Exhibit (g) (ii)
CUSTODIAN AGREEMENT
AGREEMENT dated as of______________, between BANKERS TRUST COMPANY (the
"Custodian") and [Name of customer] (the "Customer").
WHEREAS, the Customer may be organized with one or more series of
shares, each of which shall represent an interest in a separate portfolio of
Securities and Cash (each as hereinafter defined) (all such existing and
additional series now or hereafter listed on Exhibit A being hereafter referred
to individually as a "Portfolio" and collectively, as the "Portfolios"); and
WHEREAS, the Customer desires to appoint the Custodian as custodian on
behalf of the Portfolios under the terms and conditions set forth in this
Agreement, and the Custodian has agreed to so act as custodian.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN. The Customer hereby employs the
Custodian as custodian of all assets of each Portfolio which are delivered to
and accepted by the Custodian or any Subcustodian (as that term is defined in
Section 4) (the "Property") pursuant to the terms and conditions set forth
herein. For purposes of this Agreement, "delivery" of Property shall include the
acquisition of a security entitlement (as that term is defined in the New York
Uniform Commercial Code ("UCC")) with respect thereto. Without limitation, such
Property shall include stocks and other equity interests of every type,
evidences of indebtedness, other instruments representing same or rights or
obligations to receive, purchase, deliver or sell same and other non-cash
investment property of a Portfolio ("Securities") and cash from any source and
in any currency ("Cash"), provided that the Custodian shall have the right, in
its sole discretion, to refuse to accept as Property any property of a Portfolio
that the Custodian considers not to be appropriate or in proper form for deposit
for any reason. The Custodian shall not be responsible for any property of a
Portfolio held or received by the Customer or others and not delivered to the
Custodian or any Subcustodian.
2. MAINTENANCE OF SECURITIES AND CASH AT CUSTODIAN AND
SUBCUSTODIAN LOCATIONS. Pursuant to Instructions, the Customer shall direct the
Custodian to (a) settle Securities transactions and maintain cash in the country
or other jurisdiction in which the principal trading market for such Securities
is located, where such Securities are to be presented for payment or where such
Securities are acquired and (b) maintain cash and cash equivalents in such
countries in amounts reasonably necessary to effect the Customer's transactions
in such Securities. Instructions to settle Securities transactions in any
country shall be deemed to authorize the holding of such Securities and Cash in
that country.
3. CUSTODY ACCOUNT. The Custodian agrees to establish and
maintain one or more custody accounts on its books each in the name of a
Portfolio (each, an "Account") for any and all Property from time to time
received and accepted by the Custodian or any Subcustodian for the account of
such Portfolio. Upon delivery by the Customer to the Custodian of any acceptable
Property belonging to a Portfolio, the
Customer shall, by Instructions (as hereinafter defined in Section 15),
specifically indicate which Portfolio such Property belongs or if such Property
belongs to more than one Portfolio shall allocate such Property to the
appropriate Portfolio, and the Custodian shall allocate such Property to the
Accounts in accordance with the Instructions. The Customer on behalf of each
Portfolio, acknowledges its responsibility as a principal for all of its
obligations to the Custodian arising under or in connection with this Agreement,
warrants its authority to deposit in the appropriate Account any Property
received therefor by the Custodian or a Subcustodian and to give, and authorize
others to give, instructions relative thereto. The Custodian may deliver
securities of the same class in place of those deposited in the Account.
The Custodian shall hold, keep safe and protect as custodian for each
Account, on behalf of the Customer, all Property in such Account and, to the
extent such Property constitutes financial assets for purposes of the New York
UCC, shall maintain those financial assets in such Account as security
entitlements in favor of the Portfolio in whose name the Account is maintained.
All transactions, including, but not limited to, foreign exchange transactions,
involving the Property shall be executed or settled solely in accordance with
Instructions (which shall specifically reference the Account for which such
transaction is being settled), except that until the Custodian receives
Instructions to the contrary, the Custodian will:
(a) collect all interest and dividends and all other income and
payments, whether paid in cash or in kind, on the Property, as
the same become payable and credit the same to the appropriate
Account;
(b) present for payment all Securities held in an Account which
are called, redeemed or retired or otherwise become payable
and all coupons and other income items which call for payment
upon presentation to the extent that the Custodian or
Subcustodian is actually aware of such opportunities and hold
the cash received in such Account pursuant to this Agreement;
(c) (i) exchange Securities where the exchange is purely
ministerial (including, without limitation, the exchange of
temporary securities for those in definitive form and the
exchange of warrants, or other documents of entitlement to
securities, for the Securities themselves) and (ii) when
notification of a tender or exchange offer (other than
ministerial exchanges described in (i) above) is received for
an Account, endeavor to receive Instructions, provided that if
such Instructions are not received in time for the Custodian
to take timely action, no action shall be taken with respect
thereto;
(d) whenever notification of a rights entitlement or a fractional
interest resulting from a rights issue, stock dividend or
stock split is received for an Account and such rights
entitlement or fractional interest bears an expiration date,
if after endeavoring to obtain Instructions such Instructions
are not received in time for the Custodian to take timely
action or if actual notice of such actions was received too
late to seek Instructions, sell in the discretion of the
Custodian (which sale the Customer hereby authorizes the
Custodian to make) such rights entitlement or fractional
interest and credit the Account with the net proceeds of such
sale;
(e) execute in the Customer's name for an Account, whenever the
Custodian deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of
income from the Property in such Account;
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(f) pay for each Account, any and all taxes and levies in the
nature of taxes imposed on interest, dividends or other
similar income on the Property in such Account by any
governmental authority. In the event there is insufficient
Cash available in such Account to pay such taxes and levies,
the Custodian shall notify the Customer of the amount of the
shortfall and the Customer, at its option, may deposit
additional Cash in such Account or take steps to have
sufficient Cash available. The Customer agrees, when and if
requested by the Custodian and required in connection with the
payment of any such taxes to cooperate with the Custodian in
furnishing information, executing documents or otherwise; and
(g) appoint brokers and agents for any of the ministerial
transactions involving the Securities described in (a) - (f),
including, without limitation, affiliates of the Custodian or
any Subcustodian.
4. SUBCUSTODIANS AND SECURITIES SYSTEMS. The Customer authorizes
and instructs the Custodian to maintain the Property in each Account directly in
one of its U.S. branches or indirectly through custody accounts which have been
established by the Custodian with the following other securities intermediaries:
(a) another U.S. bank or trust company or branch thereof located in the U.S.
which is itself qualified under the Investment Company Act of 1940, as amended
("1940 Act"), to act as custodian (individually, a "U.S. Subcustodian"), or a
U.S. securities depository or clearing agency or system in which the Custodian
or a U.S. Subcustodian participates (individually, a "U.S. Securities System")
or (b) one of its non-U.S. branches or majority-owned non-U.S. subsidiaries, a
non-U.S. branch or majority-owned subsidiary of a U.S. bank or a non-U.S. bank
or trust company, acting as custodian (individually, a "non-U.S. Subcustodian";
U.S. Subcustodians and non-U.S. Subcustodians, collectively, "Subcustodians"),
or a non-U.S. depository or clearing agency or system in which the Custodian or
any Subcustodian participates (individually, a "non-U.S. Securities System";
U.S. Securities System and non-U.S. Securities System, collectively, Securities
System"), PROVIDED that in each case in which a U.S. Subcustodian or U.S.
Securities System is employed, each such Subcustodian or Securities System shall
have been approved by Instructions; PROVIDED FURTHER that in each case in which
a non-U.S. Subcustodian or non-U.S. Securities System is employed, (a) such
Subcustodian or Securities System either is (i) a "qualified U.S. bank" as
defined by Rule 17f-5 under the 1940 Act ("Rule 17f-5") or (ii) an "eligible
foreign custodian" within the meaning of Rule 17f-5 or such Subcustodian or
Securities System is the subject of an order granted by the U.S. Securities and
Exchange Commission ("SEC") exempting such agent or the subcustody arrangements
thereto from all or part of the provisions of Rule 17f-5 and (b) the agreement
between the Custodian and such non-U.S. Subcustodian has been approved by
Instructions; it being understood that the Custodian shall have no liability or
responsibility for determining whether the approval of any Subcustodian or
Securities System has been proper under the 1940 Act or any rule or regulation
thereunder.
Upon receipt of Instructions, the Custodian agrees to cease the
employment of any Subcustodian or Securities System with respect to the
Customer, and if desirable and practicable, appoint a replacement Subcustodian
or securities system in accordance with the provisions of this Section. In
addition, the Custodian may, at any time in its discretion, upon written
notification to the Customer, terminate the employment of any Subcustodian or
Securities System.
Upon request of the Customer, the Custodian shall deliver to the
Customer annually a certificate stating: (a) the identity of each non-U.S.
Subcustodian and non-U.S. Securities System then acting on behalf of the
Custodian and the name and address of the governmental agency or other
regulatory authority
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that supervises or regulates such non-U.S Subcustodian and non-U.S. Securities
System; (b) the countries in which each non-U.S. Subcustodian or non-U.S.
Securities System is located; and (c) so long as Rule 17f-5 requires the
Customer's Board of Trustees to directly approve its foreign custody
arrangements, such other information relating to such non-U.S. Subcustodians and
non-U.S. Securities Systems as may reasonably be requested by the Customer to
ensure compliance with Rule 17f-5. So long as Rule 17f-5 requires the Customer's
Board of Trustees to directly approve its foreign custody arrangements, the
Custodian also shall furnish annually to the Customer information concerning
such non-U.S. Subcustodians and non-U.S. Securities Systems similar in kind and
scope as that furnished to the Customer in connection with the initial approval
of this Agreement. Custodian agrees to promptly notify the Customer if, in the
normal course of its custodial activities, the Custodian has reason to believe
that any non-U.S. Subcustodian or non-U.S. Securities System has ceased to be a
qualified U.S. bank or an eligible foreign custodian each within the meaning of
Rule 17f-5 or has ceased to be subject to an exemptive order from the SEC.
5. USE OF SUBCUSTODIAN. With respect to Property in an Account
which is maintained by the Custodian through a Subcustodian employed pursuant to
Section 4:
(a) The Custodian will identify on its books as belonging to the
Customer on behalf of a Portfolio, any Property maintained
through such Subcustodian.
(b) Any Property in the Account held by a Subcustodian will be
subject only to the instructions of the Custodian or its
agents.
(c) Property deposited with a Subcustodian will be maintained in
an account holding only assets for customers of the Custodian.
(d) Any agreement the Custodian shall enter into with a non-U.S.
Subcustodian with respect to maintaining Property shall
require that (i) the Account will be adequately indemnified or
its losses adequately insured; (ii) the Securities so
maintained are not subject to any right, charge, security
interest, lien or claim of any kind in favor of such
Subcustodian or its creditors except a claim for payment in
accordance with such agreement for their safe custody or
administration and expenses related thereto, (iii) beneficial
ownership of such Securities be freely transferable without
the payment of money or value other than for safe custody or
administration and expenses related thereto, (iv) adequate
records will be maintained identifying the Property maintained
pursuant to such Agreement as belonging to the Custodian, on
behalf of its customers and (v) to the extent permitted by
applicable law, officers of or auditors employed by, or other
representatives of or designated by, the Custodian, including
the independent public accountants of or designated by, the
Customer be given access to the books and records of such
Subcustodian relating to its actions under its agreement
pertaining to any Property maintained by it thereunder or
confirmation of or pertinent information contained in such
books and records be furnished to such persons designated by
the Custodian.
6. USE OF SECURITIES SYSTEM. With respect to Property in the
Account(s) which is maintained by the Custodian or any Subcustodian through a
Securities System employed pursuant to Section 4:
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(a) The Custodian shall, and the Subcustodian will be required by
its agreement with the Custodian to, identify on its books
such Property as being maintained for the account of the
Custodian or Subcustodian for its customers.
(b) Any Property maintained through a Securities System for the
account of the Custodian or a Subcustodian will be subject
only to the instructions of the Custodian or such
Subcustodian, as the case may be.
(c) Property deposited with a Securities System will be maintained
in an account holding only assets for customers of the
Custodian or Subcustodian, as the case may be, unless
precluded by applicable law, rule, or regulation.
(d) The Custodian shall provide the Customer with any report
obtained by the Custodian on the Securities System's
accounting system, internal accounting control and procedures
for safeguarding securities deposited in the Securities
System.
7. AGENTS. The Custodian may at any time or times in its sole
discretion appoint (or remove) any other U.S. bank or trust company which is
itself qualified under the 1940 Act to act as custodian, as its agent to carry
out such of the provisions of this Agreement as the Custodian may from time to
time direct; PROVIDED, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities hereunder.
8. RECORDS, OWNERSHIP OF PROPERTY, STATEMENTS, OPINIONS OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.
(a) The ownership of the Property whether Securities, Cash and/or
other property, and whether maintained directly by the Custodian or indirectly
through a Subcustodian or a Securities System as authorized herein, shall be
clearly recorded on the Custodian's books as belonging to the appropriate
Account and not for the Custodian's own interest. The Custodian shall keep
accurate and detailed accounts of all investments, receipts, disbursements and
other transactions for each Account. All accounts, books and records of the
Custodian relating thereto shall be open to inspection and audit at all
reasonable times during normal business hours by any person designated by the
Customer. All such accounts shall be maintained and preserved in the form
reasonably requested by the Customer. The Custodian will supply to the Customer
from time to time, as mutually agreed upon, a statement in respect to any
Property in an Account maintained by the Custodian or by a Subcustodian. In the
absence of the filing in writing with the Custodian by the Customer of
exceptions or objections to any such statement within sixty (60) days of the
mailing thereof, the Customer shall be deemed to have approved such statement
and in such case or upon written approval of the Customer of any such statement,
such statement shall be presumed to be for all purposes correct with respect to
all information set forth therein.
(b) The Custodian shall take all reasonable action as the Customer
may request to obtain from year to year favorable opinions from the Customer's
independent certified public accountants with respect to the Custodian's
activities hereunder in connection with the preparation of the Customer's Form
N-1A and the Customer's Form N-SAR or other periodic reports to the SEC and with
respect to any other requirements of the SEC.
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(c) At the request of the Customer, the Custodian shall deliver to
the Customer a written report prepared by the Custodian's independent certified
public accountants with respect to the services provided by the Custodian under
this Agreement, including, without limitation, the Custodian's accounting
system, internal accounting control and procedures for safeguarding Cash and
Securities, including Cash and Securities deposited and/or maintained in a
securities system or with a Subcustodian. Such report shall be of sufficient
scope and in sufficient detail as may reasonably be required by the Customer and
as may reasonably be obtained by the Custodian.
(d) The Customer may elect to participate in any of the electronic
on-line service and communications systems offered by the Custodian which can
provide the Customer, on a daily basis, with the ability to view on-line or to
print on hard copy various reports of Account activity and of Securities and/or
Cash being held in any Account. To the extent that such service shall include
market values of Securities in an Account, the Customer hereby acknowledges that
the Custodian now obtains and may in the future obtain information on such
values from outside sources that the Custodian considers to be reliable and the
Customer agrees that the Custodian (i) does not verify or represent or warrant
either the reliability of such service nor the accuracy or completeness of any
such information furnished or obtained by or through such service and (ii) shall
be without liability in selecting and utilizing such service or furnishing any
information derived therefrom.
9. HOLDING OF SECURITIES, NOMINEES, ETC. Securities in an Account
which are maintained by the Custodian or any Subcustodian may be held directly
by such entity in the name of the Customer or in bearer form or maintained, on
behalf of a Portfolio, in the Custodian's or Subcustodian's name or in the name
of the Custodian's or Subcustodian's nominee. Securities that are maintained
through a Subcustodian or which are eligible for deposit in a Securities System
as provided above may be maintained with the Subcustodian or the Securities
System in an account for the Custodian's or Subcustodian's customers, unless
prohibited by law, rule, or regulation. The Custodian or Subcustodian, as the
case may be, may combine certificates representing Securities held in an Account
with certificates of the same issue held by it as fiduciary or as a custodian.
In the event that any Securities in the name of the Custodian or its nominee or
held by a Subcustodian and registered in the name of such Subcustodian or its
nominee are called for partial redemption by the issuer of such Security, the
Custodian may, subject to the rules or regulations pertaining to allocation of
any Securities System in which such Securities have been deposited, allot, or
cause to be allotted, the called portion of the respective beneficial holders of
such class of security in any manner the Custodian deems to be fair and
equitable. Securities maintained with a Securities System shall be maintained
subject to the rules of that Securities System governing the rights and
obligations among the Securities System and its participants.
10. PROXIES, ETC. With respect to any proxies, notices, reports or
other communications relative to any of the Securities in any Account, the
Custodian shall perform such services and only such services relative thereto as
are (i) set forth in Section 3 of this Agreement, (ii) described in the
applicable Service Standards (the "Proxy Service") or (iii) as may otherwise be
agreed upon between the Custodian and the Customer. The liability and
responsibility of the Custodian in connection with the Proxy Service referred to
in (ii) of the immediately preceding sentence and in connection with any
additional services which the Custodian and the Customer may agree upon as
provided in (iii) of the immediately preceding sentence shall be as set forth in
the description of the Proxy Service and as may be agreed upon by the Custodian
and the Customer in connection with the furnishing of any such additional
service and shall not be affected by any other term of this Agreement. Neither
the Custodian nor its nominees or agents shall vote upon or in respect of any of
the Securities in the Account, execute any form of proxy to vote thereon, or
give any
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consent or take any action (except as provided in Section 3) with respect
thereto except upon the receipt of Instructions relative thereto.
11. SEGREGATED ACCOUNT. To assist the Customer in complying with
the requirements of the 1940 Act and the rules and regulations thereunder, the
Custodian shall, upon receipt of Instructions, establish and maintain a
segregated account or accounts on its books for and on behalf of a Portfolio.
12. SETTLEMENT PROCEDURES. Securities will be transferred,
exchanged or delivered by the Custodian or a Subcustodian upon receipt by the
Custodian of Instructions which include all information required by the
Custodian. Settlement and payment for Securities received for an Account and
delivery of Securities out of such Account may be effected in accordance with
the customary or established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering Securities to the purchaser
thereof or to a dealer therefor (or an agent for such purchaser or dealer)
against a receipt with the expectation of receiving later payment for such
Securities from such purchaser or dealer, as such practices and procedures may
be modified or supplemented in accordance with the standard operating procedures
of the Custodian in effect from time to time for that jurisdiction or market.
The Custodian shall not be liable for any loss which results from effecting
transactions in accordance with the customary or established securities trading
or securities processing practices and procedures in the applicable jurisdiction
or market.
Notwithstanding that the Custodian may settle purchases and sales
against, or credit income to, an Account, on a contractual basis, as outlined in
the applicable Service Standards as defined below and provided to the Customer
by the Custodian, the Custodian may, at its sole option, reverse such credits or
debits to the appropriate Account in the event that the transaction does not
settle, or the income is not received in a timely manner, and the Customer
agrees to hold the Custodian harmless from any losses which may result
therefrom.
The applicable Service Standards shall be defined as the Global Guide,
the Policies and Standards Manual, and any other documents issued by the
Custodian from time to time specifying the procedures for communicating with the
Customer, the terms of any additional services to be provided to the Customer,
and such other matters as may be agreed between the Customer and the Custodian
from time to time.
13. CONDITIONAL CREDITS.
(a) Notwithstanding any other provision of this Agreement, the
Custodian shall not be required to comply with any Instructions to settle the
purchase of any securities for the Account, unless there are sufficient
immediately available funds in the relevant currency in the Account, PROVIDED
THAT, if, after all expenses, debits and withdrawals of Cash in the relevant
currency ("Debits") applicable to the Account have been made and if after all
Conditional Credits, as defined below, applicable to the Account have been made
final entries as set forth in (c) below, the amount of immediately available
funds of the relevant currency in such Account is at least equal to the
aggregate purchase price of all securities for which the Custodian has received
Instructions to settle on that date ("Settlement Date"), the Custodian, upon
settlement, shall credit the Securities to the Account by making a final entry
on its books and records.
(b) Notwithstanding the foregoing, if after all Debits applicable to
the Account have been made, there remains outstanding any Conditional Credit (as
defined below) applicable to the Account or the
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amount of immediately available funds in a given currency in such Account are
less than the aggregate purchase price in such currency of all securities for
which the Custodian has received Instructions to settle on the Settlement Date,
the Custodian, upon settlement, may credit the securities to the Account by
making a conditional entry on its books and records ("Conditional Credit"),
pending receipt of sufficient immediately available funds in the relevant
currency in the Account.
(c) If, within a reasonable time from the posting of a Conditional
Credit and after all Debits applicable to the Account have been made,
immediately available funds in the relevant currency at least equal to the
aggregate purchase price in such currency of all securities subject to a
Conditional Credit on a Settlement Date are deposited into the Account, the
Custodian shall make the Conditional Credit a final entry on its books and
records. In such case, the Customer shall be liable to the Custodian only for
late charges at a rate which the Custodian customarily charges for similar
extensions of credit.
(d) If (i) within a reasonable time from the posting of a Conditional
Credit, immediately available funds at least equal to the resultant Debit on a
Settlement Date are not on deposit in the Account, or (ii) any Proceeding shall
occur, the Custodian may sell such of the Securities subject to the Conditional
Credit as it selects in its sole discretion and shall apply the net proceeds of
such sale to cover such Debit, including related late charges, and any remaining
proceeds shall be credited to the Account. If such proceeds are insufficient to
satisfy such debt in full, the Customer shall continue to be liable to the
Custodian for any shortfall. The Custodian shall make the Conditional Credit a
final entry on its books as to the Securities not required to be sold to satisfy
such Debit. Pending payment in full by the Customer of the purchase price for
Securities subject to a Conditional Credit, and the Custodian's making a
Conditional Credit a final entry on its books, and, unless consented to by the
Custodian, the Customer shall have no right to give further Instructions in
respect of Securities subject to a Conditional Credit. The Custodian shall have
the sole discretion to determine which Securities shall be deemed to have been
paid for by the Customer out of funds available in the Account. Any such
Conditional Credit may be reversed (and any corresponding Debit shall be
canceled) by the Custodian unless and until the Custodian makes a final entry on
its books crediting such Securities to the Account. The term "Proceeding" shall
mean any insolvency, bankruptcy, receivership, reorganization or similar
proceeding relating to the Customer, whether voluntary or involuntary.
(e) The Customer agrees that it will not use the Account to facilitate
the purchase of securities without sufficient funds in the Account (which funds
shall not include the expected proceeds of the sale of the purchased
securities).
14. PERMITTED TRANSACTIONS. The Customer agrees that it will cause
transactions to be made pursuant to this Agreement only upon Instructions in
accordance with Section 15 and only for the purposes listed below.
(a) In connection with the purchase or sale of Securities at
prices as confirmed by Instructions.
(b) When Securities are called, redeemed or retired, or otherwise
become payable.
(c) In exchange for or upon conversion into other securities alone
or other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment.
(d) Upon conversion of Securities pursuant to their terms into
other securities.
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(e) Upon exercise of subscription, purchase or other similar
rights represented by Securities.
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses.
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts borrowed or in order
to satisfy requirements for additional or substitute collateral.
(h) In connection with any loans, but only against receipt of
collateral as specified in Instructions which shall reflect any restrictions
applicable to the Customer.
(i) For the purpose of redeeming shares of the capital stock of
the Customer against delivery of the shares to be redeemed to the Custodian, a
Subcustodian or the Customer's transfer agent.
(j) For the purpose of redeeming in kind shares of the Customer
against delivery of the shares to be redeemed to the Custodian, a Subcustodian
or the Customer's transfer agent.
(k) For delivery in accordance with the provisions of any
agreement among the Customer, on behalf of a Portfolio, the Portfolio's
investment adviser and a broker-dealer registered under the Securities Exchange
Act of 1934 and a member of the National Association of Securities Dealers,
Inc., relating to compliance with the rules of The Options Clearing Corporation,
the Commodities Futures Trading Commission or of any registered national
securities exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the Customer.
(l) For release of Securities to designated brokers under covered
call options, provided, however, that such Securities shall be released only
upon payment to the Custodian of monies for the premium due and a receipt for
the Securities which are to be held in escrow. Upon exercise of the option, or
at expiration, the Custodian will receive the Securities previously deposited
from broker. The Custodian will act strictly in accordance with Instructions in
the delivery of Securities to be held in escrow and will have no responsibility
or liability for any such Securities which are not returned promptly when due
other than to make proper request for such return.
(m) For spot or forward foreign exchange transactions to
facilitate security trading or receipt of income from Securities related
transactions.
(n) Upon the termination of this Agreement as set forth in Section
20.
(o) For other proper purposes.
The Customer agrees that the Custodian shall have no obligation to
verify the purpose for which a transaction is being effected.
15. INSTRUCTIONS. The term "Instructions" means instructions from
the Customer in respect of any of the Custodian's duties hereunder which have
been received by the Custodian at its address set forth in Section 22 below (i)
in writing (including, without limitation, facsimile transmission) or by tested
telex
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signed or given by such one or more person or persons as the Customer shall have
from time to time authorized in writing to give the particular class of
Instructions in question and whose name and (if applicable) signature and office
address have been filed with the Custodian, or (ii) which have been transmitted
electronically through an electronic on-line service and communications system
offered by the Custodian or other electronic instruction system acceptable to
the Custodian, or (iii) a telephonic or oral communication by one or more
persons as the Customer shall have from time to time authorized to give the
particular class of Instructions in question and whose name has been filed with
the Custodian; or (iv) upon receipt of such other form of instructions as the
Customer may from time to time authorize in writing and which the Custodian has
agreed in writing to accept. Instructions in the form of oral communications
shall be confirmed by the Customer by tested telex or writing in the manner set
forth in clause (i) above, but the lack of such confirmation shall in no way
affect any action taken by the Custodian in reliance upon such oral instructions
prior to the Custodian's receipt of such confirmation. Instructions may relate
to specific transactions or to types or classes of transactions, and may be in
the form of standing instructions.
The Custodian shall have the right to assume in the absence of notice
to the contrary from the Customer that any person whose name is on file with the
Custodian pursuant to this Section has been authorized by the Customer to give
the Instructions in question and that such authorization has not been revoked.
The Custodian may act upon and conclusively rely on, without any liability to
the Customer or any other person or entity for any losses resulting therefrom,
any Instructions reasonably believed by it to be furnished by the proper person
or persons as provided above.
16. STANDARD OF CARE. The Custodian shall be responsible for the
performance of only such duties as are set forth herein or contained in
Instructions given to the Custodian which are not contrary to the provisions of
this Agreement. The Custodian will use reasonable care with respect to the
safekeeping of Property in each Account and, except as otherwise expressly
provided herein, in carrying out its obligations under this Agreement. So long
as and to the extent that it has exercised reasonable care, the Custodian shall
not be responsible for the title, validity or genuineness of any Property or
other 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, and may
conclusively rely on, without liability for any loss resulting therefrom, any
notice, request, consent, certificate or other instrument reasonably believed by
it to be genuine and to be signed or furnished by the proper party or parties,
including, without limitation, Instructions, and shall be indemnified by the
Customer for any losses, damages, costs and expenses (including, without
limitation, the fees and expenses of counsel) incurred by the Custodian and
arising out of action taken or omitted with reasonable care by the Custodian
hereunder or under any Instructions. The Custodian shall be liable to the
Customer for any act or omission to act of any Subcustodian to the same extent
as if the Custodian committed such act itself. With respect to a Securities
System, the Custodian shall only be responsible or liable for losses arising
from employment of such Securities System caused by the Custodian's own failure
to exercise reasonable care. In the event of any loss to the Customer by reason
of the failure of the Custodian or a Subcustodian to utilize reasonable care,
the Custodian shall be liable to the Customer to the extent of the Customer's
actual damages at the time such loss was discovered without reference to any
special conditions or circumstances. In no event shall the Custodian be liable
for any consequential or special damages. The Custodian shall be entitled to
rely, and may act, on advice of counsel (who may be counsel for the Customer) on
all matters and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
In the event the Customer subscribes to an electronic on-line service
and communications system offered by the Custodian, the Customer shall be fully
responsible for the security of the Customer's connecting terminal, access
thereto and the proper and authorized use thereof and the initiation and
10
application of continuing effective safeguards with respect thereto and agree to
defend and indemnify the Custodian and hold the Custodian harmless from and
against any and all losses, damages, costs and expenses (including the fees and
expenses of counsel) incurred by the Custodian as a result of any improper or
unauthorized use of such terminal by the Customer or by any others.
All collections of funds or other property paid or distributed in
respect of Securities in an Account, including funds involved in third-party
foreign exchange transactions, shall be made at the risk of the Customer.
Subject to the exercise of reasonable care, the Custodian shall have no
liability for any loss occasioned by delay in the actual receipt of notice by
the Custodian or by a Subcustodian of any payment, redemption or other
transaction regarding Securities in each Account in respect of which the
Custodian has agreed to take action as provided in Section 3 hereof. The
Custodian shall not be liable for any loss resulting from, or caused by, or
resulting from acts of governmental authorities (whether de jure or de facto),
including, without limitation, nationalization, expropriation, and the
imposition of currency restrictions; devaluations of or fluctuations in the
value of currencies; changes in laws and regulations applicable to the banking
or securities industry; market conditions that prevent the orderly execution of
securities transactions or affect the value of Property; acts of war, terrorism,
insurrection or revolution; strikes or work stoppages; the inability of a local
clearing and settlement system to settle transactions for reasons beyond the
control of the Custodian; hurricane, cyclone, earthquake, volcanic eruption,
nuclear fusion, fission or radioactivity, or other acts of God.
The Custodian shall have no liability in respect of any loss, damage or
expense suffered by the Customer, insofar as such loss, damage or expense arises
from the performance of the Custodian's duties hereunder by reason of the
Custodian's reliance upon records that were maintained for the Customer by
entities other than the Custodian prior to the Custodian's employment under this
Agreement.
The provisions of this Section shall survive termination of this
Agreement.
17. INVESTMENT LIMITATIONS AND LEGAL OR CONTRACTUAL RESTRICTIONS
OR REGULATIONS. The Custodian shall not be liable to the Customer and the
Customer agrees to indemnify the Custodian and its nominees, for any loss,
damage or expense suffered or incurred by the Custodian or its nominees arising
out of any violation of any investment restriction or other restriction or
limitation applicable to the Customer or any Portfolio pursuant to any contract
or any law or regulation. The provisions of this Section shall survive
termination of this Agreement.
18. FEES AND EXPENSES. The Customer agrees to pay to the Custodian
such compensation for its services pursuant to this Agreement as may be mutually
agreed upon in writing from time to time and the Custodian's reasonable
out-of-pocket or incidental expenses in connection with the performance of this
Agreement, including (but without limitation) legal fees as described herein
and/or deemed necessary in the judgment of the Custodian to keep safe or protect
the Property in the Account. The initial fee schedule is attached hereto as
Exhibit B. Such fees will not be abated by, nor shall the Custodian be required
to account for, any profits or commissions received by the Custodian in
connection with its provision of custody services under this agreement. The
Customer hereby agrees to hold the Custodian harmless from any liability or loss
resulting from any taxes or other governmental charges, and any expense related
thereto, which may be imposed, or assessed with respect to any Property in an
Account and also agrees to hold the Custodian, its Subcustodians, and their
respective nominees harmless from any liability as a record holder
11
of Property in such Account. The Custodian is authorized to charge the
applicable Account for such items and the Custodian shall have a lien on the
Property in the applicable Account for any amount payable to the Custodian under
this Agreement, including but not limited to amounts payable pursuant to Section
13 and pursuant to indemnities granted by the Customer under this Agreement. The
provisions of this Section shall survive the termination of this Agreement.
19. TAX RECLAIMS. With respect to withholding taxes deducted and
which may be deducted from any income received from any Property in an Account,
the Custodian shall perform such services with respect thereto as are described
in the applicable Service Standards and shall in connection therewith be subject
to the standard of care set forth in such Service Standards. Such standard of
care shall not be affected by any other term of this Agreement.
20. AMENDMENT, MODIFICATIONS, ETC. No provision of this Agreement
may be amended, modified or waived except in a writing signed by the parties
hereto. No waiver of any provision hereto shall be deemed a continuing waiver
unless it is so designated. No failure or delay on the part of either party in
exercising any power or right under this Agreement operates as a waiver, nor
does any single or partial exercise of any power or right preclude any other or
further exercise thereof or the exercise of any other power or right.
21. TERMINATION. (a) TERMINATION OF ENTIRE AGREEMENT. This
Agreement may be terminated by the Customer or the Custodian by ninety (90)
days' written notice to the other; PROVIDED that notice by the Customer shall
specify the names of the persons to whom the Custodian shall deliver the
Securities in each Account and to whom the Cash in such Account shall be paid.
If notice of termination is given by the Custodian, the Customer shall, within
ninety (90) days following the giving of such notice, deliver to the Custodian a
written notice specifying the names of the persons to whom the Custodian shall
deliver the Securities in each Account and to whom the Cash in such Account
shall be paid. In either case, the Custodian will deliver such Property to the
persons so specified, after deducting therefrom any amounts which the Custodian
determines to be owed to it hereunder. In addition, the Custodian may in its
discretion withhold from such delivery such Property as may be necessary to
settle transactions pending at the time of such delivery. The Customer grants to
the Custodian a lien and right of setoff against the Account and all Property
held therein from time to time in the full amount of the foregoing obligations.
If within ninety (90) days following the giving of a notice of termination by
the Custodian, the Custodian does not receive from the Customer a written notice
specifying the names of the persons to whom the Custodian shall deliver the
Securities in each Account and to whom the Cash in such Account shall be paid,
the Custodian, at its election, may deliver such Securities and pay such Cash to
a bank or trust company doing business in the State of New York to be held and
disposed of pursuant to the provisions of this Agreement, or may continue to
hold such Securities and Cash until a written notice as aforesaid is delivered
to the Custodian, provided that the Custodian's obligations shall be limited to
safekeeping.
(b) TERMINATION AS TO ONE OR MORE PORTFOLIOS. This Agreement may
be terminated by the Customer or the Custodian as to one or more Portfolios (but
less than all of the Portfolios) by delivery of an amended Exhibit A deleting
such Portfolios, in which case termination as to such deleted Portfolios shall
take effect ninety (90) days after the date of such delivery, or such earlier
time as mutually agreed. The execution and delivery of an amended Exhibit A
which deletes one or more Portfolios shall constitute a termination of this
Agreement only with respect to such deleted Portfolio(s), shall be governed by
the preceding provisions of Section 21 as to the identification of a successor
custodian and the delivery of Cash and Securities of the Portfolio(s) so deleted
to such successor custodian, and shall not affect the obligations
12
of the Custodian and the Customer hereunder with respect to the other Portfolios
set forth in Exhibit A, as amended from time to time.
22. NOTICES. Except as otherwise provided in this Agreement, all
requests, demands or other communications between the parties or notices in
connection herewith (a) shall be in writing, hand delivered or sent by
registered mail, telex or facsimile addressed to such other address as shall
have been furnished by the receiving party pursuant to the provisions hereof and
(b) shall be deemed effective when received, or, in the case of a telex, when
sent to the proper number and acknowledged by a proper answerback.
23. SEVERAL OBLIGATIONS OF THE PORTFOLIOS. With respect to any
obligations of the Customer on behalf of each Portfolio and each of its related
Accounts arising out of this Agreement, the Custodian shall look for payment or
satisfaction of any obligation solely to the assets and property of the
Portfolio and such Accounts to which such obligation relates as though the
Customer had separately contracted with the Custodian by separate written
instrument with respect to each Portfolio and its related Accounts.
24. SECURITY FOR PAYMENT. To secure payment of all obligations due
hereunder, the Customer hereby grants to the Custodian a continuing security
interest in and right of setoff against each Account and all Property held
therein from time to time in the full amount of such obligations; PROVIDED THAT,
if there is more than one Account and the obligations secured pursuant to this
Section can be allocated to a specific Account or the Portfolio related to such
Account, such security interest and right of setoff will be limited to Property
held for that Account only and its related Portfolio. Should the Customer fail
to pay promptly any amounts owed hereunder, the Custodian shall be entitled to
use available Cash in the Account or applicable Account, as the case may be, and
to dispose of Securities in the Account or such applicable Account as is
necessary. In any such case and without limiting the foregoing, the Custodian
shall be entitled to take such other actions or exercise such other options,
powers and rights as the Custodian now or hereafter has as a secured creditor
under the New York Uniform Commercial Code or any other applicable law.
25. REPRESENTATIONS AND WARRANTIES.
(a) The Customer hereby represents and warrants to the Custodian that:
(i) the employment of the Custodian and the allocation of
fees, expenses and other charges to any Account as herein provided, is not
prohibited by law or any governing documents or contracts to which it is
subject;
(ii) the terms of this Agreement do not violate any obligation
by which it is bound, whether arising by contract, operation of law or
otherwise;
(iii) this Agreement has been duly authorized by appropriate
action and when executed and delivered will be binding upon it and each
Portfolio in accordance with its terms; and
(iv) it will deliver to the Custodian a duly executed
Secretary's Certificate in the form of Exhibit E hereto or such other evidence
of such authorization as the Custodian may reasonably require, whether by way of
a certified resolution or otherwise.
(b) The Custodian hereby represents and warrants to the Customer that:
13
(i) the terms of this Agreement do not violate any obligation
by which it is bound, whether arising by contract, operation of law or
otherwise;
(ii) this Agreement has been duly authorized by appropriate
action and when executed and delivered will be binding upon it in accordance
with its terms;
(iii) it will deliver to the Customer such evidence of such
authorization as the Customer may reasonably require, whether by way of a
certified resolution or otherwise; and
(iv) Custodian is qualified as a custodian under Section 26(a)
of the 1940 Act and warrants that it will remain so qualified or upon ceasing to
be so qualified shall promptly notify the Customer in writing.
26. GOVERNING LAW AND SUCCESSORS AND ASSIGNS. This Agreement shall
be governed by the law of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Custodian.
27. PUBLICITY. Customer shall furnish to Custodian at its office
referred to in Section 22 above, prior to any distribution thereof, copies of
any material prepared for distribution to any persons who are not parties hereto
that refer in any way to the Custodian. Customer shall not distribute or permit
the distribution of such materials if Custodian reasonably objects in writing
within ten (10) business days of receipt thereof (or such other time as may be
mutually agreed) after receipt thereof. The provisions of this Section shall
survive the termination of this Agreement.
28. REPRESENTATIVE CAPACITY AND BINDING OBLIGATION. A copy of the
[DECLARATION OF TRUST/TRUST INSTRUMENT]of the Customer is on file with The
Secretary of THE [COMMONWEALTH OF MASSACHUSETTS/STATE OF DELAWARE], and notice
is hereby given that this Agreement is not executed on behalf of the Trustees of
the Customer as individuals, and the obligations of this Agreement are not
binding upon any of the Trustees, officers or shareholders of the Customer
individually but are binding only upon the assets and property of the
Portfolios.
The Custodian agrees that no shareholder, trustee or officer of the
Customer may be held personally liable or responsible for any obligations of the
Customer arising out of this Agreement.
29. SUBMISSION TO JURISDICTION. Any suit, action or proceeding
arising out of this Agreement may be instituted in any State or Federal court
sitting in the City of Xxx Xxxx, Xxxxx xx Xxx Xxxx, Xxxxxx Xxxxxx of America,
and the Customer irrevocably submits to the non-exclusive jurisdiction of any
such court in any such suit, action or proceeding and waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of venue of any such suit, action or proceeding brought in such a court
and any claim that such suit, action or proceeding was brought in an
inconvenient forum.
30. CONFIDENTIALITY. The parties hereto agree that each shall
treat confidentially the terms and conditions of this Agreement and all
information provided by each party to the other regarding its business and
operations. All confidential information provided by a party hereto shall be
used by any other party hereto solely for the purpose of rendering services
pursuant to this Agreement and, except as may be required in carrying out this
Agreement, shall not be disclosed to any third party without the prior consent
14
of such providing party. The foregoing shall not be applicable to any
information that is publicly available when provided or thereafter becomes
publicly available other than through a breach of this Agreement, or that is
required or requested to be disclosed by any bank or other regulatory examiner
of the Custodian, Customer, or any Subcustodian, any auditor of the parties
hereto, by judicial or administrative process or otherwise by applicable law or
regulation. The provisions of this Section shall survive the termination of this
Agreement.
31. SEVERABILITY. If any provision of this Agreement is determined
to be invalid or unenforceable, such determination shall not affect the validity
or enforceability of any other provision of this Agreement.
32. ENTIRE AGREEMENT. This Agreement together with any Exhibits
attached hereto, contains the entire agreement between the parties relating to
the subject matter hereof and supersedes any oral statements and prior writings
with respect thereto.
33. HEADINGS. The headings of the paragraphs hereof are included
for convenience of reference only and do not form a part of this Agreement.
34. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered by
each of the parties hereto.
IN WITNESS WHEREOF, each of the parties has caused its duly authorized
signatories to execute this Agreement as of the date first written above.
[CUSTOMER]
By: _________________________________
Name: ___________________________
Title: ____________________________
By: _________________________________
Name: ___________________________
Title: ____________________________
BANKERS TRUST COMPANY
By: _________________________________
Name: ___________________________
Title: ____________________________
15
EXHIBIT A
To Custodian Agreement dated as of _______________, between Bankers
Trust Company and [Customer].
LIST OF PORTFOLIOS
The following is a list of Portfolios referred to in the first WHEREAS
clause of the above-referred to Custodian Agreement. Terms used herein as
defined terms unless otherwise defined shall have the meanings ascribed to them
in the above-referred to Custodian Agreement.
[CUSTOMER]
By: _________________________________
Name: ___________________________
Title: ____________________________
By: _________________________________
Name: ___________________________
Title: ____________________________
BANKERS TRUST COMPANY
By: _________________________________
Name: ___________________________
Title: ____________________________
EXHIBIT B
To Custodian Agreement dated as of _____________, between Bankers Trust
Company and CUSTOMER.
INSERT FEE SCHEDULE
EXHIBIT C
[NAME OF ENTITY]
CERTIFICATE OF THE SECRETARY
I, [NAME OF SECRETARY], hereby certify that I am the Secretary of [NAME
OF ENTITY], a [TYPE OF ENTITY] organized under the laws of [JURISDICTION] (the
"Company"), and as such I am duly authorized to, and do hereby, certify that:
1. ORGANIZATIONAL DOCUMENTS. The Company's organizational
documents, and all amendments thereto, have been filed with the appropriate
governmental officials of [JURISDICTION], the Company continues to be in
existence and is in good standing, and no action has been taken to repeal such
organizational documents, the same being in full force and effect on the date
hereof.
2. BYLAWS. The Company's Bylaws have been duly adopted and no
action has been taken to repeal such Bylaws, the same being in full force and
effect.
3. RESOLUTIONS. Resolutions have been duly adopted on behalf of
the Company, which resolutions (i) have not in any way been revoked or
rescinded, (ii) have been in full force and effect since their adoption, to and
including the date hereof, and are now in full force and effect, and (iii) are
the only corporate proceedings of the Company now in force relating to or
affecting the matters referred to therein, including, without limitation,
confirming that the Company is duly authorized to enter into a certain custody
agreement with Bankers Trust Company (the "Agreement"), and that certain
designated officers, including those identified in paragraph 4 of this
Certificate, are authorized to execute said Agreement on behalf of the Company,
in conformity with the requirements of the Company's organizational documents,
Bylaws, and other pertinent documents to which the Company may be bound.
4. INCUMBENCY. The following named individuals are duly elected
(or appointed), qualified, and acting officers of the Company holding those
offices set forth opposite their respective names as of the date hereof, each
having full authority, acting individually, to bind the Company, as a legal
matter, with respect to all matters pertaining to the Agreement, and to execute
and deliver said Agreement on behalf of the Company, and the signatures set
forth opposite the respective names and titles of said officers are their true,
authentic signatures:
NAME TITLE SIGNATURE
[NAME] [POSITION] ____________________
[NAME] [POSITION] ____________________
[NAME] [POSITION] ____________________
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of
[DATE], 19__.
By: __________________________
Name: __________________________
Title: Secretary
I, [NAME OF CONFIRMING OFFICER], [TITLE] of the Company, hereby certify
that on this ___ day of [DATE], 19__, [Name of Secretary] is the duly elected
Secretary of the Company and that the signature above is his genuine signature.
By:________________________________
Name:______________________________
Title:_____________________________
EXHIBIT D
CASH MANAGEMENT ADDENDUM (this "ADDENDUM") to the CUSTODIAN AGREEMENT
(the "AGREEMENT") between BANKERS TRUST COMPANY (the "CUSTODIAN") and [NAME OF
CLIENT] (the "CUSTOMER").
WHEREAS, the Custodian will provide cash management services to the
Customer, and the Custodian and the Customer desire to confirm their
understanding with respect to such services;
NOW, THEREFORE, the Custodian and the Customer agree as follows:
1. Until the Custodian receives Instructions to the contrary, the
Custodian will (a) hold with Subcustodians, in deposit accounts maintained for
the benefit of the Custodian's clients, all Cash received for the Account, (b)
credit such interest, if any, on Cash in the Account as the Custodian shall from
time to time determine and (c) receive compensation out of any amounts paid by
Subcustodians in respect of Cash in the Account.
2. The Custodian may (on an overnight or other short-term basis)
move certain, or all, currencies of Cash in the Account from any Subcustodian
and place it, as deposits or otherwise, with one or more other Subcustodians
(including branches and affiliates of the Custodian). The Custodian will notify
the Customer of any placement procedures it implements and will move Cash in
accordance with such procedures until it notifies the Customer otherwise or
receives Instructions to the contrary. The Custodian may credit interest and
receive compensation as described in 1 above with respect to any Cash moved. If
any Cash is held in an investment fund managed by Bankers Trust, it will notify
the fund (as opposed to the Customer) as provided herein with respect to such
Cash.
3. The Customer acknowledges that it has received and reviewed
the current policies of the Custodian regarding cash management services, which
are attached to this Addendum.
4. To the extent any of the Property or Cash in the Account is
subject to the Employee Retirement Income Security Act of 1974, the Customer (a)
represents and warrants that it, at all times during the duration of the
Agreement, will be a qualified professional asset manager as defined in the
prohibited transaction exemption 84-14 and that the provisions of the exemption
apply to the Agreement (and transactions thereunder) and (b) agrees to maintain
such records as are necessary to comply with the exemption or to enable
interested persons to determine that the conditions of the exemption are met.
5. Capitalized terms used but not defined in this Addendum are
used with the respective meanings assigned to them in the Agreement.
IN WITNESS WHEREOF, this Addendum has been executed as of the date of
the Agreement.
BANKERS TRUST COMPANY
By:___________________________
[NAME OF CUSTOMER]
By:___________________________
GLOBAL CUSTODY CASH MANAGEMENT PROGRAM
In the Global Custody cash management program, currencies on
which Bankers Trust pays interest are divided into two categories: (1)
currencies on which we pay interest based on a market benchmark rate for
overnight deposits, and (2) currencies on which we pay interest based on a rate
paid by the London branch of Bankers Trust Company or the local subcustodian.
CURRENCIES ON WHICH WE PAY INTEREST BASED ON A MARKET
BENCHMARK RATE FOR OVERNIGHT DEPOSITS (WHICH WE CALL "BENCHMARK RATE
CURRENCIES"):
(BULLET) For each of these currencies, the interest rate we pay is
based on a specific market benchmark (such as Effective Fed
Funds) and is calculated by taking an average of the benchmark
rate and subtracting a spread. (See Schedule A)
(BULLET) Currently, the only Benchmark Rate Currency is the U.S.
Dollar. Over time we will be considering additional currencies
to include in this category.
(BULLET) Operationally, most balances in Benchmark Rate Currencies are
swept overnight into deposits at the London branch of Bankers
Trust Company. Where you have selected a short-term investment
fund, your U.S. Dollar balances in the U.S. will be swept
overnight in accordance with your instructions.
CURRENCIES ON WHICH WE PAY INTEREST BASED ON A RATE PAID BY
THE LONDON BRANCH OF BANKERS TRUST COMPANY OR THE LOCAL SUBCUSTODIAN (WHICH WE
CALL "BASE RATE CURRENCIES"):
(BULLET) For each of these currencies, the interest rate we pay is
based on the rate paid by the London branch or the local
subcustodian on overnight deposits in the currency. In either
case, interest is calculated by using the overnight rate
(which will be the actual overnight, a weekly average, or
monthly average rate, depending on the currency) and
subtracting a spread. (See Schedule A)
(BULLET) Currencies that are part of the sweep program will earn
interest based on the base rate, which will be the higher of
the rate offered by the London branch of Bankers Trust Company
or the local subcustodian.
(BULLET) Currencies that are not part of the sweep program will
generally earn interest based on the rate paid by the local
subcustodian. We may at times be able to sweep certain
currency balances into deposits of Bankers Trust Company's
London branch in order to be able to earn a higher rate for
you. On those days, any such currency will be treated as part
of the sweep program, and you will earn interest on all of
your balances in that currency at the higher rate for that
day.
(BULLET) Currently, there are 29 Base Rate Currencies, 10 of which are
included in our sweep program to the London branch.
(BULLET) Operationally, most balances in Base Rate Currencies that are
part of our sweep program are swept overnight into deposits at
the London branch, while balances in Base Rate Currencies that
are not part of our sweep program remain with the local
subcustodian.
FOR EACH CURRENCY ON WHICH WE PAY INTEREST:
(BULLET) We will notify you periodically in writing of changes in
spreads and updates to the cash management program. These
program updates also will be available through Global Custody
Flash Notices.
(BULLET) FOR MARKETS WHERE WE MAINTAIN ONE OR MORE OMNIBUS CASH
ACCOUNTS, YOU EARN INTEREST AT THE CALCULATED RATE ON YOUR
ENTIRE CONTRACTUAL BALANCE WITHOUT ANY ACTION ON YOUR PART AND
WITHOUT ANY MINIMUM BALANCE REQUIREMENTS. This is the case
regardless of whether we are able to invest your balances at
or near the applicable benchmark or base rate and regardless
of whether your contractual balance may exceed your actual
balance.
(BULLET) FOR MARKETS WHERE WE MAINTAIN ONE OR MORE OMNIBUS CASH
ACCOUNTS, THE MINIMUM RATE PAID IS 0.50%, except for the
Japanese Yen (for which the minimum rate of 0.05% has been
suspended for the time being due to market conditions) and the
Singapore Dollar (for which the minimum rate is 0.25%). Please
note that this is also subject to change as appropriate for
any currency. Notwithstanding the foregoing, in no event will
interest be negative.
(BULLET) FOR THE CURRENCIES OF "CLIENT SPECIFIC MARKETS," THOSE MARKETS
WHERE FOR REGULATORY OR OTHER REASONS WE DO NOT MAINTAIN
OMNIBUS ACCOUNTS FOR CLIENT CASH, ON WHICH WE PAY CREDIT
INTEREST (which at this time are the Hungarian Forint, Israeli
Shekel, Polish Zloty, Korean Won and Taiwanese Dollar), we
will no longer be taking a spread for providing interest on
cash balances. The credit interest you earn on overnight
balances will be based on actual balances, as opposed to
contractual balances, and the minimum credit interest rate
will no longer be applied.
(BULLET) YOU WILL HAVE CONTINUOUS ACCESS THROUGH GLOBE*VIEW, BTWORLD,
OR GLOBE*LINK OR OTHER AGREED ELECTRONIC ON-LINE SYSTEM TO THE
INTEREST RATE EARNED DURING THE PREVIOUS "RATE AVERAGING
PERIOD". Because we may use weekly or monthly average rates to
calculate the interest you earn, we do not know the actual
interest rate until the weekly or monthly period is completed.
(BULLET) Our program generally requires that overnight balances in each
currency remain with (or are swept to) a subcustodian we
designate for that currency. Nevertheless, we pay our stated
rate of interest on any balances that, because of transactions
in your account, are held overnight with an alternate
subcustodian if we receive interest on that currency from that
subcustodian. If the alternate subcustodian does not pay
interest, however, these balances are excluded from our
program.
(BULLET) FOR SWEPT CURRENCIES, FROM TIME TO TIME WE MAY NOT BE ABLE TO
SWEEP THE FULL AMOUNT OF YOUR BALANCES TO THE LONDON BRANCH
because of operational constraints or because your balance on
a contractual basis temporarily exceeds your actual balance.
You will, however, always receive credit for interest based on
your entire contractual balance. To the extent you would have
earned a lower rate on balances not swept, we will make up the
difference. To the extent that actual balances are higher than
contractually posted balances due to purchase fails or
otherwise, we will retain the interest earned as compensation.
(BULLET) THE EFFECTIVE RATE WE PAY ON OVERNIGHT BALANCES WILL GENERALLY
DIFFER FROM THE EFFECTIVE RATE WE RECEIVE (WHETHER FROM THE
LONDON BRANCH OR THE LOCAL SUBCUSTODIAN). Any difference
between the effective rate we receive and the effective rate
we pay (which may be positive or negative, but is generally
positive) is kept by us and covers our fee for running the
cash management program and the related costs we absorb.
Obviously, there will be currencies on which we will not pay
interest because of local regulations, insufficient scale, or other reasons.
However, we hope to identify additional currencies where we can begin paying
interest and we will announce those to you as soon as practical.
Currently most cash balances in our overnight sweep program
are swept into deposits at the London branch of Bankers Trust Company. We
reserve the right to utilize other branches or affiliates for the overnight
sweep program. In the event of such change, we will notify you in writing, which
may be through Global Custody Flash Notice.
As you know, overdrafts are not permitted in the normal course
of business in any currency. Should they occur in any currency, your account
will be charged a fee to settle transactions in advance of receipt of funds. If
the overdraft is not promptly cured (and in any event upon the expiration of 30
days) after the investment manager has been notified of the outstanding
overdraft, the account's home currency will be used to cure the overdraft and
the associated foreign exchange will be done by Bankers Trust at market rates.
(Other currencies may be utilized to the extent the home currency is
insufficient.) Investment managers that have not cured overdrafts within such
period will be deemed to have directed such foreign exchange transaction.
Accounts subject to ERISA will be deemed to have engaged in the transaction
under the authority of the class exemptions available to qualified professional
asset managers and in-house investment managers. To the extent that the
overdraft is less than the U.S. dollar equivalent of $50,000, Bankers Trust's
foreign exchange desk will bundle the transaction with other small amounts for
other clients.
SCHEDULE A
CASH MANAGEMENT PROGRAM - GLOBAL CUSTODY
Overnight Uninvested Cash Balances
(* - Denotes currencies in sweep program)
CURRENCIES RATES
---------- -----
Argentine Peso Base Rate less 150
Australian Dollar* Base Rate less 130
British Pound Sterling* Base Rate less 215
Canadian Dollar* Base Rate less 175
Czech Koruna Base Rate less 75
Danish Krone* Base Rate less 250
EMU Euro* Base Rate less 175
Greek Drachma Base Rate less 150
Hong Kong Dollar* Base Rate less 250
Hungarian Forint Base Rate less 0
Indonesian Rupiah Base Rate less 200
Israeli Shekel Base Rate less 0
Japanese Yen Base Rate less 75
Jordanian Dinar Base Rate less 200
Korean Won Base Rate less 0
Malaysian Ringgit 1 Base Rate less 200
Mexican Peso Base Rate less 200
New Taiwan Dollar Base Rate less 0
New Zealand Dollar Base Rate less 100
Norwegian Krone* Base Rate less 175
Philippine Peso Base Rate less 150
Polish Zloty Base Rate less 0
Singapore Dollar Base Rate less 000
Xxxxxx Koruna Base Rate less 150
South African Rand* Base Rate less 250
Swedish Krona* Base Rate less 250
Swiss Franc* Base Rate less 100
Thai Baht Base Rate less 200
Turkish Lira Base Rate less 200
U.S. Dollar* Effective Fed Funds less 100 2
We reserve the right, in our sole discretion, to adjust the base rates and
benchmark rates used and the spreads charged at any time and for any reason. We
will notify you periodically in writing of changes in spreads and updates to the
cash management program. These program updates also will be available through
Global Custody Flash Notices.
1 As a result of the new rules recently introduced by local Malaysia regulators,
we have suspended paying interest on Ringgit balances. Should the situation
change, we will notify you via Flash Notice.
2 Not applicable if U.S. Dollars are swept to a short-term investment fund.
