CUSTODIAN CONTRACT
Between
FLOATING RATE PORTFOLIO
and
STATE STREET BANK AND TRUST COMPANY
CUSTODIAN CONTRACT
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This Contract between Floating Rate Portfolio, a business trust
organized and existing under the laws of Delaware, having its principal place of
business at 00 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 hereinafter
called the "Portfolio", and State Street Bank and Trust Company, a Massachusetts
trust company, having its principal place of business at 000 Xxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx, 00000, hereinafter called the "Custodian",
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
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The Portfolio hereby employs the Custodian as the custodian of its
assets, including securities which it desires to be held in places within the
United States ("domestic securities") and securities it desires to be held
outside the United States ("foreign securities") pursuant to the provisions of
the Instrument of Trust. The Portfolio agrees to deliver to the Custodian all
securities and cash owned by it, and all payments of income, payments of
principal or capital distributions received by it with respect to all securities
owned by the Portfolio from time to time, and the cash consideration received by
it for such new or shares of beneficial interest $.001 par value, ("Shares") of
the Portfolio as may be issued or sold from time to time. The Custodian shall
not be responsible for any property of the Portfolio held or received by the
Portfolio and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
4), the Custodian shall from time to time employ one or more sub-custodians
located in the United States, but only in accordance with an applicable vote by
the Board of Trustees of the Portfolio, and provided that the Custodian shall
have no more or less responsibility or liability to the Portfolio on account of
any actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Portfolio's foreign securities and other assets the foreign banking
institutions and foreign securities depositories designated in Schedule A hereto
but only in accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Portfolio Held
By the Custodian in the United States.
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2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of the Portfolio all non-cash property, to be held by
it in the United States including all domestic securities owned by the
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository
or in a book-entry system authorized by the U.S. Department of the
Treasury, collectively referred to herein as "Securities Systems" and
(b) commercial paper of an issuer for which State Street Bank and Trust
Company acts as issuing and paying agent
("Direct Paper") which is deposited and/or maintained in the Direct
Paper System of the Custodian pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by the Portfolio held by the Custodian or in
a Securities System account of the Custodian or in the Custodian's
Direct Paper book entry system account ("Direct Paper System Account")
only upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, and only in the
following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name
of the Portfolio or into the name of any nominee or nominees of
the Custodian or into the name or nominee name of any agent
appointed pursuant to Section 2.9 or into the name or nominee
name of any sub-custodian appointed pursuant to Article 1; or for
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities are to
be deliveries to the Custodian.
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall have
no responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of securities made by
the Portfolio, but only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Portfolio,
which may be in the form of cash or obligations issued by the
United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is
to be credited to the Custodian's account in the book-entry
system authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the delivery
of securities owned by the Portfolio prior to the receipt of such
collateral;
11) For delivery as security in connection with any borrowings by the
Portfolio requiring a pledge of assets by the Portfolio, but only
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Portfolio, the Custodian and a broker-dealer registered
under the Securities Exchange Act of 1934 (the "Exchange Act")
and a member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by the Portfolio;
13) For delivery in accordance with the provisions of any agreement
among the Portfolio, the Custodian, and a Futures Commission
Merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Portfolio;
14) For any other proper corporate purpose, but only upon receipt of,
in addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees or of the Executive Committee
signed by an officer and certified by the Secretary or an
Assistant Secretary, specifying the securities of the Portfolio
to be delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Portfolio or of any
nominee of the Custodian which nominee shall be assigned exclusively to
the Portfolio, unless the Portfolio has authorized in writing the
appointment of a nominee to be used in common with other registered
investment companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent appointed
pursuant to Section 2.9 or in the name or nominee name of any
sub-custodian appointed pursuant to Article l. All securities accepted
by the Custodian on behalf of the Portfolio under the terms of this
Contract shall be in "street name" or other good delivery form. If,
however, the Portfolio directs the Custodian to maintain securities in
"street name" or other good delivery form. If, however, the Portfolio
directs the Custodian to maintain securities in "street name", the
Custodian shall utilize its best efforts only to timely collect income
due the Portfolio on such securities and to notify the Portfolio on a
best efforts basis only of relevant corporate actions including,
without limitation, pendency of calls, maturities, tender or exchange
offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of the Portfolio
which shall contain only property held by the Custodian as Custodian
for the Portfolio, subject only to draft or order by the Custodian
acting pursuant to the terms of this Contract, and shall hold in such
account or accounts, subject to the provisions hereof, all cash
received by it from or for the account of the Portfolio, other than
cash maintained by the Portfolio in a bank account established and used
in accordance with Rule 17f-3 under the Investment Company Act of 1940.
Portfolios held by the Custodian for the Portfolio may be deposited by
it to its credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as it may in its
discretion deem necessary or desirable; provided, however, that every
such bank or trust company shall be qualified to act as a custodian
under the Investment Company Act of 1940 and that each such bank or
trust company and the Portfolios to be deposited with each such bank or
trust company shall be approved by vote of a majority of the Board of
Trustees of the Portfolio. Such Portfolios shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Availability of Federal Portfolios. Upon mutual agreement between the
Portfolio and the Custodian, the Custodian shall, upon the receipt of
Proper Instructions, make federal Portfolios available to the Portfolio
as of specified times agreed upon from time to time by the Portfolio
and the Custodian in the amount of checks received in payment for
Shares of the Portfolio which are deposited into the Portfolio's
account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to United States registered securities held hereunder to
which the Portfolio shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely basis
all income and other payments with respect to United States bearer
domestic securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent thereof and shall
credit such income, as collected, to the Portfolio's custodian account.
Without limiting the generality of the foregoing, the Custodian shall
detach and present for payment all coupons and other income items
requiring presentation as and when they become due and shall collect
interest when due on securities held hereunder. Income due the
Portfolio on United States securities loaned pursuant to the provisions
of Section 2.2 (10) shall be the responsibility of the Portfolio. The
Custodian will have no duty or responsibility in connection therewith,
other than to provide the Portfolio with such information or data as
may be necessary to assist the Portfolio in arranging for the timely
delivery to the Custodian of the income to which the Portfolio is
properly entitled.
2.7 Payment of Portfolio Monies. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties,
the Custodian shall pay out monies of the Portfolio in the following
cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth
in Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.11; (d) in the case of
repurchase agreements entered into between the Portfolio and
the Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities either
in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing
purchase by the Portfolio of securities owned by the Custodian
along with written evidence of the agreement by the Custodian
to repurchase such securities from the Portfolio or (e) for
transfer to a time deposit account of the Portfolio in any
bank, whether domestic or foreign; such transfer may be
effected prior to receipt of a confirmation from a broker
and/or the applicable bank pursuant to Proper Instructions as
defined in Article 4;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Portfolio whether or not such expenses are to
be in whole or part capitalized or treated as deferred
expenses;
4) For the payment of any dividends declared pursuant to the
governing documents of the Portfolio;
5) For payment of the amount of dividends received in respect of
securities sold short;
6) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees or of the Executive
Committee of the Portfolio signed by an officer of the
Portfolio and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting
forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the
Person or persons to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of the Portfolio is made by the Custodian in advance of receipt
of the securities purchased in the absence of specific written
instructions from the Portfolio to so pay in advance, the Custodian
shall be absolutely liable to the Portfolio for such securities to the
same extent as if the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, and its rules or regulations, to act as a custodian,
as its agent to carry out such of the provisions of this Article 2 as
the Custodian may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian (as
distinguished from a sub-custodian appointed pursuant to Section 3) of
its responsibilities or liabilities hereunder. In the event of any
loss, damage or expense suffered or incurred by the Portfolio caused by
or resulting from the negligence or willful misconduct of any agent
appointed by the Custodian pursuant to this paragraph 2.9, the
Custodian shall promptly reimburse the Portfolio in the amount of such
loss, damage, or expense.
2.10 Deposit of Portfolio Assets in Securities Systems. The Custodian may
deposit and/or maintain domestic securities owned by the Portfolio in a
clearing agency registered with the Securities and Exchange Commission
under Section 17A of the Securities Exchange Act of 1934, which acts as
a securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities Systems" in accordance
with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
1) The custodian may deposit and/or maintain domestic securities
of the Portfolio in a Securities System provided that such
securities are represented in an account ("Account") of the
Custodian in the Securities System which shall not include any
assets of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
2) The records of the Custodian with respect to domestic
securities of the Portfolio which are maintained in a
Securities System shall identify by book-entry those
securities belonging to the Portfolio;
3) The Custodian shall pay for domestic securities purchased for
the account of the Portfolio upon (i) receipt of advice from
the Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such payment and
transfer for the account of the Portfolio. The Custodian shall
transfer domestic securities sold for the account of the
Portfolio upon (i) receipt of advice from the Securities
System that payment for such securities has been transferred
to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such transfer and payment for the
account of the Portfolio. Copies of all advices from the
Securities System of transfers of domestic securities for the
account of the Portfolio shall identify the Portfolio, be
maintained for the Portfolio by the Custodian and be provided
to the Portfolio at its request. The Custodian shall furnish
the Portfolio confirmation of each transfer to or from the
account of the Portfolio in the form of a written advice or
notice and shall furnish to the Portfolio copies of daily
transaction sheets reflecting each day's transactions in the
Securities System for the account of the Portfolio on the next
business day;
4) The Custodian shall provide the Portfolio with any report
obtained by the Custodian (or by any agent appointed by the
custodian pursuant to Section and furnished to the custodian)
on the Securities Systems accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the Securities System;
5) The Custodian shall have received the initial certificate
required by Article 12 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Portfolio for any loss,
damage or expense to the Portfolio resulting from use of the
Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of
its or their employees or from failure of the Custodian or any
such agent to enforce effectively such rights as it may have
against the Securities System; at the election of the
Portfolio, it shall be entitled to be subrogated to the rights
of the Custodian with respect to any claim against the
Securities System or any other person which the Custodian may
have as a consequence of any such loss, damage or expense if
and to the extent that the Portfolio has not been made whole
for any such loss, damage or expense. The Custodian agrees to
cooperate with the Portfolio in connection with the
enforcement of the Portfolio's subrogation rights.
2.11 Portfolio Assets Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by the Portfolio
in the Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions;
2) The Custodian may keep securities of the Portfolio in the Direct
Paper System only if such securities are represented in an
account ("Account") of the Custodian in the Direct Paper System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the
Portfolio; the Custodian shall pay for securities purchases for
the account the Portfolio upon the making of an entry on the
records of the custodian to reflect such payment and transfer of
securities to the account of the Portfolio. The Custodian shall
transfer securities sold for the account of the Portfolio upon
the making of an entry on the records of the Custodian to reflect
such transfer and receipt of payment for the account of the
Portfolio;
5) The Custodian shall furnish the Portfolio confirmation of each
transfer to or from the account of the Portfolio, in the form of
a written advice or notice, of Direct Paper on the next business
day following such transfer and shall furnish to the Portfolio
copies of daily transaction sheets reflecting each day's
transaction in the Securities System for the account of the
Portfolio;
6) The Custodian and any agent appointed pursuant to paragraph 2.9
shall provide the Portfolio with any report on their respective
systems of internal accounting control as the Portfolio may
reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of the Portfolio, into which account or accounts may
be transferred cash and/or securities, including securities maintained
in an account by the Custodian pursuant to Section 2.10 hereof, (i) in
accordance with the provisions of any agreement among the Portfolio,
the Custodian and a broker-dealer registered under the Exchange Act and
a member of .he NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements
in connection with transactions by the Portfolio, (ii) for purposes of
segregating cash or government securities in connection with options
purchased, sold or written by the Portfolio or commodity futures
contracts or options thereon purchased or sold by the Portfolio, (iii)
for the purposes of compliance by the Portfolio with the procedures
required by Investment Company Act Release No. 10666, or any subsequent
release or releases of the Securities and Exchange Commission relating
to the maintenance of segregated accounts by registered investment
companies and (iv) as mutually agreed upon from time to time in writing
by the Custodian and the Portfolio.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of the Portfolio held by
it and 'n connection with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Portfolio or a nominee of the Portfolio, all proxies,
without indication of the manner in which such proxies are to be voted,
and shall promptly deliver to the Portfolio such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to the
Portfolio all written information (including, without limitation,
pendency of calls and maturities of domestic securities and expirations
of rights in connection therewith and notices of exercise of call and
put options written by the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian
from issuers of the domestic securities being held for the Portfolio.
With respect to tender or exchange offers, the Custodian shall transmit
promptly to the Portfolio all written information received by the
Custodian from issuers of the domestic securities whose tender or
exchange is sought and from the party (or his Agents) making the tender
or exchange offer. If the Portfolio desires to take action with respect
to any tender offer, exchange offer or any other similar transaction,
the Portfolio shall notify the Custodian at least three business days
prior to the date on which the Custodian is to take such action.
2.16 Reports to Portfolio by Independent Public Accountants. The Custodian
shall provide the Portfolio, at such times as the Portfolio may
reasonably require, with reports by independent public accountants on
the accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures
contracts, including domestic securities deposited and/or maintained in
a Securities System, relating to the services provided by the Custodian
under this Contract; such reports, shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Portfolio to
provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, there are no such inadequacies, the
reports shall so state.
3. Duties of the Custodian with Respect to Property of the Portfolio Held
Outside of the United States.
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3.1 Appointment of Foreign Sub-Custodians. The Portfolio hereby authorizes
and instructs the Custodian to employ as sub-custodians for the
Portfolio's securities and other assets maintained outside the United
States the foreign banking institutions and foreign securities
depositories designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions", as defined in
Section 4 of this Contract, together with a certified resolution of the
Portfolio's Board of Trustees, the Custodian and the Portfolio may
agree to amend Schedule A hereto from time to time to designate
additional foreign banking institutions and foreign securities
depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Portfolio may instruct the Custodian to cease the
employment of any one or more such sub-custodians for maintaining
custody of the Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities, as defined in paragraph (c)(l) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents
in such amounts as the Custodian or the Portfolio may determine to be
reasonably necessary to effect the Portfolio's foreign securities
transactions. The Custodian shall identify on its books as belonging to
the Portfolio, the foreign securities of the Portfolio held by each
foreign sub-custodian.
3.3 Foreign Securities Depositories. Except as may otherwise be agreed upon
in writing by the Custodian and the Portfolio, assets of the Portfolios
shall be maintained in foreign securities depositories only through
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof. Where possible, such
arrangements shall include entry into agreements containing the
provisions set forth in Section 3.4 hereof.
3.4 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall be substantially in the form set
forth in Exhibit 1 hereto and shall provide that: (a) the Portfolio's
assets will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution
or its creditors or agent, except a claim of payment for their safe
custody or administration; (b) beneficial ownership of the Portfolio's
assets will be freely transferable without the payment of money or
value other than for custody or administration; (c) adequate records
will be maintained identifying the assets as belonging to the
Portfolio; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted
under applicable law the independent public accountants for the
Portfolio, will be given access to the books and records or the foreign
banking institution relating to its actions under its agreement with
the Custodian; and (e) assets of the Portfolio held by the foreign
sub-custodian will be subject only to the instructions of the Custodian
or its agents.
3.5 Access of Independent Accountants of the Portfolio. Upon request of the
Portfolio, the Custodian will use its best efforts to arrange for the
independent accountants of the Portfolio to be afforded access to the
books and records of any foreign banking institution employed as a
foreign sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement
with the Custodian.
3.6 Reports by Custodian. The Custodian will supply to the Portfolio from
time to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Portfolio held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Portfolio's securities and other
assets and advices or notifications of any transfers of securities to
or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf or the Portfolio indicating, as
to securities acquired for the Portfolio, the identity of the entity
having physical possession of such securities.
3.7 Transactions in Foreign Custody Account. (a) Except as otherwise
provided in paragraph (b) of this Section 3.7, the provision of
Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis to
the foreign securities of the Portfolio held outside the United States
by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of
the Portfolio and delivery of securities maintained for the
account of the Portfolio may be effected in accordance with the
customary established securities trading or securities processing
practices and procedures in the jurisdiction or market in which
the transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor (or
an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from
such purchaser or dealer.
c) Securities maintained in the custody of a foreign sub-custodian
may be maintained in the name of such entity's nominee to the
same extent as set forth in Section 2.3 of this Contract, and the
Portfolio agrees to hold any such nominee harmless from any
liability as a holder of record of such securities.
3.8 Liability of Foreign Sub-Custodians. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable care
in the performance of its duties and to indemnify, and hold harmless,
the Custodian and the Portfolio from and against any loss, damage,
cost, expense, liability or claim arising out of or in connection with
the institutions performance of such obligations. At the election of
the Portfolio, it shall be entitled to be subrogated to the rights of
the Custodian with respect to any claims against a foreign banking
institution as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Portfolio has not been
made whole for any such loss, damage, cost, expense, liability or
claim.
3.9 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a
U.S. bank as contemplated by paragraph 3.12 hereof, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care.
3.10 Reimbursement or Advances. If the Portfolio requires the Custodian to
advance cash or securities for any purpose including the purchase or
sale of foreign exchange or of contracts for foreign exchange, or in
the event that the Custodian or its nominee shall incur or be assessed
any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may
arise from its or its nominee's own negligent action, negligent failure
to act or willful misconduct, any property at any time held for the
account of the Portfolio shall be security therefor and should the
Portfolio fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of Portfolio assets
to the extent necessary to obtain reimbursement.
3.11 Monitoring Responsibilities. The Custodian shall furnish annually to
the Portfolio, during the month of June, information concerning the
foreign sub-custodians employed by the Custodian. Such information
shall be similar in kind and scope to that furnished to the Portfolio
in connection with the initial approval of this Contract. In addition,
the Custodian will promptly inform the Portfolio in the event that the
Custodian learns of a material adverse change in the financial
condition of a foreign sub-custodian or any material loss of the assets
of the Portfolio or in the case of any foreign sub-custodian not the
subject of an exemptive order from the Securities and Exchange
Commission is notified by such foreign sub-custodian that there appears
to be a substantial likelihood that its shareholders' equity will
decline below $200 million (U.S. dollars or the equivalent thereof) or
that its shareholders' equity has declined below S200 million (in each
case computed in accordance with generally accepted U.S. accounting
principles).
3.12 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of
the Portfolios assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract.
(b) Cash held for the Portfolio in the United Kingdom shall be
maintained in an interest bearing account established for the
Portfolio with the Custodian's London branch, which account
shall be subject to the direction of the Custodian, State
Street London Ltd. or both.
3.13 Tax Law. The Custodian shall have no responsible or liability for any
obligations now or hereafter imposed on the Portfolio or the Custodian
as custodian of the Portfolio by the tax law of the United States of
America or any state or political subdivision whereof. It shall be the
responsibility of the Custodian to use reasonable efforts and due care
(a) to perform such ministerial steps as are required to collect any
tax refund, (b) to ascertain the appropriate rate of tax withholding
and (c) to provide such documents as may be required to enable the
Portfolio to receive appropriate tax treatment under applicable tax
laws and any applicable treaty provisions. Unless otherwise informed by
the Portfolio, the Custodian, in performance of its duties under this
Section, shall be entitled to apply categorical treatment of the
Portfolio according to the nationality of the Portfolio, the
particulars of its organization and other relevant details that shall
be supplied by the Portfolio. The Custodian shall be entitled to rely
on any information supplied by the Portfolio. The Custodian may engage
reasonable professional advisors disclosed to the Portfolio by the
Custodian, which may include attorneys, accountants or financial
institutions in the regular business of investment administration and
may rely upon advice received therefrom. It shall be the duty of the
Portfolio to inform the Custodian of any change in the organization,
domicile or other relevant fact concerning tax treatment of the
Portfolio and further to inform the Custodian if the Portfolio is or
becomes the beneficiary of any special ruling or treatment not
applicable to the general nationality and category or entity of which
the Portfolio is a part under general laws and treaty provisions.
4. Proper Instructions
-------------------
Proper Instructions as used herein means a writing or tested telex
signed or initialed by one or more person or persons as the Board of Trustees
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested, and may be in the
form of standing instructions. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Portfolio shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board of Trustees of the Portfolio
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided; the Board of Trustees
and the Custodian are satisfied that such procedures afford adequate safeguards
for the Portfolios assets. For purposes of this Section, Proper Instructions
shall include instructions received by the Custodian pursuant to any three party
agreement which requires a segregated asset account in accordance with Section
2.12.
5. Actions Permitted without Express Authority
-------------------------------------------
The Custodian may in its discretion, without express authority from the
Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Contract, provided that all such payments shall be accounted
for to the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks, in
general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of the Portfolio
except as otherwise directed by the Board of Trustees of the
Portfolio.
6. Evidence of Authority
---------------------
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the
Portfolio. The Custodian may receive and accept a certified copy of a vote of
the Board of Trustees of the Portfolio as conclusive evidence (a) of the
authority of any person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Trustees pursuant to the
Instrument of Trust as described in such vote, and such vote may be considered
as in full force and effect until receipt by the Custodian of written notice to
the contrary.
7. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
-----------------------------------------------------------------------
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees of the Portfolio to
keep the books of account of the Portfolio and/or compute the net asset value
per share of the outstanding shares of the Portfolio or, if directed in writing
to do so by the Portfolio pursuant to Proper Instructions, shall itself keep
such books of account and/or compute such net asset value per share. The net
asset value of the Portfolio's shares will be determined weekly as determined by
the Portfolio's Board of Trustees and will also be determined monthly as of the
close of regular trading on the New York Stock Exchange, Inc. The net asset
value per share will be computed by dividing the value of the securities held by
the Portfolio plus any cash or other assets (including interest and dividends
accrued but not yet received and earned discount) minus all liabilities
(including accrued expenses) by the total number of shares outstanding at such
time. If so directed, the Custodian shall also calculate weekly the net income
of the Portfolio as described in the Portfolio's currently effective prospectus
related to the Portfolio and shall advise the Portfolio and the Transfer Agent
weekly of the total amounts of such net income and, if instructed in writing by
an officer of the Portfolio to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various components.
The calculations of the net asset value per share and the weekly income of the
Portfolio shall be made at the time or times described from time to time in the
Portfolio's currently effective prospectus.
8. Mitigation by Custodian
-----------------------
Upon the occurrence of any event connected with the duties of the
Custodian under this Contract which causes or may cause any loss, damage or
expense to the Portfolio, (i) the Custodian shall, and (ii) shall exercise
reasonable efforts to cause any subcustodian to, use reasonable efforts and take
all reasonable steps under the circumstances to mitigate the effects of such
event and to avoid continuing harm to the Portfolio.
9. Notification of Litigation; Right to Proceed
--------------------------------------------
The Portfolio shall not be liable for indemnification under this
Contract to the extent that the Portfolio's ability to defend against any
litigation or proceeding brought against the Custodian in respect of which
indemnity may be sought under this Contract is prejudiced by the Custodian's
failure to give prompt notice of the Commencement or any such litigation or
proceeding with respect to claims in such litigation or proceedings for which
indemnity by the Portfolio may be sought and subject to applicable law and the
ruling of any court of competent jurisdiction, the Portfolio shall be entitled
to participate in any such litigation or proceeding and, after written notice
from the Portfolio to the Custodian, the Portfolio may assume the defense of
such litigation or proceeding with counsel of its choice at its own expense in
respect of that portion of the litigation for which the Portfolio may be subject
to an indemnification obligation; provided, however, that the Custodian shall be
entitled to participate in the defense of any such litigation or proceeding. If
the Portfolio has acknowledged in writing its obligation to indemnify the
Custodian with respect to such litigation or proceeding, the Custodian's
participation shall be at its own expense and the Portfolio shall control the
defense of the litigation or proceeding. If the Portfolio is not permitted to
participate in or control such litigation or proceeding under applicable law or
by a ruling of a court of competent jurisdiction, the Custodian shall reasonably
prosecute such litigation or proceeding. The Custodian shall not consent to the
entry of any judgment or enter into any settlement in any such litigation or
proceeding without providing the Portfolio with adequate notice of any such
settlement or judgment, and without the Portfolio's prior written consent. The
Custodian shall submit written evidence to the Portfolio with respect to any
cost or expense for which it is seeking indemnification in such form and detail
as the Portfolio may reasonably request.
10. Records
-------
The Custodian shall create and maintain and retain all records relating
to its activities and obligations under this Contract in such manner as will
meet the obligations of the Portfolio under the Investment Company Act of 1940
and the rules and regulations thereunder, with particular attention to Section
31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the
property of the Portfolio and in the event of termination of this Contract shall
be delivered to the Portfolio or a successor custodian as instructed by the
Portfolio. All such records shall at all times during the regular business hours
of the Custodian be open for inspection and audit by duly authorized officers,
employees or agents of, attorneys for and auditors employed by the Portfolio and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Portfolio's request, supply the Portfolio with a tabulation of
securities owned by the Portfolio and held by the Custodian and shall, when
requested to do so by the Portfolio and for such compensation as shall be agreed
upon between the Portfolio and the Custodian, include certificate numbers in
such tabulations.
11. Opinion of Portfolio's Independent Accountant
---------------------------------------------
The Custodian shall take all reasonable action, as the Portfolio may
from time to time request, to obtain from year to year favorable opinions from
the Portfolio's independent accountants with respect to its activities hereunder
in connection with the preparation of the Portfolio's Form N-2, and Form N-SAR
or other annual reports to the Securities and Exchange Commission and with
respect to any other requirements of such Commission.
12. Compensation of Custodian
-------------------------
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Portfolio and the Custodian.
13. Responsibility of Custodian
---------------------------
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care and diligence in carrying out the provisions of this
Contract and shall be liable to the Portfolio for all losses, damages and
expenses suffered or incurred by the Portfolio resulting from the failure of the
Custodian to exercise such reasonable care and diligence. The Portfolio agrees
that the Custodian shall be indemnified by and shall be without liability to the
Portfolio for any action taken or omitted by it in good faith without
negligence. It shall be entitled to rely on and may act upon advice of counsel
(who may be counsel for the Portfolios on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such advice.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to subcustodians
located in the United States (except as specifically provided in Article 3.9)
and, regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S. bank
as contemplated by paragraph 3.12 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from, or caused
by, the direction of or authorization by the Portfolio to maintain custody or
any securities or cash of the Portfolio in a foreign country including, but not
limited to, losses resulting from nationalization, expropriation, currency
restrictions or acts of war or terrorism.
If the Portfolio requires the Custodian to take any action with respect
to securities, which action involves the payment of money or which action may,
in the opinion of the Custodian, result in the custodian or its nominee assigned
to the Portfolio being liable for the payment of money or incurring liability of
some other form, the Portfolio, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an amount equal to
the Custodian's reasonable estimate of the amount to be paid or for which the
Custodian may potentially be liable and in a form satisfactory to the Custodian.
If the Portfolio requires the Custodian, its affiliates, subsidiaries
or agents, to advance cash or securities for any purpose (including but not
limited to securities settlements, foreign exchange contracts and assumed
settlement) or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Portfolio shall
be security therefor and should the Portfolio fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available cash and to
dispose of the Portfolio's assets to the extent necessary to obtain
reimbursement.
14. Effective Period; Termination and Amendment
-------------------------------------------
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not act under Section 2.10 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Trustees of the Portfolio has approved the initial
use of a particular Securities System, as required by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian shall not act
under Section 2.11 hereof in the absence of receipt or an initial certificate of
the Secretary or an Assistant Secretary that the Board of Trustees has approved
the initial use of the Direct Paper System; provided further, however, that the
Portfolio shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Instrument of
Trust, and further provided, that the Portfolio may at any time by action of its
Board of Trustees (i) substitute another bank or trust company for the Custodian
by giving notice as described above to the Custodian, or (ii) immediately
terminate this Contract in the event of the appointment of a conservator or
receiver for the Custodian by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appropriate regulatory agency
or court of competent jurisdiction.
Upon termination of the Contract, the Portfolio shall pay to the
Custodian such compensation as may be due as of the date of such termination and
shall likewise reimburse the Custodian for its costs, expenses and
disbursements.
15. Successor Custodian
-------------------
If a successor custodian shall be appointed by the Board of Trustees of
the Portfolio, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Portfolio's securities held in a
Securities System unless otherwise instructed by the Portfolio.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Trustees of the Portfolio, delivered at the office of the Custodian, transfer
such securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of the Portfolio's
securities held in any Securities System. Thereafter, such bank or Trust Company
shall be the successor of the Custodian under this contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Portfolio to procure the certified copy of the vote referred to
or of the Board of Trustees to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services during such period as
the Custodian retains possession of such securities, funds and other properties
and the provisions of this Contract relating to the duties and obligations of
the Custodian shall remain in full force and effect. The Custodian agrees to
cooperate with the successor custodian and the Portfolio in execution of
documents and performance of other action necessary or desirable in order to
substitute the successor custodian for the Custodian.
16. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Contract, the custodian and
the Portfolio may from time to time agree on such provisions interpretive of or
in addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Instrument of Trust of the Portfolio. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Contract.
17. Massachusetts Law to Apply
--------------------------
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
18. Prior Contracts
---------------
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Portfolio and the Custodian relating to the custody
of the Portfolio's assets.
19. Shareholder Communications Election
-----------------------------------
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Portfolio to indicate whether it authorizes
the Custodian to provide the Portfolio's name, address, and share position to
requesting companies whose securities the Portfolio owns. If the Portfolio tells
the Custodian "no", the Custodian will not provide this information to
requesting companies. If the Portfolio tells the custodian "yes" or does not
check either "yes" or "no" below, the custodian is required by the rule to treat
the Portfolio as consenting to disclosure of this information for all securities
owned by the Portfolio or any funds or accounts established by the Portfolio.
For the Portfolio's protection, the Rule prohibits the requesting company from
using the Portfolio's name and address for any purpose other than corporate
communications. Please indicate below whether the Portfolio consents or objects
by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Portfolio's
name, address, and share positions.
N0 [ ] The Custodian is not authorized to release the
Portfolio's name, address, and share positions.
20. Assignment
----------
Neither the Portfolio nor the Custodian shall have the right to assign
any of its rights or obligations under this Contract without the prior written
consent of the other party.
21. Severability
------------
If any provision of this Contract is held to be unenforceable as a
matter of law, the other terms and provisions hereof shall not be affected
thereby and shall remain in full force and effect.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as Of the ______ day of _______, 1997.
ATTEST FLOATING RATE PORTFOLIO
_________________________ By ______________________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
__________________________ By ________________________________________
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed as of the ______ day of
_______, 1997.
ATTEST FLOATING RATE PORTFOLIO
__________________________ By ________________________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
__________________________ By _________________________________________
Executive Vice President
Schedule A
----------
The following foreign bank institutions and foreign securities
depositories have been approved by the Board of Trustees of Floating Rate
Portfolio for use as sub-custodians for the Portfolio's Securities and other
assets:
(Insert banks and securities depositories)
Certified:
___________________________________
Portfolio's Authorized Officer
Date: _____________________________
