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AMENDED AND RESTATED CUSTODIAN AGREEMENT
between
JOHN HANCOCK VARIABLE SERIES TRUST
and
STATE STREET BANK AND TRUST COMPANY
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TABLE OF CONTENTS
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1 Definitions..........................................................1-3
2 Employment of Custodian and Property to be Held by It................3-4
3 Duties of the Custodian with Respect to
Property of the Fund.................................................4
A. Safekeeping and Holding of Property...............................4
B. Delivery of Securities............................................4-6
C. Registration of Securities........................................6-7
D. Bank Accounts.....................................................7
E. Payments for Shares of the Fund...................................7
F. Investment and Availability of Federal Funds......................7
G. Collections.......................................................7-8
H. Payment of Fund Moneys............................................8-9
I. Liability for Payment in Advance of
Receipt of Securities Purchased...................................10
J. Payments for Repurchases of Redemptions
of Shares of the Fund.............................................10
K. Appointment of Agents by the Custodian............................10
L. Deposit of Fund Portfolio Securities in
Securities Systems................................................11-12
M. Deposit of Fund Commercial Paper in an Approved
Book-Entry System for Commercial Paper............................12-14
N. Segregated Account................................................14-15
O. Ownership Certificates for Tax Purposes...........................15
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P. Proxies ........................................................15
Q. Securities........................................................15
R. Exercise of Rights; Tender Offers.................................15-16
S. Depository Receipts...............................................16
T. Interest Bearing Call or Time Deposits............................16
U. Options, Futures Contracts and Foreign
Currency Transactions...........................................17-18
V. Actions Permitted Without Express Authority.......................18
4. Duties of Bank with Respect to Books of Account and
Calculations of Net Asset Value......................................18
5. Records and Miscellaneous Duties.....................................19
6. Opinion of Fund's Independent Public Accountants.....................19
7. Compensation and Expenses of Bank....................................20
8. Responsibility of Bank...............................................21
9. Persons Having Access to Assets of the Fund..........................21
10. Effective Period, Termination and Amendment;
Successor Custodian..................................................21-22
11. Interpretive and Additional Provisions...............................22
12. Certification as to Authorized Officers..............................22
13. Notices..............................................................23
14. Massachusetts Law to Apply...........................................23
15. Adoption of the Agreement by the Fund................................23
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CUSTODIAN AGREEMENT
This Agreement is made as of January 30, 1995 between John Hancock Variable
Series Trust I (the "Fund"), a Massachusetts business trust with a principal
place of business in Boston, Massachusetts, and State Street Bank and Trust
Company (hereinafter called "Bank", "Custodian" and "Agent"), a trust company
established under the laws of Massachusetts with a principal place of business
in Boston, Massachusetts. John Hancock Advisers, Inc., which provides investment
advice to certain separate investment portfolios of the Fund listed on Appendix
A hereto (the "Portfolios"), has adopted this Agreement in the manner provided
herein.
Whereas, the Fund is registered under the Investment Company Act of 1940
and has appointed the Bank to act as Custodian of the property of and to perform
certain duties as Agent for the Portfolios, as more fully hereinafter set forth;
and
Whereas, the Bank is willing and able to act as the Portfolios' Custodian
and Agent, subject to and in accordance with the provisions hereof;
Now, therefore, in consideration of the premises and of the mutual
covenants and agreements herein contained, the Fund and the Bank agree as
follows:
1. Definitions
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Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
(a) "Fund" shall mean John Hancock Variable Series Trust I or, where
appropriate, each of the Portfolios listed on Appendix A. From time to time, the
Board (defined below) may establish new investment portfolios to be advised by
John Hancock Advisers, Inc., which new portfolios will be included on Appendix
A.
(b) "Board" shall mean the board of trustees of the Fund.
(c) "The Depository Trust Company", a clearing agency registered with the
Securities and Exchange Commission under Section l7A of the Securities Exchange
Act of 1934 which acts as a securities depository and which has been
specifically approved as a securities depository for the Fund by the Board.
(d) "Authorized Officer", shall mean any of the following officers of the
Fund: The Chairman of the Board, the President, a Vice President, the Secretary,
the Treasurer, any Assistant Secretary or Assistant Treasurer, or any other
officer of the Fund duly authorized to sign by appropriate resolution of the
Board of the Fund.
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(e) "Participants Trust Company", a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities Exchange
Act of 1934 which acts as a securities depository for the Fund but only if it
has been specifically approved as such by the Board.
(f) "Approved Clearing Agency" shall mean any other domestic clearing
agency registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act of 1934 which acts as a securities depository but
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only if the Custodian has received a certified copy of a vote of the Board
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approving such clearing agency as a securities depository for the Fund.
(g) "Federal Book-Entry System" shall mean the book-entry system referred
to in Rule 17f-4(b) under the Investment Company Act of 1940 for United States
and federal agency securities (i.e., as provided in Subpart 0 of Treasury
Circular No. 300, 31 CFR 306, Subpart B of 3l CFR Part 350, and the book-entry
regulations of federal agencies substantially in the form of Subpart 0).
(h) "Approved Foreign Securities Depository" shall mean a foreign
securities depository or clearing agency referred to in rule 17f-4 under the
Investment Company Act of 1940 for foreign securities but only if the Custodian
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has received a certified copy of a vote of the Board approving such depository
or clearing agency as a foreign securities depository for the Fund.
(i) "Approved Book-Entry System for Commercial Paper" shall mean a system
maintained by the Custodian or by a subcustodian employed pursuant to Section 2
hereof for the holding of commercial paper in book-entry form but only if the
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Custodian has received a certified copy of a vote of the Board approving the
participation by the Fund in such system.
(j) The Custodian shall be deemed to have received "proper instructions"
with respect to any of the matters referred to in this Agreement upon receipt of
written or facsimile instructions signed by such one or more person or persons
as the Board shall have from time to time authorized to give the particular
class of instructions in question. Electronic instructions for the purchase and
sale of securities which are transmitted by John Hancock Advisers, Inc. to the
Custodian through the John Hancock equity trading system and the John Hancock
fixed income trading system shall be deemed to be proper instructions; the Fund
shall cause all such instructions to be confirmed in writing. Different persons
may be authorized to give instructions for different purposes. A certified copy
of a vote of the Board may be received and accepted by the Custodian as
conclusive evidence of the authority of any such person to act and may be
considered as in full force and effect until receipt of written notice to the
contrary. Such instructions may be general or specific in terms and, where
appropriate, may be standing instructions. Unless the vote delegating authority
to any person or persons to give a particular class of instructions specifically
requires that the approval of any person, persons or committee shall first have
been obtained before the Custodian may act on instructions of that class,
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the Custodian shall be under no obligation to question the right of the person
or persons giving such instructions in so doing. Oral instructions will be
considered proper instructions if the Custodian reasonably believes them to have
been given by a person authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all oral instructions to be confirmed
in writing. The Fund authorizes the Custodian to tape record any and all
telephonic or other oral instructions given to the Custodian. Upon receipt of a
certificate signed by the Secretary or an Assistant Secretary of the Fund as to
the authorization by the President and the Treasurer of the Fund accompanied by
a detailed description of the communication procedures approved by the President
and the Treasurer of the Fund, "proper instructions" may also include
communications effected directly between electromechanical or electronic devices
provided that the President and Treasurer of the Fund and the Custodian are
satisfied that such procedures afford adequate safeguards for the Fund's assets.
In performing its duties generally, and more particularly in connection with the
purchase, sale and exchange of securities made by or for the Fund, the Custodian
may take cognizance of the provisions of the governing documents and
registration statement of the Fund as may from time to time be in effect (and
any votes, resolutions or proceedings of the shareholders or the Board), but,
nevertheless, except as otherwise expressly provided herein, the Custodian may
assume unless and until notified in writing to the contrary that "proper
instructions" received by it are not in conflict with or in any way contrary to
any provisions of such governing documents and registration statement, or votes,
resolutions or proceedings of the shareholders or the Board.
2. Employment of Custodian and Property to be Held by It
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The Fund hereby appoints and employs the Bank as the Portfolios' Custodian
and Agent in accordance with and subject to the provisions hereof, and the Bank
hereby accepts such appointment and employment. The Fund agrees to deliver to
the Custodian all securities, participation interests, cash and other assets
owned by it, and all payments of income, payments of principal and capital
distributions and adjustments received by it with respect to all securities and
participation interests owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury shares ("Shares") of the
Fund as may be issued or sold from time to time. The Custodian shall not be
responsible for any property of the Fund held by the Fund and not delivered by
the Fund to the Custodian. The Fund will also deliver to the Bank from time to
time copies of its currently effective charter (or declaration of trust or
partnership agreement, as the case may be), ByLaws, prospectus, statement of
additional information, and distribution agreement with its principal
underwriter, together with such resolutions, votes, and other proceedings of the
Fund as may be necessary for or convenient to the Bank in the performance of its
duties hereunder.
The Custodian may from time to time employ one or more subcustodians to
perform such acts and services upon such terms and conditions as shall be
approved from time to time by the Board. Any such subcustodian so employed by
the Custodian shall be deemed to be the agent of the Custodian, and the
Custodian shall remain primarily responsible for the securities, participation
interests, moneys, and other property of the Fund held by such subcustodian. Any
foreign subcustodian shall be a bank or trust company which is an eligible
foreign custodian within the meaning of Rule 17f-5 under the Investment Company
Act of 1940, and the foreign custody arrangements shall be approved by the Board
and shall be in accordance with and
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subject to the provisions of said Rule. For the purposes of this Agreement, any
property of the Fund held by any such subcustodian (domestic or foreign) shall
be deemed to be held by the Custodian under the terms of this Agreement.
3. Duties of the Custodian with Respect to Property of the Fund
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A. Safekeeping and Holding of Property The Custodian shall keep safely
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all property of the Fund and on behalf of the Fund shall from time to
time receive delivery of Fund property for safekeeping. The Custodian
shall hold, earmark and segregate on its books and records for the
account of the Fund all property of the Fund, including all
securities, participation interests and other assets of the Fund (1)
physically held by the Custodian, (2) held by any subcustodian
referred to in Section 2 hereof or by any agent referred to in
Paragraph K hereof, (3) held by or maintained in The Depository Trust
Company or in Participants Trust Company or in an Approved Clearing
Agency or in the Federal Book-Entry System or in an Approved Foreign
Securities Depository, each of which from time to time is referred to
herein as a "Securities System", and (4) held by the Custodian or by
any subcustodian referred to in Section 2 hereof and maintained in any
Approved Book-Entry System for Commercial Paper.
B. Delivery of Securities The Custodian shall release and deliver
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securities or participation interests owned by the Fund held (or
deemed to be held) by the Custodian or maintained in a Securities
System account or in an Approved Book-Entry System for Commercial
Paper account only upon receipt of proper instructions, which may be
continuing instructions when deemed appropriate by the parties, and
only in the following cases:
1) Upon sale of such securities or participation interests for the
account of the Fund, but only against receipt of payment
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therefor; if delivery is made in Boston or New York City, payment
therefor shall be made in accordance with generally accepted
clearing house procedures or by use of Federal Reserve Wire
System procedures; if delivery is made elsewhere payment therefor
shall be in accordance with the then current "street delivery"
custom or in accordance with such procedures agreed to in writing
from time to time by the parties hereto; if the sale is effected
through a Securities System, delivery and payment therefor shall
be made in accordance with the provisions of Paragraph L hereof;
if the sale of commercial paper is to be effected through an
Approved Book-Entry System for Commercial Paper, delivery and
payment therefor shall be made in accordance with the provisions
of Paragraph M hereof; if the securities are to be sold outside
the United States, delivery may be made in accordance with
procedures agreed to in writing from time to time by the parties
hereto; for the purposes of this subparagraph, the term "sale"
shall include the disposition of a portfolio security (i) upon
the exercise of an option written by the Fund and (ii) upon the
failure by the Fund to make a successful bid with respect to a
portfolio security, the continued holding of which is contingent
upon the making of such a bid;
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2) Upon the receipt of payment in connection with any repurchase
agreement or reverse repurchase agreement relating to such
securities and entered into by the Fund;
3) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
4) To the issuer thereof or its agent when such securities or
participation interests are called, redeemed, retired or
otherwise become payable; provided that, in any such case, the
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cash or other consideration is to be delivered to the Custodian
or any subcustodian employed pursuant to Section 2 hereof;
5) To the issuer thereof, or its agent, for transfer into the name
of the Fund or into the name of any nominee of the Custodian or
into the name or nominee name of any agent appointed pursuant to
Paragraph K hereof or into the name or nominee name of any sub
custodian employed pursuant to Section 2 hereof; or for exchange
for a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities or
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participation interests are to be delivered to the Custodian or
any subcustodian employed pursuant to Section 2 hereof;
6) To the broker selling the same for examination in accordance with
the "street delivery" custom; provided that the Custodian shall
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adopt such procedures as the Fund from time to time shall approve
to ensure their prompt return to the Custodian by the broker in
the event the broker elects not to accept them;
7) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion of such securities, or pursuant to
any deposit agreement; provided that, in any such case, the new
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securities and cash, if any, are to be delivered to the Custodian
or any subcustodian employed pursuant to Section 2 hereof;
8) 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
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and cash, if any, are to be delivered to the Custodian or any
subcustodian employed pursuant to Section 2 hereof;
9) For delivery in connection with any loans of securities made by
the Fund (such loans to be made pursuant to the terms of the
Fund's current registration statement), but only against receipt
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of adequate collateral as agreed upon from time to time by the
Custodian and the Fund, which may be in the form of cash or
obligations issued by the United States government, its agencies
or instrumentalities.
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10) For delivery as security in connection with any borrowings by the
Fund requiring a pledge or hypothecation of assets by the Fund
(if then permitted under circumstances described in the current
registration statement of the Fund), provided, that the
securities shall be released only upon payment to the Custodian
of the monies borrowed, except that in cases where additional
collateral is required to secure a borrowing already made,
further securities may be released for that purpose; upon receipt
of proper instructions, the Custodian may pay any such loan upon
redelivery to it of the securities pledged or hypothecated
therefor and upon surrender of the note or notes evidencing the
loan;
11) When required for delivery in connection with any redemption or
repurchase of Shares of the Fund in accordance with the
provisions of Paragraph J hereof;
12) For delivery in accordance with the provisions of any agreement
between the Custodian (or a subcustodian employed pursuant to
Section 2 hereof) and a broker-dealer registered under the
Securities Exchange Act of 1934 and, if necessary, the Fund,
relating to compliance with the rules of The Options Clearing
Corporation or of any registered national securities exchange, or
of any similar organization or organizations, regarding deposit
or escrow or other arrangements in connection with options
transactions by the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian (or a subcustodian employed
pursuant to Section 2 hereof), and a futures commission merchant,
relating to compliance with the rules of the Commodity Futures
Trading Commission and/or of any contract market or commodities
exchange or similar organization, regarding futures margin
account deposits or payments in connection with futures
transactions by the Fund;
14) For any other proper corporate purpose, but only upon receipt of,
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in addition to proper instructions, a certified copy of a vote of
the Board or the Executive Committee of the Board specifying the
securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be proper
corporate purpose, and naming the person or persons to whom
delivery of such securities shall be made.
C. Registration of Securities Securities held by the Custodian (other
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than bearer securities) for the account of the Fund shall be
registered in the name of the Fund or in the name of any nominee of
the Fund or of any nominee of the Custodian, or in the name or nominee
name of any agent appointed pursuant to Paragraph K hereof, or in the
name or nominee name of any subcustodian employed pursuant to Section
2 hereof, or in the name or nominee name of The Depository Trust
Company or Participants Trust Company or Approved Clearing Agency or
Federal Book-Entry
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System or Approved Book-Entry System for Commercial Paper; provided,
that securities are held in an account of the Custodian or of such
agent or of such subcustodian containing only assets of the Fund or
only assets held by the Custodian or such agent or such subcustodian
as a custodian or subcustodian or in a fiduciary capacity for
customers. All certificates for securities accepted by the Custodian
or any such agent or subcustodian on behalf of the Fund shall be in
"street" or other good delivery form or shall be returned to the
selling broker or dealer who shall be advised of the reason thereof.
D. Bank Accounts The Custodian shall open and maintain a separate bank
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account or accounts in the name of the Fund, subject only to draft or
order by the Custodian acting in pursuant to the terms of this
Agreement, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of
the Fund other than cash maintained by the Fund in a bank account
established and used in accordance with Rule 1 7f-3 under the
Investment Company Act of 1940. Funds held by the Custodian for the
Fund may be deposited by it to its credit as Custodian in the banking
department of the Custodian or in such other banks or trust companies
as the Custodian may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company shall be
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qualified to act as a custodian under the Investment Company Act of
1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall be approved in
writing by an Authorized Officer. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be subject to
withdrawal only by the Custodian in that capacity.
E. Payment for Shares of the Fund The Custodian shall make appropriate
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arrangements with the Transfer Agent and the principal underwriter of
the Fund to enable the Custodian to make certain it promptly receives
the cash or other consideration due to the Fund for such new or
treasury Shares as may be issued or sold from time to time by the
Fund, in accordance with the governing documents and offering
prospectus and statement of additional information of the Fund. The
Custodian will provide prompt notification to the Fund of any receipt
by it of payments for Shares of the Fund.
F. Investment and Availability of Federal Funds Upon agreement between
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the Fund and the Custodian,. the Custodian shall, upon the receipt of
proper instructions, which may be continuing instructions when deemed
appropriate by the parties, (1) invest in such securities and
instruments as may be set forth in such instructions on the same day
as received all federal funds received after a time agreed upon
between the Custodian and the Fund, and (2) make federal funds
available to the Fund as of specified times agreed upon from time to
time by the Fund and the Custodian in the amount of checks received in
payment for Shares of the Fund which are deposited into the Fund's
account.
G. Collections The Custodian shall promptly collect all income and other
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payments with respect to registered securities held hereunder to which
the Fund shall be entitled either by law or pursuant to custom in the
securities business, and shall promptly collect all income and other
payments with respect to bearer securities if, on the date
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of payment by the issuer, such securities are held by the Custodian or
agent thereof and shall credit such income, as collected, to the
Fund's custodian account.
The Custodian shall do all things necessary and proper in connection with such
prompt collections and, without limiting the generality of the foregoing, the
Custodian shall
1) Present for payment all coupons and other income items requiring
presentations;
2) Present for payment all securities which may mature or be called,
redeemed, retired or otherwise become payable;
3) Endorse and deposit for collection, in the name of the Fund,
checks, drafts or other negotiable instruments;
4) Credit income from securities maintained in a Securities System
or in an Approved Book-Entry System for Commercial Paper at the
time funds become available to the Custodian; in the case of
securities maintained in The Depository Trust Company funds shall
be deemed available to the Fund not later than the opening of
business on the first business day after receipt of such funds by
the Custodian.
The Custodian shall notify the Fund as soon as reasonably practicable whenever
income due on any security is not promptly collected. In any case in which the
Custodian does not receive any due and unpaid income after it has made demand
for the same, it shall immediately so notify the Fund in writing, enclosing
copies of any demand letter, any written response thereto, and memoranda of all
oral responses thereto and to telephonic demands, and await instructions from
the Fund; the Custodian shall in no case have any liability for any nonpayment
of such income provided the Custodian meets the standard of care set forth in
Section 8 hereof. The Custodian shall not be obligated to take legal action for
collection unless and until reasonably indemnified to its satisfaction.
The Custodian shall also receive and collect all stock dividends, rights and
other items of like nature, and deal with the same pursuant to proper
instructions relative thereto.
H. Payment of Fund Moneys Upon receipt of proper instructions, which may
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be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out moneys of the Fund in the following cases
only:
1) Upon the purchase of securities, participation interests,
options, futures contracts, forward contracts and options on
futures contracts purchased for the account of the Fund but only
(a) against the receipt of:
(i) such securities registered as provided in Paragraph C hereof
or in proper form for transfer or
(ii) detailed instructions signed by an officer of the Fund
regarding the
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participation interests to be purchased or
(iii) written confirmation of the purchase by the Fund of the
options, futures contracts, forward contracts or options on
futures contracts
by the Custodian (or by a subcustodian employed pursuant to
Section 2 hereof or by a clearing corporation of a national
securities exchange of which the Custodian is a member or by any
bank, banking institution or trust company doing business in the
United States or abroad which is qualified under the Investment
Company Act of 1940 to act as a custodian and which has been
designated by the Custodian as its agent for this purpose or by
the agent specifically designated in such instructions as
representing the purchasers of a new issue of privately placed
securities); (b) in the case of a purchase effected through a
Securities System, upon receipt of the securities by the
Securities System in accordance with the conditions set forth in
Paragraph L hereof; (c) in the case of a purchase of commercial
paper effected through an Approved Book-Entry System for
Commercial Paper, upon receipt of the paper by the Custodian or
subcustodian in accordance with the conditions set forth in
Paragraph M hereof; (d) in the case of repurchase agreements
entered into between the Fund and another bank or a
broker-dealer, against receipt by the Custodian of the securities
underlying the repurchase agreement either in certificate form or
through an entry crediting the Custodian's segregated,
non-proprietary account at the Federal Reserve Bank of Boston
with such securities along with written evidence of the agreement
by the bank or broker-dealer to repurchase such securities from
the Fund; or (e) with respect to securities purchased outside of
the United States, in accordance with written procedures agreed
to from time to time in writing by the parties hereto;
2) When required in connection with the conversion, exchange or
surrender of securities owned by the Fund as set forth in
Paragraph B hereof;
3) When required for the redemption or repurchase of Shares of the
Fund in accordance with the provisions of Paragraph J hereof;
4) 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: advisory fees, distribution plan payments,
interest, taxes, management compensation and expenses,
accounting, transfer agent and legal fees, and other operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5) For any other proper corporate purpose, but only upon receipt of,
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in addition to proper instructions, a certified copy of a vote of
the Board, specifying the amount of such payment, setting forth
the purpose for which such payment is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person
or persons to whom such payment is to be made.
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I. Liability for Payment in Advance of Receipt of Securities Purchased In
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any and every case where payment for purchase of securities for the
account of the Fund is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written
instructions signed by two officers of the Fund to so pay in advance,
the Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been received
by the Custodian; except that in the case of a repurchase agreement
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entered into by the Fund with a bank which is a member of the Federal
Reserve System, the Custodian may transfer funds to the account of
such bank prior to the receipt of (i) the securities in certificate
form subject to such repurchase agreement or (ii) written evidence
that the securities subject to such repurchase agreement have been
transferred by book-entry into a segregated non-proprietary account of
the Custodian maintained with the Federal Reserve Bank of Boston or
(iii) the safekeeping receipt, provided that such securities have in
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fact been so transferred by book-entry and the written repurchase
agreement is received by the Custodian in due course; and except that
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if the securities are to be purchased outside the United States,
payment may be made in accordance with procedures agreed to from time
to time by the parties hereto.
J. Payments for Repurchases or Redemptions of Shares of the Fund From
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such funds as may be available for the purpose, but subject to the
limitations of the Fund's Declaration of Trust and ByLaws, made known
to the Custodian, any applicable votes of the Board and the current
redemption and repurchase procedures of the Fund, the Custodian shall,
upon receipt of written instructions from the Fund or from the Fund's
transfer agent or from the principal underwriter, make funds and/or
portfolio securities available for payment to holders of Shares who
have caused their Shares to be redeemed or repurchased by the Fund or
for the Fund's account by its transfer agent or principal underwriter.
The Custodian may maintain a special checking account upon which
special checks may be drawn by shareholders of the Fund holding Shares
for which certificates have not been issued. Such checking account and
such special checks shall be subject to such rules and regulations as
the Custodian and the Fund may from time to time adopt. The Custodian
or the Fund may suspend or terminate use of such checking account or
such special checks (either generally or for one or more shareholders)
at any time. The Custodian and the Fund shall notify the other
immediately of any such suspension or termination.
K. Appointment of Agents by the Custodian The Custodian may at any time
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or times in its discretion appoint (and may at any time remove) any
other bank or trust company (provided such bank or trust company is
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itself qualified under the Investment Company Act of 1940 to act as a
custodian or is itself an eligible foreign custodian within the
meaning of Rule 17f-5 under said Act) as the agent of the Custodian to
carry out such of the duties and functions of the Custodian described
in this Section 3 as the Custodian may from time to time direct;
provided, however, that the appointment of any such agent shall not
--------
relieve the Custodian of any of its responsibilities or liabilities
hereunder, and as between the Fund and the Custodian, the Custodian
shall be fully responsible for the acts and omissions of any such
agent. For the purposes of this Agreement, any property of the Fund
held by any such agent shall be deemed to be held by the Custodian
hereunder.
10
<PAGE>
L. Deposit of Fund Portfolio Securities in Securities Systems The
----------------------------------------------------------
Custodian may deposit and/or maintain securities owned by the Fund
(1) in The Depository Trust Company;
(2) in Participants Trust Company;
(3) in any other Approved Clearing Agency;
(4) in the Federal Book-Entry System; or
(5) in an Approved Foreign Securities Depository
in each case only in accordance with applicable Federal Reserve Board
and Securities and Exchange Commission rules and regulations, and at
all times subject to the following provisions:
(a) The Custodian may (either directly or through one or more
subcustodians employed pursuant to Section 2) keep securities of the
Fund in a Securities System provided that such securities are
maintained in a non-proprietary account ("Account") of the Custodian
or such subcustodian in the Securities System which shall not include
any assets of the Custodian or such subcustodian or any other person
other than assets held by the Custodian or such subcustodian as a
fiduciary, custodian, or otherwise for its customers.
(b) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund, and the Custodian
shall be fully and completely responsible for maintaining a record
keeping system capable of accurately and currently stating the Fund's
holdings maintained in each such Securities System.
(c) The Custodian shall pay for securities purchased in book-entry form
for the account of the Fund only upon (i) receipt of notice or advice
from the Securities System that such securities have been transferred
to the Account, and (ii) the making of any entry on the records of the
Custodian to reflect such payment and transfer for the account of the
Fund. The Custodian shall transfer securities sold for the account of
the Fund only upon (i) receipt of notice or advice from the Securities
System that payment for such securities has been transferred to the
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of the
Fund. Copies of all notices or advises from the Securities System of
transfers of securities for the account of the Fund shall identify the
Fund, be maintained for the Fund by the Custodian and be promptly
provided to the Fund at its request. The Custodian shall promptly send
to the Fund confirmation of each transfer to or from the account of
the Fund in the form of a written advice or notice of each such
transaction, and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transactions in the Securities System for
the account of the Fund on the next business day.
(d) The Custodian shall promptly send to the Fund any report or other
communication received or obtained by the Custodian relating to the
Securities System's accounting
11
<PAGE>
system, system of internal accounting controls or procedures for
safeguarding securities deposited in the Securities System; the
Custodian shall promptly send to the Fund any report or other
communication relating to the Custodian's internal accounting controls
and procedures for safeguarding securities deposited in any Securities
System; and the Custodian shall ensure that any agent appointed
pursuant to Paragraph K hereof or any subcustodian employed pursuant
to Section 2 hereof shall promptly send to the Fund and to the
Custodian any report or other communication relating to such agent's
or subcustodian's internal accounting controls and procedures for
safeguarding securities deposited in any Securities System. The
Custodian's books and records relating to the Fund's participation in
each Securities System will at all times during regular business hours
be open to the inspection of the Fund's Authorized Officers, employees
or agents.
(e) The Custodian shall not act under this Paragraph L in the absence of
receipt of a certificate of an Authorized Officer that the Board has
approved the use of a particular Securities System; the Custodian
shall also obtain appropriate assurance from an Authorized Officer
that the Board has annually reviewed and approved, the continued use
by the Fund of each Securities System, so long as such review and
approval is required by Rule 17f-4 under the Investment Company Act of
1940, and the Fund shall promptly notify the Custodian if the use of a
Securities System is to be discontinued; at the request of the Fund,
the Custodian will terminate the use of any such Securities System as
promptly as practicable.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of its
agents or subcustodians or of any of its or their employees or from
any failure of the Custodian or any such agent or subcustodian to
enforce effectively, such rights as it may have against the Securities
System or any other person; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect
to any claim against the Securities System or any other person which
the Custodian may have as a consequence of any such loss or damage if
and to the extent that the Fund has not been made whole for any such
loss or damage.
M. Deposit of Fund Commercial Paper in an Approved Book-Entry System for
---------------------------------------------------------------------
Commercial Paper Upon receipt of proper instructions with respect to
----------------
each issue of direct issue commercial paper purchased by the Fund, the
Custodian may deposit and/or maintain direct issue commercial paper
owned by the Fund in any Approved Book-Entry System for Commercial
Paper, in each case only in accordance with applicable Securities and
Exchange Commission rules, regulations, and no-action correspondence,
and at all times subject to the following provisions:
(a) The Custodian may (either directly or through one or more
subcustodians employed pursuant to Section 2) keep commercial
paper of the Fund in an Approved Book-Entry System for Commercial
Paper, provided that such paper is issued in book entry form by
the Custodian or subcustodian on behalf of an issuer with which
the Custodian or subcustodian has entered into a book-entry
agreement and provided further that such paper is maintained in a
12
<PAGE>
non-proprietary account ("Account") of the Custodian or such
subcustodian in an Approved Book-Entry System for Commercial
Paper which shall not include any assets of the Custodian or such
subcustodian or any other person other than assets held by the
Custodian or such subcustodian as a fiduciary, custodian, or
otherwise for its customers.
(b) The records of the Custodian with respect to commercial paper of
the Fund which is maintained in an Approved Book-Entry System for
Commercial Paper shall identify by book-entry each specific issue
of commercial paper purchased by the Fund which is included in
the System and shall at all times during regular business hours
be open for inspection by authorized officers, employees or
agents of the Fund. The Custodian shall be fully and completely
responsible for maintaining a record keeping system capable of
accurately and currently stating the Fund's holdings of
commercial paper maintained in each such System.
(c) The Custodian shall pay for commercial paper purchased in
book-entry form for the account of the Fund only upon
contemporaneous (i) receipt of notice or advice from the issuer
that such paper has been issued, sold and transferred to the
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such purchase, payment and transfer for the
account of the Fund. The Custodian shall transfer such commercial
paper which is sold or cancel such commercial paper which is
redeemed for the account of the Fund only upon contemporaneous
(i) receipt of notice or advice that payment for such paper has
been transferred to the Account, and (ii) the making of an entry
on the records of the Custodian to reflect such transfer or
redemption and payment for the account of the Fund. Copies of all
notices, advises and confirmations of transfers of commercial
paper for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be promptly provided
to the Fund at its request. The Custodian shall promptly send to
the Fund confirmation of each transfer to or from the account of
the Fund in the form of a written advice or notice of each such
transaction, and shall furnish to the Fund copies of daily
transaction sheets reflecting each day's transactions in the
System for the account of the Fund on the next business day.
(d) The Custodian shall promptly send to the Fund any report or other
communication received or obtained by the Custodian relating to
each System's accounting system, system of internal accounting
controls or procedures for safeguarding commercial paper
deposited in the System; the Custodian shall promptly send to the
Fund any report or other communication relating to the
Custodian's internal accounting controls and procedures for
safeguarding commercial paper deposited in any Approved
Book-Entry System for Commercial Paper; and the Custodian shall
ensure that any agent appointed pursuant to Paragraph K hereof or
any subcustodian employed pursuant to Section 2 hereof shall
promptly send to the Fund and to the Custodian any report or
other communication relating to such agent's or
13
<PAGE>
subcustodian's internal accounting controls and procedures for
safeguarding securities deposited in any Approved Book-Entry
System for Commercial Paper.
(e) The Custodian shall not act under this Paragraph M in the absence
of receipt of a certificate of an officer of the Fund that the
Board has approved the use of a particular Approved Book-Entry
System for Commercial Paper; the Custodian shall also obtain
appropriate assurance from an Authorized. Officer that the Board
has annually reviewed and approved the continued use by the Fund
of each Approved Book-Entry System for Commercial Paper, so long
as such review and approval is required by Rule 1 7f-4 under the
Investment Company Act of 1940, and the Fund shall promptly
notify the Custodian if the use of an Approved Book-Entry System
for Commercial Paper is to be discontinued; at the request of the
Fund, the Custodian will terminate the use of any such System as
promptly as practicable.
(f) The Custodian (or subcustodian, if the Approved Book-Entry System
for Commercial Paper is maintained by the subcustodian) shall
issue physical commercial paper or promissory notes whenever
requested to do so by the Fund or in the event of an electronic
system failure which impedes issuance, transfer or custody of
direct issue commercial paper by book-entry.
(g) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to
the Fund resulting from use of any Approved Book-Entry System for
Commercial Paper by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or subcustodians
or of any of its or their employees or from any failure of the
Custodian or any such agent or subcustodian to enforce
effectively such rights as it may have against this System, the
issuer of the commercial paper or any other person; at the
election of the Fund, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any claim against
this System, the issuer of the commercial paper, or any other
person which the Custodian may have as a consequence of any such
loss or damage if and to the extent that the Fund has not been
made whole for any such loss or damage.
N. Segregated Account The Custodian shall upon receipt of proper
------------------
instructions establish and maintain a segregated account or accounts
for and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Paragraph L hereof, (i) in
accordance with the provisions of any agreement among the Fund, the
Custodian and any registered broker-dealer (or any futures commission
merchant), relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities
exchange (or of the Commodity Futures Trading Commission or of any
contract market or commodities exchange), or of any similar
organization or organizations, regarding escrow or deposit or other
arrangements in connection with transactions by the Fund, (ii) for
purposes of segregating cash or U.S. Government securities in
connection with options purchased, sold or written by the Fund or
futures
14
<PAGE>
contracts or options thereon purchased or sold by the Fund, (iii) for
the purposes of compliance by the Fund with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release or
releases of the Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered investment companies
and (iv) for other proper purposes, but only, in the case of clause
--- ----
(iv), upon receipt of, in addition to proper instructions, a
certificate signed by two officers of the Fund, setting forth the
purpose such segregated account and declaring such purpose to be a
proper purpose.
O. 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 securities of the Fund held by it and in
connection with transfers of securities.
P. Proxies The Custodian shall, with respect to the securities held by it
-------
hereunder, cause to be promptly delivered to the Fund all forms of
proxies and all notices of meetings and any other notices or
announcements or other written information affecting or relating to
the securities, and upon receipt of proper instructions shall execute
and deliver or cause its nominee to execute and deliver such proxies
or other authorizations as may be required. Neither the Custodian nor
its nominee shall vote upon any of the securities or execute any proxy
to vote thereon or give any consent or take any other action with
respect thereto (except as otherwise herein provided) unless ordered
to do so by proper instructions.
Q. Communications Relating to Fund Portfolio Securities The Custodian
----------------------------------------------------
shall deliver promptly to the Fund all written information (including,
without limitation, pendency of call and maturities of securities and
participation interests and expirations of rights in connection
therewith and notices of exercise of call and put options written by
the Fund and the maturity of futures contracts purchased or sold by
the Fund) received by the Custodian from issuers and other persons
relating to the securities and participation interests being held for
the Fund. With respect to tender or exchange offers, the Custodian
shall deliver promptly to the Fund all written information received by
the Custodian from issuers and other persons relating to the
securities and participation interests whose tender or exchange is
sought and from the party (or his agents) making the tender or
exchange offer.
R. Exercise of Rights; Tender Offers In the case of tender offers,
---------------------------------
similar offers to purchase or exercise rights (including, without
limitation, pendency of calls and maturities of securities and
participation interests and expirations of rights in connection
therewith and notices of exercise of call and put options and the
maturity of futures contracts) affecting or relating to securities and
participation interests held by the Custodian under this Agreement,
the Custodian shall have responsibility for promptly notifying the
Fund of all such offers in accordance with the standard of reasonable
care set forth in Section 8 hereof. For all such offers for which the
Custodian is responsible as provided in this Paragraph R, the Fund
shall have responsibility for providing the Custodian with all
necessary instructions in timely fashion. Upon receipt of proper
instructions, the Custodian shall timely deliver to the issuer or
trustee thereof, or to the agent of either,
15
<PAGE>
warrants, puts, calls, rights or similar securities for the purpose of
being exercised or sold upon proper receipt therefor and upon receipt
of assurances satisfactory to the Custodian that the new securities
and cash, if any, acquired by such action are to be delivered to the
Custodian or any subcustodian employed pursuant to Section 2 hereof.
Upon receipt of proper instructions, the Custodian shall timely
deposit securities upon invitations for tenders of securities upon
proper receipt therefor and upon receipt of assurances satisfactory to
the Custodian that the consideration to be paid or delivered or the
tendered securities are to be returned to the Custodian or
subcustodian employed pursuant to Section 2 hereof. Notwithstanding
any provision of this Agreement to the contrary, the Custodian shall
take all necessary action, unless otherwise directed to the contrary
by proper instructions, to comply with the terms of all mandatory or
compulsory exchanges, calls, tenders, redemptions, or similar rights
of security ownership, and shall thereafter promptly notify the Fund
in writing of such action.
S. Depository Receipts The Custodian shall, upon receipt of proper
-------------------
instructions, surrender or cause to be surrendered foreign securities
to the depository used by an issuer of American Depository Receipts,
European Depository Receipts or International Depository Receipts
(hereinafter collectively referred to as "ADRs") for such securities,
against a written receipt therefor adequately describing such
securities and written evidence satisfactory to the Custodian that the
depository has acknowledged receipt of instructions to issue with
respect to such securities ADRs in the name of a nominee of the
Custodian or in the name or nominee name of any subcustodian employed
pursuant to Section 2 hereof, for delivery to the Custodian or such
subcustodian at such place as the Custodian or such subcustodian may
from time to time designate. The Custodian shall, upon receipt of
proper instructions, surrender ADRs to the issuer thereof against a
written receipt therefor adequately describing the ADRs surrendered
and written evidence satisfactory to the Custodian that the issuer of
the ADRs has acknowledged receipt of instructions to cause its
depository to deliver the securities underlying such ADRs to the
Custodian or to a subcustodian employed pursuant to Section 2 hereof.
T. Interest Bearing Call or Time Deposits The Custodian shall, upon
--------------------------------------
receipt of proper instructions, place interest bearing fixed term and
call deposits with the banking department of such banking institution
(other than the Custodian) and in such amounts as the Fund may
designate. Deposits may be denominated in U.S. Dollars or other
currencies. The Custodian shall include in its records with respect to
the assets of the Fund appropriate notation as to the amount and
currency of each such deposit, the accepting banking institution, and
other appropriate details and shall retain such forms of advice or
receipt evidencing the deposit, if any, as may be forwarded to the
Custodian by the banking institution. Such deposits shall be deemed
portfolio securities of the Fund for the purposes of this Agreement,
and the Custodian shall be responsible for the collection of income
from such accounts and the transmission of cash to and from such
accounts.
16
<PAGE>
U. Options, Futures Contracts and Foreign Currency Transactions
------------------------------------------------------------
1. Options. The Custodians shall, upon receipt of proper
-------
instructions and in accordance with the provisions of any
agreement between the Custodian, any registered broker-dealer
and, if necessary, the Fund, relating to compliance with the
rules of the Options Clearing Corporation or of any registered
national securities exchange or similar organization or
organizations, receive and retain confirmations or other
documents, if any, evidencing the purchase or writing of an
option on a security, securities index, currency or other
financial instrument or index by the Fund; deposit and maintain
in a segregated account for the Fund, either physically or by
book-entry in a Securities System, securities subject to a
covered call option written by the Fund; and release and/or
transfer such securities or other assets only in accordance with
a notice or other communication evidencing the expiration,
termination or exercise of such covered option furnished by the
Options Clearing Corporation, the securities or options exchange
on which such covered option is traded, or such other
organization as may be responsible for handling such options
transactions.
2. Futures Contracts The Custodian shall, upon receipt of proper
-----------------
instructions, receive and retain confirmations and other
documents, if any, evidencing the purchase or sale of a futures
contract or an option on a futures contract by the Fund; deposit
and maintain in a segregated account, for the benefit of any
futures commission merchant, assets designated by the Fund as
initial, maintenance or variation "margin" deposits (including
mark-to-market payments) intended to secure the Fund's
performance of its obligations under any futures contracts
purchased or sold or any options on futures contracts written by
Fund, in accordance with the provisions of any agreement or
agreements among the Fund, the Custodian, and such futures
commission merchant, designed to comply with the rules of the
Commodity Futures Trading Commission and/or of any contract
market or commodities exchange or similar organization regarding
such margin deposits or payments; and release and/or transfer
assets in such margin accounts only in accordance with any such
agreements or rules.
3. Foreign Exchange Transactions The Custodian shall, pursuant to
-----------------------------
proper instructions, enter into or cause a subcustodian to enter
into foreign exchange contracts, currency swaps or options to
purchase and sell foreign currencies for spot and future delivery
on behalf and for the account of the Fund. Such transactions may
be undertaken by the Custodian or subcustodian with such banking
or financial institutions or other currency brokers, as set forth
in proper instructions. Foreign exchange contracts, swaps and
options shall be deemed to be portfolio securities of the Fund;
and accordingly, the responsibility of the Custodian therefor
shall be the same as and no greater than the Custodian's
responsibility in respect of other portfolio securities of the
Fund. The Custodian shall be responsible for the transmittal to
and receipt of cash from the currency broker or banking or
financial institution with which the contract or option is made,
the maintenance of proper records with respect to the transaction
and the maintenance of any segregated account required in
connection with the
17
<PAGE>
transaction. The Custodian shall have no duty with respect to the
selection of the currency brokers or banking or financial
institutions with which the Fund deals or for their failure to
comply with the terms of any contract or option. Without limiting
the foregoing, it is agreed that upon receipt of proper
instructions and insofar as funds are made available to the
Custodian for the purpose, the Custodian may (if determined
necessary by the Custodian to consummate a particular transaction
on behalf and for the account of the Fund) make free outgoing
payments of cash in the form of U.S. dollars or foreign currency
before receiving confirmation of a foreign exchange contract or
swap or confirmation that the countervalue currency completing
the foreign exchange contract or swap has been delivered or
received. The Custodian shall not be responsible for any costs
and interest charges which may be incurred by the Fund or the
Custodian as a result of the failure or delay of third parties to
deliver foreign exchange, provided that the Custodian shall
nevertheless be held to the standard of care set forth in, and
shall be liable to the Fund in accordance with, the provisions of
Section 8.
V. Actions Permitted Without Express Authority The Custodian may in its
-------------------------------------------
discretion, without express authority from the Fund:
1) 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 by
--------
the Custodian to the Treasurer of the Fund;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and
4) in general, attend to all nondiscretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Fund except as
otherwise directed by the Fund.
4. Duties of Bank with Respect to Books of Account and Calculations of Net As
--------------------------------------------------------------------------
1 Value
-------
The Bank shall as Agent (or as Custodian, as the case may be) keep such books of
account and render as at the close of business on each day a detailed statement
of the amounts received or paid out and of securities received or delivered for
the account of the Fund during said day and such other statements, including a
daily trial balance and inventory of the Fund's portfolio securities; and shall
furnish such other financial information and data as from time to time requested
by the Treasurer or any Authorized Officer of the Fund; and shall compute and
determine, as of the close of regular trading on the New York Stock Exchange, or
at such other time or times as the Board may determine, the net asset value of a
share in the Fund, such computation and determination to be made in accordance
with the governing documents of the Fund and the votes and instructions of the
Board at the time in force and applicable, and promptly notify the Fund and its
investment adviser and such other persons as the Fund may request of the result
of such computation and determination. In computing the net asset value the
18
<PAGE>
Custodian may rely upon security quotations received by telephone or otherwise
from sources or pricing services designated by the Fund by proper instructions,
and may further rely upon information furnished to it by any authorized officer
of the Fund relative (a) to liabilities of the Fund not appearing on its books
of account, (b) to the existence, status and proper treatment of any reserve or
reserves, (c) to any procedures established by the Board regarding the valuation
of portfolio securities, and (d) to the value to be assigned to any bond, note,
debenture, Treasury bill, repurchase agreement, subscription right, security,
participation interest or other asset or property for which market quotations
are not readily available.
5. Records and Miscellaneous Duties
--------------------------------
The Bank shall create, maintain and preserve all records relating to its
activities and obligations under this Agreement in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31 a-1 and 31 a-2
thereunder, applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the Fund. All
books of account and records maintained by the Bank in connection with the
performance of its duties under this Agreement shall be the property of the
Fund, shall at all times during the regular business hours of the Bank be open
for inspection by authorized officers, employees or agents of the Fund, and in
the event of termination of this Agreement shall be delivered to the Fund or to
such other person or persons as shall be designated by the Fund. Disposition of
any account or record after any required period of preservation shall be only in
accordance with specific instructions received from the Fund. The Bank shall
assist generally in the preparation of reports to shareholders, audits of
accounts, and other ministerial matters of like nature; and, upon request, shall
furnish the Fund's auditors with an attested inventory of securities held with
appropriate information as to securities in transit or in the process of
purchase or sale and with such other information as said auditors may from time
to time request. The Custodian shall also maintain records of all receipts,
deliveries and locations of such securities, together with a current inventory
thereof, and shall conduct periodic verifications (including sampling counts at
the Custodian) of certificates representing bonds and other securities for which
it is responsible under this Agreement in such manner as the Custodian shall
determine from time to time to be advisable in order to verify the accuracy of
such inventory. The Bank shall not disclose or use any books or records it has
prepared or maintained by reason of this Agreement in any manner except as
expressly authorized herein or directed by the Fund, and the Bank shall keep
confidential any information obtained by reason of this Agreement.
6. Opinion of Fund's Independent Public Accountants
------------------------------------------------
The Custodian shall take all reasonable action, as the Fund may from time to
time request, to enable the Fund to obtain from year to year favorable opinions
from the Fund's independent public accountants with respect to its activities
hereunder in connection with the preparation of the Fund's registration
statement and Form N-SAR or other periodic reports to the Securities and
Exchange Commission and with respect to any other requirements of such
Commission.
19
<PAGE>
7. Compensation and Expenses of Bank
---------------------------------
The Bank shall be entitled to reasonable compensation for its services as
Custodian and Agent, as agreed upon from time `to time between the Fund and the
Bank. The Bank shall be entitled to receive from the Fund on demand
reimbursement for its cash disbursements, expenses and charges, including
counsel fees, in connection with its duties as Custodian and Agent hereunder,
but excluding salaries and usual overhead expenses.
8. Responsibility of Bank
----------------------
So long as and to the extent that it is in the exercise of reasonable care, the
Bank as Custodian and Agent 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.
The Bank as Custodian and Agent shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Fund) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
The Bank as Custodian and Agent shall be held to the exercise of reasonable care
in carrying out the provisions of this Agreement but shall be liable only for
its own negligent or bad faith acts or failures to act. Notwithstanding the
foregoing, nothing contained in this paragraph is intended to nor shall it be
construed to modify the standards of care and responsibility set forth in
Section 2 hereof with respect to subcustodians and in subparagraph f of
Paragraph L of Section 3 hereof with respect to Securities Systems and in
subparagraph g of Paragraph M of Section 3 hereof with respect to an Approved
Book-Entry System for Commercial Paper.
The Custodian shall be liable for the acts or omissions of a foreign banking
institution to the same extent as set forth with respect to subcustodians
generally in Section 2 hereof, provided that, regardless of whether assets are
maintained in the custody of a foreign banking institution, a foreign securities
depository or a branch of a U.S. bank, the Custodian shall not be liable for any
loss, damage, cost, expense, liability or claim resulting from, or caused by,
the direction of or authorization by the Fund to maintain custody of any
securities or cash of the Fund in a foreign county including, but not limited
to, losses resulting from nationalization, expropriation, currency restrictions,
acts of war, civil war or terrorism, insurrection, revolution, military or
usurped powers, nuclear fission, fusion or radiation, earthquake, storm or other
disturbance of nature or acts of God.
If the Fund requires the Bank in any capacity to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Bank, result in the Bank or its nominee assigned to the Fund
being liable for the payment of money or incurring liability of some other form,
the Fund, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian, 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 the Custodian or its nominee shall incur or
20
<PAGE>
be assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its 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 Fund shall be
security therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of the Fund
assets to the extent necessary to obtain reimbursement.
9. Persons Having Access to Assets of the Fund
-------------------------------------------
(i) No trustee, director, general partner, officer, employee or
agent of the Fund shall have physical access to the assets of
the Fund held by the Custodian or be authorized or permitted to
withdraw any investments of the Fund, nor shall the Custodian
deliver any assets of the Fund to any such person. No officer or
director, employee or agent of the Custodian who holds any
similar position with the Fund or the investment adviser of the
Fund shall have access to the assets of the Fund.
(ii) Access to assets of the Fund held hereunder shall only be
available to duly Authorized Officers, employees,
representatives or agents of the Custodian or other persons or
entities for whose actions the Custodian shall be responsible to
the extent permitted hereunder, or to the Fund's independent
public accountants in connection with their auditing duties
performed on behalf of the Fund.
(iii) Nothing in this Section 9 shall prohibit any Authorized Officer,
employee or agent of the Fund or of the investment adviser of
the Fund from giving instructions to the Custodian or executing
a certificate so long as it does not result in delivery of or
access to assets of the Fund prohibited by paragraph (i) of this
Section 9.
10. Effective Period. Termination and Amendment: Successor Custodian
----------------------------------------------------------------
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, that the Fund may at any
--------
time by action of its Board, (i) substitute another bank or trust company for
the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Custodian by the Federal Deposit Insurance
Corporation or by the Banking Commissioner of The Commonwealth of Massachusetts
or upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction. Upon termination of the
Agreement, the Fund shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
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Unless the holders of a majority of the outstanding shares of the Fund vote to
have the securities, funds and other properties held hereunder delivered and
paid over to some other bank or trust company, specified in the vote, having not
less than $25,000,000 of aggregate capital, surplus and undivided profits, as
shown by its last published report, and meeting such other qualifications for
custodians set forth in the Investment Company Act of 1940, the Board shall,,
forthwith, upon giving or receiving notice of termination of this Agreement,
appoint as successor custodian, a bank or trust company having such
qualifications. The Bank, as Custodian, Agent or otherwise; shall, upon
termination of the Agreement, deliver to such successor custodian, all
securities then held hereunder and all funds or other properties of the Fund
deposited with or held by the Bank hereunder and all books of account and
records kept by the Bank pursuant to this Agreement, and all documents held by
the Bank relative thereto. In the event that no such vote has been adopted by
the shareholders and that no written order designating a successor custodian
shall have been delivered to the Bank on or before the date when such
termination shall become effective, then the Bank shall not deliver the
securities, funds and other properties of the Fund to the Fund but shall have
the right to deliver to a bank or trust company doing business in Boston,
Massachusetts 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 funds, securities and properties of the Fund held by or
deposited with the Bank, and all books of account and records kept by the Bank
pursuant to this Agreement, and all documents held by the Bank relative thereto.
Thereafter such bank or trust company shall be the successor of the Custodian
under this Agreement.
11. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Agreement, the Custodian and the Fund
may from time to time agree on such provisions interpretive of or in addition to
the provisions of this Agreement as may in their joint opinion be consistent
with the general tenor of this Agreement. Any such interpretive or additional
provisions shall be in a writing signed by the 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 instruments of the Fund. No interpretive or additional provisions made
as provided in the preceding sentence shall be deemed to be an amendment of this
Agreement.
12. Certification as to Authorized Officers
---------------------------------------
The Secretary of the Fund shall at all times maintain on file with the Bank the
Secretary's certification to the Bank, in such form as may be acceptable to the
Bank, of the names and signatures of the Authorized Officers of each fund, it
being understood that upon the occurrence of any change in the information set
forth in the most recent certification on file (including without limitation any
person named in the most recent certification who has ceased to hold the office
designated therein), the Secretary of the Fund shall sign a new or amended
certification setting forth the change and the new, additional or omitted names
or signatures. The Bank shall be entitled to rely and act upon instructions from
any officers named in the most recent certification.
22
<PAGE>
13. Notices
-------
Notices and other writings delivered or mailed postage prepaid to the Fund
addressed to Raymond F. Skiba, John Hancock Variable Series Trust I, P.O. Box
111, John Hancock Place, Boston, Massachusetts 02117, or to such other address
as the Fund may have designated to the Bank, in writing, or to State Street Bank
and Trust Company, shall be deemed to have been properly delivered or given
hereunder to the respective addressees.
14. Massachusetts Law to Apply: Limitations on Liability
----------------------------------------------------
This Agreement shall be construed and the provisions thereof interpreted under
and in accordance with the laws of The Commonwealth of Massachusetts. The Fund
being a Massachusetts business trust, the Custodian expressly acknowledges the
provision in the Fund's declaration of trust limiting the personal liability of
the trustees and shareholders of the Fund; and the Custodian agrees that it
shall have recourse only to the assets of the Fund invested in the Portfolios
for the payment of claims or obligations as between the Custodian and the Fund
arising out of this Agreement, and the Custodian shall not seek satisfaction of
any such claim or obligation from the trustees or shareholders of the Fund. The
Fund, and each Portfolio of the Fund, shall be liable only for its own
obligations to the Custodian under this Agreement and shall not be jointly or
severally liable for the obligations of any other Fund or Portfolio hereunder.
15. Adoption of the Agreement by the Fund
-------------------------------------
The Fund represents that its Board has duly authorized the Fund to enter into
this Agreement. This Agreement shall be deemed to supersede and terminate, as of
the date first written above, all prior agreements between the Fund and the Bank
relating to the custody of the Fund's assets.
* * * * *
23
<PAGE>
In Witness Whereof, the parties hereto have caused this agreement to be executed
in duplicate as of the date first written above by their respective officers
thereunto duly authorized.
John Hancock Variable Series Trust I
----------------------------------
by: Raymond F. Skiba
Treasurer
Attest:
----------------------------
Sandra M. DaDalt
State Street Bank and Trust Company
by:
-----------------------------------
24
<PAGE>
State Street Bank and Trust Company Appendix A
[EFFECTIVE JANUARY 30, 1995]
John Hancock Variable Series Trust I
International Portfolio
John Hancock Variable Series Trust I
Special Opportunities Portfolio
25
