CUSTODIAN AGREEMENT
AGREEMENT made as of the ___ day of ____, 2001, between each series of
TH Xxx, Xxxxxx Investment Trust listed on Schedule A attached hereto (each, a
"Fund"), each of such Funds acting on its own behalf separately from all the
other Funds and not jointly or jointly and severally with any of the other Funds
(each of the Funds being hereinafter referred to as the "Fund"), and Xxxxxx
Fiduciary Trust Company (the "Custodian").
WHEREAS, the Custodian represents to the Fund that it is eligible to
serve as a custodian and foreign custody manager for a management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), and
WHEREAS, the Fund wishes to appoint the Custodian as the Fund's
custodian and foreign custody manager.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF CUSTODIAN. The Fund hereby employs and appoints the Custodian
as custodian of its assets for the term and subject to the provisions of this
Agreement. At the direction of the Custodian, the Fund agrees to deliver to the
Sub-Custodians appointed pursuant to Section 2 below (the "Sub-Custodians")
securities, funds and other property owned by it. The Custodian shall have no
responsibility or liability for or on account of securities, funds or other
property not so delivered to the Sub-Custodians. Upon request, the Fund shall
deliver to the Custodian or to such Sub-Custodians as the Custodian may direct
such proxies, powers of attorney or other instruments as may be reasonably
necessary or desirable in connection with the performance by the Custodian or
any Sub-Custodian of their respective obligations under this Agreement or any
applicable Sub-Custodian Agreement.
2. APPOINTMENT OF SUB-CUSTODIANS. The Custodian may at any time and from time to
time appoint, at its own cost and expense, as a Sub-Custodian for the Fund any
bank or trust company which meets the requirements of the 1940 Act and the rules
and regulations thereunder to act as a custodian, provided that the Fund shall
have approved any such bank or trust company and the Custodian gives prompt
notice to the Fund of any such appointment. The agreement between the Custodian
and any Sub-Custodian shall be substantially in the form of the Sub-Custodian
agreement attached hereto as Exhibit 1 (the "Sub-Custodian Agreement") unless
otherwise approved by the Fund, provided, however, that the agreement between
the Custodian and any Sub-Custodian appointed primarily for the purpose of
holding foreign securities of the Fund shall be substantially in the form of the
Sub-Custodian Agreement attached hereto as Exhibit 1(A) (the "Foreign
Sub-Custodian Agreement"; the "Sub-Custodian Agreement" and the "Foreign
Sub-Custodian Agreement" are herein referred to collectively and each
individually as the "Sub-Custodian Agreement"). All Sub-Custodians shall be
subject to the instructions of the Custodian and not the Fund. The Custodian
may, at any time in its discretion, remove any bank or trust company which has
been appointed as a Sub-Custodian but shall in such case promptly notify the
Fund in writing of any such action. Securities, funds and other property of the
Fund delivered
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pursuant to this Agreement shall be held exclusively by Sub-Custodians appointed
pursuant to the provisions of this Section 2.
The Sub-Custodians which the Fund has approved to date are set forth in
Schedule B hereto. Schedule B shall be amended from time to time as
Sub-Custodians are changed, added or deleted.
With respect to the securities, funds or other property held by a
Sub-Custodian, the Custodian shall be liable to the Fund if and only to the
extent that such Sub-Custodian is liable to the Custodian. The Custodian shall
nevertheless be liable to the Fund for its own negligence in transmitting any
instructions received by it from the Fund and for its own negligence in
connection with the delivery of any securities, funds or other property of the
Fund to any such Sub-Custodian.
In the event that any Sub-Custodian appointed pursuant to the
provisions of this Section 2 fails to perform any of its obligations under the
terms and conditions of the applicable Sub-Custodian Agreement, the Custodian
shall use its best efforts to cause such Sub-Custodian to perform such
obligations. In the event that the Custodian is unable to cause such
Sub-Custodian to perform fully its obligations thereunder, the Custodian shall
forthwith terminate such Sub-Custodian and, if necessary or desirable, appoint
another Sub-Custodian in accordance with the provisions of this Section 2. The
Custodian may with the approval of the Fund commence any legal or equitable
action which it believes is necessary or appropriate in connection with the
failure by a Sub-Custodian to perform its obligations under the applicable
Sub-Custodian Agreement. Provided the Custodian shall not have been negligent
with respect to any such matter, such action shall be at the expense of the
Fund. The Custodian shall keep the Fund fully informed regarding such action and
the Fund may at any time upon notice to the Custodian elect to take
responsibility for prosecuting such action. In such event the Fund shall have
the right to enforce and shall be subrogated to the Custodian's rights against
any such Sub-Custodian for loss or damage caused the Fund by such Sub-Custodian.
At the written request of the Fund, the Custodian will terminate any
Sub-Custodian appointed pursuant to the provisions of this Section 2 in
accordance with the termination provisions of the applicable Sub-Custodian
Agreement. The Custodian will not amend any Sub-Custodian Agreement in any
material manner except upon the prior written approval of the Fund and shall in
any case give prompt written notice to the Fund of any amendment to the
Sub-Custodian Agreement.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY
SUB-CUSTODIANS.
3.1 HOLDING SECURITIES - The Custodian shall cause one or more
Sub-Custodians to hold and, by book-entry or otherwise, identify as belonging to
the Fund all non-cash property delivered to such Sub-Custodian.
3.2 DELIVERY OF SECURITIES - The Custodian shall cause Sub-Custodians
holding securities of the Fund to release and deliver securities owned by the
Fund held by the Sub-Custodian or in a Securities System (as defined in Section
3.12) account of the Sub-Custodian
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only upon receipt of Proper Instructions (as defined in Section 3.16), which may
be continuing instructions when deemed appropriate by the parties, and only in
the following cases:
3.2.1 Upon sale of such securities for the account of the Fund
and receipt of payment therefor; PROVIDED, HOWEVER, that a
Sub-Custodian may release and deliver securities prior to
the receipt of payment therefor if (i) in the
Sub-Custodian's judgment, (A) release and delivery prior to
payment is required by the terms of the instrument
evidencing the security or (B) release and delivery prior
to payment is the prevailing method of settling securities
transactions between institutional investors in the
applicable market and (ii) release and delivery prior to
payment is in accordance with generally accepted trade
practice and with any applicable governmental regulations
and the rules of Securities Systems or other securities
depositories and clearing agencies in the applicable
market. The Custodian agrees, upon request, to advise the
Fund of all pending transactions in which release and
delivery will be made prior to the receipt of payment
therefor;
3.2.2 Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered
into by the Fund;
3.2.3 In the case of a sale effected through a Securities System,
in accordance with the provisions of Section 3.12 hereof;
3.2.4 To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
provided that, in any such case, the cash or other
consideration is thereafter to be delivered to the
Sub-Custodian;
3.2.5 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 Sub-Custodian;
3.2.6 To the issuer thereof, or its agent for transfer into the
name of the Fund or into the name of any nominee or
nominees of the Sub-Custodian or into the name or nominee
name of any agent appointed pursuant to Section 3.11 or any
other name permitted pursuant to Section 3.3; or for
exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount
or number of units; provided that, in any such case, the
new securities are to be delivered to the Sub-Custodian;
3.2.7 Upon the sale of such securities for the account of the
Fund, 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
Sub-Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities prior
to receiving payment for such securities except as may
arise from the Sub-Custodian's own negligence or willful
misconduct;
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3.2.8 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
Sub-Custodian;
3.2.9 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 Sub-Custodian;
3.2.10 For delivery in connection with any loans of securities
made by the Fund;
3.2.11 For delivery as security in connection with any borrowings
by the Fund requiring a pledge of assets by the Fund, but
only against receipt of amounts borrowed;
3.2.12 Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such
Transfer Agent or to the shareholders of the Fund in
connection with distributions in kind, as may be described
from time to time in the Fund's Declaration of Trust and
currently effective registration statement, if any, in
satisfaction of requests by Fund shareholders for
repurchase or redemption;
3.2.13 For delivery to another Sub-Custodian of the Fund; and
3.2.14 For any other proper corporate purpose, but only upon
receipt of, in addition to Proper Instructions, a certified
copy of a resolution of the Trustees or of the Executive
Committee of the Fund signed by an officer of the Fund and
certified by its Clerk or an Assistant Clerk, specifying
the securities to be delivered, setting forth the purpose
for which such delivery is to be made, declaring such
purposes to be proper corporate purposes, and naming the
person or persons to whom delivery of such securities shall
be made.
3.3 REGISTRATION OF SECURITIES. Securities of the Fund held by the
Sub-Custodians hereunder (other than bearer securities) shall be registered in
the name of the Fund or in the name of any nominee of the Fund or of any nominee
of the Sub-Custodians or any Eligible Foreign Custodian subject to a Contract
(each as defined in Section 3.11A) or eligible securities depository (as defined
in Section 3.11B), which nominee shall be assigned exclusively to the Fund,
unless the Fund 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 Fund, or in the name or nominee name of any agent
appointed pursuant to Section 3.12. Notwithstanding the foregoing, a
Sub-Custodian, agent, Eligible Foreign Custodian or eligible securities
depository may hold securities of the Fund in a nominee name which is used for
its other clients provided that such
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name is not used by the Sub-Custodian, agent, Eligible Foreign Custodian or
eligible securities depository for its own securities and that securities of the
Fund are, by book-entry or otherwise, at all times identified as belonging to
the Fund and distinguished from other securities held for other clients using
the same nominee name. In addition, and notwithstanding the foregoing, a
Sub-Custodian or agent thereof or Eligible Foreign Custodian or eligible
securities depository may hold securities of the Fund in its own name if such
registration is the prevailing method in the applicable market by which
custodians register securities of institutional clients and provided that
securities of the Fund are, by book-entry or otherwise, at all times identified
as belonging to the Fund and distinguished from other securities held for other
clients or for the Sub-Custodian or agent thereof or Eligible Foreign Custodian
or eligible securities depository. All securities accepted by a Sub-Custodian
under the terms of a Sub-Custodian Agreement shall be in good delivery form.
3.4 BANK ACCOUNTS. The Custodian shall cause one or more Sub-Custodians
to open and maintain a separate bank account or accounts in the name of the Fund
or the Custodian, subject only to draft or order by the Sub-Custodian acting
pursuant to the terms of a Sub-Custodian Contract or by the Custodian acting
pursuant to this Agreement, and shall hold in such account or accounts, subject
to the provisions hereof, all cash received by it from or for the account of the
Fund, other than cash maintained by the Fund in a bank account established and
used in accordance with Rule 17f-3 under the 1940 Act. Funds held by the
Sub-Custodian for the Fund may be deposited by it to its credit as sub-custodian
or to the Custodian's credit as custodian in the Banking Department of the
Sub-Custodian or in such other banks or trust companies as it may in its
discretion deem necessary or desirable; provided, however, that every such bank
or trust company shall be qualified to act as a custodian under the 1940 Act and
that each such bank or trust company and the funds to be deposited with each
such bank or trust company shall be approved by vote of a majority of the
Trustees of the Fund. Such funds shall be deposited by the Sub-Custodian or the
Custodian in its capacity as sub-custodian or custodian, respectively, and shall
be withdrawable by the Sub-Custodian or the Custodian only in that capacity. The
Sub-Custodian shall be liable for actual losses incurred by the Fund
attributable to any failure on the part of the Sub-Custodian to report accurate
cash availability information with respect to the Fund's or the Custodian's bank
accounts maintained by the Sub-Custodian or any of its agents.
3.5 PAYMENTS FOR SHARES. The Custodian shall cause one or more
Sub-Custodians to deposit into the Fund's account amounts received from the
Transfer Agent of the Fund for shares of the Fund issued by the Fund and sold by
its distributor. The Custodian will provide timely notification to the Fund of
any receipt by the Sub-Custodian from the Transfer Agent of payments for shares
of the Fund.
3.6 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the
Fund and the Custodian, the Custodian shall cause one or more Sub-Custodians,
upon the receipt of Proper Instructions, to make federal funds available to the
Fund as of specified times agreed upon from time to time by the Fund and the
Custodian with respect to amounts received by the Sub-Custodians for the
purchase of shares of the Fund.
3.7 COLLECTION OF INCOME. The Custodian shall cause one or more
Sub-Custodians to collect on a timely basis all income and other payments with
respect to registered securities held
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hereunder, including securities held in a Securities System, to which the Fund
shall be entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and other payments with
respect to bearer securities if, on the date of payment by the issuer, such
securities are held by the Sub-Custodian or agent thereof and shall credit such
income, as collected, to the Fund's account. Without limiting the generality of
the foregoing, the Custodian shall cause the Sub-Custodian to 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
under the applicable Sub-Custodian Agreement. Arranging for the collection of
income due the Fund on securities loaned pursuant to the provisions of Section
3.2.10 shall be the responsibility of the Fund. The Custodian will have no duty
or responsibility in connection therewith, other than to provide the Fund with
such information or data as may be necessary to assist the Fund in arranging for
the timely delivery to the Sub-Custodian of the income to which the Fund is
properly entitled.
3.8 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties, the
Custodian shall cause one or more Sub-Custodians to pay out monies of the Fund
in the following cases only:
3.8.1 Upon the purchase of securities for the account of the Fund
but only (a) against the delivery of such securities to the
Sub-Custodian (or any bank, banking firm or trust company
doing business in the United States or abroad which is
qualified under the 1940 Act, as amended, to act as a
custodian and has been designated by the Sub-Custodian as
its agent for this purpose) or any Eligible Foreign
Custodian or eligible securities depository and registered
in the name of the Fund or in the name of a nominee of the
Sub-Custodian, any Eligible Foreign Custodian or eligible
securities depository referred to in Section 3.3 hereof or
in proper form for transfer; PROVIDED, HOWEVER, that the
Sub-Custodian may cause monies of the Fund to be paid out
prior to delivery of such securities if (i) in the
Sub-Custodian's judgment, (A) payment prior to delivery is
required by the terms of the instrument evidencing the
security or (B) payment prior to delivery is the prevailing
method of settling securities transactions between
institutional investors in the applicable market and (ii)
payment prior to delivery is in accordance with generally
accepted trade practice and with any applicable
governmental regulations and the rules of Securities
Systems or other securities depositories and clearing
agencies in the applicable market; the Custodian agrees,
upon request, to advise the Fund of all pending
transactions in which payment will be made prior to the
receipt of securities in accordance with the provision to
the foregoing sentence; (b) in the case of a purchase
effected through a Securities System, in accordance with
the conditions set forth in Section 3.13 hereof; or (c)(i)
in the case of a repurchase agreement entered into between
the Fund and the Sub-Custodian, another bank, or a
broker-dealer against delivery of the securities either in
certificate form or through an entry crediting the
Sub-Custodian's account at the Federal Reserve Bank with
such securities or (ii) in the case of a repurchase
agreement entered into between the Fund and the
Sub-
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Custodian, against delivery of a receipt evidencing
purchase by the Fund of securities owned by the
Sub-Custodian along with written evidence of the agreement
by the Sub-Custodian to repurchase such securities from the
Fund; or (d) for transfer to a time deposit account of the
Fund in any bank, whether domestic or foreign, which
transfer may be effected prior to receipt of a confirmation
of the deposit from the applicable bank or a financial
intermediary;
3.8.2 In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 3.2
hereof;
3.8.3 For the redemption or repurchase of shares issued by the
Fund as set forth in Section 3.10 hereof;
3.8.4 For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments
for the account of the Fund: interest, taxes, management,
accounting, transfer agent and legal fees, including the
Custodian's fee; and operating expenses of the Fund whether
or not such expenses are to be in whole or part capitalized
or treated as deferred expenses;
3.8.5 For the payment of any dividends or other distributions
declared to shareholders of the Fund;
3.8.6 For transfer to another Sub-Custodian of the Fund;
3.8.7 For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Trustees or of the Executive Committee of
the Fund signed by an officer of the Fund and certified by
its Clerk or an Assistant Clerk, 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 payments is to be made.
3.9 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES
PURCHASED. Except as otherwise provided in this Agreement, in any and every case
where payment for purchase of securities for the account of the Fund is made by
a Sub-Custodian in advance of receipt of the securities purchased in the absence
of specific written instructions from the Fund to so pay in advance, the
Custodian shall cause the Sub-Custodian to be absolutely liable to the Fund in
the event any loss results to the Fund from the payment by the Sub-Custodian in
advance of delivery of such securities.
3.10 PAYMENTS FOR REPURCHASE OR REDEMPTIONS OF SHARES OF THE FUND. From
such funds as may be available, the Custodian shall, upon receipt of Proper
Instructions, cause one or more Sub-Custodians to make funds available for
payment to a shareholder who has delivered to the Transfer Agent a request for
redemption or repurchase of shares of the Fund. In connection
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with the redemption or repurchase of shares of the Fund, the Custodian is
authorized, upon receipt of Proper Instructions, to cause one or more
Sub-Custodian, to wire funds to or through a commercial bank designated by the
redeeming shareholder. In connection with the redemption or repurchase of shares
of the Fund, the Custodian, upon receipt of Proper Instructions, shall cause one
or more Sub-Custodians to honor checks drawn on the Sub-Custodian by a
shareholder when presented to the Sub-Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to time among the
Fund, the Custodian and the Sub-Custodian.
3.11 APPOINTMENT OF AGENTS WITH RESPECT TO U.S. ASSETS. With respect to
Fund assets maintained in the United States, the Custodian may permit any
Sub-Custodian at any time or times in its discretion to appoint (and may at any
time remove) any other bank or trust company which is itself qualified under the
1940 Act to act as a custodian, as its agent to carry out such of the provisions
of this Section 3 as the Sub-Custodian may from time to time direct; provided,
however, that the appointment of any agent shall not relieve the Custodian or
any Sub-Custodian of its responsibilities or liabilities hereunder and provided
that any such agent shall have been approved by vote of the Trustees of the
Fund. The agents which the Fund and the Custodian have approved to date are set
forth in Schedule B hereto. Any Sub-Custodian Agreement shall provide that the
engagement by the Sub-Custodian of one or more agents shall not relieve the
Sub-Custodian of its responsibilities or liabilities thereunder.
3.11A APPOINTMENT OF FOREIGN CUSTODY MANAGER. Pursuant to Rule 17f-5
under the 1940 Act, the Fund's Trustees appoint the Custodian as foreign custody
manager and delegate to the Custodian, and the Custodian accepts such delegation
and agrees to perform, the duties set forth below concerning the safekeeping of
the Fund's assets in each of the countries set forth in Schedule B-1, as may be
amended from time to time by the Fund and the Custodian. The Custodian agrees to
exercise reasonable care, prudence and diligence such as a person having
responsibility for the safekeeping of the Fund's foreign assets would exercise.
The Fund acknowledges that advance notice may be required before the Custodian
shall be able to perform its duties with respect to a country added to Schedule
B-1 (such advance notice to be reasonable in light of the specific facts and
circumstances attendant to performance of duties in such country). The Custodian
may at any time and from time to time appoint, at its own cost and expense, as a
sub-foreign custody manager any Sub-Custodian that meets the requirements of the
1940 Act and the rules and regulations thereunder to act as a foreign custody
manager, provided that the Fund shall have approved the delegation of
responsibilities to such Sub-Custodian as sub-foreign custody manager, and the
Custodian gives prompt notice to the Fund of any such appointment. The Custodian
or Sub-Custodian, as the case may be, is authorized to take such actions on
behalf of or in the name of the Fund as are reasonably required to discharge its
duties, which are as follows:
3.11A.1 The Custodian shall cause the Sub-Custodian to place and
maintain the Fund's assets with a custodian; provided that
(i) each custodian is either an eligible foreign
custodian, as defined in subparagraph (a)(1) of Rule 17f-5
or a bank eligible to serve as a custodian under Section
17(f) of the 1940 Act ("Eligible Foreign Custodian"); and
(ii) the Sub-Custodian shall have determined that the
Fund's assets will be subject to reasonable care, based on
the standards applicable to custodians in the relevant
market, after
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considering all factors relevant to the safekeeping of
such assets, including, without limitation, those factors
set forth in clauses (i) through (iv) of subparagraph
(c)(1) of Rule 17f-5.
3.11A.2 The foreign custody arrangements are governed by a written
contract that the Sub-Custodian has determined will
provide reasonable care for the Fund's assets based on
those factors set forth in clauses (i) through (iv) of
subparagraph (c)(1) of Rule 17f-5, which contract shall
include the provisions required by clause (i) of
subparagraph (c)(2) of Rule 17f-5, or in lieu of any or
all of such provisions, the contract may contain such
other provisions that the Sub-Custodian determines will
provide, in their entirety, the same or a greater level of
care and protection for the Fund's assets as the
provisions set forth in such clause, in their entirety.
3.11A.3 The Sub-Custodian shall have established a system to
monitor at reasonable intervals (but at least annually)
the appropriateness of maintaining the Fund's assets with
each Eligible Foreign Custodian selected hereunder. The
Sub-Custodian shall monitor the continuing appropriateness
of placement of the Fund's assets in accordance with the
criteria set forth above. The Sub-Custodian shall monitor
the continuing performance of the contract governing the
Fund's arrangements in accordance with the criteria set
forth above.
3.11A.4 The Custodian shall provide to the Fund's Trustees at
least annually, and more frequently if requested by the
Fund, written reports specifying placement of the Fund's
assets with each Eligible Foreign Custodian selected
hereunder, and shall promptly report as to any material
changes to the Fund's foreign custody arrangements.
3.11A.5 If an arrangement with a specific Eligible Foreign
Custodian selected hereunder no longer meets the
requirements of this Agreement, the Sub-Custodian shall
withdraw the Fund's assets from the non-complying
arrangement as soon as reasonably practicable; provided,
however, that if in the reasonable judgement of the
Sub-Custodian, such withdrawal would require liquidation
of any of the Fund's assets or would materially impair the
liquidity, value or other investment characteristics of
the Fund's assets, it shall be the duty of the
Sub-Custodian to provide the Fund's investment manager
information regarding the particular circumstances and to
act only in accordance with Proper Instructions with
respect to such liquidation or other withdrawal.
If a specific Eligible Foreign Custodian fails to perform
any of its obligations under the terms and conditions of
the applicable contract, the Sub-Custodian shall use its
best efforts to cause such Eligible Foreign Custodian to
perform such obligations. If the Sub-Custodian is unable
to cause such Eligible Foreign Custodian to perform fully
its obligations
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thereunder, the Sub-Custodian shall terminate such
Eligible Foreign Custodian and, if necessary or desirable,
appoint another Eligible Foreign Custodian.
At the written request of the Fund, the Custodian shall
cause the Sub-Custodian to terminate any Eligible Foreign
Custodian in accordance with the termination provisions
under the applicable contract.
3.11A.6 Notwithstanding the foregoing provisions, the Fund, acting
through its Trustees, its investment manager or its other
authorized representative, may direct the Custodian (and,
in turn, the Custodian may direct the Sub-Custodian) to
place and maintain the Fund's assets with a particular
Eligible Foreign Custodian. In such event, the Custodian
and, as applicable, the Sub-Custodian shall be entitled to
rely on any such instruction as a Proper Instruction under
the terms of the Custodian Agreement and the Sub-Custodian
Agreement, respectively, and shall have no duties under
this Section with respect to such arrangement save those
that it may undertake specifically in writing with respect
to each particular instance.
3.11B DEPOSIT OF FUND ASSETS IN FOREIGN SECURITIES DEPOSITORIES. The
Custodian may permit any Sub-Custodian to deposit and/or maintain non-U.S.
investments of the Fund in any non-U.S. Securities Depository provided such
Securities Depository meets the requirements of an "eligible securities
depository" under Rule 17f-7 under the 1940 Act, or any successor rule or
regulation, or which by order of the Securities and Exchange Commission is
exempted therefrom. Prior to the placement of any assets of the Fund with a
non-U.S. Securities Depository, the Sub-Custodian: (a) shall provide to the
Fund's investment manager an assessment of the custody risks associated with
maintaining assets with such Securities Depository; and (b) shall have
established a system to monitor the custody risks associated with maintaining
assets with such Securities Depository. The Sub-Custodian shall monitor such
risks on a continuing basis and promptly notify the Fund's investment manager of
any material changes in such risk. If an arrangement with a non-U.S. Securities
Depository with which the assets of the Fund are maintained hereunder no longer
meets the requirements of this Agreement, the Sub-Custodian shall withdraw the
Fund's assets from the non-complying arrangement as soon as reasonably
practicable; provided, however, that if in the reasonable judgement of the
Sub-Custodian, such withdrawal would require liquidation of any of the Fund's
assets or would materially impair the liquidity, value or other investment
characteristics of the Fund's assets, it shall be the duty of the Sub-Custodian
to provide the Fund's investment manager with information regarding the
particular circumstances and to act only in accordance with Proper Instructions
with respect to such liquidation or other withdrawal. In performing its duties
under this subsection, the Sub-Custodian shall use reasonable care, prudence and
diligence. The Sub-Custodian may rely on such reasonable sources of information
as may be available including but not limited to: (i) published ratings; (ii)
information supplied by a subcustodian that is a participant in such Securities
Depository; (iii) industry surveys or publications; (iv) information supplied by
the depository itself, by its auditors (internal or external) or by the relevant
Foreign Financial Regulatory Authority. It is acknowledged that information
procured through some or all of these sources may not be independently
verifiable by the Sub-Custodian and that direct access to Securities
Depositories is limited under most circumstances.
10
Accordingly, the Sub-Custodian shall not be responsible for errors or omissions
in its duties hereunder provided that it has performed its monitoring and
assessment duties with reasonable care. The risk assessment shall be provided to
the Fund's investment manager by such means as the Sub-Custodian shall
reasonably establish. Notice of material change in such assessment may be
provided by the Sub-Custodian in the manner established as customary for
transmission of material market information.
3.12 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Custodian may
permit any Sub-Custodian to deposit and/or maintain securities owned by the Fund
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 System" in accordance with applicable rules and
regulations (including Rule 17f-4 of the 0000 Xxx) and subject to the following
provisions:
3.12.1 The Sub-Custodian may, either directly or through one or
more agents, keep securities of the Fund in a Securities
System provided that such securities are represented in an
account ("Account") of the Sub-Custodian in the Securities
System which shall not include any assets of the
Sub-Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
3.12.2 The records of the Sub-Custodian with respect to securities
of the Fund which are maintained in a Securities System
shall identify by book-entry those securities belonging to
the Fund;
3.12.3 The Sub-Custodian shall pay for securities purchased for
the account of the Fund 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 Sub-Custodian to reflect such payment
and transfer for the account of the Fund. The Sub-Custodian
shall transfer securities sold for the account of the Fund
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 Sub-Custodian to reflect such transfer and payment for
the account of the Fund. Copies of all advices from the
Securities System of transfers of securities for the
account of the Fund shall be maintained for the Fund by the
Sub-Custodian or such an agent and be provided to the Fund
at its request. The Sub-Custodian shall furnish the Fund
confirmation of each transfer to or from the account of the
Fund in the form of a written advice or notice and shall
furnish to the Fund copies of daily transaction sheets
reflecting each day's transactions in the Securities System
for the account of the Fund on the next business day;
3.12.4 The Sub-Custodian shall provide the Fund with any report
obtained by the Sub-Custodian on the Securities System's
accounting system, internal
11
accounting controls and procedures for safeguarding
securities deposited in the Securities System;
3.12.5 The Sub-Custodian shall utilize only such Securities
Systems as are approved by the Board of Trustees of the
Fund, and included on a list maintained by the Custodian;
3.12.6 Anything to the contrary in this Agreement notwithstanding,
the Sub-Custodian shall be liable to the Fund for any loss
or damage to the Fund resulting from use of the Securities
System by reason of any negligence, misfeasance or
misconduct of the Sub-Custodian or any of its agents or of
any of its or their employees or from failure of the
Sub-Custodian or any such agent to enforce effectively such
rights as it may have against the Securities System; at the
election of the Fund, it shall be entitled to be subrogated
to the rights of the Sub-Custodian with respect to any
claim against the Securities System or any other person
which the Sub-Custodian may have as a consequence of any
such loss or damage if and to the extent that the Fund has
not been made whole for any such loss or damage.
3.12A DEPOSITARY RECEIPTS. Only upon receipt of Proper Instructions,
the Sub-Custodian shall instruct an Eligible Foreign Custodian or an agent of
the Sub-Custodian appointed pursuant to the applicable Contract (an "Agent") to
surrender securities to the depositary used by an issuer of American Depositary
Receipts or International Depositary Receipts (hereinafter collectively referred
to as "ADRs") for such securities against a written receipt therefor adequately
describing such securities and written evidence satisfactory to the Eligible
Foreign Custodian or Agent that the depositary has acknowledged receipt of
instructions to issue with respect to such securities ADRs in the name of the
Sub-Custodian, or a nominee of the Sub-Custodian, for delivery to the
Sub-Custodian.
Only upon receipt of Proper Instructions, the Sub-Custodian shall
surrender ADRs to the issuer thereof against a written receipt therefor
adequately describing the ADRs surrendered and written evidence satisfactory to
the Sub-Custodian that the issuer of the ADRs has acknowledged receipt of
instructions to cause its depository to deliver the securities underlying such
ADRs to an Eligible Foreign Custodian or an Agent.
3.12B FOREIGN EXCHANGE TRANSACTIONS AND FUTURES CONTRACTS. Only upon
receipt of Proper Instructions, the Sub-Custodian shall enter into foreign
exchange contracts or options to purchase and sell foreign currencies for spot
and future delivery on behalf and for the account of the Fund or shall enter
into futures contracts or options on futures contracts. Such transactions may be
undertaken by the Sub-Custodian with such banking institutions, including the
Sub-Custodian and Eligible Foreign Custodian(s) appointed pursuant to the
applicable Contract, as principals, as approved and authorized by the Fund.
Foreign exchange contracts, futures contracts and options, other than those
executed with the Sub-Custodian, shall for all purposes of this Agreement be
deemed to be portfolio securities of the Fund.
12
3.12C OPTION TRANSACTIONS. Only upon receipt of Proper Instructions,
the Sub-Custodian shall enter into option transactions in accordance with the
provisions of any agreement among the Fund, the Custodian and/or the
Sub-Custodian and a broker-dealer.
3.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall cause
one or more Sub-Custodians as may be appropriate to 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 securities of the Fund
held by the Sub-Custodian and in connection with transfers of securities.
3.14 PROXIES. The Custodian shall, with respect to the securities held
by the Sub-Custodians, cause to be promptly executed by the registered holder of
such securities, if the securities are registered other than in the name of the
Fund or a nominee of the fund, all proxies, without indication of the manner in
which such proxies are to be voted, and shall promptly deliver to the Fund such
proxies, all proxy soliciting materials and all notices relating to such
securities.
3.15 COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES. The
Custodian shall cause the Sub-Custodians to transmit promptly to the Custodian,
and the Custodian shall transmit promptly to the Fund, all written information
(including, without limitation, pendency of calls and maturities of securities
and expirations of rights in connection therewith) received by the Sub-Custodian
from issuers of the securities being held for the account of the Fund. With
respect to tender or exchange offers, the Custodian shall cause the
Sub-Custodian to transmit promptly to the Fund, all written information received
by the Sub-Custodian from issuers of the securities whose tender or exchange is
sought and from the party (or his agents) making the tender or exchange offer.
If the Fund desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, the Fund shall notify the Custodian of
the action the Fund desires such Sub-Custodian to take, provided, however,
neither the Custodian nor the Sub-Custodian shall be liable to the Fund for the
failure to take any such action unless such instructions are received by the
Custodian at least four business days prior to the date on which the
Sub-Custodian is to take such action or, in the case of foreign securities, such
longer period as shall have been agreed upon in writing by the Custodian and the
Sub-Custodian.
3.16 PROPER INSTRUCTIONS. Proper Instructions as used throughout this
Agreement means a writing signed or initialed by one or more person or persons
who are authorized by the Trustees of the Fund and the Custodian. Each such
writing shall set forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for which such action is
requested. Oral instructions will be considered Proper Instructions if the
Custodian or Sub-Custodian, as the case may be, reasonably believes them to have
been given by a person authorized to give such instructions with respect to the
transaction involved. All oral instructions shall be confirmed in writing.
Proper Instructions also include communications effected directly between
electro-mechanical or electronic devices provided that the Trustees have
approved such procedures. Notwithstanding the foregoing, no Trustee, officer,
employee or agent of the Fund shall be permitted access to any securities or
similar investments of the Fund deposited with any Sub-Custodian or any agent of
any Sub-Custodian for any reason except in accordance with the provisions of
Rule 17f-2 under the 1940 Act.
13
3.17 ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The Custodian may in
its discretion, and may permit one or more Sub-Custodians in their discretion,
without express authority from the Fund to:
3.17.1 make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Agreement, or in the case of a
Sub-Custodian, under the applicable Sub-Custodian
Agreement, provided that all such payments shall be
accounted for to the Fund;
3.17.2 surrender securities in temporary form for securities in
definitive form;
3.17.3 endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and
3.17.4 in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and
property of the Fund except as otherwise directed by the
Trustees of the Fund.
3.18 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 Fund.
3.19 INVESTMENT LIMITATIONS. In performing its duties generally, and
more particularly in connection with the purchase, sale and exchange of
securities made by or for the Fund, the Custodian may assume, unless and until
notified in writing to the contrary, that Proper Instructions received by it are
not in conflict with or in any way contrary to any provisions of the Fund's
Declaration of Trust or By-Laws (or comparable documents) or votes or
proceedings of the shareholders or Trustees of the Fund. The Custodian shall in
no event be liable to the Fund and shall be indemnified by the Fund for any
violation of any investment limitations to which the Fund is subject or other
limitations with respect to the Fund's powers to expend funds, encumber
securities, borrow or take similar actions affecting its portfolio.
4. PERFORMANCE STANDARDS. The Custodian shall use its best efforts to perform
its duties hereunder in accordance with the standards set forth in Schedule C
hereto. Schedule C may be amended from time to time as agreed to by the
Custodian and the Trustees of the Fund.
5. RECORDS. The Custodian shall create and maintain all records relating to the
Custodian's activities and obligations under this Agreement and cause all
Sub-Custodians to create and maintain all records relating to the
Sub-Custodian's activities and obligations under the appropriate Sub-Custodian
Agreement in such manner as will meet the obligations of the Fund under the 1940
Act, with particular attention to Sections 17(f) and 31 thereof and Rules 17f-2,
31a-1 and 31a-2 thereunder, applicable federal and state tax laws, and any other
law or administrative rules or procedures which may be applicable to the Fund.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian or during the regular business hours
of the Sub-Custodian, as the case may be, be open for inspection by duly
14
authorized officers, employees or agents of the Custodian and Fund and employees
and agents of the Securities and Exchange Commission. At the Fund's request, the
Custodian shall supply the Fund and cause one or more Sub-Custodians to supply
the Custodian with a tabulation of securities owned by the Fund and held under
this Agreement. When requested to do so by the Fund and for such compensation as
shall be agreed upon, the Custodian shall include and cause one or more
Sub-Custodians to include certificate numbers in such tabulations.
6. OPINION AND REPORTS OF FUND'S INDEPENDENT ACCOUNTANTS. The Custodian shall
take all reasonable actions, as the Fund may from time to time request, to
furnish such information with respect to its activities hereunder as the Fund's
independent public accountants may request in connection with the accountant's
verification of the Fund's securities and similar investments as required by
Rule 17f-2 under the 1940 Act, the preparation of the Fund's registration
statement and amendments thereto, the Fund's reports to the Securities and
Exchange Commission, and with respect to any other requirements of such
Commission.
The Custodian shall also direct any Sub-Custodian to take all
reasonable actions, as the Fund may from time to time request, to furnish such
information with respect to its activities under the applicable Sub-Custodian
Agreement as the Fund's independent public accountant may request in connection
with the accountant's verification of the Fund's securities and similar
investments as required by Rule 17f-2 under the 1940 Act, the preparation of the
Fund's registration statement and amendments thereto, the Fund's reports to the
Securities and Exchange Commission, and with respect to any other requirements
of such Commission.
7. REPORTS OF CUSTODIAN'S AND SUB-CUSTODIANS' INDEPENDENT ACCOUNTANTS. The
Custodian shall provide the Fund, at such times as the Fund may reasonably
require, with reports by its independent public accountant on its accounting
system, internal accounting controls and procedures for safeguarding securities,
including securities deposited and/or maintained in Securities Systems, relating
to services provided by the Custodian under this Agreement. The Custodian shall
also cause one or more of the Sub-Custodians to provide the Fund, at such time
as the Fund may reasonably require, with reports by independent public
accountants on their accounting systems, internal accounting controls and
procedures for safeguarding securities, including securities deposited and/or
maintained in Securities Systems, relating to services provided by those
Sub-Custodians under their respective Sub-Custody Agreements. Such reports,
which shall be of sufficient scope and in sufficient detail as may reasonably be
required by the Fund, shall provide reasonable assurance that any material
inadequacies would be disclosed by such examinations, and, if there is no such
inadequacies, shall so state.
8. COMPENSATION. The Custodian shall be entitled to reasonable compensation for
its services and expenses as custodian, as agreed upon from time to time between
the Fund and the Custodian. Such expenses shall not include, however, the fees
paid by the Custodian to any Sub-Custodian.
9. RESPONSIBILITY OF CUSTODIAN. The Custodian shall exercise reasonable care and
diligence in carrying out the provisions of this Agreement and shall not be
liable to the Fund for any action taken or omitted by it in good faith without
negligence. So long as and to the extent that it is in the exercise of
reasonable care, neither the Custodian nor any Sub-Custodian shall be
responsible
15
for the title, validity or genuineness of any property or evidence of title
thereto received by it or delivered by it pursuant to this Agreement and shall
be held harmless in acting upon any notice, request, consent, certificate or
other instrument reasonably believed by it to be genuine and, if in writing,
reasonably believed by it to be signed by the proper party or parties. It shall
be entitled to rely on and may act upon advice of counsel (who may be counsel
for the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
It is also understood that the Custodian shall not be liable for any
loss resulting from a Sovereign Risk or Force Majeure. A "Sovereign Risk" shall
mean nationalization, expropriation, devaluation, revaluation, confiscation,
seizure, cancellation, destruction or similar action by any governmental
authority, de facto or de jure; or enactment, promulgation, imposition or
enforcement by any such governmental authority of currency restrictions,
exchange controls, taxes, levies or other charges affecting the Fund's property;
or acts of war, terrorism, insurrection or revolution; or any other similar act
or event beyond the Custodian's control. "Force Majeure" shall mean any
circumstance or event which is beyond the reasonable control of the Custodian, a
Sub-Custodian or any agent of the Custodian or a Sub-Custodian and which
adversely affects the performance by the Custodian of its obligations hereunder,
by the Sub-Custodian of its obligations under its Sub-Custodian Agreement or by
any other agent of the Custodian or the Sub-Custodian, including any event
caused by, arising out of or involving (a) an act of God, (b) accident, fire,
water damage or explosion, (c) any computer, system or other equipment failure
or malfunction caused by any computer virus or the malfunction or failure of any
communications medium, (d) any interruption of the power supply or other utility
service, (e) any strike or other work stoppage, whether partial or total, (f)
any delay or disruption resulting from or reflecting the occurrence of any
Sovereign Risk, (g) any disruption of, or suspension of trading in, the
securities, commodities or foreign exchange markets, whether or not resulting
from or reflecting the occurrence of any Sovereign Risk, (h) any encumbrance on
the transferability of a currency or a currency position on the actual
settlement date of a foreign exchange transaction, whether or not resulting from
or reflecting the occurrence of any Sovereign Risk, or (i) any other cause
similarly beyond the reasonable control of the Custodian.
If the Fund requires the Custodian which in turn may require a
Sub-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 or the Sub-Custodian result in the Custodian or its nominee or a
Sub-Custodian or its nominee being liable for the payment of money or incurring
liability of some other form, the Fund, as a prerequisite to requiring the
Custodian or the Custodian requiring any Sub-Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
The Fund agrees to indemnify and hold harmless the Custodian and its
nominee from and against all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) incurred or assessed against it or its
nominee or any Sub-Custodian or its nominee in connection with the performance
of this Agreement, or any Sub-Custodian Agreement except, as to the Custodian,
such as may arise from its or its nominee's own negligent action, negligent
failure to act or willful misconduct, and as to a Sub-Custodian, such as may
arise from such Sub-Custodian's or its nominee's own negligent action, negligent
failure to act or willful misconduct. The negligent action, negligent failure to
act or willful misconduct of the Custodian shall not diminish the Fund's
16
obligation to indemnify the Custodian in the amount, but only in the amount, of
any indemnity required to be paid to a Sub-Custodian under its Sub-Custodian
Agreement. The Custodian may assign this indemnity from the Fund directly to,
and for the benefit of, any Sub-Custodian. The Custodian is authorized, and may
authorize any Sub-Custodian, to charge any account of the Fund for such items
and such fees. To secure any such authorized charges and any advances of cash or
securities made by the Custodian or any Sub-Custodian to or for the benefit of
the Fund for any purpose which results in the Fund incurring an overdraft at the
end of any business day or for extraordinary or emergency purposes during any
business day, the Fund hereby grants to the Custodian a security interest in and
pledges to the Custodian securities up to a maximum of 10% of the value of the
Fund's net assets for the purpose of securing payment of any such advances and
hereby authorizes the Custodian on behalf of the Fund to grant to any
Sub-Custodian a security interest in and pledge of securities held for the Fund
(including those which may be held in a Securities System) up to a maximum of
10% of the value of the net assets held by such Sub-Custodian. The specific
securities subject to such security interest may be designated in writing from
time to time by the Fund or its investment adviser. In the absence of any
designation of securities subject to such security interest, the Custodian or
the Sub-Custodian, as the case may be, may designate securities held by it.
Should the Fund fail to repay promptly any authorized charges or advances of
cash or securities, the Custodian or the Sub-Custodian shall be entitled to use
such available cash and to dispose of pledged securities and property as is
necessary to repay any such authorized charges or advances and to exercise its
rights as a secured party under the U.C.C. The Fund agrees that a Sub-Custodian
shall have the right to proceed directly against the Fund and not solely as
subrogee to the Custodian with respect to any indemnity hereunder assigned to a
Sub-Custodian, and in that regard, the Fund agrees that it shall not assert
against any Sub-Custodian proceeding against it any defense or right of set-off
the Fund may have against the Custodian arising out of the negligent action,
negligent failure to act or willful misconduct of the Custodian, and hereby
waives all rights it may have to object to the right of a Sub-Custodian to
maintain an action against it.
10. SUCCESSOR CUSTODIAN. If a successor custodian shall be appointed by the
Trustees of the Fund, the Custodian shall, upon termination, cause to be
delivered to such successor custodian, duly endorsed and in the form for
transfer, all securities, funds and other properties then held by the
Sub-Custodians and all instruments held by the Sub-Custodians relative thereto
and cause the transfer to an account of the successor custodian all of the
Fund's securities held in any Securities System.
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 Trustees of
the Fund, cause to be delivered at the office of the Custodian and 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 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 meets the requirements of the 1940 Act and the rules and regulations
thereunder, such securities, funds and other properties. Thereafter, such bank
or trust company shall be the successor of the Custodian under this Agreement.
17
In the event that such securities, funds and other properties remain in
the possession of the Custodian or any Sub-Custodian after the date of
termination hereof owing to failure of the Fund to procure the certified copy of
the vote referred to or of the Trustees to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its services during such
period as the Sub-Custodians retain possession of such securities, funds and
other properties and the provisions of this Agreement relating to the duties and
obligations of the Custodian shall remain in full force and effect.
11. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT. This Agreement shall become
effective as of its execution, shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid to the other party,
such termination to take effect not sooner than thirty (30) days after the date
of such delivery or mailing; provided either party may at any time immediately
terminate this Agreement in the event of the appointment of a conservator or
receiver for the other party or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction. No provision of this Agreement may be amended or terminated except
by a statement in writing signed by the party against which enforcement of the
amendment or termination is sought.
Upon termination of the Agreement, the Fund shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian and through the Custodian any Sub-Custodian for
its costs, expenses and disbursements.
12. INTERPRETATION. This Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof. In
connection with the operation of this Agreement, the Custodian and the Fund may
from time to time agree in writing on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. No interpretive or
additional provisions made as provided in the preceding sentence shall be deemed
to be an amendment of this Agreement.
13. GOVERNING LAW. This instrument is executed and delivered in The Commonwealth
of Massachusetts and shall be governed by and construed according to the
internal laws of said Commonwealth, without regard to principles of conflicts of
law.
14. NOTICES. Notices and other writings delivered or mailed postage prepaid to
the Fund addressed to the Fund attention: Clerk, or to such other person or
address as the Fund may have designated to the Custodian in writing, or to the
Custodian at Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 attention:
General Counsel, or to such other address as the Custodian may have designated
to the Fund in writing, shall be deemed to have been properly delivered or given
hereunder to the respective addressee.
15. BINDING OBLIGATION. This Agreement shall be binding on and shall inure to
the benefit of the Fund and the Custodian and their respective successors and
assigns, provided that neither party
18
hereto may assign this Agreement or any of its rights or obligations hereunder
without the prior written consent of the other party.
16. DECLARATION OF TRUST. A copy of the Declaration of Trust of each of the
Funds is on file with the Secretary of The Commonwealth of Massachusetts and
notice is hereby given that this instrument is executed on behalf of the
Trustees of each of the Funds as Trustees and not individually and that the
obligations of this instrument are not binding on any of the Trustees or
officers or shareholders individually, but are binding only on the assets and
property of each Fund with respect to its obligations hereunder.
19
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf as of the day and year first above written.
THE FUNDS LISTED ON SCHEDULE A
By: ____________________________________________
XXXXXX FIDUCIARY TRUST COMPANY
By: ____________________________________________
Xxxx X. Xxxxxxxxx
Managing Director and Director of Custody Services
20
EXHIBIT 1
MASTER SUB-CUSTODIAN AGREEMENT
AGREEMENT made this [ ] day of [ ], 200[ ], between Xxxxxx Fiduciary
Trust Company, a Massachusetts-chartered trust company (the "Custodian"), and [
], a [ ] (the "Sub-Custodian").
WHEREAS, the Sub-Custodian represents to the Custodian that it is
eligible to serve as a custodian for a management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), and
WHEREAS, the Custodian has entered into a Custodian Agreement between
it and each series of TH Xxx, Xxxxxx Investment Trust listed on Schedule A
attached hereto (each, a "Fund"), each of such Funds acting on its own behalf
separately from all the other Funds and not jointly or jointly and severally
with any of the other Funds (each of the Funds being hereinafter referred to as
the "Fund"), and
WHEREAS, the Custodian and the Fund desire to utilize sub-custodians
for the purpose of holding cash and securities of the Fund, and
WHEREAS, the Custodian wishes to appoint the Sub-Custodian as the
Fund's Sub-Custodian,
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF CUSTODIAN. The Custodian hereby employs and appoints
the Sub-Custodian as a Sub-Custodian for the Fund for the term and subject to
the provisions of this Agreement. Upon request, the Custodian shall deliver to
the Sub-Custodian such proxies, powers of attorney or other instruments as may
be reasonably necessary or desirable in connection with the performance by the
Sub-Custodian of its obligations under this Agreement on behalf of the Fund.
2. DUTIES OF THE SUB-CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND
HELD BY IT. The Custodian may from time to time deposit securities or cash owned
by the Fund with the Sub-Custodian. The Sub-Custodian shall have no
responsibility or liability for or on account of securities, funds or other
property of the Fund not so delivered to it. The Sub-Custodian shall hold and
dispose of the securities hereafter held by or deposited with the Sub-Custodian
as follows:
2.1 HOLDING SECURITIES. The Sub-Custodian shall hold and physically
segregate for the account of the Fund all non-cash property, including all
securities owned by the Funds, other than securities which are maintained
pursuant to Section 2.13 in a Securities System. All such securities are to be
held or disposed of for, and subject at all times to the instructions of, the
21
Custodian pursuant to the terms of this Agreement. The Sub-Custodian shall
maintain adequate records identifying the securities as being held by it as
Sub-Custodian of the Fund.
2.2 DELIVERY OF SECURITIES. The Sub-Custodian shall release and deliver
securities of the Fund held by it hereunder (or in a Securities System account
of the Sub-Custodian) only upon receipt of Proper Instructions (as defined in
Section 2.17), 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 Fund 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 Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.13 hereof;
4) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
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
Sub-Custodian;
6) To the issuer thereof, or its agent, for transfer into the name
of the Fund or into the name of any nominee or nominees of the Sub-Custodian or
into the name or nominee name of any agent appointed pursuant to Section 2.12;
or for exchange for a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units; provided that,
in any such case, the new securities are to be delivered to the Sub-Custodian;
7) Upon the sale of such securities for the account of the Fund, 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
Sub-Custodian shall have no responsibility or liability for any loss arising
from the delivery of such securities prior to receiving payment for such
securities except as may arise from the Sub-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 Sub-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 Sub-Custodian;
22
10) For delivery in connection with any loans of securities made by
the Fund, but only against receipt of adequate collateral as agreed upon from
time to time by the Custodian and the Sub-Custodian, which may be in the form of
cash or obligations issued by the United States government, its agencies or
instrumentalities;
11) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Fund, but only against receipt of
amounts borrowed;
12) Upon receipt of instructions from the transfer agent for the
Fund (the "Transfer Agent"), for delivery to such Transfer Agent or to the
shareholders of the Fund in connection with distributions in kind, as may be
described from time to time in the Fund's Declaration of Trust and currently
effective registration statement, if any, in satisfaction of requests by
shareholders for repurchase or redemption;
13) For delivery to another Sub-Custodian of the Fund; and
14) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the
Trustees or of the Executive Committee of the Fund signed by an officer of the
Fund and certified by its Clerk or an Assistant Clerk, specifying the securities
to be delivered, setting forth the purpose for which such delivery is to be
made, declaring such purposes to be proper corporate purposes, and naming the
person or persons to whom delivery of such securities is to be made.
2.3 REGISTRATION OF SECURITIES. Securities of the Fund held by the
Sub-Custodian hereunder (other than bearer securities) shall be registered in
the name of the Fund or in the name of any nominee of the Fund or of any nominee
of the Sub-Custodian, which nominee shall be assigned exclusively to the Fund,
unless the Fund 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 Fund, or in the name or nominee name of any agent
appointed pursuant to Section 2.12. Notwithstanding the foregoing, a
Sub-Custodian or agent thereof may hold securities of the Fund in a nominee name
which is used for its other clients provided such name is not used by the
Sub-Custodian or agent for its own securities and that securities of the Fund
are physically segregated at all times from other securities held for other
clients using the same nominee name. All securities accepted by the
Sub-Custodian under the terms of this Agreement shall be in "street name" or
other good delivery form.
23
2.4 BANK ACCOUNTS. The Sub-Custodian shall open and maintain a separate
bank account or accounts in the name of the Fund, subject only to draft or order
by the Sub-Custodian acting pursuant to the terms of this Agreement, and shall
hold in such account or accounts, subject to the provisions hereof, all cash
received for the account of the Funds, other than cash maintained by the Fund in
a bank account established and used in accordance with Rule 17f-3 under the 1940
Act. Funds held by the Sub-Custodian for the Fund shall be deposited by it to
its credit as Sub-Custodian of the Fund in the Banking Department of the
Sub-Custodian or other banks. Such funds shall be deposited by the Sub-Custodian
in its capacity as Sub-Custodian and shall be withdrawable by the Sub-Custodian
only in that capacity. The Sub-Custodian shall be liable for losses incurred by
the Fund attributable to any failure on the part of the Sub-Custodian to report
accurate cash availability information with respect to the Fund's bank accounts
maintained by the Sub-Custodian or any of its agents, provided that such
liability shall be determined solely on a cost-of-funds basis.
2.5 PAYMENTS FOR SHARES. The Sub-Custodian shall receive from any
distributor of the Fund's shares or from the Transfer Agent of the Fund and
deposit into the Fund's account such payments as are received for shares of the
Fund issued or sold from time to time by the Fund. The Sub-Custodian will
provide timely notification to the Custodian, and the Transfer Agent of any
receipt by it of payments for shares of the Fund.
2.6 INVESTMENT AND AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement
between the Custodian and the Sub-Custodian, the Sub-Custodian shall, upon the
receipt of Proper Instructions,
1) invest in such instruments as may be set forth in such
instructions on the same day as received all federal funds received after a time
agreed upon between the Sub-Custodian and the Custodian; and
2) make federal funds available to the Fund as of specified times
agreed upon from time to time by the Custodian and the Sub-Custodian in the
amount of checks, when cleared within the Federal Reserve System, received in
payment for shares of the Fund which are deposited into the Fund's account or
accounts.
2.7 COLLECTION OF INCOME. The Sub-Custodian shall collect on a timely
basis all income and other payments with respect to registered securities held
hereunder to which the Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely basis all
income and other payments with respect to bearer securities if, on the date of
payment by the issuer, such securities are held hereunder and shall credit such
income, as collected, to the Fund's account. Without limiting the generality of
the foregoing, the Sub-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. Arranging
for the collection of income due the Fund on securities loaned pursuant to the
provisions of Section 2.2(10) shall be the responsibility of the Custodian. The
Sub-Custodian will have no duty or responsibility in connection therewith, other
than to provide the Custodian with such information or data as may be necessary
to assist the Custodian in arranging for the timely delivery to the
Sub-Custodian of the income to which the Fund is properly entitled.
24
2.8 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties, the
Sub-Custodian shall cause monies of a Fund to be paid out in the following cases
only:
1) Upon the purchase of securities for the account of the Fund but
only (a) against the delivery of such securities to the Sub-Custodian (or any
bank, banking firm or trust company doing business in the United States or
abroad which is qualified under the 1940 Act, as amended, to act as a custodian
and has been designated by the Sub-Custodian as its agent for this purpose)
registered in the name of the Fund or in the name of a nominee 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 2.13 hereof; or (c) in the case of repurchase agreements
entered into between the Fund and the Sub-Custodian, or another bank, (i)
against delivery of the securities either in certificate form or through an
entry crediting the Sub-Custodian's account at the Federal Reserve Bank with
such securities or (ii) against delivery of the receipt evidencing purchase by
the Fund of securities owned by the Sub-Custodian along with written evidence of
the agreement by the Sub-Custodian to repurchase such securities from the Fund;
2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of shares issued by the Fund as
set forth in Section 2.10 hereof;
4) For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments for the account of the
Fund: interest, taxes, management, accounting, custodian and Sub-Custodian,
transfer agent and legal fees, including the Custodian's fee; and operating
expenses of the Fund whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends declared pursuant to the
governing documents of the Fund;
6) For transfer to another Sub-Custodian of the Fund; and
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the
Trustees or of the Executive Committee of the Fund signed by an officer of the
Fund and certified by its Clerk or an Assistant Clerk, 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.
2.9 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES
PURCHASED. In any and every case where payment for purchase of securities for
the account of a Fund is made by the Sub-Custodian in advance of receipt of the
securities purchased in the absence of specific written
25
instructions from the Custodian to so pay in advance, the Sub-Custodian shall be
absolutely liable to the Fund and the Custodian in the event any loss results to
the Fund or the Custodian from the failure of the Sub-Custodian to make such
payment against delivery of such securities, except that in the case of
repurchase agreements entered into by the Fund with a bank which is a member of
the Federal Reserve System, the Sub-Custodian may transfer funds to the account
of such bank prior to the receipt of written evidence that the securities
subject to such a repurchase agreement have been transferred by book-entry into
a segregated non-proprietary account of the Sub-Custodian maintained with any
Federal Reserve Bank or of the safe-keeping receipt, provided that such
securities have in fact been so transferred by book-entry.
2.10 PAYMENTS FOR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND.
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and By-Laws and any applicable votes of
the Trustees of the Fund pursuant thereto, the Sub-Custodian shall, upon receipt
of instructions from the Custodian, make funds available for payment to
shareholders of the Fund who have delivered to the Transfer Agent a request for
redemption or repurchase of their shares. In connection with the redemption or
repurchase of shares of the Fund, the Sub-Custodian, upon receipt of Proper
Instructions, is authorized to wire funds to or through a commercial bank
designated by the redeeming shareholders. In connection with the redemption or
repurchase of shares of the Fund, the Sub-Custodian, upon receipt of Proper
Instructions, shall honor checks drawn on the Sub-Custodian by a shareholder,
when presented to the Sub-Custodian in accordance with such procedures and
controls as are mutually agreed upon from time to time among the Fund, the
Custodian and the Sub-Custodian.
2.11 VARIANCES. The Sub-Custodian may accept securities or cash
delivered in settlement of trades notwithstanding variances between the amount
of securities or cash so delivered and the amount specified in the instructions
furnished to it by the Custodian, provided that the variance in any particular
transaction does not exceed (i) $25 in the case of transactions of $1,000,000 or
less, and (ii) $50 in the case of transactions exceeding $1,000,000. The
Sub-Custodian shall maintain a record of any such variances and notify the
Custodian of such variances in periodic transaction reports submitted to the
Custodian. The Sub-Custodian will not advise any party with whom the Fund
effects securities transactions of the existence of these variance provisions
without the consent of the Fund and the Custodian.
2.12 APPOINTMENT OF AGENTS. Without limiting its own responsibility for
its obligations assumed hereunder, the Sub-Custodian may at any time and from
time to time engage, at its own cost and expense, as an agent to act for the
Fund on the Sub-Custodian's behalf with respect to any such obligations any bank
or trust company which meets the requirements of the 1940 Act, and the rules and
regulations thereunder, to perform services delegated to the Sub-Custodian
hereunder, provided that the Fund shall have approved in writing any such bank
or trust company and the Sub-Custodian shall give prompt written notice to the
Custodian and the Fund of any such engagement. All agents of the Sub-Custodian
shall be subject to the instructions of the Sub-Custodian and not the Custodian.
The Sub-Custodian may, at any time in its discretion, and shall at the
Custodian's direction, remove any bank or trust company which has been appointed
as an agent, and shall in either case promptly notify the Custodian and the Fund
in writing of the completion of any such action.
26
The agents which the Fund has approved to date are set forth in
Schedule B hereto. Schedule B shall be amended from time to time as approved
agents are changed, added or deleted. The Custodian shall be responsible for
informing the Sub-Custodian sufficiently in advance of a proposed investment
which is to be held at a location not listed on Schedule B, in order that there
shall be sufficient time for the Fund to give the approval required by the
preceding paragraph and for the Sub-Custodian to complete the appropriate
contractual and technical arrangements with such agent. The engagement by the
Sub-Custodian of one or more agents to carry out such of the provisions of this
Section 2 shall not relieve the Sub-Custodian of its responsibilities or
liabilities hereunder.
2.13 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Sub-Custodian
may deposit and/or maintain securities owned by the Fund 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
(collectively referred to herein as "Securities System") in accordance with
applicable Federal Reserve Board and Securities and Exchange Commission rules
and regulations (including Rule 17f-4 of the 1940 Act), and subject to the
following provisions:
1) The Sub-Custodian may keep securities of the Fund in a
Securities System provided that such securities are represented in an account
("Account") of the Sub-Custodian in the Securities System which shall not
include any assets other than assets held as a fiduciary, custodian or otherwise
for customers;
2) The records of the Sub-Custodian with respect to securities of
the Fund which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund;
3) The Sub-Custodian shall pay for securities purchased for the
account of the Fund 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 Sub-Custodian to reflect such payment and transfer
for the account of the Fund. The Sub-Custodian shall transfer securities sold
for the account of the Fund upon (a) receipt of advice from the Securities
System that payment for such securities has been transferred to the Account, and
(b) the making of an entry on the records of the Sub-Custodian to reflect such
transfer and payment for the account of the Fund. Copies of all advices from the
Securities System of transfers of securities for the account of the Fund shall
identify the Fund, be maintained for the Fund by the Sub-Custodian and be
provided to the Fund or the Custodian at the Custodian's request. The
Sub-Custodian shall furnish the Custodian confirmation of each transfer to or
from the account of the Fund in the form of a written advice or notice and shall
furnish to the Custodian copies of daily transaction sheets reflecting each
day's transactions in the Securities System for the account of the Fund on the
next business day;
4) The Sub-Custodian shall provide the Custodian with any report
obtained by the Sub-Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding securities deposited
in the Securities System;
27
5) The Sub-Custodian shall have received the initial or annual
certificate, as the case may be, required by Section 2.10 hereof;
6) Anything to the contrary in this Agreement notwithstanding, the
Sub-Custodian shall be liable to the Fund and the Custodian for any loss or
damage to the Fund or the Custodian resulting from use of the Securities System
by reason of any negligence, misfeasance or misconduct of the Sub-Custodian or
any of its agents or of any of its or their employees or from failure of the
Sub-Custodian or any such agent to enforce effectively such rights as it may
have against the Securities System; at the election of the Custodian, it shall
be entitled to be subrogated to the rights of the Sub-Custodian with respect to
any claim against the Securities System or any other person which the
Sub-Custodian may have as a consequence of any such loss or damage if and to the
extent that the Fund and the Custodian have not been made whole for any such
loss or damage.
2.14 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Sub-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 securities held by it hereunder and in connection with transfers of
securities.
2.15 PROXIES. The Sub-Custodian shall, with respect to the 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 a
Fund, all proxies, without indication of the manner in which such proxies are to
be voted, and shall promptly deliver to the Custodian such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.16 COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES. The
Sub-Custodian shall transmit promptly to the Custodian all written information
(including, without limitation, pendency of calls and maturities of securities
and expirations of rights in connection therewith) received by the Sub-Custodian
from issuers of the securities being held for the account of the Fund. With
respect to tender or exchange offers, the Sub-Custodian shall transmit promptly
to the Custodian all written information received by the Sub-Custodian from
issuers of the securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or any other similar
transactions, the Custodian shall notify the Sub-Custodian of the action the
Fund desires the Sub-Custodian to take; provided, however, that the
Sub-Custodian shall not be liable to the Fund or the Custodian for the failure
to take any such action unless such instructions are received by the
Sub-Custodian at least two business days prior to the date on which the
Sub-Custodian is to take such action.
2.17 PROPER INSTRUCTIONS. Proper Instructions as used throughout this
Agreement means a writing signed or initialed by one or more persons who are
authorized by the Trustees of the Fund and by vote of the Board of Directors of
the Custodian. Each such writing shall set forth the specific transaction or
type of transaction involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be considered Proper
Instructions if the Sub-Custodian reasonably believes them to have been given by
a person authorized to give such instructions with respect to the transaction
involved. The Custodian shall
28
cause all oral instructions to be confirmed in writing. Upon receipt of a
certificate of the Clerk or an Assistant Clerk as to the authorization by the
Trustees of the Funds accompanied by a detailed description of procedures
approved by the Trustees, Proper Instructions may include communications
effected directly between electro-mechanical or electronic devices, provided
that the Trustees, the Custodian and the Sub-Custodian are satisfied that such
procedures afford adequate safeguards for the Fund's assets. Notwithstanding the
foregoing, no Trustee, officer, employee or agent of the Fund shall be permitted
access to any securities or similar investments of the Fund deposited with the
Sub-Custodian or any agent for any reason except in accordance with the
provisions of Rule 17f-2 under the 1940 Act.
2.18 ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The Sub-Custodian may
in its discretion, without express authority from the Custodian:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this Agreement,
provided that all such payments shall be accounted for to the Fund and the
Custodian;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Fund held by the Sub-Custodian
hereunder except as otherwise directed by the Custodian or the Trustees of the
Fund.
2.19 EVIDENCE OF AUTHORITY. The Sub-Custodian shall be protected in
acting upon any instruction, notice, request, consent, certificate or other
instrument or paper reasonably believed by it to be genuine and to have been
properly executed by or on behalf of the Fund or the Custodian as custodian of
the Fund. The Sub-Custodian may receive and accept a certified copy of a vote of
the Trustees of the Fund or the Board of Directors of the Custodian, 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 Trustees pursuant
to the Declaration of Trust and By-Laws and the Board of Directors of the
Custodian, as the case may be as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Sub-Custodian of
written notice to the contrary.
3. PERFORMANCE STANDARDS; PROTECTION OF THE FUND. The Sub-Custodian
shall use its best efforts to perform its duties hereunder in accordance with
the standards set forth in Schedule C hereto. Schedule C may be amended from
time to time as agreed to by the Custodian and the Trustees of the Fund.
4. RECORDS. The Sub-Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Trustees of the Fund to
keep the books of account of the Funds or, if directed in writing to do so by
the Custodian, shall itself keep such
29
books of account. The Sub-Custodian shall create and maintain all records
relating to its activities and obligations under this Agreement in such manner
as will meet the obligations of the Custodian under its Custodian Agreement with
the Fund under the 1940 Act, with particular attention to Sections 17(f) and 31
thereof and Rules 17f-2, 31a-1 and 31a-2 thereunder, applicable federal and
state tax laws, and any other law or administrative rules or procedures which
may be applicable to the Fund or the Custodian. All such records shall be the
property of the Fund and shall at all times during the regular business hours of
the Sub-Custodian be open for inspection by duly authorized officers, employees
or agents of the Custodian and the Fund and employees and agents of the
Securities and Exchange Commission. The Sub-Custodian shall, at the Custodian's
request, supply the Custodian with a tabulation of securities owned by the Fund
and held under this Agreement and shall, when requested to do so by the
Custodian and for such compensation as shall be agreed upon between the
Custodian and Sub-Custodian, include certificate numbers in such tabulations.
5. OPINION AND REPORTS OF THE FUND'S INDEPENDENT ACCOUNTANTS. The
Sub-Custodian shall take all reasonable actions, as the Custodian may from time
to time request, to obtain from year to year favorable opinions from the Fund's
independent public accountants with respect to its activities hereunder in
connection with the preparation of the Fund's registration statements and
amendments thereto, the Fund's reports to the Securities and Exchange Commission
and with respect to any other requirements of such Commission.
6. REPORTS OF SUB-CUSTODIAN'S INDEPENDENT ACCOUNTANTS. The
Sub-Custodian shall provide the Custodian, at such times as the Custodian may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Sub-Custodian under this
Agreement; such reports, which shall be of sufficient scope and in sufficient
detail as may reasonably be required by the Custodian, shall provide reasonable
assurance that any material inadequacies would be disclosed by such examination,
and, if there are no such inadequacies, shall so state.
7. COMPENSATION. The Sub-Custodian shall be entitled to reasonable
compensation for its services and expenses as Sub-Custodian, as agreed upon from
time to time between the Custodian and the Sub-Custodian.
8. RESPONSIBILITY OF SUB-CUSTODIAN. The Sub-Custodian shall exercise
reasonable care and diligence in carrying out the provisions of this Agreement
and shall not be liable to the Fund or the Custodian for any action taken or
omitted by it in good faith without negligence. So long as and to the extent
that it is in the exercise of reasonable care, the Sub-Custodian shall not be
responsible for the title, validity or genuineness of any property or evidence
of title thereto received by it or delivered by it pursuant to this Agreement
and shall be held harmless in acting upon any notice, request, consent,
certificate or other instrument reasonably believed by it to be genuine and to
be signed by the proper party or parties. It shall be entitled to rely on and
may act upon advice of counsel (who may be counsel for the Fund) on all matters,
and shall be without liability for any action reasonably taken or omitted
pursuant to such advice. Notwithstanding the foregoing, the responsibility of
the Sub-Custodian with respect to redemptions effected by check
30
shall be in accordance with a separate agreement entered into between the
Custodian and the Sub-Custodian.
The Sub-Custodian shall protect the Fund and the Custodian from direct
losses to the Fund resulting from any act or failure to act of the Sub-Custodian
in violation of its duties hereunder or of law and shall maintain customary
errors and omissions and fidelity insurance policies in an amount not less than
$25 million to cover losses to the Fund resulting from any such act or failure
to act.
If the Custodian requires the Sub-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 Sub-Custodian, result in the Sub-Custodian's
being liable for the payment of money or incurring liability of some other form,
the Custodian, as a prerequisite to requiring the Sub-Custodian to take such
action, shall provide indemnity to the Sub-Custodian in an amount and form
satisfactory to it.
The Custodian agrees to indemnify and hold harmless the Sub-Custodian
from and against all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) incurred or assessed against it or its
nominee in connection with the performance of this Agreement, except such as may
arise from its own negligent action, negligent failure to act or willful
misconduct. To secure any such authorized charges and any advances of cash or
securities made by the Sub-Custodian to or for the benefit of the Fund for any
purpose which results in the Fund's incurring an overdraft at the end of any
business day or for extraordinary or emergency purposes during any business day,
the Custodian on behalf of the Fund, unless prohibited from doing so by one or
more of the Fund's fundamental investment restrictions, hereby represents that
it has obtained from the Fund authorization to apply available cash in any
account maintained by the Sub-Custodian on behalf of the Fund and a security
interest in and pledge to it of securities held for the Fund by the
Sub-Custodian, in an amount not to exceed the amount not prohibited by such
restrictions, for the purposes of securing payment of any such advances, and
that the Fund has agreed, from time to time, to designate in writing, or to
cause its investment adviser to designate in writing, the specific securities
subject to such security interest and pledge. The Custodian hereby assigns the
benefits of such security interest and pledge to the Sub-Custodian, and agrees
that, should the Fund or the Custodian fail to repay promptly any advances of
cash or securities, the Sub-Custodian shall be entitled to use such available
cash and to dispose of such pledged securities as is necessary to repay any such
advances.
9. SUCCESSOR SUB-CUSTODIAN. If a successor Sub-Custodian shall be
appointed by the Custodian, the Sub-Custodian shall, upon termination, cause to
be delivered to such successor Sub-Custodian, duly endorsed and in the form for
transfer, all securities then held by it, shall cause the transfer to an account
of the successor Sub-Custodian all of the Fund's securities held in a Securities
System and shall cause to be delivered to such successor Sub-Custodian all funds
and other property held by it or any of its agents.
If no such successor Sub-Custodian shall be appointed, the
Sub-Custodian shall, in like manner, upon receipt of a certified copy of a vote
of the Trustees of the Fund, cause to be
31
delivered at the office of the Sub-Custodian and transfer such securities, funds
and other properties in accordance with such vote.
In the event that no written order designating a successor
Sub-Custodian or certified copy of a vote of the Trustees shall have been
delivered to the Sub-Custodian on or before the date when such termination shall
become effective, then the Sub-Custodian shall have the right to deliver to a
bank or trust company, which is a "bank" as defined in the 1940 Act, doing
business in Boston, Massachusetts, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published report,
of not less than $25,000,000, all securities, funds and other properties held by
the Sub-Custodian and its agents and all instruments held by the Sub-Custodian
and its agents relative thereto and all other property held by it and its agents
under this Agreement and to cause to be transferred to an account of such
successor Sub-Custodian all of the Fund's securities held in any Securities
System. Thereafter, such bank or trust company shall be the successor of the
Sub-Custodian under this Agreement.
In the event that securities, funds and other properties remain in the
possession of the Sub-Custodian after the date of termination hereof owing to
failure of the Custodian to obtain the certified copy of vote referred to or of
the Trustees to appoint a successor Sub-Custodian, the Sub-Custodian shall be
entitled to fair compensation for its services during such period as the
Sub-Custodian retains possession of such securities, funds and other properties
and the provisions of this Agreement relating to the duties and obligations of
the Sub-Custodian shall remain in full force and effect.
Upon termination, the Sub-Custodian shall, upon receipt of a certified
copy of a vote of the Trustees of the Fund, cause to be delivered to any other
Sub-Custodian designated in such vote such assets, securities and other property
of the Fund as are designated in such vote, or pursuant to Proper Instructions,
cause such assets, securities and other property of the Fund as are designated
by the Custodian to be delivered to one or more of the sub-custodians designated
on Schedule D hereto, as from time to time amended.
10. EFFECTIVE PERIOD; TERMINATION AND AMENDMENT. This Agreement shall
become effective as of its execution, shall continue in full force and effect
until terminated as hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid, to the other party,
such termination to take effect not sooner than thirty (30) days after the date
of mailing; provided, however, that the Sub-Custodian shall not act under
Section 2.13 hereof in the absence of receipt of an initial certificate of the
Clerk or an Assistant Clerk that the Trustees of the Fund have approved the
initial use of a particular Securities System and the receipt of an annual
certificate of the Clerk or an Assistant Clerk that the Trustees have reviewed
the use by the Fund of such Securities System, as required in each case by Rule
17f-4 under the Investment Company Act of 1940; and provided, further, however,
that the Custodian shall not amend or terminate this Agreement in contravention
of any applicable federal or state regulations or any provision of the
Declarations of Trust or By-Laws of the Fund; and provided, further, that the
Custodian may at any time, by action of its Board of Directors, or the Trustees
of the Fund, as the case may be, immediately terminate this Agreement in the
event of the appointment of a conservator or receiver
32
for the Sub-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 this Agreement, the Custodian shall pay to the
Sub-Custodian such compensation as may be due as of the date of such termination
and shall likewise reimburse the Sub-Custodian for its reimbursable costs,
expenses and disbursements.
11. AMENDMENT AND INTERPRETATION. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof. No provision of this Agreement may be amended or terminated
except by a statement in writing signed by the party against which enforcement
of the amendment or termination is sought.
In connection with the operation of this Agreement, the Sub-Custodian
and the Custodian may from time to time agree in writing on such provisions
interpretive of or in addition to the provisions of this Agreement as may in
their joint opinion be consistent with the general tenor of this Agreement. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Agreement.
12. GOVERNING LAW. This Agreement is executed and delivered in The
Commonwealth of Massachusetts and shall be governed by and construed according
to the laws of said Commonwealth.
13. NOTICES. Notices and other writings delivered or mailed postage
prepaid to the Custodian addressed to the Custodian attention: General Counsel,
Xxxxxx Fiduciary Trust Company, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx, XX 00000 or to
such other person or address as the Custodian may have designated to the
Sub-Custodian in writing, or to the Sub-Custodian at
________________________________, or to such other address as the Sub-Custodian
may have designated to the Custodian in writing, shall be deemed to have been
properly delivered or given hereunder to the respective addressee.
14. BINDING OBLIGATION. This Agreement shall be binding on and shall
inure to the benefit of the Custodian and the Sub-Custodian and their respective
successors and assigns, provided that neither party hereto may assign this
Agreement or any of its rights or obligations hereunder without the prior
written consent of the other party.
15. PRIOR AGREEMENTS. This Agreement supersedes and terminates, as of
the date hereof, all prior contracts between the Fund or the Custodian and the
Sub-Custodian relating to the custody of the Fund's assets.
16. DECLARATION OF TRUST. A copy of the Agreement and Declaration of
Trust of the Fund is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that the obligations of or arising out
of this instrument are not binding upon any of the Trustees or beneficiaries
individually but binding only upon the assets and property of the Funds.
33
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 [ ], 200[ ].
XXXXXX FIDUCIARY TRUST COMPANY
By: _______________________
[SUB-CUSTODIAN]
By: _______________________
34
EXHIBIT 1(A)
MASTER FOREIGN SUB-CUSTODIAN AGREEMENT
AGREEMENT made this _____ day of _______, 2001, between Xxxxxx
Fiduciary Trust Company, a Massachusetts-chartered trust company (the
"Custodian"), and [__________________________], a [______________________] (the
"Sub-Custodian").
WHEREAS, the Sub-Custodian represents to the Custodian that it is
eligible to serve as a custodian and foreign custody manager for a management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), and
WHEREAS, the Custodian has entered into a Custodian Agreement between
it and each series of TH Xxx, Xxxxxx Investment Trust listed on Schedule A
attached hereto (each, a "Fund"), each of such Funds acting on its own behalf
separately from all the other Funds and not jointly or jointly and severally
with any of the other Funds (each of the Funds being hereinafter referred to as
the "Fund"), and
WHEREAS, the Custodian and the Fund desire to utilize sub-custodians
for the purpose of holding cash and securities of the Fund, and
WHEREAS, the Custodian wishes to appoint the Sub-Custodian as the
Fund's Sub-Custodian and sub-foreign custody manager,
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF SUB-CUSTODIAN. The Custodian hereby employs and appoints the
Sub-Custodian as a sub-custodian for safekeeping of securities and other assets
of the Fund for the term and subject to the provisions of this Agreement. Upon
request, the Custodian shall deliver to the Sub-Custodian such proxies, powers
of attorney or other instruments as may be reasonably necessary or desirable in
connection with the performance by the Sub-Custodian of its obligations under
this Agreement on behalf of the Fund.
2. DUTIES OF THE SUB-CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY IT.
The Custodian may from time to time deposit or direct the deposit of securities
or cash owned by the Fund with the Sub-Custodian. The Sub-Custodian shall have
no responsibility or liability for or on account of securities, funds or other
property of the Fund not so delivered to it. Except for securities and funds
held by Eligible Foreign Custodians (as defined in Section 2.11A) the
Sub-Custodian shall hold and dispose of the securities or cash hereafter held by
or deposited with the Sub-Custodian as follows:
2.1 HOLDING SECURITIES. The Sub-Custodian shall hold and, by book-entry
or otherwise, identify as belonging to the Fund all non-cash property which has
been delivered to the
35
Sub-Custodian. All such securities are to be held or disposed of for, and
subject at all times to the instructions of, the Custodian pursuant to the terms
of this Agreement. The Sub-Custodian shall maintain adequate records identifying
the securities as being held by it as sub-custodian of the Fund.
2.2 Delivery of Securities. The Sub-Custodian shall release and deliver
securities of the Fund held by it hereunder (or in a Securities System account
of the Sub-Custodian as defined in Section 2.12) only upon receipt of Proper
Instructions (as defined in Section 2.19), 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 Fund and
receipt of payment therefor, provided, however, that the Sub-Custodian may
release and deliver securities prior to the receipt of payment therefor if (i)
in the Sub-Custodian's judgment, (A) release and delivery prior to payment is
required by the terms of the instrument evidencing the security or (B) release
and delivery prior to payment is the prevailing method of settling securities
transactions between institutional investors in the applicable market and (ii)
release and delivery prior to payment is in accordance with generally accepted
trade practice and with any applicable governmental regulations and the rules of
Securities Systems or other securities depositories and clearing agencies in the
applicable market. The Sub-Custodian agrees, upon request, to advise the
Custodian of all pending transactions in which release and delivery will be made
prior to the receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender or other
similar offers for such securities; provided that, in any such case, the cash or
other consideration is thereafter to be delivered to the Sub-Custodian;
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 thereafter to be delivered to the
Sub-Custodian;
6) To the issuer thereof, or its agent, for transfer into the name
of the Fund or into the name of any nominee or nominees of the Sub-Custodian or
into the name or nominee name of any agent appointed pursuant to Section 2.11 or
any other name permitted pursuant to Section 2.3; 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 thereafter to be delivered to the Sub-Custodian;
7) Upon the sale of such securities for the account of the Fund, to
the broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom;
36
provided that, in any such case, the Sub-Custodian shall have no responsibility
or liability for any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from the
Sub-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, thereafter
are to be delivered to the Sub-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 now securities and cash, if
any, are thereafter to be delivered to the Sub-Custodian;
10) For delivery in connection with any loans of securities made by
the Fund;
11) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Fund, but only against receipt of
amounts borrowed;
12) Upon receipt of instructions from the transfer agent for the
Fund (the "Transfer Agent"), for delivery to such Transfer Agent or to the
shareholders of the Fund in connection with distributions in kind, in
satisfaction of requests by shareholders for repurchase or redemption;
13) For delivery to the Custodian or another sub-custodian of the
Fund; and
14) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the
Trustees or of the Executive Committee of the Fund signed by an officer of the
Fund and certified by its Clerk or an Assistant Clerk, specifying the securities
to be delivered, setting forth the purpose for which such delivery is to be
made, declaring such purposes to be proper corporate purposes, and naming the
person or persons to whom delivery of such securities is to be made.
2.3 REGISTRATION OF SECURITIES. Securities of the Fund held by the
Sub-Custodian hereunder (other than bearer securities) shall be registered in
the name of the Fund or in the name of any nominee of the Fund or of any nominee
of the Sub-Custodian or any Eligible Foreign Custodian subject to a Contract as
set forth in Section 2.11A or eligible securities depository as set forth in
Section 2.11B, which nominee shall be assigned exclusively to the Fund, unless
the Fund 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 Fund, or in the name or nominee name of any agent appointed
pursuant to Section 2.11. Notwithstanding the foregoing, the Sub-Custodian or
agent thereof or any Eligible Foreign Custodian or eligible securities
depository may hold securities of the Fund in a nominee name which is used for
its other clients provided that such name is not used by the Sub-Custodian,
agent, Eligible Foreign Custodian or eligible securities depository for its own
securities and that securities of the Fund are, by book-
37
entry or otherwise, at all times identified as belonging to the Fund and
distinguished from other securities held for other clients using the same
nominee name. In addition, and notwithstanding the foregoing, the Sub-Custodian
or agent thereof or Eligible Foreign Custodian or eligible securities depository
may hold securities of the Fund in its own name if such registration is the
prevailing method in the applicable market by which custodians register
securities of institutional clients and provided that securities of the Fund
are, by book-entry or otherwise, at all times identified as belonging to the
Fund and distinguished from other securities held for other clients or for the
Sub-Custodian or agent thereof or Eligible Foreign Custodian or eligible
securities depository. All securities accepted by the Sub-Custodian under the
terms of this Agreement shall be in good delivery form.
2.4 BANK ACCOUNTS. The Sub-Custodian shall open and maintain a separate
bank account or accounts in the name of the Fund or of the Custodian for the
benefit of the Fund, subject only to draft or order by the Sub-Custodian acting
pursuant to the terms of this Agreement or by the Custodian acting pursuant to
the Custodian Agreement, and shall hold in such account or accounts, subject to
the provisions hereof, to the Sub-Custodian's credit as sub-custodian of the
Fund or the Custodian's credit as custodian for the Fund, cash received for the
account of the Fund other than cash maintained by the Fund in a bank account
established and used in accordance with Rule 17f-3 under the 1940 Act or cash
held as deposits with Eligible Foreign Custodians in accordance with the
following paragraph. The responsibilities of the Sub-Custodian for cash,
including foreign currency, of the Fund accepted on the Sub-Custodian's books as
a deposit shall be that of a U.S. bank for a similar deposit.
The Sub-Custodian may open a bank account on the books of an Eligible
Foreign Custodian in the name of the Fund or of the Sub-Custodian as a
sub-custodian for the Fund, and may deposit cash, including foreign currency, of
the Fund in such account, and such funds shall be withdrawable only pursuant to
draft or order of the Sub-Custodian. The records for such account will be
maintained by the Sub-Custodian but such account shall not constitute a deposit
liability of the Sub-Custodian. The responsibilities of the Sub-Custodian for
deposits maintained in such account shall be the same as and no greater than the
Sub-Custodian's responsibility in respect of other portfolio securities of the
Fund.
The Sub-Custodian shall be liable for actual losses incurred by the
Fund attributable to any failure on the part of the Sub-Custodian to report
accurate cash availability information with respect to the bank accounts
referred to in this Section 2.4.
2.5 PAYMENTS FOR SHARES. The Sub-Custodian shall maintain custody of
amounts received from the Transfer Agent of the Fund for shares of the Fund
issued by the Fund and sold by its distributor and deposit such amounts into the
Fund's account. The Sub-Custodian will provide timely notification to the
Custodian and the Transfer Agent of any receipt by it of payments for shares of
the Fund.
2.6 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the
Custodian and the Sub-Custodian, the Sub-Custodian shall, upon the receipt of
Proper Instructions, make federal funds available to the Custodian for the
account of the Fund as of specified times agreed upon from time to time by the
Custodian and the Sub-Custodian with respect to amounts received
38
by the Sub-Custodian for the purchase of shares of the Fund.
2.7 COLLECTION OF INCOME. The Sub-Custodian shall collect on a timely
basis all income and other payments with respect to registered securities held
hereunder, including securities held in a Securities System, to which the Fund
shall be entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and other payments with
respect to bearer securities if, on the date of payment by the issuer, such
securities are held hereunder and shall credit such income, as collected, to the
Fund's account. Without limiting the generality of the foregoing, the
Sub-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. Arranging for the collection of
income due the Fund on securities loaned pursuant to the provisions of Section
2.2(10) shall be the responsibility of the Custodian. The Sub-Custodian will
have no duty or responsibility in connection therewith, other than to provide
the Custodian with such information or data as may be necessary to assist the
Custodian in arranging for the timely delivery to the Sub-Custodian of the
income to which the Fund is properly entitled.
2.8 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties, the
Sub-Custodian shall cause monies of the Fund to be paid out in the following
cases only:
1) Upon the purchase of securities for the account of the Fund but
only (a) against the delivery of such securities to the Sub-Custodian (or any
bank, banking firm or trust company doing business in the United States or
abroad which is qualified under the 1940 Act, as amended, to act as a custodian
and has been designated by the Sub-Custodian as its agent for this purpose) or
any Eligible Foreign Custodian or eligible securities depository and registered
in the name of the Fund or in the name of a nominee of the Sub-Custodian, any
Eligible Foreign Custodian or eligible securities depository referred to in
Section 2.3 hereof or in proper form for transfer, provided, however, that the
Sub-Custodian may cause monies of the Fund to be paid out prior to delivery of
such securities if (i) in the Sub-Custodian's judgment, (A) payment prior to
delivery is required by the terms of the instrument evidencing the security or
(B) payment prior to delivery is the prevailing method of settling securities
transactions between institutional investors in the applicable market and (ii)
payment prior to delivery is in accordance with generally accepted trade
practice and with any applicable governmental regulations and the rules of
Securities Systems or other securities depositories and clearing agencies in the
applicable market. The Sub-Custodian agrees, upon request, to advise the
Custodian of all pending transactions in which payment will be made prior to the
receipt of securities in accordance with the proviso to the foregoing sentence;
(b) in the case of a purchase effected through a Securities System, in
accordance with the conditions set forth in Section 2.12 hereof; or (c) (i) in
the case of a repurchase agreement entered into between the Fund and the
Sub-Custodian, another bank or a broker-dealer, against delivery of the
securities either in certificate form or through an entry crediting the
Sub-Custodian's or its agent's non-proprietary account at any Federal Reserve
Bank with such securities or (ii) in the case of a repurchase agreement entered
into between the Fund and the Sub-Custodian, against delivery of a receipt
evidencing purchase by the Fund of securities owned by the Sub-Custodian along
with written evidence of the agreement by the Sub-Custodian to repurchase such
securities from the Fund; or (d) for transfer to a time deposit account of the
39
Fund in any bank, whether domestic or foreign, which transfer may be effected
prior to receipt of a confirmation of the deposit from the applicable bank or a
financial intermediary;
2) In connection with conversion, exchange or surrender or tender
or exercise of securities owned by the Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of shares issued by the Fund as
set forth in Section 2.10 hereof;
4) For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments for the account of the
Fund: interest, taxes, management, accounting, custodian and sub-custodian,
transfer agent and legal fees, including the Custodian's fee; and operating
expenses of the Fund whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends or other distributions declared
to shareholders of the Fund;
6) For transfer to the Custodian or another sub-custodian of the
Fund; and
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the
Trustees or of the Executive Committee of the Fund signed by an officer of the
Fund and certified by its Clerk or Assistant Clerk, 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.
2.9 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES
PURCHASED. Except as otherwise provided in this Agreement, in any and every case
where payment for purchase of securities for the account of the Fund is made by
the Sub-Custodian in advance of receipt of the securities purchased in the
absence of Proper Instructions from the Custodian to so pay in advance, the
Sub-Custodian shall be absolutely liable to the Fund and the Custodian in the
event any loss results to the Fund or the Custodian from the payment by the
Sub-Custodian in advance of delivery of such securities.
2.10 PAYMENTS FOR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND.
From such funds as may be available, the Sub-custodian shall, upon receipt of
Proper Instructions, make funds available for payment to a shareholder of the
Fund who has delivered to the Transfer Agent a request for redemption or
repurchase of shares of the Fund. In connection with the redemption or
repurchase of shares of the Fund, the Sub-Custodian, upon receipt of Proper
Instructions, is authorized to wire funds to or through a commercial bank
designated by the redeeming shareholder. In connection with the redemption or
repurchase of shares of the Fund, the Sub-Custodian, upon receipt of Proper
Instructions, shall honor checks drawn on the Sub-Custodian by a shareholder,
when presented to the Sub-Custodian in accordance with such procedures and
controls as are mutually agreed upon from time to time among the Fund, the
Custodian and the Sub-Custodian.
40
2.11 APPOINTMENT OF AGENTS WITH RESPECT TO U.S. ASSETS.
Agents. With respect to Fund assets maintained in the United States and
without limiting its own responsibility for its obligations assumed hereunder,
the Sub-Custodian may at any time and from time to time engage, at its own cost
and expense, as an agent to act for the Fund on the Sub-Custodian's behalf with
respect to any such obligations any bank or trust company which meets the
requirements of the 1940 Act, and the rules and regulations thereunder, to
perform services delegated to the Sub-Custodian hereunder, provided that the
Fund and the Custodian shall have approved in writing any such bank or trust
company. All agents of the Sub-Custodian shall be subject to the instructions of
the Sub-Custodian and not the Custodian. The Sub-Custodian may, at any time in
its discretion, and shall at the Custodian's direction, remove any bank or trust
company which has been appointed as an agent, and shall in either case promptly
notify the Custodian and the Fund in writing of the completion of any such
action.
The agents which the Fund has approved to date are set forth in
Schedule B hereto. The engagement by the Sub-Custodian of one or more agents
shall not relieve the Sub-Custodian of its responsibilities or liabilities
hereunder.
2.11A APPOINTMENT OF SUB-FOREIGN CUSTODY MANAGER. The Custodian hereby
employs and appoints the Sub-Custodian as a sub-foreign custody manager for the
term and subject to the provisions of this Agreement. The sub-foreign custody
manager accepts such appointment and agrees to perform the duties set forth in
this Agreement concerning the safekeeping of the Fund's assets in each of the
countries set forth in Schedule B-1, as may be amended from time to time by the
Custodian and the Sub-Custodian.
The Sub-Custodian agrees to exercise reasonable care, prudence and
diligence such as a person having responsibility for the safekeeping of the
Fund's foreign assets would exercise. The Custodian acknowledges that advance
notice may be required before the custodian shall be able to perform its duties
with respect to a country added to Schedule B-1 (such advance notice to be
reasonable in light of the specific facts and circumstances attendant to
performance of duties in such country).
1) The Sub-Custodian shall place and maintain the Fund's assets
with a custodian; provided that (i) each custodian is either an eligible foreign
custodian, as defined in subparagraph (a)(1) of Rule 17f-5 or a bank eligible to
serve as a custodian under Section 17(f) of the 1940 Act ("Eligible Foreign
Custodian"); and (ii) the Sub-Custodian shall have determined that the Fund's
assets will be subject to reasonable care, based on the standards applicable to
custodians in the relevant market, after considering all factors relevant to the
safekeeping of such assets, including, without limitation, those factors set
forth in clauses (i) through (iv) of subparagraph (c)(1) of Rule 17f-5.
2) The foreign custody arrangements are governed by a written
contract that the Sub-Custodian has determined will provide reasonable care for
the Fund's assets based upon those factors set forth in clauses (i) through (iv)
of subparagraph (c)(1) of Rule 17f-5, which contract shall include the
provisions required by clause (i) of subparagraph (c)(2) of Rule 17f-5, or in
lieu of any or all of such provisions, the contract may contain such other
provisions that the
41
Sub-Custodian determines will provide, in their entirety, the same or a greater
level of care and protection for the Fund's assets as the provisions set forth
in such clause, in their entirety.
3) The Sub-Custodian shall have established a system to monitor at
reasonable intervals (but at least annually) the appropriateness of maintaining
the Fund's assets with each Eligible Foreign Custodian selected hereunder. The
Sub-Custodian shall monitor the continuing appropriateness of placement of the
Fund's assets in accordance with the criteria set forth above. The Sub-Custodian
shall monitor the continuing performance of the contract governing the Fund's
arrangements in accordance with the criteria set forth above.
4) The Sub-Custodian shall provide to the Custodian at least
annually, and more frequently if requested, written reports specifying placement
of the Fund's assets with each Eligible Foreign Custodian selected hereunder,
and shall promptly report as to any material changes to the Fund's foreign
custody arrangements.
5) If an arrangement with a specific Eligible Foreign Custodian
selected hereunder no longer meets the requirements of this Agreement, the
Sub-Custodian shall withdraw the Fund's assets from the non-complying
arrangement as soon as reasonably practicable; provided, however, that if in the
reasonable judgement of the Sub-Custodian, such withdrawal would require
liquidation of any of the Fund's assets or would materially impair the
liquidity, value or other investment characteristics of the Fund's assets, it
shall be the duty of the Sub-Custodian to provide the Fund's investment manager
with information regarding the particular circumstances and to act only in
accordance with Proper Instructions with respect to such liquidation or other
withdrawal.
If a specific Eligible Foreign Custodian fails to perform any of its obligations
under the terms and conditions of the applicable Contract, the Sub-Custodian
shall use its best efforts to cause such Eligible Foreign Custodian to perform
such obligations. If the Sub-Custodian is unable to cause such Eligible Foreign
Custodian to perform fully its obligations thereunder, the Sub-Custodian shall
terminate such Eligible Foreign Custodian and, if necessary or desirable,
appoint another Eligible Foreign Custodian. At the election of the Custodian, it
shall have the right to enforce and shall be subrogated to the Sub-Custodian's
rights against any such Eligible Foreign Custodian for loss or damage caused the
Fund by such Eligible Foreign Custodian.
At the written request of the Fund or Custodian, the Sub-Custodian will
terminate any Eligible Foreign Custodian in accordance with the termination
provisions under the applicable Contract.
6) Notwithstanding the foregoing provisions, the Custodian may
direct the Sub-Custodian to place and maintain the Fund's assets with a
particular Eligible Foreign Custodian. In such event, the Sub-Custodian shall be
entitled to rely on any such instruction as a Proper Instruction under the terms
of the Sub-Custodian Agreement.
7) With respect to the securities and funds held by an Eligible
Foreign Custodian, either directly or indirectly, including demand and interest
bearing deposits, currencies or other deposits and foreign exchange contracts,
the Sub-Custodian shall be liable to
42
the Custodian and the Fund if and only to the extent that such Eligible Foreign
Custodian is liable to the Sub-Custodian and the Sub-Custodian recovers under
the applicable Contract, provided, however, that the foregoing limitation shall
not apply if such Eligible Foreign Custodian's liability to the Sub-Custodian is
limited because the applicable Contract does not contain provisions
substantially similar to the provisions outlined in this Agreement. The
Sub-Custodian shall also be liable to the Custodian and the Fund for its own
negligence in transmitting any instructions received by it from the Fund or the
Custodian and for its own negligence in connection with the delivery of any
securities or funds held by it to any such Eligible Foreign Custodian.
8) In the event the Sub-Custodian makes any payment to an Eligible
Foreign Custodian under the indemnification provisions of any Contract, no more
than thirty days after written notice to the Custodian of the Sub-Custodian's
having made such payment, the Custodian will reimburse the Sub-Custodian the
amount of such payment except in respect of any negligence or misconduct of the
Sub-Custodian.
2.11B DEPOSIT OF FUND ASSETS IN FOREIGN SECURITIES DEPOSITORIES. The
Sub-Custodian may deposit and/or maintain non-U.S. investments of the Fund in
any non-U.S. Securities Depository provided such Securities Depository meets the
requirements of an "eligible securities depository" under Rule 17f-7 under the
1940 Act, or any successor rule or regulation, or which by order of the
Securities and Exchange Commission is exempted therefrom. Prior to the placement
of any assets of the Fund with a non-U.S. Securities Depository, the
Sub-Custodian: (a) shall provide to the Fund's investment manager an assessment
of the custody risks associated with maintaining assets within such Securities
Depository; and (b) shall have established a system to monitor the custody risks
associated with maintaining assets with such Securities Depository. The
Sub-Custodian shall monitor such risks on a continuing basis and promptly notify
the Fund or its investment manager of any material changes in such risks. If an
arrangement with a non-U.S. Securities Depository with which the assets of the
Fund are maintained hereunder no longer meets the requirements of this
Agreement, the Sub-Custodian shall withdraw the Fund's assets from the
non-complying arrangement as soon as reasonably practicable; provided, however
that if in the reasonable judgement of the Sub-Custodian, such withdrawal would
require liquidation of any of the Fund's assets or would materially impair the
liquidity, value or other investment characteristics of the Fund's assets, it
shall be the duty of the Sub-Custodian to provide the Fund's investment manager
with information regarding the particular circumstances and to act only in
accordance with Proper Instructions with respect to such liquidation or other
withdrawal. In performing its duties under this subsection, the Sub-Custodian
shall use reasonable care, prudence and diligence. The Sub-Custodian and may
rely on such reasonable sources of information as may be available including but
not limited to: (i) published ratings; (ii) information supplied by a
subcustodian that is a participant in such Securities Depository; (iii) industry
surveys or publications; (iv) information supplied by the depository itself, by
its auditors (internal or external) or by the relevant Foreign Financial
Regulatory Authority. The Sub-Custodian shall not be responsible for errors or
omissions in its duties hereunder provided that it has performed its monitoring
and assessment duties with reasonable care. The risk assessment shall be
provided to the Fund's investment manager by such means as the Sub-Custodian
shall reasonably establish. Advice of material changes in such assessment may be
provided by the Sub-Custodian in the manner established as customary for
transmission of material market information.
2.12 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Sub-Custodian
may deposit
43
and/or maintain securities owned by the Fund 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 or by a
federal agency (collectively referred to herein as "Securities System") in
accordance with applicable rules and regulations (including Rule 17f-4 of the
1940 Act), and subject to the following provisions:
1) The Sub-Custodian may, either directly or through one or more
agents, keep securities of the Fund in a Securities System provided that such
securities are represented in an account ("Account") of the Sub-Custodian or
such an agent in the Securities System which shall not include any assets other
than assets held as a fiduciary, custodian or otherwise for customers;
2) The records of the Sub-Custodian with respect to securities of
the Fund which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund;
3) The Sub-Custodian shall pay for securities purchased for the
account of the Fund 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 Sub-Custodian to reflect such payment and transfer
for the account of the Fund. The Sub-Custodian shall transfer securities sold
for the account of the Fund 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 Sub-Custodian to reflect such
transfer and payment for the account of the Fund. Copies of all advices from the
Securities System of transfers of securities for the account of the Fund shall
be maintained for the Fund by the Sub-Custodian or such an agent and be provided
to the Fund or the Custodian at the Custodian's request. The Sub-Custodian shall
furnish the Custodian confirmation of each transfer to or from the account of
the Fund in the form of a written advice or notice and shall furnish to the
Custodian copies of daily transaction statements reflecting each day's
transactions in the Securities System for the account of the Fund on the next
business day;
4) The Sub-Custodian shall provide the Custodian with any report
obtained by the Sub-Custodian on the Securities System's accounting system,
internal accounting controls and procedures for safeguarding securities
deposited in the Securities System;
5) The Sub-Custodian shall utilize only such Securities Systems as
are set forth in a list provided by the Custodian of Securities Systems approved
for use by the Board of Trustees of the Fund, which list will be amended from
time to time by the Custodian as may be necessary to reflect any subsequent
action taken by the Trustees of the Fund;
6) Anything to the contrary in this Agreement notwithstanding, the
Sub-Custodian shall be liable to the Fund and the Custodian for any loss or
damage to the Fund or the Custodian resulting from use of the Securities System
by reason of any negligence, misfeasance or misconduct of the Sub-Custodian or
any of its agents or of any of its or their employees or from failure of the
Sub-Custodian or any such agent or employee to enforce effectively such rights
as it may have against the Securities System. At the election of the Custodian,
it shall be entitled to be
44
subrogated to the rights of the Sub-Custodian with respect to any claim against
the Securities System or any other person which the Sub-Custodian may have as a
consequence of any such loss or damage if and to the extent that the Fund and
the Custodian have not been made whole for any such loss or damage.
2.13 DEPOSITARY RECEIPTS. Only upon receipt of Proper Instructions, the
Sub-Custodian shall instruct an Eligible Foreign Custodian or an agent of the
Sub-Custodian appointed pursuant to Section 2.11hereof (an "Agent") to surrender
securities to the depositary used by an issuer of American Depositary Receipts
or International Depositary Receipts (hereinafter collectively referred to as
"ADRs") for such securities against a written receipt therefor adequately
describing such securities and written evidence satisfactory to the Eligible
Foreign Custodian or Agent that the depositary has acknowledged receipt of
instructions to issue with respect to such securities ADRs in the name of the
Sub-Custodian, or a nominee of the Sub-Custodian, for delivery to the
Sub-Custodian in Boston, Massachusetts, or at such other place as the
Sub-Custodian may from time to time designate.
Only upon receipt of Proper Instructions, the Sub-Custodian shall
surrender ADRs to the issuer thereof against a written receipt therefor
adequately describing the ADRs surrendered and written evidence satisfactory to
the Sub-Custodian that the issuer of the ADRs has acknowledged receipt of
instructions to cause its depository to deliver the securities underlying such
ADRs to an Eligible Foreign Custodian or an Agent.
2.14 FOREIGN EXCHANGE TRANSACTIONS AND FUTURES CONTRACTS. Only upon
receipt of Proper Instructions, the Sub-Custodian shall enter into foreign
exchange contracts or options to purchase and sell foreign currencies for spot
and future delivery on behalf and for the account of the Fund or shall enter
into futures contracts or options on futures contracts. Such transactions may be
undertaken by the Sub-Custodian with such banking institutions, including the
Sub-Custodian and Eligible Foreign Custodian appointed pursuant to the
applicable Contract, as principals, as approved and authorized by the Fund. In
connection with such transaction, the Sub-Custodian is authorized to make free
outgoing payments of cash in the form of U.S. Dollars or foreign currency
without receiving confirmation of a foreign exchange contract, futures contract
or option thereon or confirmation that the countervalue currency completing the
foreign exchange contract or futures contract has been delivered or received or
that the option has been delivered or received. Foreign exchange contracts,
futures contracts and options, other than those executed with the Sub-Custodian
as principal, shall for all purposes of this Agreement be deemed to be portfolio
securities of the Fund.
2.15 OPTION TRANSACTIONS. Only upon receipt of Proper Instructions, the
Sub-Custodian shall enter into option transactions in accordance with the
provisions of any agreement among the Fund, the Custodian, and/or the
Sub-Custodian and a broker-dealer.
2.16 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Sub-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 securities held by it hereunder and in connection with transfers of
securities.
45
2.17 PROXIES. The Sub-Custodian shall, with respect to the securities
held hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered other than in the name of the Fund,
all proxies that are received by the Sub-Custodian, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to the
Custodian such proxies, all proxy soliciting materials and all notices relating
to such securities.
2.18 COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES. The
Sub-Custodian shall transmit promptly to the Custodian all written information
(including, without limitation, pendency of calls and maturities of securities
and expirations of rights in connection therewith) received by the Sub-Custodian
from issuers of the securities being held for the account of the Fund. With
respect to tender or exchange offers, the Sub-Custodian shall transmit promptly
to the Custodian all written information received by the Sub-Custodian from
issuers of the securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or any other similar
transactions, the Custodian shall notify the Sub-Custodian of the action the
Fund desires the Sub-Custodian to take; provided, however, that the
Sub-Custodian shall not be liable to the Fund or the Custodian for the failure
to take any such action unless Proper Instructions are received by the
Sub-Custodian at least two business days prior to the date on which the
Sub-Custodian is to take such action, or in the case of foreign securities, such
longer periods as shall have been agreed upon in writing by the Custodian and
the Sub-Custodian, which may be in the form of written operating procedures or
standards.
2.19 PROPER INSTRUCTIONS. Proper Instructions as used throughout this
Agreement means a writing signed or initialed by one or more persons who are
authorized by the Trustees of the Fund and by the Custodian. Each such writing
shall set forth the specific transaction or type of transaction involved. Oral
instructions will be considered Proper Instructions if the Sub-Custodian
reasonably believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Custodian shall cause
all oral instructions to be confirmed in writing. Proper Instructions shall also
include communications effected directly between the Custodian and Sub-Custodian
by electro-mechanical or electronic devices, provided that the Custodian and the
Sub-Custodian have approved such procedures. Notwithstanding the foregoing, no
Trustee, officer, employee or agent of the Fund shall be permitted access to any
securities or similar investments of the Fund deposited with the Sub-Custodian
or any agent for any reason except in accordance with the provisions of Rule
17f-2 under the 1940 Act.
2.20 ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The Sub-Custodian may
in its discretion, without express authority from the Custodian:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this Agreement,
provided that all such payments shall be accounted for to the Custodian;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fund, checks, drafts
and other
46
negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Fund held by the Sub-Custodian
hereunder except as otherwise directed by the Custodian.
2.21 EVIDENCE OF AUTHORITY. The Sub-Custodian shall be protected in
acting upon any instruction, notice, request, consent, certificate or other
instrument or paper reasonably believed by it to be genuine and to have been
properly executed by or on behalf of the Fund or the Custodian as custodian of
the Fund.
2.22 PERFORMANCE STANDARDS. The Sub-Custodian shall use its best
efforts to perform its duties hereunder in accordance with such standards as are
agreed upon from time to time by the Custodian and the Sub-Custodian.
3. RECORDS. The Sub-Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Trustees of the Fund to
keep the books of account of the Fund or, if directed in writing to do so by the
Custodian, shall itself keep such books of account. The Sub-Custodian shall
create and maintain all records relating to its activities and obligations under
this Agreement in such manner as will meet the obligations of the Fund under the
1940 Act, with particular attention to Sections 17(f) and 31 thereof and Rules
17f-2, 31a-1 and 31a-2 thereunder; the Sub-Custodian shall also create and
maintain such records as are required by applicable federal and state tax laws,
and any other law or administrative rules or procedures which may be applicable
to the Fund or the Custodian, such laws, rules or procedures to be specified by
the Custodian from time to time. All such records shall be the property of the
Fund and shall at all times during the regular business hours of the
Sub-Custodian be open for inspection by duly authorized officers, employees or
agents of the Custodian and the Fund and employees and agents of the Securities
and Exchange Commission. The Sub-Custodian shall, at the Custodian's request,
supply the Custodian with a tabulation of securities owned by the Fund and held
under this Agreement and shall, when requested to do so by the Custodian and for
such compensation as shall be agreed upon between the Custodian and
Sub-Custodian, include certificate numbers in such tabulations.
4. OPINION AND REPORTS OF THE FUND'S INDEPENDENT ACCOUNTANT. The Sub-Custodian
shall take all reasonable actions, as the Custodian may from time to time
request, to furnish such information with respect to its activities hereunder as
the Fund's independent public accountant may request in connection with the
accountant's verification of the Fund's securities and similar investments as
required by Rule 17f-2 under the 1940 Act, the preparation of the Fund's
registration statement and amendments thereto, the Fund's reports to the
Securities and Exchange Commission and with respect to any other requirements of
such Commission.
5. REPORTS OF SUB-CUSTODIAN'S INDEPENDENT ACCOUNTANT. The Sub-Custodian shall
provide the Custodian, at such times as the Custodian may reasonably require,
with reports by an independent public accountant on the accounting system,
internal accounting controls and procedures for safeguarding securities,
including securities deposited and/or maintained in a Securities System,
relating to the services provided by the Sub-Custodian under this Agreement;
47
such reports, which shall be of sufficient scope and in sufficient detail as may
reasonably be required by the Custodian, shall provide reasonable assurance that
any material inadequacies would be disclosed by such examination, and if there
are no such inadequacies, shall so state.
6. COMPENSATION. The Sub-Custodian shall be entitled to reasonable compensation
for its services and expenses as sub-custodian, as agreed upon from time to time
between the Custodian and the Sub-Custodian.
7. RESPONSIBILITY OF SUB-CUSTODIAN. The Sub-Custodian shall exercise reasonable
care and diligence in carrying out the provisions of this Agreement and shall
not be liable to the Fund or the Custodian for any action taken or omitted by it
in good faith without negligence or willful misconduct. So long as and to the
extent that it is in the exercise of reasonable care, the Sub-Custodian shall
not be responsible for the title, validity or genuineness of any property or
evidence of title thereto received by it or delivered by it pursuant to this
Agreement and shall be held harmless in acting upon any notice, request,
consent, certificate or other instrument reasonably believed by it to be genuine
and, if in writing, reasonably believed to be signed by the proper party or
parties. It shall be entitled to rely on and may act upon advice of counsel (who
may be counsel for the Fund) on all matters and shall be without liability for
any action reasonably taken or omitted pursuant to such advice. Notwithstanding
the foregoing, the responsibility of the Sub-Custodian with respect to
redemptions effected by check shall be in accordance with a separate agreement
entered into between the Custodian and the Sub-Custodian. It is also understood
that the Sub-Custodian shall not be liable for any loss resulting from a
Sovereign Risk or Force Majeure. A "Sovereign Risk" shall mean nationalization,
expropriation, devaluation, revaluation, confiscation, seizure, cancellation,
destruction or similar action by any governmental authority, de facto or de
jure; or enactment, promulgation, imposition or enforcement by any such
governmental authority of currency restrictions, exchange controls, taxes,
levies or other charges affecting the Fund's property; or acts of war,
terrorism, insurrection or revolution; or any other similar act or event beyond
the Sub-Custodian's control. "Force Majeure" shall mean any circumstance or
event which is beyond the reasonable control of the Sub-Custodian or any agent
of the Sub-Custodian and which adversely affects the performance by the
Sub-Custodian of its obligations under its Sub-Custodian Agreement or by any
other agent of the Sub-Custodian, including any event caused by, arising out of
or involving (a) an act of God, (b) accident, fire, water damage or explosion,
(c) any computer, system or other equipment failure or malfunction caused by any
computer virus or the malfunction or failure of any communications medium, (d)
any interruption of the power supply or other utility service, (e) any strike or
other work stoppage, whether partial or total, (f) any delay or disruption
resulting from or reflecting the occurrence of any Sovereign Risk, (g) any
disruption of, or suspension of trading in, the securities, commodities or
foreign exchange markets, whether or not resulting from or reflecting the
occurrence of any Sovereign Risk, (h) any encumbrance on the transferability of
a currency or a currency position on the actual settlement date of a foreign
exchange transaction, whether or not resulting from or reflecting the occurrence
of any Sovereign Risk, or (i) any other cause similarly beyond the reasonable
control of the Sub-Custodian.
The Sub-Custodian shall protect the Fund and the Custodian from losses
to the Fund resulting from any act or failure to act of the Sub-Custodian or its
Eligible Foreign Custodian in violation of its duties hereunder or of any law
applicable to the Sub-Custodian's duties hereunder.
48
If the Custodian requires the Sub-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 Sub-Custodian, result in the Sub-Custodian's
being liable for the payment of money or incurring liability of some other form,
the Custodian, as a prerequisite to requiring the Sub-Custodian to take such
action, shall provide indemnity to the Sub-Custodian in an amount and form
satisfactory to the Sub-Custodian.
The Custodian agrees to indemnify and hold harmless the Sub-Custodian
from and against all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) (collectively, "Authorized Charges")
incurred or assessed against it or its nominee in connection with the
performance of this Agreement, except such as may arise from its own negligent
action, negligent failure to act or willful misconduct. The Sub-Custodian is
authorized to charge any account of the Fund for such items and such fees. To
secure any such Authorized Charges and any advances of cash or securities made
by the Sub-Custodian to or for the benefit of the Fund for any purpose which
results in the Fund's incurring an overdraft at the end of any business day or
for extraordinary or emergency purposes during any business day, the Custodian
on behalf of the Fund hereby represents that it has obtained from the Fund
authorization to apply available cash in any account maintained by the
Sub-Custodian on behalf of the Fund and a security interest in and pledge to the
Sub-Custodian of securities of the Fund held by the Sub-Custodian (including
those which may be held in a Securities System) up to a maximum of 10% of the
value of the net assets held by the Sub-Custodian for the purposes of securing
payment of any Authorized Charges and any advances of cash or securities, and
that the Fund has agreed, from time to time, to designate in writing, or to
cause its investment adviser to, or permit the Custodian to, designate in
writing, the securities subject to such security interest and pledge with such
specificity and detail as the Sub-Custodian may reasonably request (and in the
absence of such designation to permit the Sub-Custodian so to designate
securities). The Custodian hereby grants on behalf of the Fund a security
interest and pledge to the Sub-Custodian, as aforesaid, in securities and
available cash, as security for any Authorized Charges and any advances of cash
or securities and agrees that, should the Fund or the Custodian fail to repay
promptly any Authorized Charges and any advances of cash or securities, the
Sub-Custodian shall be entitled to use such available cash and to dispose of
such pledged securities as is necessary to repay any such Authorized Charges or
any advances of cash or securities and to exercise the rights of a secured party
under the Uniform Commercial Code.
The Custodian agrees not to amend the last paragraph of Section 9 of
the Custodian Agreement unless it provides the Sub-Custodian with at least
thirty (30) days' prior written notice of the substance of any proposed
amendments, provided that the foregoing shall not be construed to in any way to
provide that the Sub-Custodian's consent shall be required to make such an
amendment effective or that the Sub-Custodian's failure to give such consent
shall in any way affect its obligations under this Agreement.
8. SUCCESSOR SUB-CUSTODIAN. If a successor sub-custodian shall be appointed by
the Custodian, the Sub-Custodian shall, upon termination and upon receipt of
Proper Instructions, cause to be delivered to such successor sub-custodian, duly
endorsed and in the form for transfer, all securities, funds and other property
of the Fund then held by it and all instruments held by the
49
Sub-Custodian related thereto and cause the transfer to an account of the
successor sub-custodian all of the Fund's securities held in any Securities
Systems.
If no such successor sub-custodian shall be appointed, the
Sub-Custodian shall, in like manner, upon receipt of a certified copy of a vote
of the Trustees of the Fund, cause to be transferred such securities, funds and
other property in accordance with such vote.
In the event that no written order designating a successor
sub-custodian or certified copy of a vote of the Trustees shall have been
delivered to the Sub-Custodian on or before the date when such termination shall
become effective, then the Sub-Custodian shall have the right to deliver to a
bank or trust company, which meets the requirements of the 1940 Act and the
rules and regulations thereunder, all securities, funds and other properties of
the Fund. Thereafter, such bank or trust company shall be the successor of the
Sub-Custodian under this Agreement.
In the event that securities, funds and other property remain in the
possession of the Sub-Custodian after the date of termination hereof owing to
failure of the Custodian to obtain a certified copy of the Trustees appointing a
successor sub-custodian, the Sub-Custodian shall be entitled to fair
compensation for its services during such period as the Sub-Custodian retains
possession of such securities, funds and other property and the provisions of
this Agreement relating to the duties and obligations of the Sub-Custodian shall
remain in full force and affect.
9. EFFECTIVE PERIOD; TERMINATION AND AMENDMENT. This Agreement shall become
effective as of its execution, shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid, to the other party,
such termination to take effect not sooner than thirty (30) days after the date
of mailing; provided, that either party may at any time immediately terminate
this Agreement in the event of the appointment of a conservator or receiver for
the other party or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction. No provision
of this Agreement may be amended or terminated except by a statement in writing
signed by the party against which enforcement of the amendment or termination is
sought.
Upon termination of this Agreement, the Custodian shall pay to the
Sub-Custodian such compensation as may be due as of the date of such termination
and shall likewise reimburse the Sub-Custodian for its reimbursable costs,
expenses and disbursements. The provisions of Section 7, including, until any
Authorized Charges and any advances of cash or securities referred to therein
are repaid, all liens and security interests created pursuant thereto, and all
rights to indemnification, shall survive any termination of this Agreement.
10. INTERPRETATION. This Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof. In
connection with the operation of this Agreement, the Sub-Custodian and the
Custodian may from time to time agree in writing on such provisions interpretive
of or in addition to the provisions of this Agreement as may in their joint
opinion be consistent with the general tenor of this Agreement. No interpretive
or additional provisions made as provided in the preceding sentence shall be
deemed to be an amendment of this Agreement.
50
11. GOVERNING LAW. This Agreement is executed and delivered in The Commonwealth
of Massachusetts and shall be governed by and construed according to the
internal laws of said Commonwealth, without regard to principles of conflicts of
law.
12. NOTICES. Notices and other writings delivered or mailed postage prepaid to
the Custodian addressed to the Custodian attention: General Counsel, Xxxxxx
Fiduciary Trust Company, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx, XX 00000 or to such
other person or address as the Custodian may have designated to the
Sub-Custodian in writing, or to the Sub-Custodian attention:
_____________________________________________or to such other address as the
Sub-Custodian may have designated to the Custodian in writing, shall be deemed
to have been properly delivered or given hereunder to the respective addressee.
13. BINDING OBLIGATION. This Agreement shall be binding on and shall inure to
the benefit of the Custodian and the Sub-Custodian and their respective
successors and assigns, provided that neither party hereto may assign this
Agreement or any of its rights or obligations hereunder without the prior
written consent of the other party.
14. PRIOR AGREEMENTS. This Agreement supersedes and terminates, as of the date
hereof, all prior contracts between the Fund or the Custodian and the
Sub-Custodian relating to the custody of the Fund's assets.
15. DECLARATION OF TRUST. A copy of the Declaration of Trust of the Fund is on
file with the Secretary of The Commonwealth of Massachusetts, and notice is
hereby given that the obligations of or arising out of this instrument are not
binding upon any of the Trustees or beneficiaries individually but binding only
upon the assets and property of the Fund.
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 date first above written.
XXXXXX FIDUCIARY TRUST COMPANY
By _______________________________
Name:
Title:
[SUB-CUSTODIAN]
By ________________________________
Name:
Title:
