EXHIBIT 8
FORM OF CUSTODIAN AGREEMENT
AGREEMENT dated as of ___________________________________ , 199_
between BANKERS TRUST COMPANY (the "Custodian") and ISI STRATEGY FUND, INC.
(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. 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 noncash investment property of a Portfolio which is
acceptable for deposit ("Securities") and cash from any source and in any
currency ("Cash"). 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 Property
belonging to a Portfolio, the Customer shall, by Instructions (as herein
defined in Section 14), specifically indicate which
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Portfolio such Property belongs or if such Property belongs to more than one
Portfolio shall allocate such Property to the appropriate Portfolio. The
Custodian shall allocate such Property to the Accounts in accordance with the
Instructions; provided that the Custodian shall have the right, in its sole
discretion, to refuse to accept any Property that is not in proper form for
deposit for any reason. 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. 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 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:
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(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;
(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 hold the Property in each Account in custody
accounts which have been established by the Custodian with (a) one of its U.S.
branches or 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.
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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 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 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 nominal 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 in the custody of 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 held by 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 the holding of Property shall require that (i)
the Account will be adequately indemnified or its losses adequately insured;
(ii) the Securities 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 held pursuant to such Agreement as
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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 held 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 are maintained by the Custodian or any Subcustodian in the
custody of a Securities System employed pursuant to Section 4:
(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 held for the account of the
Custodian or Subcustodian for its customers.
(b) Any Property held in 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 held by the Custodian or
a Subcustodian or in 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
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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 held 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 N1-A and the Customer's Form N-SAR or other
periodic reports to the SEC and with respect to any other
requirements of the SEC.
(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 held by the Custodian or any Subcustodian may be held by such entity
in the name of the Customer, on behalf of a Portfolio, in the Custodian's or
Subcustodian's name, in the name of the Custodian's or Subcustodian's nominee,
or in bearer form. Securities that are held by a Subcustodian or which are
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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.
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 Exhibit
B attached hereto (as such service therein described may be in effect from
time to time) (the "Proxy Service") and (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
an Account, execute any form of proxy to vote thereon, or give any 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
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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 Global Guide 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.
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 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 customary charges for
similar extensions of credit.
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(d) 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 not deposited
into the Account, the Customer authorizes the Custodian, as
agent, to sell the securities and credit the Account with
the proceeds of such sale. In such case, the Customer shall
be liable to the Custodian for any deficiencies,
out-of-pocket costs and expenses associated with the sale of
the securities, including but not limited to, shortfalls in
the sales proceeds and the Custodian is hereby authorized to
sell such other securities to the extent necessary to
satisfy such shortfalls with the net proceeds of such sales.
(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.
(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.
(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.
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(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
Custodian 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 and
of any registered national securities exchange, or of any
similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the
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 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)
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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 night 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.
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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 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
12
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 C. 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 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 Exhibit D attached hereto and shall in connection therewith be
subject to the standard of care set forth in such Exhibit D. 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 Securities and Cash to the
persons so specified, after deducting therefrom any amounts
which the Custodian determines to be owed to it under
Sections 13, 18, and 24. In addition, the Custodian may in
its discretion withhold from such delivery such Cash and
Securities 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
13
(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 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 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.
14
Should the Customer fail to pay promptly any amounts owed hereunder, 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, Custodian shall be entitled to take such other action(s) or
exercise such other options, powers and rights as 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 the
Customer is subject;
(ii) the terms of this Agreement do not violate any
obligation by which the Customer 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 the Customer and
each Portfolio in accordance with its terms; and
(iv) the Customer 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:
(i) the terms of this Agreement do not violate any
obligation by which the Custodian 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 the Custodian in accordance
with its terms;
(iii) the Custodian 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.
15
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 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.
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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.
[NAME OF CUSTOMER]
By:_____________________________
Name:___________________________
Title:__________________________
By:_____________________________
Name:___________________________
Title:__________________________
BANKERS TRUST COMPANY
By:_____________________________
Name:___________________________
Title:__________________________
17
EXHIBIT A
To Custodian Agreement dated as of ______________,199__ between
Bankers Trust Company and _______________________.
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.
Dated as of:
[NAME OF CUSTOMER]
By:________________________
Name:______________________
Title:_____________________
By:________________________
Name:______________________
Title:_____________________
BANKERS TRUST COMPANY
By:________________________
Name:______________________
Title:_____________________
EXHIBIT B
To Custodian Agreement dated as of ________________, 199__ between
Bankers Trust Company and __________________.
PROXY SERVICE
The following is a description of the Proxy Service referred to in
Section 10 of the above referred to Custodian Agreement. Terms used herein as
defined terms shall have the meanings ascribed to them therein unless
otherwise defined below.
The Custodian provides a service, described below, for the
transmission of corporate communications in connection with shareholder
meetings relating to Securities held in the countries specified in the Global
Guide]. For the United States and Canada, the term "corporate communications"
means the proxy statements or meeting agenda, proxy cards, annual reports and
any other meeting materials received by the Custodian. For countries other
then the United States and Canada, the term "corporate communications" means
the meeting agenda only and does not include any meeting circulars, proxy
statements or any other corporate communications furnished by the issuer in
connection with such meeting. Non-meeting related corporate communications are
not included in the transmission service to be provided by the Custodian
except upon request as provided below.
The Custodian's process for transmitting and translating meeting
agendas will be as follows:
1) If the meeting agenda is not provided by the issuer in the
English language, and if the language of such agenda is in
the official language of the country in which the related
security is held, the Custodian will as soon as practicable
after receipt of the original meeting agenda by a
Subcustodian provide an English translation prepared by that
Subcustodian.
2) If an English translation of the meeting agenda is
furnished, the local language agenda will not be furnished
unless requested.
Translations will be free translations and neither the Custodian nor
any Subcustodian will be liable or held responsible for the accuracy thereof
or any direct or indirect consequences arising therefrom, including without
limitation arising out of any action taken or omitted to be taken based
thereon.
If requested, the Custodian will, on a reasonable efforts basis,
endeavor to obtain any additional corporate communication such as annual or
interim reports, proxy statements, meeting circulars, or local language
agendas, and provide them in the form obtained.
Timing in the voting process is important and, in that regard, upon
receipt by the Custodian of notice from a Subcustodian, the Custodian will
provide a notice to the Customer indicating the deadline for receipt of its
instructions to enable the voting process to take place effectively and
efficiently. As voting procedures will vary from market to market, attention
to any required procedures will be very important. Upon timely receipt of
voting instructions, the Custodian will promptly forward such instructions to
the applicable Subcustodian. If voting instructions are not timely received,
the Custodian shall have no liability or obligation to take any action.
For Securities held in markets other than those set forth in the
first paragraph, the Custodian wall not furnish the material described above
or seek voting instructions. However, if requested to exercise voting rights
at a specific meeting, the Custodian will endeavor to do so on a reasonable
efforts basis without any assurance that such rights will be so exercised at
such meeting.
If the Custodian or any Subcustodian incurs extraordinary expenses in
exercising voting rights related to any Securities pursuant to appropriate
instructions or direction (e.g., by way of illustration only and not by way of
limitation, physical presence is required at a meeting and/or travel expenses
are incurred), such expenses will be reimbursed out of the Account containing
such Securities unless other arrangements have been made for such
reimbursement.
It is the intent of the Custodian to expand the Proxy Service to
include jurisdictions which are not currently included as set forth in the
Global Guide. The Custodian will notify the Customer as
to the inclusion of additional countries or deletion of existing countries
after their inclusion or deletion and this Exhibit B will be deemed to be
automatically amended to include or delete such countries as the case may be.
Dated as of [NAME OF CUSTOMER]
By:________________________
Name:______________________
Title:_____________________
By:________________________
Name:______________________
Title:_____________________
BANKERS TRUST COMPANY
By:________________________
Name:______________________
Title:_____________________
EXHIBIT C
To Custodian Agreement dated as of _____________, 199__ between
Bankers Trust Company and ________________.
CUSTODY FEE SCHEDULE
This Exhibit C shall be amended upon delivery by the Custodian of a new
Exhibit C to the Customer and acceptance thereof by the Customer and shall be
effective as of the date of acceptance by the Customer or a date agreed upon
between the Custodian and the Customer.
EXHIBIT D
To Custodian Agreement dated as of _____________, 199__ between
Bankers Trust Company and ______________.
TAX RECLAIMS
Pursuant to Section 18 of the above referred to Custodian Agreement,
the Custodian shall perform the following services with respect to withholding
taxes imposed or which may be imposed on income from Property in any Account.
Terms used herein as defined terms shall unless otherwise defined have the
meanings ascribed to them in the above referred to Custodian Agreement.
When Withholding tax has been deducted with respect to income from
any Property in an Account, the Custodian will actively pursue on a reasonable
efforts basis the reclaim process, provided that the Custodian shall not be
required to institute any legal or administrative proceeding against any
Subcustodian or other person. The Custodian will provide fully detailed
advices/vouchers to support reclaims submitted to the local authorities by the
Custodian or its designee. In all cases of withholding, the Custodian will
provide full details to the Customer. If exemption from withholding at the
source can be obtained in the future, the Custodian will notify the Customer
and advise what documentation, if any, is required to obtain the exemption.
Upon receipt of such documentation from the Customer, the Custodian will file
for exemption on the Customer's behalf and notify the Customer when it has
been obtained.
In connection with providing the foregoing service, the Custodian
shall be entitled to apply categorical treatment of the Customer according to
the Customer's nationality, the particulars of its organization and other
relevant details that shall be supplied by the Customer. It shall be the duty
of the Customer to inform the Custodian of any change in the organization,
domicile or other relevant fact concerning tax treatment of the Customer and
further to inform the Custodian if the Customer is or becomes the beneficiary
of any special ruling or treatment not applicable to the general nationality
and category or entity of which the Customer is a part under general laws and
treaty provisions. The Custodian may rely on any such information provided by
the Customer.
In connection with providing the foregoing service, the Custodian may
also rely on professional tax services published by a major international
accounting firm and/or advice received from a Subcustodian in the
jurisdictions in question. In addition, the Custodian may seek the advice of
counsel or other professional tax advisers in such jurisdictions. The
Custodian is entitled to rely, and may act, on information set forth in such
services and on advice received from a Subcustodian,
counsel or other professional tax advisers and shall be without liability to
the Customer for any action reasonably taken or omitted pursuant to
information contained in such services or such advice.
Dated as of [NAME OF CUSTOMER]
By:________________________
Name:______________________
Title:_____________________
BANKERS TRUST COMPANY
By:________________________
Name:______________________
Title:_____________________
EXHIBIT E
[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. By-Laws. The Company's By-Laws have been duly adopted and no action
has been taken to repeal such By-Laws, 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:______________________________
