EX-99.g.1
Final Execution Version Optimum Funds
MUTUAL FUND CUSTODY AND
SERVICES AGREEMENT
THIS AGREEMENT, effective as of the 20th day of July, 2007, and is by and
between each investment company listed on Appendix D (referred to herein
individually as the "Fund" and collectively, as the "Funds") and MELLON BANK,
N.A. (referred to herein as the "Custodian") a national banking association with
its principal place of business at One Mellon Center, 000 Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000. As a matter of administrative convenience, this
Agreement is entered into by and between the Custodian and multiple Funds, each
on behalf of their respective Series (as hereinafter defined). Nevertheless,
this Agreement shall be construed to constitute a separate Agreement between
each such Fund, on behalf of its Series, and the Custodian. As such, the term
Fund is used in the singular herein.
W I T N E S S E T H:
WHEREAS, the Fund is authorized to issue shares in separate series with
each such series representing interests in a separate portfolio of securities
and other assets, and the Fund has made the Series listed on Appendix D subject
to this Agreement (each such series, together with all other series subsequently
established by the Fund and made subject to the Agreement in accordance with the
terms hereof, shall be referred to as a "Series" and collectively as the
"Series");
WHEREAS, the Fund and the Custodian desire to set forth their agreement
with respect to the custody of the Series' Securities and cash and the
processing of Securities transactions;
WHEREAS, the Board desires to delegate certain of its responsibilities for
performing the services set forth in paragraphs (c)(1), (c)(2) and (c)(3) of
Rule 17f-5 to the Custodian as a Foreign Custody Manager;
WHEREAS, the Custodian agrees to accept such delegation with respect to
Assets; and
WHEREAS, the Custodian agrees to perform the function of a Primary
Custodian under Rule 17f-7;
NOW THEREFORE, the Fund and the Custodian agree as follows:
DEFINITIONS
The following words and phrases, unless the context requires otherwise,
shall have the following meanings:
1. "Act": the Investment Company Act of 1940 and the Rules and Regulations
thereunder, all as amended from time to time.
1
2. "Agreement": this agreement and any amendments.
3. "Assets": any Securities and other assets and investments of the Fund and/or
Series, including foreign currencies and investments 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 and/or Series' transactions in such
investments.
4. "Authorized Person": any person, whether or not any such person is an officer
or employee of the Fund, duly authorized by the Fund to add or delete
jurisdictions pursuant to Article II and to give Instructions on behalf of a
Series which is listed in the Certificate annexed hereto as Appendix A or such
other Certificate as may be received by the Custodian from time to time.
5. "Board": the Board of Directors/Trustees (or the body authorized to exercise
authority similar to that of the board of directors of a corporation) of the
Fund.
6. "Book-Entry System": the Federal Reserve/Treasury book-entry system for
United States and federal agency Securities, its successor or successors and its
nominee or nominees.
7. "Business Day": any day on which the Series, the Custodian, the Book-Entry
System and appropriate clearing corporation(s) are open for business.
8. "Certificate": any notice, instruction or other instrument in writing,
authorized or required by this Agreement to be given to the Custodian, which is
actually received by the Custodian and signed on behalf of a Series by an
Authorized Person or Persons designated by the Board to issue a Certificate.
9. "Eligible Securities Depository": the meaning of the term set forth in Rule
17f-7(b)(1).
10. "Foreign Countries": the jurisdictions listed on Appendix C for which the
Custodian makes available Foreign Custodians, as such list may be amended from
time to time in accordance with Article II.
11. "Foreign Custodian": (a) a banking institution or trust company incorporated
or organized under the laws of a country other than the United States, that is
regulated as such by the country's government or an agency of the country's
government; (b) a majority-owned direct or indirect subsidiary of a U.S. Bank or
bank-holding company; or (c) any entity, other than a Securities Depository,
with respect to which exemptive or no-action relief has been granted by the
Securities and Exchange Commission to act as an eligible foreign custodian under
Rule 17f-5. For the avoidance of doubt, the term "Foreign Custodian" shall not
include Euroclear, Clearstream, Bank One or any other transnational system for
the central handling of securities or equivalent book-entries regardless of
whether or not such entities or their service providers are acting in a
custodial capacity with respect to Assets, Securities or other property of the
Series.
2
12. "Foreign Custody Manager": the meaning set forth in Rule 17f-5(a)(3).
13. "Instructions": (i) all directions to the Custodian from an Authorized
Person pursuant to the terms of this Agreement; (ii) all directions by or on
behalf of the Fund to the Custodian in its corporate capacity (or any of its
affiliates) with respect to contracts for foreign exchange; (iii) all directions
by or on behalf of the Fund pursuant to an agreement with Custodian (or any of
its affiliates) with respect to benefit disbursement services or information or
transactional services provided via a web site sponsored by the Custodian (or
any of its affiliates) (e.g., the "Workbench web site") and (iv) all directions
by or on behalf of the Fund pursuant to any other agreement or procedure between
the Custodian (or any of its affiliates) and the Fund, if such agreement or
procedure specifically provides that authorized persons thereunder are deemed to
be authorized to give instructions under this Agreement. Instructions shall be
in writing, transmitted by first class mail, overnight delivery, private
courier, facsimile, or shall be an electronic transmission subject to the
Custodian's policies and procedures, other institutional delivery systems or
trade matching utilities as directed by an Authorized Person and supported by
the Custodian, or other methods agreed upon in writing by the Fund and
Custodian. The Custodian may, in its discretion, accept oral directions and
instructions from an Authorized Person and may require confirmation in writing.
However, where the Custodian acts on an oral direction prior to receipt of a
written confirmation, the Custodian shall not be liable if a subsequent written
confirmation fails to conform to the oral direction.
14. "Primary Custodian": the meaning set forth in Rule 17f-7(b)(2).
15. "Prospectus": a Series' current registration statement, including the
prospectus and statement of additional information, relating to the registration
of the Shares under the Securities Act of 1933, as amended, and the Act.
16. "Risk Analysis": the analysis required under Rule 17f-7(a)(1)(i)(A).
17. "Rules 17f-4, 17f-5 and 17f-7": such Rules as promulgated under Section
17(f) of the Act, as such rules (and any successor rules or regulations) may be
amended from time to time.
18. "Security" or "Securities": bonds, debentures, notes, stocks, shares,
evidences of indebtedness, and other securities, commodities, interests and
investments from time to time owned by the Series.
19. "Securities Depository": a system for the central handling of securities as
defined in Rule 17f-4.
20. "Shares": shares of each Series, however designated.
3
ARTICLE I. - CUSTODY PROVISIONS
1. Appointment of Custodian. The Board appoints the Custodian, and the Custodian
accepts appointment, as custodian of all the Assets at the time owned by or in
the possession of the Series during the period of this Agreement. The Board
shall not appoint any other custodian for any Assets of any Series during the
Initial Term.
2. Custody of Cash and Securities.
a. Receipt and Holding of Assets. The Series will deliver or cause to be
delivered to the Custodian all Assets owned by it at any time during the period
of this Custody Agreement. The Custodian will not be responsible for such Assets
until actually received. The Board specifically authorizes the Custodian to hold
Assets or other property of the Series with any domestic subcustodian or
Securities Depository, and Foreign Custodians or Eligible Securities
Depositories in the Foreign Countries as provided in Article II, as may be
directed by the Fund or its investment adviser or subadviser, as the case may
be. Assets of the Series deposited in a Securities Depository or Eligible
Securities Depositories will be reflected in an account or accounts which
include only assets held by the Custodian or a Foreign Custodian for its
customers.
b. Disbursements of Cash and Delivery of Securities. The Custodian shall
disburse cash or deliver out Securities only for the purposes listed below.
Instructions must specify or evidence the purpose for which any transaction is
to be made and the Series shall be solely responsible to assure that
Instructions are in accord with any limitations or restrictions applicable to
the Series:
(1) In payment for Securities purchased for the applicable Series;
(2) In payment of dividends or distributions with respect to Shares;
(3) In payment for Shares which have been redeemed by the applicable
Series;
(4) In payment of taxes;
(5) When Securities are sold, called, redeemed, retired, or otherwise
become payable;
(6) In exchange for, or upon conversion into, other securities alone
or other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization, readjustment or other similar transactions;
(7) Upon conversion of Securities pursuant to their terms into other
securities;
(8) Upon exercise of subscription, purchase or other similar rights
4
represented by Securities;
(9) For the payment of interest, management or supervisory fees,
distributions or operating expenses;
(10) In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the applicable Series;
(11) In connection with any borrowings by the applicable Series or
short sales of securities requiring a pledge of Assets, but only against receipt
of amounts borrowed;
(12) In connection with any loans, but only against receipt of
adequate collateral as specified in Instructions which shall reflect any
restrictions applicable to the Series;
(13) For the purpose of redeeming Shares of the capital stock of the
applicable Series and the delivery to, or the crediting to the account of, the
Custodian or the applicable Series' transfer agent, such Shares to be purchased
or redeemed;
(14) For the purpose of redeeming in kind Shares of the applicable
Series against delivery to the Custodian, its subcustodian or the Series'
transfer agent of such Shares to be so redeemed;
(15) For delivery in accordance with the provisions of any agreement
among the Fund, 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 Fund. The Custodian will act only in accordance with
Instructions in the delivery of Securities to be held in escrow and will have no
responsibility or liability for any such Securities which are not returned
promptly when due other than to make proper requests for such return;
(16) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related transactions;
(17) Upon the termination of this Agreement;
(18) In connection with non-certificated investments including, but
not limited to: deposit obligations, repurchase agreements, and swap
transactions, loan participations, options and futures transactions and other
derivative investments;
(19) For other proper purposes as may be specified in Instructions
issued by an Authorized Person of the Fund which shall include a statement of
the purpose for which the delivery or payment is to be made, the amount of the
payment or
5
specific Assets to be delivered, the name of the person or persons to whom
delivery or payment is to be made, and a Certificate stating that the purpose is
a proper purpose under the instruments governing the Fund; and
(20) For delivery of Assets of the Fund as set forth under Article I,
Section 7.
c. Actions Which May be Taken Without Instructions. Unless an Instruction
to the contrary is received, the Custodian shall:
(1) Collect all income due or payable, provided that the Custodian
shall not be responsible for the failure to receive payment of (or late payment
of) distributions or other payments with respect to Assets held in the account;
(2) Present for payment and collect the amount payable upon all Assets
which may mature or be called, redeemed, retired or otherwise become payable.
Notwithstanding the foregoing, the Custodian shall have no responsibility to the
Series for monitoring or ascertaining any call, redemption or retirement dates
with respect to put bonds or similar instruments which are owned by the Series
and held by the Custodian or its nominees where such dates are not published in
sources routinely used by the Custodian. Nor shall the Custodian have any
responsibility or liability to the Series for any loss by the Series for any
missed payments or other defaults resulting therefrom, unless the Custodian
received timely notification from the Series specifying the time, place and
manner for the presentment of any such put bond owned by the Series and held by
the Custodian or its nominee. The Custodian shall not be responsible and assumes
no liability for the accuracy or completeness of any notification the Custodian
may furnish to the Series with respect to put bonds or similar instruments;
(3) Surrender Securities in temporary form for definitive Securities;
(4) Hold directly, or through a Securities Depository with respect to
Securities therein deposited, for the account of the applicable Series all
rights and similar Securities issued with respect to any Securities held by the
Custodian hereunder for that Series;
(5) Submit or cause to be submitted to the applicable Series or its
investment advisor as designated by the Fund information actually received by
the Custodian regarding ownership rights, including proxies pertaining to Assets
held for the applicable Series;
(6) Deliver or cause to be delivered any Securities held for the
applicable Series in exchange for other Securities or cash issued or paid in
connection with the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the exercise of any
conversion privilege;
(7) Deliver or cause to be delivered any Securities held for the
applicable Series to any protective committee, reorganization committee or other
person
6
in connection with the reorganization, refinancing, merger, consolidation or
recapitalization or sale of assets of any corporation, and receive and hold
under the terms of this Agreement such certificates of deposit, interim receipts
or other instruments or documents as may be issued to it to evidence such
delivery;
(8) Make or cause to be made such transfers or exchanges of the Assets
specifically allocated to the applicable Series and take such other steps as
shall be stated in Instructions to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger, consolidation or
recapitalization of the applicable Series;
(9) Deliver Securities upon the receipt of payment in connection with
any repurchase agreement related to such Securities entered into by the Series;
(10) Deliver Securities owned by the applicable Series to the issuer
thereof or its agent when such Securities are called, redeemed, retired or
otherwise become payable; provided, however, that in any such case the cash or
other consideration is to be delivered to the Custodian. Notwithstanding the
foregoing, the Custodian shall have no responsibility to the Series for
monitoring or ascertaining any call, redemption or retirement dates with respect
to the put bonds or similar instruments which are owned by the Series and held
by the Custodian or its nominee where such dates are not published in sources
routinely used by the Custodian. Nor shall the Custodian have any responsibility
or liability to the Series for any loss by the Series for any missed payment or
other default resulting therefrom unless the Custodian received timely
notification from the Series specifying the time, place and manner for the
presentment of any such put bond owned by the Series and held by the Custodian
or its nominee. The Custodian shall not be responsible and assumes no liability
to the Series for the accuracy or completeness of any notification the Custodian
may furnish to the applicable Series with respect to put bonds or similar
investments but shall provide the Fund with information concerning such notices
received;
(11) Endorse and collect all checks, drafts or other orders for the
payment of money received by the Custodian for the account of the applicable
Series;
(12) Report the Asset positions of a Series as of such dates as the
Fund and the Custodian may agree upon, in accordance with methods consistently
followed and uniformly applied. It is hereby expressly acknowledged and agreed
that any Asset values that may be reflected in any such report shall be
furnished by the Custodian solely on an accommodation basis and is provided to
or for the benefit of the Fund (or the Fund's service provider or agent) as
general information and is not intended to be a comprehensive summary or report
of the value of the Assets comprising a Series. No representation is made by the
Custodian as to the accuracy or completeness of any such values. The Custodian
does not undertake any duty or responsibility to notify or otherwise provide any
updates or other revisions with respect to any such values. It is hereby further
expressly acknowledged and agreed that the Custodian shall not be liable
7
for any loss, cost, damage, expense, liability or claim directly or indirectly
relating to any such values reflected on any such report for a Series provided
by the Custodian; and
(13) Execute any and all documents, agreements or other instruments
and take all actions as may be necessary or desirable for the accomplishment and
take all actions as may be necessary or desirable for the accomplishment of the
purposes of this Agreement.
d. Confirmation and Statements. Promptly after the close of business on
each Business Day, the Custodian shall furnish each Series with confirmations
and a summary of all transfers to or from the account of the Series during such
Business Day. Where Securities purchased by a Series are in a fungible bulk of
securities registered in the name of the Custodian (or its nominee) or shown on
the Custodian's account on the books of a Securities Depository, the Custodian
shall by book-entry or otherwise identify the quantity of those securities
belonging to that Series. At least monthly, the Custodian shall furnish each
Series with a detailed statement of the Securities and other Assets held for the
Series under this Custody Agreement.
e. Registration of Securities. The Custodian is authorized to hold all
Securities, Assets, or other property of each Series in nominee name, in bearer
form or in book-entry form. The Custodian may register any Securities, Assets or
other property of each Series in the name of the Fund or the Series, in the name
of the Custodian, any domestic subcustodian or Foreign Custodian, in the name of
any duly appointed registered nominee of such entity, or in the name of a
Securities Depository or its successor or successors, or its nominee or
nominees. The Fund agrees to furnish to the Custodian appropriate instruments to
enable the Custodian to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee or in the name of a domestic
subcustodian, Foreign Custodian or Securities Depository, any Securities which
the Custodian may hold for the account of the applicable Series and which may
from time to time be registered in the name of the Fund or the applicable
Series.
f. Reporting and Recordkeeping. The ownership of the property whether
securities, cash and/or other property, and whether held by the Custodian or a
subcustodian or in a depository, clearing agency or clearing system, shall be
clearly recorded on the Custodian's books as belonging to the Series and not for
the Custodian's own interest. Where certificates are legended or otherwise not
fungible with publicly traded certificates (and in other cases where the
Custodian and the Series may agree), the Series reserves the right to instruct
the Custodian as to the name only in which such securities shall be registered
and the Custodian, to the extent reasonably practicable, shall comply with such
Instructions; provided, however, if the Custodian reasonably determines that
compliance with such Instructions is not reasonably practicable or otherwise may
conflict with applicable law, rule or regulation, the Custodian shall promptly
notify the Series and shall comply with reasonable alternatives as to which the
parties may agree. The Custodian shall keep accurate and detailed accounts of
all investments, receipts, disbursements and other transactions for the Series.
All accounts, books and records of the Custodian relating thereto shall be open
to inspection and audit at all reasonable times during normal business hours of
the Custodian by any person
8
designated by the Series. All such books, records and accounts shall be
maintained and preserved in the form reasonably requested by the Series and in
accordance with the Act and the Rules and Regulations thereunder, including,
without limitation, Section 31 thereof and Rule 31a-1 and 31a-2 thereunder. All
books, records and accounts pertaining to the Series, which are in the
possession of the Custodian, shall be the property of the Fund and such
materials or (unless the delivery of original materials is required pursuant to
applicable law) legible copies thereof in a format reasonably acceptable to the
Fund, shall be surrendered promptly upon request; provided, however, that the
Custodian shall be entitled to retain a copy or the original of any such books,
records and accounts as may be required or permitted by applicable law and the
Custodian's own policies and procedures. The Custodian will supply to the Series
from time to time, as mutually agreed upon, a statement in respect to any
property of the Series held by the Custodian or by a subcustodian.
g. Segregated Accounts. Upon receipt of Instructions, the Custodian will,
from time to time establish, segregated accounts on behalf of the applicable
Series to hold and deal with specified Assets as shall be directed.
3. Settlement of Series Transactions.
a. Customary Practices. Settlement of transactions may be effected in
accordance with trading and processing practices customary in the jurisdiction
or market where the transaction occurs. The Fund acknowledges that this may, in
certain circumstances, require the delivery of Assets without the concurrent
receipt of Securities (or other property) or cash. In such circumstances, the
Custodian shall have no responsibility for nonreceipt of payments (or late
payment) or nondelivery of Securities or other property (or late delivery) by
the counterparty.
b. Contractual Income. The Custodian shall credit the applicable Series, in
accordance with the Custodian's standard operating procedure, with income and
maturity proceeds on Securities on the contractual payment dates net of any
taxes or upon actual receipt. To the extent the Custodian credits income on
contractual payment date, the Custodian may reverse such accounting entries to
the contractual payment date if the Custodian reasonably believes that such
amount will not be received.
c. Contractual Settlement. The Custodian will attend to the settlement of
Securities transactions in accordance with the Custodian's standard operating
procedure, on the basis of either contractual settlement date accounting or
actual settlement date accounting. To the extent the Custodian settles certain
Securities transactions on the basis of contractual settlement date accounting,
the Custodian may reverse to the contractual settlement date any entry relating
to such contractual settlement if the Custodian reasonably believes that such
amount will not be received.
4. Lending of Securities. The Custodian may lend the Assets of the Series in
accordance with the terms and conditions of one or more separate securities
lending agreements, approved by the Fund.
9
5. Persons Having Access to Assets of the Series.
a. No trustee or agent of the Fund, and no officer, director, employee or
agent of the Fund's investment adviser, of any sub-investment adviser of the
Fund, or of the Fund's administrator, shall have physical access to the assets
of the Series held by the Custodian or be authorized or permitted to withdraw
any investments of the Series, nor shall the Custodian deliver any Assets of the
Series to any such person. No officer, director, employee or agent of the
Custodian who holds any similar position with the Fund's investment adviser,
with any sub-investment adviser of the Fund or with the Fund's administrator
shall have access to the Assets of the Series.
b. Nothing in this Section 5 shall prohibit any duly authorized officer,
employee or agent of the Fund, or any duly authorized officer, director,
employee or agent of the investment adviser, of any sub-investment adviser of
the Series or of the Series' administrator, from giving Instructions to the
Custodian or executing a Certificate so long as it does not result in delivery
of or access to Assets of the Series prohibited by paragraph (a) of this Section
5.
6. Standard of Care; Scope of Custodial Responsibilities.
a. Standard of Care. The Custodian shall be required to exercise reasonable
care with respect to its duties under this Agreement unless otherwise provided.
(1) Notwithstanding any other provision of this Agreement, the
Custodian shall not be liable for any loss or damage, including counsel fees,
resulting from its action or omission to act or otherwise, except for any such
loss or damage arising out of the negligence or willful misconduct of the
Custodian or of any agent, subcustodian or Foreign Custodian appointed by the
Custodian.
(2) The Custodian may consult with the Custodian's or the Fund's
counsel with respect to any matter arising in connection with this Agreement,
and the Custodian shall not be liable nor accountable for any action taken or
omitted by it in good faith in accordance with the advice of such counsel. To
the extent possible, the Custodian shall notify the Fund at any time the
Custodian believes it needs advice of the Fund's counsel with regard to the
Custodian's responsibilities and duties pursuant to this Agreement. If the
Custodian wishes to seek and rely on legal advice from counsel that is neither
the Custodian's counsel nor the Fund's counsel, and the Custodian seeks to be
reimbursed for the counsel fees, then the Custodian must notify and seek prior
approval of the affected Fund, which shall not be unreasonably withheld. The
Custodian shall in no event be liable to a Fund or any Fund shareholder or
beneficial owner for any action reasonably taken or omitted pursuant to such
advice.
b. Scope of Duties. Without limiting the generality of the foregoing, the
Custodian shall be under no duty or obligation to inquire into, and shall not be
liable for:
(1) The acts or omissions of any agent appointed pursuant to
Instructions of the Fund or its investment advisor including, but not limited
to, any broker-dealer or
10
other entity to hold any Assets of the Fund as collateral or otherwise pursuant
to any investment strategy.
(2) The title, genuineness or validity of the issue of any Securities
purchased by the Series, the legality of the purchase thereof, or the propriety
of the amount paid therefor;
(3) The legality of the sale of any Securities by the Series or the
propriety of the amount for which the same are sold;
(4) The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
(5) The legality of the redemption of any Shares, or the propriety of
the amount to be paid therefor;
(6) The legality of the declaration or payment of any distribution of
the Series; or
(7) The legality of any borrowing for temporary administrative or
emergency purposes.
c. No Liability Until Receipt. The Custodian shall not be liable for, or
considered to be the Custodian of, any money, whether or not represented by any
check, draft, or other instrument for the payment of money, received by it on
behalf of the Series, until the Custodian actually receives and collects such
money.
d. Amounts Due from Transfer Agent. The Custodian shall not be required to
effect collection of any amount due to the Series from the Series' transfer
agent nor be required to cause payment or distribution by such transfer agent of
any amount paid by the Custodian to the transfer agent.
e. Collection Where Payment Refused. The Custodian shall not be required to
take action to effect collection of any amount, if the Securities upon which
such amount is payable are in default, if payment is refused after due demand or
presentation, or with respect to any insolvency or similar proceeding, unless
and until it shall be directed to take such action and it shall be assured to
its satisfaction of reimbursement of its related costs and expenses.
f. No Duty to Ascertain Authority. The Custodian shall not be under any
duty or obligation to ascertain whether any Assets at any time delivered to or
held by it for the Series are such as may properly be held by the Series under
the provisions of its governing instruments or Prospectus.
g. Reliance on Instructions. The Custodian shall be entitled to rely upon
any Instruction, notice or other instrument in writing received by the Custodian
and reasonably believed by the Custodian to be genuine and to be signed by an
Authorized
11
Person of the Series. Where the Custodian is issued Instructions orally, the
Series acknowledge that if written confirmation is requested, the validity of
the transactions or enforceability of the transactions authorized by the Series
shall not be affected if such confirmation is not received or is contrary to
oral Instructions given. The Custodian shall be fully protected in acting in
accordance with all such Instructions and in failing to act in the absence
thereof. The Custodian shall be under no duty to question any direction of an
Authorized Person with respect to the portion of the account over which such
Authorized Person has authority, to review any property held in the account, to
make any suggestions with respect to the investment and reinvestment of the
Assets in the account, or to evaluate or question the performance of any
Authorized Person. The Custodian shall not be responsible or liable for any
diminution of value of any Assets held by the Custodian or its subcustodians
pursuant to Instructions. In following Instructions, the Custodian shall be
fully protected and shall not be liable for the acts or omissions of any person
or entity not selected or retained by the Custodian in its sole discretion,
including but not limited to, any broker-dealer or other entity designated by
the Fund or Authorized Person to hold Assets of the account as collateral or
otherwise pursuant to an investment strategy.
7. Appointment of Subcustodians; Transfer of Assets to Subcustodians or Brokers.
The Custodian is hereby authorized to appoint one or more domestic subcustodians
(which may be an affiliate of the Custodian) to hold Assets at any time owned by
the Series. The Custodian is also hereby authorized, when acting pursuant to
Instructions, to: 1) place Assets with any Foreign Custodian located in a
jurisdiction which is not a Foreign Country and with Euroclear, Clearstream,
Banc One or any other transnational depository; and 2) settle or place Assets
with a broker or any such domestic subcustodian or Foreign Custodian in
connection with derivative transactions of any kind, including futures, options,
short selling, swaps or other transactions. When acting pursuant to such
Instructions, the Custodian shall not be liable for the acts or omissions of any
such broker, subcustodian or Foreign Custodian.
8. Overdraft Facility and Security for Payment. In the event that the Custodian
receives Instructions to make payments or transfers of Assets on behalf of the
Series for which there would be, at the close of business on the Business Day of
such payment or transfer, insufficient monies held by the Custodian on behalf of
the Series, the Custodian may, in its sole discretion, provide an overdraft (an
"Overdraft") to the Series in an amount sufficient to allow the completion of
such payment or transfer. Any Overdraft provided hereunder: (a) shall be payable
on the next Business Day, unless otherwise agreed by the Series and the
Custodian; and (b) shall accrue interest from the date of the Overdraft to the
date of payment in full by the Series at a rate agreed upon from time to time by
the Custodian and the Series or, in the absence of specific agreement, by such
rate as charged to other customers of the Custodian under procedures uniformly
applied. The Custodian and the Series acknowledge that the purpose of such
Overdraft is to temporarily finance the purchase of Securities for prompt
delivery in accordance with the terms hereof, to meet unanticipated or unusual
redemptions, to allow the settlement of foreign exchange contracts or to meet
other unanticipated Series expenses. The Custodian shall promptly notify the
Series (an "Overdraft Notice") of any Overdraft. To
12
secure payment of any Overdraft and related interest and expenses, the Series
hereby grants to the Custodian a first priority security interest in and right
of setoff against the Assets in the Series' account, including all income,
substitutions and proceeds, whether now owned or hereafter acquired (the
"Collateral"), in the full amount of such Overdraft, interest and expenses;
provided that the Series does not grant the Custodian a security interest in any
Securities issued by an affiliate of the Custodian (as defined in Section 23A of
the Federal Reserve Act). The Custodian and the Series intend that, as the
securities intermediary with respect to the Collateral, the Custodian's security
interest shall automatically be perfected when it attaches. Should the Series
fail to pay promptly any amounts owed hereunder, the Custodian shall be entitled
to use available Assets in the Series' account and to liquidate Securities in
the account as necessary to meet the Series' obligations relating to such
Overdraft, interest and expenses. In any such case, and without limiting the
foregoing, the Custodian shall be entitled to take such other actions(s) or
exercise such other options, powers and rights as the Custodian now or hereafter
has as a secured creditor under the Pennsylvania Uniform Commercial Code or any
other applicable law.
9. Tax Obligations. For purposes of this Agreement, "Tax Obligations" shall mean
taxes, withholding, certification and reporting requirements, claims for
exemptions or refund, interest, penalties, additions to tax and other related
expenses. To the extent that the Custodian has received relevant and necessary
information with respect to the account, the Custodian shall perform the
following services with respect to Tax Obligations:
a. The Custodian shall file claims for exemptions or refunds with respect
to withheld foreign (non-U.S.) taxes in instances in which such claims are
appropriate upon receipt of sufficient information;
b. The Custodian shall withhold appropriate amounts, as required by U.S.
tax laws, with respect to amounts received on behalf of nonresident aliens upon
receipt of Instructions; and
c. The Custodian shall provide to the Fund or the Authorized Person such
information received by the Custodian which could, in the Custodian's reasonable
belief, assist the Fund or the Authorized Person in the submission of any
reports or returns with respect to Tax Obligations. The Fund shall inform the
Custodian in writing as to which party or parties shall receive information from
the Custodian.
d. The Custodian shall provide such other services with respect to Tax
Obligations, including preparation and filing of tax returns and reports and
payment of amounts due (to the extent funded), as requested by the Fund and
agreed to by the Custodian in writing. The Custodian shall have no independent
obligation to determine the existence of any information with respect to, or the
extent of, any Tax Obligations now or hereafter imposed on the Fund or the
account by any taxing authority. Except as specifically provided herein or
agreed to in writing by the Custodian, the Custodian shall have no obligations
or liability with respect to Tax Obligations, including, without
13
limitation, any obligation to file or submit returns or reports with any state,
foreign or other taxing authorities.
e. In making payments to service providers pursuant to Instructions, the
Fund acknowledges that the Custodian is acting as a paying agent and not as the
payor, for tax information reporting and withholding purposes.
ARTICLE II. - FOREIGN CUSTODY MANAGER SERVICES
1. Delegation. The Board delegates to the Custodian, and the Custodian hereby
agrees to accept, responsibility as the Fund's Foreign Custody Manager for
selecting, contracting with and monitoring Foreign Custodians in Foreign
Countries in accordance with Rule 17f-5(c).
2. Changes to Appendix C. Appendix C may be amended by written agreement from
time to time to add or delete jurisdictions by written agreement signed by an
Authorized Person of the Fund and the Custodian, but the Custodian reserves the
right to delete jurisdictions upon reasonable notice to the Series.
3. Reports to Board. Custodian shall provide written reports notifying the Board
of the placement of Assets with a particular Foreign Custodian and of any
material change in a Series' foreign custody arrangements. Such reports shall be
provided to the Board quarterly, except as otherwise agreed by the Custodian and
the Fund.
4. Monitoring System. In each case in which the Custodian has exercised
delegated authority to place Assets with a Foreign Custodian, the Custodian
shall establish a system, to re-assess or re-evaluate selected Foreign
Custodians, at least annually in accordance with Rule 17f-5(c)(3).
5. Standard of Care. In exercising the delegated authority under this Article II
of the Agreement, the Custodian agrees to exercise reasonable care, prudence and
diligence such as a person having responsibility for the safekeeping of the
Assets would exercise in like circumstances. Contracts with Foreign Custodians
shall provide for reasonable care for Assets based on the standards applicable
to Foreign Custodians in the Foreign Country. In making this determination, the
Custodian shall consider the provisions of Rule 17f-5(c)(2).
6. Use of Securities Depositories. In exercising its delegated authority, the
Custodian may assume that the Series and its investment adviser have determined,
pursuant to Rule 17f-7, that the depository provides reasonable safeguards
against custody risks, if a Series decides to place and maintain foreign Assets
with any Securities Depository as to which the Custodian has provided the Fund
on behalf of such Series with a Risk Analysis.
14
7. Notice of Change of Subcustodians. The Custodian shall promptly advise or
provide notice to the Series of any change to its subcustodial network.
ARTICLE III. - INFORMATION SERVICES
1. Risk Analysis. The Custodian will provide the Fund on behalf of the Series
with a Risk Analysis with respect to Securities Depositories operating in the
Foreign Countries. If the Custodian is unable to provide a Risk Analysis with
respect to a particular Securities Depository, it will notify the Fund on behalf
of the Series. Custodian shall advise whether a particular Securities Depository
meets the objective standard set forth in applicable provisions of Rule 17f-7 of
the Act. If a new Securities Depository commences operation in one of the
Foreign Countries, the Custodian will provide the Fund on behalf of the Series
with a Risk Analysis in a reasonably practicable time after such Securities
Depository becomes operational. If a new country is added to Appendix C, the
Custodian will provide the Fund on behalf of the Series with a Risk Analysis
with respect to each Securities Depository in that country within a reasonably
practicable time after the addition of the country to Appendix C.
2. Monitoring of Securities Depositories. The Custodian will monitor the custody
risks associated with maintaining assets with each Securities Depository for
which it has provided the Fund on behalf of the Series with a Risk Analysis as
required under Rule 17f-7. The Custodian will promptly notify the Fund on behalf
of the Series or its investment adviser of any material change in these risks.
3. Use of Agents. The Custodian may employ agents, including, but not limited to
Foreign Custodians, to perform its responsibilities under Sections 1 and 2 of
this Article III.
4. Exercise of Reasonable Care The Custodian will exercise reasonable care,
prudence, and diligence in performing its responsibilities under this Article
III. With respect to the Risk Analyses provided or monitoring performed by an
agent, the Custodian will exercise reasonable care in the selection of such
agent, and shall be entitled to rely upon information provided by agents so
selected in the performance of its duties and responsibilities under this
Article III.
5. Liabilities and Warranties. While the Custodian will take reasonable
precautions to ensure that information provided is accurate, the Custodian shall
have no liability with respect to information provided to it by third parties.
Due to the nature and source of information, and the necessity of relying on
various information sources, most of which are external to the Custodian, the
Custodian shall have no liability for direct or indirect use of such
information.
15
ARTICLE IV. - GENERAL PROVISIONS
1. Compensation.
a. The Fund will compensate the Custodian for its services rendered under
this Agreement in accordance with the fees set forth on Appendix E (the "Fees"),
which schedule may be modified by the Custodian after the Initial Term upon not
less than sixty days prior written notice to, and the consent of, the Fund. Any
undisputed Fees not paid within sixty (60) days of the invoice date will be
subject to a late charge equal to 1.5% of the Fees remaining unpaid. Additional
charges of 1.5% per month will accrue and be owing on such undisputed and unpaid
Fees for each additional month during which such Fees remain unpaid, subject to
any maximum amounts imposed by law. If any Fees are disputed by the Fund, the
Custodian and the Fund shall work together in good faith to resolve the dispute
promptly.
b. The Custodian will xxxx the Fund as soon as practicable after the end of
each calendar month. The Fund will promptly pay to the Custodian the amount of
such billing.
c. If not paid directly or timely by the Fund, the Custodian may, with
prior approval of the Fund which may not be unreasonably withheld, charge
against Assets held on behalf of the Series compensation and any expenses
incurred by the Custodian in the performance of its duties pursuant to this
Agreement. The Custodian shall also be entitled, subject to the approval of the
Fund, to charge against Assets of the Series the amount of any loss, damage,
liability or expense incurred with respect to the Series, including counsel
fees, for which it shall be entitled to reimbursement under the provisions of
this Agreement.
2. Insolvency of Foreign Custodians. The Custodian shall be responsible for
losses or damages suffered by the Series arising as a result of the insolvency
of a Foreign Custodian only to the extent that the Custodian failed to comply
with the standard of care set forth in Article II with respect to the selection
and monitoring of such Foreign Custodian.
3. Liability for Depositories. The Custodian shall not be responsible for any
losses resulting from the deposit or maintenance of Securities, Assets or other
property of the Series with a Securities Depository.
4. Damages. Under no circumstances shall the Custodian be liable for any
indirect, consequential or special damages with respect to its role as Foreign
Custody Manager, Custodian or information vendor.
5. Indemnification; Liability of the Series.
a. The Fund shall indemnify and hold the Custodian harmless from all
liabilities and costs and expenses, including reasonable counsel fees and
expenses, relating to or arising out of the performance of the Custodian's
obligations under this
16
Agreement except to the extent resulting from the negligence or willful
misconduct of the Custodian, any agent or subcustodian appointed by the
Custodian or any of its or their directors, officers, agents, nominees or
employees, in the performance of any functions hereunder, or any other failure
to comply with the standard of care required by this Agreement. This provision
shall survive the termination of this Agreement.
b. The Custodian shall indemnify and hold the Fund harmless from all
liabilities and costs and expenses, including reasonable counsel fees and
expenses, resulting from: (i) the negligence or willful misconduct of the
Custodian, any agent or subcustodian appointed by the Custodian or any of its or
their directors, officers, agents, nominees or employees, in the performance of
any functions hereunder, or any other failure to comply with the standard of
care required by this Agreement; or (ii) any burglary, robbery, hold-up, theft,
or mysterious disappearance, including loss by damage or destruction. This
provision shall survive the termination of this Agreement.
c. The Series and the Custodian agree that the obligations of the Fund
under this Agreement shall not be binding upon any of the directors/trustees,
shareholders, nominees, officers, employees or agents, whether past, present or
future, of the Series, individually, but are binding only upon the Assets and
other property of the Fund.
6. Force Majeure; Disaster Recovery and Business Continuity. Notwithstanding
anything in this Agreement to the contrary contained herein, the Custodian shall
not be responsible or liable for its failure to perform under this Agreement or
for any losses to the account resulting from any event beyond the reasonable
control of the Custodian, its agents or its subcustodians (other than
subcustodians that were engaged by the Custodian at the instruction of the
Fund). In the event of such event, or any disaster that causes a business
interruption, the Custodian shall act in good faith and follow applicable
procedures in its disaster recovery and business continuity plan and use all
commercially reasonable efforts to minimize service interruptions.
The Custodian represents and warrants that it has implemented and maintains
reasonable procedures and systems (including reasonable disaster recovery and
business continuity plans and procedures consistent with legal, regulatory and
business needs applicable to the Custodian's duties under this Agreement) to
safeguard the Fund's records and data and the Custodian's records, data,
equipment facilities and other property that it uses in the performance of its
obligations hereunder from loss or damage attributable to fire, theft, or any
other cause, and the Custodian will make such changes to the procedures and
systems from time to time as are reasonably required for the secure performance
of its obligations hereunder.
7. Term and Termination.
a. The term of this Agreement shall begin on the date hereof (the
"Effective Date") and continue for an initial term of three (3) years (the
"Initial Term"). After the Initial Term expires, this Agreement shall continue
but either (1) the Custodian may terminate this Agreement with respect to a Fund
by giving such Fund one hundred twenty (120) days notice in writing, specifying
the date of such termination, or (2) a Fund may
17
terminate this Agreement with respect to such Fund by giving the Custodian sixty
(60) days notice in writing, specifying the date of such termination.
b. This Agreement may be terminated by the following party or parties, as
the case may be, for one or more of the following reasons, provided the
terminating party or parties provides the applicable written notice to the other
party or parties of the reason for such termination:
(1) NonRenewal: This Agreement shall terminate with respect to a Fund
at the end of the Initial Term if either the Custodian or such Fund provides
notice that it does not want to renew or extend this Agreement at the end of the
Initial Term;
(2) Mutual Agreement: The Custodian and a Fund may mutually agree in
writing to terminate this Agreement with respect to such Fund at any time;
(3) "For Cause": (A) The Custodian may terminate this Agreement with
respect to a Fund "For Cause," as defined below, by providing such Fund with
written notice of termination "For Cause" at least 60 days prior to the date of
termination of this Agreement with respect to such Fund, or (B) a Fund may
terminate this Agreement with respect to such Fund "For Cause," as defined
below, by providing the Custodian with written notice of termination "For Cause"
at least 60 days prior to the date of termination of this Agreement with respect
to such Fund; or
(4) Failure to Pay: The Custodian may terminate this Agreement with
respect to a Fund if the Custodian has notified such Fund that it has failed to
pay the Custodian any undisputed amounts when due under this Agreement and it
has failed to cure such default within 60 days of receipt of such notice (or, if
the Fund has disputed any amounts in good faith, upon resolution of the
dispute).
For purposes of subparagraph (3) above, "For Cause" shall mean:
(A) a material breach of this Agreement by any other party that
has not been remedied for 30 days following written notice by the
terminating party that identifies in reasonable detail the alleged
failure of the other party to perform, provided that if such default
is capable of being cured, then the other party shall be entitled to
such longer period as may reasonably be required to cure such default
if the other party shall have commenced such cure and is diligently
pursuing same, but such cure must be completed within 120 days in any
event;
(B) when any other party commits any act or omission that
constitutes gross negligence, willful misconduct, fraud or reckless
disregard of its or their duties under this Agreement and that act or
omission results in material adverse consequences to the terminating
party;
18
(C) a final, unappealable judicial, regulatory or administrative
ruling or order in which any other party has been found guilty of
criminal or unethical behavior in the conduct of its business that
directly relates to the subject matter of the services provided
hereunder; or
(D) when any other party shall make a general assignment for the
benefit of its creditors or any proceeding shall be instituted by or
against the other party to adjudicate it as bankrupt or insolvent, or
to seek to liquidate, wind up, or reorganize the other party, or
protect or relieve its debts under any law, or to seek the entry of an
order for relief or the appointment of a receiver, trustee or other
similar official for it or for a substantial portion of its assets,
which proceeding shall remain unstayed for sixty (60) days or the
other party shall have taken steps to authorize any of the above
actions or has become unable to pay its debts as they mature.
c. If this Agreement is terminated by any party with respect to a Fund
(regardless of whether it is terminated pursuant to paragraph (b) above or for
any reason other than those specified in paragraph (b) above), such Fund shall
pay to Custodian on or before the date of such termination any undisputed and
unpaid fees owed to, and shall reimburse Custodian for any undisputed and unpaid
out-of-pocket costs and expenses owed to, Custodian under this Agreement prior
to its termination.
d. If either (1) a Fund terminates this Agreement with respect to such Fund
during the Initial Term for any reason other than those specified in paragraph
(b) above, or (2) the Custodian terminates this Agreement with respect to a Fund
during the Initial Term "For Cause" or the Fund's "failure to pay" under
subparagraphs (b)(3) or (b)(4) of this Section, respectively, then such Fund
shall be liable to the Custodian for all provable actual damages of Custodian
arising from such termination, excluding punitive, special, indirect, incidental
and consequential damages, and shall reimburse all Costs and Expenses incurred
by the Custodian in connection with effecting such termination and converting
such Fund to a successor custodian, including without limitation the delivery to
such successor custodian, such Fund and/or such Fund's service providers, any of
the Fund's Assets, property, records, data, instruments and documents. In
addition, such Fund shall reimburse the Custodian promptly for any actual,
provable, extraordinary, non-customary and direct costs and expenses (other than
any Costs and Expenses) incurred by the Custodian in connection with effecting
such termination and converting such Fund to a successor custodian, including
without limitation the delivery to such successor custodian, such Fund and/or
such Fund's service providers, any of such Fund's Assets, property, records,
data, instruments and documents.
e. If either (1) the Custodian terminates this Agreement with respect to a
Fund at any time for any reason other than those specified in paragraph (b)
above, or (2) a Fund terminates this Agreement with respect to such Fund at any
time "For Cause" under subparagraph (b)(3) of this Section, then the Custodian
shall reimburse such Fund for any
19
Costs and Expenses incurred by such Fund in connection with converting the
Assets of such Fund to a successor custodian, including without limitation the
delivery to such successor custodian, such Fund and/or such Fund's service
providers, any of such Fund's Assets, property, records, data, instruments and
documents.
f. If this Agreement is terminated (1) by either the Custodian or a Fund
for "nonrenewal" under subparagraph (b)(1), (2) by the Custodian and a Fund
"upon mutual agreement" under subparagraph (b)(2), (3) by a Fund at any time
after the Initial Term for any reason other than those specified in paragraph
(b) above, or (4) by Custodian at any time after the Initial Term "For Cause" or
such Fund's "failure to pay" under subparagraphs (b)(3) or (b)(4) of this
Section, respectively, such Fund shall reimburse Custodian promptly for any
Costs and Expenses incurred by Custodian in connection with effecting such
termination and converting such Fund to a successor custodian, including without
limitation the delivery to such successor custodian, such Fund and/or such
Fund's service providers any of such Fund's Assets, property, records, data,
instruments and documents.
g. For purposes of this Section 7 of this Article IV, "Costs and Expenses"
incurred by a party shall mean any actual, provable, reasonable, customary and
direct costs and expenses incurred by such party. For purposes of this Section 7
of this Article IV, Costs and Expenses shall not include any wind-down costs,
including, without limitation, non-cancelable lease payments; severance payments
due and payable to personnel of the Custodian or its subcustodians (other than
subcustodians that were engaged by the Custodian at the instruction of a Fund);
unused equipment expense; and non-cancelable payments or termination charges
regarding subcustodial services that were not incurred at the instruction of a
Fund and that cannot be transferred or redeployed by Mellon.
Such party must provide the other party or parties with written evidence of
such costs and expenses before the other party or parties are obligated to pay
them. Such party also has a duty to mitigate, and must exercise its duty to
mitigate, such costs and expenses. Except as expressly set forth herein, no
party hereto shall be responsible for any costs and expenses or damages of any
kind whatsoever resulting from, related to or otherwise in connection with the
termination of this Agreement.
h. In the event that this Agreement is terminated by a party, the parties
hereto agree to cooperate and act in good faith to ensure an orderly conversion
of the Assets, property, records, data, instruments and documents of the
applicable Fund or Funds to a successor custodian with respect to the services
provided under this Agreement. Without limiting the generality of the foregoing
sentence, the Custodian agrees that, in the event this Agreement is terminated
by a party or the parties, it will deliver a Fund's or the Funds' Assets,
property, records, data, instruments and documents to such Fund or the Funds,
its or their successor service providers and/or its or their other service
providers, as the case may be, in a non-proprietary, commerically-available
format.
20
i. The termination of this Agreement with respect to any given Fund shall
in no way affect the continued validity of this Agreement with respect to any
other Fund. Furthermore, if, following termination of this Agreement with
respect to any given Fund, Custodian continues to perform any one or more of the
services governed hereby with the express consent of such Fund, then the
provisions of this Agreement, including without limitation the provisions
dealing with indemnification and compensation, shall continue in full force and
effect.
j. In the event notice of termination is given by the Custodian, which
notice shall be given at least 60 days prior to the date of termination
(notwithstanding the reason for termination), a Fund shall, on or before the
termination date, deliver to the Custodian a Certificate evidencing the vote of
the Board designating a successor custodian. In the absence of such designation,
the Custodian may designate a successor custodian, which shall be a person
qualified to so act under the Act for such Fund. If a Fund fails to designate a
successor custodian, such Fund shall, upon the date specified in the notice of
termination, and upon the delivery by the Custodian of all Assets then owned by
such Fund, be deemed to be its own custodian and the Custodian shall thereby be
relieved of all obligations under this Agreement other than the duty with
respect to Securities held in the Book-Entry System which cannot be delivered to
such Fund.
k. Upon termination of the Agreement, the Custodian shall, upon receipt of
a notice of acceptance by the successor custodian, deliver to the successor all
Assets then held by the Custodian on behalf of a Fund, after deducting all fees,
expenses and other amounts owed, if any, that are not disputed in good faith by
such Fund.
l. Following termination, the Custodian will promptly forward income and
principal received, if any, with respect to a Fund, including but not limited to
tax reclaim payments for tax reclaims filed prior to termination, to a
designated successor custodian.
m. In the event of a dispute following the expiration or termination of
this Agreement, all relevant provisions shall be deemed to continue to apply to
the obligations and liabilities of the parties.
8. Inspection of Books and Records. The books and records of the Custodian
directly related to the Fund shall be open to inspection and audit at reasonable
times by officers and representatives of the Fund and auditors employed by the
Fund at its own expense and with prior written notice to the Custodian, and by
the appropriate employees of the Securities and Exchange Commission.
9. Miscellaneous.
a. Appendix A is a Certificate signed by the Secretary of the Fund setting
forth the names and the signatures of Authorized Persons. The Fund shall furnish
a new Certificate when the list of Authorized Persons is changed in any way.
Until a new Certificate is received, the Custodian shall be fully protected in
acting upon Instructions from Authorized Persons as set forth in the last
delivered Certificate.
21
b. Appendix B is a Certificate signed by the Secretary of the Fund setting
forth the names and the positions of the present officers of the Fund. The Fund
agrees to furnish to the Custodian a new Certificate when any changes are made.
Until a new Certificate is received, the Custodian shall be fully protected in
relying upon the last delivered Certificate.
c. Any required written notice or other instrument shall be sufficiently
given if addressed to the Custodian or the Fund, as the case may be, and
delivered to it at its offices at:
The Custodian:
Mellon Bank, N.A.
One Mellon Center
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq., Senior Vice President and Associate General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
The Fund:
Optimum Fund Trust
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Chief Financial Officer and General Counsel
or at such other place as the parties may from time to time designate to
the other in writing.
d. This Agreement may not be amended or modified except by a written
agreement executed by both parties.
e. 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 the Fund without the written consent
of the Custodian, or by the Custodian without the written consent of the Fund,
authorized or approved by a vote of the Board, provided, however, that a Fund
merger or reorganization where the fund surviving from such merger or
reorganization assumes the duties and obligations of such Fund under this
Agreement shall not require the Custodian's consent; provided further, however,
that the Custodian may assign the Agreement or any function thereof to any
corporation or entity which directly or indirectly is controlled by, or is under
common control with, the Custodian and any other attempted assignment without
written consent shall be null and void.
22
f. Nothing in this Agreement shall give or be construed to give or confer
upon any third party any rights hereunder.
g. The Custodian represents that it is a U.S. Bank within the meaning of
paragraph (a)(7) of Rule 17f-5 under the 1940 Act. The Fund has the requisite
amount and scope of fidelity bond coverage required by Rule 17g-1 under the 1940
Act, and has directors' and officers' errors and omissions insurance coverage.
The Custodian will maintain a fidelity bond and an insurance policy with respect
to errors and omissions coverage in form and amount that are commercially
reasonable in light of Custodian's duties and responsibilities under this
Agreement.
h. The Fund acknowledges and agrees that, except as expressly set forth in
this Agreement, the Fund is solely responsible to assure that the maintenance of
the Series' Assets hereunder complies with applicable laws and regulations,
including without limitation the Act and applicable interpretations thereof or
exemptions therefrom. The Fund represents that it has determined that it is
reasonable to rely on Custodian to perform the responsibilities delegated
pursuant to this Agreement.
i. Agreement shall be construed in accordance with the laws of The
Commonwealth of Pennsylvania.
j. The captions of the Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.
k. Each party represents to the other that it has all necessary power and
authority, and has obtained any consent or approval necessary to permit it, to
enter into and perform this Agreement and that this Agreement does not violate,
give rise to a default or right of termination under or otherwise conflict with
any applicable law, regulation, ruling, decree or other governmental
authorization or any contract to which it is a party or by which any of its
assets is bound. Each party represents and warrants that the individual
executing this Agreement on its behalf has the requisite authority to bind the
Fund or the Custodian to this Agreement. The Fund has received and read the
"Customer Identification Program Notice", a copy of which is attached to this
Agreement as Exhibit A.
l. 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.
[Remainder of page intentionally left blank]
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective representatives duly authorized as of the day and
year first above written.
MELLON BANK, N.A.
By: /s/ illegible
Title: First Vice President
OPTIMUM FUND TRUST, on behalf of its
Series identified on Schedule A
By: /s/ Xxxxxxx Xxxxx
Title: Chief Financial Officer
24
APPENDIX A
LIST OF AUTHORIZED PERSONS
I, Xxxxx X. Xxxxxx, Secretary of Optimum Fund Trust, do hereby certify
that:
The following individuals have been duly authorized as Authorized Persons
to give Instructions on behalf of the Fund and each Series thereof and the
specimen signatures set forth opposite their respective names are their true and
correct signatures:
Name and Position Signature
Xxxx X. X'Xxxxxx /s/ Xxxx X. X'Xxxxxx
Senior Vice President
Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxx
Vice President
Xxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxx
Vice President
Xxxxxxx Xxxxx /s/ Xxxxxxx Xxxxx
Assistant Vice President
Xxxxx Xxxxxxx /s/ Xxxxx Xxxxxxx
Assistant Vice President
Xxxxxx X. Xxxxxxxxx /s/ Xxxxxx X. Xxxxxxxxx
Assistant Vice President
Xxxxxxx X'Xxxxxxx /s/ Xxxxxxx X'Xxxxxxx
Assistant Vice President
Xxxx Xxxxxxx /s/ Xxxx Xxxxxxx
Assistant Vice President
Xxxx Xxxxxxxxxxxxxx /s/ Xxxx Xxxxxxxxxxxxxx
Assistant Vice President
Xxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
Senior Vice President
25
Xxxxxx Xxxxxxx /s/ Xxxxxx Xxxxxxx
Assistant Vice President
Xxxx Xxxxxxxxxxx /s/ Xxxx Xxxxxxxxxxx
Assistant Vice President
Xxxx Xxxxxx /s/ Xxxx Xxxxxx
Assistant Vice President
Xxxx Xxxxxx /s/ Xxxx Xxxxxx
Assistant Vice President
Xxxxx Xxxxx /s/ Xxxxx Xxxxx
Assistant Vice President
By: /s/ Xxxxx X. Xxxxxx
Secretary
Dated:
00
XXXXXXXX X
FUND OFFICERS
I, Xxxxx X. Xxxxxx, Secretary of Optimum Fund Trust, do hereby certify
that:
The following individuals serve in the following positions with the Series
and each individual has been duly elected or appointed to each such position and
qualified therefor in conformity with the Fund's governing instrument:
Name Position
Xxxx X. X. Xxxxxxxx President/Chief Executive Officer
Xxxxxxx Xxxxx Senior Vice President/Chief Financial Officer
Xxxx X. X'Xxxxxx Senior Vice President/Treasurer
Xxxxx X. X'Xxxxxx Senior Vice President/General Counsel
Xxxxx X. Xxxxx Vice President/Chief Compliance Officer
Xxxxx X. Xxxxxx Vice President/Deputy General Counsel/Secretary
Xxxxxx X. Xxxxxxx Senior Vice President/Senior Portfolio Manager
Xxxxxxx X. Xxxxxxxxxx Vice President/Associate General Counsel/Assistant
Secretary
Xxxx X. Xxxxxxxx Vice President/Taxation
Xxxxxx X. Xxxxxxx Vice President/Investment Accounting
Xxxxx Xxxxxxxx Vice President/Product Manager
Xxxxx X. Xxxxxx Vice President/Investment Accounting
Xxxxxxx X. Xxxxxxxx Vice President/Associate General Counsel/Assistant
Secretary
Xxxxxxx X. Xxxxxxx Assistant Vice President/Counsel/Assistant Secretary
Xxxx X. Xxxx Assistant Vice President/Legal Services
Xxxxx Xxxxxx Assistant Vice President/Legal Services
Xxxxx X. X'Xxxxx Assistant Vice President/Senior Compliance Officer
By: /s/ Xxxxx X. Xxxxxx
Secretary
Dated:
27
APPENDIX C
SELECTED COUNTRIES
See attachment.
* Note, the Fund or its investment adviser or subadviser, as the case may be ,
shall be responsible for determining the Foreign Countries in which the Fund may
invest, and shall direct the Custodian from time to time as to the Foreign
Countries which have been approved for investment by the Fund.
** Note, the Custodian will not act as a Foreign Custody Manager with respect to
Assets held in this country. Holding Assets and use of Custodian's usual
subcustodian in this country is subject to Instructions by the Fund and its
execution of a separate letter-agreement pertaining to custody and market risks.
00
XXXXXXXX X FEE SCHEDULE
Basis Point/ Unit Cost
----------------------
Administrative Fee
Domestic
1/10 basis point (.000010) on domestic assets 0.10
Global
Developed Markets Category 1 3.00
Developed Markets Category 2 4.50
Developed Markets Category 3 7.00
Intermediate Markets Category 4 12.00
Intermediate Markets Category 5 20.00
Emerging Markets- Category 6 40.00
Structural Charges
Per Domestic Account waived
Per Global Account waived
Per Fund of Fund waived
Third party Lending Support (per fund) 5,000.00
Transaction Fee
Domestic
Per Depository or Fed Eligible Transaction $1.00
Per Physical Transaction $15.00
Per Fed Funds Wire Received Or Delivered $3.00
Per Paydown $1.00
Per Option (per Write, Close, Expire, or Exercise) $5.00
Per Forward Contract $20.00
Per F/X Not Executed At Mellon $30.00
Per Security Segregation $3.00
Global
Developed Markets Category 1 $25.00
Developed Markets Category 2 $25.00
Developed Markets Category 3 $25.00
Intermediate Markets Category 4 $50.00
Intermediate Markets Category 5 $60.00
Emerging Markets- Category 6 $85.00
Conversion and Implementation Costs
Conversion and Implementation Waived (see Notes)
Workbench Information Delivery
Client Reporting
Unlimited Workbench User IDs*
Customized Report Development
Per Report (Minimum) for One-time Development Fee $1,000.00
Per Report Annual Maintenance Fee $500.00
Per Hour for Special Projects $150.00
--------------------------------------------------------------------------------
NOTES
--------------------------------------------------------------------------------
Custodian will pass through to the client any out-of-pocket expenses associated
with the following:
--------------------------------------------------------------------------------
o Worldwide custody, including but not limited to, postage, courier expenses,
registration fees, stamp duties, and fed wire fees, etc.
--------------------------------------------------------------------------------
o Postage and courier expenses associated with delivery of reports
--------------------------------------------------------------------------------
o Proxy or tender solicitation expenses incurred with respect to our duties
--------------------------------------------------------------------------------
o Charges for customized reporting development, programming, interface
development and maintenance at $150 per hour
--------------------------------------------------------------------------------
o Costs on client specific, customized vendor feeds or data services used to
support client customized reporting
--------------------------------------------------------------------------------
o Communication and hardware expenses including terminals, printers and
leased lines required to support data transmissions to/from Custodian
--------------------------------------------------------------------------------
o Legal charges for extraordinary events, such as lawsuits, client initiated
events and regulatory audits, etc.
--------------------------------------------------------------------------------
o The U.S. depository, physical and foreign market transaction categories
will include buys and sells in the appropriate market, free trades,
maturities, corporate action transactions, pairoff transactions, repurchase
agreements, cross trades and fund mergers as well as transfers out of
Custodian as it relates to a deconversion or transactions related to a
transfer in kind. Subject to the provisions of Article IV, Section 7(f) and
7(g) of the Agreement to which this Appendix E is attached, (i)
transactions related to the change of a sub-custodian will not be billed,
nor will transactions related to a conversion of assets into Custodian be
billed and (ii) Custodian will not charge transaction fees for security
movements related to securities lending provided that Custodian or its
affiliate is the securities lending agent.
--------------------------------------------------------------------------------
o Memo items and non-affiliated/external sweep products will be included as a
U.S. depository transaction.
--------------------------------------------------------------------------------
o Non-U.S. cash transfers to/from an outside party are included under foreign
market transactions. (Excludes cash transfers between accounts within
Custodian's Subcustodian network.)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Additional fees may apply in situations where the following may occur: client's
billing requirements are exceptional, client requires "rush" service or systems
development, clients require consulting services and / or manual or otherwise
exceptional pricing for securities, Tax Department support work, or client
requires on-site training.
--------------------------------------------------------------------------------
Market Tiers:
--------------------------------------------------------------------------------
Developed Markets
--------------------------------------------------------------------------------
Category 1: Canada, Euroclear, France, Germany, Italy, Japan, Netherlands, New
Zealand, Spain, Sweden, Switzerland, United Kingdom, CEDEL
--------------------------------------------------------------------------------
Category 2: Austria, Australia, Belgium, Denmark, Finland, Ireland, Luxembourg,
Mexico, Norway, South Africa
--------------------------------------------------------------------------------
Category 3: Argentina, Brazil, Hong Kong, Malaysia, Portugal, Singapore, South
Korea, Sri Lanka, Thailand, Turkey
--------------------------------------------------------------------------------
Intermediate Markets
--------------------------------------------------------------------------------
Category 4: Czech Republic, Greece, Hungary, Indonesia, Israel, Peru, Taiwan,
Zimbabwe
--------------------------------------------------------------------------------
Category 5: Xxxxxxxxxx, Xxxxxxx, Xxxxxxxx, Xxxxx, Xxxxx, Xxxxxxxxx, Xxxxxxxx,
Philippines, Poland, Uruguay
--------------------------------------------------------------------------------
Emerging Markets
--------------------------------------------------------------------------------
Category 6: Chile, China - Shanghai, China - Shenzhen, Colombia, Cyprus, Egypt,
Estonia, India, Jordan, Morocco, Russia, Slovak Republic, Venezuela, Zambia
--------------------------------------------------------------------------------
29
--------------------------------------------------------------------------------
Earnings credits and Overdraft Fees:
--------------------------------------------------------------------------------
Earnings credits and overdraft rates will be calculated monthly on the
basis of the following formula: The Account may earn interest on balances,
including disbursement balances and balances arising from purchase and sale
transactions. For each month during which the Custodian holds property for
the Client, there shall be an adjustment to the custody fees, calculated as
follows. For each day of the month in which the closing cash balance of the
Account is more than zero, such cash balance amount will earn interest
calculated by taking the amount of the idle balance multiplied by the
Overnight Federal Funds Rate (defined below) minus .50% divided by 365
days. The amount of interest credit shall be known as the "Daily Credits."
Alternatively, for each day of the month in which the closing balance of
the Account is less than zero (an "overdraft"), the overdraft amount will
be subject to a charge calculated by taking the amount of the overdraft
multiplied by the Overnight Federal Funds Rate (defined below) plus .50%
divided by 365 days. The amount of interest charge shall be known as "Daily
Charges." The net of the Daily Credits and Daily Charges for a particular
month will be credited or debited, as the case may be, to the Monthly
Notification for the applicable period. Monthly credit balances will roll
forward to offset future Custodian fees and expenses. Unused Daily Credits
will expire at calendar year end. Credit balances may not be transferred.
They are used exclusively to offset Custodian fees and expenses and shall
not be applied against investment or other related expenses. A Daily Charge
shall not apply to the extent that an overdraft is solely due to Custodian
error. The term "Overnight Federal Funds Rate" shall mean, for any month,
the average of daily "Federal Funds Rates" for such month. In turn, the
daily Federal Funds Rates shall mean, for any day, the weighted average of
the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers on such day, as
published by the Federal Reserve Bank of New York on the business day next
succeeding such day.
--------------------------------------------------------------------------------
Initial Custody Conversion Fee Waiver
--------------------------------------------------------------------------------
Custodian will not charge custody transaction charges (per this fee schedule)
related to the initial conversion of assets to Custodian. Custodian will not
pass thru global custody market charges (including but not limited to, postage,
courier expenses, registration fees, stamp duties, and fed wire fees, etc.)
related to the initial conversion of assets to Custodian provided that the
securities are properly registered at current custodian.
--------------------------------------------------------------------------------
FEES WILL BE PAYABLE AS FOLLOWS
--------------------------------------------------------------------------------
Fees will be calculated and billed on a monthly basis. Fees not paid within 60
days of the due date will be subject to a late charge of 1.5% of the amount
billed. Additional charges of 1.5% per month will be incurred for each
additional month fees remain unpaid.
--------------------------------------------------------------------------------
MELLON BANK, N.A.
By: /s/ illegible
Title: First Vice President
OPTIMUM FUND TRUST, on behalf of its
Series identified on Appendix D
By: /s/ Xxxxxxx Xxxxx
Title: Chief Financial Officer
30
EXHIBIT A
CUSTOMER IDENTIFICATION PROGRAM NOTICE
[GRAPHIC OMITTED]MELLON
--------------------------------------------------------------------------------
CUSTOMER IDENTIFICATION PROGRAM NOTICE
--------------------------------------------------------------------------------
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT
--------------------------------------------------------------------------------
To help the government fight the funding of terrorism and money laundering
activities, all financial institutions are required by law to obtain, verify and
record information that identifies each individual or entity that opens an
account.
What this means for you: When you open an account, we will ask you for your
name, address, taxpayer or other government identification number and other
information, such as date of birth for individuals, that will allow us to
identify you. We may also ask to see identification documents such as a driver's
license, passport or documents showing existence of the entity.
--------------------------------------------------------------------------------
Rev. 09/03
34
