FORM OF CUSTODY AGREEMENT] CUSTODY AGREEMENT
EXHIBIT J
[FORM OF CUSTODY AGREEMENT]
AGREEMENT, dated as of , 200___between *, a business trust organized and
existing under the laws of the State of ** having its principal office and place of business at ***
(the “Fund”) and The Bank of New York, a New York corporation authorized to do a banking business
having its principal office and place of business at Xxx Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(“Custodian”).
W I T N E S S E T H:
that for and in consideration of the mutual promises hereinafter set forth the Fund and Custodian
agree as follows:
ARTICLE I
DEFINITIONS
DEFINITIONS
Whenever used in this Agreement, the following words shall have the meanings set forth below:
1. “Authorized Person” shall be any person, whether or not an officer or employee of the Fund,
duly authorized by the Fund’s board to execute any Certificate or to give any Oral Instruction with
respect to one or more Accounts, such persons to be designated in a Certificate annexed hereto as
Schedule I hereto or such other Certificate as may be received by Custodian from time to time.
2. “BNY Affiliate” shall mean any office, branch or subsidiary of The Bank of New York
Company, Inc.
3. “Book-Entry System” shall mean the Federal Reserve/Treasury book-entry system for receiving
and delivering securities, its successors and nominees.
4. “Business Day” shall mean any day on which Custodian and relevant Depositories are open for
business.
5. “Certificate” shall mean any notice, instruction, or other instrument in writing,
authorized or required by this Agreement to be given to Custodian, which is actually received by
Custodian by letter or facsimile transmission and signed on behalf of the Fund by an Authorized
Person or a person reasonably believed by Custodian to be an Authorized Person.
6. “Composite Currency Unit” shall mean the Euro or any other composite currency unit
consisting of the aggregate of specified amounts of specified currencies, as such unit may be
constituted from time to time.
7. “Depository” shall include (a) the Book-Entry System, (b) the Depository Trust Company, (c)
any other clearing agency or securities depository registered with the Securities and Exchange
Commission identified to the Fund from time to time, and (d) the respective successors and nominees
of the foregoing.
8. “Foreign Depository” shall mean (a) Euroclear, (b) Clearstream Banking, societe anonyme,
(c) each Eligible Securities Depository as defined in Rule 17f-7 under the Investment Company Act
of 1940, as amended, identified to the Fund from time to time, and (d) the respective successors
and nominees of the foregoing.
9. “Instructions” shall mean communications actually received by Custodian by S.W.I.F.T.,
tested telex, letter, facsimile transmission, or other method or system specified by Custodian as
available for use in connection with the services hereunder.
10. “Oral Instructions” shall mean verbal instructions received by Custodian from an
Authorized Person or from a person reasonably believed by Custodian to be an Authorized Person.
11. “Series” shall mean the various portfolios, if any, of the Fund listed on Schedule II
hereto, and if none are listed references to Series shall be references to the Fund.
12. “Securities” shall include, without limitation, any common stock and other equity
securities, bonds, debentures and other debt securities, notes, mortgages or other obligations, and
any instruments representing rights to receive, purchase, or subscribe for the same, or
representing any other rights or interests therein (whether represented by a certificate or held in
a Depository or by a Subcustodian).
13. “Subcustodian” shall mean a bank (including any branch thereof) or other financial
institution (other than a Foreign Depository) located outside the U.S. which is utilized by
Custodian in connection with the purchase, sale or custody of Securities hereunder and identified
to the Fund from time to time, and their respective successors and nominees.
ARTICLE II
APPOINTMENT OF CUSTODIAN; ACCOUNTS;
REPRESENTATIONS, WARRANTIES, AND COVENANTS
APPOINTMENT OF CUSTODIAN; ACCOUNTS;
REPRESENTATIONS, WARRANTIES, AND COVENANTS
1. (a) The Fund hereby appoints Custodian as custodian of all Securities and cash at any time
delivered to Custodian during the term of this Agreement, and authorizes Custodian to hold
Securities in registered form in its name or the name of its nominees. Custodian hereby accepts
such appointment and agrees to establish and maintain one or more securities accounts and cash
accounts for each Series in which Custodian will hold Securities and cash as provided herein.
Custodian shall maintain books and records segregating the assets of each Series from the assets of
any other Series. Such accounts (each, an “Account”; collectively, the “Accounts”) shall be in the
name of the Fund.
(b) Custodian may from time to time establish on its books and records such sub-accounts
within each Account as the Fund and Custodian may agree upon (each a “Special
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Account”), and Custodian shall reflect therein such assets as the Fund may specify in a
Certificate or Instructions.
(c) Custodian may from time to time establish pursuant to a written agreement with and for the
benefit of a broker, dealer, future commission merchant or other third party identified in a
Certificate or Instructions such accounts on such terms and conditions as the Fund and Custodian
shall agree, and Custodian shall transfer to such account such Securities and money as the Fund may
specify in a Certificate or Instructions.
2. The Fund hereby represents and warrants, which representations and warranties shall be
continuing and shall be deemed to be reaffirmed upon each delivery of a Certificate or each giving
of Oral Instructions or Instructions by the Fund, that:
(a) It is duly organized and existing under the laws of the jurisdiction of its organization,
with full power to carry on its business as now conducted, to enter into this Agreement, and to
perform its obligations hereunder;
(b) This Agreement has been duly authorized, executed and delivered by the Fund, approved by a
resolution of its board, constitutes a valid and legally binding obligation of the Fund,
enforceable in accordance with its terms, and there is no statute, regulation, rule, order or
judgment binding on it, and no provision of its charter or by-laws, nor of any mortgage, indenture,
credit agreement or other contract binding on it or affecting its property, which would prohibit
its execution or performance of this Agreement;
(c) It is conducting its business in substantial compliance with all applicable laws and
requirements, both state and federal, and has obtained all regulatory licenses, approvals and
consents necessary to carry on its business as now conducted;
(d) It will not use the services provided by Custodian hereunder in any manner that is, or
will result in, a violation of any law, rule or regulation applicable to the Fund;
(e) Its board or its foreign custody manager, as defined in Rule 17f-5 under the Investment
Company Act of 1940, as amended (the “‘40 Act”), has determined that use of each Subcustodian
(including any Replacement Custodian) which Custodian is authorized to utilize in accordance with
Section 1(a) of Article III hereof satisfies the applicable requirements of the ‘40 Act and Rule
17f-5 thereunder;
(f) The Fund or its investment adviser has determined that the custody arrangements of each
Foreign Depository provide reasonable safeguards against the custody risks associated with
maintaining assets with such Foreign Depository within the meaning of Rule 17f-7 under the ‘40 Act;
(g) It is fully informed of the protections and risks associated with various methods of
transmitting Instructions and Oral Instructions and delivering Certificates to Custodian, shall,
and shall cause each Authorized Person, to safeguard and treat with extreme care any user and
authorization codes, passwords and/or authentication keys, understands that there may be more
secure methods of transmitting or delivering the same than the methods
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selected by the Fund, agrees that the security procedures (if any) to be followed in
connection therewith provide a commercially reasonable degree of protection in light of its
particular needs and circumstances, and acknowledges and agrees that Instructions need not be
reviewed by Custodian, may conclusively be presumed by Custodian to have been given by person(s)
duly authorized, and may be acted upon as given;
(h) It shall manage its borrowings, including, without limitation, any advance or overdraft
(including any day-light overdraft) in the Accounts, so that the aggregate of its total borrowings
for each Series does not exceed the amount such Series is permitted to borrow under the ‘40 Act;
(i) Its transmission or giving of, and Custodian acting upon and in reliance on, Certificates,
Instructions, or Oral Instructions pursuant to this Agreement shall at all times comply with the
‘40 Act;
(j) It shall impose and maintain restrictions on the destinations to which cash may be
disbursed by Instructions to ensure that each disbursement is for a proper purpose; and
(k) It has the right to make the pledge and grant the security interest and security
entitlement to Custodian contained in Section 1 of Article V hereof, free of any right of
redemption or prior claim of any other person or entity, such pledge and such grants shall have a
first priority subject to no setoffs, counterclaims, or other liens or grants prior to or on a
parity therewith, and it shall take such additional steps as Custodian may require to assure such
priority.
3. The Fund hereby covenants that it shall from time to time complete and execute and deliver
to Custodian upon Custodian’s request a Form FR U-1 (or successor form) whenever the Fund borrows
from Custodian any money to be used for the purchase or carrying of margin stock as defined in
Federal Reserve Regulation U.
ARTICLE III
CUSTODY AND RELATED SERVICES
CUSTODY AND RELATED SERVICES
1. (a) Subject to the terms hereof, the Fund hereby authorizes Custodian to hold any
Securities received by it from time to time for the Fund’s account. Custodian shall be entitled to
utilize, subject to subsection (c) of this Section 1, Depositories, Subcustodians, and, subject to
subsection (d) of this Section 1, Foreign Depositories, to the extent possible in connection with
its performance hereunder. Securities and cash held in a Depository or Foreign Depository will be
held subject to the rules, terms and conditions of such entity. Securities and cash held through
Subcustodians shall be held subject to the terms and conditions of Custodian’s agreements with such
Subcustodians. Subcustodians may be authorized to hold Securities in Foreign Depositories in which
such Subcustodians participate. Unless otherwise required by local law or practice or a particular
subcustodian agreement, Securities deposited with a Subcustodian, a Depositary or a Foreign
Depository will be held in a commingled account, in the name of Custodian, holding only Securities
held by Custodian as custodian for its customers. Custodian shall identify on its books and
records the Securities and cash belonging to the Fund, whether held directly or indirectly through
Depositories, Foreign Depositories, or Subcustodians. Custodian shall,
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directly or indirectly through Subcustodians, Depositories, or Foreign Depositories, endeavor,
to the extent feasible, to hold Securities in the country or other jurisdiction in which the
principal trading market for such Securities is located, where such Securities are to be presented
for cancellation and/or payment and/or registration, or where such Securities are acquired.
Custodian at any time may cease utilizing any Subcustodian and/or may replace a Subcustodian with a
different Subcustodian (the “Replacement Subcustodian”). In the event Custodian selects a
Replacement Subcustodian, Custodian shall not utilize such Replacement Subcustodian until after the
Fund’s board or foreign custody manager has determined that utilization of such Replacement
Subcustodian satisfies the requirements of the ‘40 Act and Rule 17f-5 thereunder.
(b) Unless Custodian has received a Certificate or Instructions to the contrary, Custodian
shall hold Securities indirectly through a Subcustodian only if (i) the Securities are not subject
to any right, charge, security interest, lien or claim of any kind in favor of such Subcustodian or
its creditors or operators, including a receiver or trustee in bankruptcy or similar authority,
except for a claim of payment for the safe custody or administration of Securities on behalf of the
Fund by such Subcustodian, and (ii) beneficial ownership of the Securities is freely transferable
without the payment of money or value other than for safe custody or administration.
(c) With respect to each Depository, Custodian (i) shall exercise due care in accordance with
reasonable commercial standards in discharging its duties as a securities intermediary to obtain
and thereafter maintain Securities or financial assets deposited or held in such Depository, and
(ii) will provide, promptly upon request by the Fund, such reports as are available concerning the
internal accounting controls and financial strength of Custodian.
(d) With respect to each Foreign Depository, Custodian shall exercise reasonable care,
prudence, and diligence (i) to provide the Fund with an analysis of the custody risks associated
with maintaining assets with the Foreign Depository, and (ii) to monitor such custody risks on a
continuing basis and promptly notify the Fund of any material change in such risks. The Fund
acknowledges and agrees that such analysis and monitoring shall be made on the basis of, and
limited by, information gathered from Subcustodians or through publicly available information
otherwise obtained by Custodian, and shall not include any evaluation of Country Risks. As used
herein the term “Country Risks” shall mean with respect to any Foreign Depository: (a) the
financial infrastructure of the country in which it is organized, (b) such country’s prevailing
custody and settlement practices, (c) nationalization, expropriation or other governmental actions,
(d) such country’s regulation of the banking or securities industry, (e) currency controls,
restrictions, devaluations or fluctuations, and (f) market conditions which affect the order
execution of securities transactions or affect the value of securities.
2. Custodian shall furnish the Fund with an advice of daily transactions (including a
confirmation of each transfer of Securities) and a monthly summary of all transfers to or from the
Accounts.
3. With respect to all Securities held hereunder, Custodian shall, unless otherwise instructed
to the contrary:
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(a) Receive all income and other payments and advise the Fund as promptly as practicable of
any such amounts due but not paid;
(b) Present for payment and receive the amount paid upon all Securities which may mature and
advise the Fund as promptly as practicable of any such amounts due but not paid;
(c) Forward to the Fund copies of all information or documents that it may actually receive
from an issuer of Securities which, in the opinion of Custodian, are intended for the beneficial
owner of Securities;
(d) Execute, as custodian, any certificates of ownership, affidavits, declarations or other
certificates under any tax laws now or hereafter in effect in connection with the collection of
bond and note coupons;
(e) Hold directly or through a Depository, a Foreign Depository, or a Subcustodian all rights
and similar Securities issued with respect to any Securities credited to an Account hereunder; and
(f) Endorse for collection checks, drafts or other negotiable instruments.
4. (a) Custodian shall notify the Fund of rights or discretionary actions with respect to
Securities held hereunder, and of the date or dates by when such rights must be exercised or such
action must be taken, provided that Custodian has actually received, from the issuer or the
relevant Depository (with respect to Securities issued in the United States) or from the relevant
Subcustodian, Foreign Depository, or a nationally or internationally recognized bond or corporate
action service to which Custodian subscribes, timely notice of such rights or discretionary
corporate action or of the date or dates such rights must be exercised or such action must be
taken. Absent actual receipt of such notice, Custodian shall have no liability for failing to so
notify the Fund.
(b) Whenever Securities (including, but not limited to, warrants, options, tenders, options to
tender or non-mandatory puts or calls) confer discretionary rights on the Fund or provide for
discretionary action or alternative courses of action by the Fund, the Fund shall be responsible
for making any decisions relating thereto and for directing Custodian to act. In order for
Custodian to act, it must receive the Fund’s Certificate or Instructions at Custodian’s offices,
addressed as Custodian may from time to time request, not later than noon (New York time) at least
two (2) Business Days prior to the last scheduled date to act with respect to such Securities (or
such earlier date or time as Custodian may specify to the Fund). Absent Custodian’s timely receipt
of such Certificate or Instructions, Custodian shall not be liable for failure to take any action
relating to or to exercise any rights conferred by such Securities.
5. All voting rights with respect to Securities, however registered, shall be exercised by the
Fund or its designee. Custodian will make available to the Fund proxy voting services upon the
request of, and for the jurisdictions selected by, the Fund in accordance with terms and conditions
to be mutually agreed upon by Custodian and the Fund.
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6. Custodian shall promptly advise the Fund upon Custodian’s actual receipt of notification of
the partial redemption, partial payment or other action affecting less than all Securities of the
relevant class. If Custodian, any Subcustodian, any Depository, or any Foreign Depository holds
any Securities in which the Fund has an interest as part of a fungible mass, Custodian, such
Subcustodian, Depository, or Foreign Depository may select the Securities to participate in such
partial redemption, partial payment or other action in any non-discriminatory manner that it
customarily uses to make such selection.
7. Custodian shall not under any circumstances accept bearer interest coupons which have been
stripped from United States federal, state or local government or agency securities unless
explicitly agreed to by Custodian in writing.
8. The Fund shall be liable for all taxes, assessments, duties and other governmental charges,
including any interest or penalty with respect thereto (“Taxes”), with respect to any cash or
Securities held on behalf of the Fund or any transaction related thereto. The Fund shall indemnify
Custodian and each Subcustodian for the amount of any Tax that Custodian, any such Subcustodian or
any other withholding agent is required under applicable laws (whether by assessment or otherwise)
to pay on behalf of, or in respect of income earned by or payments or distributions made to or for
the account of the Fund (including any payment of Tax required by reason of an earlier failure to
withhold). Custodian shall, or shall instruct the applicable Subcustodian or other withholding
agent to, withhold the amount of any Tax which is required to be withheld under applicable law upon
collection of any dividend, interest or other distribution made with respect to any Security and
any proceeds or income from the sale, loan or other transfer of any Security. In the event that
Custodian or any Subcustodian is required under applicable law to pay any Tax on behalf of the
Fund, Custodian is hereby authorized to withdraw cash from any cash account in the amount required
to pay such Tax and to use such cash, or to remit such cash to the appropriate Subcustodian or
other withholding agent, for the timely payment of such Tax in the manner required by applicable
law. If the aggregate amount of cash in all cash accounts is not sufficient to pay such Tax,
Custodian shall promptly notify the Fund of the additional amount of cash (in the appropriate
currency) required, and the Fund shall directly deposit such additional amount in the appropriate
cash account promptly after receipt of such notice, for use by Custodian as specified herein. In
the event that Custodian reasonably believes that Fund is eligible, pursuant to applicable law or
to the provisions of any tax treaty, for a reduced rate of, or exemption from, any Tax which is
otherwise required to be withheld or paid on behalf of the Fund under any applicable law, Custodian
shall, or shall instruct the applicable Subcustodian or withholding agent to, either withhold or
pay such Tax at such reduced rate or refrain from withholding or paying such Tax, as appropriate;
provided that Custodian shall have received from the Fund all documentary evidence of
residence or other qualification for such reduced rate or exemption required to be received under
such applicable law or treaty. In the event that Custodian reasonably believes that a reduced rate
of, or exemption from, any Tax is obtainable only by means of an application for refund, Custodian
and the applicable Subcustodian shall have no responsibility for the accuracy or validity of any
forms or documentation provided by the Fund to Custodian hereunder. The Fund hereby agrees to
indemnify and hold harmless Custodian and each Subcustodian in respect of any liability arising
from any underwithholding or underpayment of any Tax which results from the inaccuracy or
invalidity of any such forms or other documentation, and such obligation to indemnify shall be a
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continuing obligation of the Fund, its successors and assigns notwithstanding the termination
of this Agreement.
9. (a) For the purpose of settling Securities and foreign exchange transactions, the Fund
shall provide Custodian with sufficient immediately available funds for all transactions by such
time and date as conditions in the relevant market dictate. As used herein, “sufficient immediately
available funds” shall mean either (i) sufficient cash denominated in U.S. dollars to purchase the
necessary foreign currency, or (ii) sufficient applicable foreign currency, to settle the
transaction. Custodian shall provide the Fund with immediately available funds each day which
result from the actual settlement of all sale transactions, based upon advices received by
Custodian from Subcustodians, Depositories, and Foreign Depositories. Such funds shall be in U.S.
dollars or such other currency as the Fund may specify to Custodian.
(b) Any foreign exchange transaction effected by Custodian in connection with this Agreement
may be entered with Custodian or a BNY Affiliate acting as principal or otherwise through customary
banking channels. The Fund may issue a standing Certificate or Instructions with respect to
foreign exchange transactions, but Custodian may establish rules or limitations concerning any
foreign exchange facility made available to the Fund. The Fund shall bear all risks of investing
in Securities or holding cash denominated in a foreign currency.
10. Until such time as Custodian receives a certificate to the contrary with respect to a
particular Security, Custodian may release the identity of the Fund to an issuer which requests
such information pursuant to the Shareholder Communications Act of 1985 for the specific purpose of
direct communications between such issuer and shareholder.
ARTICLE IV
PURCHASE AND SALE OF SECURITIES;
CREDITS TO ACCOUNT
PURCHASE AND SALE OF SECURITIES;
CREDITS TO ACCOUNT
1. Promptly after each purchase or sale of Securities by the Fund, the Fund shall deliver to
Custodian a Certificate or Instructions, or with respect to a purchase or sale of a Security
generally required to be settled on the same day the purchase or sale is made, Oral Instructions
specifying all information Custodian may reasonably request to settle such purchase or sale.
Custodian shall account for all purchases and sales of Securities on the actual settlement date
unless otherwise agreed by Custodian.
2. The Fund understands that when Custodian is instructed to deliver Securities against
payment, delivery of such Securities and receipt of payment therefor may not be completed
simultaneously. Notwithstanding any provision in this Agreement to the contrary, settlements,
payments and deliveries of Securities may be effected by Custodian or any Subcustodian in
accordance with the customary or established securities trading or securities processing practices
and procedures in the jurisdiction in which the transaction occurs, including, without limitation,
delivery to a purchaser or dealer therefor (or agent) against receipt with the expectation of
receiving later payment for such Securities. The Fund assumes full responsibility for all risks,
including, without limitation, credit risks, involved in connection with such deliveries of
Securities.
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3. Custodian may, as a matter of bookkeeping convenience or by separate agreement with the
Fund, credit the Account with the proceeds from the sale, redemption or other disposition of
Securities or interest, dividends or other distributions payable on Securities prior to its actual
receipt of final payment therefor. All such credits shall be conditional until Custodian’s actual
receipt of final payment and may be reversed by Custodian to the extent that final payment is not
received. Payment with respect to a transaction will not be “final” until Custodian shall have
received immediately available funds which under applicable local law, rule and/or practice are
irreversible and not subject to any security interest, levy or other encumbrance, and which are
specifically applicable to such transaction.
ARTICLE V
OVERDRAFTS OR INDEBTEDNESS
OVERDRAFTS OR INDEBTEDNESS
1. If Custodian should in its sole discretion advance funds on behalf of any Series which
results in an overdraft (including, without limitation, any day-light overdraft) because the money
held by Custodian in an Account for such Series shall be insufficient to pay the total amount
payable upon a purchase of Securities specifically allocated to such Series, as set forth in a
Certificate, Instructions or Oral Instructions, or if an overdraft arises in the separate account
of a Series for some other reason, including, without limitation, because of a reversal of a
conditional credit or the purchase of any currency, or if the Fund is for any other reason indebted
to Custodian with respect to a Series, including any indebtedness to The Bank of New York under the
Fund’s Cash Management and Related Services Agreement (except a borrowing for investment or for
temporary or emergency purposes using Securities as collateral pursuant to a separate agreement and
subject to the provisions of Section 2 of this Article), such overdraft or indebtedness shall be
deemed to be a loan made by Custodian to the Fund for such Series payable on demand and shall bear
interest from the date incurred at a rate per annum ordinarily charged by Custodian to its
institutional customers, as such rate may be adjusted from time to time. In addition, the Fund
hereby agrees that Custodian shall to the maximum extent permitted by law have a continuing lien,
security interest, and security entitlement in and to any property, including, without limitation,
any investment property or any financial asset, of such Series at any time held by Custodian for
the benefit of such Series or in which such Series may have an interest which is then in
Custodian’s possession or control or in possession or control of any third party acting in
Custodian’s behalf. The Fund authorizes Custodian, in its sole discretion, at any time to charge
any such overdraft or indebtedness together with interest due thereon against any balance of
account standing to such Series’ credit on Custodian’s books.
2. If the Fund borrows money from any bank (including Custodian if the borrowing is pursuant
to a separate agreement) for investment or for temporary or emergency purposes using Securities
held by Custodian hereunder as collateral for such borrowings, the Fund shall deliver to Custodian
a Certificate specifying with respect to each such borrowing: (a) the Series to which such
borrowing relates; (b) the name of the bank, (c) the amount of the borrowing, (d) the time and
date, if known, on which the loan is to be entered into, (e) the total amount payable to the Fund
on the borrowing date, (f) the Securities to be delivered as collateral for such loan, including
the name of the issuer, the title and the number of shares or the principal amount of any
particular Securities, and (g) a statement specifying whether such loan is for investment purposes
or for temporary or emergency purposes and that such loan is in conformance with the ‘40 Act
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and the Fund’s prospectus. Custodian shall deliver on the borrowing date specified in a
Certificate the specified collateral against payment by the lending bank of the total amount of the
loan payable, provided that the same conforms to the total amount payable as set forth in the
Certificate. Custodian may, at the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights therein given the lending bank by
virtue of any promissory note or loan agreement. Custodian shall deliver such Securities as
additional collateral as may be specified in a Certificate to collateralize further any transaction
described in this Section. The Fund shall cause all Securities released from collateral status to
be returned directly to Custodian, and Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund fails to specify in a Certificate
the Series, the name of the issuer, the title and number of shares or the principal amount of any
particular Securities to be delivered as collateral by Custodian, Custodian shall not be under any
obligation to deliver any Securities.
ARTICLE VI
SALE AND REDEMPTION OF SHARES
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any shares issued by the Fund (“Shares”) it shall deliver to
Custodian a Certificate or Instructions specifying the amount of money and/or Securities to be
received by Custodian for the sale of such Shares and specifically allocated to an Account for such
Series.
2. Upon receipt of such money, Custodian shall credit such money to an Account in the name of
the Series for which such money was received.
3. Except as provided hereinafter, whenever the Fund desires Custodian to make payment out of
the money held by Custodian hereunder in connection with a redemption of any Shares, it shall
furnish to Custodian (a) a resolution of the Fund’s board directing the Fund’s transfer agent to
redeem the Shares, and (b) a Certificate or Instructions specifying the total amount to be paid for
such Shares. Custodian shall make payment of such total amount to the transfer agent specified in
such Certificate or Instructions out of the money held in an Account of the appropriate Series.
ARTICLE VII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. Whenever the Fund shall determine to pay a dividend or distribution on Shares it shall
furnish to Custodian Instructions or a Certificate setting forth with respect to the Series
specified therein the date of the declaration of such dividend or distribution, the total amount
payable, and the payment date.
2. Upon the payment date specified in such Instructions or Certificate, Custodian shall pay
out of the money held for the account of such Series the total amount payable to the dividend agent
of the Fund specified therein.
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ARTICLE VIII
CONCERNING CUSTODIAN
CONCERNING CUSTODIAN
1. (a) Except as otherwise expressly provided herein, Custodian shall not be liable for any
costs, expenses, damages, liabilities or claims, including attorneys’ and accountants’ fees
(collectively, “Losses”), incurred by or asserted against the Fund, except those Losses arising out
of Custodian’s own negligence or willful misconduct. Custodian shall have no liability whatsoever
for the action or inaction of any Depositories or of any Foreign Depositories, except in each case
to the extent such action or inaction is a direct result of the Custodian’s failure to fulfill its
duties hereunder. With respect to any Losses incurred by the Fund as a result of the acts or any
failures to act by any Subcustodian (other than a BNY Affiliate), Custodian shall take appropriate
action to recover such Losses from such Subcustodian; and Custodian’s sole responsibility and
liability to the Fund shall be limited to amounts so received from such Subcustodian (exclusive of
costs and expenses incurred by Custodian). In no event shall Custodian be liable to the Fund or
any third party for special, indirect or consequential damages, or lost profits or loss of
business, arising in connection with this Agreement, nor shall BNY or any Subcustodian be liable:
(i) for acting in accordance with any Certificate or Oral Instructions actually received
by Custodian and reasonably believed by Custodian to be given by an Authorized Person; (ii)
for acting in accordance with Instructions without reviewing the same; (iii) for
conclusively presuming that all Instructions are given only by person(s) duly authorized;
(iv) for conclusively presuming that all disbursements of cash directed by the Fund,
whether by a Certificate, an Oral Instruction, or an Instruction, are in accordance with Section
2(i) of Article II hereof; (v) for holding property in any particular country, including,
but not limited to, Losses resulting from nationalization, expropriation or other governmental
actions; regulation of the banking or securities industry; exchange or currency controls or
restrictions, devaluations or fluctuations; availability of cash or Securities or market conditions
which prevent the transfer of property or execution of Securities transactions or affect the value
of property; (vi) for any Losses due to forces beyond the control of Custodian, including
without limitation strikes, work stoppages, acts of war or terrorism, insurrection, revolution,
nuclear or natural catastrophes or acts of God, or interruptions, loss or malfunctions of
utilities, communications or computer (software and hardware) services; (vii) for the insolvency of
any Subcustodian (other than a BNY Affiliate), any Depository, or, except to the extent such action
or inaction is a direct result of the Custodian’s failure to fulfill its duties hereunder, any
Foreign Depository; or (viii) for any Losses arising from the applicability of any law or
regulation now or hereafter in effect, or from the occurrence of any event, including, without
limitation, implementation or adoption of any rules or procedures of a Foreign Depository, which
may affect, limit, prevent or impose costs or burdens on, the transferability, convertibility, or
availability of any currency or Composite Currency Unit in any country or on the transfer of any
Securities, and in no event shall Custodian be obligated to substitute another currency for a
currency (including a currency that is a component of a Composite Currency Unit) whose
transferability, convertibility or availability has been affected, limited, or prevented by such
law, regulation or event, and to the extent that any such law, regulation or event imposes a cost
or charge upon Custodian in relation to the transferability, convertibility, or availability of any
cash currency or Composite Currency Unit, such cost or charge shall be for the account of the Fund,
and Custodian may treat any account
-11-
denominated in an affected currency as a group of separate accounts denominated in the
relevant component currencies.
(b) Custodian may enter into subcontracts, agreements and understandings with any BNY
Affiliate, whenever and on such terms and conditions as it deems necessary or appropriate to
perform its services hereunder. No such subcontract, agreement or understanding shall discharge
Custodian from its obligations hereunder.
(c) The Fund agrees to indemnify Custodian and hold Custodian harmless from and against any
and all Losses sustained or incurred by or asserted against Custodian by reason of or as a result
of any action or inaction, or arising out of Custodian’s performance hereunder, including
reasonable fees and expenses of counsel incurred by Custodian in a successful defense of claims by
the Fund; provided however, that the Fund shall not indemnify Custodian for those Losses arising
out of Custodian’s own negligence or willful misconduct. This indemnity shall be a continuing
obligation of the Fund, its successors and assigns, notwithstanding the termination of this
Agreement.
2. Without limiting the generality of the foregoing, Custodian shall be under no obligation to
inquire into, and shall not be liable for:
(a) Any Losses incurred by the Fund or any other person as a result of the receipt or
acceptance of fraudulent, forged or invalid Securities, or Securities which are otherwise not
freely transferable or deliverable without encumbrance in any relevant market;
(b) The validity of the issue of any Securities purchased, sold, or written by or for the
Fund, the legality of the purchase, sale or writing thereof, or the propriety of the amount paid or
received therefor;
(c) The legality of the sale or redemption of any Shares, or the propriety of the amount to be
received or paid therefor;
(d) The legality of the declaration or payment of any dividend or distribution by the Fund;
(e) The legality of any borrowing by the Fund;
(f) The legality of any loan of portfolio Securities, nor shall Custodian be under any duty or
obligation to see to it that any cash or collateral delivered to it by a broker, dealer or
financial institution or held by it at any time as a result of such loan of portfolio Securities is
adequate security for the Fund against any loss it might sustain as a result of such loan, which
duty or obligation shall be the sole responsibility of the Fund. In addition, Custodian shall be
under no duty or obligation to see that any broker, dealer or financial institution to which
portfolio Securities of the Fund are lent makes payment to it of any dividends or interest which
are payable to or for the account of the Fund during the period of such loan or at the termination
of such loan, provided, however that Custodian shall promptly notify the Fund in the event that
such dividends or interest are not paid and received when due;
-12-
(g) The sufficiency or value of any amounts of money and/or Securities held in any Special
Account in connection with transactions by the Fund; whether any broker, dealer, futures commission
merchant or clearing member makes payment to the Fund of any variation margin payment or similar
payment which the Fund may be entitled to receive from such broker, dealer, futures commission
merchant or clearing member, or whether any payment received by Custodian from any broker, dealer,
futures commission merchant or clearing member is the amount the Fund is entitled to receive, or to
notify the Fund of Custodian’s receipt or non-receipt of any such payment; or
(h) Whether any Securities at any time delivered to, or held by it or by any Subcustodian, for
the account of the Fund and specifically allocated to a Series are such as properly may be held by
the Fund or such Series under the provisions of its then current prospectus and statement of
additional information, or to ascertain whether any transactions by the Fund, whether or not
involving Custodian, are such transactions as may properly be engaged in by the Fund.
3. Custodian may, with respect to questions of law specifically regarding an Account, obtain
the advice of counsel and shall be fully protected with respect to anything done or omitted by it
in good faith in conformity with such advice.
4. Custodian shall be under no obligation to take action to collect any amount payable on
Securities in default, or if payment is refused after due demand and presentment.
5. Custodian shall have no duty or responsibility to inquire into, make recommendations,
supervise, or determine the suitability of any transactions affecting any Account.
6. The Fund shall pay to Custodian the fees and charges as may be specifically agreed upon
from time to time and such other fees and charges at Custodian’s standard rates for such services
as may be applicable. The Fund shall reimburse Custodian for all costs associated with the
conversion of the Fund’s Securities hereunder and the transfer of Securities and records kept in
connection with this Agreement. The Fund shall also reimburse Custodian for out-of-pocket expenses
which are a normal incident of the services provided hereunder.
7. Custodian has the right to debit any cash account for any amount payable by the Fund in
connection with any and all obligations of the Fund to Custodian. In addition to the rights of
Custodian under applicable law and other agreements, at any time when the Fund shall not have
honored any of its obligations to Custodian, Custodian shall have the right without notice to the
Fund to retain or set-off, against such obligations of the Fund, any Securities or cash Custodian
or a BNY Affiliate may directly or indirectly hold for the account of the Fund, and any obligations
(whether matured or unmatured) that Custodian or a BNY Affiliate may have to the Fund in any
currency or Composite Currency Unit. Any such asset of, or obligation to, the Fund may be
transferred to Custodian and any BNY Affiliate in order to effect the above rights.
8. The Fund agrees to forward to Custodian a Certificate or Instructions confirming Oral
Instructions by the close of business of the same day that such Oral Instructions are given to
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Custodian. The Fund agrees that the fact that such confirming Certificate or Instructions are
not received or that a contrary Certificate or contrary Instructions are received by Custodian
shall in no way affect the validity or enforceability of transactions authorized by such Oral
Instructions and effected by Custodian. If the Fund elects to transmit Instructions through an
on-line communications system offered by Custodian, the Fund’s use thereof shall be subject to the
Terms and Conditions attached as Appendix I hereto. If Custodian receives Instructions which
appear on their face to have been transmitted by an Authorized Person via (i) computer facsimile,
email, the Internet or other insecure electronic method, or (ii) secure electronic transmission
containing applicable authorization codes, passwords and/or authentication keys, the Fund
understands and agrees that Custodian cannot determine the identity of the actual sender of such
Instructions and that Custodian shall conclusively presume that such Written Instructions have been
sent by an Authorized Person, and the Fund shall be responsible for ensuring that only Authorized
Persons transmit such Instructions to Custodian. If the Fund elects (with Custodian’s prior
consent) to transmit Instructions through an on-line communications service owned or operated by a
third party, the Fund agrees that Custodian shall not be responsible or liable for the reliability
or availability of any such service.
9. The books and records pertaining to the Fund which are in possession of Custodian shall be
the property of the Fund. Such books and records shall be prepared and maintained as required by
the ‘40 Act and the rules thereunder. The Fund, or its authorized representatives, shall have
access to such books and records during Custodian’s normal business hours. Upon the reasonable
request of the Fund, copies of any such books and records shall be provided by Custodian to the
Fund or its authorized representative. Upon the reasonable request of the Fund, Custodian shall
provide in hard copy or on computer disc any records included in any such delivery which are
maintained by Custodian on a computer disc, or are similarly maintained.
10. It is understood that Custodian is authorized to supply any information regarding the
Accounts which is required by any law, regulation or rule now or hereafter in effect. The
Custodian shall provide the Fund with any report obtained by the Custodian on the system of
internal accounting control of a Depository, and with such reports on its own system of internal
accounting control as the Fund may reasonably request from time to time.
11. Custodian shall have no duties or responsibilities whatsoever except such duties and
responsibilities as are specifically set forth in this Agreement, and no covenant or obligation
shall be implied against Custodian in connection with this Agreement.
ARTICLE IX
TERMINATION
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving to the other party a
notice in writing specifying the date of such termination, which shall be not less than ninety (90)
days after the date of giving of such notice. In the event such notice is given by the Fund, it
shall be accompanied by a copy of a resolution of the board of the Fund, certified by the Secretary
or any Assistant Secretary, electing to terminate this Agreement and designating a successor
custodian or custodians, each of which shall be a bank or trust company eligible to serve as a
custodian of a unit investment trust under the Investment Company Act of 1940, as
-14-
amended. In the event such notice is given by Custodian, the Fund shall, on or before the
termination date, deliver to Custodian a copy of a resolution of the board of the Fund, certified
by the Secretary or any Assistant Secretary, designating a successor custodian or custodians. In
the absence of such designation by the Fund, Custodian may designate a successor custodian which
shall be a bank or trust company eligible to serve as custodian for a unit investment trust under
the Investment Company Act of 1940, as amended. Upon the date set forth in such notice this
Agreement shall terminate, and Custodian shall upon receipt of a notice of acceptance by the
successor custodian on that date deliver directly to the successor custodian all Securities and
money then owned by the Fund and held by it as Custodian, after deducting all fees, expenses and
other amounts for the payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or Custodian in accordance with the
preceding Section, the Fund shall upon the date specified in the notice of termination of this
Agreement and upon the delivery by Custodian of all Securities (other than Securities which cannot
be delivered to the Fund) and money then owned by the Fund be deemed to be its own custodian and
Custodian shall thereby be relieved of all duties and responsibilities pursuant to this Agreement,
other than the duty with respect to Securities which cannot be delivered to the Fund to hold such
Securities hereunder in accordance with this Agreement.
ARTICLE X
MISCELLANEOUS
MISCELLANEOUS
1. The Fund agrees to furnish to Custodian a new Certificate of Authorized Persons in the
event of any change in the then present Authorized Persons. Until such new Certificate is
received, Custodian shall be fully protected in acting upon Certificates or Oral Instructions of
such present Authorized Persons.
2. Any notice or other instrument in writing, authorized or required by this Agreement to be
given to Custodian, shall be sufficiently given if addressed to Custodian and received by it at its
offices at 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as Custodian may
from time to time designate in writing.
3. Any notice or other instrument in writing, authorized or required by this Agreement to be
given to the Fund shall be sufficiently given if addressed to the Fund and received by it at its
offices at ***, or at such other place as the Fund may from time to time designate in writing.
4. Each and every right granted to either party hereunder or under any other document
delivered hereunder or in connection herewith, or allowed it by law or equity, shall be cumulative
and may be exercised from time to time. No failure on the part of either party to exercise, and no
delay in exercising, any right will operate as a waiver thereof, nor will any single or partial
exercise by either party of any right preclude any other or future exercise thereof or the exercise
of any other right.
5. In case any provision in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any exclusive jurisdiction, the validity, legality and enforceability of the
-15-
remaining provisions shall not in any way be affected thereby. This Agreement may not be
amended or modified in any manner except by a written agreement executed by both parties, except
that any amendment to the Schedule I hereto need be signed only by the Fund and any amendment to
Appendix I hereto need be signed only by Custodian. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by either party without the written consent of the
other.
6. This Agreement shall be construed in accordance with the substantive laws of the State of
New York, without regard to conflicts of laws principles thereof. The Fund and Custodian hereby
consent to the jurisdiction of a state or federal court situated in New York City, New York in
connection with any dispute arising hereunder. The Fund hereby irrevocably waives, to the fullest
extent permitted by applicable law, any objection which it may now or hereafter have to the laying
of venue of any such proceeding brought in such a court and any claim that such proceeding brought
in such a court has been brought in an inconvenient forum. The Fund and Custodian each hereby
irrevocably waives any and all rights to trial by jury in any legal proceeding arising out of or
relating to this Agreement.
7. The Fund hereby acknowledges that Custodian is subject to federal laws, including its
Customer Identification Program (CIP) requirements under the USA PATRIOT Act and its implementing
regulations, pursuant to which Custodian must obtain, verify and record information that allows
Custodian to identify the Fund. Accordingly, prior to opening an Account hereunder Custodian will
ask the Fund to provide certain information including, but not limited to, the Fund’s name,
physical address, tax identification number and other information that will help Custodian to
identify and verify the Fund’s identity such as organizational documents, certificate of good
standing, license to do business, or other pertinent identifying information. The Fund agrees that
Custodian cannot open an Account hereunder unless and until Custodian verifies the Fund’s identity
in accordance with its CIP.
8. This Agreement may be executed in any number of counterparts, each of which shall be deemed
to be an original, but such counterparts shall, together, constitute only one instrument.
-16-
IN WITNESS WHEREOF, the Fund and Custodian have caused this Agreement to be executed by their
respective officers, thereunto duly authorized, as of the day and year first above written.
| * | ||
| By: | ||
| Title: | ||
| Tax Identification No: | ||
| THE BANK OF NEW YORK | ||
| By: | ||
| Title: |
SCHEDULE I
CERTIFICATE OF AUTHORIZED PERSONS
(The Fund — Oral and Written Instructions)
CERTIFICATE OF AUTHORIZED PERSONS
(The Fund — Oral and Written Instructions)
The undersigned hereby certifies that he/she is the duly elected and acting
of * (the “Fund”), and further certifies that the following officers or
employees of the Fund have been duly authorized in conformity with the Fund’s Declaration of Trust
and By-Laws to deliver Certificates and Oral Instructions to The Bank of New York (“Custodian”)
pursuant to the Custody Agreement between the Fund and Custodian dated , and that
the signatures appearing opposite their names are true and correct:
Name
|
Title | Signature | ||
Name
|
Title | Signature | ||
Name
|
Title | Signature | ||
Name
|
Title | Signature | ||
Name
|
Title | Signature | ||
Name
|
Title | Signature | ||
Name
|
Title | Signature |
This certificate supersedes any certificate of Authorized Persons you may currently have on
file.
[seal]
|
By: | |||
| Title: | ||||
Date: |
SCHEDULE II
SERIES
APPENDIX I
THE BANK OF NEW YORK
ON-LINE COMMUNICATIONS SYSTEM (THE “SYSTEM”)
TERMS AND CONDITIONS
1. License; Use. Upon delivery to an Authorized Person or a person reasonably
believed by Custodian to be an Authorized Person, Fund of software enabling the Fund to obtain
access to the System (the “Software”), Custodian grants to the Fund a personal, nontransferable and
nonexclusive license to use the Software solely for the purpose of transmitting Written
Instructions, receiving reports, making inquiries or otherwise communicating with Custodian in
connection with the Account(s). The Fund shall use the Software solely for its own internal and
proper business purposes and not in the operation of a service bureau. Except as set forth herein,
no license or right of any kind is granted to the Fund with respect to the Software. The Fund
acknowledges that Custodian and its suppliers retain and have title and exclusive proprietary
rights to the Software, including any trade secrets or other ideas, concepts, know-how,
methodologies, or information incorporated therein and the exclusive rights to any copyrights,
trademarks and patents (including registrations and applications for registration of either), or
other statutory or legal protections available in respect thereof. The Fund further acknowledges
that all or a part of the Software may be copyrighted or trademarked (or a registration or claim
made therefor) by Custodian or its suppliers. The Fund shall not take any action with respect to
the Software inconsistent with the foregoing acknowledgments, nor shall the Fund attempt to
decompile, reverse engineer or modify the Software. The Fund may not copy, sell, lease or provide,
directly or indirectly, any of the Software or any portion thereof to any other person or entity
without Custodian’s prior written consent. The Fund may not remove any statutory copyright notice
or other notice included in the Software or on any media containing the Software. The Fund shall
reproduce any such notice on any reproduction of the Software and shall add any statutory copyright
notice or other notice to the Software or media upon Custodian’s request.
2. Equipment. The Fund shall obtain and maintain at its own cost and expense all
equipment and services, including but not limited to communications services, necessary for it to
utilize the Software and obtain access to the System, and Custodian shall not be responsible for
the reliability or availability of any such equipment or services.
3. Proprietary Information. The Software, any data base and any proprietary data,
processes, information and documentation made available to the Fund (other than which are or become
part of the public domain or are legally required to be made available to the public)
(collectively, the “Information”), are the exclusive and confidential property of Custodian or its
suppliers. The Fund shall keep the Information
confidential by using the same care and discretion that the Fund uses with respect to its own
confidential property and trade secrets, but not less than reasonable care. Upon termination of
the Agreement or the Software license granted herein for any reason, the Fund shall return to
Custodian any and all copies of the Information which are in its possession or under its control.
4. Modifications. Custodian reserves the right to modify the Software from time to
time and the Fund shall install new releases of the Software as Custodian may direct. The Fund
agrees not to modify or attempt to modify the Software without Custodian’s prior written consent.
The Fund acknowledges that any modifications to the Software, whether by the Fund or Custodian and
whether with or without Custodian’s consent, shall become the property of Custodian.
5. NO REPRESENTATIONS OR WARRANTIES. CUSTODIAN AND ITS MANUFACTURERS AND SUPPLIERS
MAKE NO WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE SOFTWARE, SERVICES OR ANY DATABASE,
EXPRESS OR IMPLIED, IN FACT OR IN LAW, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE. THE FUND ACKNOWLEDGES THAT THE SOFTWARE, SERVICES AND ANY
DATABASE ARE PROVIDED “AS IS.” IN NO EVENT SHALL CUSTODIAN OR ANY SUPPLIER BE LIABLE FOR ANY
DAMAGES, WHETHER DIRECT, INDIRECT SPECIAL, OR CONSEQUENTIAL, WHICH THE FUND MAY INCUR IN CONNECTION
WITH THE SOFTWARE, SERVICES OR ANY DATABASE, EVEN IF CUSTODIAN OR SUCH SUPPLIER HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL CUSTODIAN OR ANY SUPPLIER BE LIABLE FOR ACTS OF
GOD, MACHINE OR COMPUTER BREAKDOWN OR MALFUNCTION, INTERRUPTION OR MALFUNCTION OF COMMUNICATION
FACILITIES, LABOR DIFFICULTIES OR ANY OTHER SIMILAR OR DISSIMILAR CAUSE BEYOND THEIR REASONABLE
CONTROL.
6. Security; Reliance; Unauthorized Use. The Fund will cause all persons utilizing
the Software and System to treat all applicable user and authorization codes, passwords and
authentication keys with extreme care, and it will establish internal control and safekeeping
procedures to restrict the availability of the same to persons duly authorized to give
Instructions. Custodian is hereby irrevocably authorized to act in accordance with and rely on
Instructions received by it through the System. The Fund acknowledges that it is its sole
responsibility to assure that only persons duly authorized use the System and that Custodian shall
not be responsible nor liable for any unauthorized use thereof.
7. System Acknowledgments. Custodian shall acknowledge through the System its receipt
of each transmission communicated through the System, and in the absence of such acknowledgment
Custodian shall not be liable for any failure to act in accordance with such transmission and the
Fund may not claim that such transmission was received by Custodian.
8. EXPORT RESTRICTIONS. EXPORT OF THE SOFTWARE IS PROHIBITED BY UNITED STATES LAW.
THE FUND MAY NOT UNDER ANY CIRCUMSTANCES RESELL, DIVERT, TRANSFER, TRANSSHIP OR OTHERWISE DISPOSE
OF THE SOFTWARE (IN ANY FORM) IN OR TO ANY OTHER COUNTRY. IF CUSTODIAN DELIVERED THE SOFTWARE TO
THE FUND OUTSIDE OF THE UNITED STATES, THE SOFTWARE WAS EXPORTED FROM THE UNITED STATES IN
ACCORDANCE WITH THE EXPORTER ADMINISTRATION REGULATIONS. DIVERSION CONTRARY TO U.S. LAW IS
PROHIBITED. The Fund hereby authorizes Custodian to report its name and address to government
agencies to which Custodian is required to provide such information by law.
9. ENCRYPTION. The Fund acknowledges and agrees that encryption may not be available
for every communication through the System, or for all data. The Fund agrees that Custodian may
deactivate any encryption features at any time, without notice or liability to the Fund, for the
purpose of maintaining, repairing or troubleshooting the System or the Software.
