Exhibit (g)(6)
AMENDMENT TO THE CUSTODIAN AGREEMENT
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THIS AMENDMENT, dated as of July 2, 2001 between XXXXXXX TARGET EQUITY
FUND (the "Fund"), a Massachusetts Business Trust organized as an open-end
management investment company under the laws of the Massachusetts and registered
with the Commission under the 1940 Act, and XXXXX BROTHERS XXXXXXXX & CO., a
limited partnership formed under the laws of the State of New York ("BBH&Co." or
the "Custodian"), amends the Custodian Agreement between the parties dated
December 5, 2000 (the "Custodian Agreement").
W I T N E S S E T H:
WHEREAS, the Fund has employed BBH&Co. to act as custodian for the Fund
and to provide related services, all as provided in the Custodian Agreement;
WHEREAS, the Securities and Exchange Commission has promulgated Rules
17f-5 and 17f-7 under the Investment Company Act of 1940 which establish rules
regarding the Fund's investments held outside the United States by subcustodians
or through Securities Depositories; and
WHEREAS, BBH&Co. is willing to provide services in connection with such
Rules in accordance with the terms of this Amendment to the Custodian Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Fund and BBH&Co. hereby agree, as follows:
1. That Article II - Powers and Duties of Custodian shall be amended by the
inclusion of the following subsection:
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2.26 Deposit of Fund Assets in Foreign Securities Depositories. Unless
instructed otherwise by the Fund, the Custodian may deposit and/or
maintain non-U.S. investments of the Fund in any non-U.S. Securities
Depository provided such Securities Depository either meets the
requirements of an "eligible securities depository" under Rule 17f-7
promulgated under the 1940 Act, or any successor rule or regulation
("Rule 17f-7") or by order of the Securities and Exchange Commission is
exempted therefrom. Prior to the time that securities are placed with
such depository the Custodian shall have prepared an analysis of the
custody risks associated with maintaining assets with the Securities
Depository and shall have established a system to monitor such risks on
a continuing basis in accordance with Sub-section 2.26.1 of this
Section. An instruction to open an account in a given country shall
comprise authorization for the Custodian to hold assets in such country
in accordance with the terms of this Agreement. The Custodian shall not
be required to make independent inquiry as to the authorization of the
Fund to invest in such country.
2.26.1 Monitoring and Risk Assessment of Securities
Depositories. Prior to the placement of any assets of the Fund
with a Securities Depository, the Custodian: (a) shall provide
to the Fund, its investment adviser or its authorized
representative an assessment of the custody risks associated
with maintaining assets within such Securities Depository in
accordance with Rule 17f-7(a)(1)(i)(A), and (b) shall have
established a system to monitor the custody risks associated
with maintaining assets with such Securities Depository on a
continuing basis and to promptly notify the Fund or its
investment adviser of any material changes in such risk in
accordance with Rule 17f-7(a)(1) (i)(B). In performing its
duties under this subsection, the Custodian shall use
reasonable care, prudence and diligence and may rely on such
reasonable sources of information as may be available
including but not limited to: (i) published ratings; (ii)
information supplied by a Subcustodian that is a participant
in such Securities Depository; (iii) industry surveys or
publications; (iv) information supplied by the depository
itself, by its auditors (internal or external) or by the
relevant Foreign Financial Regulatory Authority. It is
acknowledged that information procured through some or all of
these sources may not be independently verifiable by the
Custodian and that direct access to Securities Depositories is
limited under most circumstances. Accordingly, the Custodian
shall not be responsible for errors or omissions in its duties
hereunder provided that it has performed its monitoring and
assessment duties in accordance with the standard of care set
forth above in this sub-section 2.26.1. The risk assessment
shall be
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provided to the Fund or its Investment Adviser or its
authorized representative by such means as the Custodian shall
reasonably establish. The form and substance of the risk
assessment shall be agreed upon by the parties. Advice of
material change in such assessment may be provided by the
Custodian in the manner established as customary between the
Fund and the Custodian for transmission of material market
information.
2. That Article IV - Subcustodians shall be amended by the inclusion of the
following at the end of Sub-section 4.2.(a) Foreign Subcustodians and Interim
Subcustodians.:
(a)(1) Delegation of Directors/Trustees Review of
Subcustodians. From time to time, the Custodian may agree to
perform certain reviews of Subcustodians and of Subcustodian
Contracts as delegate of the Fund's Directors/Trustees. In
such event, the Custodian's duties and obligations with
respect to this delegated review will be performed in
accordance with the terms of the attached 17f-5 Delegation
Schedule to this Agreement.
3. In addition, that the definitions under the Custodian Agreement shall be
amended with the addition modification of the following:
Foreign Financial Regulatory Authority shall have the meaning
given by Section 2(a)(50) of the 1940 Act.
Securities Depository shall mean a central or book entry
system or agency established under Applicable Law for purposes
of recording the ownership and/or entitlement to investment
securities for a given market that, if a foreign Securities
Depository, meets the definitional requirements of Rule 17f-7
under the 1940 Act.
All defined terms used herein shall have the meaning given to such terms in
the Custodian Agreement as amended by this Amendment.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be
duly executed as of the date first above written.
XXXXXXX TARGET EQUITY FUND
By: /s/Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Vice President
By: XXXXX BROTHERS XXXXXXXX & CO.
By: /s/Xxxxx X. Xxxxxxxxxx
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Xxxxx X. Xxxxxxxxxx
Partner
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17f-5 DELEGATION SCHEDULE
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By its execution of this Delegation Schedule, XXXXXXX TARGET EQUITY
FUND, (the "Fund"), a management investment company registered with the
Securities and Exchange Commission (the "Commission") under the Investment
Company Act of 1940, as amended, (the "1940 Act"), acting through its
Directors/Trustees or its duly appointed representative, hereby appoints XXXXX
BROTHERS XXXXXXXX & CO., a New York limited partnership with an office in
Boston, Massachusetts (the "Foreign Custody Manager"), as its delegate to
perform certain functions with respect to the custody of Fund's Foreign Assets
outside the United States.
1. Maintenance of Fund's Foreign Assets Abroad. The Fund, acting through its
Directors/Trustees or its duly authorized representative, hereby instructs the
Foreign Custody Manager pursuant to the terms of the Custodian Agreement to
place and maintain the Fund's Foreign Assets within the countries listed on the
attached Foreign Custody Network. Such instruction shall constitute an
instruction under the terms of the Custodian Agreement. Countries may be added
to the Foreign Custody Network by written instruction of the Fund that is
accepted and agreed to in writing by the Custodian. With respect to amendments
to the Foreign Custody Network, the Fund acknowledges that - (a) the Foreign
Custody Manager shall perform services hereunder only with respect to the
countries where it provides custodial services to the Fund under the Custodian
Agreement; (b) depending on conditions in the particular country, advance notice
may be required before the Foreign Custody Manager shall be able to perform its
duties hereunder in or with respect to such country (such advance notice to be
reasonable in light of the specific facts and circumstances attendant to
performance of duties in such country); and (c) nothing in this Delegation
Schedule shall require the Foreign Custody Manager to provide delegated or
custodial services in any country not listed on the Foreign Custody Network
until such amended Foreign Custody Network has been accepted by the Foreign
Custody Manager in accordance herewith.
2. Delegation. Pursuant to the provisions of Rule 17f-5 under the 1940 Act as
amended, the Directors/Trustees hereby delegates to the Foreign Custody Manager,
and the Foreign Custody Manager hereby accepts such delegation and agrees to
perform, only those duties set forth in this Delegation Schedule concerning the
safekeeping of the Fund's Foreign Assets in each of the countries set forth in
Attachment A as amended from time to time in accordance with the terms of
Section 1 of this Delegation Schedule. The Foreign Custody Manager is hereby
authorized to take such actions on behalf of or in the name of the Fund as are
reasonably required to discharge its duties under this Delegation
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Schedule, including, without limitation, to cause the Fund's Foreign Assets to
be placed with a particular Eligible Foreign Custodian in accordance herewith.
3. Selection of Eligible Foreign Custodian and Contract Administration. The
Foreign Custody Manager shall perform the following duties with respect to the
selection of Eligible Foreign Custodians and administration of certain contracts
governing the Fund's foreign custodial arrangements:
(a) Selection of Eligible Foreign Custodian. The Foreign Custody
Manager shall place and maintain the Fund's Foreign Assets with an Eligible
Foreign Custodian; provided that the Foreign Custody Manager shall have
determined that the Fund's Foreign Assets will be subject to reasonable care
based on the standards applicable to custodians in the relevant market after
considering all factors relevant to the safekeeping of such assets including
without limitation:
(i) The Eligible Foreign Custodian's practices, procedures, and
internal controls, including, but not limited to, the physical
protections available for certificated securities (if applicable), the
controls and procedures for dealing with any Securities Depository, the
method of keeping custodial records, and the security and data
protection practices;
(ii) Whether the Eligible Foreign Custodian has the requisite financial
strength to provide reasonable care for the Fund's Foreign Assets,
including, but not limited to, the adequacy of the Eligible Foreign
Custodian's capital with regard to protecting the Fund's assets against
the risk of loss due to such Eligible Foreign Custodian's insolvency;
(iii) The Eligible Foreign Custodian's general reputation and standing;
and
(iv) Whether the Fund will have jurisdiction over and be able to
enforce judgments against the Eligible Foreign Custodian, such as by
virtue of the existence of any offices of such Eligible Foreign
Custodian in the United States or such Eligible Foreign Custodian's
appointment of an agent for service of process in the United States or
consent to jurisdiction in the United States.
The Foreign Custody Manager shall be required to make the foregoing
determination to the best of its knowledge and belief based only on information
reasonably available to it in accordance with the standard of care set forth in
Section 8 of this Schedule.
(b) Contract Administration. The Foreign Custody Manager shall cause
that the foreign custody arrangements with an Eligible Foreign Custodian shall
be governed by a written contract that the
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Foreign Custody Manager has determined will provide reasonable care for Fund
assets based on the standards applicable to custodians in the relevant market
after considering all factors relevant to the safekeeping of such assets,
including, without limitation, those set forth in section 3(a) of this
Delegation Schedule. Each such contract shall, except as set forth in the last
paragraph of this subsection (b), include provisions that provide:
(i) For indemnification or insurance arrangements (or any
combination of the foregoing) such that the Fund will be adequately
protected against the risk of loss of assets held in accordance with
such contract;
(ii) That the Fund's Foreign Assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of
the Eligible Foreign Custodian or its creditors, except a claim of
payment for their safe custody or administration or, in the case of
cash deposits, liens or rights in favor of creditors of such Custodian
arising under bankruptcy, insolvency or similar laws;
(iii) That beneficial ownership of the Fund's Foreign Assets
will be freely transferable without the payment of money or value other
than for safe custody or administration;
(iv) That adequate records will be maintained identifying the
Fund's Foreign Assets as belonging to the Fund or as being held by a
third party for the benefit of the Fund;
(v) That the Fund's independent public accountants will be
given access to those records described in (iv) above or confirmation
of the contents of such records; and
(vi) That the Foreign Custody Manager on behalf of the Fund
will receive sufficient and timely periodic reports with respect to the
safekeeping of the Fund's Foreign Assets, including, but not limited
to, notification of any transfer to or from the Fund's account or a
third party account containing the Fund's Foreign Assets.
Such contract may contain, in lieu of any or all of the provisions
specified in this Section 3 (b), such other provisions that the Foreign
Custody Manager determines will provide, in their entirety, the same or
a greater level of care and protection for the Fund's Foreign Assets as
the specified provisions, in their entirety.
(c) Limitation to Delegated Selection. Notwithstanding anything in this
Delegation Schedule to the contrary, the duties under this Section 3 shall apply
only to Eligible Foreign Custodians selected by the Foreign Custody Manager and
shall not apply to Securities Depositories or to any Eligible
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Foreign Custodian that the Foreign Custody Manager is directed to use pursuant
to Section 7.
4. Monitoring. The Foreign Custody Manager shall establish a system to monitor
at reasonable intervals , (i) the appropriateness of maintaining the Fund's
Foreign Assets with each Eligible Foreign Custodian that has been selected by
the Foreign Custody Manager pursuant to Section 3 of this Delegation Schedule;
and (ii) the performance of the contract governing custody arrangements
established by the Foreign Custody Manager with each Eligible Foreign Custodian.
The Foreign Custody Manager shall monitor the continuing appropriateness of
placement of the Fund's Foreign Assets in accordance with the criteria
established under Section 3(a) of this Delegation Schedule and other relevant
criteria. The Foreign Custody Manager shall monitor the continuing
appropriateness of the contract governing the Fund's arrangements in accordance
with the criteria established under Section 3(b) of this Delegation Schedule and
other relevant criteria
5. Reporting. At least annually and more frequently as the Directors/Trustees
deems reasonable and appropriate based on the circumstances, the Foreign Custody
Manager shall provide to the Directors/Trustees written reports specifying
placement of the Fund's Foreign Assets with each Eligible Foreign Custodian
selected by the Foreign Custody Manager pursuant to Section 3 of this Delegation
Schedule and shall promptly report to the Directors/Trustees as to any material
changes to such foreign custody arrangements. The Foreign Custody Manager will
prepare such a report with respect to any Eligible Foreign Custodian that the
Foreign Custody Manager has been instructed to use pursuant to Section 7 only to
the extent specifically agreed with respect to the particular situation.
6. Withdrawal of Fund's Foreign Assets. If the Foreign Custody Manager
determines that an arrangement with a specific Eligible Foreign Custodian
selected by the Foreign Custody Manager under Section 3 of this Delegation
Schedule no longer meets the requirements of said Section, the Foreign Custody
Manager shall promptly notify the Fund of such fact and shall withdraw the
Fund's Foreign Assets from the non-complying arrangement as soon as reasonably
practicable; provided, however, that if in the reasonable judgment of the
Foreign Custody Manager, such withdrawal would require liquidation of any of the
Fund's Foreign Assets or would materially impair the liquidity, value or other
investment characteristics of the Fund's Foreign Assets, it shall be the duty of
the Foreign Custody Manager to provide information regarding the particular
circumstances and to act only in accordance with Proper Instructions of the Fund
or its Investment Adviser with respect to such liquidation or other withdrawal.
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7. Direction as to Eligible Foreign Custodian. Notwithstanding this Delegation
Schedule, the Fund, acting through its Directors/Trustees, its Investment
Adviser or its other authorized representative, may direct the Foreign Custody
Manager to place and maintain the Fund's Foreign Assets with a particular
Eligible Foreign Custodian, including without limitation with respect to
investment in countries as to which the Custodian will not provide delegation
services. In such event, the Foreign Custody Manager shall be entitled to rely
on any such instruction as a Proper Instruction under the terms of the Custodian
Agreement and shall have no duties under this Delegation Schedule with respect
to such arrangement save those that it may undertake specifically in writing
with respect to each particular instance.
8. Standard of Care. In carrying out its duties under this Delegation Schedule,
the Foreign Custody Manager agrees to exercise reasonable care, prudence and
diligence such as a person having responsibility for the safekeeping of the
Fund's Foreign Assets would exercise.
9. Representations.The Foreign Custody Manager hereby represents and warrants
that it is a U.S. Bank and that this Delegation Schedule has been duly
authorized, executed and delivered by the Foreign Custody Manager and is a
legal, valid and binding agreement of the Foreign Custody Manager.
The Fund hereby represents and warrants that its Directors/Trustees has
determined that it is reasonable to rely on the Foreign Custody Manager to
perform the delegated responsibilities provided for herein and that this
Delegation Schedule has been duly authorized, executed and delivered by the Fund
and is a legal, valid and binding agreement of the Fund.
10. Effectiveness; termination. This Delegation Schedule shall be effective as
of the date on which this Delegation Schedule shall have been accepted by the
Foreign Custody Manager, as indicated by the date set forth below the Foreign
Custody Manager's signature. This Delegation Schedule may be terminated at any
time, without penalty, by written notice from the terminating party to the
non-terminating party. Such termination shall be effective on the 30th day
following the date on which the non-terminating party shall receive the
foregoing notice. The foregoing to the contrary notwithstanding, this Delegation
Schedule shall be deemed to have been terminated concurrently with the
termination of the Custodian Agreement.
11. Notices.Notices and other communications under this Delegation Schedule are
to be made in accordance with the arrangements designated for such purpose under
the Custodian Agreement unless
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otherwise indicated in a writing referencing this Delegation Schedule and
executed by both parties.
12. Definitions. Capitalized terms in this Delegation Schedule have the
following meanings:
a. Eligible Foreign Custodian - shall have the meaning set forth in
Rule 17f-5(a)(1) and shall also include a U.S. Bank.
b. Fund's Foreign Assets - shall mean any of the Fund's 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 Fund's transactions in such investments.
c. Proper Instructions - shall have the meaning set forth in the
Custodian Agreement.
d. Securities Depository - shall mean "eligible securities depository"
as such term is defined in Rule 17f-7.
e. U.S. Bank - Shall have the meaning set forth in Rule 17f-5 (a) (7).
13. Governing Law and Jurisdiction. This Delegation Schedule shall be construed
in accordance with the laws of the State of New York. The parties hereby submit
to the exclusive jurisdiction of the Federal courts sitting in the State of New
York or the Commonwealth of Massachusetts or of the state courts of either such
State or such Commonwealth.
14. Fees. Foreign Custody Manager shall perform its functions under this
Delegation Schedule for the compensation determined under the Custodian
Agreement.
15. Integration. This Delegation Schedule sets forth all of the Foreign Custody
Manager's duties with respect to the selection and monitoring of Eligible
Foreign Custodians, the administration of contracts with Eligible Foreign
Custodians, the withdrawal of assets from Eligible Foreign Custodians and the
issuance of reports in connection with such duties. The terms of the Custodian
Agreement shall apply generally as to matters not expressly covered in this
Delegation Schedule, including dealings with the Eligible Foreign Custodians in
the course of discharge of the Foreign Custody Manager's obligations under the
Custodian Agreement.
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16.APPLIES ONLY TO MASS BUSINESS TRUSTS Limitation of Liability. It is
understood and expressly stipulated that none of the trustees, officers, agents
or shareholders of the Fund shall be personally liable hereunder. It is
understood and acknowledged that all persons dealing with the Fund must look
solely to the property of the Fund for the enforcement of any claims against the
Fund, as neither the trustees, officers agents nor shareholders assume any
personal liability for obligations entered into on behalf of the Fund.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the date first above written.
XXXXXXX TARGET EQUITY FUND
By: /s/Xxxxxx X. Xxxxxxx
------------------------
Xxxxxx X. Xxxxxxx
Vice President
By: XXXXX BROTHERS XXXXXXXX & CO.
By: /s/Xxxxx X. Xxxxxxxxxx
-------------------------
Xxxxx X. Xxxxxxxxxx
Partner
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