CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT ("Agreement") is made and entered into as of
June 9, 1990, by and between Franklin Tax-Advantaged International Bond Fund,
a California Limited Partnership (the "Fund"), and Bank of America National
Trust and Savings Association, a banking association organized under the laws
of the United States (the "Custodian").
RECITALS
A. The Fund is an Investment Company registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), that invests
and reinvests, on behalf of its various series, in domestic and foreign
securities.
B. The Fund and the Custodian desire to provide for the retention of
the Custodian as the custodian of the assets of the Fund, on the terms and
subject to the provisions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
Section l. APPOINTMENT OF CUSTODIAN; DELIVERY OF ASSETS
1.1 Appointment of Custodian. The Fund hereby appoints and
designates the Custodian as the custodian of the assets of the Fund including
cash, securities the Fund desires to be held within the United States
("domestic securities") and securities it desires to be held outside the
United States ("foreign securities"). Domestic securities and foreign
securities ore sometimes referred to herein, collectively, as "securities."
The Custodian hereby accepts such appointment and designation and agrees that
it shall maintain custody of the assets of the Fund delivered to it hereunder
in the manner provided for herein.
1.2 Delivery of Assets. The Fund agrees to deliver to the
Custodian securities and cash owned by the Fund, and payments of income,
principal or capital distributions received by the Fund with respect to
securities owned by the Fund from time to time, and the cash consideration
received by it for such shares of beneficial interest ("Shares"), of the Fund
as may be issued and sold from time to time. The Custodian shall have no
responsibility whatsoever for any property or assets of the Fund held or
received by the Fund and not delivered to the Custodian pursuant to and in
accordance with the terms hereof. All securities accepted by the Custodian
on behalf of the Fund under the terms of this Agreement shall be in "street
name" or other good delivery form.
1.3 Subcustodians. Upon receipt of Proper Instructions (as
defined in Section 4 hereof) and a certified copy of a resolution of the
Managing General Partners of the Fund (the "Managing General Partners") or of
the Executive Committee of the Managing General Partners (the "Executive
Committee") certified by the Secretary or an Assistant Secretary of the Fund,
the Custodian may from time to time appoint one or more subcustodians,
including "foreign custodians" (as defined in Subsection 3.1 hereof), to hold
assets of the Fund.
1.4 No Duty to Manage. The Custodian shall have no duty or
responsibility to manage or recommend investments of the assets of the Fund
held by it as custodian hereunder or to initiate any purchase, sale or other
investment transaction in the absence of Proper Instructions or except as
otherwise specifically provided herein.
Section 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO ASSETS OF THE FUND
HELD BY THE CUSTODIAN
2.1 Holding Securities. The Custodian shall hold and physically
segregate from any property owned by the Custodian, for the account of the
Fund, all non-cash property delivered by the Fund to the Custodian hereunder
other than securities which, pursuant to Subsection 2.8 hereof, are held
through a registered clearing agency, a registered securities depository or
in the Federal Reserve's book-entry securities system (referred to herein,
individually, as a "Securities System"), or in a "foreign securities
depository" (as defined in Section 3.1 hereof).
2.2 Delivery of Securities. The Custodian shall release and
deliver securities owned by the Fund and held by the Custodian only upon
receipt of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, and only in the following cases:
(a) except as otherwise provided herein, upon sale of such
securities for the account of the Fund and receipt by the
Custodian or a subcustodian or agent appointed by the Custodian
of payment therefor;
(b) upon the receipt of payment by the Custodian or a
subcustodian or agent appointed by the Custodian in connection
with any repurchase agreement related to such securities entered
into by the Fund;
(c) in the case of a sale effected through a Securities System,
in accordance with the provisions of Subsection 2.8 hereof;
(d) to a tender agent or other authorized agent in connection
with a tender or other similar offer for securities owned by the
Fund;
(e) to the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided,
that in any such case, the cash or other consideration is to be
delivered to the Custodian or a subcustodian or agent appointed
by the Custodian hereunder;
(f) to the issuer thereof, or its agent, for transfer into the
name of the Fund, the nominee name of the Fund, a nominee name of
the Custodian, the name or nominee name of any agent appointed
pursuant to Subsection 2.7 or the name or nominee name of any
subcustodian appointed pursuant to Section 1 hereof; or for
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities are to
be delivered to the Custodian or a subcustodian or agent
appointed by the Custodian hereunder;
(g) to the broker selling the same for examination in accordance
with the "street delivery" custom;
(h) for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, or reorganization of the issuer
of such securities, or pursuant to a conversion of such
securities; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian or a
subcustodian or agent appointed by the Custodian hereunder;
(i) in the case of warrants, rights or similar securities, the
surrender thereof in connection with the exercise of such
warrants, rights or similar securities or the surrender of
interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian or a
subcustodian or agent appointed by the Custodian hereunder;
(j) for delivery in connection with any loans of securities made
by the Fund, but only against receipt by the Custodian or a
subcustodian or agent appointed by the Custodian hereunder of
adequate collateral as determined by the Fund (and identified in
the Proper instructions communicated to the Custodian), which may
be in the form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be credited
to the account of the Custodian in the Federal Reserve's
book-entry securities system, the Custodian will not be held
liable or responsible for the delivery of securities owned by the
Fund prior to the receipt of such collateral;
(k) for delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Fund, but only
against receipt by the Custodian or a subcustodian or agent
appointed by the Custodian hereunder of amounts borrowed;
(l) for delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer
relating to compliance with the rules of registered clearing
corporations and of any registered national securities exchange,
or of any similar organization or organizations, regarding escrow
or other arrangements in connection with transactions by the Fund;
(m) for delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a futures commission
merchant, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any contract market, or any
similar organization or organizations, regarding account deposits
in connection with transactions by the Fund;
(n) upon the receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such Transfer
Agent or to the holders of shares in connection with
distributions in kind in satisfaction of requests by holders of
Shares for repurchase or redemption; and
(o) for any other proper purpose, but only upon receipt of Proper
Instructions, and a certified copy of a resolution of the
Managing General Partners or of the Executive Committee certified
by the Secretary or an Assistant Secretary of the Fund,
specifying the securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such
purpose to be a proper purpose, and naming the person or persons
to whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the
Custodian (other than bearer securities) shall be registered in the name of
the Fund, in the name of any nominee of the Fund, in the name of any nominee
of the Custodian or in the name or nominee name of any agent appointed
pursuant to Subsection 2.7 or in the name or nominee name of any subcustodian
appointed by the Custodian pursuant to the terms hereof. The Fund agrees to
hold the Custodian any such agent, nominee or subcustodian harmless from any
liability as a holder of record of such securities.
2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the name of the Fund, subject only to
draft or order by the Custodian acting pursuant to the terms of this
Agreement, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of the
Fund, other than cash maintained by the Fund in a bank account established
and used in accordance with Rule l7f-3 under the Investment Company Act.
Funds held by the Custodian for the Fund may be deposited by it to its credit
as Custodian in the banking department of the Custodian or, upon receipt of
Proper Instructions, in other banks or trust companies: provided, however,
that every such bank or trust company shall be qualified to act as a
custodian of the assets of the Fund under the Investment Company Act. It is
understood and agreed by the Custodian and the Fund that the rate of interest
payable on such funds (including foreign currency deposits) that are
deposited with the Custodian may not be a market rate of interest and that
the rate of interest payable by the Custodian to the Fund shall be agreed
upon by the Custodian and the Fund from time to time. Such funds shall be
deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
2.5 Collection of Income; Trade Settlement; Crediting of
Accounts. The Custodian shall collect income payable with respect to
securities owned by the Fund, settle securities trades for the account of the
Fund and credit and debit the Fund's account with the Custodian in connection
therewith as follows:
(a) The Custodian shall effect the purchase of a security by
charging the account of the Fund on the contractual settlement
date; provided, however, that Proper Instructions are provided to
the Custodian by the Fund prior to the contractual settlement
date in accordance with, and within the time period specified in,
the "Global Custody Guidelines for Franklin Opportunity Income
Fund" (the "Guidelines"), as amended by the Custodian from time
to time in its sole discretion. A copy of the Guidelines has
been delivered by the Custodian to the Fund. The Custodian shall
have no liability of any kind to any person, including the Fund,
if the Custodian effects payment on behalf of the Fund as
provided for herein or in Proper Instructions, and the seller or
selling broker fails to deliver the securities purchased.
(b) The Custodian shall effect the sale of a security by
delivering a certificate or other indicia of ownership, and shall
credit the account of the Fund with the proceeds of such sale on
the contractual settlement date; provided, however, that notice
is provided to the Custodian by the Fund prior to the contractual
settlement date in accordance with, and within the time period
specified in the Guidelines. The Custodian shall have no
liability of any kind to any person, including the Fund, if the
Custodian delivers such a certificate(s) or other indicia of
ownership as provided for herein or in Proper Instructions, and
the purchaser or purchasing broker fails to effect payment to the
Fund within a reasonable time period, as determined by the
Custodian in its sole discretion. In such event, the Custodian
shall be entitled to reimbursement of the amount so credited to
the account of the Fund in connection with such sale.
(c) The Fund is responsible for ensuring that the Custodian
receives timely and accurate instructions in accordance with the
Guidelines to enable the Custodian to effect settlement of any
purchase or sale. If the Custodian does not receive such
instructions within the time period specified in the Guidelines,
the Custodian shall have no liability of any kind to any person,
including the Fund, for failing to effect settlement on the
contractual settlement date. However, the Custodian shall use
its best reasonable efforts to effect settlement as soon as
possible after receipt of accurate instructions.
(d) The Custodian shall credit the account of the Fund with
interest income payable on interest bearing foreign securities on
payable date. Interest income on cash balances will be credited
monthly to the account of the Fund on the first business day (on
which the Custodian is open for business) following the end of
each month. Interest income on any other securities and
dividends and other amounts payable' with respect to securities
shall be credited to the account of the Fund when received by the
Custodian or a foreign custodian. The Custodian shall not be
required, however, to commence suit or collection proceedings or
resort to any extraordinary means to collect such income and
other amounts payable with respect to securities owned by the
Fund. The collection of income due the Fund on domestic
securities loaned pursuant to the provisions of Subsection 2.2(j)
shall be the responsibility of the Fund. The Custodian will have
no duty or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be
necessary to assist the Fund in arranging for the timely delivery
to the Custodian of the income to which the Fund is entitled.
The Custodian shall have no liability to any person, including
the Fund, if the Custodian credits the account of the Fund with
such income or other amounts payable with respect to securities
owned by the Fund (other than securities loaned by the Fund
pursuant to Subsection 2.2(j) hereof) and the Custodian
subsequently is unable to collect such income or other amounts
from the payors thereof within a reasonable time period, as
determined by the Custodian in its sole discretion. In such
event, the Custodian shall be entitled to reimbursement of the
amount so credited to the account of the Fund.
2.6 Payment of Fund Monies. Upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate by the parties,
the Custodian shall pay out monies of the Fund in the following cases only:
(a) upon the purchase of securities, futures contracts or options
on futures contracts for the account of the Fund but only, except
as otherwise provided herein, (i) against the delivery of such
securities, or evidence of title to futures contracts or options
on futures contracts, to the Custodian or a subcustodian or agent
appointed by the Custodian hereunder registered pursuant to
Subsection 2.3 hereof or in proper form for transfer; (ii) in the
case of a purchase effected through a Securities System, in
accordance with the conditions set forth in Subsection 2.8
hereof; or (iii) in the case of repurchase agreements entered
into between the Fund and the Custodian, another bank or a
broker-dealer (A) against delivery of the securities either in
certificated form to the Custodian or a subcustodian's agent
appointed by the Custodian hereunder or through an entry
crediting the Custodian's account at the appropriate Federal
Reserve Bank with such securities or (B) against delivery of the
confirmation evidencing purchase by the Fund of securities owned
by the Custodian or such broker-dealer or other bank along with
written evidence of the agreement by the Custodian or such
broker-dealer or other bank to repurchase such securities from
the Fund;
(b) in connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Subsection 2.2
hereof;
(c) for the redemption or repurchase of Shares issued by the Fund
as set forth in Subsection 2.2 hereof;
(d) for the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments for the
account of the Fund: custodian fees, interest, taxes, management,
accounting, transfer agent and legal fees and operating expenses
of the Fund whether or not such expenses are to be in whole or
part capitalized or treated as deferred expenses;
(e) for the payment of any dividends declared by the Board of
Directors; and
(f) for any other proper purpose, but only upon receipt of Proper
Instructions and a certified copy of a resolution of the Managing
General Partners or of the Executive Committee certified by its
Secretary or an Assistant Secretary, specifying the amount of
such payment, setting forth the purpose for which such payment is
to be made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be made.
2.7 Appointment of Agents. The Custodian may at any time in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act to act as
a custodian, as its agent to carry out such of the provisions of this Section
2 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.
2.8 Deposit of Securities in Securities Systems. The Custodian
may deposit and/or maintain domestic securities owned by the Fund in a
Securities System in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, If any, and subject
to the following provisions:
(a) the Custodian may hold domestic securities of the Fund in a
Securities System provided that such securities are held in an
account of the Custodian in the Securities System ("Securities
System Account") which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
(b) the records of the Custodian with respect to domestic
securities of the Fund which are maintained in a Securities
System shall identify by book-entry those securities belonging to
the Fund;
(c) the Custodian shall pay for domestic securities purchased for
the account of the Fund upon Ii) receipt of advice from the
Securities System that such securities have been transferred to
the Securities System Account, and (ii) the making of an entry on
the records of the Custodian to reflect such payment and transfer
for the account of the Fund. The Custodian shall transfer
domestic securities sold for the account of the Fund upon (A)
receipt of advice from the Securities System that payment for
such securities has been transferred to the Securities System
Account, and (B) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of
the Fund. Copies of all advices from the Securities System of
transfers of domestic securities for the account of the Fund
shall be maintained for the Fund by the Custodian and be provided
to the Fund at its request. Upon request, the Custodian shall
furnish the Fund confirmation of each transfer to or from the
account of the Fund in the form of a written advice or notice; and
(d) upon request, the Custodian shall provide the Fund with any
report obtained by the Custodian on the Securities System's
accounting system, internal accounting control and procedures for
safeguarding domestic securities deposited in the Securities
System.
2.9 Segregated Account. The Custodian shall upon receipt of
Proper Instructions establish end maintain a segregated account or accounts
for and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained in an
account by the Custodian pursuant to Section 2.8 hereof, (i) in accordance
with the provisions of any agreement among-the Fund, the Custodian and a
broker-dealer or futures commission merchant, relating to compliance with the
rules of registered clearing corporations and of any national securities
exchange (or the Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the Fund,
(ii) for purposes of segregation cash or government securities in connection
with options purchased, sold or written by the Fund or commodity futures
contracts or options thereon purchased or sold by the Fund and (iii) for
other proper corporate purposes, but only, in the case of this clause (iii),
upon receipt of, in addition to Proper Instructions, a certified copy of a
resolution of the Managing General Partners or of the Executive Committee
certified by the Secretary or an Assistant Secretary, setting forth the
purpose or purposes of such segregated account and declaring such purposes to
be proper corporate purposes.
2.10 Ownership Certificates for Tax Purposes. The Custodian
shall execute ownership and other certificates and affidavits for all federal
and state tax purposes in connection with receipt of income or other payments
with respect to domestic securities of the Fund held by it and in connection
with transfers of such securities.
2.11 Proxies. The Custodian shall, with respect to the domestic
securities held hereunder, use its best reasonable efforts, consistent with
applicable law, to cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in the name
of the Fund or a nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to
the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.
2.12 Communications Relating to Fund Portfolio Securities. The
Custodian shall transmit promptly to the Fund all written information
(including, without limitation, pendency of calls and maturities of domestic
securities and expirations of rights in connection therewith and notices of
exercise of put 'and call options written by the Fund and the maturity of
futures contracts purchased or sold by the Fund) received by the Custodian
from issuers of the domestic securities being held for the Fund. With
respect to tender or exchange offers, the Custodian shall transmit promptly
to the Fund all written information received by the Custodian from issuers of
the domestic securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Fund desires to
take action with respect to any tender offer, exchange offer or any other
similar transaction, the Fund shall notify the Custodian at least three
business days prior to the date of which the Custodian is to take such action.
2.13 Reports by Custodian. The Custodian shall supply to the
Fund the daily, weekly and monthly reports described in the Guidelines as
well as any other reports which the Custodian and the Fund may agree upon
from time to time.
Section 3. DUTIES OF THE CUSTODIAN WITH RESPECT TO ASSETS OF THE FUND
HELD OUTSIDE OF THE UNITED STATES
3.1 Custody Outside of the United States, The Fund authorizes
the Custodian to hold foreign securities and cash in custody accounts which
have been established by the Custodian with (i) its foreign branches, (ii)
foreign banking institutions, foreign branches of United States banks and
subsidiaries of United States banks or bank holding companies (each a
"foreign custodian") and (iii) foreign securities depositories or clearing
agencies (each a "foreign securities depository"); provided, however, that
the Managing General Partners have approved in advance the use of each such
Custodian branch, foreign custodian and foreign securities depository and the
contract between the Custodian and each foreign custodian and that such
approval is set forth in Proper Instructions and a certified copy of a
resolution of the Managing General Partners or of the Executive Committee
certified by the Secretary or an Assistant Secretary of the Fund. Unless
expressly provided to the contrary in this Section 3, custody of foreign
securities and assets held outside the United States shall be governed by
Section 2 hereof.
3.2 Assets to be Held. The Custodian shall limit the securities
and other assets maintained in the custody of its foreign branches, foreign
custodians and foreign securities depositories to: (i) "foreign securities",
as defined in paragraph (c) (l) of Rule l7f-5 under the Investment Company
Act, and (ii) cash and cash equivalents in such amounts as the Custodian or
the Fund may determine to be reasonably necessary to effect the Fund's
foreign securities transactions.
3.3 Foreign Securities Depositories. Except as may otherwise be
agreed upon in writing by the Custodian and the Fund, assets of the Fund
shall be maintained in foreign securities depositories only through
arrangements implemented by the Custodian or foreign custodians pursuant to
the terms hereof.
3.4 Segregation of Securities. The Custodian shall identify on
its books and records as belonging to the Fund, the foreign securities of the
Fund held by each foreign subcustodian.
3.5 Agreements with Foreign Custodians. Each agreement with a
foreign custodian shall provide generally that: (a) the Fund's assets will
not be subject to any right, charge, security interest, lien or claim of any
kind in favor of the foreign custodian or its creditors, except a claim of
payment for their safe custody or administration; (b) beneficial ownership
for the Fund's assets will be freely transferable without the payment of
money or value other than for custody or administration; (c) adequate records
will be maintained identifying the assets as belonging to the Fund: (d) the
independent public accountants for the Fund, will be given access to the
records of the foreign custodian relating to the assets of the Fund or
confirmation of the contents of those records; (e) the disposition of assets
of the Fund held by the foreign custodian will be subject only to the
instructions of the Custodian or its agents; (f) the foreign custodian shall
indemnify and hold harmless the Custodian and the Fund from and against any
loss, damage, cost, expense, liability or claim arising out of or in
connection with the foreign banking institution's performance of its
obligations under such agreement; (g) to the extent practicable, the Fund's
assets will be adequately insured in the event of loss; and (h) the Custodian
will receive periodic reports with respect to the safekeeping of the Fund's
assets, including notification of any transfer to or from the Fund's account.
3.6 Access of Independent Accountants of the Fund. Upon request
of the Fund, the Custodian will use its best reasonable efforts to arrange
for the independent accountants of the Fund to be afforded access to the
books and records of any foreign custodian insofar as such books and records
relate to the custody by any such foreign custodian of assets of the Fund.
3.7 Transactions in Foreign Custody Accounts. Upon receipt of
Proper Instructions, the Custodian shall instruct the appropriate foreign
custodian to transfer, exchange or deliver foreign securities owned by the
Fund, but except to the extent explicitly provided herein only in any of the
cases specified in Subsection 2.2. Upon receipt of Proper Instructions, the
Custodian shall pay out or instruct the appropriate foreign custodian to pay
out monies of the Fund in any of the cases specified in Subsection 2.6.
Notwithstanding anything herein to the contrary, settlement and payment for
securities received for the account of the Fund and delivery of securities
maintained for the account of the Fund 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. Securities maintained in
the custody of a foreign custodian may be maintained in the name of such
entity's nominee to the same extent as set forth in Section 2.3 of this
Agreement and the Fund agrees to hold any such nominee harmless from any
liability as a holder of record of such securities.
3.8 Liability of Foreign Custodian. Each agreement between the
Custodian and a foreign custodian shall require the foreign custodian to
exercise reasonable care in the performance of its duties and to indemnify
and hold harmless the Custodian and the Fund from and against any loss,
damage, cost, expense, liability or claim arising out of or in connection
with the foreign custodian's performance of such obligations. At the
election of the Fund, it shall be entitled to be subrogated to the rights of
the Custodian with respect to any claims against a foreign custodian as a
consequence of any such loss, damage, cost, expense, liability or claim if
and to the extent that the Fund has not been made whole for any such loss,
damage, cost, expense, liability or claim.
3.9 Monitoring Responsibilities. The Custodian will promptly
inform the Fund in the event that the Custodian learns of a material adverse
change in the financial condition of a foreign custodian or is notified by
(i) a foreign banking institution employed as a foreign custodian that there
appears to be a substantial likelihood that its shareholders' equity will
decline below U.S. $200 million (in each case computed in accordance with
generally accepted United States accounting principles), or (ii) a subsidiary
of a United States bank or bank holding company acting as a foreign custodian
that there appears to be a substantial likelihood that its shareholders'
equity will decline below U.S. $100 million or that its shareholders' equity
has declined below U.S. $100 million (in each case computed in accordance
with generally accepted United States accounting principles).
Section 4. PROPER INSTRUCTIONS
As used in this Agreement, the term "Proper Instructions" means
instructions of the Fund received by the Custodian, via telephone, telex, the
custodian's Global Custody Instruction System (trademark), facsimile
transmission, bank wire or other teleprocess or electronic instruction system
acceptable to the Custodian which the Custodian believes in good faith to
have been given by Authorized Persons (as defined below) or which are
transmitted with proper testing or authentication pursuant to terms and
conditions which the Custodian may specify. Any Proper Instructions
delivered to the Custodian by telephone shall promptly thereafter be
confirmed in writing by an Authorized Person (which confirmation may bear the
facsimile signature of such Person), but the Fund will hold the Custodian
harmless for its failure to send such confirmation in writing, the failure of
such confirmation to conform to the telephone instructions received or the
Custodian's failure to produce such confirmation at any subsequent time.
Unless otherwise expressly provided, all Proper Instructions shall continue
in full force and effect until cancelled or superseded. If the Custodian
requires test arrangements, authentication methods or other security devices
to be used with respect to Proper Instructions, any Proper Instructions given
by the Fund thereafter shall be given and processed in accordance with such
terms and conditions for the use of such arrangements, methods or devices as
the Custodian may xxx into effect and modify from time to time. The Fund
shall safeguard any test keys, identification codes or other security devices
which the Custodian shall make available to it. The Custodian may
electronically record any Proper Instructions given by telephone, and any
other telephone discussions, with respect to its activities hereunder. As
used in this Agreement, the term "Authorized Persons" means such officers or
such agents of the Fund as have been designated by a resolution of the
Managing General Partners or of the Executive Committee, a certified copy of
which has been provided to the Custodian, to act on behalf of the Fund under
this Agreement. Each of such persons shall continue to be an Authorized
Person until such time as the Custodian receives Proper Instructions that any
such officer or agent is no longer an Authorized Person.
Section 5. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from the
Fund:
(a) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its duties
under this Agreement, provided that all such payments shall be
accounted for to the Fund;
(b) endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and
(c) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property of
the Fund except as otherwise directed by the Managing General
Partners of the Fund.
Section 6. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions (in
Writing or oral), notice, request, consent, certificate or other instrument
or paper believed by it to be genuine and to have been properly given or
executed by or on behalf of the Fund. The Custodian may receive and accept a
certified copy of a resolution of the Managing General Partners as conclusive
evidence (a) of the authority of any person to act in accordance with such
resolution or (b) of any determination or of any action by the Managing
General Partners as described in such resolution, and such resolution may be
considered as in full force and effect until receipt by the Custodian of
written notice to the contrary.
Section 7. DUTY OF CUSTODIAN TO SUPPLY INFORMATION
The Custodian shall cooperate with and supply necessary information in
its possession to the entity or entities appointed by the Managing General
Partners to keep the books of account of the Fund and/or compute the net
asset value per share of the outstanding shares of the Fund.
Section 8. RECORDS
The Custodian shall create and maintain all records relating to its
activities under this Agreement which are required with respect to such
activities under Section 31 of the Investment Company Act and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of the Fund and
shall at all times during the regular business hours of the Custodian be open
for inspection by duly authorized officers, employees or agents of the Fund
and employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the Fund's request, supply the Fund with a tabulation of
securities owned by the Fund and held by the Custodian and shall, when
requested to do so by the Fund and for such compensation as shall be agreed
upon between the Fund and the Custodian, include certificate numbers in such
tabulations.
Section 9. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between
the Fund and the Custodian.
Section 10. RESPONSIBILITY OF CUSTODIAN
The Custodian shall be responsible for the performance of only such
duties as are set forth herein or contained in Proper Instructions and shall
use reasonable care in carrying out such duties. The Custodian shall be
liable to the Fund for any loss which shall occur as the result of the
failure of a foreign custodian or a foreign securities depository engaged by
such custodian or the Custodian to exercise reasonable care with respect to
the safekeeping of securities and other assets of the Fund to the same extent
that the Custodian would be liable to the Fund if the Custodian itself were
holding such securities and other assets. In the event of any loss to the
Fund by reason of the failure of the Custodian, a foreign custodian or a
foreign securities depository engaged by such custodian or the Custodian to
utilize reasonable care, the Custodian shall be liable to the Fund to the
extent of the Fund's damages, to be determined based on the market value of
the property which is the subject of the loss at the date of discovery of
such loss and without reference to any special conditions or circumstances.
The Custodian shall be held to the exercise of reasonable care in carrying
out this Agreement but shall be indemnified by, and shall be without
liability to, the Fund for any action taken or omitted by the Custodian in
good faith without negligence. The Custodian shall be entitled to rely, and
may act, on advice of counsel (who may be counsel for the Fund) on all
matters and shall be without liability far any action reasonably taken or
omitted pursuant to such advice. The Custodian need not maintain any
insurance for the benefit of the Fund.
All collections of funds or other property paid or distributed in
respect of securities held by the Custodian, agent, subcustodian or foreign
custodian hereunder shall be made at the risk of the Fund. The Custodian
shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Custodian, agent, subcustodian or by a foreign
custodian of any payment, redemption or other transaction regarding
securities in respect of which the Custodian has agreed to take action as
provided in Section 2 hereof. The Custodian shall not be liable for any
action taken in good faith upon Proper Instructions or upon any certified
copy of any resolution of the Managing General Partners and may rely on the
genuineness of any such documents which it may in good faith believe to be
validly executed. The Custodian shall not be liable for any loss resulting
from, or caused by, the direction of the Fund to maintain custody of any
securities or cash in a foreign country including, but not limited to, losses
resulting from nationalization, expropriation, currency restrictions, civil
disturbance, acts of war or terrorism, insurrection, revolution, nuclear
fusion, fission or radiation or other similar occurrences or events beyond
the control of the Custodian. Finally, the Custodian shall not be liable for
any taxes, including interest and penalties with respect thereto, that may be
levied or assessed upon or in respect of any assets of the Fund held by the
Custodian.
Section 11. LIMITED LIABILITY OF THE FUND
The Custodian acknowledges that it has received notice of and accepts
the limitations of the Fund's liability as set forth in its Agreement and
Declaration of Fund. The Custodian agrees that the Fund's obligation
hereunder shall be limited to the assets of the Fund, and that the Custodian
shall not seek satisfaction of any such obligation from the shareholders of
the Fund nor from any Partner, officer, employee, or agent of the Fund.
Section 12. EFFECTIVE PERIOD; TERMINATION
This Agreement shall become effective as of the date of its execution
and shall continue in full force and effect until terminated as hereinafter
provided. This Agreement may be terminated by the Fund or the Custodian by
60 days notice in Writing to the other provided that any termination by the
Fund shall be authorized by a resolution of the Managing General Partners, a
certified copy of which shall accompany such notice of termination, and
provided further, that such resolution shall specify the names of the persons
to whom the Custodian shall deliver the assets of the Fund held by it. If
notice of termination is given by the Custodian, the Fund shall, within 60
days following the giving of such notice, deliver to the Custodian &
certified copy of & resolution of the Managing General Partners specifying
the names of the persons to whom the Custodian shall deliver assets of the
Fund held by it. In either case the Custodian will deliver such assets to
the persons so specified, after deducting therefrom any amounts which the
Custodian determines to be owed to it hereunder (including all costs and
expenses of delivery or transfer of Fund assets to the persons so
specified). If within 60 days following the giving of a notice of
termination by the Custodian, the Custodian does not receive from the Fund a
certified copy of a resolution of the Managing General Partners specifying
the names of the persons to whom the custodian shall deliver the assets of
the Fund held by it, the Custodian, at its election, may deliver such assets
to a bank or trust company doing business in the State of California to be
held and disposed of pursuant to the provisions of this Agreement or may
continue to hold such assets until a certified copy of one or more
resolutions as aforesaid is delivered to the Custodian. The obligations of
the parties hereto regarding the use of reasonable care, indemnities and
payment of fees and expenses shall survive the termination of this Agreement.
Section 13. MISCELLANEOUS
13.1 Relationship. Nothing contained in this Agreement shall (i)
create any fiduciary, joint venture or partnership relationship between the
Custodian and the Fund or (ii) be construed as or constitute a prohibition
against the provision by the Custodian or any of its affiliates to the Trust
or the Fund of investment banking, securities dealing or brokerages services
or any other banking or financial services.
13.2 Further Assurances. Each party hereto shall furnish to the
other party hereto such instruments and other documents as such other party
may reasonably request for the purpose of carrying out or evidencing the
transactions contemplated by this Agreement.
13.3 Attorneys' Fees. If any lawsuit or other action or
proceeding relating to this Agreement is brought by a party hereto or by any
Associate of a party hereto against the other party hereto, the prevailing
party shall be entitled to recover reasonable attorneys' fees, costs and
disbursements (in addition to any other relief to which the prevailing party
may be entitled),
13.4 Notices. Except as otherwise specified herein, each notice
or other communication hereunder shall be in writing and shall be delivered
to the intended recipient at the following address (or at ouch other address
as the intended recipient shall have specified in a written notice given to
the other parties hereto):
if to the Fund:
Franklin Tax-Advantaged International Bond Fund
c/o Franklin Resources, Inc.
000 Xxxxxxxx Xxxxxx Xxxx.
Xxx Xxxxx, XX 00000
Attention: Fund Manager
if to the Custodian:
Bank of America NT & SA
International Securities Services
00 Xxxxxx Xxxxxx
Xxxxxx XX0X0XX
Xxxxxxx
Attention: Manager
13.5 Headings. The underlined headings that are contained herein
are for convenience of reference only, shall not be deemed to be a part of
this Agreement and shall not be referred to in connection with the
interpretation hereof.
13.6 Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original and both of which,
when taken together, shall constitute one agreement.
13.7 Governing Law. This Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflict of laws).
13.8 Force Majeure. No failure, delay or default in performance
of any obligation hereunder shall constitute an event of default or a breach
of this agreement, or give rise to any liability whatsoever an the part of
one party hereto to the other, to the extent that such failure to perform,
delay or default arises out of a cause beyond the control and without
negligence of the party otherwise chargeable with failure, delay or default;
including, but not limited to: action or inaction of governmental, civil or
military authority, fire; strike; lockout or other labor dispute; flood; war;
riot; theft; earthquake; natural disaster; breakdown of public or common
carrier communications facilities; computer malfunction; or act, negligence
or default of the other party. This paragraph shall in no way limit the
right of either party to this Agreement to make any claim against third
parties for any damages suffered due to such causes.
13.9 Successors and Assigns. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns, if any.
13.10 Waiver. No failure on the part of any person to exercise
any power, right, privilege or remedy hereunder, and no delay on the part of
any person in the exercise of any power, right, privilege or remedy
hereunder, shall operate as a waiver thereof; and no single or partial
exercise of any such power, right, privilege or remedy shall preclude any
other or further exercise thereof or of any other power, right, privilege or
remedy.
13.11 Amendments. This Agreement may not be amended, modified,
altered or supplemented other than by means of an agreement or instrument
executed on behalf of each of the parties hereto.
13.12 Severability. In the event that any provision of this
Agreement, or the application of any such provision to any person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to persons or circumstances other than those as
to which it is determined to be invalid, unlawful, void or unenforceable,
shall not be impaired or otherwise affected and shall continue to be valid
and enforceable to the fullest extent permitted by law.
13.13 Parties in Interest. None of the provisions of this
Agreement is intended to provide any rights or remedies to any person other
than the Fund and the Custodian and their respective successors and assigns,
if any.
13.14 Entire Agreement. This Agreement together with the
agreement between the Fund and the Custodian relating to the Fund's use of
the Custodian's Global Custody Instruction System (trademark) set forth the
entire understanding of the parties hereto and supersede all prior agreements
and understandings between the parties hereto relating to the subject matter
hereof. The parties acknowledge and agree that this Agreement relates only
to the custody of the assets of the Fund and not to the custody of the assets
of any other series or portfolio of the Fund.
13.15 Variations of Pronouns. Whenever required by the context
hereof, the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; and the
neuter gender shall include the masculine and feminine genders.
13.16 "Writing". The term "Writing" shall mean written
communication, telex, facsimile or any other commonly used electronic message
transmission facility including, without limitation, the Custodian's Global
Custody Instruction System (trademark).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered as of the date first above written.
"Custodian": BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
/s/ illegible
Its: Vice President
/s/ illegible
Its: Vice President
"Fund": FRANKLIN TAX-ADVANTAGED
INTERNATIONAL BOND FUND
/s/ Xxxxxxx X. Xxxxxx
Its: Secretary
/s/ Xxxxxx X. Xxxxx
Its: Vice President
