Exhibit 2(j)(ii)
FORM OF CUSTODIAN AND INVESTMENT ACCOUNTING AGREEMENT
This Agreement is made effective the 1st day of November, 2001, by and
between EACH OF THE FUNDS SET FORTH ON EXHIBIT A HERETO, each a business trust
or corporation organized and existing under the laws of the jurisdiction listed
on Exhibit A (each a "FUND"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company ("STATE STREET"),
WITNESSETH:
WHEREAS, Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, Fund intends that this Agreement be applicable to each of its
series existing on the date HEREOF (such series together with all other series
subsequently established by Fund and made subject to this Agreement in
accordance with Section 16.2, be referred to herein as the "PORTFOLIO(S)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ AS CUSTODIAN AND RECORDKEEPING AGENT. Fund
hereby appoints State Street as the custodian of the assets of the Portfolios,
including securities that Fund, on behalf of the applicable Portfolio, desires
to be held in places within the United States ("DOMESTIC SECURITIES") and
securities it desires to be held outside the United States ("FOREIGN
SECURITIES"). Fund, on behalf of the Portfolio(s), agrees to deliver to State
Street all securities and cash of the Portfolios, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of beneficial
interest of Fund representing interests in the Portfolios ("SHARES") as may be
issued or sold from time to time. State Street shall not be responsible for any
property of a Portfolio held or received by the Portfolio and not delivered to
State Street.
Upon receipt of "PROPER INSTRUCTIONS" (as such term is defined in Section 6
hereof), State Street shall on behalf of the applicable Portfolio(s) from time
to time appoint one or more sub-custodians located in the United States, but
only in accordance with an applicable vote by the Board of Trustees or Directors
of Fund (the "BOARD") on behalf of the applicable Portfolio(s). State Street may
appoint as sub-custodian for Fund's foreign securities on behalf of the
applicable Portfolio(s) the foreign banking institutions and foreign securities
depositories designated in Schedules A and B hereto, but only in accordance with
the applicable provisions of Sections 3 and 4. State Street shall have no more
or less responsibility or liability to Fund on account of any actions or
omissions of any sub-custodian so appointed as if State Street had not retained
a sub-custodian.
Fund hereby appoints State Street as agent to perform certain investment
accounting and recordkeeping functions relating to portfolio transactions
required of a duly registered investment company under Rule 31a of the
Investment Company Act of 1940, as amended and the rules promulgated thereunder,
including without limitation Rules 31a-1, 31a-2 and 31a-3 (the "1940 ACT") and
to calculate the net asset value of the Portfolio(s) in accordance with the
provisions of Section 9 hereof.
SECTION 2 DUTIES OF STATE STREET WITH RESPECT TO PROPERTY OF FUND HELD BY STATE
STREET IN THE UNITED STATES
SECTION 2.1 HOLDING SECURITIES. State Street shall hold and physically
segregate for the account of each Portfolio all non-cash property to be held by
it in the United States, including all domestic securities other than securities
which are maintained pursuant to Section 2.8 in a clearing agency which acts as
a securities depository or in a book-entry system authorized by the U.S.
Department of the Treasury (each, a "U.S. SECURITIES SYSTEM").
SECTION 2.2 DELIVERY OF SECURITIES. State Street shall release and deliver
domestic securities held by State Street or in a U.S. Securities System account
of State Street only upon receipt of Proper Instructions on behalf of the
applicable Portfolio, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.8 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to State
Street;
6) To the issuer thereof, or its agent, for transfer into the name of the
Portfolio or into the name of any nominee(s) of State Street or into
the name or nominee name of any agent appointed pursuant to Section
2.7 or into the name or nominee name of any sub-custodian appointed
pursuant to Section 1; or for exchange for a different number of
bonds, certificates or other evidence representing the same aggregate
face amount or number of units; PROVIDED that, in any such case, the
new securities are to be delivered to State Street;
7) Upon the sale of such securities for the account of the Portfolio, to
the broker or its clearing agent, against a receipt, for examination
in accordance with "street delivery" custom; provided that in any such
case, State Street shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from State Street's
own negligence or willful misconduct;
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8) For exchange or conversion pursuant to any corporate action, including
without limitation, any calls for redemption, tender or exchange
offers, declarations, record and payment dates and amounts of any
dividends or income, plan of merger, consolidation, recapitalization,
reorganization, readjustment, split-up of shares, changes of par
value, or conversion ("CORPORATE ACTION") of the securities of the
issuer of such securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash, if any,
are to be delivered to State Street;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to State Street;
10) For delivery in connection with any loans of securities made by the
Portfolio, BUT ONLY against receipt of adequate collateral as agreed
upon from time to time by State Street and Fund on behalf of the
Portfolio, which may be in the form of cash or obligations issued by
the United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is to be
credited to State Street's account in the book-entry system authorized
by the U.S. Department of the Treasury, State Street will not be held
liable or responsible for the delivery of securities owned by the
Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowing by Fund on
behalf of the Portfolio requiring a pledge of assets by Fund , BUT
ONLY against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among
Fund on behalf of the Portfolio, State Street and a broker-dealer
registered under the Securities Exchange Act of 1934 (the "EXCHANGE
ACT") and a member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Portfolio;
13) For delivery in accordance with the provisions of any agreement among
Fund on behalf of the Portfolio, State Street, and a futures
commission merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures Trading
Commission ("CFTC") and/or any contract market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Portfolio;
14) Upon receipt of instructions from the transfer agent for Fund (the
"TRANSFER AGENT") for delivery to such Transfer Agent or to the
holders of Shares in connection with distributions in kind, as may be
described from time to time in the currently effective prospectus and
statement of additional information related to the Portfolio (the
"PROSPECTUS"), in satisfaction of requests by holders of Shares for
repurchase or redemption; and
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15) For any other purpose, BUT ONLY upon receipt of Proper Instructions on
behalf of the applicable Portfolio specifying the securities to be
delivered and naming the person or persons to whom delivery of such
securities shall be made.
SECTION 2.3 REGISTRATION OF SECURITIES. Domestic securities (other than
bearer securities) shall be registered in the name of the Portfolio or in the
name of any nominee of Fund on behalf of the Portfolio or of State Street which
nominee shall be assigned exclusively to the Portfolio, UNLESS Fund has
authorized in writing the appointment of a nominee to be used in common with
other registered investment companies having the same investment advisor as the
Portfolio, or in the name or nominee name of any agent appointed pursuant to
Section 2.7 or in the name or nominee name of any sub-custodian appointed
pursuant to Section 1. All securities accepted by State Street under the terms
hereof shall be in "street name" or other good delivery form. If, however, Fund
directs State Street to maintain securities in "street name", State Street shall
utilize its best efforts only to timely collect income due Fund on such
securities and to notify Fund on a best efforts basis only of relevant
information regarding securities such as maturities and pendency of calls and
Corporate Actions.
SECTION 2.4 BANK ACCOUNTS. State Street shall open and maintain a separate
bank account or accounts in the United States in the name of each Portfolio,
subject only to draft or order by State Street acting pursuant hereto, and shall
hold in such account or accounts, subject to the provisions hereof, all cash
received by it from or for the account of the Portfolio, other than cash
maintained by the Portfolio in an account established and used in accordance
with Rule 17f-3 under the 1940 Act. Funds held by State Street for a Portfolio
may be deposited by it to its credit as custodian in the banking department of
State Street or in such other banks or trust companies as it may in its
discretion deem necessary or desirable; PROVIDED, however, that every such bank
or trust company shall be qualified to act as a custodian under the 1940 Act and
that each such bank or trust company and the funds to be deposited with each
such bank or trust company shall on behalf of each applicable Portfolio be
approved by vote of a majority of the Board. Such funds shall be deposited by
State Street in its capacity as custodian and shall be withdrawable by State
Street only in that capacity.
SECTION 2.5 COLLECTION OF INCOME. Subject to the provisions of ▇▇▇▇▇▇▇ ▇.▇,
▇▇▇▇▇ ▇▇▇▇▇▇ shall collect on a timely basis all income and other payments with
respect to registered domestic securities to which each Portfolio shall be
entitled either by law or pursuant to custom in the securities business, and
shall collect on a timely basis all income and other payments with respect to
bearer domestic securities if, on the date of payment by the issuer, such
securities are held by State Street or its agent thereof and shall credit such
income, as collected, to such Portfolio's custodian account. Without limiting
the generality of the foregoing, State Street shall detach and present for
payment all coupons and other income items requiring presentation as and when
they become due and shall collect interest when due on securities held
hereunder. Income due each Portfolio on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of Fund. State Street
will have no duty or responsibility in connection therewith, other than to
provide Fund with such information or data as may be necessary to assist Fund in
arranging for the timely delivery to State Street of the income to which the
Portfolio is properly entitled.
SECTION 2.6 PAYMENT OF PORTFOLIOMONIES. Except to the extent that Section
4.4.2 applies, upon receipt of Proper Instructions on behalf of the applicable
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Portfolio, which may be continuing instructions when deemed appropriate by the
parties, State Street shall pay out monies of a Portfolio in the following cases
only:
1) Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the account of the Portfolio but
only (a) against the delivery of such securities or evidence of title
to such options, futures contracts or options on futures contracts to
State Street (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified under the
1940 Act to act as a custodian and has been designated by State Street
as its agent for this purpose) registered in the name of the Portfolio
or in the name of a nominee of State Street referred to in Section 2.3
hereof or in proper form for transfer; (b) in the case of a purchase
effected through a U.S. Securities System, in accordance with the
conditions set forth in Section 2.8 hereof; (c) in the case of
repurchase agreements entered into between Fund on behalf of the
Portfolio and State Street, or another bank, or a broker-dealer which
is a member of NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting State Street's account
at the Federal Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by the Portfolio of
securities owned by State Street along with written evidence of the
agreement by State Street to repurchase such securities from the
Portfolio; or (d) for transfer to a time deposit account of Fund in
any bank, whether domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker and/or the applicable
bank pursuant to Proper Instructions ;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued as set forth in
Section 5 hereof;
4) For the payment of any expense or liability incurred by the Portfolio,
including but not limited to the following payments for the account of
the Portfolio: interest, taxes, management, accounting, transfer agent
and legal fees, and operating expenses of Fund whether or not such
expenses are to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends on Shares declared pursuant to the
Declaration of Trust, Articles of Incorporation, Bylaws or other
governing documents of Fund (collectively, the "GOVERNING DOCUMENTS");
6) For payment of the amount of dividends received in respect of
securities sold short; and
7) For any other purpose, BUT ONLY upon receipt of Proper Instructions on
behalf of the Portfolio specifying the amount of such payment and
naming the person or persons to whom such payment is to be made.
SECTION 2.7 APPOINTMENT OF AGENTS. State Street may at any time or times in
its discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the 1940 Act to act as a custodian, as
its agent to carry out such of the provisions of this Section 2 as State Street
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may from time to time direct; PROVIDED, however, that the appointment of any
agent shall not relieve State Street of its responsibilities or liabilities
hereunder.
SECTION 2.8 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. State Street
may deposit and/or maintain securities owned by a Portfolio in a U.S. Securities
System subject to the following provisions:
▇) ▇▇▇▇▇ ▇▇▇▇▇▇ may keep securities of the Portfolio in a U.S. Securities
System provided that such securities are represented in an account of
State Street in the U.S. Securities System (the "U.S. SECURITIES
SYSTEM ACCOUNT") which account shall not include any assets of State
Street other than assets held as a fiduciary, custodian or otherwise
for customers;
2) The records of State Street with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
▇) ▇▇▇▇▇ ▇▇▇▇▇▇ shall pay for securities purchased for the account of the
Portfolio upon (i) receipt of advice from the U.S. Securities System
that such securities have been transferred to the U.S. Securities
System Account, and (ii) the making of an entry on the records of
State Street to reflect such payment and transfer for the account of
the Portfolio. State Street shall transfer securities sold for the
account of the Portfolio upon (i) receipt of advice from the U.S.
Securities System that payment for such securities has been
transferred to the U.S. Securities System Account, and (ii) the making
of an entry on the records of State Street to reflect such transfer
and payment for the account of the Portfolio. Copies of all advices
from the U.S. Securities System of transfers of securities for the
account of the Portfolio shall identify the Portfolio, be maintained
for the Portfolio by State Street and be provided to Fund at its
request. Upon request, State Street shall furnish Fund on behalf of
the Portfolio confirmation of each transfer to or from the account of
the Portfolio in the form of a written advice or notice and shall
furnish to Fund on behalf of the Portfolio copies of daily transaction
sheets reflecting each day's transactions in the U.S. Securities
System for the account of the Portfolio;
4) State Street shall provide Fund with any report obtained by State
Street on the U.S. Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the U.S. Securities System;
5) Anything to the contrary herein notwithstanding, State Street shall be
liable to Fund for the benefit of the Portfolio for any loss or damage
to the Portfolio resulting from use of the U.S. Securities System by
reason of any negligence, misfeasance or misconduct of State Street or
any of its agents or of any of its their employees or from failure of
State Street or any such agent to enforce effectively such rights as
it may have against the U.S. Securities System; at the election of
Fund, it shall be entitled to be subrogated to the rights of State
Street with respect to any claim against the U.S. Securities System or
any other person which State Street may have as a consequence of any
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such loss or damage if and to the extent that the Portfolio has not
been made whole for any such loss or damage.
SECTION 2.9 SEGREGATED ACCOUNT. State Street shall upon receipt of Proper
Instructions on behalf of each applicable Portfolio establish and maintain a
segregated account or accounts for and on behalf of each such Portfolio, into
which account or accounts may be transferred cash and/or securities, including
securities maintained in an account by State Street pursuant to Section 2.8
hereof, (i) in accordance with the provisions of any agreement among Fund on
behalf of the Portfolio, State Street and a broker-dealer registered under the
Exchange Act and a member of the NASD (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 CFTC or any registered contract market), or of any
similar organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Portfolio, (ii) for purposes of segregating
cash or government securities in connection with options purchased, sold or
written by the Portfolio or commodity futures contracts or options thereon
purchased or sold by the Portfolio, (iii) for the purposes of compliance by the
Portfolio with the procedures required by Investment Company Act Release No.
10666, or any subsequent release of the U.S. Securities and Exchange Commission
(the "SEC"), or interpretative opinion of the staff of the SEC, relating to the
maintenance of segregated accounts by registered investment companies, and (iv)
for any other purpose upon receipt of Proper Instructions on behalf of the
applicable Portfolio.
SECTION 2.10 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. State Street shall
execute ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other payments with
respect to domestic securities of each Portfolio and in connection with
transfers of securities.
SECTION 2.11 PROXIES. State Street shall, with respect to domestic
securities, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of the
Portfolio or a nominee of the Portfolio, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to the
Portfolio such proxies, all proxy soliciting materials and all notices relating
to such securities.
SECTION 2.12 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to
the provisions of ▇▇▇▇▇▇▇ ▇.▇, ▇▇▇▇▇ ▇▇▇▇▇▇ shall transmit promptly to Fund for
each Portfolio all written information received by State Street from issuers of
the securities being held for the Portfolio with respect to Corporate Actions,
notices of exercise of call and put options written by Fund on behalf of the
Portfolio, and the maturity of futures contracts purchased or sold by the
Portfolio. With respect to tender or exchange offers, State Street shall
transmit promptly to the Portfolio all written information received by State
Street from issuers of the securities whose tender or exchange is sought and
from the party (or its agents) making the tender or exchange offer. If the
Portfolio desires to take action with respect to any Corporate Action, the
Portfolio shall provide Proper Instruction to State Street at least three
business days prior to the date on which State Street is to take such action.
SECTION 3 PROVISIONS RELATING TO RULES 17F-5 AND 17F-7
SECTION 3.1 DEFINITIONS. As used throughout this Agreement, the capitalized
terms set forth below shall have the indicated meanings:
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"Country Risk" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country including, but not limited to,
such country's political environment, economic and financial infrastructure
(including any Eligible Securities Depository operating in the country),
prevailing or developing custody and settlement practices, and laws and
regulations applicable to the safekeeping and recovery of Foreign Assets held in
custody in that country.
"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule
17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as
defined in Rule 17f-5), a bank holding company meeting the requirements of an
Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate
action of the SEC, or a foreign branch of a Bank (as defined in section 2(a)(5)
of the ▇▇▇▇ ▇▇▇) meeting the requirements of a custodian under section 17(f) of
the 1940 Act; the term does not include any Eligible Securities Depository.
"Eligible Securities Depository" has the meaning set forth in section (b)(1) of
Rule 17f-7.
"Foreign Assets" means any of the Portfolios' investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Portfolios'
transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(3) of Rule
17f-5.
"Rule 17f-5" means Rule 17f-5 promulgated under the 1940 Act.
"Rule 17f-7" means Rule 17f-7 promulgated under the 1940 Act.
SECTION 3.2 STATE STREET AS FOREIGN CUSTODY MANAGER.
3.2.1 DELEGATION TO STATE STREET AS FOREIGN CUSTODY MANAGER. Fund, by
resolution adopted by its Board, hereby delegates to State Street, subject
to section (b) of Rule 17f-5, the responsibilities set forth in this
Section 3.2 with respect to Foreign Assets held outside the United States,
and State Street hereby accepts such delegation as Foreign Custody Manager
with respect to the Portfolios.
3.2.2 COUNTRIES COVERED. The Foreign Custody Manager shall be responsible
for performing the delegated responsibilities defined below only with
respect to the countries and custody arrangements for each such country
listed on Schedule A, which list of countries may be amended from time to
time by Fund with the agreement of the Foreign Custody Manager. The Foreign
Custody Manager shall list on Schedule A the Eligible Foreign Custodians
selected by the Foreign Custody Manager to maintain the assets of the
Portfolios, which list of Eligible Foreign Custodians may be amended from
time to time in the sole discretion of the Foreign Custody Manager. The
Foreign Custody Manager will provide amended versions of Schedule A in
accordance with Section 3.2.5 hereof.
Upon the receipt by the Foreign Custody Manager of Proper Instructions to
open an account or to place or maintain Foreign Assets in a country listed
on Schedule A, and the fulfillment by Fund, on behalf of the Portfolios, of
the applicable account opening requirements for such country, the Foreign
Custody Manager shall be deemed to have been delegated by the Board on
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behalf of the Portfolios responsibility as Foreign Custody Manager with
respect to that country and to have accepted such delegation. Execution
hereof by Fund shall be deemed to be a Proper Instruction to open an
account, or to place or maintain Foreign Assets, in each country listed on
Schedule A in which State Street has previously placed or currently
maintains Foreign Assets pursuant to the terms of the contract governing
the custody arrangement. Following the receipt of Proper Instructions
directing the Foreign Custody Manager to close the account of a Portfolio
with the Eligible Foreign Custodian selected by the Foreign Custody Manager
in a designated country, the delegation by the Board on behalf of the
Portfolios to State Street as Foreign Custody Manager for that country
shall be deemed to have been withdrawn and State Street shall immediately
cease to be the Foreign Custody Manager of the Portfolios with respect to
that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written notice
to Fund. Thirty days (or such longer period to which the parties agree in
writing) after receipt of any such notice by Fund, State Street shall have
no further responsibility in its capacity as Foreign Custody Manager to
Fund with respect to the country as to which State Street's acceptance of
delegation is withdrawn.
3.2.3 SCOPE OF DELEGATED RESPONSIBILITIES:
(a) SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the
provisions of this Section 3.2, the Foreign Custody Manager may place and
maintain the Foreign Assets in the care of the Eligible Foreign Custodian
selected by the Foreign Custody Manager in each country listed on Schedule
A, as amended from time to time. In performing its delegated
responsibilities as Foreign Custody Manager to place or maintain Foreign
Assets with an Eligible Foreign Custodian, the Foreign Custody Manager
shall determine that the Foreign Assets will be subject to reasonable care,
based on the standards applicable to custodians in the country in which the
Foreign Assets will be held by that Eligible Foreign Custodian, after
considering all factors relevant to the safekeeping of such assets,
including, without limitation the factors specified in Rule 17f-5(c)(1).
(b) CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS. The Foreign Custody
Manager shall determine that the contract governing the foreign custody
arrangements with each Eligible Foreign Custodian selected by the Foreign
Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).
(c) MONITORING. In each case in which the Foreign Custody Manager
maintains Foreign Assets with an Eligible Foreign Custodian selected by the
Foreign Custody Manager, the Foreign Custody Manager shall establish a
system to monitor (i) the appropriateness of maintaining the Foreign Assets
with such Eligible Foreign Custodian and (ii) the contract governing the
custody arrangements established by the Foreign Custody Manager with the
Eligible Foreign Custodian. In the event the Foreign Custody Manager
determines that the custody arrangements with an Eligible Foreign Custodian
it has selected are no longer appropriate, the Foreign Custody Manager
shall notify the Board in accordance with Section 3.2.5 hereunder.
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3.2.4 GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For purposes of
this Section 3.2, the Board shall be deemed to have considered and
determined to accept such Country Risk as is incurred by placing and
maintaining the Foreign Assets in each country for which State Street is
serving as Foreign Custody Manager of the Portfolios.
3.2.5 REPORTING REQUIREMENTS. The Foreign Custody Manager shall report the
withdrawal of the Foreign Assets from an Eligible Foreign Custodian and the
placement of such Foreign Assets with another Eligible Foreign Custodian by
providing to the Board an amended Schedule A at the end of the calendar
quarter in which an amendment to such Schedule has occurred. The Foreign
Custody Manager shall make written reports notifying the Board of any other
material change in the foreign custody arrangements of the Portfolios
described in this Section 3.2 after the occurrence of the material change.
3.2.6 STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF A PORTFOLIO. In
performing the responsibilities delegated to it, the Foreign Custody
Manager agrees to exercise reasonable care, prudence and diligence such as
a person having responsibility for the safekeeping of assets of management
investment companies registered under the 1940 Act would exercise.
3.2.7 REPRESENTATIONS WITH RESPECT TO RULE 17F-5. The Foreign Custody
Manager represents to Fund that it is a U.S. Bank as defined in section
(a)(7) of Rule 17f-5. Fund represents to State Street that the Board has
determined that it is reasonable for the Board to rely on State Street to
perform the responsibilities delegated pursuant hereto to State Street as
the Foreign Custody Manager of the Portfolios.
3.2.8 EFFECTIVE DATE AND TERMINATION OF STATE STREET AS FOREIGN CUSTODY
MANAGER. The Board's delegation to State Street as Foreign Custody Manager
of the Portfolios shall be effective as of the date hereof and shall remain
in effect until terminated at any time, without penalty, by written notice
from the terminating party to the non-terminating party. Termination will
become effective thirty (30) days after receipt by the non-terminating
party of such notice. The provisions of Section 3.2.2 hereof shall govern
the delegation to and termination of State Street as Foreign Custody
Manager of the Portfolios with respect to designated countries.
SECTION 3.3 ELIGIBLE SECURITIES DEPOSITORIES.
3.3.1 ANALYSIS AND MONITORING. State Street shall (a) provide Fund (or its
duly-authorized investment manager or investment advisor) with an analysis
of the custody risks associated with maintaining assets with the Eligible
Securities Depositories set forth on Schedule B hereto in accordance with
section (a)(1)(i)(A) of Rule 17f-7, and (b) monitor such risks on a
continuing basis, and promptly notify Fund (or its duly-authorized
investment manager or investment advisor) of any material change in such
risks, in accordance with section (a)(1)(i)(B) of Rule 17f-7.
3.3.2 STANDARD OF CARE. State Street agrees to exercise reasonable care,
prudence and diligence in performing the duties set forth in Section 3.3.1.
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SECTION 4 DUTIES OF STATE STREET WITH RESPECT TO PROPERTY HELD OUTSIDE THE
UNITED STATES
SECTION 4.1 DEFINITIONS. As used throughout this Agreement, the capitalized
terms set forth below shall have the indicated meanings:
"Foreign Securities System" means an Eligible Securities Depository listed on
Schedule B hereto.
"Foreign Sub-Custodian" means a foreign banking institution serving as an
Eligible Foreign Custodian.
SECTION 4.2 HOLDING SECURITIES. State Street shall identify on its books as
belonging to the Portfolios the foreign securities held by each Foreign
Sub-Custodian or Foreign Securities System. State Street may hold foreign
securities for all of its customers, including the Portfolios, with any Foreign
Sub-Custodian in an account that is identified as belonging to State Street for
the benefit of its customers, provided however, that (i) the records of State
Street with respect to foreign securities which are maintained in such account
shall identify those securities as belonging to the Portfolios and (ii), to the
extent permitted and customary in the market in which the account is maintained,
State Street shall require that securities so held by the Foreign Sub-Custodian
be held separately from any assets of such Foreign Sub-Custodian or of other
customers of such Foreign Sub-Custodian.
SECTION 4.3 FOREIGN SECURITIES SYSTEMS. Foreign securities shall be
maintained in a Foreign Securities System in a designated country through
arrangements implemented by State Street or a Foreign Sub-Custodian, as
applicable, in such country. (Foreign Securities Systems and U.S. Securities
Systems are collectively referred to herein as "SECURITIES SYSTEMS").
SECTION 4.4 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1. DELIVERY OF FOREIGN ASSETS. State Street or a Foreign Sub-Custodian
shall release and deliver foreign securities held by State Street or such
Foreign Sub-Custodian, or in a Foreign Securities System account, only upon
receipt of Proper Instructions on behalf of the Applicable Portfolio, which
may be continuing instructions when deemed appropriate by the parties, and
only in the following cases:
(i) upon the sale of such foreign securities for the Portfolio in
accordance with commercially reasonable market practice in the country
where such foreign securities are held or traded, including, without
limitation: (A) delivery against reasonable expectation of receiving later
payment; or (B) in the case of a sale effected through a Foreign Securities
System, in accordance with the rules governing the operation of the Foreign
Securities System;
(ii) in connection with any repurchase agreement related to foreign
securities;
(iii) to the depository agent in connection with tender or other
similar offers for foreign securities;
11
(iv) to the issuer thereof or its agent when such foreign securities
are called, redeemed, retired or otherwise become payable;
(v) to the issuer thereof, or its agent, for transfer into the name of
State Street (or the name of the respective Foreign Sub-Custodian or of any
nominee of State Street or such Foreign Sub-Custodian) or for exchange for
a different number of bonds, certificates or other evidence representing
the same aggregate face amount or number of units;
(vi) to brokers, clearing banks or other clearing agents for
examination or trade execution in accordance with market custom; provided
that in any such case the Foreign Sub-Custodian shall have no
responsibility or liability for any loss arising from the delivery of such
securities prior to receiving payment for such securities except as may
arise from the Foreign Sub-Custodian's own negligence or willful
misconduct;
(vii) for exchange or conversion pursuant to any Corporate Actions or
pursuant to provisions for conversion contained in such securities, or
pursuant to any deposit agreement;
(viii) in the case of warrants, rights or similar foreign securities,
the surrender thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary securities for
definitive securities;
(ix) for delivery as security in connection with any borrowing by the
Portfolios requiring a pledge of assets by the Portfolios;
(x) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin in accordance
with applicable regulatory requirements;
(xi) in connection with the lending of foreign securities by the
Portfolio; and
(xii) for any other purpose, but only upon receipt of Proper
Instructions specifying the foreign securities to be delivered and naming
the person or persons to whom delivery of such securities shall be made.
4.4.2. PAYMENT OF PORTFOLIO MONIES -FOREIGN SECURITIES. Upon receipt of
Proper Instructions on behalf of the applicable Portfolio, which may be
continuing instructions when deemed appropriate by the parties, State
Street shall pay out, or direct the respective Foreign Sub-Custodian or the
respective Foreign Securities System to pay out, monies of a Portfolio in
the following cases only:
(i) upon the purchase of foreign securities for the Portfolio, unless
otherwise directed by Proper Instructions, by (A) delivering money to the
seller thereof or to a dealer therefor (or an agent for such seller or
dealer) against reasonable expectation of receiving later delivery of such
foreign securities; or (B) in the case of a purchase effected through a
Foreign Securities System, in accordance with the rules governing the
operation of such Foreign Securities System;
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(ii) in connection with the conversion, exchange or surrender of
foreign securities;
(iii) for the payment of any expense or liability of the Portfolio,
including but not limited to the following payments: interest, taxes,
investment advisory fees, transfer agency fees, fees hereunder, legal fees,
accounting fees, and other operating expenses;
(iv) for the purchase or sale of foreign exchange or foreign exchange
contracts for the Portfolio, including transactions executed with or
through State Street or its Foreign Sub-Custodians;
(v) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(vi) for payment of part or all of the dividends received in respect
of securities sold short;
(vii) in connection with the borrowing or lending of foreign
securities; and
(viii) for any other purpose, but only upon receipt of Proper
Instructions specifying the amount of such payment and naming the person or
persons to whom such payment is to be made.
4.4.3. MARKET CONDITIONS. Notwithstanding any provision hereof to the
contrary, settlement and payment for Foreign Assets received for the
account of the Portfolios and delivery of Foreign Assets maintained for the
account of the Portfolios may be effected in accordance with the customary
established securities trading or processing practices and procedures in
the country or market in which the transaction occurs, including, without
limitation, delivering Foreign Assets to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer) with the
expectation of receiving later payment for such Foreign Assets from such
purchaser or dealer.
State Street shall provide to the Board the information with respect to
custody and settlement practices in countries in which State Street employs
a Foreign Sub-Custodian described on Schedule C hereto at the time or times
set forth on such Schedule. State Street may revise Schedule C from time to
time, provided that no such revision shall result in the Board being
provided with substantively less information than had been previously
provided hereunder.
SECTION 4.5 REGISTRATION OF FOREIGN SECURITIES. The foreign securities
maintained in the custody of a Foreign Sub-Custodian (other than bearer
securities) shall be registered in the name of the applicable Portfolio or in
the name of State Street or in the name of any Foreign Sub-Custodian or in the
name of any nominee of the foregoing, and Fund on behalf of such Portfolio
agrees to hold any such nominee harmless from any liability as a holder of
record of such foreign securities. State Street or a Foreign Sub-Custodian shall
not be obligated to accept securities on behalf of a Portfolio under the terms
hereof unless the form of such securities and the manner in which they are
delivered are in accordance with reasonable market practice.
13
SECTION 4.6 BANK ACCOUNTS. State Street shall identify on its books as
belonging to Fund cash (including cash denominated in foreign currencies)
deposited with State Street. Where State Street is unable to maintain, or market
practice does not facilitate the maintenance of, cash on the books of State
Street, a bank account or bank accounts shall be opened and maintained outside
the United States on behalf of a Portfolio with a Foreign Sub-Custodian. All
accounts referred to in this Section shall be subject only to draft or order by
State Street (or, if applicable, such Foreign Sub-Custodian) acting pursuant to
the terms hereof to hold cash received by or from or for the account of the
Portfolio. Cash maintained on the books of State Street (including its branches,
subsidiaries and affiliates), regardless of currency denomination, is maintained
in bank accounts established under, and subject to the laws of, The Commonwealth
of Massachusetts.
SECTION 4.7 COLLECTION OF INCOME. State Street shall use reasonable
commercial efforts to collect all income and other payments with respect to the
Foreign Assets held hereunder to which the Portfolios shall be entitled and
shall credit such income, as collected, to the applicable Portfolio. In the
event that extraordinary measures are required to collect such income, Fund and
State Street shall consult as to such measures and as to the compensation and
expenses of State Street relating to such measures.
SECTION 4.8 SHAREHOLDER RIGHTS. With respect to the foreign securities held
pursuant to this ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇▇▇▇ will use reasonable commercial efforts
to facilitate the exercise of voting and other shareholder rights, subject
always to the laws, regulations and practical constraints that may exist in the
country where such securities are issued. Fund acknowledges that local
conditions, including lack of regulation, onerous procedural obligations, lack
of notice and other factors may have the effect of severely limiting the ability
of Fund to exercise shareholder rights.
SECTION 4.9 COMMUNICATIONS RELATING TO FOREIGN SECURITIES. State Street
shall transmit promptly to Fund written information with respect to Corporate
Actions received by State Street via the Foreign Sub-Custodians from issuers of
the foreign securities being held for the account of the Portfolios. With
respect to tender or exchange offers, State Street shall transmit promptly to
Fund written information with respect to materials so received by State Street
from issuers of the foreign securities whose tender or exchange is sought or
from the party (or its agents) making the tender or exchange offer. State Street
shall not be liable for any untimely exercise of any action, right or power in
connection with a Corporate Action unless (i) State Street or the respective
Foreign Sub-Custodian is in actual possession of such foreign securities or
property and (ii) State Street receives Proper Instructions with regard to the
Corporate Action, and both (i) and (ii) occur at least three business days prior
to the date on which State Street is to take action to exercise such right or
power.
SECTION 4.10 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant
to which State Street employs a Foreign Sub-Custodian shall, to the extent
possible, require the Foreign Sub-Custodian to exercise reasonable care in the
performance of its duties, and to indemnify, and hold harmless, State Street
from and against any loss, damage, cost, expense, liability or claim arising out
of or in connection with the Foreign Sub-Custodian's performance of such
obligations. At Fund's election, the Portfolios shall be entitled to be
subrogated to the rights of State Street with respect to any claims against a
Foreign Sub-Custodian as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Portfolios have not been made
whole for any such loss, damage, cost, expense, liability or claim.
14
SECTION 4.11 TAX LAW. State Street shall have no responsibility or
liability for any obligations now or hereafter imposed on Fund, the Portfolios
or State Street as custodian of the Portfolios by the tax law of the United
States or of any state or political subdivision thereof. It shall be the
responsibility of Fund to notify State Street of the obligations imposed on Fund
with respect to the Portfolios or State Street as custodian of the Portfolios by
the tax law of countries other than those mentioned in the above sentence,
including responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting. The sole
responsibility of State Street with regard to such tax law shall be to use
reasonable efforts to assist Fund with respect to any claim for exemption or
refund under the tax law of countries for which Fund has provided such
information.
SECTION 4.12 LIABILITY OF STATE STREET. State Street shall be liable for
the acts or omissions of a Foreign Sub-Custodian to the same extent as set forth
with respect to sub-custodians generally herein and, regardless of whether
assets are maintained in the custody of a Foreign Sub-Custodian or a Foreign
Securities System, State Street shall not be liable for any loss, damage, cost,
expense, liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism, or any other loss to the
extent that the Sub-Custodian has acted with reasonable care.
SECTION 5 PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES. State
Street shall receive from the distributor for the Shares or from the Transfer
Agent and deposit into the account of the appropriate Portfolio such payments as
are received for Shares thereof issued or sold from time to time by Fund. State
Street will provide timely notification to Fund on behalf of each such Portfolio
and the Transfer Agent of any receipt by it of payments for Shares of such
Portfolio.
From such funds as may be available for the purpose, State Street shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares, State Street is authorized upon receipt of instructions
from the Transfer Agent to wire funds to or through a commercial bank designated
by the redeeming shareholders. In connection with the redemption or repurchase
of Shares, State Street shall honor checks drawn on State Street by a holder of
Shares, which checks have been furnished by Fund to the holder of Shares, when
presented to State Street in accordance with such procedures and controls as are
mutually agreed upon from time to time between Fund and State Street.
SECTION 6 PROPER INSTRUCTIONS. Proper Instructions as used throughout this
Agreement means a writing signed or initialed by one or more person or persons
as the Board shall have from time to time authorized. Each such writing shall
set forth the specific transaction or type of transaction involved, including a
specific statement of the purpose for which such action is requested. Oral
instructions will be considered Proper Instructions if State Street reasonably
believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. Fund shall cause all oral
instructions to be confirmed in writing. If given pursuant to procedures to be
agreed upon by the parties, Proper Instructions may include communications
effected directly between electro-mechanical or electronic devices provided that
15
Fund and State Street agree to security procedures, including but not limited
to, the security procedures selected by Fund in the Funds Transfer Addendum
attached hereto. For purposes of this Section, Proper Instructions shall include
instructions received by State Street pursuant to any three-party agreement that
requires a segregated asset account in accordance with Section 2.9.
SECTION 7 ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. State Street may in its
discretion, without express authority from Fund on behalf of each applicable
Portfolio: 1) surrender securities in temporary form for securities in
definitive form; 2) endorse for collection, in the name of the Portfolio,
checks, drafts and other negotiable instruments; and 3) in general, attend to
all non-discretionary details in connection with the sale, exchange,
substitution, purchase, transfer and other dealings with the securities and
property of the Portfolio except as otherwise directed by the Board.
SECTION 8 EVIDENCE OF AUTHORITY. State Street shall be protected in acting upon
any instructions, notice, request, consent, certificate or other instrument or
paper believed by it to be genuine and to have been properly executed by or on
behalf of Fund. State Street may receive and accept a copy of a resolution
certified by the Secretary or an Assistant Secretary of Fund ("CERTIFIED
RESOLUTION") as conclusive evidence (a) of the authority of any person to act in
accordance with such resolution or (b) of any determination or of any action by
the Board as described in such resolution, and such resolution may be considered
as in full force and effect until receipt by State Street of written notice to
the contrary.
SECTION 9 DUTIES OF STATE STREET WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE
SECTION 9.1 ACCOUNTS AND RECORDS. State Street will prepare and maintain,
under the direction of and as interpreted by Fund, Fund's or Portfolio's
accountants and/or other advisors, in complete, accurate and current form such
accounts and records: (A) required to be maintained by Fund with respect to
portfolio transactions under the 1940 Act; (B) required as a basis for
calculation of each Portfolio's net asset value; and (C) as otherwise agreed
upon by the parties. Fund will advise State Street in writing of all applicable
record retention requirements, other than those set forth in the 1940 Act. State
Street will preserve such accounts and records in the manner and for the periods
prescribed in the 1940 Act or for such longer period as is agreed upon by the
parties. Fund will furnish, in writing or its electronic or digital equivalent,
accurate and timely information needed by State Street to complete such accounts
and records when such information is not readily available from generally
accepted securities industry services or publications. State Street shall, at
Fund's request, supply Fund with a tabulation of securities owned by a Portfolio
and held by State Street and shall, when requested to do so by Fund and for such
compensation as shall be agreed upon between Fund and State Street, include
certificate numbers in such tabulations.
SECTION 9.2 DELIVERY OF ACCOUNTS AND RECORDS. Fund will turn over or cause
to be turned over to State Street all accounts and records needed by State
Street to perform its duties and responsibilities hereunder fully and properly.
State Street may rely conclusively on the completeness and correctness of such
accounts and records.
SECTION 9.3 ACCOUNTS AND RECORDS PROPERTY OF FUND. State Street
acknowledges that all of the accounts and records maintained by State Street
pursuant hereto are the property of Fund, and will be made available to Fund for
16
inspection or reproduction within a reasonable period of time, upon demand.
State Street will assist Fund's independent auditors, or upon the prior written
approval of Fund, or upon demand, any regulatory body, in any requested review
of Fund's accounts and records but Fund will reimburse State Street for all
reasonable expenses and employee time invested in any such review outside of
routine and normal periodic reviews. Upon receipt from Fund of the necessary
information or instructions, State Street will supply information from the books
and records it maintains for Fund that Fund may reasonably request for tax
returns, questionnaires, periodic reports to shareholders and such other reports
and information requests as Fund and State Street may agree upon from time to
time.
SECTION 9.4 ADOPTION OF PROCEDURES. State Street and Fund may from time to
time adopt such procedures as they agree upon, and State Street may conclusively
assume that no procedure approved or directed by Fund, Fund's or Portfolio's
accountants or other advisors conflicts with or violates any requirements of
Fund's Prospectus, governing documents, any applicable law, rule or regulation,
or any order, decree or agreement by which Fund may be bound. Fund will be
responsible for notifying State Street of any changes in statutes, regulations,
rules, requirements or policies which may impact State Street responsibilities
or procedures hereunder.
SECTION 9.5 VALUATION OF ASSETS. State Street will value the assets of each
Portfolio in accordance with Proper Instructions utilizing the pricing sources
designated by Fund ("PRICING SOURCES") on the Price Source and Methodology
Authorization Matrix, incorporated herein by this reference. State Street will
assist with the shadow pricing of any money market Portfolios as requested by
Fund. If so directed, State Street shall also calculate daily net income of a
Portfolio as described in the prospectus and shall advise the Fund and the
Transfer Agent periodically of the division of such net income of its various
components.
SECTION 9.6 LIMITATION OF LIABILITY. So long as and to the extent that it
is in the excise of reasonable care, State Street is not responsible or liable
for, and Fund will indemnify and hold State Street harmless from and against,
any and all costs, expenses, losses, damages, charges, counsel fees (including,
without limitation, disbursements and the allocable cost of in-house counsel),
payments and liabilities which may be asserted against or incurred by State
Street or for which State Street may be held to be liable, arising out of or
attributable to any error, omission, inaccuracy or other deficiency in any
Portfolio's accounts and records or other information provided to State Street
by or on behalf of a Portfolio, including the accuracy of the prices quoted by
the Pricing Sources or for the information supplied by Fund to value the assets,
or the failure of Fund to provide, or provide in a timely manner, any accounts,
records, or information needed by State Street to perform its duties hereunder.
SECTION 10 OPINION OF FUND'S INDEPENDENT ACCOUNTANT. State Street shall take all
reasonable action, as Fund on behalf of each applicable Portfolio may from time
to time request, to obtain from year to year favorable opinions from Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of Fund's Form N-1A, and Form N-SAR or other annual reports
to the SEC and with respect to any other requirements thereof.
SECTION 11 REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS. State Street shall
provide Fund, on behalf of each of the Portfolios at such times as Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in any Securities System, relating to the
17
services provided by State Street hereunder; such reports, shall be of
sufficient scope and in sufficient detail, as may reasonably be required by Fund
to provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
SECTION 12 COMPENSATION OF STATE STREET. State Street shall be entitled to
reasonable compensation for its services and expenses as custodian and
recordkeeping agent, as agreed upon from time to time between Fund on behalf of
each applicable Portfolio and State Street.
SECTION 13 RESPONSIBILITY OF STATE STREET. So long as and to the extent that it
is in the exercise of reasonable care, State Street 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 hereto and shall be held harmless in
acting upon any notice, request, consent, certificate or other instrument
reasonably believed by it to be genuine and to be signed by the proper party or
parties, including any futures commission merchant acting pursuant to the terms
of a three-party futures or options agreement. State Street shall be held to the
exercise of reasonable care in carrying out the provisions hereof, but shall be
kept indemnified by and shall be without liability to Fund for any action taken
or omitted by it in good faith without negligence, including, without
limitation, acting in accordance with any Proper Instruction. It shall be
entitled to rely on and may act upon advice of counsel on all matters, and shall
be without liability for any action reasonably taken or omitted pursuant to such
advice. State Street shall be without liability to Fund and the Portfolios for
any loss, liability, claim or expense resulting from or caused by anything which
is part of Country Risk (as defined in Section 3 hereof), including without
limitation nationalization, expropriation, currency restrictions, or acts of
war, revolution, riots or terrorism.
Except to the extent of State Street's own negligence or willful misconduct or
the negligence or willful misconduct of a sub-custodian or agent, State Street
shall be without liability to Fund for any loss, liability, claim or expense
resulting from or caused by; (i) events or circumstances beyond the reasonable
control of State Street or any sub-custodian or Securities System or any agent
or nominee of any of the foregoing, including, without limitation, the
interruption, suspension or restriction of trading on or the closure of any
securities market, power or other mechanical or technological failures or
interruptions, computer viruses or communications disruptions, work stoppages,
natural disasters, or other similar events or acts ("Force Majeure Events");
(ii) errors by Fund or its duly-authorized investment manager or investment
advisor in their instructions to State Street provided such instructions have
been in accordance with this Agreement; (iii) the insolvency of or acts or
omissions by a Securities System; (iv) any delay or failure of any broker, agent
or intermediary, central bank or other commercially prevalent payment or
clearing system to deliver to State Street's sub-custodian or agent securities
purchased or in the remittance or payment made in connection with securities
sold; (v) any delay or failure of any company, corporation, or other body in
charge of registering or transferring securities in the name of State Street,
Fund, State Street's sub-custodians, nominees or agents or any consequential
losses arising out of such delay or failure to transfer such securities
including non-receipt of bonus, dividends and rights and other accretions or
benefits; (vi) delays or inability to perform its duties due to any disorder in
market infrastructure with respect to any particular security or Securities
System; and (vii) any provision of any present or future law or regulation or
order of the United States of America, or any state thereof, or any other
country, or political subdivision thereof or of any court of competent
jurisdiction.
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ shall be liable for the acts or omissions of a Foreign
Sub-Custodian (as defined in Section 4 hereof) to the same extent as set forth
with respect to sub-custodians generally herein.
If Fund on behalf of a Portfolio requires State Street to take any action with
respect to securities, which action involves the payment of money or which
action may, in the opinion of State Street, result in State Street or its
nominee assigned to Fund or the Portfolio being liable for the payment of money
or incurring liability of some other form, Fund on behalf of the Portfolio, as a
prerequisite to requiring State Street to take such action, shall provide
indemnity to State Street in an amount as State Street may reasonably require.
If Fund requires State Street, its affiliates, subsidiaries or agents, to
advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that State Street or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in connection with the
performance of this Agreement, except such as may arise from State Street's or
its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the applicable
Portfolio shall be security therefor and should Fund fail to repay State Street
promptly, State Street shall be entitled to utilize available cash and to
dispose of such Portfolio's assets to the extent necessary to obtain
reimbursement.
In no event shall either party be liable for indirect, special or consequential
damages.
SECTION 14 EFFECTIVE PERIOD, TERMINATION AND AMENDMENT. This Agreement shall
become effective as of its execution, shall continue in full force and effect
until terminated as hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid to the other party,
such termination to take effect not sooner than sixty (60) days after the date
of such delivery or mailing; PROVIDED, however, that Fund shall not amend or
terminate this Agreement in contravention of any applicable federal or state
regulations, or any provision of the governing documents, and further provided,
that Fund on behalf of one or more of the Portfolios may at any time by action
of its Board (i) substitute another bank or trust company for State Street by
giving notice as described above to State Street, or (ii) immediately terminate
this Agreement in the event of the appointment of a conservator or receiver for
State Street by the Comptroller of the Currency or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination hereof, Fund on behalf of each applicable Portfolio shall pay
to State Street such compensation as may be due as of the date of such
termination and shall likewise reimburse State Street for its costs, expenses
and disbursements.
SECTION 15 SUCCESSOR CUSTODIAN AND RECORDKEEPING AGENT. Upon termination of
State Street as recordkeeping agent, State Street shall, upon payment of all
sums due to it from Fund that are not in dispute, deliver all accounts and
records to the successor recordkeeping agent (or, if none, to Fund) at the
office of State Street.
Upon termination of State Street as Custodian, if a successor custodian for one
or more Portfolios shall be appointed by the Board, State Street shall deliver
to such successor custodian at the office of State Street, duly endorsed and in
the form for transfer, all securities of each applicable Portfolio then held by
19
it hereunder and shall transfer to an account of the successor custodian all of
the securities of each such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, State Street shall, in like
manner, upon receipt of a Certified Resolution, deliver at the office of State
Street and transfer such securities, funds and other properties in accordance
with such resolution.
In the event that no written order designating a successor custodian or
Certified Resolution shall have been delivered to State Street on or before the
date when such termination shall become effective, then State Street shall have
the right to deliver to a bank or trust company, which is a "bank" as defined in
the 1940 Act, doing business in Boston, Massachusetts, or New York, New York, 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, funds and other properties held by State Street on behalf of each
applicable Portfolio and all instruments held by State Street relative thereto
and all other property held by it hereunder on behalf of each applicable
Portfolio, and to transfer to an account of such successor custodian all of the
securities of each such Portfolio held in any Securities System. Thereafter,
such bank or trust company shall be the successor of State Street hereunder.
In the event that accounts, records, securities, funds and other properties
remain in the possession of State Street after the date of termination hereof
owing to failure of Fund to procure the Certified Resolution to appoint a
successor custodian or otherwise, State Street shall be entitled to fair
compensation for its services during such period as State Street retains
possession of such accounts, records, securities, funds and other properties and
the provisions hereof relating to the duties and obligations of State Street
shall remain in full force and effect.
SECTION 16 CONFIDENTIAL INFORMATION The parties acknowledge that in the
course of performing their responsibilities under the Agreement, they may be
exposed to or acquire certain non-public information belonging to the other
party ("Confidential Information"). The parties agree to hold any such
Confidential Information in strict confidence and not to copy, reproduce, sell,
assign, license, market, transfer or otherwise dispose of, give or disclose such
Confidential Information to third parties or to use such Confidential
Information for any purposes whatsoever other than the provision of the services
under this Agreement and to advise each of its officers, directors, employees
and agents who may be exposed to such Confidential Information of their
obligations to keep such information confidential. It is understood that in the
event of a breach of this Section, damages may not be an adequate remedy and the
non-breaching party shall be entitled to injunctive relief to restrain any such
breach, threatened or actual.
The foregoing confidentiality obligations shall not apply to such Confidential
Information (1) which at the time of disclosure, is publicly available or in the
public knowledge; (2) which, after disclosure, lawfully becomes part of the
public knowledge through publication or otherwise, but through no fault of the
receiving party; (3) which the receiving party possesses at the time of
disclosure of such Confidential Information and which was not acquired, directly
or indirectly, from the disclosing party; (4) was acquired by the receiving
party from a third party which has the right to disclose such Confidential
Information; or (5) is independently developed by the receiving party without
reference to the Confidential Information.
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SECTION 17 GENERAL
SECTION 17.1 INTERPRETIVE AND ADDITIONAL PROVISIONS. In connection with the
operation hereof, State Street and Fund on behalf of each of the Portfolios, may
from time to time agree on such provisions interpretive of or in addition to the
provisions hereof as may in their joint opinion be consistent with the general
tenor of this Agreement. Any such interpretive or additional provisions shall be
in a writing signed by both parties and shall be annexed hereto, PROVIDED that
no such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the governing documents. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Agreement.
SECTION 17.2 ADDITIONAL PORTFOLIOS. In the event that Fund establishes one
or more additional series with respect to which it desires to have State Street
render services as custodian and recordkeeping agent under the terms hereof, it
shall so notify State Street in writing, and if State Street agrees to provide
such services, such series shall become a Portfolio hereunder.
SECTION 17.3 MASSACHUSETTS LAW TO APPLY. This Agreement shall be construed
and the provisions thereof interpreted under and in accordance with laws of The
Commonwealth of Massachusetts.
SECTION 17.4 PRIOR AGREEMENTS. This Agreement supersedes and terminates, as
of the date hereof, all prior agreements between Fund on behalf of each of the
Portfolios and State Street relating to the custody or recordkeeping of Fund's
assets, as more specifically set forth on Exhibit A hereto.
SECTION 17.5 NOTICES. Any notice, instruction or other instrument required
to be given hereunder may be delivered in person to the offices of the parties
as set forth herein during normal business hours or delivered prepaid registered
mail or by telex, cable or telecopy to the parties at the following addresses or
such other addresses as may be notified by any party from time to time.
To Fund: To State Street:
ING PILGRIM INVESTMENTS STATE STREET BANK AND TRUST COMPANY
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ 801 Pennsylvania Avenue
Scottsdale, Arizona 85258-2034 ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Attention: Vice President, Custody
Telephone: ▇▇▇-▇▇▇-▇▇▇▇ Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇ Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Such notice, instruction or other instrument shall be deemed to have been served
in the case of a registered letter at the expiration of five business days after
posting, in the case of cable twenty-four hours after dispatch and, in the case
of telex, immediately on dispatch and if delivered outside normal business hours
it shall be deemed to have been received at the next time after delivery when
normal business hours commence and in the case of cable, telex or telecopy on
the business day after the receipt thereof. Evidence that the notice was
properly addressed, stamped and put into the post shall be conclusive evidence
of posting.
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SECTION 17.6 REPRODUCTION OF DOCUMENTS. This Agreement and all schedules,
addenda, exhibits, attachments and amendments hereto may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties hereto all/each agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
SECTION 17.7 REMOTE ACCESS SERVICES ADDENDUM. State Street and Fund agree
to be bound by the terms of the Remote Access Services Addendum attached hereto.
SECTION 17.8 ASSIGNMENT. Except as otherwise set forth herein, this
Agreement may not be assigned by either party without the written consent of the
other.
SECTION 17.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all such
counterparts taken together shall constitute but one and the same Agreement.
SECTION 17.10 SEVERABILITY. If any provision in this Agreement is
determined to be invalid, illegal, in conflict with any law or otherwise
unenforceable, the remaining provisions hereof will be considered severable and
will not be affected thereby, and every remaining provision hereof will remain
in full force and effect and will remain enforceable to the fullest extent
permitted by applicable law.
SECTION 17.11 SHAREHOLDER COMMUNICATIONS ELECTION. SEC Rule 14b-2 requires
banks which hold securities for the account of customers to respond to requests
by issuers of securities for the names, addresses and holdings of beneficial
owners of securities of that issuer held by the bank unless the beneficial owner
has expressly objected to disclosure of this information. In order to comply
with the rule, State Street needs Fund to indicate whether it authorizes State
Street to provide Fund's name, address, and share position to requesting
companies whose securities Fund owns. If Fund tells ▇▇▇▇▇ ▇▇▇▇▇▇ "▇▇", ▇▇▇▇▇
▇▇▇▇▇▇ will not provide this information to requesting companies. If Fund tells
State Street "yes" or does not check either "yes" or "no" below, State Street is
required by the rule to treat Fund as consenting to disclosure of this
information for all securities owned by Fund or any funds or accounts
established by Fund. For Fund's protection, the Rule prohibits the requesting
company from using Fund's name and address for any purpose other than corporate
communications. Please indicate below whether Fund consents or objects by
checking one of the alternatives below.
YES [ ] State Street is authorized to release Fund's name, address, and share
positions.
NO [X] State Street is not authorized to release Fund's name, address, and
share positions.
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IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative effective
as of the day and year first written above.
ON BEHALF OF EACH OF THE FUNDS
SET FORTH ON EXHIBIT A HERETO FUND SIGNATURE ATTESTED TO BY:
By: By:
------------------------------ ---------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title: *[SECRETARY/ASS'T SECRETARY]
------------------------------ ---------------------------------
STATE STREET BANK AND TRUST COMPANY SIGNATURE ATTESTED TO BY:
By: By:
------------------------------ ---------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
------------------------------ ---------------------------------
23
EXHIBIT A: LIST OF FUNDS
ENTITY NAME JURISDICTION
----------- ------------
PILGRIM FINANCIAL SERVICES FUND, INC. Maryland corporation
PILGRIM EQUITY TRUST Massachusetts Business Trust
Pilgrim Biotechnology Fund
Pilgrim MidCap Opportunities Fund
Pilgrim Principal Protection Fund
Pilgrim Principal Protection Fund II
ING SmallCap Value Fund
ING MidCap Value Fund
PILGRIM FUNDS TRUST Delaware Business Trust
Pilgrim High Yield Bond Fund
Pilgrim Intermediate Bond Fund
Plgrim Internet Fund
Pilgrim National Tax-Exempt Bond Fund
Pilgrim Tax Efficient Equity Fund
ING Pilgrim Money Market Fund
PILGRIM GNMA INCOME FUND, INC.
PILGRIM GROWTH AND INCOME FUND, INC.
PILGRIM GROWTH OPPORTUNITIES FUND Massachusetts Business Trust
PILGRIM INVESTMENT FUNDS, INC. Maryland corporation
Pilgrim MagnaCap Fund
Pilgrim High Yield Fund
PILGRIM MAYFLOWER TRUST Massachusetts Business Trust
Pilgrim Growth + Value Fund
Pilgrim Research Enhanced Index Fund
PILGRIM MUTUAL FUNDS Delaware Trust
Pilgrim LargeCap Growth Fund
Pilgrim MidCap Growth Fund
Pilgrim SmallCap Growth Fund
Pilgrim Convertible Fund
Pilgrim Balanced Fund
Pilgrim High Yield Fund II
Pilgrim Strategic Income Fund
Pilgrim Money Market Fund
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PILGRIM NATURAL RESOURCES TRUST
PILGRIM SENIOR INCOME FUND Delaware Business Trust
PILGRIM SMALLCAP OPPORTUNITIES FUND Massachusetts Business Trust
PILGRIM PRIME RATE TRUST Massachusetts business trust
PILGRIM VARIABLE PRODUCTS TRUST
Pilgrim VP Convertible Portfolio
Pilgrim VP Growth & Income Portfolio
Pilgrim VP Growth + Value Portfolio
Pilgrim VP LargeCap Growth Portfolio
Pilgrim VP SmallCap Opportunities Portfolio
Pilgrim VP Research Enhanced Index Portfolio
Pilgrim VP High Yield Bond Portfolio
Pilgrim VP MagnaCap Portfolio
Pilgrim VP Growth Opportunities Portfolio
Pilgrim ▇▇ ▇▇▇▇▇▇ Opportunities Portfolio
Pilgrim VP Financial Services Portfolio
USLICO SERIES FUND Massachusetts Business Trust
Asset Allocation Portfolio
Bond Portfolio
Money Market Portfolio
Stock Portfolio
LEXINGTON MONEY MARKET TRUST
25