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EXHIBIT 99.b.8
CUSTODIAN AGREEMENT
This Agreement between AMERICAN AADVANTAGE FUNDS, a business trust
organized and existing under the laws of Massachusetts with its principal place
of business at 0000 Xxxx Xxxxxx Xxxxxxxxx, Xxxx Xxxxx, Xxxxx 00000 (the
"TRUST"), and STATE STREET BANK and TRUST COMPANY, a Massachusetts trust
company with its principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 (the "CUSTODIAN"),
WITNESSETH:
WHEREAS, the Trust intends to offer shares in the series set forth on
Schedule D hereto (such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Section 20 and as of the effective date set forth on Schedule D, shall be
referred to herein as the "PORTFOLIO(S)"); and
WHEREAS, each Portfolio, with the exceptions of (a) the S&P 500 INDEX
FUND (which intends to invest all of its investable assets in the EQUITY 500
INDEX PORTFOLIO) and (b) the SHORT-TERM INCOME FUND, intends to invest all of
its investable assets in the portfolio of AMR INVESTMENT SERVICES TRUST, an
open-end, diversified management investment company, with which it shares its
investment objectives,
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Trust hereby employs the Custodian as the custodian of the assets
of the Portfolios of the Trust, including securities which the Trust, 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") pursuant to the provisions of the Trust's
Declaration of Trust. The Trust 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
each class of beneficial interest of the Trust 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 Trust (the "BOARD OF TRUSTEES") on behalf of the applicable
Portfolio(s), and provided that the Custodian shall have no more or less
responsibility or liability to the Trust on account of any actions or omissions
of any sub-custodian so employed than any such sub-custodian has to the
Custodian. The Custodian may employ as sub-custodian for the Trust's
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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 TRUST
HELD BY THE CUSTODIAN IN THE UNITED STATES
SECTION 2.1 HOLDING SECURITIES. The Custodian shall hold and
physically segregate for the account of each Portfolio all non-cash property,
to be held by it in the United States including all domestic securities owned
by such Portfolio, other than (a) securities which are maintained pursuant to
Section 2.9 in a clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the Treasury (each, a
"U.S. SECURITIES SYSTEM") and (b) commercial paper of an issuer for which
State Street Bank and Trust Company acts as issuing and paying agent ("DIRECT
PAPER") which is deposited and/or maintained in the Direct Paper System of the
Custodian (the "DIRECT PAPER SYSTEM") pursuant to Section 2.10.
SECTION 2.2 DELIVERY OF SECURITIES. The Custodian shall release
and deliver domestic securities owned by a Portfolio held by the Custodian or
in a U.S. Securities System account of the Custodian or in the Custodian's
Direct Paper book entry system account ("DIRECT PAPER SYSTEM ACCOUNT") only
upon receipt of Proper Instructions from the Trust 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 2.9
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 2.8 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 are to be delivered to the Custodian;
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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 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 adequate
collateral as agreed upon from time to time by the Custodian
and the Trust 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 Trust on behalf of the Portfolio requiring a pledge of
assets by the Trust on behalf of the Portfolio, but only
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Trust on behalf of the 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 Trust;
13) For delivery in accordance with the provisions of any
agreement among the Trust 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 and/or any
Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by
the Portfolio of the Trust;
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14) Upon receipt of instructions from the transfer agent for the
Trust (the "TRANSFER AGENT") for delivery to such Transfer
Agent or to the holders of Shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Trust related to the Portfolio
(the "PROSPECTUS"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper trust purpose, but only upon receipt of
written Proper Instructions 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 trust 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 the Custodian (other than bearer securities) shall be registered in the name
of the Portfolio or in the name of any nominee of the Trust on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be assigned
exclusively to the Portfolio, unless the Trust has authorized in writing the
appointment of a nominee to be used in common with other registered investment
companies having the same investment adviser as the Portfolio, or in the name
or nominee name of any agent appointed pursuant to Section 2.8 or in the name
or nominee name of any sub-custodian appointed pursuant to Section 1. All
securities accepted by the Custodian on behalf of the Portfolio under the terms
of this Agreement shall be in "street name" or other good delivery form. If,
however, the Trust directs the Custodian to maintain securities in "street
name", the Custodian shall utilize its best efforts only to timely collect
income due the Trust on such securities and to notify the Trust on a best
efforts basis only of relevant corporate actions including, without limitation,
pendency of calls, maturities, tender or exchange offers.
SECTION 2.4 BANK ACCOUNTS. The Custodian shall open and maintain
a separate bank account or accounts in the United States in the name of each
Portfolio of the Trust, subject only to draft or order by the Custodian acting
pursuant to the terms of this Agreement, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or for
the account of the 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"). Trusts 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 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 of
Trustees. Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.
SECTION 2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement
between the Trust, on behalf of each applicable Portfolio, and the Custodian,
the Custodian shall, upon the receipt of Proper Instructions from the Trust,
make federal funds available to such Portfolio as of specified times agreed
upon from time to time by the Trust and the Custodian in the amount of checks
received in payment for Shares of such Portfolio which are deposited into the
Portfolio's account.
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SECTION 2.6 COLLECTION OF INCOME. Subject to the provisions of
Section 2.3, the Custodian shall collect on a timely basis all income and other
payments with respect to registered domestic securities held hereunder to which
each 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 Trust. The Custodian will have no duty or responsibility in connection
therewith, other than to provide the Trust with such information or data as may
be necessary to assist the Trust in arranging for the timely delivery to the
Custodian of the income to which the Portfolio is properly entitled.
SECTION 2.7 PAYMENT OF TRUST MONIES. Upon receipt of Proper
Instructions from the Trust 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 2.9 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.10; (d) in the case of
repurchase agreements entered into between the Trust 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 (e) for transfer to a time deposit account of
the Trust in any bank, whether domestic or foreign; such
transfer may be effected prior to receipt of a confirmation
from a broker and/or the applicable bank pursuant to Proper
Instructions from the Trust as defined herein;
2) In connection with conversion, exchange or surrender of
securities owned by the 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 Trust whether or not such expenses
are to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends on Shares declared pursuant
to the governing documents of the Trust;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper trust purpose, but only upon receipt of
written 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 trust
purpose, and naming the person or persons to whom such payment
is to be made.
SECTION 2.8 APPOINTMENT OF AGENTS. The Custodian may at any time
or times in its discretion appoint (and may at any time remove) any other bank
or trust company which is itself qualified under the 1940 Act to act as a
custodian, as its agent to carry out such of the provisions of this Section 2
as the Custodian may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
SECTION 2.9 DEPOSIT OF TRUST ASSETS IN U.S. SECURITIES SYSTEMS.
The Custodian may deposit and/or maintain securities owned by a Portfolio in a
clearing agency registered with the United States Securities and Exchange
Commission (the "SEC") under Section 17A of the Exchange Act, which acts as a
securities depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively referred
to herein as "U.S. SECURITIES SYSTEM" in accordance with applicable Federal
Reserve Board and SEC rules and regulations, if any, and 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;
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
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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
Trust at its request. Upon request, the Custodian shall
furnish the Trust 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
Trust 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 Trust for the Portfolio 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) The Custodian shall have received from the Trust on behalf of
the Portfolio the initial or annual certificate, as the case
may be, required by Section 15 hereof;
6) Anything to the contrary in this Agreement notwithstanding,
the Custodian shall be liable to the Trust 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 Trust, it shall be
entitled to be subrogated to the rights of the Custodian with
respect to any claim against the U.S. Securities System or any
other person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that the
Portfolio has not been made whole for any such loss or damage;
the Custodian agrees to provide reasonable cooperation in
connection with such subrogation.
SECTION 2.10 TRUST ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER
SYSTEM. The Custodian may deposit and/or maintain securities owned by a
Portfolio in the Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Trust on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented in
the Direct Paper System Account, which account shall not
include any assets of the Custodian other than assets held as
a fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to the
Portfolio;
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4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Portfolio. The Custodian
shall transfer securities sold for the account of the
Portfolio upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for
the account of the Portfolio;
5) The Custodian shall furnish the Trust 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,
of Direct Paper on the next business day following such
transfer and shall furnish to the Trust on behalf of the
Portfolio copies of daily transaction sheets reflecting each
day's transaction in the Direct Paper System for the account
of the Portfolio;
6) The Custodian shall provide the Trust on behalf of the
Portfolio with any report on its system of internal accounting
control as the Trust may reasonably request from time to time.
SECTION 2.11 SEGREGATED ACCOUNT. The Custodian shall upon receipt
of Proper Instructions from the Trust 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 Trust on behalf of the Portfolio, the Custodian and
a broker-dealer registered under the Exchange Act and a member of the NASD (or
any futures commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing Corporation and
of any registered national securities exchange (or the Commodity Futures
Trading Commission 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 or releases of the SEC relating to the
maintenance of segregated accounts by registered investment companies and (iv)
for other proper trust purposes, but only, in the case of clause (iv), upon
receipt of written Proper Instructions from the Trust on behalf of the
applicable Portfolio setting forth the purpose or purposes of such segregated
account and declaring such purpose(s) to be a proper trust purpose.
SECTION 2.12 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The
Custodian shall execute ownership and other certificates and affidavits for all
federal and state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of each Portfolio held by it and
in connection with transfers of securities.
SECTION 2.13 PROXIES. The Custodian shall, with respect to the
domestic securities held hereunder, cause to be promptly executed by the
registered holder of such securities, if the securities are registered
otherwise than in the name of the Portfolio or a nominee of the Portfolio, all
proxies, without indication of the manner in which such proxies are to be
voted, and shall
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promptly deliver to the Portfolio such proxies, all proxy soliciting materials
and all notices relating to such securities.
SECTION 2.14 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES.
Subject to the provisions of Section 2.3, the Custodian shall transmit promptly
to the Trust 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 Trust 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 his 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.
SECTION 3. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER OF THE PORTFOLIOS
SECTION 3.1 DEFINITIONS. The following capitalized terms 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 Mandatory Securities Depositories 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, except that the term does not include Mandatory
Securities Depositories.
"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)(2) of Rule
17f-5.
"MANDATORY SECURITIES DEPOSITORY" means a foreign securities depository or
clearing agency that, either as a legal or practical matter, must be used if
the Trust, on the Portfolios' behalf, determines to place Foreign Assets in a
country outside the United States (i) because required by law or regulation;
(ii) because securities cannot be withdrawn from such foreign securities
depository or clearing agency; or (iii) because maintaining or effecting trades
in securities outside
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the foreign securities depository or clearing agency is not consistent with
prevailing or developing custodial or market practices.
SECTION 3.2 DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY
MANAGER. The Trust, by resolution adopted by the Board of Trustees, hereby
delegates to the Custodian with respect to the Portfolios, subject to Section
(b) of Rule 17f-5, the responsibilities as Foreign Custody Manager set forth
in this Section 3 with respect to Foreign Assets of the Portfolios held outside
the United States, and the Custodian hereby accepts such delegation, as the
Portfolios' Foreign Custody Manager.
SECTION 3.3 COUNTRIES COVERED. The Foreign Custody Manager shall
be responsible for performing the delegated responsibilities defined below only
with respect to the countries and custody arrangements for each such country
listed on Schedule A of this Contract, which list of countries may be amended
from time to time by the Trust with the agreement of the Custodian. 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 discretion of the Foreign Custody Manager. Mandatory
Securities Depositories are listed on Schedule B to this Agreement, which may
be amended from time to time by the Foreign Custody Manager. The Foreign
Custody Manager will provide amended versions of Schedules A and B in
accordance with Section 3.7 hereof.
Upon the receipt by the Foreign Custody Manager of Proper Instructions
to open an account or to place or maintain Foreign Assets in a country listed
on Schedule A, and the fulfillment by the Trust on behalf of the Portfolios of
the applicable account opening requirements for the country, the Foreign
Custody Manager shall be deemed to have been delegated by the Board of Trustees
on behalf of the Portfolios responsibility as Foreign Custody Manager with
respect to that country and to have accepted such delegation. 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 of
Trustees 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 Trust. Thirty days (or such longer period as to which the parties agree in
writing) after receipt of any such notice by the Trust, the Custodian shall
have no further responsibility as Foreign Custody Manager to the Trust with
respect to the country as to which the Custodian's acceptance of delegation is
withdrawn.
SECTION 3.4 SCOPE OF DELEGATED RESPONSIBILITIES.
3.4.1 Selection of Eligible Foreign Custodians. Subject to the
provisions of this Section 3, the Portfolios' 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.
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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).
3.4.2 Contracts With Eligible Foreign Custodians. The Foreign
Custody Manager shall determine that the contract (or the rules or established
practices or procedures in the case of an Eligible Foreign Custodian that is a
foreign securities depository or clearing agency) 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).
3.4.3 Monitoring. In each case in which the Foreign Custody Manager
maintains Foreign Assets with an Eligible Foreign Custodian selected by the
Foreign Custody Manager, the Foreign Custody Manager shall establish a system
to monitor (i) the appropriateness of maintaining the Foreign Assets with such
Eligible Foreign Custodian and (ii) the contract governing the custody
arrangements established by the Foreign Custody Manager with the Eligible
Foreign Custodian (or the rules or established practices and procedures in the
case of an Eligible Foreign Custodian selected by the Foreign Custody Manager
which is a foreign securities depository or clearing agency that is not a
Mandatory Securities Depository). 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 of Trustees in accordance with Section 3.7 hereunder.
SECTION 3.5 GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY.
For purposes of this Section 3, the Board of Trustees 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. The Trust, on behalf of
the Portfolios, and the Custodian each expressly acknowledge that the Foreign
Custody Manager shall not be delegated any responsibilities under this Section
3 with respect to Mandatory Securities Depositories.
SECTION 3.6 STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF THE
PORTFOLIOS. 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.
SECTION 3.7 REPORTING REQUIREMENTS. The Foreign Custody Manager
shall report the withdrawal of the Foreign Assets from an Eligible Foreign
Custodian and the placement of such Foreign Assets with another Eligible
Foreign Custodian by providing to the Board of Trustees amended Schedules A or
B at the end of the calendar quarter in which an amendment to either Schedule
has occurred. The Foreign Custody Manager shall make written reports notifying
the Board of Trustees of any other material change in the foreign custody
arrangements of the Portfolios described in this Article 3 after the occurrence
of the material change.
SECTION 3.8 REPRESENTATIONS WITH RESPECT TO RULE 17f-5. The
Foreign Custody Manager represents to the Trust that it is a U.S. Bank as
defined in section (a)(7) of Rule 17f-5.
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The Trust represents to the Custodian that the Board of Trustees has determined
that it is reasonable for the Board of Trustees 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.
SECTION 3.9 EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS
FOREIGN CUSTODY MANAGER. The Board of Trustees' delegation to the Custodian as
Foreign Custody Manager of the Portfolios shall be effective as of the date of
execution of this Agreement 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 3.3 hereof shall govern the delegation to and termination of the
Custodian as Foreign Custody Manager of the Portfolios with respect to
designated countries.
SECTION 4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE
PORTFOLIOS HELD OUTSIDE OF THE UNITED STATES
SECTION 4.1 DEFINITIONS. Capitalized terms in this Section 4
shall have the following meanings:
"FOREIGN SECURITIES SYSTEM" means either a clearing agency or a securities
depository listed on Schedule A hereto or a Mandatory 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) 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 only
through arrangements implemented by the Foreign Sub-Custodian in such country
pursuant to the terms of this Agreement.
SECTION 4.4 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1 Delivery of Foreign Securities. The Custodian or a Foreign
Sub-Custodian shall release and deliver foreign securities of the Portfolios
held by such Foreign Sub-Custodian, or in a Foreign Securities System account,
only upon receipt of Proper Instructions, which may be continuing instructions
when deemed appropriate by the parties, and only in the following cases:
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(i) upon the sale of such foreign securities for the Portfolios in
accordance with market practice generally accepted by
institutional investors 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) or 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;
(xi) in connection with the lending of foreign securities; and
(xii) for any other proper trust purpose, but only upon receipt of
written Proper Instructions specifying the foreign securities
to be delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a proper
trust purpose, and naming the person or persons to whom
delivery of such securities shall be made.
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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
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;
(vii) in connection with the borrowing or lending of foreign
securities; and
(viii) for any other proper trust purpose, but only upon receipt of
written 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 trust
purpose, and naming the person or persons to whom such payment
is to be made.
4.4.3 Market Conditions; Market Information. 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 generally accepted by institutional investors 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 will provide the Trust the information with respect to
custody and settlement practices in countries in which the Custodian employs a
Foreign Sub-Custodian,
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including without limitation information relating to Foreign Securities
Systems, described on Schedule E hereto at the time or times set forth on such
Schedule. The Custodian may revise Schedule E from time to time, provided that
no such revision shall result in the Trust 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 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 Trust 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 a Portfolio 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 opened and
maintained outside the United States on behalf of a Portfolio with a Foreign
Sub-Custodian shall be subject only to draft or order by the Custodian or 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.
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 Trust and the Custodian shall consult as to such measures and
as to the compensation and expenses of the Custodian relating to such measures.
SECTION 4.8 SHAREHOLDER RIGHTS. With respect to the foreign
securities held pursuant to this Agreement, the Custodian will use its
reasonable commercial efforts to facilitate the exercise of voting and other
shareholder proxy rights, subject always to the laws, regulations and practical
constraints that may exist in the country where such securities are issued.
The Trust acknowledges that local conditions, including lack of regulation,
onerous procedural obligations, lack of notice and other factors may have the
effect of severely limiting the ability of the Trust to exercise shareholder
rights.
SECTION 4.9 COMMUNICATIONS RELATING TO FOREIGN SECURITIES. The
Custodian shall transmit promptly to the Trust written information (including,
without limitation, pendency of calls and maturities of foreign securities and
expirations of rights in connection therewith) received by the Custodian via
the Foreign Sub-Custodians from issuers of the foreign securities being held
for the account of the Portfolios. With respect to tender or exchange offers,
the Custodian shall transmit promptly to the Trust written information 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
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Custodian receives Proper Instructions with regard to the exercise of any such
right or power, and both (i) and (ii) occur at least three (3) business days
prior to the date on which the Custodian is to take such action to exercise
such right or power.
SECTION 4.10 LIABILITY OF FOREIGN SUB-CUSTODIANS AND FOREIGN
SECURITIES SYSTEMS. Each agreement pursuant to which the Custodian employs as
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 the extent possible, 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 institution's performance of such obligations. At the
election of the Trust, 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 Trust, 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 Trust to notify the Custodian of the obligations
imposed on the Trust 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 Trust with
respect to any claim for exemption or refund under the tax law of countries for
which the Trust has provided such information.
SECTION 4.12 CONFLICT. If the Custodian is delegated the
responsibilities of Foreign Custody Manager pursuant to the terms of Section 3
hereof, in the event of any conflict between the provisions of Sections 3 and 4
hereof, the provisions of Section 3 shall prevail.
SECTION 4(A). CONTRACTUAL SETTLEMENT
SECTION 4(A).1 SCHEME OF CONTRACTUAL SERVICES.
(a) Subject to paragraphs (b) and (c) below and Sections 4.4.1,
4.4.2 and 4.4.3 hereof, the Custodian shall credit or debit
the appropriate account of each Portfolio in connection with
(i) the purchases of, (ii) income or dividends associated
with, or (iii) proceeds of the sale, maturity, redemption, or
other disposition of, securities and other assets held for the
time being on behalf of a Portfolio on a contractual
settlement basis.
(b) The Custodian may make available provisional credit of
settlement, maturity, redemption proceeds on a contractual
settlement basis in the markets set forth on Schedule C hereto
when the Custodian has a reasonable expectation that the
transaction will settle in due course. The Custodian reserves
the right to reverse any such crediting at any time before
actual receipt of the item associated with the credit when the
Custodian determines that such transaction will not settle in
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accordance with its terms or that amounts due pursuant thereto
will not be collectable, or the Custodian has not been
provided with Proper Instructions with respect thereto. In
such instances, the Custodian may charge the appropriate
account of the applicable Portfolio for the expense of
providing funds associated with such advance in an amount not
to exceed a commercially reasonable rate.
(c) With respect to the markets set forth on Schedule C hereto,
the consideration payable in connection with a purchase
transaction shall be debited from the appropriate account of
the applicable Portfolio upon the contractual settlement date
for the relevant purchase transaction. The Custodian shall
promptly recredit such amount at the time that the Portfolio
notifies the Custodian by Proper Instruction that such
transaction has been canceled.
SECTION 4(A).2 MARKETS ELIGIBLE FOR CONTRACTUAL SERVICES. The
services described in Section 4(A).1 hereof (for the purposes of this Section
4(A), the "Services") shall be provided with respect to the applicable
securities transactions in the countries set forth on Schedule C attached
hereto.
SECTION 4(A).3 OBLIGATIONS. All payments made under this Section
4(A) are made subject to actual collection; the Custodian shall not be liable
to the Trust or the Portfolios for any amount that is not actually collected in
accordance with the terms hereof. The provision of the Services is intended to
facilitate settlement in ordinary course. The Custodian may terminate
provision of Services under Section 4(A)1(b) immediately upon notice to Trust,
particularly with respect to the occurrence of force majeure events affecting
settlement, any disorder in markets, or other changed external business
circumstances.
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 Trust. The Custodian will provide timely notification to
the Trust 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 but subject to the
limitations of the Trust's Declaration of Trust and any applicable votes of the
Board of Trustees pursuant thereto, 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 Trust 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 Trust and the Custodian.
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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 of Trustees
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes
them to have been given by a person authorized to give such instructions with
respect to the transaction involved. The Trust shall cause all oral
instructions to be confirmed in writing. Upon receipt of a certificate of the
Secretary or an Assistant Secretary as to the authorization by the Board of
Trustees accompanied by a detailed description of procedures approved by the
Board of Trustees, Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that the
Board of Trustees and the Custodian are satisfied that such procedures afford
adequate safeguards for the Portfolios' assets. For purposes of this Section,
Proper Instructions shall include instructions received by the Custodian
pursuant to any three-party agreement which requires a segregated asset
account in accordance with Section 2.11.
SECTION 7. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from
the Trust on behalf of each applicable 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 Trust 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 of
Trustees.
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 Trust. The Custodian may receive and accept a 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
of Trustees pursuant to the Trust's Declaration of Trust 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.
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SECTION 9. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees to keep the books of
account of each Portfolio and/or compute the net asset value per Share of the
outstanding Shares or, if directed in writing to do so by the Trust on behalf
of the Portfolio, shall itself keep such books of account and/or compute such
net asset value per Share. If so directed, the Custodian shall also calculate
daily the net income of the Portfolio as described in the Prospectus related to
such Portfolio and shall advise the Trust and the Transfer Agent daily of the
total amounts of such net income and, if instructed in writing by an officer of
the Trust to do so, shall advise the Transfer Agent periodically of the
division of such net income among its various components. The calculations of
the net asset value per Share and the daily income of each Portfolio shall be
made at the time or times described from time to time in the Prospectus related
to such Portfolio.
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 Trust under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder. All such records shall be the property of the Trust and shall at
all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Trust and
employees and agents of the SEC. The Custodian shall, at the Trust's request,
supply the Trust with a tabulation of securities owned by each Portfolio and
held by the Custodian and shall, when requested to do so by the Trust and for
such compensation as shall be agreed upon between the Trust and the Custodian,
include certificate numbers in such tabulations.
SECTION 11. OPINION OF TRUST'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Trust on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Trust's independent accountants with
respect to its activities hereunder in connection with the preparation of the
Trust's Form N-1A, and Form N-SAR or other annual reports to the SEC and with
respect to any other requirements thereof.
SECTION 12. REPORTS TO TRUST BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Trust, on behalf of each of the
Portfolios at such times as the Trust may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a U.S. Securities System or a Foreign Securities System (collectively
referred to herein as the "SECURITIES SYSTEMS"), 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
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the Trust to provide reasonable assurance that any material inadequacies would
be disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
SECTION 13. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between
the Trust 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 received by it or
delivered by it pursuant to this Agreement and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Agreement,
but shall be kept indemnified by and shall be without liability to the Trust
for any action taken or omitted by it in good faith without negligence. It
shall be entitled to rely on and may act upon advice of counsel (who may be
counsel for the Trust) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice. The Custodian
shall be without liability to the Trust and the Portfolios for any loss,
liability, claim or expense resulting from or caused by anything which is (A)
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, or (B) part of the "prevailing country
risk" of the Portfolios, as such term is used in SEC Release Nos. IC-22658;
IS-1080 (May 12, 1997) or as such term or other similar terms are now or in the
future interpreted by the SEC or by the staff of the Division of Investment
Management thereof.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Trust for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances
beyond the reasonable control of the Custodian or any sub-custodian or
Securities System or any agent or nominee of any of the foregoing, including,
without limitation, the interruption, suspension or restriction of trading on
or the closure of any securities market, power or other mechanical or
technological failures or interruptions, computer viruses or communications
disruptions, work stoppages, natural disasters, or other similar events or
acts; (ii) errors by the Trust or the Investment Advisor in their instructions
to the Custodian provided such instructions have been in accordance with this
Agreement; (iii) the insolvency of or acts or omissions by a Securities System;
(iv) any delay or failure of any broker, agent or intermediary, central bank or
other commercially prevalent payment or clearing system to deliver to the
Custodian's sub-custodian or agent securities purchased or in the remittance
or payment made in connection with securities sold; (v) any delay or failure of
any company, corporation, or other body in charge of registering or
transferring securities in the name of the Custodian, the Trust, the
Custodian's sub-custodians, nominees or agents or any consequential losses
arising out of such
21
delay or failure to transfer such securities including non-receipt of bonus,
dividends and rights and other accretions or benefits; (vi) delays or inability
to perform its duties due to any disorder in market infrastructure with respect
to any particular security or Securities System; and (vii) any provision of any
present or future law or regulation or order of the United States of America,
or any state thereof, or any other country, or political subdivision thereof or
of any court of competent jurisdiction.
The Custodian shall be liable for the acts or omissions of a Foreign
Sub-Custodian (as defined in Section 4 hereof) to the same extent as set forth
with respect to sub-custodians generally in this Agreement.
If the Trust on behalf of a 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 Trust or the Portfolio being liable
for the payment of money or incurring liability of some other form, the Trust
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.
If the Trust requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not
limited to securities settlements, foreign exchange contracts and assumed
settlement) or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Agreement, except such as may arise
from its or its nominee's own negligent action, negligent failure to act or
willful misconduct, any property at any time held for the account of the
applicable Portfolio shall be security therefor and should the Trust fail to
repay the Custodian promptly, the Custodian shall be entitled to utilize
available cash and to dispose of such 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. MITIGATION BY CUSTODIAN
Upon the occurrence of any event connected with the Custodian under
this Agreement which causes or may cause any loss, damage or expense to the
Trust or any Portfolio, the Custodian shall, and shall exercise reasonable
efforts to cause any Foreign Sub-Custodian to, use reasonable efforts under the
circumstances to mitigate the effect of such event and to avoid continuing harm
to the Trust and the Portfolios.
SECTION 16. NOTIFICATION OF LITIGATION; RIGHT TO PROCEED
In any case in which the Trust may be asked to indemnify or hold the
Custodian harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Custodian will use all reasonable care to identify and
notify the Trust promptly concerning any situation which presents or appears
likely to present the probability of such claim for indemnification against the
Trust; provided, however, that the failure to so advise, identify or notify the
Trust shall not in any way limit the Trust's liability for
22
indemnification under this Agreement with respect to any such claim to the
extent that the defense thereof is not materially prejudiced by such failure.
If the Trust acknowledges in writing that the Custodian is entitled to
indemnification, the Trust shall have the option to defend the Custodian
against any claim which may be the subject of this indemnification, and in the
event that the Trust so elects, it will so notify the Custodian, and thereupon
the Trust shall take over complete defense of the claim. In the event the
Trust elects to assume the control of the defense of the claim, the Custodian
may participate in such proceeding and retain additional counsel but shall
bear all fees and expenses of such retention of such counsel, unless (i) the
Trust shall have specifically authorized the retention of such counsel, or (ii)
if the Trust and the Custodian agree that the retention of such counsel is
required as a result of a conflict of interest. In the event the Trust assumes
control of any proceeding, the Trust shall keep the Custodian notified of the
progress of such proceeding and, upon request, consult with the Custodian and
counsel. The Trust will, upon request by the Custodian, either pay in the
first instance or reimburse the Custodian for any expenses subject to indemnity
hereunder. The Trust shall not settle or compromise any proceeding without the
prior written consent of the Custodian unless (i) such settlement or compromise
involves no admission of guilt, wrongdoing, or misconduct by the Custodian,
(ii) such settlement or compromise does not impose any obligations or
restrictions on the Custodian other than obligations to pay money that are
subject to indemnity under this Agreement, and (iii) the Trust shall have paid,
or made arrangements satisfactory to the Custodian for payment of amounts
payable by the Custodian in connection with such settlement. The Custodian
shall in no case confess any claim or make any compromise in any case in which
the Trust will be asked to indemnify the Custodian except with the Trust's
prior written consent.
SECTION 17. 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 Custodian shall not with respect to a Portfolio act under
Section 2.9 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Trustees has approved
the initial use of a particular Securities System by such Portfolio, as
required by Rule 17f-4 under the 1940 Act and that the Custodian shall not with
respect to a Portfolio act under Section 2.10 hereof in the absence of receipt
of an initial certificate of the Secretary or an Assistant Secretary that the
Board of Trustees has approved the initial use of the Direct Paper System by
such Portfolio; provided further, however, that the Trust shall not amend or
terminate this Agreement in contravention of any applicable federal or state
regulations, or any provision of the Trust's Declaration of Trust, and further
provided, that the Trust on behalf of one or more of the Portfolios may at any
time by action of its Board of Trustees (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.
23
Upon termination of the Agreement, the Trust 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 reasonable costs, expenses and disbursements.
SECTION 18. SUCCESSOR CUSTODIAN
If a successor custodian for the Trust, of one or more of the
Portfolios shall be appointed by the Board of Trustees, 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.
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, 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 Trust to procure the Certified Resolution to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for its
services during such period as the Custodian retains possession of such
securities, funds and other properties and the provisions of this Agreement
relating to the duties and obligations of the Custodian shall remain in full
force and effect.
SECTION 19. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Agreement, the Custodian and
the Trust 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 Trust's Declaration of
Trust. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Agreement.
24
SECTION 20. ADDITIONAL PORTFOLIOS
In the event that the Trust establishes one or more series of Shares
with respect to which it desires to have the Custodian render services as
custodian pursuant to 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 and Schedule D hereto shall
be revised to so reflect.
SECTION 21. 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.
SECTION 22. RECOURSE AGAINST SHAREHOLDERS, OFFICERS AND TRUSTEES
This Agreement is executed by the officers of the Trust in their
capacity as such and not individually. Any responsibility or liability of the
Trust (or a particular Portfolio) under any provision of this Contract shall be
satisfied solely from the assets of the Trust or the particular Portfolio,
tangible or intangible, realized or unrealized, and in no event shall the
Custodian, a sub-custodian or agent have any recourse against the shareholders,
officers or Trustees of the Trust under this Contract or against any one
Portfolio for the obligations of any other Portfolio. The execution and
delivery of this Agreement have been authorized by the Board of Trustees, and
this Agreement has been executed and delivered by an authorized officer of the
Trust acting as such; neither such authorization by the Trustees nor execution
and delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on them personally, but shall only bind
the assets and property of the Trust.
SECTION 23. CONFIDENTIALITY.
None of the parties hereto shall, unless compelled to do so by any
court of competent jurisdiction either before or after the termination of this
Agreement, disclose to any person not authorized by the relevant party to
receive the same any information relating to such party and to the affairs of
such party of which the party disclosing the same shall have become possessed
during the period of this Agreement and each party shall use its best endeavors
to prevent any such disclosure as aforesaid.
SECTION 24. ASSIGNMENT.
This Agreement may not be assigned by either party without the written
consent of the other.
25
SECTION 25. SEVERABILITY.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
SECTION 26. PRIOR AGREEMENTS
This Agreement supersedes and terminates, as of the date hereof, all
prior Agreements between the Trust on behalf of each of the Portfolios and the
Custodian relating to the custody of the Trust's assets.
SECTION 27. NOTICES.
Any notice, instruction or other instrument required to be given
hereunder may be delivered in person to the offices of the parties as set forth
herein during normal business hours or delivered prepaid registered mail or by
telex, cable or telecopy to the parties at the following addresses or such
other addresses as may be notified by any party from time to time:
To the Trust: AMERICAN AADVANTAGE FUNDS
0000 Xxxx Xxxxxx Xxxxxxxxx, Maildrop 5645
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President
Telephone: 000-000-0000
Telecopy: 000-000-0000
To the Custodian: STATE STREET BANK AND TRUST COMPANY
Xxxxx Xxxxxx Building
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Xx.
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 28. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, 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
26
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.
SECTION 29. SHAREHOLDER COMMUNICATIONS ELECTION
SEC Rule 14b-2 requires banks which hold securities for the account of
customers to respond to requests by issuers of securities for the names,
addresses and holdings of beneficial owners of securities of that issuer held
by the bank unless the beneficial owner has expressly objected to disclosure of
this information. In order to comply with the rule, the Custodian needs the
Trust to indicate whether it authorizes the Custodian to provide the Trust's
name, address, and share position to requesting companies whose securities the
Trust owns. If the Trust tells the Custodian "no", the Custodian will not
provide this information to requesting companies. If the Trust tells the
Custodian "yes" or does not check either "yes" or "no" below, the Custodian is
required by the rule to treat the Trust as consenting to disclosure of this
information for all securities owned by the Trust or any funds or accounts
established by the Trust. For the Trust's protection, the Rule prohibits the
requesting company from using the Trust's name and address for any purpose
other than corporate communications. Please indicate below whether the Trust
consents or objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Trust's
name, address, and share positions.
NO [ ] The Custodian is not authorized to release the Trust's
name, address, and share positions.
27
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 December 1, 1997.
AMERICAN AADVANTAGE FUNDS
By: /s/ XXXXXXX X. XXXXX
------------------------------------
Its: President
STATE STREET BANK AND TRUST COMPANY
By: /s/ XXXXXX X. XXXXX
-----------------------------------
Its: Executive Vice President
28
SCHEDULE C
COUNTRIES/SETTLEMENT SYSTEMS WITH RESPECT TO WHICH
CONTRACTUAL SETTLEMENT MAY BE PROVIDED
Australia
Austria
Belgium
Canada
Denmark
Euroclear
Finland
France
Germany
Hong Kong
Italy
Japan
Netherlands
New Zealand
Norway
Portugal
Singapore
Spain
Sweden
Switzerland
United Kingdom
29
SCHEDULE D
PORTFOLIOS
Name of Portfolio Effective Date
----------------------------------------------------------------------------------
BALANCED FUND JANUARY 1, 1998
GROWTH AND INCOME FUND JANUARY 1, 1998
INTERMEDIATE BOND FUND DECEMBER 1, 1997
INTERNATIONAL EQUITY FUND JANUARY 1, 1998
LIMITED-TERM INCOME FUND DECEMBER 1, 1997
MONEY MARKET FUND DECEMBER 1, 1997
MUNICIPAL MONEY MARKET FUND DECEMBER 1, 1997
S&P 500 INDEX FUND JANUARY 1, 1998
SHORT-TERM INCOME FUND TO BE DETERMINED
U.S. GOVERNMENT MONEY MARKET FUND DECEMBER 1, 1997
30
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Argentina Citibank, N.A. --
Australia Westpac Banking Corporation --
Austria Erste Bank der oesterreichischen --
Sparkasen AG
Bahrain The British Bank of the Middle East --
(as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank --
Belgium Generale Bank --
Bermuda The Bank of Bermuda Limited --
Bolivia Banco Boliviano Americano --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Bulgaria ING Bank N.V. --
Canada Canada Trustco Mortgage Company --
Chile Citibank, N.A. --
People's Republic The Hongkong and Shanghai --
of China Banking Corporation Limited,
Shanghai and Shenzhen branches
Colombia Cititrust Colombia S.A. --
Sociedad Fiduciaria
00
XXXXX XXXXXX SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Croatia Privredana banka Zagreb d.d --
Cyprus Barclays Bank PLC --
Cyprus Offshore Banking Unit
Czech Republic Ceskoslovenska Obchodni --
Banka A.S.
Denmark Den Danske Bank --
Ecuador Citibank, N.A. --
Egypt National Bank of Egypt --
Estonia Hansabank --
Finland Xxxxxx Bank Ltd. --
France Banque Paribas --
Germany Dresdner Bank AG --
Ghana Barclays Bank of Ghana Limited --
Greece National Bank of Greece S.A Bank of Greece
Hong Kong Standard Chartered Bank --
Hungary Citibank Budapest Rt. --
India Deutsche Bank AG; --
The Hongkong and Shanghai
Banking Corporation Limited
Indonesia Standard Chartered Bank --
00
XXXXX XXXXXX SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Ireland Bank of Ireland --
Israel Bank Hapoalim B.M. --
Italy Banque Paribas --
Ivory Coast Societe Generale de Banques --
en Cote d'Ivoire
Jamaica Scotiabank Trust and Merchant Bank --
Japan The Daiwa Bank, Limited; Japan Securities
The Fuji Bank, Limited Depository Center;
Jordan The British Bank of the Middle East --
(as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Kenya Barclays Bank of Kenya Limited --
Republic of Korea The Hongkong and Shanghai Banking --
Corporation Limited
Latvia Hansabank --
Lebanon The British Bank of the Middle East Custodian and Clearing Center of Financial
(as delegate of the Hongkong and
Instruments for Lebanon (MIDCLEAR) X.X.X.;
Shanghai Banking Corporation Limited)
Lithuania Vilniaus Bankas AB --
Malaysia Standard Chartered Bank --
Malaysia Berhad
Mauritius The Hongkong and Shanghai --
Banking Corporation Limited
00
XXXXX XXXXXX SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Mexico Citibank Mexico, S.A. --
Morocco Banque Commerciale du Maroc --
Namibia (via) Standard Bank of South Africa -
The Netherlands MeesPierson N.V. --
New Zealand ANZ Banking Group --
(New Zealand) Limited
Norway Christiania Bank og --
Kreditkasse
Oman The British Bank of the Middle East --
(as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank AG --
Peru Citibank, N.A. --
Philippines Standard Chartered Bank --
Poland Citibank Poland S.A. --
Portugal Banco Comercial Portugues --
Romania ING Bank, N.V. --
Russia Credit Suisse First Boston, Zurich --
via Credit Suisse First Boston
Limited, Moscow
Singapore The Development Bank --
of Singapore Ltd.
00
XXXXX XXXXXX SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Slovak Republic Ceskoslovenska Obchodna --
Banka A.S.
Slovenia Banka Creditanstalt d.d. --
South Africa Standard Bank of South Africa Limited --
Spain Banco Santander, S.A. --
Sri Lanka The Hongkong and Shanghai --
Banking Corporation Limited
Swaziland Barclays Bank of Swaziland Limited --
Sweden Skandinaviska Enskilda Banken --
Switzerland Union Bank of Switzerland --
Taiwan - R.O.C. Central Trust of China --
Thailand Standard Chartered Bank --
Trinidad & Tobago Republic Bank Ltd. --
Tunisia Banque Internationale Arabe de Tunisie --
Turkey Citibank, N.A. --
United Kingdom State Street Bank and Trust --
Uruguay Citibank, N.A. --
Venezuela Citibank, N.A. --
00
XXXXX XXXXXX SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Zambia Barclays Bank of Zambia Limited --
Zimbabwe Barclays Bank of Zimbabwe Limited --
Euroclear (The Euroclear System)
Cedel (Cedel Bank, societe anonyme)
INTERSETTLE (for EASDAQ Securities)
36
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Argentina -Caja de Valores S.A.;
-CRYL
Australia -Austraclear Limited;
-Reserve Bank Information and
Transfer System
Austria -Oesterreichische Kontrollbank AG
(Wertpapiersammelbank Division)
Belgium -Caisse Interprofessionnelle de Depots et
de Virements de Titres S.A.;
-Banque Nationale de Belgique
Brazil - Camara de Liquidacao de Sao Paulo, (Calispa);
-Bolsa de Valores de Rio de Janeiro
- All SSB clients presently use Calispa
-Central de Custodia e de Liquidacao Financeira
de Titulos
-Banco Central do Brasil,
Systema Especial de Liquidacao e
Custodia
Bulgaria - Central Depository AD
Canada -The Canadian Depository
for Securities Limited; West Canada
Depository Trust Company [depositories
linked]
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
37
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
People's Republic -Shanghai Securities Central Clearing and
of China Registration Corporation;
-Shenzhen Securities Central Clearing
Co., Ltd.
Croatia Ministry of Finance
Czech Republic -Stredisko cennych papiru(degree);
-Czech National Bank
Denmark -Vaerdipapircentralen - The Danish
Securities Center
Egypt -Misr Company for Clearing, Settlement,
and Central Depository
Estonia - Eesti Vaartpaberite Keskdepositooruim
Finland -The Finnish Central Securities
Depository
France -Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres;
-Banque de France,
Saturne System
Germany -The Deutscher Kassenverein AG
Greece -The Central Securities Depository
(Apothetirion Titlon A.E.);
Hong Kong -The Central Clearing and
Settlement System;
-The Central Money Markets Unit
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
38
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Hungary -The Central Depository and Clearing
House (Budapest) Ltd.
[Mandatory for Gov't Bonds only;
SSB does not use for other securities]
India The National Securities Depository Limited
Indonesia -Bank of Indonesia
Ireland -The Central Bank of Ireland,
The Gilt Settlement Office
Israel -The Clearing House of the
Tel Aviv Stock Exchange;
-Bank of Israel
Italy -Monte Titoli S.p.A.;
-Banca d'Italia
Japan -Bank of Japan Net System
Republic of Korea -Korea Securities Depository Corporation
Latvia - The Latvian Central Depository
Lebanon -The Central Bank of Lebanon
Lithuania - The Central Securities Depository of Lithuania
Malaysia -Malaysian Central Depository Sdn.
Bhd.;
-Bank Negara Malaysia,
Scripless Securities Trading and Safekeeping
Systems
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
39
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Mauritius -The Central Depository & Settlement
Co. Ltd.
Mexico -S.D. INDEVAL, S.A. de C.V.
(Instituto para el Deposito de
Valores);
The Netherlands -Nederlands Centraal Instituut voor
Giraal Effectenverkeer B.V. ("NECIGEF");
New Zealand -New Zealand Central Securities
Depository Limited
Norway -Verdipapirsentralen - The Norwegian
Registry of Securities
Oman -Muscat Securities Market
Peru -Caja de Valores y Liquidaciones
(CAVALI, S.A.)
Philippines -The Philippines Central Depository Inc.
-The Book-Entry-System of Bangko
Sentral ng Pilipinas;
-The Registry of Scripless Securities of the
Bureau of the Treasury
Poland -The National Depository of Securities
(Krajowy Depozyt Papierow Wartosciowych);
-National Bank of Poland
Portugal -Central de Valores Mobiliarios
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
40
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Romania -National Securities Clearing, Settlement and
Depository Co.;
-Bucharest Stock Exchange;
-National Bank of Romania
Singapore -The Central Depository (Pvt.)
Limited;
-Monetary Authority of Singapore
Slovak Republic -Stredisko Cennych Papierov;
-National Bank of Slovakia
Slovenia - Klirinsko Depotna Bruzba
South Africa -The Central Depository Limited
Spain -Servicio de Compensacion y
Liquidacion de Valores, S.A.;
-Banco de Espana,
Anotaciones en Cuenta
Sri Lanka -Central Depository System
(Pvt) Limited
Sweden -Vardepapperscentralen VPC AB -
The Swedish Central Securities Depository
Switzerland -Schweizerische Effekten - Giro AG;
Taiwan - R.O.C. -The Taiwan Securities Central
Depository Company, Ltd.
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
41
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Thailand -Thailand Securities Depository
Company Limited
Tunisia -STICODEVAM;
-Central Bank of Tunisia;
-Tunisian Treasury
Turkey -Takas ve Saklama Bankasi A.S.;
-Central Bank of Turkey
United Kingdom -The Bank of England,
The Central Gilts Office;
The Central Moneymarkets Office
Uruguay -Central Bank of Uruguay
Zambia -Lusaka Central Depository
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
42
SCHEDULE C
MARKET INFORMATION
PUBLICATION/TYPE OF INFORMATION BRIEF DESCRIPTION
------------------------------- -----------------
(FREQUENCY)
The Guide to Custody in World Markets
(annually): An overview of safekeeping and settlement practices and procedures in each
market in which State Street Bank and Trust Company offers custodial services.
The Depository Review (annually): Information relating to the operating history and structure of depositories
located in the markets in which State Street Bank and Trust Company offers
custodial services, including transnational depositories.
legal opinions (annually): With respect to each market in which State Street Bank and Trust Company
offers custodial services, opinions relating to whether local law restricts
(i) access of a fund's independent public accountants to books and records of
a Foreign Sub-Custodian or Foreign Securities System, (ii) the Fund's ability
to recover in the event of bankruptcy or insolvency of a Foreign Sub-Custodian
or Foreign Securities System, (iii) the Fund's ability to recover in the event
of a loss by a Foreign Sub-Custodian or Foreign Securities System, and (iv)
the ability of a foreign investor to convert cash and cash equivalents to U.S.
dollars.
Network Bulletins (weekly): Developments of interest to investors in the markets in which State Street
Bank and Trust Company offers custodial services.
Foreign Custody Advisories (as
necessary): With respect to markets in which State Street Bank and Trust Company offers
custodial services which exhibit special custody risks, developments which may
impact State Street's ability to deliver expected levels of service.
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DATA ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT
----------------------------------------------------
AGREEMENT between American AAdvantage Funds (the "Customer") and State
Street Bank and Trust Company ("State Street").
PREAMBLE
WHEREAS, State Street has been appointed as custodian of certain
assets of the Customer pursuant to a certain Custodian Agreement (the
"Custodian Agreement") dated as December 1, 1997;
WHEREAS, State Street has developed and utilizes proprietary
accounting and other systems, including State Street's proprietary
Multicurrency HORIZON(R) Accounting System, in its role as custodian of the
Customer, and maintains certain Customer-related data ("Customer Data") in
databases under the control and ownership of State Street (the "Data Access
Services"); and
WHEREAS, State Street makes available to the Customer certain Data
Access Services solely for the benefit of the Customer, and intends to provide
additional services, consistent with the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and for other good and valuable consideration, the
parties agree as follows:
1. SYSTEM AND DATA ACCESS SERVICES
a. System. Subject to the terms and conditions of this
Agreement, State Street hereby agrees to provide the Customer with access to
State Street's Multicurrency HORIZON(R) Accounting System and the other
information systems (collectively, the "System") as described in Attachment A,
on a remote basis for the purpose of obtaining reports, solely on computer
hardware, system software and telecommunication links, as listed in Attachment
B (the "Designated Configuration") of the Customer, or certain third parties
approved by State Street that serve as investment advisors or investment
managers (the "Investment Advisor") or independent auditors (the "Independent
Auditors") of the Customer and solely with respect to the Customer or on any
designated substitute or back-up equipment configuration with State Street's
written consent, such consent not to be unreasonably withheld.
b. Data Access Services. State Street agrees to make available
to the Customer the Data Access Services subject to the terms and conditions of
this Agreement and data access operating standards and procedures as may be
issued by State Street from time to time. The ability of the Customer to
originate electronic instructions to State Street on behalf of the Customer in
order to (i) effect the transfer or movement of cash or securities held under
custody by State Street or (ii) transmit accounting or other information (such
transactions are referred to herein as "Client Originated Electronic Financial
Instructions"), and (iii) access data for the
44
purpose of reporting and analysis, shall be deemed to be Data Access Services
for purposes of this Agreement.
c. Additional Services. State Street may from time to time agree
to make available to the Customer additional Systems that are not described in
the attachments to this Agreement. In the absence of any other written
agreement concerning such additional systems, the term "System" shall include,
and this Agreement shall govern, the Customer's access to and use of any
additional System made available by State Street and/or accessed by the
Customer.
2. NO USE OF THIRD PARTY SYSTEMS-LEVEL SOFTWARE
State Street and the Customer acknowledge that in connection with the
Data Access Services provided under this Agreement, the Customer will have
access, through the Data Access Services, to Customer Data and to functions of
State Street's proprietary systems; provided, however that in no event will the
Customer have direct access to any third party systems-level software that
retrieves data for, stores data from, or otherwise supports the System.
3. LIMITATION ON SCOPE OF USE
a. Designated Equipment; Designated Location. The System and the
Data Access Services shall be used and accessed solely on and through the
Designated Configuration at the offices of the Customer or the Investment
Advisor or Independent Auditor located in Fort Worth, Texas ("Designated
Location").
b. Designated Configuration; Trained Personnel. State Street
shall be responsible for supplying, installing and maintaining the Designated
Configuration at the Designated Location. State Street and the Customer agree
that each will engage or retain the services of trained personnel to enable
both parties to perform their respective obligations under this Agreement.
State Street agrees to use commercially reasonable efforts to maintain the
System so that it remains serviceable, provided, however, that State Street
does not guarantee or assure uninterrupted remote access use of the System.
c. Scope of Use. The Customer will use the System and the Data
Access Services only for the processing of securities transactions, the keeping
of books of account for the Customer and accessing data for purposes of
reporting and analysis. The Customer shall not, and shall cause its employees
and agents not to (i) permit any third party to use the System or the Data
Access Services, (ii) sell, rent, license or otherwise use the System or the
Data Access Services in the operation of a service bureau or for any purpose
other than as expressly authorized under this Agreement, (iii) use the System
or the Data Access Services for any fund, trust or other investment vehicle
without the prior written consent of State Street, (iv) allow access to the
System or the Data Access Services through terminals or any other computer or
telecommunications facilities located outside the Designated Locations, (v)
allow or cause any information (other than portfolio holdings, valuations of
portfolio holdings, and other information reasonably necessary for the
management or distribution of the assets of the Customer) transmitted from
State Street's databases, including data from third party sources,
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45
available through use of the System or the Data Access Services to be
redistributed or retransmitted to another computer, terminal or other device
for other than use for or on behalf of the Customer or (vi) modify the System
in any way, including without limitation, developing any software for or
attaching any devices or computer programs to any equipment, system, software
or database which forms a part of or is resident on the Designated
Configuration.
d. Other Locations. Except in the event of an emergency or of a
planned System shutdown, the Customer's access to services performed by the
System or to Data Access Services at the Designated Location may be transferred
to a different location only upon the prior written consent of State Street.
In the event of an emergency or System shutdown, the Customer may use any
back-up site included in the Designated Configuration or any other back-up site
agreed to by State Street, which agreement will not be unreasonably withheld.
The Customer may secure from State Street the right to access the System or the
Data Access Services through computer and telecommunications facilities or
devices complying with the Designated Configuration at additional locations
only upon the prior written consent of State Street and on terms to be mutually
agreed upon by the parties.
e. Title. Title and all ownership and proprietary rights to the
System, including any enhancements or modifications thereto, whether or not
made by State Street, are and shall remain with State Street.
f. No Modification. Without the prior written consent of State
Street, the Customer shall not modify, enhance or otherwise create derivative
works based upon the System, nor shall the Customer reverse engineer, decompile
or otherwise attempt to secure the source code for all or any part of the
System.
g. Security Procedures. The Customer shall comply with data
access operating standards and procedures and with user identification or other
password control requirements and other security procedures as may be issued
from time to time by State Street for use of the System on a remote basis and
to access the Data Access Services. The Customer shall have access only to the
Customer Data and authorized transactions agreed upon from time to time by
State Street and, upon notice from State Street, the Customer shall discontinue
remote use of the System and access to Data Access Services for any security
reasons cited by State Street; provided, that, in such event, State Street
shall, for a period not less than 180 days (or such other shorter period
specified by the Customer) after such discontinuance, assume responsibility to
provide accounting services under the terms of the Custodian Agreement.
h. Inspections. State Street shall have the right to inspect the
use of the System and the Data Access Services by the Customer and the
Investment Advisor to ensure compliance with this Agreement. The on-site
inspections shall be upon prior written notice to Customer and the Investment
Advisor and at reasonably convenient times and frequencies so as not to result
in an unreasonable disruption of the Customer's or the Investment Advisor's
business.
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4. PROPRIETARY INFORMATION
a. Proprietary Information. The Customer acknowledges and State
Street represents that the System and the databases, computer programs, screen
formats, report formats, interactive design techniques, documentation and other
information made available to the Customer by State Street as part of the Data
Access Services and through the use of the System constitute copyrighted, trade
secret, or other proprietary information of substantial value to State Street.
Any and all such information provided by State Street to the Customer shall be
deemed proprietary and confidential information of State Street (hereinafter
"Proprietary Information"). The Customer agrees that it will hold such
Proprietary Information in the strictest confidence and secure and protect it
in a manner consistent with its own procedures for the protection of its own
confidential information and to take appropriate action by instruction or
agreement with its employees who are permitted access to the Proprietary
Information to satisfy its obligations hereunder. The Customer further
acknowledges that State Street shall not be required to provide the Investment
Advisor or the Investment Auditor with access to the System unless it has first
received from the Investment Advisor and the Investment Auditor an undertaking
with respect to State Street's Proprietary Information in the form of
Attachment C and/or Attachment C-1 to this Agreement. The Customer shall use
all commercially reasonable efforts to assist State Street in identifying and
preventing any unauthorized use, copying or disclosure of the Proprietary
Information or any portions thereof or any of the logic, formats or designs
contained therein.
b. Cooperation. Without limitation of the foregoing, the
Customer shall advise State Street promptly in the event the Customer learns or
has reason to believe that any person to whom the Customer has given access to
the Proprietary Information, or any portion thereof, has violated or intends to
violate the terms of this Agreement, and the Customer will, at its expense,
co-operate with State Street in seeking injunctive or other equitable relief in
the name of the Customer or State Street against any such person.
c. Injunctive Relief. The Customer acknowledges that the
disclosure of any Proprietary Information, or of any information which at law
or equity ought to remain confidential, will immediately give rise to
continuing irreparable injury to State Street inadequately compensable in
damages at law. In addition, State Street shall be entitled to obtain
immediate injunctive relief against the breach or threatened breach of any of
the foregoing undertakings, in addition to any other legal remedies which may
be available.
d. Survival. The provisions of this Section 4 shall survive the
termination of this Agreement.
5. LIMITATION ON LIABILITY
a. Limitation on Amount and Time for Bringing Action. The
Customer agrees any liability of State Street to the Customer or any third
party arising out of State Street's provision of Data Access Services or the
System under this Agreement shall be limited to the amount paid by the Customer
for the preceding 24 months for such services. In no event shall State Street
be liable to the Customer or any other party for any special, indirect,
punitive or consequential
4
47
damages even if advised of the possibility of such damages. No action,
regardless of form, arising out of this Agreement may be brought by the Customer
more than two years after the Customer has knowledge that the cause of action
has arisen.
b. Year 0000. Xxxxx Xxxxxx will take all steps necessary to
ensure that its products (and those of its third-party suppliers) reflect the
available state of the art technology to offer products that are Year 2000
compliant, including, but not limited to, century recognition of dates,
calculations that correctly compute same century and multi century formulas and
date values, and interface values that reflect the date issues arising between
now and the next one-hundred years. If any changes are required, State Street
will make the changes to its products at no cost to Customer and in a
commercially reasonable time frame and will require third-party suppliers to do
likewise.
c. Limited Warranties. NO OTHER WARRANTIES, WHETHER EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE MADE BY STATE STREET.
IN NO EVENT WILL STATE STREET BE LIABLE TO THE CUSTOMER OR ANY OTHER PARTY FOR
ANY CONSEQUENTIAL OR INCIDENTAL DAMAGES WHICH MAY ARISE FROM THE CUSTOMER'S
ACCESS TO THE SYSTEM OR USE OF INFORMATION OBTAINED THEREBY.
d. Third-Party Data. Organizations from which State Street may
obtain certain data included in the System or the Data Access Services are
solely responsible for the contents of such data, and State Street shall have
no liability for claims arising out of the contents of such third-party data,
including, but not limited to, the accuracy thereof.
e. Regulatory Requirements. As between State Street and the
Customer, the Customer shall be solely responsible for the accuracy of any
accounting statements or reports produced using the Data Access Services and
the System and the conformity thereof with any requirements of law.
f. Force Majeure. Neither party shall be liable for any costs or
damages due to delay or nonperformance under this Agreement arising out of any
cause or event beyond such party's reasonable control, including without
limitation, cessation of services hereunder or any damages resulting therefrom
to the other party, or the Customer as a result of work stoppage, power or
other mechanical failure, computer virus, natural disaster, governmental
action, or communication disruption.
6. INDEMNIFICATION
The Customer agrees to indemnify and hold State Street harmless from
any loss, damage or expense including reasonable attorney's fees, (a "loss")
suffered by State Street arising from (i) the negligence or willful misconduct
in the use by the Customer of the Data Access Services or the System, including
any loss incurred by State Street resulting from a security breach at the
Designated Location or committed by the Customer's employees or agents or the
Investment
5
48
Advisor or the Independent Auditor and (ii) any loss resulting from incorrect
Client Originated Electronic Financial Instructions. State Street shall be
entitled to rely on the validity and authenticity of Client Originated
Electronic Financial Instructions without undertaking any further inquiry as
long as such instruction is undertaken in conformity with security procedures
established by State Street from time to time.
7. FEES
Fees and charges for the use of the System and the Data Access
Services and related payment terms shall be as set forth in the Custody Fee
Schedule in effect from time to time between the parties (the "Fee Schedule").
Any tariffs, duties or taxes imposed or levied by any government or
governmental agency by reason of the transactions contemplated by this
Agreement, including, without limitation, federal, state and local taxes, use,
value added and personal property taxes (other than income, franchise or
similar taxes which may be imposed or assessed against State Street) shall be
borne by the Customer. Any claimed exemption from such tariffs, duties or
taxes shall be supported by proper documentary evidence delivered to State
Street.
8. TRAINING, IMPLEMENTATION AND CONVERSION
a. Training. State Street agrees to provide training, at a
designated State Street training facility or at the Designated Location, to the
Customer's personnel in connection with the use of the System on the Designated
Configuration. The Customer agrees that it will set aside, during regular
business hours or at other times agreed upon by both parties, sufficient time
to enable all operators of the System and the Data Access Services, designated
by the Customer, to receive the training offered by State Street pursuant to
this Agreement.
b. Installation and Conversion. State Street shall be
responsible for the technical installation and conversion ("Installation and
Conversion") of the Designated Configuration. The Customer shall have the
following responsibilities in connection with Installation and Conversion of
the System:
(i) The Customer shall be solely responsible for the timely
acquisition and maintenance of the hardware and software that
attach to the Designated Configuration in order to use the
Data Access Services at the Designated Location.
(ii) State Street and the Customer each agree that they will assign
qualified personnel to actively participate during the
Installation and Conversion phase of the System implementation
to enable both parties to perform their respective obligations
under this Agreement.
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9. SUPPORT
During the term of this Agreement, State Street agrees to provide the
support services set out in Attachment D to this Agreement.
10. TERM OF AGREEMENT
a. Term of Agreement. This Agreement shall become effective on
the date of its execution by State Street and shall remain in full force and
effect until terminated as herein provided.
b. Termination of Agreement. Either party may terminate this
Agreement (i) for any reason by giving the other party at least one-hundred
and eighty days' prior written notice in the case of notice of termination by
State Street to the Customer or thirty days' notice in the case of notice from
the Customer to State Street of termination; or (ii) immediately for failure of
the other party to comply with any material term and condition of the Agreement
by giving the other party written notice of termination. In the event the
Customer shall cease doing business, shall become subject to proceedings under
the bankruptcy laws (other than a petition for reorganization or similar
proceeding) or shall be adjudicated bankrupt, this Agreement and the rights
granted hereunder shall, at the option of State Street, immediately terminate
with notice to the Customer. This Agreement shall in any event terminate as to
any Customer within 90 days after the termination of the Custodian Agreement
applicable to such Customer.
c. Termination of the Right to Use. Upon termination of this
Agreement for any reason, any right to use the System and access to the Data
Access Services shall terminate and the Customer shall immediately cease use of
the System and the Data Access Services. Immediately upon termination of this
Agreement for any reason, the Customer shall return to State Street all copies
of documentation and other Proprietary Information in its possession; provided,
however, that in the event that either party terminates this Agreement or the
Custodian Agreement for any reason other than the Customer's breach, State
Street shall provide the Data Access Services for a period of time and at a
price to be agreed upon by the parties.
11. MISCELLANEOUS
a. Assignment; Successors. This Agreement and the rights and
obligations of the Customer and State Street hereunder shall not be assigned by
either party without the prior written consent of the other party, except that
State Street may assign this Agreement to a successor of all or a substantial
portion of its business, or to a party controlling, controlled by, or under
common control with State Street.
b. Survival. All provisions regarding indemnification, warranty,
liability and limits thereon, and confidentiality and/or protection of
proprietary rights and trade secrets shall survive the termination of this
Agreement.
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c. Entire Agreement. This Agreement and the attachments hereto
constitute the entire understanding of the parties hereto with respect to the
Data Access Services and the use of the System and supersedes any and all prior
or contemporaneous representations or agreements, whether oral or written,
between the parties as such may relate to the Data Access Services or the
System, and cannot be modified or altered except in a writing duly executed by
the parties. This Agreement is not intended to supersede or modify the duties
and liabilities of the parties hereto under the Custodian Agreement or any
other agreement between the parties hereto except to the extent that any such
agreement specifically refers to the Data Access Services or the System. No
single waiver or any right hereunder shall be deemed to be a continuing waiver.
d. Severability. If any provision or provisions of this
Agreement shall be held to be invalid, unlawful, or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired.
e. Governing Law. This Agreement shall be interpreted and
construed in accordance with the internal laws of The Commonwealth of
Massachusetts without regard to the conflict of laws provisions thereof.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
effective as of December 1, 1997.
STATE STREET BANK AND TRUST
COMPANY
By: /s/ XXXXXX X. XXXXX
--------------------------------
Title: Xxxxxx X. Xxxxx
--------------------------------
Date: December 1, 1997
--------------------------------
AMERICAN AADVANTAGE FUNDS
By: /s/ XXXXXXX X. XXXXX
--------------------------------
Title: President
--------------------------------
Date: December 1, 1997
--------------------------------
52
ATTACHMENT A
Multicurrency HORIZON(R) Accounting System
System Product Description
I. The Multicurrency HORIZON(R) Accounting System is designed to provide
lot level portfolio and general ledger accounting for SEC and ERISA type
requirements and includes the following services: 1) recording of general
ledger entries; 2) calculation of daily income and expense; 3) reconciliation
of daily activity with the trial balance, and 4) appropriate automated feeding
mechanisms to (i) domestic and international settlement systems, (ii) daily,
weekly and monthly evaluation services, (iii) portfolio performance and
analytic services, (iv) customer's internal computing systems and (v) various
State Street provided information services products.
II. GlobalQuest(R) GlobalQuest(R) is designed to provide customer access
to the following information maintained on The Multicurrency HORIZON(R)
Accounting System: 1) cash transactions and balances; 2) purchases and sales;
3) income receivables; 4) tax refund receivables; 5) daily priced positions; 6)
open trades; 7) settlement status; 8) foreign exchange transactions; 9) trade
history; and 10) daily, weekly and monthly evaluation services.
III. InSight is designed to provide customer access to the following
information maintained on The Multicurrency HORIZON Accounting System: 1) cash
transactions and balances; 2) purchases and sales; 3) income receivables; 4)
tax refund receivables; 5) daily priced positions; 6) open trades; 7)
settlement status; 8) foreign exchange transactions; 9) trade history, and 10)
daily, weekly and monthly evaluation services.
53
ATTACHMENT B
Designated Configuration
54
ATTACHMENT C
Undertaking
The undersigned understands that in the course of its employment as
Investment Advisor to American AAdvantage Funds (the "Customer") it will have
access to State Street Bank and Trust Company's ("State Street") Multicurrency
HORIZON Accounting System and other information systems (collectively, the
"System").
The undersigned acknowledges that the System and the databases,
computer programs, screen formats, report formats, interactive design
techniques, documentation, and other information made available to the
Undersigned by State Street as part of the Data Access Services provided to the
Customer and through the use of the System constitute copyrighted, trade
secret, or other proprietary information of substantial value to State Street.
Any and all such information provided by State Street to the Undersigned shall
be deemed proprietary and confidential information of State Street (hereinafter
"Proprietary Information"). The Undersigned agrees that it will hold such
Proprietary Information in confidence and secure and protect it in a manner
consistent with its own procedures for the protection of its own confidential
information and to take appropriate action by instruction or agreement with its
employees who are permitted access to the Proprietary Information to satisfy
its obligations hereunder.
The Undersigned will not attempt to intercept data, gain access to
data in transmission, or attempt entry into any system or files for which it is
not authorized. It will not intentionally adversely affect the integrity of
the System through the introduction of unauthorized code or data, or through
unauthorized deletion.
Upon notice by State Street for any reason, any right to use the
System and access to the Data Access Services shall terminate and the
Undersigned shall immediately cease use of the System and the Data Access
Services. Immediately upon notice by State Street for any reason, the
Undersigned shall return to State Street all copies of documentation and other
Proprietary Information in its possession.
AMR Investment Services, Inc.
By:
-----------------------------------
Title:
--------------------------------
Date:
---------------------------------
55
ATTACHMENT C-1
Undertaking
The undersigned understands that in the course of its employment as
Independent Auditor to American AAdvantage Funds (the "Customer") it will have
access to State Street Bank and Trust Company's ("State Street") Multicurrency
HORIZON Accounting System and other information systems (collectively, the
"System").
The undersigned acknowledges that the System and the databases,
computer programs, screen formats, report formats, interactive design
techniques, documentation, and other information made available to the
Undersigned by State Street as part of the Data Access Services provided to the
Customer and through the use of the System constitute copyrighted, trade
secret, or other proprietary information of substantial value to State Street.
Any and all such information provided by State Street to the Undersigned shall
be deemed proprietary and confidential information of State Street (hereinafter
"Proprietary Information"). The Undersigned agrees that it will hold such
Proprietary Information in confidence and secure and protect it in a manner
consistent with its own procedures for the protection of its own confidential
information and to take appropriate action by instruction or agreement with its
employees who are permitted access to the Proprietary Information to satisfy
its obligations hereunder.
The Undersigned will not attempt to intercept data, gain access to
data in transmission, or attempt entry into any system or files for which it is
not authorized. It will not intentionally adversely affect the integrity of
the System through the introduction of unauthorized code or data, or through
unauthorized deletion.
Upon notice by State Street for any reason, any right to use the
System and access to the Data Access Services shall terminate and the
Undersigned shall immediately cease use of the System and the Data Access
Services. Immediately upon notice by State Street for any reason, the
Undersigned shall return to State Street all copies of documentation and other
Proprietary Information in its possession.
Independent Auditor
By:
------------------------------------
Title:
---------------------------------
Date:
----------------------------------
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ATTACHMENT D
Support
During the term of this Agreement, State Street agrees to provide the
following on-going support services:
a. Telephone Support. The Customer Designated Persons may
contact State Street's HORIZON(R) Help Desk and Customer Assistance Center
between the hours of 8 a.m. and 6 p.m. (Eastern time) on all business days for
the purpose of obtaining answers to questions about the use of the System, or
to report apparent problems with the System. From time to time, the Customer
shall provide to State Street a list of persons, not to exceed five in number,
who shall be permitted to contact State Street for assistance (such persons
being referred to as "the Customer Designated Persons").
b. Technical Support. State Street will provide technical
support to assist the Customer in using the System and the Data Access
Services. The total amount of technical support provided by State Street shall
not exceed 10 resource days per year. State Street shall provide such
additional technical support as is expressly set forth in the fee schedule in
effect from time to time between the parties (the "Fee Schedule"). Technical
support, including during installation and testing, is subject to the fees and
other terms set forth in the Fee Schedule.
c. Maintenance Support. State Street shall use commercially
reasonable efforts to correct system functions that do not work according to
the System Product Description as set forth on Attachment A in priority order
in the next scheduled delivery release or otherwise as soon as is practicable.
d. System Enhancements. State Street will provide to the
Customer any enhancements to the System developed by State Street and made a
part of the System; provided that, sixty (60) days prior to installing any such
enhancement, State Street shall notify the Customer and shall offer the
Customer reasonable training on the enhancement. Charges for system
enhancements shall be as provided in the Fee Schedule. State Street retains
the right to charge for related systems or products that may be developed and
separately made available for use other than through the System.
e. Custom Modifications. In the event the Customer desires
custom modifications in connection with its use of the System, the Customer
shall make a written request to State Street providing specifications for the
desired modification. Any custom modifications may be undertaken by State
Street in its sole discretion in accordance with the Fee Schedule.
f. Limitation on Support. State Street shall have no obligation
to support the Customer's use of the System: (1) for use on any computer
equipment or telecommunication facilities which does not conform to the
Designated Configuration or (ii) in the event the Customer has modified the
System in breach of this Agreement.
