on Appendix B hereto. Appendix B 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.
13. Duties of the Bank.
13.1 Performance of Duties and Standard of Care. 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 in no
event less than a reasonable 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 written advice of independent
counsel of its own selection, which may be counsel for a 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.
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13.2 Agents and Subcustodians with Respect to Property of the Fund Held in
the United States. Upon notification to the appropriate Fund, 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.
Upon receipt of Proper Instructions, the Bank may employ subcustodians
selected by or at the direction of a 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
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 out of the performance of any
subcustodian. Upon request of the Bank or if elected by the Fund, the Fund shall
assume the entire defense of any action, suit, or claim subject to the foregoing
indemnity. The Fund shall pay all fees and expenses of any subcustodian.
13.3 Duties of the Bank with Respect to Property of the Fund Held Outside
of the United States.
(a) Appointment of Foreign Custody Manager.
(i) If a 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 a 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 14 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.
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(e) Transactions in Foreign Custody Account. Transactions with
respect to the assets of a 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.
Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for Foreign Portfolio Securities received for the account
of a 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
appropriate 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.
13.4 Insurance. The Bank need not maintain any special insurance for the
benefit of a Fund, although the Bank shall at all times maintain insurance
coverage adequate for the nature of its operations, including directors and
officers, errors and omissions, and fidelity bond insurance coverage. The Bank
shall notify the Funds if there are any material adverse changes to its
insurance policies or coverage. The Bank shall notify the Funds of any material
errors or omissions, interruptions in, or delay or unavailability of the Bank's
abilities to safeguard and hold the securities and cash of a Fund in accordance
with this Agreement as promptly as practicable, and proceed to correct the same
as soon as is reasonably possible.
13.5 Advances by the Bank. The Bank may, in its sole discretion, advance
funds on behalf of a Fund to make any payment permitted by this Agreement upon
receipt of any proper authorization
16
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 on the part of a Portfolio and to the extent required by law, in
and to any property at any time held by it for the Portfolio's benefit or in
which the Portfolio 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). Such payment liability and the concomitant liens and security
interests are not permitted to exceed a value equal to 33-1/3% of a Portfolio's
total assets. 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.
13.6. Fees and Expenses of the Bank. For the services rendered by the Bank
hereunder, each Fund will pay to the Bank such fees at such rate as shall be
agreed upon in writing by the parties from time to time. The Fund will also pay
or reimburse the Bank from time to time for any transfer taxes payable upon any
transfers 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 herein.
The Bank will also be entitled to reimbursement by the Fund for all reasonable
expenses incurred in conjunction with termination of this Agreement and any
conversion or transfer work done in connection therewith, except for a
termination by a Fund due to a breach of this Agreement by the Bank.
Fees and expenses will be calculated monthly. Fees and expenses owed to
the Bank for any month may be charged against any cash balance held by the Fund
beginning on the first (1st) business day after the end of such month based on
information then available. Fees charged to an account may result in an
overdraft that will be subject to normal interest charges. The Fund will have
sixty (60) days after the receipt of an invoice to dispute any charge that
appears on such invoice. After such sixty (60) day period, the invoice will be
deemed to be complete and accurate and may no longer be disputed.
13.7 Cooperation with Fund's Independent Public Accountants. The Bank
shall cooperate with each Fund's independent public accountants and shall take
all reasonable action in the performance of its obligations under this Agreement
to assure that all necessary information is made available to the accountant for
the expression of their unqualified opinion, including but not limited to the
opinion included in the Funds' registration statements on Form N-1A, and
periodic reports made on Forms N-SAR and N-CSR, and any other reports to the SEC
and for any requirement of the SEC.
13.8 Reports to Fund by Bank's Independent Public Accountants. The Bank
shall provide each Fund, at all times as a Fund may reasonably require, with
reports from the Bank's independent public accountant on the Bank's accounting
systems and internal accounting controls and procedures for safeguarding
securities and cash of the Fund, including securities deposited and/or
maintained in a Securities Depository or Book-Entry System, relating to the
services the Bank provides under this Agreement and generally made available to
the Bank's clients. These reports shall be of sufficient scope and in sufficient
detail as a Fund may reasonably require to provide reasonable assurance that the
examination would disclose any material inadequacies and, if there are no
material inadequacies, the reports shall so state.
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14. Limitation of Liability.
14.1 Notwithstanding anything in this Agreement to the contrary, in no
event shall the Bank or any of its officers, directors or employees
(collectively, the "Bank Indemnified Parties") be liable to the Fund or any
third party, and the Fund shall indemnify and hold the Bank and the Bank
Indemnified Parties harmless from and against any and all loss, damage,
liability, actions, suits, claims, and reasonable costs and expenses, including
reasonable legal fees, (a "Claim") arising as a result of any act or omission of
the Bank or any Bank Indemnified Party under this Agreement, except to the
extent any such Claim results from the negligence, willful misfeasance, bad
faith or reckless disregard of its duties on the part of the Bank or any Bank
Indemnified Party. Without limiting the foregoing, neither the Bank nor the Bank
Indemnified Parties shall be liable for, and the Bank and the Bank Indemnified
Parties shall be indemnified against, any Claim arising as a result of:
(a) Any act or omission by the Bank or any Bank 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 omission 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; or
(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.
14.2 The Bank agrees to indemnify and hold harmless each Fund and its
affiliates and their Directors/Trustees, officers and employees ("Fund
Indemnified Parties") from and against any and all Claims arising as a result of
any act or omission of the Bank or any Bank Indemnified Party under this
Agreement to the extent any such Claim results from the negligence, willful
misfeasance, bad faith or reckless disregard of its duties on the part of the
Bank or any Bank Indemnified Party.
14.3 Notwithstanding anything to the contrary in this Agreement, neither
Party shall be liable to the other party 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.
14.4 The obligations set forth in this Section 14 shall survive the
termination of this Agreement.
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15. Termination.
15.1 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 one-year terms (each a "Renewal Term") unless
written notice of non-renewal (due to a Party's violation of a material
provision of the contract or for any other reason) is delivered by the
non-renewing party to the other party no later than ninety days if a Fund is the
non-renewing party and one hundred eighty days if Bank is the non-renewing party
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 terminating party gives
written notice of such violation to the other party and such party does not cure
such violation within 90 days of receipt of such notice. The Bank's right to
termination shall be limited to the Portfolio in respect of which a violation
has occurred. Termination by either party with respect to a Fund or a Portfolio
will not affect the terms of this Agreement with respect to other Funds or
Portfolios.
15.2 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 15.3, 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, except for
any obligations arising prior to the date of delivery of such Portfolio
Securities and cash and those obligations under Section 14.
15.3 Prior to the expiration of ninety (90) days after notice of
termination has been given, the Fund may furnish the Bank with an order of the
Fund advising that a successor custodian cannot be found willing and able to act
upon reasonable and customary terms and that 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,
upon receipt by the Bank of a copy of the minutes of the meeting of the Board of
Directors/Trustees 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, except for any obligations arising prior to the date of delivery
of such Portfolio Securities and cash and those obligations under Section 14.
15.4 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.
16. 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
19
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. The parties agree that they shall abide by the provisions of the
Xxxxx-Xxxxx-Xxxxxx Act ("GLB") and other applicable privacy laws and shall each
establish commercially reasonable controls to ensure the confidentiality of
confidential information and to ensure that confidential information is not
disclosed contrary to the provisions of this Agreement, GLB or any other
applicable privacy laws and regulations.
17. 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:
Treasurer
Eclipse Funds
Eclipse Funds, Inc.
The MainStay Funds
MainStay VP Series Fund, Inc.
McMorgan Funds
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
with a copy to:
Secretary
Eclipse Funds
Eclipse Funds, Inc.
The MainStay Funds
MainStay VP Series Fund, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
and with a copy to
Secretary
McMorgan Funds
Xxx Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
(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: Xxxxxxxxxxx X. Xxxxx, 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.
20
18. Amendments. This Agreement may not be altered or amended, except by an
instrument in writing, executed by both parties.
19. Parties. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of the Bank or by the Bank without the written
consent of the Fund, authorized and approved by its Board; and provided further
that termination proceedings pursuant to Section 15 hereof will not be deemed to
be an assignment within the meaning of this provision.
20. 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.
21. 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.
22. 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.
23. Several Obligations of the Portfolios. This Agreement is an agreement
entered into between the Bank and each Fund with respect to the Fund's
respective Portfolios. With respect to any obligation of a Fund on behalf of any
Portfolio arising out of this Agreement, the Bank shall look for payment or
satisfaction of such obligation solely to the assets of the Portfolio to which
such obligation relates as though the Bank had separately contracted with such
Fund by separate written instrument with respect to each Portfolio.
24. Fund Disclaimer. It is expressly agreed that the obligations of the
Funds hereunder shall not be binding upon any of their Directors/Trustees,
shareholders, nominees, officers, agents or employees personally, but shall bind
only the property or assets of the applicable Fund, as the case may be. The
execution and delivery of this Agreement has been authorized by the
Directors/Trustees, and this Agreement has been signed and delivered by an
authorized officer of the Funds, acting as such, and neither such authorization
by the Directors/Trustees nor such execution and delivery by such officer shall
be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the property or assets
of the Funds, as the case may be, as provided in the Funds' respective
organizational documents. With respect to any Fund that is organized as a
Massachusetts business trust, a copy of such Fund's Agreement and Declaration of
Trust establishing the Fund is on file with the Secretary of State of The
Commonwealth of Massachusetts.
25. Business Recovery. The Bank represents and warrants that it has and
will continue to have in place a commercially reasonable business recovery
program.
26. Force Majeure. Notwithstanding anything otherwise to the contrary in
this Agreement, no party shall be liable to the other for any loss or liability
arising from 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, except to
21
the extent that any such loss or liability results from the failure of the Bank
to (a) maintain a commercially reasonable business recovery program, and (b) act
reasonably to mitigate, as soon as practicable, the specific occurrence or
event.
27. Use of Name. Neither party shall use the name of the other in any
prospectus, sales literature or other material in a manner not approved by the
other party prior thereto in writing; provided however, that the approval of a
party shall not be required for any use of its name or that of its affiliates
which merely refers in accurate and factual terms to its appointment hereunder
or which is required by the Securities and Exchange Commission or any state
securities authority or any other appropriate regulatory, governmental or
judicial authority; provided further, that in no event shall such approval be
unreasonably withheld or delayed.
28. Bank Loan Funds. The following provisions shall apply to any Fund
holding Bank Loans:
(a) The Bank shall physically hold at such premises and under such
conditions as the Bank may determine in its sole discretion each "Loan File" (as
hereinafter defined) from time to time delivered to the Bank by a Portfolio, and
shall segregate, keep and maintain the Loan Files for such Portfolio separate
and apart from those of any other Portfolio.
(b) The Portfolio shall deliver to the Bank: (a) each Loan File relating
to such Portfolio promptly upon the Portfolio's receipt of the same, and (b) a
Proper Instruction specifying such Loan File as a Loan File of the Portfolio and
the related identifying number described in paragraph (d) of this Section.
(c) The Bank shall have no duty or obligation with respect to, and no
responsibility for, the quality, completeness, or authenticity of any Loan File
or anything included therein, nor deemed to have for any purpose whatsoever
actual or constructive knowledge of the contents of, or information contained
in, any Loan File. As used herein the term "Loan File" shall mean a package of
paper documents so designated as such by the Portfolio with respect to any
promissory note or similar obligation purchased by the Portfolio, and any
document received by the Bank with respect to any such promissory note or
similar obligation shall be deemed a part of the Loan File.
(d) Whenever the Portfolio purchases any promissory note or similar
obligation which will be included in a Loan File, the Portfolio shall provide
the Bank with a Proper Instruction specifying: (a) the amount to be paid
therefor; (b) the entity to which such payment is to be made, together with
appropriate wiring instructions; (c) the date on which such payment is to be
made, which date shall be at least three business days after the Bank's receipt
of the Proper Instruction; and (d) the name and identifying number to be
recorded and utilized by the Bank with respect to such Loan File and payments
made, or received, by the Bank with respect to such promissory note or similar
obligation. The Bank shall make such payment out of the monies held for the
applicable Portfolio, and if monies are insufficient shall so advise the
Portfolio and the Bank shall take no further action until it has received
further instructions in a Proper Instruction. Any such payments made by the Bank
shall not be "against receipt" of any Loan File unless the Portfolio has
otherwise specified in its Proper Instructions. Where payments are not made
"against receipt", the Portfolio understands and accepts the risk that the
related Loan File may not be received.
(e) From time to time upon receipt of a Proper Instruction the Bank shall
make such deliveries of any Loan File held hereunder as may be specified
therein, including any "free" (and not against payment) deliveries. For any
delivery against payment, the Portfolio understands that settlements, payments
and deliveries may be effected by the Bank in accordance with the customary or
established trading or processing practices and procedures in the jurisdiction
in which the transaction
22
occurs, including, without limitation, delivery to a purchaser or dealer
therefor (or agent) against receipt with the expectation of receiving later
payment. The Portfolio assumes full responsibility for all risks, including,
without limitation, credit risks, involved in connection with such deliveries of
Loan Files. When any deliveries are made "free", the Portfolio understands and
accepts the risk that payments may not be received. Payments received by the
Bank shall be credited to the account of the Portfolio.
(f) The Portfolio, and not the Bank, shall be solely responsible for
obtaining delivery of each Loan File, and where a payment described in paragraph
(d) of this Section is "against receipt" of a Loan File, such receipt shall be
by the Bank from the Portfolio.
(g) Each week the Bank shall provide to the Portfolio a report specifying
by the related identifying number described in paragraph (d) of this Section
each Loan File not yet delivered to and received by the Bank.
(h) Whenever a Portfolio anticipates receipt of any payment of principal
or interest or other amount with respect to any Loan File, it shall provide the
Bank, at least three days before such payment date, a Proper Instruction
specifying: (i) the identifying number (described in paragraph (d) of this
Section) of the Loan File to which such payment relates; (ii) the amount to be
received; and (iii) the date on which payment of such amount is to be received.
The Bank shall receive such amounts and credit the same to the account of the
Portfolio and shall provide to Portfolio an advice setting forth the amount so
received and any amounts which were specified to be received in the Proper
Instruction but not received. The Portfolio, and not the Bank, shall be solely
responsible for making demands for any such payments or taking further action if
any such payment is not received.
(i) Each Portfolios understands that all credits to its account are
provisional, may be reversed if the same are not finally collected, and that any
such reversal may create indebtedness subject to Section 13.5 of this Agreement.
For purposes of such Section 13.5, the Portfolio agrees that each Loan File and
each right to receive payment shall be property as described therein, and
further agrees that such rights shall constitute "financial assets" within the
meaning of Article 8 of the New York Uniform Commercial Code and that the
account of the Portfolio shall for such purposes be considered a "securities
account" maintained by the Bank as a "financial intermediary", as such terms are
defined in said Article 8.
(j) In the event the Bank receives any notices, demands, documents, or
other materials with respect to a Loan File, the Bank's sole responsibility
shall be to deliver the same to the Portfolio.
(k) In the event of any conflict between the provisions of this Section
and any other provision of this Agreement, this Section shall control.
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.
23
ECLIPSE FUNDS
ECLIPSE FUNDS INC
By:_____________________________________
Name: Xxxx X. Xxxxxxxxx
Title: President
THE MAINSTAY FUNDS
By:_____________________________________
Name: Xxxxxxxxxxx X. Xxxxx
Title: President
MAINSTAY VP SERIES FUND, INC.
By:_____________________________________
Name: Xxxx X. Xxxxxxx
Title: President
MCMORGAN FUNDS
By:_____________________________________
Name: Xxxx X. Xxxxxx
Title: President
INVESTORS BANK & TRUST COMPANY
By:_____________________________________
Name:
Title:
24
APPENDIX A
TO THE
MASTER CUSTODIAN AGREEMENT
(as of June 30, 2005)
FUND PORTFOLIO
---- ---------
THE MAINSTAY FUNDS Blue Chip Growth Fund
Capital Appreciation Fund
Common Stock Fund
Convertible Fund
Diversified Income Fund
Equity Index Fund
Global High Income Fund
Government Fund
High Yield Corporate Bond Fund
International Equity Fund
Large Cap Growth Fund
MAP Fund
Mid Cap Growth Fund
Mid Cap Value Fund
Money Market Fund
Small Cap Growth Fund
Small Cap Value Fund
Tax Free Bond Fund
Total Return Fund
Value Fund
ECLIPSE FUNDS Mid Cap Opportunity Fund
Small Cap Opportunity Fund
Balanced Fund
ECLIPSE FUNDS INC. All Cap Growth Fund
All Cap Value Fund
Asset Manager Fund
Cash Reserves Fund
Conservative Allocation Fund
Floating Rate Fund
Growth Allocation Fund
Indexed Bond Fund
Intermediate Term Bond Fund
Large Cap Opportunity Fund (as of July 29, 2005)
Moderate Allocation Fund
Moderate Growth Allocation Fund
S&P 500 Index Fund
Short Term Bond Fund
25
FUND PORTFOLIO
MAINSTAY VP SERIES FUND, INC. Balanced Portfolio
Basic Value Portfolio
Bond Portfolio
Capital Appreciation Portfolio
Cash Management Portfolio
Common Stock Portfolio
Convertible Portfolio
Developing Growth Portfolio
Floating Rate Portfolio
Government Portfolio
Growth Portfolio
High Yield Corporate Bond Portfolio
Income and Growth Portfolio
International Equity Portfolio
Mid Cap Core Portfolio
Mid Cap Growth Portfolio
Mid Cap Value Portfolio
S&P 500 Index Portfolio
Small Cap Growth Portfolio
Total Return Portfolio
Value Portfolio
MCMORGAN FUNDS Balanced Fund
Equity Investment Fund
Fixed Income Fund
High Yield Fund
Intermediate Fixed Income Fund
Principal Preservation Fund
00
XXXXXXXX X
ADDITIONAL SERVICES
(as of June 30, 2005)
NONE
27
