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EXHIBIT 99.B8.1
AGREEMENT BETWEEN
XXXXX BROTHERS XXXXXXXX & CO.
AND
FIRSTAR TRUST COMPANY
AND
THE STRONG FUNDS
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TABLE OF CONTENTS
1. Employment of Subcustodian......................................... 1
2. Powers and Duties of the Subcustodian
with respect to Property of the Funds
held by the Subcustodian........................................... 2
2.1 Safekeeping................................................... 2
2.2 Manner of Holding Securities.................................. 2
2.3 Registration.................................................. 2
2.4 Purchases..................................................... 3
2.5 Exchanges..................................................... 4
2.6 Sales of Securities........................................... 5
2.7 Depositary Receipts........................................... 6
2.8 Exercise of Rights; Tender Offers............................. 7
2.9 Stock Dividends, Rights, Etc.................................. 7
2.10 Options....................................................... 7
2.11 Borrowings.................................................... 8
2.12 Demand Deposit Bank Accounts.................................. 9
2.13 Interest Bearing Call or Time Deposits........................ 10
2.14 Futures Contracts............................................. 12
2.15 Foreign Exchange Transactions................................. 13
2.16 Stock Loans................................................... 14
2.17 Collections................................................... 14
2.18 Dividends, Distributions and Redemptions...................... 16
2.19 Proxies, Notices, Etc......................................... 16
2.20 Nondiscretionary Details...................................... 17
2.21 Bills......................................................... 17
2.22 Deposit of Fund Assets in Securities Systems.................. 18
2.23 Other Transfers............................................... 20
2.24 Investment Limitations........................................ 21
2.25 Subcustodian Advances......................................... 21
2.26 Restricted Securities......................................... 22
2.27 Proper Instructions........................................... 24
2.28 Segregated Account............................................ 26
2.29 Opinion of Fund's Independent Certified
Public Accountants............................................ 27
2.30 Reports by Independent Certified Public Accountants........... 27
2.31 Proceeds from Shares Sold..................................... 27
3. Powers and Duties of the Subcustodian with
Respect to the Appointment of Secondary Subcustodians.............. 28
4. Assistance by the Subcustodian as to Certain Matters............... 33
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5. Powers and Duties of the Subcustodian with
Respect to its Role as Recordkeeping Agent........................ 34
5.1 Records...................................................... 34
5.2 Accounts..................................................... 34
5.3 Access to Records............................................ 34
6. Standard of Cars and Related Matters.............................. 35
6.1 Liabilities of the Subcustodian with
Respect to Proper Instructions;
Evidence of Authority; Etc................................... 35
6.2 Liabilities of the Subcustodian with
Respect to Use of Securities Systems
and Foreign Depositories..................................... 36
6.3 Liabilities of the Subcustodian with
respect to Secondary Subcustodians........................... 37
6.4 Standard of Care; Liability;
Indemnification.............................................. 38
6.5 Mitigation by Subcustodian................................... 40
6.6 Expenses of the Custodian and the Funds...................... 40
6.7 Liability for Past Records................................... 41
6.8 Reimbursement of Disbursements, Etc.......................... 41
6.9 Notice of Litigation; Right to Prosecute, Etc................ 41
6.10 Security for Obligations to Subcustodian..................... 42
6.11 Appointment of Agents........................................ 45
6.12 Powers of Attorney........................................... 45
7. Compensation of the Subcustodian.................................. 46
8. Termination; Successor Custodian/Subcustodian;
Additional Funds.................................................. 46
9. Amendment; Waiver................................................. 48
10. Governing Law..................................................... 48
11. Notices........................................................... 48
12. Binding Effect.................................................... 49
13. Severability...................................................... 49
14. Counterparts...................................................... 49
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CUSTODIAN AGREEMENT
AGREEMENT made this 22nd day of December, 1993, between FIRSTAR TRUST
COMPANY (the "Custodian") and each of the Funds listed in Appendix B attached
hereto as said Exhibit may from time to time be revised (collectively, the
"Funds" individually, a "Fund") and Xxxxx Brothers Xxxxxxxx & Co, (the
"Subcustodian");
WITNESSETH: That in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Employment of Subcustodian: The Custodian and the Funds hereby employ
and appoint the Subcustodian as a subcustodian for the term and subject to the
provisions of this Agreement. The Subcustodian shall not be under any duty or
obligation to require a Fund to deliver to it any securities, funds or other
property owned by the Fund and shall have no responsibility or liability for or
on account of securities, funds or other property not so delivered. Each Fund
will deposit with the Subcustodian copies of its Declaration of Trust or
Certificate of Incorporation and By-Laws (or comparable documents) and all
amendments thereto, and copies of such votes and other proceedings of the
shareholders or Trustees or Directors of the Fund as may be necessary for or
convenient to the Subcustodian in the performance of its duties. The
Subcustodian shall maintain separate accounts and records for each of the Funds.
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2. Powers and Duties of the Subcustodian with respect to Property of
the Funds held by the Subcustodian: Except for securities, funds and other
property held by any Secondary Subcustodian appointed pursuant to the
provisions of Section 3 hereof or held by any Foreign Depository (as said term
is defined in Section 3) utilized by a Secondary Subcustodian, the Subcustodian
shall have and perform the following powers and duties with respect to
securities, funds and other property of the Funds:
2.1 Safekeeping - To keep safely the securities, funds and other
property of each Fund that have been delivered to the Subcustodian and, on
behalf of the Custodian and each Fund, from time to time to receive delivery of
securities and other property for safekeeping.
2.2 Manner of Holding Securities - To hold securities of each Fund (1) by
physical possession of the share certificates or other instruments
representing such securities in registered or bearer form, or (2) in book-entry
form by a Securities System (as said term is defined in Section 2.22) or a
Foreign Depository,
2.3 Registration - To hold registered securities of each Fund, with or
without any indication of fiduciary capacity, provided that securities are
held in an account of the Subcustodian containing only property of such Fund or
only property held as fiduciary or custodian for customers; provided that the
records of the Subcustodian shall indicate at all times the Funds or other
customers for which such securities and other
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property are held in such account and the respective interests therein.
2.4 Purchases - Upon receipt of proper instructions, as defined in
Section 2.27, insofar as funds are available for the purpose, to pay for and
receive securities purchased for the account of a Fund, payment being made only
upon receipt of the securities (1) by the Subcustodian, or (2) by a clearing
corporation of a national securities exchange of which the Subcustodian is a
member, or (3) by a Securities System or a Foreign Depository. However, (i) in
the case of repurchase agreements entered into by a Fund, the Subcustodian (as
well as an Agent) may release funds to a Securities System, a Foreign
Depository or a Secondary Subcustodian prior to the receipt of advice from the
Securities System, Foreign Depository or Secondary Subcustodian that the
securities underlying such repurchase agreement have been transferred by
book-entry into the Account (as defined in Section 2.22) of the Subcustodian
(or such Agent) maintained with such Securities System or to the Foreign
Depository or Secondary Subcustodian, so long as such payment instructions to
the Securities System, Foreign Depository or Secondary Subcustodian include a
requirement that delivery is only against payment for securities, (ii) in the
case of foreign exchange contracts, options, time deposits, call account
deposits, currency deposits, and other deposits, contracts or options pursuant
to Sections 2.10, 2.72, 2.13, 2.14 and 2.15, the Subcustodian may make payment
therefor without receiving an
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instrument evidencing said deposits, contracts or options so long as such
payment instructions detail specific deposits, contracts or options to be
acquired, and (iii) in the case of securities as to which payment for the
securities and receipt of the instrument evidencing the securities ordinarily
take place in different locations or through separate parties, the Subcustodian
may make payment for such securities prior to delivery thereof only if such
payment is in accordance with the terms of the instrument representing the
security or the generally accepted practice of Institutional Clients (as
hereinafter defined) in the country or countries in which the settlement
occurs or the terms of the instrument representing the security, but in all
events subject to the standard of care set forth in Section 6 hereof.
"Institutional Clients" shall mean major commercial banks, corporations,
insurance companies, or substantially similar institutions, which, as a
substantial part of their business operations, purchase or sell securities and
make use of custodial services.
2.5 Exchanges - Upon receipt of proper instructions, to exchange
securities held by it for the account of a Fund 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 to deposit any such securities in accordance
with the terms of any reorganization or protective plan. Without proper
instructions, the Subcustodian may
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surrender securities in temporary form for definitive securities, may surrender
securities for transfer into an account as permitted in Section 2.3, and may
surrender securities for a different number of certificates or instruments
representing the same number of shares or same principal amount of indebtedness,
provided the securities to be issued are to be delivered to the Subcustodian.
2.6 Sales of Securities - Upon receipt of proper instructions, to make
delivery of securities which have been sold for the account of a Fund, but only
against payment therefor (1) in cash, by a certified check, bank cashier's
check, bank credit, or bank wire transfer, or (2) by credit to the account of
the Subcustodian with a clearing corporation of a national securities exchange
of which the Subcustodian is a member, or (3) by credit to the account of the
Subcustodian or an Agent of the Subcustodian with a Securities System or a
Foreign Depository. Notwithstanding the foregoing: (i) in the case of delivery
of physical certificates or instruments representing securities, the
Subcustodian may make delivery to the broker buying the securities, against
receipt therefor, for examination in accordance with "street delivery" custom,
provided that the payment therefor is to be made to the Subcustodian (which
payment may be made by a broker's check) or that such securities are to be
returned to the Subcustodian, and (ii) in the case of securities referred to in
clause (iii) of Section 2.4, the Subcustodian may make settlement, including
with respect to the
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form of payment, in accordance with the terms of the instrument representing
the security or the generally accepted trade practice of Institutional Clients
in the country or countries in which the settlement occurs, but in all events
subject to the standard of care set forth in Section 6 hereof, provided that
the Subcustodian shall have taken all reasonable steps to ensure prompt
collection of the payment for, or return of, such securities by the broker or
its clearing agent and provided further that the Subcustodian shall not be
responsible for the selection of a broker or clearing agent that fails or is
unable to perform.
2.7 Depositary Receipts - Upon receipt of proper instructions, to
instruct a Secondary Subcustodian or an Agent to surrender securities to the
depositary used by an issuer of American Depositary Receipts or International
Depositary Receipts (hereinafter collectively referred to as "ADRs") for such
securities against a written receipt therefor adequately describing such
securities and written evidence satisfactory to the Secondary Subcustodians or
Agent that the depositary has acknowledged receipt of instructions to issue
with respect to such securities ADRs in the name of the Subcustodian, or a
nominee of the Subcustodian, for delivery to the Subcustodian in Boston,
Massachusetts, or at such other place as the Subcustodian may from time to time
designate.
Upon receipt of proper instructions, to surrender ADRs to the issuer
thereof against a written receipt therefor adequately
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describing the ADRs surrendered and written evidence satisfactory to the
Subcustodian that the issuer of the ADRs has acknowledged receipt of
instructions to cause its depositary to deliver the securities underlying such
ADRs to a Secondary Subcustodian or an Agent.
2.8 Exercise of Rights; Tender Offers - Upon timely receipt of proper
instructions, to promptly deliver to the issuer or trustee thereof, or to the
agent of either, warrants, puts, calls, rights or similar securities for the
purpose of being exercised or sold, provided that the new securities and cash,
if any, acquired by such action are to be delivered to the Subcustodian, and,
upon receipt of proper instructions, to promptly deposit securities upon
invitations for tenders of securities, provided that the consideration is to be
paid or delivered or the tendered securities are to be returned to the
Subcustodian.
2.9 Stock Dividends, Rights, Etc. - To receive and collect all stock
dividends, rights and other items of like nature; and to deal with the same
pursuant to proper instructions relative thereto.
2.10 Options - Upon receipt of proper instructions or upon receipt of
instructions given pursuant to any agreement relating to an option or as
otherwise provided in any such agreement to (i) receive and retain, to the
extent provided to the Subcustodian, confirmations or other documents evidencing
the purchase, sale or writing of an option of any type on or in
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respect of a security, securities index or similar form of property by a Fund:
(ii) deposit and maintain in a segregated account, either physically or by
book-entry in a Securities System or Foreign Depository or with a broker, dealer
or other entity, securities, funds or other property in connection with options
transactions entered into by a Fund; (iii) transfer securities, funds or other
property to a Securities System, Foreign Depository, broker, dealer or other
entity, as margin (including variation margin) or other security for a Fund's
obligations in respect of any option; and (iv) pay, release and/or transfer
such securities, funds or other property in accordance with a notice or other
communication evidencing the expiration, termination or exercise of or default
under any such option furnished by The Options Clearing Corporation, by the
securities or options exchange on which such option is traded or by such
broker, dealer or other entity as may be responsible for handling such options
transaction or have authority to give such notice or communication. The
Subcustodian shall not be responsible for the sufficiency of property held in
any segregated account established in compliance with applicable margin
maintenance requirements or the performance of the other terms of any agreement
relating to an option. Notwithstanding the foregoing, options on futures
contracts the options to purchase and sell foreign currencies shall be governed
by Sections 2.14 and 2.15.
2.11 Borrowings - Upon receipt of proper instructions, to
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deliver securities of a Fund to lenders or their agents as collateral for
borrowings effected by the Fund, provided that such borrowed money is payable
by the lender to or upon the Subcustodian's order as Subcustodian for the Fund.
2.12 Demand Deposit Bank Accounts - To open and operate an account or
accounts in the name of each Fund, subject only to draft or order by the
Custodian or a Fund, and to hold in such account or accounts as a deposit
accepted on the Subcustodian's books cash, including foreign currency, received
for the account of such Fund other than cash held as deposits with Banking
Institutions in accordance with the following paragraph. The responsibilities
of the Subcustodian for cash, including foreign currency, of a Fund accepted on
the Subcustodian's books as a deposit shall be that of a U.S. bank for a
similar deposit.
If and when authorized by proper instructions, the Subcustodian may open
and operate an additional account(s) in such other banks or trust companies as
may be designated by the Custodian or a Fund in such instructions (any such
bank or trust company so designated by the Custodian and a Fund being referred
to hereafter as a "Banking Institution"), and may deposit cash, including
foreign currency, of such Fund in such account or accounts, provided that such
account(s) (hereinafter collectively referred to as "demand deposit bank
accounts") shall be in the name of the Subcustodian or a nominee of the
Subcustodian for the account of such Fund or for the account of the
Subcustodian's customers generally and shall be subject only to the
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Subcustodian's draft or order; provided that any such demand deposit bank
account shall contain only property held by the Subcustodian as a fiduciary or
custodian for the Fund and/or other customers and that the records of the
Subcustodian shall indicate at all times such Fund and/or other customers for
which such funds are held in such account and the respective interests therein.
Such demand deposit accounts may be opened with Banking Institutions in the
United States and in other countries and may be denominated in either U.S.
Dollars or other currencies as the Custodian or a Fund may determine. The
records for each such account will be maintained by the Subcustodian but the
deposits in any such account shall not constitute a deposit liability of the
Subcustodian. All such deposits, including with Secondary Subcustodians, shall
be deemed to be portfolio securities of a Fund and accordingly the
responsibility of the Subcustodian therefor shall be the same as and no greater
than the Subcustodian's responsibility in respect of other portfolio securities
of the Fund. The authorization by Custodian or a Fund to appoint a Secondary
Subcustodian as such shall also constitute a proper instruction to open a
demand deposit bank account subject to the provisions of this paragraph with
such Secondary Subcustodian.
2.13 Interest Bearing Call or Time Deposits - To place interest bearing
fixed term and call deposits with such banks and in such amounts as the
Custodian or a Fund may authorize pursuant to proper instructions. Such
deposits may be placed with the
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Subcustodian or with Secondary Subcustodians or other Banking Institutions as
the Custodian or a Fund may determine, in the name of the Subcustodian or a
nominee of the Subcustodian for the account of the Fund or the account of the
Subcustodian's customers generally and subject only to the Subcustodian's draft
or order; provided that any such deposit shall be held in an account containing
only property held by the Subcustodian as a fiduciary or custodian for the Fund
and/or other customers and that the records of the Subcustodian shall indicate
at all times such Fund and/or other customers for which such funds are held in
such account and the respective interests therein. Deposits may be denominated
in U.S. Dollars or other currencies and need not be evidenced by the issuance
or delivery of a certificate to the Subcustodian, provided that the
Subcustodian shall include in its records with respect to the assets of a Fund
appropriate notation as to the amount and currency of each such deposit, the
accepting Banking Institution and other appropriate details, and shall retain
such forms of advice or receipt evidencing the deposit, if any, as may be
forwarded to the Subcustodian by the Banking Institution. Funds, other than
those accepted on the Subcustodian's books as a deposit, but including those
placed with Secondary Subcustodians, shall be deemed portfolio securities of a
Fund and the responsibilities of the Subcustodian therefor shall be the same as
those for demand deposit bank accounts placed with other banks, as described in
the second paragraph of Section 2.12 of this Agreement. The responsibility
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of the Subcustodian for funds accepted on the Subcustodian's books as a deposit
shall be that of a U. S. bank for a similar deposit.
2.14 Futures Contracts - Upon receipt of proper instructions or upon
receipt of instructions given pursuant to any agreement relating to a futures
contract or an option thereon or as otherwise provided in any such agreement,
to (i) receive and retain, to the extent provided to the Subcustodian,
confirmations or other documents evidencing the purchase or sale of a futures
contract or an option on a futures contract by a Fund; (ii) deposit and
maintain in a segregated account, either physically or by book-entry in a
Securities System or Foreign Depository, for the benefit of any futures
commission merchant, or pay to such futures commission merchant, securities,
cash or other property designated by the Custodian or a Fund as initial,
maintenance or variation "margin" deposits intended to secure the Fund's
performance of its obligations under any futures contract purchased or sold or
any option on a futures contract written, purchased or sold by the Fund, in
accordance with the provisions of any agreement relating thereto or the rules
of the Commodity Futures Trading Commission and/or any contract market or any
similar organization on which such contract or option is traded; and (iii) pay,
release and/or transfer securities, cash or other property into or out of such
margin accounts only in accordance with any such agreement or rules. The
Subcustodian shall not be responsible for the sufficiency of property held in
any
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segregated account established in compliance with applicable margin maintenance
requirements or the performance of the other terms of any agreement relating to
a futures contract or an option thereon.
2.15 Foreign Exchange Transactions - Pursuant to proper instructions, to
settle foreign exchange contracts or options to purchase and sell foreign
currencies for spot and future delivery on behalf and for the account of a Fund
with such currency brokers or Banking Institutions, including Secondary
Subcustodians, as the Custodian or the Fund may direct pursuant to proper
instructions. The Subcustodian 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 as the Subcustodian may receive and the maintenance of
proper records as set forth in Section 5.1. In connection with such
transactions, the Subcustodian is authorized to make free outgoing payments of
cash in the form of U.S. Dollars or foreign currency without receiving
confirmation of a foreign exchange contract or option or confirmation that the
countervalue currency completing the foreign exchange contract has been
delivered or received or that the option has been delivered or received. Each
Fund accepts full responsibility for its use of third-party foreign exchange
dealers and for execution of said foreign exchange contracts and options and
understands
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that the Fund shall be responsible for any and all costs and interest charges
which may be incurred by the Fund or the Subcustodian as a result of the
failure or delay of third parties to deliver foreign exchange.
Alternatively, such transactions may be undertaken by the Subcustodian as
principal, if instructed by a Fund.
Foreign exchange contracts and options, other than those executed with the
Subcustodian as principal, but including those executed with Secondary
Subcustodians, shall be deemed to be portfolio securities of a Fund and the
responsibility of the Subcustodian therefor shall be the same as and no greater
than the Subcustodian's responsibility in respect of other portfolio securities
of the Fund. The responsibility of the Subcustodian with respect to foreign
exchange contracts and options executed with the Subcustodian as principal
shall be that of a U. S. bank with respect to a similar contract or option.
2.16 Stock Loans - Upon receipt of proper instructions, to deliver
securities of a Fund, in connection with loans of securities by the Fund, to
the borrower thereof prior to receipt of the collateral, if any, for such
borrowing, provided that for stock loans secured by cash collateral the
Subcustodian's instructions to any Securities System holding such securities
require that the Securities System may deliver the securities to the borrower
thereof only upon receipt of the collateral for such borrowing.
2.17 Collections - (i) To collect and receive all income.
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payments of principal and other payments with respect to the securities held
hereunder, and in connection therewith to deliver the certificates or other
instruments representing the securities to the issuer thereof or its agent when
securities are called, redeemed, retired or otherwise become payable; provided,
that the payment is to be made in such form and manner and at such time, which
may be after delivery by the Subcustodian of the instrument representing the
security, as is in accordance with the terms of the instrument representing the
security, or such proper instructions as the Subcustodian may receive, or
governmental regulations, the rules of Securities Systems, Foreign Depositories
or other U.S. or foreign securities depositories and clearing agencies or, with
respect to securities referred to in clause (iii) of Section 2.4, in accordance
with the terms of the instrument representing the security or the generally
accepted practice of Institutional Clients in the country or countries in which
the settlement occurs, but in all events subject to the standard of care set
forth in Section 6 hereof, provided that the Subcustodian shall have taken all
reasonable steps to ensure prompt collection of the payment for, or return of,
such securities by the broker or its clearing agent and provided further that
the Subcustodian shall not be responsible for the selection of a broker or
clearing agent that fails or is unable to perform; (ii) to execute ownership
and other certificates and affidavits for all federal and state tax purposes in
connection with receipt of income, principal or other payments with respect
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to securities of a Fund or in connection with transfer of securities; and (iii)
pursuant to proper instructions to take such other actions with respect to
collection or receipt of funds or transfer of securities which involve an
investment decision.
2.18 Dividends, Distributions and Redemptions - Upon receipt of proper
instructions from the Custodian or a Fund, or upon receipt of instructions from
the Fund's shareholder servicing agent or agent with comparable duties (the
"Shareholder Servicing Agent") (given by such person or persons and in such
manner on behalf of the Shareholder Servicing Agent as the Custodian or the
Fund shall have authorized), the Subcustodian shall release securities, funds
or other property to the Shareholder Servicing Agent or otherwise apply
securities, funds or other property, insofar as available, for the payment of
dividends or other distributions to Fund shareholders. Upon receipt of proper
instructions from the Custodian or the Fund, or upon receipt of instructions
from the Shareholder Servicing Agent (given by such person or persons and in
such manner on behalf of the Shareholder Servicing Agent as the Custodian or
the Fund shall have authorized), the Subcustodian shall release securities,
funds or other property, insofar as available, to the Shareholder Servicing
Agent or as such agent shall otherwise instruct for payment to Fund
shareholders who have delivered to such Agent a request for repurchase or
redemption of their shares of the Fund.
2.19 Proxies, Notices, Etc. - Promptly to deliver or mail
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to the Custodian or a Fund all forms of proxies and all notices of meetings and
any other notices or announcements affecting or relating to securities owned by
the Fund that are received by the Subcustodian, and upon receipt of proper
instructions, to promptly execute and deliver or cause its nominee to promptly
execute and deliver such proxies or other authorizations as may be required.
Neither the Subcustodian nor its nominee shall vote upon any of such securities
or execute any proxy to vote thereon or give any consent or take any other
action with respect thereto (except as otherwise herein provided) unless
ordered to do so by proper instructions.
2.20 Nondiscretionary Details - Without the necessity of express
authorization from the Custodian or a Fund, (1) to attend to all
nondiscretionary details in connection with the sale, exchange, substitution,
purchase, transfer or other dealings with securities, funds or other property of
the Fund held by the Subcustodian except as otherwise directed from time to
time by the Custodian or the Directors or Trustees of the Fund, and (2) to make
payments to itself or others for minor expenses or handling securities or other
similar items relating to the Subcustodian's duties under this Agreement,
provided that all such payments shall be accounted for to a Fund.
2.21 Bills - Upon receipt of proper instructions, to pay or cause to be
paid, insofar as funds are available for the purpose, bills, statements and
other obligations of a Fund (including but not limited to interest charges,
taxes, management
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fees, compensation to Fund officers and employees, and other operating expenses
of a Fund).
2.22 Deposit of Fund Property in Securities Systems - The Subcustodian may
deposit and/or maintain securities owned by a Fund in (i) The Depository Trust
Company, (ii) the Participants Trust Company, (iii) any book-entry system as
provided in Subpart O of Treasury Circular Xx. 000, 00 XXX 000, Xxxxxxx X of 31
CFR Part 350, or the book-entry regulations of federal agencies substantially
in the form of Subpart O, or (iv) any other domestic clearing agency registered
with the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934 which acts as a securities depository and whose use the
Custodian or the Fund has previously approved in writing (each of the foregoing
being referred to in this Agreement as a "Securities System"). Utilization of a
Securities System shall be in accordance with applicable Federal Reserve Board
and Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
1) The Subcustodian may deposit and/or maintain Fund securities, either
directly or through one or more Agents appointed by the Subcustodian (provided
that any such agent shall be qualified to act as a custodian of a Fund pursuant
to the Investment Company Act of 1940 and the rules and regulations
thereunder), in a Securities System provided that such securities are
represented in an account ("Account") of the Subcustodian or such Agent in the
Securities System which shall not include any
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assets of the Subcustodian or Agent other than property held as a fiduciary,
custodian, or otherwise for customers;
2) The records of the Subcustodian with respect to securities of a Fund
which are maintained in a Securities System shall identify by book-entry those
securities belonging to the Fund;
3) The Subcustodian shall pay for securities purchased for the account of
a Fund upon (i) receipt of advice from the Securities System that such
securities have been transferred to the Account, and (ii) the making of an entry
on the records of the Subcustodian to reflect such payment and transfer for the
account of the Fund. The Subcustodian shall transfer securities sold for the
account of a Fund upon (i) receipt of advice from the Securities System that
payment for such securities has been transferred to the Account, and (ii) the
making of an entry on the records of the Subcustodian to reflect such transfer
and payment for the account of the Fund. Copies of all advices from the
Securities System of transfers of securities for the account of a Fund shall
identify the Fund, be maintained for a Fund by the Subcustodian or an Agent as
referred to above, and be provided to the Custodian or the Fund at its request.
The Subcustodian shall furnish the Custodian or a Fund confirmation of each
transfer to or from the account of the Fund in the form of a written advice or
notice and shall furnish to the Custodian or the Fund copies of daily
transaction sheets reflecting each day's transactions in the Securities System
for the account of the Custodian or the Fund on the next business day;
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23
4) The Subcustodian shall provide the Custodian or a Fund with any
report obtained by the Subcustodian or any Agent as referred to above on the
Securities System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the Securities System; and
the Subcustodian and such Agents shall send to the Custodian or the Fund such
reports on their own systems of internal accounting control as the Custodian or
the Fund may reasonably request from time to time; and
5) At the written request of the Custodian or the Fund, the Subcustodian
will terminate the use of any such Securities System on behalf of the Fund as
promptly as practicable.
2.23 Other Transfers - Upon receipt of proper instructions, to deliver
securities, funds and other property of a Fund to a Secondary Subcustodian or
another custodian for the Fund as necessary to effect transactions authorized by
proper instructions an upon receipt of proper instructions, to deliver
securities, funds and other property of a Fund to a Secondary Subcustodian or
another custodian of the Fund; and, upon receipt of proper instructions, to make
such other disposition of securities, funds or other property of a Fund in a
manner other than or for purposes other than as enumerated elsewhere in this
Agreement, provided that the instructions relating to such disposition shall
state the amount of securities to be delivered and the name of the person or
persons to whom delivery is to be made.
- 20 -
24
2.24 Investment Limitations - In performing its duties generally, and more
particularly in connection with the purchase, sale and exchange of securities
made by or for a Fund, the Subcustodian may assume unless and until notified in
writing to the contrary that proper instructions received by it are not in
conflict with or in any way contrary to any provisions of the Fund's
Declaration of Trust or Certificate of Incorporation or By-Laws (or comparable
documents) or votes or proceedings of the shareholders or Trustees or Directors
of the Fund. The Subcustodian shall in no event be liable to the Custodian or
any Fund and shall be indemnified by the Custodian and the Fund for any
violation which occurs in the course of carrying out instructions given by the
Custodian or the Fund of any investment limitations to which the Fund is
subject or other limitations with respect to the Fund's powers to make
expenditures, encumber securities, borrow or take similar actions affecting the
Fund.
2.25 Subcustodian Advances - In the event that the Subcustodian is
directed by proper instructions to make any payment or transfer of funds on
behalf of a Fund for which there would be, at the close of business on the date
of such payment or transfer, insufficient funds held by the Subcustodian on
behalf of the Fund, the Subcustodian may, in its discretion without further
proper instructions, provide an advance ("Advance") to the Fund in an amount
sufficient to allow the completion of the transaction by reason of which such
payment or transfer of funds is to be made. In addition, in the event the
Subcustodian is
- 21 -
25
directed by proper instructions to make any payment or transfer of funds on
behalf of a Fund as to which it is subsequently determined that the Fund has
overdrawn its cash account with the Subcustodian as of the close of business on
the date of such payment or transfer, said overdraft shall constitute an
Advance. Any Advance shall be payable by the Fund or the Custodian on demand by
Subcustodian, unless otherwise agreed by the Custodian or the Fund and the
Subcustodian, and shall accrue interest from the date of the Advance to the date
of payment by the Fund or the Custodian at a rate agreed upon in writing from
time to time by the Subcustodian and the Custodian or the Fund. It is understood
that any transaction in respect of which the Subcustodian shall have made an
Advance, including but not limited to a foreign exchange contract or transaction
in respect of which the Subcustodian is not acting as a principal, is for the
account of and at the risk of a Fund, and not, by reason of such Advance, deemed
to be transaction undertaken by the Subcustodian for its own account and risk.
The Subcustodian and each Fund acknowledge that the purpose of Advances is to
finance temporarily the purchase or sale of securities for prompt delivery in
accordance with the settlement terms of such transactions or to meet emergency
expenses not reasonably foreseeable by the Fund. The Subcustodian shall promptly
notify a Fund of any Advance. Such notification shall be sent by facsimile
transmission or in such other manner as such Fund and the Subcustodian may
agree.
2.26 Restricted Securities - In the case of a "restricted
- 22 -
26
security", the Custodian or the Fund shall have the responsibility to provide
to or obtain for the Subcustodian, the issuer of the security or other
appropriate third party any necessary documentation, including without
limitation, legal opinions or consents, and to take any necessary actions
required in connection with the registration of restricted securities in the
manner provided in Section 2.3 upon acquisition thereof by the Fund or required
in connection with any sale or other disposition thereof by the Fund. Upon
acquisition and until so registered, the Subcustodian shall use its best
efforts to service such restricted securities (including, without limitation,
the receipt and collection of cash and stock dividends, rights and other items
of like nature); to exercise in a timely manner any right in respect of any
restricted security; and to take any action in a timely manner in respect of
any other type of corporate action relating to a restricted security. The
Subcustodian shall not have responsibility for the inability of a Fund to sell
or otherwise transfer in a timely manner any restricted security in the absence
of any such documentation or action to be provided, obtained or taken by the
Custodian or the Fund or for the Subcustodian's inability to take in a timely
manner any of the actions referred to in the preceding sentence provided that
such inability of the Custodian or the Fund to sell or otherwise transfer
restricted securities pursuant to this Section 2.26 or the Subcustodian's
inability to take the aforesaid actions is not caused by the negligence,
misfeasance or
- 23 -
27
misconduct of the Subcustodian or its nominees. At such time as the
Subcustodian shall receive any restricted security, regardless of when it shall
be registered as aforesaid, the Custodian or the Fund shall also deliver to the
Subcustodian a term sheet summarizing those rights, restrictions or other
matters of which the Subcustodian should have knowledge, such as exercise
periods, expiration dates and payment dates, in order to assist the
Subcustodian in servicing such securities. As used herein, the term "restricted
security" shall mean a security which is subject to restrictions on transfer,
whether by reason of contractual restrictions or federal, state or foreign
securities or similar laws, or a security which has special rights or
contractual features which do not apply to publicly-traded shares of, or
comparable interests representing, such security.
2.27 Proper Instructions - Proper instructions shall mean a tested telex
or a swift message from the Custodian or a Fund or a written request,
direction, instruction or certification signed or initialled on behalf of the
Custodian or the Fund by two or more persons as the Custodian or the Board of
Trustees or Directors of the Fund shall have from time to time authorized,
provided, however, that no such instructions directing the delivery of
securities or the payment of funds to an authorized signatory of the Custodian
or the Fund shall be signed by such person. Those persons authorized to give
proper instructions may be identified by the Custodian or the Fund's Board of
Trustees or
- 24 -
28
Directors by name, title or position and will include at least one officer
empowered by the Custodian or the Board to name other individuals who are
authorized to give proper instructions on behalf of the Custodian or the Fund.
Telephonic or other oral instructions or instructions given by facsimile
transmission may be given by any one of the above persons and will be
considered proper instructions if the Subcustodian reasonably believes them to
have been given by a person authorized to give such instructions with respect
to the transaction involved. Oral instructions will be confirmed by tested
telex or in writing in the manner set forth above but the lack of such
confirmation shall in no way affect any action taken by the Subcustodian in
reasonable reliance upon such oral instructions. The Custodian and each Fund
authorizes the Subcustodian to tape record any and all telephonic or other oral
instructions given to the Subcustodian by or on behalf of the Custodian or the
Fund (including any of their respective officers, Directors, Trustees,
employees or agents or any investment manager or adviser of the Fund or person
or entity with similar responsibilities which is authorized to give proper
instructions on behalf of the Custodian or the Fund to the Subcustodian).
Proper instructions may relate to specific transactions or to types or classes
of transactions, and may be in the form of standing instructions.
Proper instructions may include communications effected directly between
electromechanical or electronic devices or systems, in addition to tested
telex, provided that the Custodian
- 25 -
29
or the Fund and the Subcustodian agree to the use of such device or system.
2.28 Segregated Account - The Subcustodian shall upon receipt of proper
instructions establish and maintain on its books a segregated account or
accounts for and on behalf of each Fund, into which account or accounts may be
transferred cash and/or securities of the Fund, including securities maintained
by the Subcustodian pursuant to Section 2.22 hereof, (i) in accordance with the
provisions of any agreement among the Fund, the Subcustodian and/or Custodian
and a broker-dealer registered under the Securities Exchange Act of 1934 and a
member of the National Association of Securities Dealers, Inc. (or any futures
commission merchant registered under the Commodity Exchange Act) relating to
compliance with the rules of the Options Clearing Corporation and of any
registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Fund, (ii) for purposes of segregating cash or 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, (iii) for
the purposes of compliance by the Fund with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release or releases
of the Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment
- 26 -
30
companies, or (iv) as mutually agreed from time to time between the Custodian
or the Fund and the Subcustodian.
2.29 Opinion of Fund's Independent Certified Public Accountants - The
Subcustodian shall take all reasonable action as a Fund may request to obtain
from year to year favorable opinions from the Fund's independent certified
public accountants with respect to the Subcustodian's activities hereunder in
connection with the preparation of the Fund's Securities and Exchange
Commission registration statement and all amendments thereto and the Fund's
Form N-SAR or other periodic reports to the Securities and Exchange Commission
and with respect to any other requirements of the Securities and Exchange
Commission.
2.30 Reports by Independent Certified Public Accountants - At the request
of a Fund, the Subcustodian shall deliver to the Fund a written report prepared
by the Subcustodian's independent certified public accountants with respect to
the services provided by the Subcustodian under this Agreement, including,
without limitation, the Subcustodian's accounting system, internal accounting
control and procedures for safeguarding cash, securities and other property,
including cash, securities and other property deposited and/or maintained in a
Securities System or with a Secondary Subcustodian. Such report shall be
sufficient scope and in sufficient detail as may reasonably be required by a
Fund and as may reasonably be obtained by the Subcustodian.
2.31 Proceeds from Shares Sold - The Subcustodian shall
- 27 -
31
receive funds representing cash payments received for Fund shares issued or
sold from time to time by a Fund, and shall promptly credit such funds to the
account of the applicable Fund. The Subcustodian shall promptly notify such
Fund of the Subcustodian's receipt of cash in payment for shares issued by the
Fund by facsimile transmission or in such other manner as the Fund and
Subcustodian may agree in writing. Upon receipt of proper instructions, the
Subcustodian shall: (a) deliver all federal funds received by the Subcustodian
in payment for Fund shares in payment for such investments and at the time
agreed upon by the Subcustodian and the relevant Fund; and (b) make federal
funds available to such Fund as of specified times agreed upon from time to
time by the Fund and the Subcustodian, in the amount of checks received in
payment for Fund shares that are deposited in the account of the Fund.
3. Powers and Duties of the Subcustodian with Respect to the Appointment
of Secondary Subcustodians: With regard to the selection of a Secondary
Subcustodian or Foreign Depository pursuant to this Section 3, the Subcustodian
may, at any time and from time to time; appoint, subject to approval of the
relevant Fund or Funds: (i) any bank, trust company or other entity meeting the
requirements of an "eligible foreign custodian" under Section 17(f) of the
Investment Company Act of 1940 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 Investment Company Act of 1940
- 28 -
32
meeting the requirements of a custodian under Section 17(f) of the Investment
Company Act of 1940 and the rules and regulations thereunder. The Custodian and
each Fund hereby authorize and instruct the Subcustodian to hold securities,
funds and other property of the Fund which are maintained outside the United
States at subcustodians appointed pursuant to the provisions of this Section 3
(a "Secondary Subcustodian"). The Custodian and each Fund shall approve in
writing (1) the appointment of each Secondary Subcustodian and the subcustodian
agreement to be entered into between such Secondary Subcustodian and the
Subcustodian, and (2) if the Secondary Subcustodians is organized under the
laws of a country other than the United States, the country or countries in
which the Secondary Subcustodians is authorized to hold securities, funds and
other property of the Fund. The Custodian and each Fund hereby further
authorize and instruct the Subcustodian and any Secondary Subcustodian to
utilize such securities depositories located outside the United States which
are approved in writing by the Custodian and the Fund to hold securities, funds
and other property of the Fund (a "Foreign Depository"). Upon such approval by
the Custodian and the Fund, the Subcustodian is authorized on behalf of the
Custodian and the Fund to notify each Secondary Subcustodian of its appointment
as such.
Those Secondary Subcustodians, and the countries where and the Foreign
Depositories through which they or the Subcustodian may hold securities, funds
and other property of a Fund which the
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33
Custodian and each Fund has approved to date are set forth on Appendix A hereto.
The Custodian shall monitor the performance and financial condition of the
Subcustodians, Secondary Subcustodians and Foreign Depositories to the extent
practicable and shall promptly report to each Fund any material adverse facts
of which it becomes aware. Upon request of a Fund, the Custodian shall deliver
to the Fund a certificate stating: (i) the identity of each Subcustodian or
Secondary Subcustodian then acting on behalf of the Custodian, as identified in
Appendix A and as such Appendix may be amended from time to time; (ii) the
countries in which and the securities depositories and clearing agents through
which each such Subcustodian or Secondary Subcustodian is then holding
securities, funds and other property of the Fund; and (iii) such other
information as may be requested by the Fund and as the Custodian shall be
reasonably able to obtain to evidence compliance with Rule 17f-5 under the
Investment Company Act of 1940. Upon approval by a Fund in accordance with this
Section 3, Appendix A shall be amended from time to time as Secondary
Subcustodians, and/or countries and/or Foreign Depositories are changed, added
or deleted. The Custodian or the Fund shall be responsible for informing the
Subcustodian sufficiently in advance of a proposed investment which is to be
held in a country not listed on Appendix A, in order that there shall be
sufficient time for the Custodian and the Fund to give the approval required by
the preceding paragraph and for the Subcustodian to put the appropriate
arrangements in
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34
place with such Secondary Subcustodian, including negotiation of a subcustodian
agreement and submission of such subcustodian agreement to the Custodian and the
Fund for approval.
If a Fund shall have invested in a security to be held in a country before
the foregoing procedures have been completed, such security shall be held by
such agent as the Subcustodian may appoint. In any event, the subcustodian shall
be liable to the Custodian and the Fund for the actions of such agent if and
only to the extent the Subcustodian shall have recovered from such agent for
any damages caused the Custodian and/or the Fund by such agent. At the request
of the Custodian or a Fund, the Subcustodian agrees to remove any securities
held on behalf of the Fund by such agent, if practical, to an approved
Secondary Subcustodian. Under such circumstances the Subcustodian will collect
income and respond to corporate actions on a best efforts basis.
With respect to securities and funds held by a Secondary Subcustodian,
either directly or indirectly (including by a Foreign Depository or foreign
clearing agency) or by a Foreign Depository or foreign clearing agency utilized
by the Subcustodian, notwithstanding any provision of this Agreement to the
contrary, payment for securities purchased and delivery of securities sold may
be made prior to receipt of the securities or payment, respectively, and
securities or payment may be received in a form, in accordance with governmental
regulations, rules of Foreign Depositories and foreign clearing agencies, or
generally accepted trade practice in the applicable local market.
- 31 -
35
In the event that any Secondary Subcustodian appointed pursuant to the
provisions of this Section 3 fails to perform any of its obligations under the
terms and conditions of the applicable subcustodian agreement, the Subcustodian
shall use its best efforts to cause such Secondary Subcustodian to perform such
obligations. In the event that the Subcustodian is unable to cause such
Secondary Subcustodian to perform fully its obligations thereunder, the
Subcustodian shall forthwith upon the Custodian or a Fund's request terminate
such Secondary Subcustodian as a Secondary Subcustodian for such Fund in
accordance with the termination provisions under the applicable subcustodian
agreement and, if necessary or desirable, appoint another subcustodian in
accordance with the provisions of this Section 3. At the election of the
Custodian or a Fund, it shall have the right to enforce, to the extent permitted
by the subcustodian agreement and applicable law, the Subcustodian's rights
against any such Secondary Subcustodian for loss, damage or expense caused the
Custodian or the Fund by such Secondary Subcustodian. The Subcustodian agrees
to cooperate with the Fund and or the Custodian, as the case may be, and take
all actions reasonably requested by the Fund or the Custodian, at the Fund's
expense, in connection with the enforcement of any rights of the Subcustodian by
the Fund or the Custodian.
The Subcustodian will not amend any subcustodian agreement or agree to
change or permit any changes thereunder in respect of a Fund except upon the
prior written approval of the Custodian and the Fund.
- 32 -
36
The Subcustodian may, at any time in its discretion upon notification to
the Custodian and a Fund, terminate any Secondary Subcustodian of the Fund in
accordance with the termination provisions under the applicable secondary
subcustodian agreement, and at the written request of the Custodian or a Fund,
the Subcustodian will terminate any Secondary Subcustodian in respect of the
Fund in accordance with the termination provisions under the applicable
secondary subcustodian agreement.
If necessary or desirable, the Subcustodian may appoint another
subcustodian in respect of a Fund to replace a Secondary Subcustodian terminated
pursuant to the foregoing provisions of this Section 3, such appointment to be
made upon approval of the successor subcustodian by the Custodian and the Fund's
Board of Directors or Trustees in accordance with the provisions of this Section
3.
In the event the Subcustodian receives a claim from a Secondary
Subcustodian under the indemnification provisions of any subcustodian agreement
in respect of a Fund, the Subcustodian shall promptly give written notice to the
Custodian and the Fund of such claim. No more than thirty days after written
notice to the Custodian and the Fund of the Subcustodian's intention to make
such payment, the Custodian or the Fund will reimburse the Subcustodian the
amount of such payment except in respect of any negligence or misconduct of the
Subcustodian.
4. Assistance by the Subcustodian as to Certain Matters: The Subcustodian
may assist generally in the preparation of
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37
reports to Fund shareholders and others, audits of accounts, and other
ministerial matters of like nature.
5. Powers and Duties of the Subcustodian with Respect to its Role as
Recordkeeping Agent: The Subcustodian shall have and perform the following
powers and duties with respect to recordkeeping:
5.1 Records - To create, maintain and retain such records relating to its
activities and obligations under this Agreement as are required under the
Investment Company Act of 1940 and the rules and regulations thereunder
(including Section 31 thereof and Rules 3la-1 and 3la-2 thereunder) and under
applicable Federal and State tax laws. All such records will be the property of
the relevant Fund and in the event of termination of this Agreement shall be
delivered to the Fund or successor custodian.
5.2 Accounts - To keep books of account and render statements, including
interim monthly and complete quarterly financial statements, or copies thereof,
from time to time as reasonably requested by proper instructions.
5.3 Access to Records - The books and records maintained by the
Subcustodian pursuant to Sections 5.1 and 5.2 shall at all times during the
Subcustodian's regular business hours be open to inspection and audit by
officers of, attorneys for and auditors employed by the Custodian or a Fund and
by employees and agents of the Securities and Exchange Commission, provided that
all such individuals shall observe all security requirements of the
- 34 -
38
Subcustodian applicable to its own employees having access to similar records
within the Subcustodian and such regulations as may be reasonably imposed by the
Subcustodian.
6. Standard of Care and Related Matters:
6.1 Liability of the Subcustodian with Respect to Proper Instructions;
Evidence of Authority, Etc. The Subcustodian shall not be liable for any action
taken or omitted in reliance upon proper instructions reasonably believed by it
to be genuine or upon any other written notice, request, direction, instruction,
certificate or other instrument believed by it to be genuine and signed by the
proper party or parties.
The Secretary or Assistant Secretary of the Custodian and of each Fund
shall certify to the Subcustodian the names, signatures and scope of authority
of all persons authorized to give proper instructions or any other such notice,
request, direction, instruction, certificate or instrument on behalf of the
Custodian or the Fund, respectively, the names and signatures of the officers of
the Custodian or the Fund, respectively, the name and address of the Shareholder
Servicing Agent, and any resolutions, votes, instructions or directions of the
Custodian or the Fund's respective Board of Directors or Trustees or
shareholders. Such certificate may be accepted and relied upon by the
Subcustodian as conclusive evidence of the facts set forth therein and may be
considered in full force and effect until receipt of a similar certificate to
the contrary.
So long as and to the extent that it is in the exercise of
- 35 -
39
reasonable care, the Subcustodian shall not be responsible for the title,
validity or genuineness of any property or evidence of title thereto received by
it or delivered by it pursuant to this Agreement.
The Subcustodian shall be entitled, at the expense of a Fund, to receive
and act upon advice of (i) counsel regularly retained by the Subcustodian in
respect of custodian matters, (ii) counsel for the Custodian or the Fund, or
(iii) such other counsel as the Custodian or the Fund and the Subcustodian may
agree upon, with respect to all matters, and the Subcustodian shall be without
liability for any action reasonably taken or omitted pursuant to such advice.
6.2 Liability of the Subcustodian with Respect to Use of Securities
Systems and Foreign Depositories - With respect to the portfolio securities,
funds and other property of a Fund held by a Securities System or by a Foreign
Depository utilized by the Subcustodian or any Secondary Subcustodian, the
Subcustodian shall be liable to the Custodian or a Fund only for any loss,
damage or expense to the Custodian or the Fund resulting from use of the
Securities System or Foreign Depository it caused by any negligence, misfeasance
or misconduct of the Subcustodian or any of its Agents (as said term is defined
in Section 6.6) or of any of its or its Agents' employees or from any failure of
the Subcustodian or any such Agent to enforce effectively such rights as it may
have against the Securities System or Foreign Depository. At the election of the
Custodian or a Fund, it shall
- 36 -
40
be entitled to be subrogated to the rights of the Subcustodian with respect to
any claim against the Securities System. Foreign Depository or any other person
which the Subcustodian may have as a consequence of any such loss, damage or
expense to the Custodian or the Fund if and to the extent that the Custodian or
the Fund has not been made whole for any such loss, damage or expense. The
Subcustodian agrees to cooperate with the Fund or the Custodian, as the case may
be, and take all actions reasonable requested by the Fund or the Custodian, at
the Fund's expense, in connection with the enforcement of any rights of the
Subcustodian by the Fund or the Custodian.
6.3 Liability of the Subcustodian with respect to Secondary Subcustodians
- The Subcustodian shall be liable to a Fund for the actions or omissions of any
Secondary Subcustodian to the same extent as if such actions or omissions were
performed by the Subcustodian itself in the country in which the Secondary
Subcustodian is operating under the terms of the secondary subcustodian
agreement; provided, however, that if there has been a final adjudication of any
term or provision thereof or of the governing law of such agreement by a court
of competent jurisdiction, then such determination shall govern the
determination of the Subcustodian's liability under this Section 6.3. In the
event of any loss, damage or expense suffered or incurred by a Fund caused by
or resulting from the actions or omissions of any Secondary Subcustodian for
which the Subcustodian would be liable pursuant to this Section 6.3, the
- 37 -
41
Subcustodian shall promptly reimburse the Fund in the amount of any such loss,
damage or expense.
The Subcustodian shall also be liable to a Fund for the Subcustodian's own
negligence in transmitting any instructions received by it from a Fund and for
the Subcustodian's own negligence in connection with the delivery of any
securities, funds or other property held by it to any Secondary Subcustodian.
6.4 Standard of Care; Liability; Indemnification - The Subcustodian shall
be held to the exercise of reasonable care and diligence in carrying out the
provisions of this Agreement, and shall be liable to the Custodian and the
relevant Fund for all loss, damage and expense suffered or incurred by the
Custodian or the Fund resulting from the failure of the Subcustodian to exercise
such reasonable care and diligence; provided that the Subcustodian shall not
thereby be required to take any action which is in contravention of any
applicable law, rule or regulation or any order or judgment of any court of
competent jurisdiction.
The Custodian and each Fund agree to indemnify and hold harmless the
Subcustodian and its nominees from all claims and liabilities (including counsel
fees) incurred or assessed against it or its nominees in connection with the
performance of this Agreement, except such as may arise from the Subcustodian or
its nominee's breach of the relevant standard of conduct set forth in this
Agreement. Notwithstanding the above, no Fund shall be liable to indemnify the
Subcustodian for any claims and liabilities other than those arising from
services provided to that particular Fund. Without limiting the
- 38 -
42
foregoing indemnification obligation of the Custodian and each Fund, the
Custodian and each relevant Fund agree to indemnify the Subcustodian and any
nominee in whose name portfolio securities or other property of the Fund is
registered against any liability the Subcustodian or such nominee may incur by
reason of taxes assessed to the Subcustodian or such nominee or other costs,
liability or expense incurred by the Subcustodian or such nominee resulting
directly or indirectly from the fact that portfolio securities or other property
of the Fund is registered in the name of the Subcustodian or such nominee.
In no event shall the Subcustodian incur liability under this Agreement if
the Subcustodian or any Secondary Subcustodian, Securities System, Foreign
Depository, Banking Institution or any agent or entity utilized by any of them
(each 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 Sovereign
Risk or (ii) 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 securities depository or clearing
agency which operates a central system for handling of securities or equivalent
book-entries in a country or which operates a transnational system for the
central handling of securities or equivalent book-entries, or (iii) any
provision of any order or judgment of any court of competent jurisdiction. A
"Sovereign Risk" shall mean nationalization, expropriation, devaluation,
revaluation,
- 39 -
43
confiscation, seizure, cancellation, destruction or similar action by any
governmental authority, de facto or de jure; or enactment, promulgation,
imposition or enforcement by any such governmental authority of currency
restrictions, exchange controls, taxes, levies or other charges affecting a
Fund's property; or acts of war, terrorism, insurrection or revolution; or any
other act or event beyond the Subcustodian's control.
6.5 Mitigation by Subcustodian - Upon the occurrence of any event that
causes or may cause loss, damage or expense to the Custodian or a Fund, (i) the
Subcustodian or a Secondary Subcustodian shall and (ii) the Subcustodian or a
Secondary Subcustodian shall cause any applicable Subcustodian or Secondary
Subcustodian to use all commercially reasonable efforts and take all reasonable
steps under the circumstances to mitigate the effects of such event and to avoid
continuing harm to the Custodian or the Fund.
6.6 Expenses of the Custodian and the Funds - In addition to the liability
of the Subcustodian or a Secondary Subcustodian under this Section 6, the
Subcustodian or a Secondary Subcustodian shall be liable to the Custodian or the
relevant Fund for all reasonable costs and expenses incurred by the Custodian or
the Fund in connection with any claim by the Custodian or the Fund against the
Subcustodian or a Secondary Subcustodian arising from the obligations of the
Subcustodian or Secondary Subcustodian hereunder including, without limitation,
- 40 -
44
all reasonable attorneys' fees and expenses incurred by the Custodian or the
Fund in asserting any such claim, and all expenses incurred by the Fund in
connection with any investigations, lawsuits or proceedings relating to such
claims; provided, that the Custodian or relevant Fund has recovered from the
Subcustodian or a Secondary Subcustodian for such claim.
6.7 Liability for Past Records - The Subcustodian shall have no liability
in respect of any loss, damage or expense suffered by a Fund, insofar as such
loss, damage or expense arises from the performance of the Subcustodian's duties
hereunder by reason of the Subcustodian's reasonable reliance upon records that
were maintained for the Fund by entities other than the Subcustodian prior to
the Subcustodian's employment hereunder.
6.8 Reimbursement of Disbursements, Etc. - The Subcustodian shall be
entitled to receive reimbursement from the Custodian or the relevant Fund on
demand, in the manner provided in Section 7, for its cash disbursements,
expenses and charges (including the fees and expenses of any Secondary
Subcustodian or any Agent) in connection with this Agreement, but excluding
salaries and usual overhead expenses.
6.9 Notice of Litigation; Right to Prosecute, Etc. - Neither the Custodian
nor the Fund shall be liable or indemnification under Section 6 of this
Agreement unless a Person shall have promptly notified the Custodian or the
relevant Fund in writing of the commencement of any litigation or proceeding
- 41 -
45
brought against such Person in respect of which indemnity may be sought under
Section 6. With respect to claims in such litigation or proceedings for which
indemnity by the Custodian or a Fund may be sought and subject to applicable law
and the ruling of any court of competent jurisdiction, the Custodian and the
Fund shall be entitled to participate in any such litigation or proceeding and,
after written notice from the Custodian or the Fund to any Person, the Custodian
or the relevant 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 Custodian or 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 expense, the defense of any such
litigation or proceeding if the Custodian or the Fund has not acknowledged in
writing its obligation to indemnify the Person with respect to such litigation
or proceeding. If the Custodian or the Fund is not permitted to participate in
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.
6.10 Security for obligations to Subcustodian - If the Subcustodian or any
nominee thereof shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of this
Agreement (collectively a "Liability"), except such as may arise from its
- 42 -
46
or such nominee's breach of the relevant standard of conduct set forth in this
Agreement, or if the Subcustodian shall make any Advance to a Fund, then in such
event property equal in value to not more than 125% of such Advance and accrued
interest on the Advance or the anticipated amount of such Liability, held at any
time for the account of the Fund by the Subcustodian or a Secondary Subcustodian
may be held as security for such Liability or for such Advance and accrued
interest on the Advance. The Subcustodian shall designate the security or
securities constituting security for an Advance or Liability (the "Designated
Securities") by notice in writing to the Fund (which may be sent by telefax or
telex). In the event the value of the Designated Securities shall decline to
less than 110% of the amount of such Advance and accrued interest on the Advance
or the anticipated amount of such Liability, then the Subcustodian may designate
in the same manner an additional security for such obligation but the aggregate
value of the Designated Securities and Additional Securities shall not be in
excess of 125% of the amount of such Advance and the accrued interest on the
Advance or the anticipated amount of such Liability. At the request of the Fund,
the Subcustodian shall agree to substitution of a security or securities which
have a value equal to the value of the Designated or Additional Securities which
the Fund desires be released from their status as security, and such release
from status as security shall be effective upon the Subcustodian and the Fund
agreeing in writing as to the identity of the
- 43 -
47
substituted security or securities, which shall thereupon become Designated
Securities.
Notwithstanding the above, the Subcustodian shall, at the request of a
Fund, immediately release from their status as security any or all of the
Designated Securities or Additional Securities upon the Subcustodian's receipt
from such Fund cash or cash equivalents in an amount equal to 100% of the value
of the Designated Securities or Additional Securities that the Fund desires to
be released from their status as security pursuant to this Section. The Fund
shall reimburse or indemnify the Subcustodian and shall pay any Advances upon
demand; provided, however, that the Subcustodian first notified the Custodian or
the Fund of such demand for repayment, reimbursement or indemnification. If,
upon notification, the Custodian or the Fund shall fail to pay such Advance or
interest when due or shall fail to reimburse or indemnify the Subcustodian
promptly in respect of a Liability, the Subcustodian shall be entitled to
dispose of the Designated Securities and Additional Securities to the extent
necessary to obtain repayment, reimbursement or indemnification. Interest,
dividends and other distributions paid or received on the Designated Securities
and Additional Securities, other than payments of principal or payments upon
retirement, redemption or repurchase, shall remain the property of the Fund, and
shall not be subject to this Section 6.10. To the extent that the disposition of
a Fund's property, designated as security for such Advance or Liability, results
in an amount
- 44 -
48
less than necessary to obtain repayment, reimbursement or indemnification, the
Fund shall continue to be liable to the Subcustodian for the difference between
the proceeds of the disposition of the Fund's property, designated as security
for such Advance or Liability, and the amount of the repayment, reimbursement
or indemnification due to the Subcustodian.
6.11 Appointment of Agents - The Subcustodian may at any time or times in
its discretion appoint (and may at any time remove) any other bank or trust
company as its agent (an "Agent") to carry out such of the provisions of this
Agreement as the Subcustodian may from time to time direct, provided, however,
that the appointment of such Agent (other than an Agent appointed pursuant to
the third paragraph of Section 3) shall not relieve the Subcustodian of any of
its responsibilities under this Agreement.
In the event of any loss, damage, or expense suffered or incurred by the
Custodian or a Fund caused by or resulting from the actions or omissions of any
Agent for which the Subcustodian would otherwise be liable, the Subcustodian
shall promptly reimburse the Custodian or the Fund, as the case may be, in the
amount of any such loss, damage or expense.
6.12 Powers of Attorney - Upon request, the Custodian or a Fund shall
deliver to the Subcustodian such proxies, powers of attorney or other
instruments as may be reasonable and necessary or desirable in connection with
the performance by the Subcustodian or any Secondary Subcustodian of their
respective
- 45 -
49
obligations under this Agreement or any applicable subcustodian agreement.
7. Compensation of the Subcustodian: The Custodian or such Fund shall
pay the Subcustodian a custody fee based on such fee schedule as may from time
to time be agreed upon in writing by the Subcustodian, the Custodian and each
Fund. Such fee, together with all amounts for which the Subcustodian is to be
reimbursed in accordance with Section 6.4, shall be billed to the Custodian or
the Fund and be paid in cash to the Subcustodian.
8. Termination; Successor Custodian/Subcustodian; Additional Funds: This
Agreement shall continue in full force and effect until terminated as to one or
more of the Funds by the Custodian, the Subcustodian or such Fund or Funds by
an instrument in writing delivered or mailed, postage prepaid, to the other
parties, such termination to take effect not sooner than sixty (60) days after
the date of such delivery or mailing. In the event of termination, the
Subcustodian shall be entitled to receive prior to delivery of the securities,
funds and other property held by it all accrued fees and unreimbursed expenses
the payment of which is contemplated by Sections 6.4 and 7, and all Advances
and Liabilities, upon receipt by the Custodian or the relevant Fund or Funds of
a statement setting forth such fees, expenses, Advances and Liabilities.
In the event of the appointment of a successor custodian, the Subcustodian
shall take all reasonable steps to execute an agreement with the successor
custodian and a Fund or Funds on
- 46 -
50
substantially the same terms as contained in this Agreement. The Subcustodian
agrees to cooperate with the Custodian, the successor custodian, and such Fund
or Funds in execution of documents and performance of other actions necessary
or desirable in order to substitute the successor custodian for the Custodian.
In the event of the appointment of a successor subcustodian, it is agreed
that the securities, funds and other property owned by a Fund or Funds as to
which this Agreement has been terminated and held by the Subcustodian or any
Secondary Subcustodian shall be delivered to the successor subcustodian, unless
the Subcustodian is otherwise instructed by the Custodian or the Fund or Funds.
The Subcustodian agrees to cooperate with the Custodian, the successor
custodian, and such Fund or Funds in execution of documents and performance of
other actions necessary or desirable in order to substitute the successor
subcustodian for the Subcustodian under this Agreement.
An additional Fund or Funds may become a party to this Agreement after the
date hereof by an instrument in writing to such effect signed by such Fund or
Funds, the Custodian and the Subcustodian. If this Agreement is terminated as
to one or more of the Funds (but less than all of the Funds) or if an
additional Fund or Funds shall become a party to this Agreement, there shall be
delivered to the Subcustodian by the Custodian an amended Appendix B deleting
or adding such Fund or Funds, as the case may be. The termination of this
Agreement as to less than all of the Funds shall not affect the obligations of
the Custodian, the
- 47 -
51
Subcustodian and the remaining Funds hereunder as set forth in Appendix B, as
revised from time to time.
9. Amendment; Waiver: This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof. No provision of this Agreement may be waived, amended or
terminated except by a statement in writing signed by the party or parties
against which enforcement of the waiver, amendment or termination is sought.
In connection with the operation of this Agreement, the Subcustodian, the
Custodian and one or more of the Funds may agree in writing from time to time
on such provisions interpretative of or in addition to the provisions of this
Agreement as may in their joint opinion be consistent with the general tenor of
this Agreement. No interpretative or additional provisions made as provided in
the preceding sentence shall be deemed to be an amendment of this Agreement.
The section headings in this Agreement are for the convenience of the
parties and in no way alter, amend, limit or restrict the contractual
obligations of the parties set forth in this Agreement.
10. Governing Law: This Agreement is executed and delivered in The
Commonwealth of Massachusetts and shall be governed by and construed according
to the laws of said Commonwealth.
11. Notices: Notices and other writings delivered or mailed postage
prepaid to a Fund addressed to the Fund at 100
- 48 -
00
Xxxxxxxx Xxxxxxx, Xxxxxxxxx Xxxxx, Xxxxxxxxx 00000 Attention: Xxxxx Xxxxx Xxx,
or to such other address as the Fund may have designated to the Subcustodian
and the Custodian in writing, or to the Custodian at 000 Xxxx Xxxxxxxx Xxxxxx,
P. O. Xxx 000, Xxxxxxxxx, Xxxxxxxxx 00000, Attention: X. Xxxxxxx, or to such
other address as the Custodian may have designated to the Funds and the
Subcustodian in writing or to the Subcustodian at 00 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Manager, Securities Department, or to such
other address as the Subcustodian may have designated to the Custodian and the
Funds in writing, shall be deemed to have properly delivered or given hereunder
to the respective addressee.
12. Binding Effect: This Agreement shall be binding on and shall inure to
the benefit of the Funds, the Custodian and the Subcustodian and their
respective successors and assigns, provided that no party hereto may assign
this Agreement or any of its rights or obligations hereunder without the prior
written consent of the other parties (except that assignment by a Fund shall
not require the consent of any other Funds).
13. Severability: If any provision of this Agreement shall be held or
made unenforceable by a court decision, statute, rule, regulation or otherwise,
the remaining provisions of this Agreement shall not be affected thereby.
14. Counterparts: This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more
- 49 -
53
counterparts have been signed and delivered by each of the parties.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and behalf on the day and year first above written.
FIRSTAR TRUST COMPANY XXXXX BROTHERS XXXXXXXX & CO.
By per pro
-------------------------- --------------------------
Title
-----------------------
FUNDS LISTED IN APPENDIX B
By
--------------------------
Title
-----------------------
- 50 -
54
STRONG CAPITAL MANAGEMENT, INC.
DOMESTIC MUTUAL FUND
REVISED GLOBAL CUSTODY FEE SCHEDULE
OCTOBER 1996
Payable quarterly on the value of assets:
Foreign (excluding Euroclear)
.0010 per year on all assets
Euroclear (Bonds Only)
.0006 per year on all assets
Argentina
.0030 on all assets
Transaction charge: $75
Bangladesh
.0045 on all assets
Transaction charge: $175
Botswana
.0050 on all assets
Transaction charge: $200
Brazil
.0015 on all assets
Transaction charge: $50
Chile
.0035 on all assets
Transaction charge: $85
China
.0035 on all assets
Transaction charge: $75
55
STRONG CAPITAL MANAGEMENT, INC.
DOMESTIC MUTUAL FUND
GLOBAL CUSTODY FEE SCHEDULE
OCTOBER 1996
PAGE 2
Colombia
.0045 on all assets
Transaction charge: $100
Czech Republic
.0030 on all assets
Transaction charge: $65
Ecuador
.0050 on all assets
Transaction charge: $150
Egypt
.0050 on all assets
Transaction charge: $150
Ghana:
.0050 on all assets
Transaction charge: $150
Greece
.0050 on all assets
Transaction charge: $100 on-site
$400 off-site
Hungary
.0055 on all assets
Transaction charge: $200
Israel
.0025 on all assets
Transaction charge: $75
India
.0040 on all assets
Transaction charge: $150
56
STRONG CAPITAL MANAGEMENT, INC.
DOMESTIC MUTUAL FUND
GLOBAL CUSTODY FEE SCHEDULE
OCTOBER 1996
PAGE 3
Indonesia
.0015 on all assets
Transaction charge: $55
Jordan
.0045 on all assets
Transaction charge: $175
Kenya
.0050 on all assets
Transaction charge: $150
Korea
.0022 on all assets
Transaction charge: $50
Lebanon
.0055 on all assets
Transaction charge: $150
Mauritius
.0055 on all assets
Transaction charge: $150
Morocco
.0040 on all assets
Transaction charge: $150
Namibia
.0065 on all assets
Transaction charge: $175
Pakistan
.0035 on all assets
Transaction charge: $125
57
STRONG CAPITAL MANAGEMENT, INC.
DOMESTIC MUTUAL FUND
GLOBAL CUSTODY FEE SCHEDULE
OCTOBER 1996
PAGE 4
Peru
.0050 on all assets
Transaction charge: $110
Philippines
.0025 on all assets
Transaction charge: $65
Poland
.0060 on all assets
Transaction charge: $125
Portugal
.0030 on all assets
Transaction charge: $150
Russia
.0065 on all assets
Transaction charge: $250
Slovakia
.0035 on all assets
Transaction charge: $100
South Africa
.0012 on all assets
Transaction charge: $50
Sri Lanka
.0020 on all assets
Transaction charge: $85
Swaziland
.0050 on all assets
Transaction charge: $200
58
STRONG CAPITAL MANAGEMENT, INC.
DOMESTIC MUTUAL FUND
GLOBAL CUSTODY FEE SCHEDULE
OCTOBER 1996
PAGE 5
Taiwan
.0025 on all assets
Transaction charge: $75
Turkey
.0035 on all assets
Transaction charge: $125
Uruguay
.0055 on all assets
Transaction charge: $125
Venezuela
.0045 on all assets
Transaction charge: $125
Zambia
.0050 on all assets
Transaction charge: $150
Zimbabwe
.0050 on all assets
Transaction charge: $150
Minimum: $45,000 (all domestic portfolios combined)
Transaction charge: $35
Emerging markets will be negotiated at the time of investment.
59
STRONG CAPITAL MANAGEMENT, INC.
DOMESTIC MUTUAL FUND
GLOBAL CUSTODY FEE SCHEDULE
OCTOBER 1996
PAGE 6
OUT-OF-POCKET EXPENSES
Out-of-pocket expenses including, but not limited to telex, legal,
telephone, postage and direct expenses including but not limited to customized
systems programming, registration and certificate fees would be additional.
Brokerage, stamp duty and Euroclear deposit and withdrawal charges are for the
account of the Fund.
This schedule includes all custody fees and transaction charges of
subcustodians. Emerging Markets may require the use of a local administrative
agent. Administrative fees will be for the account of the Fund. Charges
associated with income collection, governmental stamp or other taxes will also
be for the account of the Fund.
RUSSIA: Expenses include, but are not limited to, travel expenses,
registration fees for shares, transportation, and insurance costs, and will be
charged as incurred. Estimated costs may be provided prior to investment.
