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Exhibit 8(a)
CUSTODIAN AGREEMENT
DATED AS OF: MAY 4, 1996
BETWEEN
THE PILOT FUNDS
AND
BOATMEN'S TRUST COMPANY
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TABLE OF CONTENTS
PAGE
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ARTICLE I - APPOINTMENT OF CUSTODIAN................................................................ 1
ARTICLE II - POWERS AND DUTIES OF CUSTODIAN......................................................... 1
Section 2.1 Safekeeping.............................................................. 2
Section 2.2 Manner of Holding Securities............................................. 2
Section 2.3 Security Purchases....................................................... 2
Section 2.4 Exchanges of Securities.................................................. 3
Section 2.5 Sales of Securities...................................................... 3
Section 2.6 Depositary Receipts...................................................... 4
Section 2.7 Exercise of Rights; Tender Offers........................................ 4
Section 2.8 Stock Dividends, Rights, Etc............................................. 4
Section 2.9 Options.................................................................. 4
Section 2.10 Futures Contracts........................................................ 5
Section 2.11 Borrowing................................................................ 5
Section 2.12 Interest Bearing Deposits................................................ 5
Section 2.13 Foreign Exchange Transactions............................................ 6
Section 2.14 Securities Loans......................................................... 7
Section 2.15 Collections.............................................................. 7
Section 2.16 Dividends, Distributions and Redemptions................................. 7
Section 2.17 Proceeds from Shares Sold................................................ 7
Section 2.18 Proxies, Notices, Etc.................................................... 8
Section 2.19 Bills and Other Disbursements............................................ 8
Section 2.20 Nondiscretionary Functions............................................... 8
Section 2.21 Bank Accounts............................................................ 8
Section 2.22 Deposit of Fund Assets in Securities Systems............................. 9
Section 2.23 Other Transfers..........................................................11
Section 2.24 Establishment of Segregated Account......................................11
Section 2.25 Custodian's Books and Records............................................11
Section 2.26 Opinion of Fund's Independent Certified Public Accountants...............12
Section 2.27 Reports by Independent Certified Public Accountants......................12
Section 2.28 Overdraft Facility.......................................................12
ARTICLE III - PROPER INSTRUCTIONS, SPECIAL
INSTRUCTIONS AND RELATED MATTERS...........................................................12
Section 3.1 Proper Instructions and Special Instructions.............................12
Section 3.2 Authorized Persons.......................................................13
Section 3.3 Persons Having Access to Assets of the Portfolios........................14
Section 3.4 Actions of Custodian Based on Proper Instructions and Special
Instructions......................................................................14
(i)
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ARTICLE IV - SUBCUSTODIANS..........................................................................14
Section 4.1 Domestic Subcustodians...................................................14
Section 4.2 Foreign Subcustodians and Interim Subcustodians..........................15
Section 4.3 Termination of a Subcustodian............................................15
Section 4.4 Certification Regarding Foreign Subcustodians............................16
ARTICLE V - STANDARD OF CARE; INDEMNIFICATION.......................................................16
Section 5.1 Standard of Care.........................................................16
Section 5.2 Liability of Custodian for Actions of Other Persons......................17
Section 5.3 Indemnification..........................................................18
Section 5.4 Fund's Right to Proceed..................................................18
ARTICLE VI - COMPENSATION...........................................................................19
ARTICLE VII - TERMINATION...........................................................................19
Section 7.1 Termination of Agreement as to the Fund..................................19
Section 7.2 Termination as to One or More Portfolios.................................20
ARTICLE VIII - DEFINED TERMS........................................................................21
ARTICLE IX - MISCELLANEOUS..........................................................................21
Section 9.1 Execution of Documents, Etc..............................................21
Section 9.2 Representative Capacity; Nonrecourse Obligations.........................22
Section 9.3 Several Obligations of the Fund and the Portfolios.......................22
Section 9.4 Representations and Warranties...........................................22
Section 9.5 Entire Agreement.........................................................23
Section 9.6 Waivers and Amendments...................................................23
Section 9.7 Interpretation...........................................................23
Section 9.8 Captions.................................................................23
Section 9.9 Governing Law............................................................23
Section 9.10 Notices..................................................................24
Section 9.11 Assignment...............................................................24
Section 9.12 Counterparts.............................................................24
Section 9.13 Confidentiality; Survival of Obligations.................................24
(ii)
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Xxxxxxxx "A" - List of Portfolios
(iii)
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CUSTODIAN AGREEMENT
AGREEMENT made as of the 4th day of May, 1996 between The Pilot Funds
(the "Fund") and Boatmen's Trust Company (the "Custodian").
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the " 1940 Act");
WHEREAS, the Fund is organized with more than one series of shares,
each of which shall represent an interest in a separate portfolio of cash,
securities and other assets (all such existing and additional series now or
hereafter listed on Appendix "A" being hereinafter referred to individually, as
a "Portfolio," and collectively, as the "Portfolios"); and
WHEREAS, the Fund desires to appoint the Custodian as custodian on
behalf of each of its Portfolios in accordance with the provisions of the 1940
Act, and the rules and regulations thereunder, under the terms and conditions
set forth in this Agreement, and the Custodian has agreed so to act as
custodian.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I - APPOINTMENT OF CUSTODIAN
On behalf of each of its Portfolios, the Fund hereby employs and
appoints the Custodian as custodian, subject to the terms and provisions of this
Agreement. The Fund shall deliver to the Custodian, or shall cause to be
delivered to the Custodian, cash, securities and other assets owned by each of
its Portfolios from time to time during the term of this Agreement and shall
specify which of its Portfolios such cash, securities and other assets are to be
specifically allocated.
ARTICLE II - POWERS AND DUTIES OF CUSTODIAN
As custodian, the Custodian shall have and perform the powers and
duties set forth in this Article II. Pursuant to and in accordance with Article
IV hereof, the Custodian may appoint one or more Subcustodians (as hereinafter
defined) to exercise the powers and perform the duties of the Custodian set
forth in this Article II and references to the Custodian in this Article II
shall include any Subcustodian so appointed.
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Section 2.1 Safekeeping. The Custodian shall keep safely all cash,
securities and other assets of the Fund's Portfolios delivered to the Custodian
and, on behalf of such Portfolios, the Custodian shall, from time to time,
accept delivery of cash, securities and other assets for safekeeping.
Section 2.2 Manner of Holding Securities.
(a) The Custodian shall at all times hold securities of the Fund's
Portfolios either: (i) by physical possession of the share certificates or other
instruments representing such securities in registered or bearer form; (ii) in
book-entry form by a Securities System (as hereinafter defined) in accordance
with the provisions of Section 2.22 below; (iii) with respect to securities
consisting of shares of a registered open-end investment company, by maintenance
of a shareholder account with the transfer agent of such investment company; or
(iv) in such other manner as is provided in Special Instructions.
(b) The Custodian shall at all times hold registered securities of
each Portfolio in the name of the Custodian, the Portfolio or a nominee of
either of them, unless specifically directed by Proper Instructions to hold such
registered securities in so-called street name; provided that, in any event, all
such securities and other assets shall be held in an account of the Custodian
containing only assets of a Portfolio, or only assets held by the Custodian as a
fiduciary or custodian for customers; and provided further, that the records of
the Custodian shall indicate at all times the Portfolio or other customer for
which such securities and other assets are held in such account and the
respective interests therein.
Section 2.3 Security Purchases. Upon receipt of Proper Instructions (as
hereinafter defined), the Custodian shall pay for and receive securities
purchased for the account of a Portfolio, provided that payment shall be made by
the Custodian only upon receipt of the securities: (a) by the Custodian; (b) by
a clearing corporation of a national securities exchange of which the Custodian
is a member; or (c) by a Securities System. Notwithstanding the foregoing, upon
receipt of Proper Instructions: (i) in the case of a repurchase agreement, the
Custodian may release funds to a Securities System prior to the receipt of
advice from the Securities System that the securities underlying such repurchase
agreement have been transferred by book-entry into the Account (as hereinafter
defined) maintained with such Securities System by the Custodian, provided that
the Custodian's instructions to the Securities System require that the
Securities System may make payment of such funds to the other party to the
repurchase agreement only upon transfer by book-entry of the securities
underlying the repurchase agreement into the Account; (ii) in the case of time
deposits, call account deposits, currency deposits, and other deposits, foreign
exchange transactions, futures contracts or options, pursuant to Sections 2.9,
2.10, 2.12 and 2.13 hereof, the Custodian may make payment therefor before
receipt of an advice or confirmation evidencing said deposit or entry into such
transaction; (iii) in the case of the purchase of securities, the settlement of
which occurs outside of the United States of America, the Custodian may make
payment therefor and receive delivery of such securities in accordance with
local custom and practice generally accepted by Institutional Clients (as
hereinafter defined) in the country in which
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the settlement occurs, but in all events subject to the standard of care set
forth in Article V hereof; and (iv) in the case of the purchase of securities in
which, in accordance with standard industry custom and practice generally
accepted by Institutional Clients with respect to such securities, the receipt
of such securities and the payment therefor take place in different countries,
the Custodian may receive delivery of such securities and make payment therefor
in accordance with standard industry custom and practice for such securities
generally accepted by Institutional Clients, but in all events subject to the
standard of care set forth in Article V hereof. For purposes of this Agreement,
an "Institutional Client" shall mean a major commercial bank, corporation,
insurance company, or substantially similar institution, which, as a substantial
part of its business operations, purchases or sells securities and makes use of
custodial services.
Section 2.4 Exchanges of Securities. Upon receipt of Proper
Instructions, the Custodian shall exchange securities held by it for the account
of a Portfolio for other securities in connection with any reorganization,
recapitalization, split-up of shares, change of par value, conversion or other
event relating to the securities or the issuer of such securities, and shall
deposit any such securities in accordance with the terms of any reorganization
or protective plan. The Custodian shall, without receiving Proper Instructions:
surrender securities in temporary form for definitive securities; surrender
securities for transfer into the name of the Custodian, a Portfolio or a nominee
of either of them, as permitted by Section 2.2(b); and surrender securities for
a different number of certificates or instruments representing the same number
of shares or same principal amount of indebtedness, provided that the securities
to be issued will be delivered to the Custodian or a nominee of the Custodian.
Section 2.5 Sales of Securities. Upon receipt of Proper Instructions,
the Custodian shall make delivery of securities which have been sold for the
account of a Portfolio, but only against payment therefor in the form of: (a)
cash, certified check, bank cashier's check, bank credit, or bank wire transfer;
(b) credit to the account of the Custodian with a clearing corporation of a
national securities exchange of which the Custodian is a member; or (c) credit
to the Account of the Custodian with a Securities System, in accordance with the
provisions of Section 2.22 hereof. Notwithstanding the foregoing: (i) in the
case of the sale of securities, the settlement of which occurs outside of the
United States of America, such securities shall be delivered and paid for in
accordance with local custom and practice generally accepted by Institutional
Clients in the country in which the settlement occurs; (ii) in the case of the
sale of securities in which, in accordance with standard industry custom and
practice generally accepted by Institutional Clients with respect to such
securities, the delivery of such securities and receipt of payment therefor take
place in different countries, the Custodian may deliver such securities and
receive payment therefor in accordance with standard industry custom and
practice for such securities generally accepted by Institutional Clients; and
(iii) in the case of securities held in physical form, such securities shall be
delivered and paid for in accordance with "street delivery custom" to a broker
or its clearing agent, it being understood that the Custodian shall not be
responsible for the selection of or the failure or inability to perform of such
broker or its clearing agent.
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Section 2.6 Depositary Receipts. Upon receipt of Proper Instructions,
the Custodian shall surrender securities to the depositary used for such
securities by an issuer of American Depositary Receipts or International
Depositary Receipts (hereinafter referred to, collectively, as "ADRs"), against
a written receipt therefor adequately describing such securities and written
evidence satisfactory to the Custodian that the depositary has acknowledged
receipt of instructions to issue ADRs with respect to such securities in the
name of the Custodian or a nominee of the Custodian, for delivery to the
Custodian at such place as the Custodian may from time to time designate. Upon
receipt of Proper Instructions, the Custodian shall surrender ADRs to the issuer
thereof, against a written receipt therefor adequately describing the ADRs
surrendered and written evidence satisfactory to the Custodian that the issuer
of the ADRs has acknowledged receipt of instructions to cause its depositary to
deliver the securities underlying such ADRs to the Custodian.
Section 2.7 Exercise of Rights; Tender Offers. Upon receipt of Proper
Instructions, the Custodian shall: (a) deliver warrants, puts, calls, rights or
similar securities to the issuer or trustee thereof, or to the agent of such
issuer or trustee, for the purpose of exercise or sale, provided that the new
securities, cash or other assets, if any, acquired as a result of such actions
are to be delivered to the Custodian; and (b) deposit securities upon
invitations for tenders thereof, provided that the consideration for such
securities is to be paid or delivered to the Custodian, or the tendered
securities are to be returned to the Custodian. Notwithstanding any provision of
this Agreement to the contrary, the Custodian shall take all necessary action,
unless otherwise directed to the contrary in Proper Instructions, to comply with
the terms of all mandatory or compulsory exchanges, calls, tenders, redemptions,
or similar rights of security ownership, and shall promptly notify the Fund of
such action in writing by facsimile transmission or in such other manner as the
Fund and the Custodian may agree in writing.
Section 2.8 Stock Dividends, Rights, Etc. The Custodian shall receive
and collect all stock dividends, rights and other items of like nature and, upon
receipt of Proper Instructions, take action with respect to the same as directed
in such Proper Instructions.
Section 2.9 Options. Upon receipt of Proper Instructions and in
accordance with the provisions of any agreement between the Custodian, any
registered broker-dealer and, if necessary, the Fund on behalf of any applicable
Portfolio relating to compliance with the rules of the Options Clearing
Corporation or of any registered national securities exchange or similar
organization(s), the Custodian shall: (a) receive and retain confirmations or
other documents, if any, evidencing the purchase or writing of an option on a
security or securities index by the applicable Portfolio; (b) deposit and
maintain in a segregated account, securities (either physically or by book-entry
in a Securities System), cash or other assets; and (c) pay, release and/or
transfer such securities, cash or other assets in accordance with notices or
other communications evidencing the expiration, termination or exercise of such
options furnished by the Options Clearing Corporation, the securities or options
exchange on which such options are traded, or such other organization as may be
responsible for handling such option transactions. The Fund, on behalf of its
Portfolios, and the broker-dealer shall be responsible for the sufficiency of
assets held
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in any segregated account established in compliance with applicable margin
maintenance requirements and the performance of other terms of any option
contract.
Section 2.10 Futures Contracts. Upon receipt of Proper Instructions, or
pursuant to the provisions of any futures margin procedural agreement among the
Fund, on behalf of any applicable Portfolio, the Custodian and any futures
commission merchant (a "Procedural Agreement"), the Custodian shall: (a) receive
and retain confirmations, if any, evidencing the purchase or sale of a futures
contract or an option on a futures contract by the applicable Portfolio; (b)
deposit and maintain in a segregated account, cash, securities and other assets
designated as initial, maintenance or variation "margin" deposits intended to
secure the applicable Portfolio's performance of its obligations under any
futures contracts purchased or sold or any options on futures contracts written
by the Portfolio, in accordance with the provisions of any Procedural Agreement
designed to comply with the rules of the Commodity Futures Trading Commission
and/or any commodity exchange or contract market (such as the Chicago Board of
Trade), or any similar organization(s), regarding such margin deposits; and (c)
release assets from and/or transfer assets into such margin accounts only in
accordance with any such Procedural Agreements. The Fund, on behalf of its
applicable Portfolios, and such futures commission merchant shall be responsible
for the sufficiency of assets held in the segregated account in compliance with
applicable margin maintenance requirements and the performance of any futures
contract or option on a futures contract in accordance with its terms.
Section 2.11 Borrowing. Upon receipt of Proper Instructions, the
Custodian shall deliver securities of a Portfolio to lenders or their agents, or
otherwise establish a segregated account as agreed to by the Fund on behalf of
such Portfolio and the Custodian, as collateral for borrowings effected by such
Portfolio, provided that such borrowed money is payable by the lender (a) to or
upon the Custodian's order, as Custodian for such Portfolio, and (b)
concurrently with delivery of such securities.
Section 2.12 Interest Bearing Deposits. Upon receipt of Proper
Instructions directing the Custodian to purchase interest bearing fixed term and
call deposits (hereinafter referred to collectively, as "Interest Bearing
Deposits") for the account of a Portfolio, the Custodian shall purchase such
Interest Bearing Deposits in the name of the Portfolio with such banks or trust
companies (including the Custodian, any Subcustodian or any subsidiary or
affiliate of the Custodian) (hereinafter referred to as "Banking Institutions")
and in such amounts as the Fund may direct pursuant to Proper Instructions. Such
Interest Bearing Deposits may be denominated in U.S. Dollars or other
currencies, as the Fund on behalf of its Portfolio may determine and direct
pursuant to Proper Instructions. The Custodian shall include in its records with
respect to the assets of each Portfolio appropriate notation as to the amount
and currency of each such Interest Bearing Bank Deposit, the accepting Banking
Institution and all other appropriate details, and shall retain such forms of
advice or receipt evidencing such account, if any, as may be forwarded to the
Custodian by the Banking Institution. The responsibilities of the Custodian to
the Fund for Interest Bearing Deposits accepted on the Custodian's books in the
United States on behalf of the Fund's Portfolios shall be that of a U.S. bank
for a similar deposit. With respect to Interest
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Bearing Deposits other than those accepted on the Custodian's books, (a) the
Custodian shall be responsible for the collection of income as set forth in
Section 2.15 and the transmission of cash and instructions to and from such
accounts; and (b) the Custodian shall have no duty with respect to the selection
of the Banking Institution or, so long as the Custodian acts in accordance with
Proper Instructions, for the failure of such Banking Institution to pay upon
demand. Upon receipt of Proper Instructions, the Custodian shall take such
reasonable actions as the Fund deems necessary or appropriate to cause each such
Interest Bearing Deposit Account to be insured to the maximum extent possible by
all applicable deposit insurers including, without limitation, the Federal
Deposit Insurance Corporation.
Section 2.13 Foreign Exchange Transactions.
(a) Foreign Exchange Transactions Other Than as Principal.
Upon receipt of Proper Instructions, the Custodian shall settle foreign exchange
contracts or options to purchase and sell foreign currencies for spot and future
delivery on behalf of and for the account of a Portfolio with such currency
brokers or Banking Institutions as the Fund may determine and direct pursuant to
Proper Instructions. The Custodian shall be responsible for the transmission of
cash and instructions to and from the currency broker or Banking Institution
with which the contract or option is made, the safekeeping of all certificates
and other documents and agreements evidencing or relating to such foreign
exchange transactions and the maintenance of proper records as set forth in
Section 2.25. The Custodian shall have no duty with respect to the selection of
the currency brokers or Banking Institutions with which the Fund deals on behalf
of its Portfolios or, so long as the Custodian acts in accordance with Proper
Instructions, for the failure of such brokers or Banking Institutions to comply
with the terms of any contract or option.
(b) Foreign Exchange Contracts as Principal. The Custodian
shall not be obligated to enter into foreign exchange transactions as principal.
However, if the Custodian has made available to the Fund its services as a
principal in foreign exchange transactions, upon receipt of Proper Instructions,
the Custodian shall enter into foreign exchange contracts or options to purchase
and sell foreign currencies for spot and future delivery on behalf of and for
the account of a Portfolio of the Fund with the Custodian as principal. The
Custodian shall be responsible for the selection of the currency brokers or
Banking Institutions and the failure of such currency brokers or Banking
Institutions to comply with the terms of any contract or option.
(c) Payments. Notwithstanding anything to the contrary
contained herein, upon receipt of Proper Instructions the Custodian may, in
connection with a foreign exchange contract, make free outgoing payments of cash
in the form of U.S. Dollars or foreign currency prior to receipt of confirmation
of such foreign exchange contract or confirmation that the countervalue currency
completing such contract has been delivered or received.
Section 2.14 Securities Loans. Upon receipt of Proper Instructions, the
Custodian shall, in connection with loans of securities by a Portfolio, deliver
securities of such Portfolio to the borrower thereof prior to receipt of the
collateral, if any, for such borrowing; provided that, in
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cases of loans of securities secured by cash collateral, the Custodian's
instructions to the Securities System shall require that the Securities System
deliver the securities of the Portfolio to the borrower thereof only upon
receipt of the collateral for such borrowing.
Section 2.15 Collections. The Custodian shall, and shall cause any
Subcustodian to: (a) collect amounts due and payable to the Fund with respect to
portfolio securities and other assets of each of the Fund's Portfolios; (b)
promptly credit to the account of each applicable Portfolio all income and other
payments relating to portfolio securities and other assets held by the Custodian
hereunder upon Custodian's receipt of such income or payments or as otherwise
agreed in writing by the Custodian and the Fund; (c) promptly endorse and
deliver any instruments required to effect such collections; (d) promptly
execute ownership and other certificates and affidavits for all federal, state
and foreign tax purposes in connection with receipt of income, capital gains or
other payments with respect to portfolio securities and other assets of each
applicable Portfolio, or in connection with the purchase, sale or transfer of
such securities or other assets; and (e) promptly file any certificates or other
affidavits for the refund or reclaim of foreign taxes paid, and promptly notify
the Fund of any changes to law, interpretative rulings or procedures regarding
such reclaims, and otherwise use all available measures customarily used to
minimize the imposition of foreign taxes at source, and promptly inform the Fund
of alternative means of minimizing such taxes of which the Custodian shall
become aware (or with the exercise of reasonable care should have become aware);
provided, however, that with respect to portfolio securities registered in
so-called "street name", the Custodian shall use its best efforts to collect
amounts due and payable to the Fund with respect to its Portfolios. The
Custodian shall promptly notify the Fund in writing by facsimile transmission or
in such other manner as the Fund and the Custodian may agree in writing if any
amount payable with respect to portfolio securities or other assets of the
Portfolios of the Fund is not received by the Custodian when due. The Custodian
shall not be responsible for the collection of amounts due and payable with
respect to portfolio securities or other assets that are in default.
Section 2.16 Dividends, Distributions and Redemptions. The Custodian
shall promptly release funds or securities: (a) upon receipt of Proper
Instructions, to one or more Distribution Accounts designated by the Fund in
such Proper Instructions; or (b) upon receipt of Special Instructions, as
otherwise directed by the Fund, for the purpose of the payment of dividends or
other distributions to shareholders of each applicable Portfolio, and payment to
shareholders who have requested repurchase or redemption of their shares of the
Portfolio(s) (collectively, the "Shares"). For purposes of this Agreement, a
"Distribution Account" shall mean an account established at a Banking
Institution designated by the Fund on behalf of one or more of its Portfolios in
Special Instructions.
Section 2.17 Proceeds from Shares Sold. The Custodian shall receive
funds representing cash payments received for Shares issued or sold from time to
time by the Fund, and shall promptly credit such funds to the account(s) of the
applicable Portfolio(s). The Custodian shall promptly notify the Fund of
Custodian's receipt of cash in payment for Shares issued by the Fund by
facsimile transmission or in such other manner as the Fund and Custodian may
agree in
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writing. Upon receipt of Proper Instructions, the Custodian shall: (a) deliver
all federal funds received by the Custodian in payment for Shares in payment for
such investments as may be set forth in such Proper Instructions and at a time
agreed upon between the Custodian and the Fund; and (b) make federal funds
available to the Fund as of specified times agreed upon from time to time by the
Fund and the Custodian, in the amount of checks received in payment for Shares
which are deposited to the accounts of each applicable Portfolio.
Section 2.18 Proxies, Notices, Etc. The Custodian shall deliver to the
Fund, in the most expeditious manner practicable, all forms of proxies, all
notices of meetings, and any other notices or announcements affecting or
relating to securities owned by the Portfolios that are received by the
Custodian, any Subcustodian, or any nominee of either of them, and, upon receipt
of Proper Instructions, the Custodian shall execute and deliver, or cause such
Subcustodian or nominee to execute and deliver, such proxies or other
authorizations as may be required. Except as directed pursuant to Proper
Instructions, neither the Custodian nor any Subcustodian or nominee shall vote
upon any such securities, or execute any proxy to vote thereon, or give any
consent or take any other action with respect thereto.
Section 2.19 Bills and Other Disbursements. Upon receipt of Proper
Instructions, the Custodian shall promptly pay or cause to be paid, all bills,
statements, or other obligations of each Portfolio.
Section 2.20 Nondiscretionary Functions. The Custodian shall attend to
all nondiscretionary details in connection with the sale, exchange,
substitution, purchase, transfer or other dealings with securities or other
assets of each Portfolio held by the Custodian, except as otherwise directed
from time to time pursuant to Proper Instructions.
Section 2.21 Bank Accounts.
(a) Accounts with the Custodian and any Subcustodians. The
Custodian may open and operate a bank account or accounts (hereinafter referred
to collectively, as "Bank Accounts") on the books of the Custodian or any
Subcustodian provided that such account(s) shall be in the name of the Custodian
or a nominee of the Custodian, for the account of a Portfolio, and shall be
subject only to the draft or order of the Custodian; provided however, that such
Bank Accounts in countries other than the United States may be held in an
account of the Custodian containing only assets held by the Custodian as a
fiduciary or custodian for customers, and provided further, that the records of
the Custodian shall indicate at all times the Portfolio or other customer for
which such securities and other assets are held in such account and the
respective interests therein. Such Bank Accounts may be denominated in either
U.S. Dollars or other currencies. The responsibilities of the Custodian to the
Fund for deposits accepted on the Custodian's books in the United States shall
be that of a U.S. bank for a similar deposit. The responsibilities of the
Custodian to the Fund for deposits accepted on any Subcustodian's books shall be
governed by the provisions of Section 5.2.
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(b) Accounts With Other Banking Institutions. The Custodian
may open and operate Bank Accounts on behalf of a Portfolio, in the name of the
Custodian or a nominee of the Custodian, at a Banking Institution other than the
Custodian or any Subcustodian, provided that such account(s) shall be in the
name of the Custodian or a nominee of the Custodian, for the account of a
Portfolio, and shall be subject only to the draft or order of the Custodian;
provided however, that such Bank Accounts may be held in an account of the
Custodian containing only assets held by the Custodian as a fiduciary or
custodian for customers, and provided further, that the records of the Custodian
shall indicate at all times the Portfolio or other customer for which such
securities and other assets are held in such account and the respective
interests therein. Such Bank Accounts may be denominated in either U.S. Dollars
or other currencies. Subject to the provisions of Section 5.1 (a), the Custodian
shall be responsible for the selection of the Banking Institution and for the
failure of such Banking Institution to pay according to the terms of the
deposit.
(c) Deposit Insurance. Upon receipt of Proper Instructions,
the Custodian shall take such reasonable actions as the Fund deems necessary or
appropriate to cause each deposit account established by the Custodian pursuant
to this Section 2.21 to be insured to the maximum extent possible by all
applicable deposit insurers including, without limitation, the Federal Deposit
Insurance Corporation.
Section 2.22 Deposit of Fund Assets in Securities Systems. The
Custodian may deposit and/or maintain domestic securities owned by a Portfolio
in: (a) The Depository Trust Company; (b) the Participants' Trust Company; (c)
any book-entry system as provided in (i) Subpart 0 of Treasury Circular Xx. 000,
00 XXX 306.115, (ii) Subpart B of Treasury Circular Public Debt Series Xx.
00-00, 00 XXX 350.2, or (iii) the book-entry regulations of federal agencies
substantially in the form of 31 CFR 306.115; or (d) any other domestic clearing
agency registered with the Securities and Exchange Commission ("SEC") under
Section 17A of the Securities Exchange Act of 1934 (or as may otherwise be
authorized by the Securities and Exchange Commission to serve in the capacity of
depository or clearing agent for the securities or other assets of investment
companies) which acts as a securities depository and the use of which the Fund
has previously approved by Special Instructions (as hereinafter defined) (each
of the foregoing being referred to in this Agreement as a "Securities System").
Use of a Securities System shall be in accordance with applicable Federal
Reserve Board and SEC rules and regulations, if any, and subject to the
following provisions:
(i) The Custodian may deposit and/or maintain
securities held hereunder in a Securities System, provided
that such securities are represented in an account ("Account")
of the Custodian in the Securities System which Account shall
not contain any assets of the Custodian other than assets held
as a fiduciary, custodian, or otherwise for customers and
shall be so designated on the books and records of the
Securities System.
(ii) The Securities System shall be obligated to
comply with the Custodian's directions with respect to the
securities held in such Account and shall not be
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entitled to a lien against the assets in such Account for extensions of
credit to the Custodian other than for payment of the purchase price of
such assets.
(iii) The Fund hereby designates the Custodian as the
party in whose name any securities deposited by the Custodian in the
Account are to be registered.
(iv) The books and records of the Custodian shall at
all times identify those securities belonging to each Portfolio which
are maintained in a Securities System.
(v) The Custodian shall pay for securities
purchased for the account of a Portfolio only upon (w) receipt of
advice from the Securities System that such securities have been
transferred to the Account of the Custodian, and (x) the making of an
entry on the records of the Custodian to reflect such payment and
transfer for the account of such Portfolio. The Custodian shall
transfer securities sold for the account of a Portfolio only upon (y)
receipt of advice from the Securities System that payment for such
securities has been transferred to the Account of the Custodian, and
(z) the making of an entry on the records of the Custodian to reflect
such transfer and payment for the account of such Portfolio. Copies of
all advices from the Securities System relating to transfers of
securities for the account of a Portfolio shall identify such Portfolio
and shall be maintained for such Portfolio by the Custodian. The
Custodian shall deliver to the Fund on the next succeeding business day
daily transaction reports which shall include each day's transactions
in the Securities System for the account of each applicable Portfolio.
Such transaction reports shall be delivered to the Fund or any agent
designated by the Fund pursuant to Proper Instructions, by computer or
in such other manner as the Fund and the Custodian may agree in
writing.
(vi) The Custodian shall, if requested by the Fund
pursuant to Proper Instructions, provide the Fund with all reports
obtained by the Custodian or any Subcustodian with respect to a
Securities System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the Securities
System.
(vii) Upon receipt of Special Instructions, the
Custodian shall terminate the use of any Securities System (except the
federal book-entry system) on behalf of any Portfolio as promptly as
practicable and shall take all actions reasonably practicable to
safeguard the securities of any Portfolio maintained with such
Securities System.
Section 2.23 Other Transfers. Upon receipt of Special Instructions, the
Custodian shall make such other dispositions of securities, funds or other
property of a Portfolio in a manner or for purposes other than as expressly set
forth in this Agreement, provided that the Special Instructions relating to such
disposition shall include a statement of the purpose for which the delivery is
to be made, the amount of funds and/or securities to be delivered, and the name
of the person or persons to whom delivery is to be made, and shall otherwise
comply with the provisions of Sections 3.1 and 3.3 hereof.
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Section 2.24 Establishment of Segregated Account. Upon receipt of
Proper Instructions, the Custodian shall establish and maintain on its books a
segregated account or accounts for and on behalf of a Portfolio, into which
account or accounts may be transferred cash and/or securities or other assets of
such Portfolio, including securities maintained by the Custodian in a Securities
System pursuant to Section 2.22 hereof, said account or accounts to be
maintained: (a) for the purposes set forth in Sections 2.9, 2.10 and 2.11
hereof, (b) for the purposes of compliance by the Portfolio with the procedures
required by Investment Company Act Release No. 10666, or any subsequent release
or releases of the SEC relating to the maintenance of segregated accounts by
registered investment companies; or (c) for such other purposes as set forth,
from time to time, in Special Instructions.
Section 2.25 Custodian's Books and Records. The Custodian shall provide
any assistance reasonably requested by the Fund in the preparation of reports to
the Fund's shareholders and others, audits of accounts, and other ministerial
matters of like nature. The Custodian shall maintain complete and accurate
records with respect to securities and other assets held for the accounts of
each Portfolio as required by the rules and regulations of the SEC applicable to
investment companies registered under the 1940 Act, including: (a) journals or
other records of original entry containing a detailed and itemized daily record
of all receipts and deliveries of securities (including certificate and
transaction identification numbers, if any), and all receipts and disbursements
of cash; (b) ledgers or other records reflecting (i) securities in transfer,
(ii) securities in physical possession, (iii) securities borrowed, loaned or
collateralizing obligations of each Portfolio, (iv) monies borrowed and monies
loaned (together with a record of the collateral therefor and substitutions of
such collateral), (v) dividends and interest received, (vi) the amount of tax
withheld by any person in respect of any collection by the Custodian or any
Subcustodian, and (vii) the amount of reclaims or refunds for foreign taxes
paid; and (c) cancelled checks and bank records related thereto. The Custodian
shall keep such other books and records of the Fund as the Fund shall reasonably
request. All such books and records maintained by the Custodian shall be
maintained in a form acceptable to the Fund and in compliance with the rules and
regulations of the SEC, including, but not limited to, books and records
required to be maintained by Section 31 (a) of the 1940 Act and the rules and
regulations from time to time adopted thereunder. All books and records
maintained by the Custodian pursuant to this Agreement shall at all times be the
property of the Fund and shall be available during normal business hours for
inspection and use by the Fund and its agents, including, without limitation,
its independent certified public accountants. Notwithstanding the preceding
sentence, the Fund shall not take any actions or cause the Custodian to take any
actions which would cause, either directly or indirectly, the Custodian to
violate any applicable laws, regulations or orders.
Section 2.26 Opinion of Fund's Independent Certified Public
Accountants. The Custodian shall take all reasonable action as the Fund may
request to obtain from year to year favorable opinions from the Fund's
independent certified public accountants with respect to the Custodian's
activities hereunder in connection with the preparation of the Fund's Form N-IA
and the Fund's Form N-SAR or other periodic reports to the SEC and with respect
to any other requirements of the SEC.
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Section 2.27 Reports by Independent Certified Public Accountants. At
the request of the Fund, the Custodian shall deliver to the Fund 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, securities and other
assets, including cash, securities and other assets 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
Fund and as may reasonably be obtained by the Custodian.
Section 2.28 Overdraft Facility. In the event that the Custodian is
directed by Proper Instructions to make any payment or transfer of funds on
behalf of a Portfolio for which there would be, at the close of business on the
date of such payment or transfer, insufficient funds held by the Custodian on
behalf of such Portfolio, the Custodian may, in its discretion, provide an
overdraft (an "Overdraft") to the Fund on behalf of such Portfolio, in an amount
sufficient to allow the completion of such payment. Any Overdraft provided
hereunder: (a) shall be payable on the next Business Day, unless otherwise
agreed by the Fund and the Custodian; and (b) shall accrue interest from the
date of the Overdraft to the date of payment in full by the Fund on behalf of
the applicable Portfolio at a rate agreed upon in writing, from time to time, by
the Custodian and the Fund. The Custodian and the Fund acknowledge that the
purpose of such Overdrafts is to temporarily finance the purchase or sale of
securities for prompt delivery in accordance with the terms hereof, or to meet
emergency expenses not reasonably foreseeable by the Fund. The Custodian shall
promptly notify the Fund in writing (an "Overdraft Notice") of any Overdraft by
facsimile transmission or in such other manner as the Fund and the Custodian may
agree in writing.
ARTICLE III - PROPER INSTRUCTIONS, SPECIAL
INSTRUCTIONS AND RELATED MATTERS
Section 3.1 Proper Instructions and Special Instructions.
(a) Proper Instructions. As used herein, the term "Proper
Instructions" shall mean: (i) a tested telex, a written (including, without
limitation, facsimile transmission) request, direction, instruction or
certification signed or initialed by or on behalf of the Fund by one or more
Authorized Persons (as hereinafter defined); (ii) a telephonic or other oral
communication by one or more Authorized Persons; or (iii) a communication
effected directly between an electromechanical or electronic device or system
(including, without limitation, computers) by or on behalf of the Fund by one or
more Authorized Persons; provided, however, that communications of the types
described in clauses (ii) and (iii) above purporting to be given by an
Authorized Person shall be considered Proper Instructions only if the Custodian
believes in good faith that such communications were given by an Authorized
Person with respect to the transaction involved. Proper Instructions in the form
of oral communications shall be confirmed by the Fund by tested telex or in
writing in the manner set forth in clause (i) above, but the lack of such
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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. The Fund and the Custodian are hereby authorized to record any and
all telephonic or other oral instructions communicated to the Custodian. Proper
Instructions may relate to specific transactions or to types or classes of
transactions, and may be in the form of standing instructions.
(b) Special Instructions. As used herein, the term "Special
Instructions" shall mean Proper Instructions countersigned or confirmed in
writing by the Treasurer or any Assistant Treasurer of the Fund or any other
person designated by the Treasurer of the Fund in writing, which
countersignature or confirmation shall be (i) included on the same instrument
containing the Proper Instructions or on a separate instrument relating thereto,
and (ii) delivered by hand, by facsimile transmission, or in such other manner
as the Fund and the Custodian agree in writing.
(c) Address for Proper Instructions and Special Instructions.
Proper Instructions and Special Instructions shall be delivered to the Custodian
at the address and/or telephone, telecopy or telex number agreed upon from time
to time by the Custodian and the Fund.
Section 3.2 Authorized Persons. Concurrently with the execution of
this Agreement and from time to time thereafter, as appropriate, the Fund shall
deliver to the Custodian, duly certified as appropriate by a Treasurer or
Assistant Treasurer of the Fund, a certificate setting forth: (a) the names,
titles, signatures and scope of authority of all persons authorized to give
Proper Instructions or any other notice, request, direction, instruction,
certificate or instrument on behalf of the Fund (collectively, the "Authorized
Persons" and individually, an "Authorized Person"); and (b) the names, titles
and signatures of those persons authorized to issue Special Instructions. Such
certificate may be accepted and relied upon by the Custodian as conclusive
evidence of the facts set forth therein and shall be considered to be in full
force and effect until delivery to the Custodian of a similar certificate to the
contrary. Upon delivery of a certificate which deletes the name(s) of a person
previously authorized by the Fund to give Proper Instructions or to issue
Special Instructions, such persons shall no longer be considered an Authorized
Person or authorized to issue Special Instructions for the Fund.
Section 3.3 Persons Having Access to Assets of the Portfolios.
Notwithstanding anything to the contrary contained in this Agreement, no
Authorized Person, Trustee, officer, employee or agent of the Fund shall have
physical access to the assets of any Portfolio of the Fund held by the Custodian
nor shall the Custodian deliver any assets of a Portfolio for delivery to an
account of such person; provided, however, that nothing in this Section 3.3
shall prohibit (a) any Authorized Person from giving Proper Instructions, or any
person authorized to issue Special Instructions from issuing Special
Instructions, so long as such action does not result in delivery of or access to
assets of any Portfolio prohibited by this Section 3.3; or (b) the Fund's
independent certified public accountants from examining or reviewing the assets
of the Portfolios of the Fund held by the Custodian. The Fund shall deliver to
the Custodian a written certificate identifying such Authorized Persons,
Trustees, officers, employees and agents of the Fund.
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Section 3.4 Actions of Custodian Based on Proper Instructions and
Special Instructions. So long as and to the extent that the Custodian acts in
accordance with (a) Proper Instructions or Special Instructions, as the case may
be, and (b) the terms of this Agreement, the Custodian shall not be responsible
for the title, validity or genuineness of any property, or evidence of title
thereof, received by it or delivered by it pursuant to this Agreement.
ARTICLE IV - SUBCUSTODIANS
The Custodian may, from time to time, in accordance with the relevant
provisions of this Article IV, appoint one or more Domestic Subcustodians,
Foreign Subcustodians or Interim Subcustodians to act on behalf of a Portfolio.
(For purposes of this Agreement, all duly appointed Domestic Subcustodians,
Interim Subcustodians and Foreign Subcustodians, are hereinafter referred to
collectively, as "Subcustodians.")
Section 4.1 Domestic Subcustodians. The Custodian may, at any time and
from time to time, appoint any bank as defined in Section 2(a)(5) of the 1940
Act meeting the requirements of a custodian under Section 17(f) of the 1940 Act
and the rules and regulations thereunder, to act on behalf of one or more
Portfolios as a subcustodian for purposes of holding cash, securities and other
assets of such Portfolios and performing other functions of the Custodian within
the United States (a "Domestic Subcustodian"); provided, that, the Custodian
shall notify the Fund in writing of the identity and qualifications of any
proposed Domestic Subcustodian at least thirty (30) days prior to appointment of
such Domestic Subcustodian, and the Fund may, in its sole discretion, by written
notice to the Custodian executed by an Authorized Person disapprove of the
appointment of such Domestic Subcustodian. If, following notice by the Custodian
to the Fund regarding appointment of a Domestic Subcustodian and the expiration
of thirty (30) days after the date of such notice, the Fund shall have failed to
notify the Custodian of its disapproval thereof, the Custodian may, in its
discretion, appoint such proposed Domestic Subcustodian as its subcustodian.
Section 4.2 Foreign Subcustodians and Interim Subcustodians.
(a) Foreign Subcustodians. The Custodian or a Domestic
Subcustodian may, at any time and from time to time, appoint: (i) any bank,
trust company or other entity meeting the requirements of an "eligible foreign
custodian" under Section 17(f) of the 1940 Act and the rules and regulations
thereunder or by order of the Securities and Exchange Commission exempted
therefrom, or (ii) any bank as defined in Section 2(a)(5) of the 1940 Act
meeting the requirements of a custodian under Section 17(f) of the 1940 Act and
the rules and regulations thereunder to act on behalf of one or more Portfolios
as a subcustodian for purposes of holding cash, securities and other assets of
such Portfolios and performing other functions of the Custodian in countries
other than the United States of America (a "Foreign Subcustodian"); provided,
that, prior to the appointment of any Foreign Subcustodian, the Custodian or the
Domestic Subcustodian shall have obtained written confirmation of the approval
of the Board of Trustees of the Fund on behalf of
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its applicable Portfolio(s) (which approval may be withheld in the sole
discretion of such Board of Trustees) with respect to (i) the identity and
qualifications of any proposed Foreign Subcustodian, (ii) the country or
countries in which, and the securities depositories or clearing agencies, if
any, through which, any proposed Foreign Subcustodian is authorized to hold
securities and other assets of the applicable Portfolio(s), and (iii) the form
and terms of the subcustodian agreement to be entered into between such proposed
Foreign Subcustodian and the Custodian or Domestic Subcustodian. The Fund shall
be responsible for informing the Custodian sufficiently in advance of a proposed
investment by one of its Portfolios which is to be held in a country in which no
Foreign Subcustodian is authorized to act, in order that there shall be
sufficient time for the Custodian or Domestic Subcustodian to effect the
appropriate arrangements with a proposed foreign subcustodian, including
obtaining approval as provided in this Section 4.2(a). Neither the Custodian nor
the Domestic Subcustodian shall amend any subcustodian agreement entered into
with a Foreign Subcustodian, or agree to change or permit any changes
thereunder, or waive any rights under such agreement, which materially affect a
Fund's rights or the Foreign Subcustodian's obligations or duties to a Fund
under such agreement, except upon prior approval of the Fund pursuant to Special
Instructions.
(b) Interim Subcustodians. Notwithstanding the foregoing, in
the event that a Portfolio shall invest in a security or other asset to be held
in a country in which no Foreign Subcustodian is authorized to act, the
Custodian shall promptly notify the Fund in writing by facsimile transmission or
in such other manner as the Fund and Custodian shall agree in writing of the
unavailability of an approved Foreign Subcustodian in such country; and the
Custodian shall, upon receipt of Special Instructions, appoint any Person
designated by the Fund in such Special Instructions to hold such security or
other asset. (Any Person appointed as a subcustodian pursuant to this Section
4.2(b) is hereinafter referred to as an "Interim Subcustodian.")
Section 4.3 Termination of a Subcustodian. The Custodian shall (i)
cause each Domestic Subcustodian and Foreign Subcustodian to, and (ii) use
reasonable efforts to cause each Interim Subcustodian to, perform all of its
obligations in accordance with the terms and conditions of the subcustodian
agreement between the Custodian and such Domestic Subcustodian or Interim
Subcustodian. In the event that the Custodian is unable to cause such
Subcustodian to fully perform its obligations thereunder, the Custodian shall
forthwith, upon the receipt of Special Instructions, terminate such Subcustodian
and, if necessary or desirable, appoint a replacement Subcustodian in accordance
with the provisions of Section 4.1, Section 4.2 or Section 4.3, as the case may
be. In addition to the foregoing, the Custodian (A) may, at any time in its
discretion, upon written notification to the Fund, terminate any Domestic
Subcustodian, Foreign Subcustodian or Interim Subcustodian, and (B) shall, upon
receipt of Special Instructions, terminate any Subcustodian, in accordance with
the termination provisions under the applicable subcustodian agreement.
Section 4.4 Certification Regarding Foreign Subcustodians. Upon
request of the Fund, the Custodian shall deliver to the Fund a certificate
stating: (i) the identity of each Foreign Subcustodian then acting on behalf of
the Custodian for the Fund and its Portfolios; (ii) the
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countries in which and the securities depositories and clearing agents through
which each such Foreign Subcustodian is then holding cash, securities and other
assets of any Portfolio of the Fund; and (iii) such other information as may be
requested by the Fund to ensure compliance with Rule 17f-5 under the 1940 Act.
ARTICLE V - STANDARD OF CARE; INDEMNIFICATION
Section 5.1 Standard of Care.
(a) General Standard of Care. The Custodian shall exercise
reasonable care and diligence in carrying out all of its duties and obligations
under this Agreement, and shall be liable to the Fund for all loss, damage and
expense suffered or incurred by the Fund or its Portfolios resulting from the
failure of the Custodian to exercise such reasonable care and diligence.
Notwithstanding the foregoing, under no circumstances shall the Custodian be
liable to the Fund or its Portfolios for consequential, special or incidental
damages.
(b) Actions Prohibited by Applicable Law, Etc. In no event
shall the Custodian incur liability hereunder if the Custodian or any
Subcustodian or Securities System, or any subcustodian, securities depository or
securities system utilized by any such Subcustodian, or any nominee of the
Custodian or any Subcustodian (individually, a "Person") is prevented, forbidden
or delayed from performing, or omits to perform, any act or thing which this
Agreement provides shall be performed or omitted to be performed, by reason of:
(i) any provision of any present or future law or regulation or order of the
United States of America, or any state thereof, or of any foreign country, or
political subdivision thereof or of any court of competent jurisdiction; or (ii)
any act of God or war or other similar circumstance beyond the control of the
Custodian.
(c) Advice of Counsel. The Custodian shall be entitled to
receive and act upon advice of counsel on all matters. The Custodian shall be
without liability for any action reasonably taken or omitted in good faith
pursuant to the advice of (i) counsel for the Fund or Trustees of the Fund, or
(ii) at the expense of the Custodian, such other counsel as the Fund and the
Custodian may agree upon; provided, however, with respect to the performance of
any action or omission of any action upon such advice, the Custodian shall be
required to conform to the standard of care set forth in Section 5.1 (a).
(d) Liability for Past Records. The Custodian shall have no
liability in respect of any loss, damage or expense suffered by the Fund,
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 Fund by entities other than the Custodian prior to
the Custodian's appointment as custodian for the Fund.
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Section 5.2 Liability of Custodian for Actions of Other Persons.
(a) Domestic Subcustodians and Foreign Subcustodians.
Notwithstanding the provisions of Section 5.1 to the contrary, the Custodian
shall have no more responsibility or liability to the Fund for any loss, damage
or expense suffered or incurred by the Fund or any of its Portfolios resulting
from the actions or omissions of a Domestic Subcustodian or Foreign Subcustodian
than any such Domestic Subcustodian or Foreign Subcustodian has to the
Custodian.
(b) Interim Subcustodians. Notwithstanding the provisions of
Section 5.1 to the contrary, the Custodian shall not be liable to the Fund for
any loss, damage or expense suffered or incurred by the Fund or any of its
Portfolios resulting from the actions or omissions of an Interim Subcustodian
unless such loss, damage or expense is caused by, or results from, the
negligence, misfeasance or misconduct of the Custodian; provided, however, in
the event of any such loss, damage or expense, the Custodian shall take all
reasonable steps to enforce such rights as it may have against such Interim
Subcustodian to protect the interests of the Fund and the Portfolios.
(c) Securities Systems. Notwithstanding the provisions of
Section 5.1 to the contrary, the Custodian shall not be liable to a Fund for any
loss, damage or expense suffered or incurred by the Fund or any of its
Portfolios resulting from the use by the Custodian of a Securities System,
unless such loss, damage or expense is caused by, or results from, the
negligence, misfeasance or misconduct of the Custodian; provided, however, that
in the event of any such loss, damage or expense, the Custodian shall take all
reasonable steps to enforce such rights as it may have against the Securities
System to protect the interests of the Fund and the Portfolios.
(d) Reimbursement of Expenses. The Fund agrees to reimburse
the Custodian for all reasonable out-of-pocket expenses incurred by the
Custodian on behalf of the Fund in connection with the fulfillment of its
obligations under this Section 5.2; provided, however, that such reimbursement
shall not apply to expenses occasioned by or resulting from the negligence,
misfeasance or misconduct of the Custodian.
Section 5.3 Indemnification.
(a) Indemnification Obligations. Subject to the limitations
set forth in this Agreement, the Fund agrees to indemnify and hold harmless the
Custodian and its nominees from all loss, damage and expense (including
reasonable attorneys' fees) suffered or incurred by the Custodian or its nominee
caused by or arising from actions taken by the Custodian on behalf of the Fund
in the performance of its duties and obligations under this Agreement; provided,
however, that such indemnity shall not apply to loss, damage and expense
occasioned by or resulting from the negligence, misfeasance or misconduct of the
Custodian or its nominee. In addition, the Fund agrees to indemnify any Person
against any liability incurred by reason of taxes assessed to such Person, or
other loss, damage or expenses incurred by such Person, resulting
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from the fact that securities and other property of the Fund's Portfolios are
registered in the name of such Person; provided, however, that in no event shall
such indemnification be applicable to income, franchise or similar taxes which
may be imposed or assessed against any Person.
(b) Notice of Litigation, Right to Prosecute, Etc. Any Person
entitled to indemnification under Section 5.3(a) hereof shall promptly notify
the Fund in writing of the commencement of any litigation or proceeding brought
against such Person in respect of which indemnity may be sought under this
Section 5.3; provided, however, that the failure to so notify the Fund promptly
will not relieve the Fund from any liability except to the extent that the Fund
shall have been prejudiced as a result of such failure. With respect to claims
in such litigation or proceedings for which indemnity by the Fund may be sought
and subject to applicable law and the ruling of any court of competent
jurisdiction, the Fund shall be entitled to participate in any such litigation
or proceeding and, after written notice from the Fund to any Person, the Fund
may assume the defense of such litigation or proceeding with counsel of its
choice at its own expense in respect of that portion of the litigation for which
the Fund may be subject to an indemnification obligation; provided, however, a
Person shall be entitled to participate in (but not control) at its own cost and
expense, the defense of any such litigation or proceeding if the Fund has not
acknowledged in writing its obligation to indemnify the Person with respect to
such litigation or proceeding. If the Fund is not permitted to participate or
control such litigation or proceeding under applicable law or by a ruling of a
court of competent jurisdiction, such Person shall reasonably prosecute such
litigation or proceeding. A Person shall not consent to the entry of any
judgment or enter into any settlement in any such litigation or proceeding
without providing the Fund with adequate notice of any such settlement or
judgment, and without the Fund's prior written consent. All Persons shall submit
written evidence to the Fund with respect to any cost or expense for which they
are seeking indemnification in such form and detail as the Fund may reasonably
request.
Section 5.4 Fund's Right to Proceed. Notwithstanding anything to the
contrary contained herein, the Fund shall have, at its election upon reasonable
notice to the Custodian, the right to enforce, to the extent permitted by any
applicable agreement and applicable law, the Custodian's rights against any
Subcustodian, Securities System, or other Person for loss, damage or expense
caused the Fund by such Subcustodian, Securities System, or other Person, and
shall be entitled to enforce the rights of the Custodian with respect to any
claim against such Subcustodian, Securities System or other Person, which the
Custodian may have as a consequence of any such loss, damage or expense, if and
to the extent that the Fund has not been made whole for any such loss or damage.
If the Custodian makes the Fund whole for any such loss or damage, the Custodian
shall retain the ability to enforce its rights directly against such
Subcustodian, Securities System or other Person. Upon the Fund's election to
enforce any rights of the Custodian under this Section 5.4, the Fund shall
reasonably prosecute all actions and proceedings directly relating to the rights
of the Custodian in respect of the loss, damage or expense incurred by the Fund;
provided that, so long as the Fund has acknowledged in writing its obligation to
indemnify the Custodian under Section 5.3 hereof with respect to such claim, the
Fund shall retain the right to settle, compromise and/or terminate any action or
proceeding in
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respect of the loss, damage or expense incurred by the Fund without the
Custodian's consent and provided further, that if the Fund has not made an
acknowledgment of its obligation to indemnify, the Fund shall not settle,
compromise or terminate any such action or proceeding without the written
consent of the Custodian, which consent shall not be unreasonably withheld or
delayed. The Custodian agrees to cooperate with the Fund and take all actions
reasonably requested by the Fund in connection with the Fund's enforcement of
any rights of the Custodian. The Fund agrees to reimburse the Custodian for all
reasonable out-of-pocket expenses incurred by the Custodian on behalf of the
Fund in connection with the fulfillment of its obligations under this Section
5.4; provided, however, that such reimbursement shall not apply to expenses
occasioned by or resulting from the negligence, misfeasance or misconduct of the
Custodian.
ARTICLE VI - COMPENSATION
On behalf of each of its Portfolios, the Fund shall compensate the
Custodian in an amount, and at such times, as may be agreed upon in writing,
from time to time, by the Custodian and the Fund.
ARTICLE VII - TERMINATION
Section 7.1 Termination of Agreement as to the Fund. With respect to
the Fund, this Agreement shall continue in full force and effect until the first
to occur of: (a) termination by the Custodian by an instrument in writing
delivered or mailed to the Fund, such termination to take effect not sooner than
ninety (90) days after the date of such delivery; (b) termination by the Fund by
an instrument in writing delivered or mailed to the Custodian, such termination
to take effect not sooner than ninety (90) days after the date of such delivery;
or (c) termination by the Fund by written notice delivered to the Custodian,
based upon the Fund's determination that there is a reasonable basis to conclude
that the Custodian is insolvent or that the financial condition of the Custodian
is deteriorating in any material respect, in which case termination shall take
effect upon the Custodian's receipt of such notice or at such later time as the
Fund shall designate. In the event of termination pursuant to this Section 7.1
by the Fund, the Fund shall make payment of all accrued fees and unreimbursed
expenses within a reasonable time following termination and delivery of a
statement to the Fund setting forth such fees and expenses. The Fund shall
identify in any notice of termination a successor custodian or custodians to
which the cash, securities and other assets of its Portfolios shall, upon
termination of this Agreement, be delivered. In the event that no written notice
designating a successor custodian shall have been delivered to the Custodian on
or before the date when termination of this Agreement shall become effective,
the Custodian may deliver to a bank or trust company doing business in the
United States of its own selection, having an aggregate capital, surplus, and
undivided profits, as shown by its last published report, of not less than
$25,000,000, all securities and other assets of the Fund's Portfolios held by
the Custodian and all instruments held by the Custodian relative thereto and all
other property of the
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Fund's Portfolios held by the Custodian under this Agreement. Thereafter, such
bank or trust company shall be the successor of the Custodian under this
Agreement. In the event that securities and other assets of the Fund's
Portfolios remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to appoint a successor
custodian, the Custodian shall be entitled to compensation for its services in
accordance with the fee schedule most recently in effect, for such period as the
Custodian retains possession of such securities and other assets, and the
provisions of this Agreement relating to the duties and obligations of the
Custodian and the Fund shall remain in full force and effect. In the event of
the appointment of a successor custodian, it is agreed that the cash, securities
and other property owned by the Fund and held by the Custodian, any Subcustodian
or nominee shall be delivered to the successor custodian; and the Custodian
agrees to cooperate with the Fund in the execution of documents and performance
of other actions necessary or desirable in order to substitute the successor
custodian for the Custodian under this Agreement.
Section 7.2 Termination as to One or More Portfolios. This Agreement
may be terminated as to one or more of the Fund's Portfolios (but less than all
of its Portfolios) by delivery of an amended Appendix "A" deleting such
Portfolios pursuant to Section 9.6(b) hereof, in which case termination as to
such deleted Portfolios shall take effect ninety (90) days after the date of
such delivery. The execution and delivery of an amended Appendix "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 7.1 as to the identification of a successor
custodian and the delivery of cash, securities and other assets of the
Portfolio(s) so deleted, and shall not affect the obligations of the Custodian
and the Fund hereunder with respect to the other Portfolios set forth in
Appendix "A," as amended from time to time.
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ARTICLE VIII - DEFINED TERMS
The following terms are defined in the following sections:
Term Section
---- -------
Account...................................................... 2.22
ADRs......................................................... 2.6
Authorized Person(s)......................................... 3.2
Banking Institution.......................................... 2.12(a)
Bank Accounts................................................ 2.21
Distribution Account......................................... 2.16
Domestic Subcustodian........................................ 4.1
Foreign Subcustodian......................................... 4.2(a)
Fund......................................................... Preamble
Institutional Client......................................... 2.3
Interim Subcustodian......................................... 4.2(b)
Overdraft.................................................... 2.28
Overdraft Notice............................................. 2.28
Person....................................................... 5.1(b)
Portfolio.................................................... Preamble
Procedural Agreement......................................... 2.10
Proper Instructions.......................................... 3.1(a)
SEC.......................................................... 2.22
Securities System............................................ 2.22
Shares....................................................... 2.16
Special Instructions......................................... 3.1(b)
Subcustodian................................................. Article IV
1940 Act..................................................... Preamble
ARTICLE IX - MISCELLANEOUS
Section 9.1 Execution of Documents, Etc.
(a) Actions by the Fund. Upon request, the Fund shall execute
and deliver to the Custodian such proxies, powers of attorney or other
instruments as may be reasonable and necessary or desirable in connection with
the performance by the Custodian or any Subcustodian of their respective
obligations to the Fund under this Agreement or any applicable subcustodian
agreement with respect to the Fund.
(b) Actions by Custodian. Upon receipt of Proper Instructions,
the Custodian shall execute and deliver to the Fund or to such other parties as
the Fund may designate in such
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Proper Instructions, all such documents, instruments or agreements as may be
reasonable and necessary or desirable in order to effectuate any of the
transactions contemplated hereby.
Section 9.2 Representative Capacity; Nonrecourse Obligations. A COPY OF
THE DECLARATION OF TRUST OF THE FUND IS ON FILE WITH THE SECRETARY OF STATE OF
MASSACHUSETTS, AND NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT IS NOT EXECUTED ON
BEHALF OF THE TRUSTEES OF THE FUND AS INDIVIDUALS, AND THE OBLIGATIONS OF THIS
AGREEMENT ARE NOT BINDING UPON ANY OF THE TRUSTEES, OFFICERS, OR SHAREHOLDERS OF
THE FUND INDIVIDUALLY, BUT ARE BINDING ONLY UPON THE ASSETS AND PROPERTY OF THE
FUND'S PORTFOLIOS. THE CUSTODIAN AGREES THAT NO SHAREHOLDER, TRUSTEE OR OFFICER
OF THE FUND MAY BE HELD PERSONALLY LIABLE OR RESPONSIBLE FOR ANY OBLIGATIONS OF
THE FUND ARISING OUT OF THIS AGREEMENT.
Section 9.3 Several Obligations of the Fund and the Portfolios. WITH
RESPECT TO ANY OBLIGATIONS OF THE FUND ON BEHALF OF ANY OF ITS PORTFOLIOS
ARISING OUT OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE OBLIGATIONS
ARISING UNDER SECTIONS 2.28, 5.3, 5.4 and ARTICLE VI HEREOF, THE CUSTODIAN SHALL
LOOK FOR PAYMENT OR SATISFACTION OF ANY OBLIGATION SOLELY TO THE ASSETS AND
PROPERTY OF THE PORTFOLIO TO WHICH SUCH OBLIGATION RELATES AS THOUGH THE FUND
HAD SEPARATELY CONTRACTED WITH THE CUSTODIAN BY SEPARATE WRITTEN INSTRUMENT WITH
RESPECT TO EACH OF ITS PORTFOLIOS.
Section 9.4 Representations and Warranties.
(a) Representations and Warranties of the Fund. The Fund
hereby represents and warrants that each of the following shall be true, correct
and complete at all times during the term of this Agreement: (i) the Fund is
duly organized under the laws of its jurisdiction of organization and is
registered as an open-end management investment company under the 1940 Act; and
(ii) the execution, delivery and performance by the Fund of this Agreement are
(w) within its power, (x) have been duly authorized by all necessary action, and
(y) will not (A) contribute to or result in a breach of or default under or
conflict with any existing law, order, regulation or ruling of any governmental
or regulatory agency or authority, or (B) violate any provision of the Fund's
corporate charter, Declaration of Trust or bylaws, or any amendment thereof or
any provision of its most recent Prospectus or Statement of Additional
Information.
(b) Representations and Warranties of the Custodian. The
Custodian hereby represents and warrants to the Fund that each of the following
shall be true, correct and complete at all times during the term of this
Agreement: (i) the Custodian is duly organized under the laws of its
jurisdiction of organization and qualifies to act as a custodian to open-end
management investment companies under the provisions of the 1940 Act; and (ii)
the execution, delivery and
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