Exhibit 10.2
MASTER CUSTODY AGREEMENT
THIS CUSTODY AGREEMENT ("Agreement") is made and entered into
as of February 16, 1996, by and between each Investment Company listed
on Exhibit A, for itself and for each of its Series listed on Exhibit
A, and BANK OF NEW YORK, a New York corporation authorized to do a
banking business (the "Custodian").
RECITALS
A. Each Investment Company is an investment company
registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act") that invests and reinvests, for itself or on
behalf of its Series, in Domestic Securities and Foreign Securities.
B. The Custodian is, and has represented to each Investment
Company that the Custodian is, a "bank" as that term is defined in
Section 2(a)(5) of the Investment Company Act of 1940, as amended, and
is eligible to receive and maintain custody of investment company
assets pursuant to Section 17(f) and Rule 17f-2 thereunder.
C. The Custodian and each Investment Company, for itself and
for each of its Series, desire to provide for the retention of the
Custodian as a custodian of the assets of each Investment Company and
each Series, on the terms and subject to the provisions set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1.0 FORM OF AGREEMENT
Although the parties have executed this Agreement in the form
of a Master Custody Agreement for administrative convenience, this
Agreement shall create a separate custody agreement for each Investment
Company and for each Series designated on Exhibit A, as though each
Investment Company had separately executed an identical custody
agreement for itself and for each of its Series. No rights,
responsibilities or liabilities of any Investment Company or Series
shall be attributed to any other Investment Company or Series.
Section 1.1 DEFINITIONS
For purposes of this Agreement, the following terms shall
have the respective meanings specified below:
"Agreement" shall mean this Custody Agreement.
"Board" shall mean the Board of Trustees, Directors or
Managing General Partners, as applicable, of an Investment Company.
"Business Day" with respect to any Domestic Security means
any day, other than a Saturday or Sunday, that is not a day on which
banking institutions are authorized or required by law to be closed in
The City of New York and, with respect to Foreign Securities, a London
Business Day. "London Business Day" shall mean any day on which
dealings and deposits in U.S. dollars are transacted in the London
interbank market.
"Custodian" shall mean Bank of New York.
"Domestic Securities" shall have the meaning provided in
Subsection 2.1 hereof.
"Executive Committee" shall mean the executive committee of a
Board.
"Foreign Custodian" shall have the meaning provided in
Section 4.1 hereof.
"Foreign Securities" shall have the meaning provided in
Section 2.1 hereof.
"Foreign Securities Depository" shall have the meaning
provided in Section 4.1 hereof.
"Fund" shall mean an entity identified on Exhibit A as an
Investment Company, if the Investment Company has no series, or a
Series.
"Investment Company" shall mean an entity identified on
Exhibit A under the heading "Investment Company."
"Investment Company Act" shall mean the Investment Company
Act of 1940, as amended.
"Securities" shall have the meaning provided in Section 2.1
hereof.
"Securities System" shall have the meaning provided in
Section 3.1 hereof.
"Securities System Account" shall have the meaning provided
in Subsection 3.8(a) hereof.
"Series" shall mean a series of an Investment Company which
is identified as such on Exhibit A.
"Shares" shall mean shares of beneficial interest of the
Investment Company.
"Subcustodian" shall have the meaning provided in Subsection
3.7 hereof, but shall not include any Foreign Custodian.
"Transfer Agent" shall mean the duly appointed and acting
transfer agent for each Investment Company.
"Writing" shall mean a communication in writing, a
communication by telex, facsimile transmission, bankwire or other
teleprocess or electronic instruction system acceptable to the
Custodian.
Section 2. APPOINTMENT OF CUSTODIAN; DELIVERY OF ASSETS
2.1 Appointment of Custodian. Each Investment Company
hereby appoints and designates the Custodian as a custodian of the
assets of each Fund, including cash denominated in U.S. dollars or
foreign currency ("cash"), securities the Fund desires to be held
within the United States ("Domestic Securities") and securities it
desires to be held outside the United States ("Foreign Securities").
Domestic Securities and Foreign Securities are sometimes referred to
herein, collectively, as "Securities." The Custodian hereby accepts
such appointment and designation and agrees that it shall maintain
custody of the assets of each Fund delivered to it hereunder in the
manner provided for herein.
2.2 Delivery of Assets. Each Investment Company may deliver
to the Custodian Securities and cash owned by the Funds, payments of
income, principal or capital distributions received by the Funds with
respect to Securities owned by the Funds from time to time, and the
consideration received by the Funds for such Shares or other securities
of the Funds as may be issued and sold from time to time. The
Custodian shall have no responsibility whatsoever for any property or
assets of the Funds held or received by the Funds and not delivered to
the Custodian pursuant to and in accordance with the terms hereof. All
Securities accepted by the Custodian on behalf of the Funds under the
terms of this Agreement shall be in "street name" or other good
delivery form as determined by the Custodian.
2.3 Subcustodians. The Custodian may appoint BNY Western
Trust Company as a Subcustodian to hold assets of the Funds in
accordance with the provisions of this Agreement. In addition, upon
receipt of Proper Instructions and a certified copy of a resolution of
the Board or of the Executive Committee, and certified by the Secretary
or an Assistant Secretary, of an Investment Company, the Custodian may
from time to time appoint one or more other Subcustodians or Foreign
Custodians to hold assets of the affected Funds in accordance with the
provisions of this Agreement.
2.4 No Duty to Manage. The Custodian, a Subcustodian or a
Foreign Custodian shall not have any duty or responsibility to manage
or recommend investments of the assets of any Fund held by them or to
initiate any purchase, sale or other investment transaction in the
absence of Proper Instructions or except as otherwise specifically
provided herein.
Section 3. DUTIES OF THE CUSTODIAN WITH RESPECT TO ASSETS OF THE
FUNDS HELD BY THE CUSTODIAN
3.1 Holding Securities. The Custodian shall hold and
physically segregate from any property owned by the Custodian, for the
account of each Fund, all non-cash property delivered by each Fund to
the Custodian hereunder other than Securities which, pursuant to
Subsection 3.8 hereof, are held through a registered clearing agency, a
registered securities depository, the Federal Reserve's book-entry
securities system (referred to herein, individually, as a "Securities
System"), or held by a Subcustodian, Foreign Custodian or in a Foreign
Securities Depository.
3.2 Delivery of Securities. Except as otherwise
provided in Subsection 3.5 hereof, the Custodian, upon receipt of
Proper Instructions, shall release and deliver Securities owned by a
Fund and held by the Custodian in the following cases or as otherwise
directed in Proper Instructions:
(a) except as otherwise provided herein, upon sale of
such Securities for the account of the Fund and receipt by the
Custodian, a Subcustodian or a Foreign Custodian of payment therefor;
(b) upon the receipt of payment by the Custodian, a
Subcustodian or a Foreign Custodian in connection with any repurchase
agreement related to such Securities entered into by the Fund;
(c) in the case of a sale effected through a Securities
System, in accordance with the provisions of Subsection 3.8 hereof;
(d) to a tender agent or other authorized agent in
connection with (i) a tender or other similar offer for Securities
owned by the Fund, or (ii) a tender offer or repurchase by the Fund of
its own Shares;
(e) to the issuer thereof or its agent when such
Securities are called, redeemed, retired or otherwise become payable;
provided, that in any such case, the cash or other consideration is to
be delivered to the Custodian, a Subcustodian or a Foreign Custodian;
(f) to the issuer thereof, or its agent, for transfer
into the name or nominee name of the Fund, the name or nominee name of
the Custodian, the name or nominee name of any Subcustodian or Foreign
Custodian; or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate face
amount or number of units; provided that, in any such case, the new
Securities are to be delivered to the Custodian, a Subcustodian or
Foreign Custodian;
(g) to the broker selling the same for examination in
accordance with the "street delivery" custom;
(h) for exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, or reorganization of the
issuer of such Securities, or pursuant to a conversion of such
Securities; provided that, in any such case, the new Securities and
cash, if any, are to be delivered to the Custodian or a Subcustodian;
(i) in the case of warrants, rights or similar
securities, the surrender thereof in connection with the exercise of
such warrants, rights or similar Securities or the surrender of interim
receipts or temporary Securities for definitive Securities; provided
that, in any such case, the new Securities and cash, if any, are to be
delivered to the Custodian, a subcustodian or a Foreign Custodian;
(j) for delivery in connection with any loans of
Securities made by the Fund, but only against receipt by the Custodian,
a Subcustodian or a Foreign Custodian of adequate collateral as
determined by the Fund (and identified in Proper Instructions
communicated to the Custodian), which may be in the form of cash or
obligations issued by the United States government, its agencies or
instrumentalities, except that in connection with any loans for which
collateral is to be credited to the account of the Custodian, a
Subcustodian or a Foreign Custodian in the Federal Reserve's book-entry
securities system, the Custodian will not be held liable or responsible
for the delivery of Securities owned by the Fund prior to the receipt
of such collateral;
(k) for delivery as security in connection with any
borrowings by the Fund requiring a pledge of assets by the Fund, but
only against receipt by the Custodian, a Subcustodian or a Foreign
Custodian of amounts borrowed;
(l) for delivery in accordance with the provisions of
any agreement among the Fund, the Custodian, a Subcustodian or a
Foreign Custodian and a broker-dealer relating to compliance with the
rules of registered clearing corporations and of any registered
national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Fund;
(m) for delivery in accordance with the provisions of
any agreement among the Fund, the Custodian, a Subcustodian or a
Foreign Custodian and a futures commission merchant, relating to
compliance with the rules of the Commodity Futures Trading Commission
and/or any contract market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Fund;
(n) upon the receipt of instructions from the Transfer
Agent for delivery to the Transfer Agent or to the holders of Shares in
connection with distributions in kind in satisfaction of requests by
holders of Shares for repurchase or redemption; and
(o) for any other proper purpose, but only upon receipt
of Proper Instructions, and a certified copy of a resolution of the
Board or of the Executive Committee certified by the Secretary or an
Assistant Secretary of the Fund, specifying the securities to be
delivered, setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper purpose, and naming the
person or persons to whom delivery of such securities shall be made.
3.3 Registration of Securities. Securities held by the
Custodian, a Subcustodian or a Foreign Custodian (other than bearer
Securities) shall be registered in the name or nominee name of the
appropriate Fund, in the name or nominee name of the Custodian or in
the name or nominee name of any Subcustodian or Foreign Custodian.
Each Fund agrees to hold the Custodian, any such nominee, Subcustodian
or Foreign Custodian harmless from any liability as a holder of record
of such Securities.
3.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts for each Fund, subject only to draft
or order by the Custodian acting pursuant to the terms of this
Agreement, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it hereunder from or for the
account of each Fund, other than cash maintained by a Fund in a bank
account established and used in accordance with Rule 17f-3 under the
Fund Act. Funds held by the Custodian for a Fund may be deposited by
it to its credit as Custodian in the banking departments of the
Custodian, a Subcustodian or a Foreign Custodian. Such funds shall be
deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity. In the event a
Fund's account for any reason becomes overdrawn, or in the event an
action requested in Proper Instructions would cause such an account to
become overdrawn, the Custodian shall immediately notify the affected
Fund.
3.5 Collection of Income; Trade Settlement; Crediting of
Accounts. The Custodian shall collect income payable with respect to
Securities owned by each Fund, settle Securities trades for the account
of each Fund and credit and debit each Fund's account with the
Custodian in connection therewith as stated in this Subsection 3.5.
This Subsection shall not apply to repurchase agreements, which are
treated in Subsection 3.2(b), above.
(a) Upon receipt of Proper Instructions, the Custodian
shall effect the purchase of a Security by charging the account of the
Fund on the contractual settlement date, and by making payment against
delivery. If the seller or selling broker fails to deliver the Security
within a reasonable period of time, the Custodian shall notify the Fund
and credit the transaction amount to the account of the Fund, but the
Custodian shall have no further liability or responsibility for the
transaction.
(b) Upon receipt of Proper Instructions, the Custodian
shall effect the sale of a Security by withdrawing a certificate or
other indicia of ownership from the account of the Fund and by making
delivery against payment, and shall credit the account of the Fund with
the amount of such proceeds on the contractual settlement date. If the
purchaser or the purchasing broker fails to make payment within a
reasonable period of time, the Custodian shall notify the Fund, debit
the Fund's account for any amounts previously credited to it by the
Custodian as proceeds of the transaction and, if delivery has not been
made, redeposit the Security into the account of the Fund.
(c) The Fund is responsible for ensuring that the
Custodian receives timely and accurate Proper Instructions to enable
the Custodian to effect settlement of any purchase or sale. If the
Custodian does not receive such instructions within the required time
period, the Custodian shall have no liability of any kind to any
person, including the Fund, for failing to effect settlement on the
contractual settlement date. However, the Custodian shall use its best
reasonable efforts to effect settlement as soon as possible after
receipt of Proper Instructions.
(d) The Custodian shall credit the account of the Fund
with interest income payable on interest bearing Securities on payable
date. Dividends and other amounts payable with respect to Domestic
Securities and Foreign Securities shall be credited to the account of
the Fund when received by the Custodian. The Custodian shall not be
required to commence suit or collection proceedings or resort to any
extraordinary means to collect such income and other amounts payable
with respect to Securities owned by the Fund. The collection of income
due the Fund on Domestic Securities loaned pursuant to the provisions
of Subsection 3.2(j) shall be the responsibility of the Fund. The
Custodian will have no duty or responsibility in connection therewith,
other than to provide the Fund with such information or data as may be
necessary to assist the Fund in arranging for the timely delivery to
the Custodian of the income to which the Fund is entitled. The
Custodian shall have no liability to any person, including the Fund, if
the Custodian credits the account of the Fund with such income or other
amounts payable with respect to Securities owned by the Fund (other
than Securities loaned by the Fund pursuant to Subsection 3.2(j)
hereof) and the Custodian subsequently is unable to collect such income
or other amounts from the payors thereof within a reasonable time
period, as determined by the Custodian in its sole discretion. In such
event, the Custodian shall be entitled to reimbursement of the amount
so credited to the account of the Fund.
3.6 Payment of Fund Monies. Upon receipt of Proper
Instructions the Custodian shall pay out monies of a Fund in the
following cases or as otherwise directed in Proper Instructions:
(a) upon the purchase of Securities, futures contracts
or options on futures contracts for the account of the Fund but only,
except as otherwise provided herein, (i) against the delivery of such
securities, or evidence of title to futures contracts or options on
futures contracts, to the Custodian or a Subcustodian registered
pursuant to Subsection 3.3 hereof or in proper form for transfer; (ii)
in the case of a purchase effected through a Securities System, in
accordance with the conditions set forth in Subsection 3.8 hereof; or
(iii) in the case of repurchase agreements entered into between the
Fund and the Custodian, another bank or a broker-dealer (A) against
delivery of the Securities either in certificated form to the Custodian
or a Subcustodian or through an entry crediting the Custodian's account
at the appropriate Federal Reserve Bank with such Securities or (B)
against delivery of the confirmation evidencing purchase by the Fund of
Securities owned by the Custodian or such broker-dealer or other bank
along with written evidence of the agreement by the Custodian or such
broker-dealer or other bank to repurchase such Securities from the
Fund;
(b) in connection with conversion, exchange or
surrender of Securities owned by the Fund as set forth in Subsection
3.2 hereof;
(c) for the redemption or repurchase of Shares issued
by the Fund;
(d) for the payment of any expense or liability
incurred by the Fund, including but not limited to the following
payments for the account of the Fund: custodian fees, interest, taxes,
management, accounting, transfer agent and legal fees and operating
expenses of the Fund whether or not such expenses are to be in whole or
part capitalized or treated as deferred expenses; and
(e) for the payment of any dividends or distributions
declared by the Board with respect to the Shares.
3.7 Appointment of Subcustodians. The Custodian may appoint
BNY Western Trust Company or, upon receipt of Proper Instructions,
another bank or trust company, which is itself qualified under the
Investment Company Act to act as a custodian (a "Subcustodian"), as the
agent of the Custodian to carry out such of the duties of the Custodian
hereunder as a Custodian may from time to time direct; provided,
however, that the appointment of any Subcustodian shall not relieve the
Custodian of its responsibilities or liabilities hereunder.
3.8 Deposit of Securities in Securities Systems. The
Custodian may deposit and/or maintain Domestic Securities owned by a
Fund in a Securities System in accordance with applicable Federal
Reserve Board and Securities and Exchange Commission rules and
regulations, if any, and subject to the following provisions:
(a) the Custodian may hold Domestic Securities of the
Fund in the Depository Trust Company or the Federal Reserve's book
entry system or, upon receipt of Proper Instructions, in another
Securities System provided that such securities are held in an account
of the Custodian in the Securities System ("Securities System
Account") which shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for customers;
(b) the records of the Custodian with respect to
Domestic Securities of the Fund which are maintained in a Securities
System shall identify by book-entry those Domestic Securities belonging
to the Fund;
(c) the Custodian shall pay for Domestic Securities
purchased for the account of the Fund upon (i) receipt of advice from
the Securities System that such securities have been transferred to the
Securities System Account, and (ii) the making of an entry on the
records of the Custodian to reflect such payment and transfer for the
account of the Fund. The Custodian shall transfer Domestic Securities
sold for the account of the Fund upon (A) receipt of advice from the
Securities System that payment for such securities has been transferred
to the Securities System Account, and (B) the making of an entry on the
records of the Custodian to reflect such transfer and payment for the
account of the Fund. Copies of all advices from the Securities System
of transfers of Domestic Securities for the account of the Fund shall
be maintained for the Fund by the Custodian and be provided to the
Fund at its request. Upon request, the Custodian shall furnish the
Fund confirmation of the transfer to or from the account of the Fund in
the form of a written advice or notice; and
(d) upon request, the Custodian shall provide the Fund
with any report obtained by the Custodian on the Securities System's
accounting system, internal accounting control and procedures for
safeguarding domestic securities deposited in the Securities System.
3.9 Segregated Account. The Custodian shall upon receipt of
Proper Instructions establish and maintain a segregated account or
accounts for and on behalf of a Fund, into which account or accounts
may be transferred cash and/or Securities, including Securities
maintained in an account by the Custodian pursuant to Section 3.8
hereof, (i) in accordance with the provisions of any agreement among
the Fund, the Custodian and a broker-dealer or futures commission
merchant, relating to compliance with the rules of registered clearing
corporations and of any national securities exchange (or the Commodity
Futures Trading Commission or any registered contract market), or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund, (ii) for
purposes of 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, and (iii) for other
proper corporate purposes, but only, in the case of this clause (iii),
upon receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Board or of the Executive Committee certified by
the Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such purposes to be
proper corporate purposes.
3.10 Ownership Certificates for Tax Purposes. The Custodian
shall execute ownership and other certificates and affidavits for all
federal and state tax purposes in connection with receipt of income or
other payments with respect to domestic securities of each Fund held by
it and in connection with transfers of such securities.
3.11 Proxies. The Custodian shall, with respect to the
Securities held hereunder, promptly deliver to each Fund all proxies,
all proxy soliciting materials and all notices relating to such
Securities. If the Securities are registered otherwise than in the
name of a Fund or a nominee of a Fund, the Custodian shall use its best
reasonable efforts, consistent with applicable law, to cause all
proxies to be promptly executed by the registered holder of such
Securities in accordance with Proper Instructions.
3.12 Communications Relating to Fund Portfolio Securities.
The Custodian shall transmit promptly to each Fund all written
information (including, without limitation, pendency of calls and
maturities of Securities and expirations of rights in connection
therewith and notices of exercise of put and call options written by
the Fund and the maturity of futures contracts purchased or sold by the
Fund) received by the Custodian from issuers of Securities being held
for the Fund. With respect to tender or exchange offers, the Custodian
shall transmit promptly to each Fund all written information received
by the Custodian 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 a Fund desires to take action with respect to
any tender offer, exchange offer or any other similar transaction, the
Fund shall notify the Custodian at least three Business Days prior to
the date of which the Custodian is to take such action.
3.13 Reports by Custodian. The Custodian shall each
business day furnish each Fund with a statement summarizing all
transactions and entries for the account of the Fund for the preceding
day. At the end of every month, the Custodian shall furnish each Fund
with a list of the cash and portfolio securities showing the quantity
of the issue owned, the cost of each issue and the market value of each
issue at the end of each month. Such monthly report shall also contain
separate listings of (a) unsettled trades and (b) when-issued
securities. The Custodian shall furnish such other reports as may be
mutually agreed upon from time-to-time.
Section 4. CERTAIN DUTIES OF THE CUSTODIAN WITH RESPECT TO ASSETS
OF THE FUNDS HELD OUTSIDE THE UNITED STATES
4.1 Custody Outside the United States. Each Fund authorizes
the Custodian to hold Foreign Securities and cash in custody accounts
which have been established by the Custodian with (i) its foreign
branches, (ii) foreign banking institutions, foreign branches of United
States banks and subsidiaries of United States banks or bank holding
companies (each a "Foreign Custodian") and (iii) Foreign Securities
depositories or clearing agencies (each a "Foreign Securities
Depository"); provided, however, that the appropriate Board or
Executive Committee has approved in advance the use of each such
Foreign Custodian and Foreign Securities Depository and the contract
between the Custodian and each Foreign Custodian and that such approval
is set forth in Proper Instructions and a certified copy of a
resolution of the Board or of the Executive Committee certified by the
Secretary or an Assistant Secretary of the appropriate Investment
Company. Unless expressly provided to the contrary in this Section 4,
custody of Foreign Securities and assets held outside the United States
by the Custodian, a Foreign Custodian or through a Foreign Securities
Depository shall be governed by this Agreement, including Section 3
hereof.
4.2 Assets to be Held. The Custodian shall limit the
securities and other assets maintained in the custody of its foreign
branches, Foreign Custodians and Foreign Securities Depositories to:
(i) "foreign securities", as defined in paragraph (c) (1) of Rule 17f-5
under the Fund Act, and (ii) cash and cash equivalents in such amounts
as the Custodian or an affected Fund may determine to be reasonably
necessary to effect the Fund's Foreign Securities transactions.
4.3 Omitted.
4.4 Segregation of Securities. The Custodian shall identify
on its books and records as belonging to the appropriate Fund, the
Foreign Securities of each Fund held by each Foreign Custodian.
4.5 Agreements with Foreign Custodians. Each agreement
between the Custodian and a Foreign Custodian shall be substantially in
the form as delivered to the Investment Companies for their Boards'
review, and shall not be amended in a way that materially adversely
affects any Fund without the prior written consent of the Fund. Upon
request, the Custodian shall certify to the Funds that an agreement
between the Custodian and a Foreign Custodian meets the requirements of
Rule 17f-5 under the 1940 Act.
4.6 Access of Independent Accountants of the Funds. Upon
request of a Fund, the Custodian will use its best reasonable efforts
to arrange for the independent accountants or auditors of the Fund to
be afforded access to the books and records of any Foreign Custodian
insofar as such books and records relate to the custody by any such
Foreign Custodian of assets of the Fund.
4.7 Transactions in Foreign Custody Accounts. Upon receipt
of Proper Instructions, the Custodian shall instruct the appropriate
Foreign Custodian to transfer, exchange or deliver Foreign Securities
owned by a Fund, but, except to the extent explicitly provided herein,
only in any of the cases specified in Subsection 3.2. Upon receipt of
Proper Instructions, the Custodian shall pay out or instruct the
appropriate Foreign Custodian to pay out monies of a Fund in any of the
cases specified in Subsection 3.6. Notwithstanding anything herein to
the contrary, settlement and payment for Foreign Securities received
for the account of a Fund and delivery of Foreign Securities maintained
for the account of a Fund may be effected in accordance with the
customary or established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor (or an
agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such
purchaser or dealer. Foreign Securities maintained in the custody of a
Foreign Custodian may be maintained in the name of such entity or its
nominee name to the same extent as set forth in Section 3.3 of this
Agreement and each Fund agrees to hold any Foreign Custodian and its
nominee harmless from any liability as a holder of record of such
securities.
4.8 Liability of Foreign Custodian. Each agreement between
the Custodian and a Foreign Custodian shall, unless otherwise mutually
agreed to by the Custodian and a Fund, require the Foreign Custodian to
exercise reasonable care or, alternatively, impose a contractual
liability for breach of contract without an exception based upon a
standard of care in the performance of its duties and to indemnify and
hold harmless the Custodian from and against any loss, damage, cost,
expense, liability or claim arising out of or in connection with the
Foreign Custodian's performance of such obligations, excepting,
however, Citibank, N.A., and its subsidiaries and branches, where the
indemnification is limited to direct money damages and requires that
the claim be promptly asserted. At the election of a Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect
to any claims against a Foreign Custodian as a consequence of any such
loss, damage, cost, expense, liability or claim if and to the extent
that the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim, unless such subrogation is prohibited by
local law.
4.9 Monitoring Responsibilities.
(a) The Custodian will promptly inform each Fund in the
event that the Custodian learns of a material adverse change in the
financial condition of a Foreign Custodian or learns that a Foreign
Custodian's financial condition has declined or is likely to decline
below the minimum levels required by Rule 17f-5 of the 1940 Act.
(b) The custodian will furnish such information as may
be reasonably necessary to assist each Investment Company's Board in
its annual review and approval of the continuance of all contracts or
arrangements with Foreign Subcustodians.
Section 5. PROPER INSTRUCTIONS
As used in this Agreement, the term "Proper Instructions"
means instructions of a Fund received by the Custodian via telephone or
in Writing which the Custodian believes in good faith to have been
given by Authorized Persons (as defined below) or which are transmitted
with proper testing or authentication pursuant to terms and conditions
which the Custodian may specify. Any Proper Instructions delivered to
the Custodian by telephone shall promptly thereafter be confirmed in
accordance with procedures, and limited in subject matter, as mutually
agreed upon by the parties. Unless otherwise expressly provided, all
Proper Instructions shall continue in full force and effect until
canceled or superseded. If the Custodian requires test arrangements,
authentication methods or other security devices to be used with
respect to Proper Instructions, any Proper Instructions given by the
Funds thereafter shall be given and processed in accordance with such
terms and conditions for the use of such arrangements, methods or
devices as the Custodian may put into effect and modify from time to
time. The Funds shall safeguard any testkeys, identification codes or
other security devices which the Custodian shall make available to
them. The Custodian may electronically record any Proper Instructions
given by telephone, and any other telephone discussions, with respect
to its activities hereunder. As used in this Agreement, the term
"Authorized Persons" means such officers or such agents of a Fund as
have been properly appointed pursuant to a resolution of the
appropriate Board or Executive Committee, a certified copy of which has
been provided to the Custodian, to act on behalf of the Fund under this
Agreement. Each of such persons shall continue to be an Authorized
Person until such time as the Custodian receives Proper Instructions
that any such officer or agent is no longer an Authorized Person.
Section 6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express
authority from a Fund:
(a) make payments to itself or others for minor
expenses of handling Securities or other similar items relating to its
duties under this Agreement, provided that all such payments shall be
accounted for to the Fund;
(b) endorse for collection, in the name of the Fund,
checks, drafts and other negotiable instruments; and
(c) in general, attend to all non-discretionary details
in connection with the sale, exchange, substitution, purchase, transfer
and other dealings with the Securities and property of the Fund except
as otherwise provided in Proper Instructions.
Section 7. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any
instructions (conveyed by telephone or in Writing), notice, request,
consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly given or executed by or on behalf of
a Fund. The Custodian may receive and accept a certified copy of a
resolution of a Board or Executive Committee 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 or
Executive Committee as described in such resolution, and such
resolution may be considered as in full force and effect until receipt
by the Custodian of written notice by an Authorized Person to the
contrary.
Section 8. DUTY OF CUSTODIAN TO SUPPLY INFORMATION
The Custodian shall cooperate with and supply necessary
information in its possession (to the extent permissible under
applicable law) to the entity or entities appointed by the appropriate
Board to keep the books of account of a Fund and/or compute the net
asset value per Share of the outstanding Shares of a Fund.
Section 9. RECORDS
The Custodian shall create and maintain all records relating
to its activities under this Agreement which are required with respect
to such activities under Section 31 of the Investment Company Act and
Rules 31a-1 and 31a-2 thereunder. All such records shall be the
property of the appropriate Investment Company and shall at all times
during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the
Investment Company and employees and agents of the Securities and
Exchange Commission. The Custodian shall, at a Fund's request, supply
the Fund with a tabulation of Securities and Cash owned by the Fund and
held by the Custodian and shall, when requested to do so by the Fund
and for such compensation as shall be agreed upon between the Fund and
the Custodian, include certificate numbers in such tabulations.
Section 10. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation
for its services and expenses as Custodian, as agreed upon from time to
time between each Investment Company, on behalf of each Fund, and the
Custodian. In addition, should the Custodian in its discretion advance
funds (to include overdrafts) to or on behalf of a Fund pursuant to
Proper Instructions, the Custodian shall be entitled to prompt
reimbursement of any amounts advanced. In the event of such an
advance, and to the extent permitted by the 1940 Act and the Fund's
policies, the Custodian shall have a continuing lien and security
interest in and to the property of the Fund in the possession or
control of the Custodian or of a third party acting in the Custodian's
behalf, until the advance is reimbursed. Nothing in this Agreement
shall obligate the Custodian to advance funds to or on behalf of a
Fund, or to permit any borrowing by a Fund except for borrowings for
temporary purposes, to the extent permitted by the Fund's policies.
Section 11. RESPONSIBILITY OF CUSTODIAN
The Custodian shall be responsible for the performance of
only such duties as are set forth herein or contained in Proper
Instructions and shall use reasonable care in carrying out such duties.
The Custodian shall be liable to a Fund for any loss which shall occur
as the result of the failure of a Foreign Custodian engaged directly or
indirectly by the Custodian to exercise reasonable care with respect to
the safekeeping of securities and other assets of the Fund to the same
extent that the Custodian would be liable to the Fund if the Custodian
itself were holding such securities and other assets. Nothing in this
Agreement shall be read to limit the responsibility or liability of the
Custodian or a Foreign Custodian for their failure to exercise
reasonable care with regard to any decision or recommendation made by
the Custodian or Subcustodian regarding the use or continued use of a
Foreign Securities Depository. In the event of any loss to a Fund by
reason of the failure of the Custodian or a Foreign Custodian engaged
by such Foreign Custodian or the Custodian to utilize reasonable care,
the Custodian shall be liable to the Fund to the extent of the Fund's
damages, to be determined based on the market value of the property
which is the subject of the loss at the date of discovery of such loss
and without reference to any special conditions or circumstances. The
Custodian shall be held to the exercise of reasonable care in carrying
out this Agreement, and shall not be liable for acts or omissions
unless the same constitute negligence or willful misconduct on the part
of the Custodian or any Foreign Custodian engaged directly or
indirectly by the Custodian. Each Fund agrees to indemnify and hold
harmless the Custodian and its nominees from all taxes, charges,
expenses, assessments, claims and liabilities (including legal fees and
expenses) incurred by the Custodian or its nominess in connection with
the performance of this Agreement with respect to such Fund, except
such as may arise from any negligent action, negligent failure to act
or willful misconduct on the part of the indemnified entity or any
Foreign Custodian. The Custodian shall be entitled to rely, and may
act, on advice of counsel (who may be counsel for a Fund) on all
matters and shall be without liability for any action reasonably taken
or omitted pursuant to such advice. The Custodian need not maintain
any insurance for the benefit of any Fund.
All collections of funds or other property paid or
distributed in respect of Securities held by the Custodian, agent,
Subcustodian or Foreign Custodian hereunder shall be made at the risk
of the Funds. The Custodian shall have no liability for any loss
occasioned by delay in the actual receipt of notice by the Custodian,
agent, Subcustodian or by a Foreign Custodian of any payment,
redemption or other transaction regarding securities in respect of
which the Custodian has agreed to take action as provided in Section 3
hereof. The Custodian shall not be liable for any action taken in good
faith upon Proper Instructions or upon any certified copy of any
resolution of the Board and may rely on the genuineness of any such
documents which it may in good faith believe to be validly executed.
Notwithstanding the foregoing, the Custodian shall not be liable for
any loss resulting from, or caused by, the direction of a Fund to
maintain custody of any Securities or cash in a foreign country
including, but not limited to, losses resulting from nationalization,
expropriation, currency restrictions, civil disturbance, acts of war or
terrorism, insurrection, revolution, nuclear fusion, fission or
radiation or other similar occurrences, or events beyond the control of
the Custodian. Finally, the Custodian shall not be liable for any
taxes, including interest and penalties with respect thereto, that may
be levied or assessed upon or in respect of any assets of any Fund held
by the Custodian.
Section 12. LIMITED LIABILITY OF EACH INVESTMENT COMPANY
The Custodian acknowledges that it has received notice of and
accepts the limitations of liability as set forth in each Investment
Company's Agreement and Declaration of Trust, Articles of
Incorporation, or Agreement of Limited Partnership. The Custodian
agrees that each Fund's obligation hereunder shall be limited to the
assets of the Fund, and that the Custodian shall not seek satisfaction
of any such obligation from the shareholders of the Fund nor from any
Board Member, officer, employee, or agent of the Fund or the Investment
Company on behalf of the Fund.
Section 13. EFFECTIVE PERIOD; TERMINATION
This Agreement shall become effective as of the date of its
execution and shall continue in full force and effect until terminated
as hereinafter provided. This Agreement may be terminated by each
Investment Company, on behalf of a Fund, or by the Custodian by 90 days
notice in Writing to the other provided that any termination by an
Investment Company shall be authorized by a resolution of the Board, a
certified copy of which shall accompany such notice of termination, and
provided further, that such resolution shall specify the names of the
persons to whom the Custodian shall deliver the assets of the affected
Funds held by the Custodian. If notice of termination is given by the
Custodian, the affected Investment Companies shall, within 90 days
following the giving of such notice, deliver to the Custodian a
certified copy of a resolution of the Boards specifying the names of
the persons to whom the Custodian shall deliver assets of the affected
Funds held by the Custodian. In either case the Custodian will deliver
such assets to the persons so specified, after deducting therefrom any
amounts which the Custodian determines to be owed to it hereunder
(including all costs and expenses of delivery or transfer of Fund
assets to the persons so specified). If within 90 days following the
giving of a notice of termination by the Custodian, the Custodian does
not receive from the affected Investment Companies certified copies of
resolutions of the Boards specifying the names of the persons to whom
the Custodian shall deliver the assets of the Funds held by the
Custodian, the Custodian, at its election, may deliver such assets to a
bank or trust company doing business in the State of California to be
held and disposed of pursuant to the provisions of this Agreement or
may continue to hold such assets until a certified copy of one or more
resolutions as aforesaid is delivered to the Custodian. The
obligations of the parties hereto regarding the use of reasonable care,
indemnities and payment of fees and expenses shall survive the
termination of this Agreement.
Section 14. MISCELLANEOUS
14.1 Relationship. Nothing contained in this Agreement shall
(i) create any fiduciary, joint venture or partnership relationship
between the Custodian and any Fund or (ii) be construed as or
constitute a prohibition against the provision by the Custodian or any
of its affiliates to any Fund of investment banking, securities dealing
or brokerages services or any other banking or financial services.
14.2 Further Assurances. Each party hereto shall furnish to
the other party hereto such instruments and other documents as such
other party may reasonably request for the purpose of carrying out or
evidencing the transactions contemplated by this Agreement.
14.3 Attorneys' Fees. If any lawsuit or other action or
proceeding relating to this Agreement is brought by a party hereto
against the other party hereto, the prevailing party shall be entitled
to recover reasonable attorneys' fees, costs and disbursements
(including allocated costs and disbursements of in-house counsel), in
addition to any other relief to which the prevailing party may be
entitled.
14.4 Notices. Except as otherwise specified herein, each
notice or other communication hereunder shall be in Writing and shall
be delivered to the intended recipient at the following address (or at
such other address as the intended recipient shall have specified in a
written notice given to the other parties hereto):
if to a Fund or Investment Company: if to the Custodian:
[Fund or Investment Company] The Bank of New York
c/o Franklin Resources, Inc. Mutual Fund Custody
Manager
777 Mariners Island Blvd. BNY Western Trust Co.
San Mateo, CA 94404 550 Kearney St., Suite 60
Attention: Chief Legal Officer San Francisco, CA 94108
14.5 Headings. The underlined headings contained herein
are for convenience of reference only, shall not be deemed to be a part
of this Agreement and shall not be referred to in connection with the
interpretation hereof.
14.6 Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original and both of
which, when taken together, shall constitute one agreement.
14.7 Governing Law. This Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State
of New York (without giving effect to principles of conflict of laws).
14.8 Force Majeure. Notwithstanding the provisions of
Section 11 hereof regarding the Custodian's general standard of care,
no failure, delay or default in performance of any obligation hereunder
shall constitute an event of default or a breach of this agreement, or
give rise to any liability whatsoever on the part of one party hereto
to the other, to the extent that such failure to perform, delay or
default arises out of a cause beyond the control and without negligence
of the party otherwise chargeable with failure, delay or default;
including, but not limited to: action or inaction of governmental,
civil or military authority; fire; strike; lockout or other labor
dispute; flood; war; riot; theft; earthquake; natural disaster;
breakdown of public or common carrier communications facilities;
computer malfunction; or act, negligence or default of the other party.
This paragraph shall in no way limit the right of either party to this
Agreement to make any claim against third parties for any damages
suffered due to such causes.
14.9 Successors and Assigns. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and
their respective successors and assigns, if any.
14.10 Waiver. No failure on the part of any person to
exercise any power, right, privilege or remedy hereunder, and no delay
on the part of any person in the exercise of any power, right,
privilege or remedy hereunder, shall operate as a waiver thereof; and
no single or partial exercise of any such power, right, privilege or
remedy shall preclude any other or further exercise thereof or of any
other power, right, privilege or remedy.
14.11 Amendments. This Agreement may not be amended,
modified, altered or supplemented other than by means of an agreement
or instrument executed on behalf of each of the parties hereto.
14.12 Severability. In the event that any provision of this
Agreement, or the application of any such provision to any person or
set of circumstances, shall be determined to be invalid, unlawful, void
or unenforceable to any extent, the remainder of this Agreement, and
the application of such provision to persons or circumstances other
than those as to which it is determined to be invalid, unlawful, void
or unenforceable, shall not be impaired or otherwise affected and shall
continue to be valid and enforceable to the fullest extent permitted by
law.
14.13 Parties in Interest. None of the provisions of this
Agreement is intended to provide any rights or remedies to any person
other than the Investment Companies, for themselves and for the Funds,
and the Custodian and their respective successors and assigns, if any.
14.14 Pre-Emption of Other Agreements. In the event of any
conflict between this Agreement, including without limitation any
amendments hereto, and any other agreement which may now or in the
future exist between the parties, the provisions of this Agreement
shall prevail.
14.15 Variations of Pronouns. Whenever required by the
context hereof, the singular number shall include the plural, and vice
versa; the masculine gender shall include the feminine and neuter
genders; and the neuter gender shall include the masculine and feminine
genders.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above
written.
THE BANK OF NEW YORK
By: _____________________________
Its: _____________________________
THE INVESTMENT COMPANIES LISTED ON EXHIBIT A
By: ______________________________
Harmon E. Burns
Their: Vice President
By: ______________________________
Deborah R. Gatzek
heir: Vice President & Secretary
THE BANK OF NEW YORK
MASTER CUSTODY AGREEMENT
EXHIBIT A
The following is a list of the Investment Companies and their
respective Series for which the Custodian shall serve under the Master
Custody Agreement dated as of February 16, 1996.
INVESTMENT COMPANY ORGANIZATION SERIES ---(if applicable)
Adjustable Rate Delaware U.S. Government Adjustable Rate
Securities Business Mortgage Portfolio
Portfolios Trust Adjustable Rate Securities
Portfolio
AGE High Income Colorado
Fund, Inc. Corporation
Franklin California Maryland
Tax-Free Income Corporation
Fund, Inc.
Franklin California Massachusetts Franklin California Insured Tax-
Tax-Free Trust Business Free Income Fund
Trust Franklin California Tax-Exempt
Money Fund
Franklin California Intermediate-
Term Tax-Free
Income Fund
Franklin Custodian Maryland Growth Series
Funds, Inc. Corporation Utilities Series
Dynatech Series
Income Series
U.S. Government Securities Series
INVESTMENT COMPANY ORGANIZATION SERIES ---(if applicable)
Franklin Equity California
Fund Corporation
Franklin Federal California
Money Fund Corporation
Franklin Federal California
Tax- Free Income Corporation
Fund
Franklin Gold Fund California
Corporation
Franklin Government Massachusetts
Securities Trust Business
Trust
Franklin Templeton Delaware Templeton Pacific Growth Fund
International Trust Business Franklin International Equity Fund
Trust
Franklin Investors Massachusetts Franklin Global Government Income
Securities Trust Business Fund
Trust Franklin Short-Intermediate U.S.
Gov't Securities Fund
Franklin Convertible Securities
Fund
Franklin Adjustable U.S.
Government Securities Fund
Franklin Equity Income Fund
Franklin Adjustable Rate
Securities Fund
INVESTMENT COMPANY ORGANIZATION SERIES ---(if applicable)
Franklin Managed Massachusetts Franklin Corporate Qualified
Trust Business Dividend Fund
Trust Franklin Rising Dividends Fund
Franklin Investment Grade Income
Fund
Franklin Institutional Rising
Dividends Fund
Franklin Money Fund California
Corporation
Franklin Municipal Delaware Franklin Hawaii Municipal Bond
Securities Trust Business Fund
Trust Franklin California High Yield
Municipal Fund
Franklin Washington Municipal Bond
Fund
Franklin Tennessee Municipal Bond
Fund
Franklin Arkansas Municipal Bond
Fund
Franklin New York New York
Tax-Free Income Corporation
Fund, Inc.
Franklin New York Massachusetts Franklin New York Tax-Exempt Money
Tax-Free Trust Business Fund
Trust Franklin New York Intermediate-
Term Tax-Free
Income Fund
Franklin New York Insured Tax-Free
Income Fund
INVESTMENT COMPANY ORGANIZATION SERIES ---(if applicable)
Franklin Tax- California
Advantaged Limited
International Bond Partnership
Fund
Franklin Tax- California
Advantaged U.S. Limited
Government Partnership
Securities Fund
Franklin Tax- California
Advantaged High Limited
Yield Securities Partnership
Fund.
Franklin Premier California
Return Fund Corporation
Franklin Real Delaware Franklin Real Estate Securities
Estate Securities Business Fund
Trust Trust
Franklin Strategic Delaware
Mortgage Portfolio Business
Trust
Franklin Strategic Delaware Franklin California Growth Fund
Series Business Franklin Strategic Income Fund
Trust Franklin MidCap Growth Fund
Franklin Institutional MidCap
Growth Fund
Franklin Global Utilities Fund
Franklin Small Cap Growth Fund
Franklin Global Health Care Fund
Franklin Natural Resources Fund
Franklin Tax-Exempt California
Money Fund Corporation
INVESTMENT COMPANY ORGANIZATION SERIES---(if applicable)
Franklin Tax-Free Massachusetts Franklin Massachusetts Insured Tax-
Trust Business Free Income Fund
Trust Franklin Michigan Insured Tax-Free
Income Fund
Franklin Minnesota Insured Tax-
Free Income Fund
Franklin Insured Tax-Free Income
Fund
Franklin Ohio Insured Tax-Free
Income Fund
Franklin Puerto Rico Tax-Free
Income Fund
Franklin Arizona Tax-Free Income
Fund
Franklin Colorado Tax-Free Income
Fund
Franklin Georgia Tax-Free Income
Fund
Franklin Pennsylvania Tax-Free
Income Fund
Franklin High Yield Tax-Free
Income Fund
Franklin Missouri Tax-Free Income
Fund
Franklin Oregon Tax-Free Income
Fund
Franklin Texas Tax-Free Income
Fund
Franklin Virginia Tax-Free Income
Fund
Franklin Alabama Tax-Free Income
Fund
Franklin Florida Tax-Free Income
Fund
Franklin Connecticut Tax-Free
Income Fund
Franklin Indiana Tax-Free Income
Fund
Franklin Louisiana Tax-Free Income
Fund
Franklin Maryland Tax-Free Income
Fund
INVESTMENT COMPANY ORGANIZATION SERIES ---(if applicable)
Franklin Tax-Free Massachusetts Franklin North Carolina Tax-Free
Trust Business Income Fund
(cont.) Trust Franklin New Jersey Tax-Free
Income Fund
Franklin Kentucky Tax-Free Income
Fund
Franklin Federal Intermediate-Term
Tax-Free Income Fund
Franklin Arizona Insured Tax-Free
Income Fund
Franklin Florida Insured Tax-Free
Income fund
Franklin Templeton Massachusetts Franklin Templeton German
Global Trust Business Government Bond Fund
Trust Franklin Templeton Global Currency
Fund
Franklin Templeton Hard Currency
Fund
Franklin Templeton High Income
Currency Fund
Franklin Templeton Delaware Franklin Templeton Money Fund II
Money Fund Trust Business
Trust
Franklin Value Massachusetts Franklin Balance Sheet Investment
Investors Trust Business Fund
Trust Franklin MicroCap Value Fund
Franklin Value Fund
INVESTMENT COMPANY ORGANIZATION SERIES ---(if applicable)
Franklin Valuemark Massachusetts Money Market Fund
Funds Business Growth and Income Fund
Trust Precious Metals Fund
Real Estate Securities Fund
Utility Equity Fund
High Income Fund
Templeton Global Income Securities
Fund
Investment Grade Intermediate Bond
Fund
Income Securities Fund
U.S. Government Securities Fund
Zero Coupon Fund - 2000
Zero Coupon Fund - 2005
Zero Coupon Fund - 2010
Adjustable U.S. Government Fund
Rising Dividends Fund
Templeton Pacific Growth Fund
Templeton International Equity
Fund
Templeton Developing Markets
Equity Fund
Templeton Global Growth Fund
Templeton Global Asset Allocation
Fund
Small Cap Fund
INVESTMENT COMPANY ORGANIZATION SERIES ---(if applicable)
Institutional Massachusetts Money Market Portfolio
Fiduciary Trust Business Franklin Late Day Money Market
Trust Portfolio
Franklin U.S. Government
Securities Money Market
Portfolio
Franklin U.S. Treasury Money
Market Portfolio
Franklin Institutional Adjustable
U.S. Government
Securities Fund
Franklin Institutional Adjustable
Rate Securities Fund
Franklin U.S. Government Agency
Money Market Fund
Franklin Cash Reserves Fund
MidCap Growth Delaware
Portfolio Business
Trust
The Money Market Delaware The Money Market Portfolio
Portfolios Business The U.S. Government Securities
Trust Money Market Portfolio
CLOSED END FUNDS:
Franklin Multi- Massachusetts
Income Trust Business
Trust
Franklin Principal Massachusetts
Maturity Trust Business
Trust
Franklin Universal Massachusetts
Trust Business
Trust