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FORM OF GLOBAL CUSTODY AGREEMENT
BETWEEN
FRIENDS IVORY & SIME FUNDS
AND
THE CHASE MANHATTAN BANK
Novemeber ,1999
GLOBAL CUSTODY AGREEMENT
TABLE OF CONTENTS
1 . INTENTION OF THE PARTIES; DEFINITIONS----------------------------------------------------2
1.1 INTENTION OF THE PARTIES---------------------------------------------------------------2
1.2 DEFINITIONS----------------------------------------------------------------------------2
2. WHAT BANK IS REQUIRED TO DO---------------------------------------------------------------4
2.1 SET UP ACCOUNTS------------------------------------------------------------------------4
2.2 CASH ACCOUNT---------------------------------------------------------------------------5
2.3 SEGREGATION OF ASSETS; NOMINEE NAME----------------------------------------------------5
2.4 SETTLEMENT OF TRADES-------------------------------------------------------------------5
2.5 CONTRACTUAL SETTLEMENT DATE ACCOUNTING-------------------------------------------------5
2.6 ACTUAL SETTLEMENT DATE ACCOUNTING------------------------------------------------------6
2.7 INCOME COLLECTION; AUTOCREDIT----------------------------------------------------------6
2.8 FRACTIONS/ REDEMPTIONS BY LOT----------------------------------------------------------7
2.9 PRESENTATION OF COUPONS; CERTAIN OTHER MINISTERIAL ACTS--------------------------------7
2.10 CORPORATE ACTIONS----------------------------------------------------------------------7
2.11 PROXY VOTING---------------------------------------------------------------------------7
2.12 STATEMENTS-----------------------------------------------------------------------------9
2.13 ACCESS TO BANK'S RECORDS---------------------------------------------------------------9
2.14 MAINTENANCE OF FINANCIAL ASSETS AT BANK AND SUBCUSTODIAN LOCATIONS---------------------9
2.15 TAX RECLAIMS--------------------------------------------------------------------------10
2.16 FOREIGN EXCHANGE TRANSACTIONS---------------------------------------------------------10
3. INSTRUCTIONS-----------------------------------------------------------------------------10
3.1 ACTING ON INSTRUCTIONS; UNCLEAR INSTRUCTIONS------------------------------------------10
3.2 CONFIRMATION OF ORAL INSTRUCTIONS/ SECURITY DEVICES-----------------------------------11
3.3 INSTRUCTIONS; CONTRARY TO LAW/MARKET PRACTICE-----------------------------------------11
3.4 CUT-OFF TIMES---------------------------------------------------------------------------11
4. FEES EXPENSES AND OTHER AMOUNTS OWING TO BANK--------------------------------------------12
4.1 FEES AND EXPENSES---------------------------------------------------------------------12
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4.2 OVERDRAFTS----------------------------------------------------------------------------12
4.3 BANK'S RIGHT OVER SECURITIES; SET-OFF------------------------------------------------12
5. SUBCUSTODIANS, SECURITIES DEPOSITORIES AND OTHER AGENTS----------------------------------12
5.1 APPOINTMENT OF SUBCUSTODIANS----------------------------------------------------------12
5.2 LIABILITY FOR SUBCUSTODIANS-----------------------------------------------------------13
5.3 USE OF AGENTS-------------------------------------------------------------------------14
6. ADDITIONAL PROVISIONS RELATING TO CUSTOMER-----------------------------------------------14
6.1 REPRESENTATIONS OF CUSTOMER-----------------------------------------------------------14
6.2 CUSTOMER TO PROVIDE CERTAIN INFORMATION TO BANK---------------------------------------14
6.3 CUSTOMER IS LIABLE TO BANK EVEN IF IT IS ACTING FOR ANOTHER PERSON--------------------15
7. WHEN BANK IS LIABLE TO CUSTOMER----------------------------------------------------------15
7.1 STANDARD OF CARE; LIABILITY-----------------------------------------------------------15
7.2 FORCE MAJEURE-------------------------------------------------------------------------16
7.3 BANK CAN CONSULT WITH COUNSEL---------------------------------------------------------16
7.4 BANK PROVIDES DIVERSE FINANCIAL SERVICES AND MAY GENERATE PROFITS AS A RESULT---------16
8. TAXATION---------------------------------------------------------------------------------16
8.1 TAX OBLIGATIONS-----------------------------------------------------------------------16
8.2 TAX RECLAIMS--------------------------------------------------------------------------17
9. TERMINATION------------------------------------------------------------------------------18
10. MISCELLANEOUS----------------------------------------------------------------------------18
10.1 NOTICES-------------------------------------------------------------------------------18
10.2 SUCCESSORS AND ASSIGNS----------------------------------------------------------------18
10.3 INTERPRETATION------------------------------------------------------------------------18
10.4 ENTIRE AGREEMENT----------------------------------------------------------------------19
10.5 INFORMATION CONCERNING DEPOSITS AT BANK'S LONDON BRANCH-------------------------------19
10.6 CONFIDENTIALITY-----------------------------------------------------------------------19
10.7 INSURANCE-----------------------------------------------------------------------------19
10.8 GOVERNING LAW AND JURISDICTION.CERTIFICATION OF RESIDENCY-----------------------------19
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10.9 SEVERABILITY AND WAIVER---------------------------------------------------------------20
10.10 COUNTERPARTS--------------------------------------------------------------------------20
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GLOBAL CUSTODY AGREEMENT
This Agreement, dated November , 1999 is between THE CHASE MANHATTAN BANK
("BANK"), with a place of business at 000 Xxxx Xxx., Xxx Xxxx, Xxx Xxxx
00000-0000, and FRIENDS IVORY & SIME INC ("CUSTOMER") with a place of business
at Xxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000.
1. INTENTION OF THE PARTIES; DEFINITIONS
1.1 INTENTION OF THE PARTIES.
(a) This Agreement sets out the terms governing custodial, settlement and
certain other associated services offered by Bank to Customer. Bank will be
responsible for the performance of only those duties that are set forth in this
Agreement or expressly contained in Instructions that are consistent with the
provisions of this Agreement and with Bank's operations and procedures. Customer
acknowledges that Bank is not providing any legal, tax or investment advice in
providing the services hereunder.
(b) Investing in foreign markets may be a risky enterprise. The holding
of Financial Assets and cash in foreign jurisdictions may involve risks of loss
or other special features. Bank will not be liable for any loss that results
from the general risks of investing or Country Risk.
1.2 DEFINITIONS.
(a) As used herein, the following terms have the meaning hereinafter
stated.
"ACCOUNT" has the meaning set forth in Section 2.1 of this Agreement.
"AFFILIATE" means an entity controlling, controlled by, or under common
control with, Bank.
"AFFILIATED SUBCUSTODIAN" means a Subcustodian that is an Affiliate.
"APPLICABLE LAW" means any statute, whether national, state or local,
applicable in the United States or any other country, the rules of the
treaty establishing the European Community, any other law, rule,
regulation or interpretation of any governmental entity, any applicable
common law, and any decree, injunction, judgment, order, ruling, or writ
of any governmental entity.
"AUTHORIZED PERSON" means any person (including an investment manager or
other agent) who has been designated by written notice from Customer or
its designated agent to act on behalf of Customer hereunder. Such
persons will continue to be
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Authorized Persons until such time as Bank receives Instructions from
Customer or its designated agent that any such person is no longer an
Authorized Person.
"BANK INDEMNITEES" means Bank, its Subcustodians, and their respective
nominees, directors, officers, employees and agents.
"BANK'S LONDON BRANCH" means the London branch office of The Chase Manhattan
Bank.
"CASH ACCOUNT" has the meaning set forth in Section 2.1(a)(ii).
"CORPORATE ACTION" means any subscription right, bonus issue, stock
repurchase plan, redemption, exchange, tender offer, or similar matter
with respect to a Financial Asset in the Securities Account that require
discretionary action by the holder, but does not include proxy voting.
"COUNTRY RISK" means the risk of investing or holding assets in a particular
country or market, including, but not limited to, risks arising from:
nationalization, expropriation or other governmental actions; the
country's financial infrastructure, including prevailing custody and
settlement practices; laws applicable to the safekeeping and recovery of
Financial Assets and cash held in custody; the regulation of the banking
and securities industries, including changes in market rules; currency
restrictions, devaluations or fluctuations; and market conditions
affecting the orderly execution of securities transactions or the value
of assets.
"ENTITLEMENT HOLDER" means the person named on the records of a Securities
Intermediary as the person having a Securities Entitlement against the
Securities Intermediary.
"FINANCIAL ASSET" means, as the context requires, either the asset itself or
the means by which a person's claim to it is evidenced, including a
Security, a security certificate, or a Securities Entitlement.
"FINANCIAL ASSET" does not include cash.
"INSTRUCTIONS" has the meaning set forth in Section 3.1 of this Agreement.
"LIABILITIES" means any liabilities, losses, claims, costs, damages,
penalties, fines, obligations, or expenses of any kind whatsoever
(including, without limitation, reasonable attorneys', accountants',
consultants' or experts' fees and disbursements).
"SECURITIES" means stocks, bonds, rights, warrants and other negotiable and
non-negotiable instruments, whether issued in certificated or
uncertificated form, that are commonly traded or dealt in on securities
exchanges or financial markets. "SECURITIES" also means other
obligations of an issuer, or shares, participations and interests in an
issuer recognized in the country in which it is issued or dealt in as a
medium for investment and any other property as may be acceptable to
Bank for the Securities Account.
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"SECURITIES ACCOUNT" means each Securities custody account on Bank's records
to which Financial Assets are or may be credited pursuant hereto.
"SECURITIES DEPOSITORY" has the meaning set forth in Section 5.1 of this
Agreement.
"SECURITIES ENTITLEMENT" means the rights and property interest of an
Entitlement Holder with respect to a Financial Asset as set forth in
Part 5 of Article 8 of the Uniform Commercial Code of the State of New
York, as the same may be amended from time to time.
"SECURITIES INTERMEDIARY" means Bank, a Subcustodian, a Securities
Depository, and any other financial institution which in the ordinary
course of business maintains custody accounts for others and acts in
that capacity.
"SUBCUSTODIAN" has the meaning set forth in Section 5.1 and includes
Affiliated Subcustodians.
(b) All terms in the singular will have the same meaning in the plural
unless the context otherwise provides and visa versa.
2. WHAT BANK IS REQUIRED TO DO
2.1 SET UP ACCOUNTS.
(a) Bank will establish and maintain the following accounts ("ACCOUNTS"):
(i) a Securities Account in the name of Customer for Financial
Assets, which may be received by Bank or its Subcustodian for
the account of Customer, including as an Entitlement Holder; and
(ii) an account in the name of Customer ("CASH ACCOUNT") for any and
all cash in any currency received by Bank or its Subcustodian
for the account of Customer.
Notwithstanding paragraph (ii), cash held in respect of those markets where
Customer is required to have a cash account in its own name held directly with
the relevant Subcustodian will be held in that manner and will not be part of
the Cash Account.
(b) At the request of Customer, additional Accounts may be opened in the
future, which will be subject to the terms of this Agreement.
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2.2 CASH ACCOUNT.
Except as otherwise provided in Instructions acceptable to Bank, all cash
held in the Cash Account will be deposited during the period it is credited to
the Accounts in one or more deposit accounts at Bank or at Bank's London Branch.
Any cash so deposited with Bank's London Branch will be payable exclusively by
Bank's London Branch in the applicable currency, subject to compliance with any
applicable laws, regulations, governmental decrees or similar orders.
2.3 SEGREGATION OF ASSETS; NOMINEE NAME.
(a) Bank will identify in its records that Financial Assets credited to
Customer's Securities Account belong to Customer (except as otherwise may be
agreed by Bank and Customer).
(b) Bank will require each Subcustodian to identify in its own records
that Financial Assets credited to Customer's Securities Account belong to
customers of Bank (to the extent permitted by Applicable Law or market
practice), such that it is readily apparent that the Financial Assets do not
belong to Bank or the Subcustodian.
(c) Bank is authorized, in its discretion, to hold in bearer form, such
Financial Assets as are customarily held in bearer form; and to register in the
name of the Customer, Bank, a Subcustodian, a Securities Depository, or their
respective nominees, such Financial Assets as are customarily held in registered
form. Customer authorizes Bank or its Subcustodian to hold Financial Assets in
omnibus accounts and will accept delivery of Financial Assets of the same class
and denomination as those deposited with Bank or its Subcustodian.
2.4 SETTLEMENT OF TRADES.
When Bank receives an Instruction directing settlement of a trade in
Financial Assets that includes all information required by Bank, Bank will use
reasonable care to effect such settlement as instructed. Settlement of purchases
and sales of Financial Assets will be conducted in accordance with prevailing
standards of the market in which the transaction occurs. The risk of loss will
be Customer's whenever Bank delivers Financial Assets or payment in accordance
with applicable market practice in advance of receipt or settlement of the
expected consideration. In the case of the failure of Customer's counterparty to
deliver the expected consideration as agreed, Bank will contact the counterparty
to seek settlement, but Bank will not be obligated to institute legal
proceedings, file proof of claim in any insolvency proceeding, or take any
similar action.
2.5 CONTRACTUAL SETTLEMENT DATE ACCOUNTING.
(a) Bank will effect book entries on a "contractual settlement date
accounting" basis as described below with respect to the settlement of trades in
those markets where Bank
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generally offers contractual settlement day accounting and will notify Customer
of these markets from time to time.
(i) SALES: On the settlement date for a sale, Bank will credit
the Cash Account with the sale proceeds of the sale and
transfer the relevant Financial Assets to an account pending
settlement of the trade if not already delivered.
(ii) PURCHASES: On the settlement date for the purchase (or
earlier, if market practice requires delivery of the
purchase price before the settlement date), Bank will debit
the Cash Account with the settlement monies and credit a
separate account. Bank then will post the Securities Account
as awaiting receipt of the expected Financial Assets.
Customer will not be entitled to the delivery of Financial
Assets that are awaiting receipt until Bank or a
Subcustodian actually receives them.
Bank reserves the right to restrict in good faith the availability of
contractual day settlement accounting for credit reasons.
(b) Bank may (in its absolute discretion) upon oral or written
notification to Customer reverse any debit or credit made pursuant to Section
2.5(a) prior to a transaction's actual settlement, and Customer will be
responsible for any costs or liabilities resulting from such reversal. Customer
acknowledges that the procedures described in this sub-section are of an
administrative nature, and Bank does not undertake to make loans and/or
Financial Assets available to Customer.
2.6 ACTUAL SETTLEMENT DATE ACCOUNTING.
With respect to any sale or purchase transaction that is not posted to the
Account on the contractual settlement date as referred to in Section 2.5, Bank
will post the transaction on the date on which the cash or Financial Assets
received as consideration for the transaction is actually received by Bank.
2.7 INCOME COLLECTION; AUTOCREDIT.
(a) Bank will credit the Cash Account with income and redemption proceeds
on Financial Assets in accordance with the times notified by Bank from time to
time on or after the anticipated payment date, net of any taxes that are
withheld by Bank or any third party. Where no time is specified for a particular
market, income and redemption proceeds from Financial Assets will be credited
only after actual receipt and reconciliation. Bank may reverse such credits upon
oral or written notification to Customer that Bank believes that the
corresponding payment will not be received by Bank within a reasonable period or
such credit was incorrect.
(b) Bank will make reasonable endeavors in its discretion to contact
appropriate parties to collect unpaid interest, dividends or redemption
proceeds, but neither Bank nor its
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Subcustodians will be obliged to file any formal notice of default, institute
legal proceedings, file proof of claim in any insolvency proceeding, or take any
similar action.
2.8 FRACTIONS/ REDEMPTIONS BY LOT.
Bank may sell fractional interests in Financial Assets and credit the Cash
Account with the proceeds of the sale. If some, but not all, of an outstanding
class of Financial Asset is called for redemption, Bank may allot the amount
redeemed among the respective beneficial holders of such class of Financial
Asset in any manner Bank deems to be fair and equitable.
2.9 PRESENTATION OF COUPONS; CERTAIN OTHER MINISTERIAL ACTS.
Until Bank receives Instructions to the contrary, Bank will:
(a) present all Financial Assets for which Bank has received
notice of a call for redemption or that have otherwise
matured, and all income and interest coupons and other
income items that call for payment upon presentation;
(b) execute in the name of Customer such certificates as may be
required to obtain payment in respect of Financial Assets;
and
(c) exchange interim or temporary documents of title held in the
Securities Account for definitive documents of title.
2.10 CORPORATE ACTIONS.
(a) Bank will follow Corporate Actions and advise Customer of those
Corporate Actions of which Bank's central corporate actions department receives
notice from the issuer or from the Securities Depository in which such Financial
Assets are maintained or notice published in publications and reported in
reporting services routinely used by Bank for this purpose.
(b) If an Authorized Person fails to provide Bank with timely
Instructions with respect to any Corporate Action, neither Bank nor its
Subcustodians or their respective nominees will take any action in relation to
that Corporate Action, except as otherwise agreed in writing by Bank and
Customer or as may be set forth by Bank as a default action in the advice it
provides under Section 2.10 (a) with respect to that Corporate Action.
2.11 PROXY VOTING.
(a) Subject to and upon the terms of this sub-section, Bank will provide
Customer with information which it receives on matters to be voted upon at
meetings of holders of Financial Assets ("NOTIFICATIONS"), and Bank will act in
accordance with Customer's Instructions in relation to such Notifications ("THE
ACTIVE PROXY VOTING SERVICE"). If
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information is received by Bank at its proxy voting department too late to
permit timely voting by Customer, Bank's only obligation is to provide, so far
as reasonably practicable, a Notification (or summary information concerning a
Notification) on an "information only" basis.
(b) The active proxy voting service is available only in certain markets,
details of which are available from Bank on request. Provision of the active
proxy voting service is conditional upon receipt by Bank of a duly completed
enrollment form as well as additional documentation that may be required for
certain markets.
(c) Bank will act upon Instructions to vote on matters referred to in a
Notification, provided Instructions are received by Bank at its proxy voting
department by the deadline referred to in the relevant Notification. If
Instructions are not received in a timely manner, Bank will not be obligated to
provide further notice to Customer.
(d) Bank reserves the right to provide Notifications or parts thereof in
the language received. Bank will attempt in good faith to provide accurate and
complete Notifications, whether or not translated.
(e) Customer acknowledges that Notifications and other information
furnished pursuant to the active proxy voting service ("INFORMATION") are
proprietary to Bank and that Bank owns all intellectual property rights,
including copyrights and patents, embodied therein. Accordingly, Customer will
not make any use of such information except in connection with the active proxy
voting service.
(f) In markets where the active proxy voting service is not available or
where Bank has not received a duly completed enrollment form or other relevant
documentation, Bank will not provide Notifications to Customer but will endeavor
to act upon Instructions to vote on matters before meetings of holders of
Financial Assets where it is reasonably practicable for Bank (or its
Subcustodians or nominees as the case may be) to do so and where such
Instructions are received in time for Bank to take timely action (the "PASSIVE
PROXY VOTING SERVICE").
(g) Customer acknowledges that the provision of proxy voting services
(whether active or passive) may be precluded or restricted under a variety of
circumstances. These circumstances include, but are not limited to: (i) the
Financial Assets being on loan or out for registration, (ii) the pendency of
conversion or another corporate action, or (iii) Financial Assets being held at
Customer's request in a name not subject to the control of Bank or its
Subcustodian, in a margin or collateral account at Bank or another bank or
broker, or otherwise in a manner which affects voting, local market regulations
or practices, or restrictions by the issuer. Additionally, in some cases Bank
may be required to vote all shares held for a particular issue for all of Bank's
customers in the same way. Bank will inform Customer where this is the case.
(h) Notwithstanding the fact that Bank may act in a fiduciary capacity
with respect
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to Customer under other agreements or otherwise hereunder, in
performing active or passive voting proxy services Bank will be acting solely as
the agent of Customer, and will not exercise any discretion with regard to such
proxy services or vote any proxy except when directed by an Authorized Person.
2.12 STATEMENTS AND INFORMATION AVAILABLE ON-LINE.
(a) Bank will issue statements to Customer at times mutually agreed
identifying the Financial Assets and cash in the Accounts. Bank also will
provide additional statements containing this information upon Customer's
request. Additionally, Bank will send (or make available on-line to) Customer an
advice or notification of any transfers of cash or Financial Assets with respect
to the Accounts. Bank will be not be liable with respect to any matter set forth
in those portions of any such statement (or reasonably implied therefrom) to
which Customer has not given Bank a written exception or objection within sixty
(60) days of receipt of the statement.
(b) Prices and other information obtained from third parties which may be
contained in any statement sent to Customer have been obtained from sources Bank
believes to be reliable. Bank does not, however, make any representation as to
the accuracy of such information or that the prices specified necessarily
reflect the proceeds that would be received on a disposal of the relevant
Financial Assets. References in this Agreement to statements include any
statements in electronic form.
(c) Customer acknowledges that records and unaudited reports available to
it on-line will be unaudited and may not be accurate due to inaccurate pricing,
delays in updating Account records, and other causes. Bank will not be liable
for any loss or damage arising out of the inaccuracy of any such records or
unaudited reports accessed on-line.
2.13 ACCESS TO BANK'S RECORDS.
Bank will allow Customer's independent public accountants such reasonable
access to the records of Bank relating to Financial Assets as is required in
connection with their examination of books and records pertaining to Customer's
affairs. Subject to restrictions under Applicable Law, Bank will also obtain an
undertaking to permit Customer's independent public accountants reasonable
access to the records of any Subcustodian of Securities held in the Securities
Account as may be required in connection with such examination.
2.14 MAINTENANCE OF FINANCIAL ASSETS AT BANK AND SUBCUSTODIAN LOCATIONS.
(a) Unless Instructions (as detailed in Article 3) require another
location acceptable to Bank, Financial Assets will be held in the country or
jurisdiction in which their principal trading market is located, where such
Financial Assets may be presented for payment, where such Financial Assets were
acquired, or where such Financial Assets are held. Bank reserves the right to
refuse to accept delivery of Financial Assets or cash in countries and
jurisdictions
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other than those referred to in Schedule 1 to this Agreement, as in effect from
time to time.
(b) Bank will not be obliged to follow an Instruction to hold Financial
Assets with, or have them registered or recorded in the name of, any person not
chosen by Bank. However, if Customer does instruct Bank to hold Securities with
or register or record Securities in the name of a person not chosen by Bank, the
consequences of doing so are at Customer's own risk and Bank will not be liable
therefor.
2.15 TAX RECLAIMS.
Bank will provide tax reclamation services as provided in Section 8.2.
2.16 FOREIGN EXCHANGE TRANSACTIONS.
To facilitate the administration of Customer's trading and investment
activity, Bank may, but will not be obliged to, enter into spot or forward
foreign exchange contracts with Customer, or an Authorized Person, and may also
provide foreign exchange contracts and facilities through its Affiliates or
Subcustodians. Instructions, including standing instructions, may be issued with
respect to such contracts, but Bank may establish rules or limitations
concerning any foreign exchange facility made available. In all cases where
Bank, its Affiliates or Subcustodians enter into a master foreign exchange
contract that covers foreign exchange transactions for the Accounts, the terms
and conditions of that foreign exchange contract and, to the extent not
inconsistent, this Agreement, will apply to such transactions.
3. INSTRUCTIONS
3.1 ACTING ON INSTRUCTIONS; UNCLEAR INSTRUCTIONS.
(a) Bank is authorized to act under this Agreement (or to refrain from
taking action) in accordance with the instructions received by Bank, via
telephone, telex, facsimile transmission, or other teleprocess or electronic
instruction or trade information system acceptable to Bank ("Instructions").
Bank will have no responsibility for the authenticity or propriety of any
Instructions that Bank believes in good faith to have been given by Authorized
Persons or which are transmitted with proper testing or authentication pursuant
to terms and conditions that Bank may specify. Customer authorizes Bank to
accept and act upon any Instructions received by it without inquiry. Customer
will indemnify the Bank Indemnitees against, and hold each of them harmless
from, any Liabilities that may be imposed on, incurred by, or asserted against
the Bank Indemnitees as a result of any action or omission taken in accordance
with any Instructions or other directions upon which Bank is authorized to rely
under the terms of this Agreement.
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(b) Unless otherwise expressly provided, all Instructions will continue
in full force and effect until canceled or superseded.
(c) Bank may (in its sole discretion and without affecting any part of
this Section 3.1) seek clarification or confirmation of an Instruction from an
Authorized Person and may decline to act upon an Instruction if it does not
receive clarification or confirmation satisfactory to it. Bank will not be
liable for any loss arising from any delay while it seeks such clarification or
confirmation.
(d) In executing or paying a payment order Bank may rely upon the
identifying number (e.g. Fedwire routing number or account) or any party as
instructed in the payment order. Customer assumes full responsibility for any
inconsistency between the name and identifying number of any party in payment
orders issued to Bank in Customer's name.
3.2 CONFIRMATION OF ORAL INSTRUCTIONS/ SECURITY DEVICES.
Any Instructions delivered to Bank by telephone will promptly thereafter be
confirmed in writing by an Authorized Person. Each confirmation is to be clearly
marked "Confirmation." Bank will not be liable for having followed such
Instructions notwithstanding the failure of an Authorized Person to send such
confirmation in writing or the failure of such confirmation to conform to the
telephone Instructions received. Either party may record any of their telephonic
communications. Customer will comply with any security procedures reasonably
required by Bank from time to time with respect to verification of Instructions.
Customer will be responsible for safeguarding any test keys, identification
codes or other security devices that Bank will make available to Customer or any
Authorized Person.
3.3 INSTRUCTIONS; CONTRARY TO LAW/MARKET PRACTICE.
Bank need not act upon Instructions which it reasonably believes to be
contrary to law, regulation or market practice but will be under no duty to
investigate whether any Instructions comply with Applicable Law or market
practice.
3.4 CUT-OFF TIMES.
Bank has established cut-off times for receipt of some categories of
Instruction, which will be made availableto Customer. If Bank receives an
Instruction after its established cut-off time, it will attempt to act upon the
Instruction on the day requested if Bank deems it practicable to do so or
otherwise as soon as practicable after that day.
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4. FEES, EXPENSES AND OTHER AMOUNTS OWING TO BANK
4.1 FEES AND EXPENSES.
Customer will pay Bank for its services hereunder the fees set forth in
Schedule B hereto or such other amounts as may be agreed upon in writing from
time to time, together with Bank's reasonable out-of-pocket or incidental
expenses, including, but not limited to, legal fees. Customer authorizes Bank to
charge any Cash Accounts, for any such fees or expenses.
4.2 OVERDRAFTS.
If a debit to any currency in the Cash Account results in a debit balance
in that currency (without regard to any Cash Account investments) then Bank may,
in its discretion, advance an amount equal to the overdraft and such an advance
will be deemed a loan to Customer, payable on demand, bearing interest at the
rate charged by Bank from time to time, for overdrafts incurred by customers
similar to Customer, from the date of such advance to the date of payment (both
after as well as before judgment) and otherwise on the terms on which Bank makes
similar overdrafts available from time to time. No prior action or course of
dealing on Bank's part with respect to the settlement of transactions on
Customer's behalf will be asserted by Customer against Bank for Bank's refusal
to make advances to the Cash Account or to settle any transaction for which
Customer does not have sufficient available funds in the applicable currency in
the Account.
4.3 BANK'S RIGHT OVER SECURITIES; SET-OFF.
(a) Customer grants Bank a security interest in and a lien on the
Financial Assets held in the Securities Account as security for any and all
amounts which are now or become owing to Bank under any provision of this
Agreement, whether or not matured or contingent ("Indebtedness").
(b) Bank will be further entitled to set any such Indebtedness off
against any cash or deposit account with Bank or any of its Affiliates of which
Customer is the beneficial owner, regardless of the currency involved. Bank will
notify Customer in advance of any such charge unless Bank reasonably believes
that it might prejudice its interests to do so and, in such event, Bank will
notify Customer promptly afterwards.
5. SUBCUSTODIANS, SECURITIES DEPOSITORIES, AND OTHER AGENTS
5.1 APPOINTMENT OF SUBCUSTODIANS; USE OF SECURITIES DEPOSITORIES.
(a) Bank is authorized under this Agreement to act through and hold
Customer's Financial Assets with subcustodians, being at the date of this
Agreement the entities listed in
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Schedule 1 and/or such other entities as Bank may appoint as subcustodians
("Subcustodians"). Bank will use reasonable care in the selection and continued
appointment of such Subcustodians. In addition, Bank and each Subcustodian may
deposit Financial Assets with, and hold Financial Assets in, any securities
depository, settlement system, dematerialized book entry system or similar
system (together a "SECURITIES DEPOSITORY") on such terms as such systems
customarily operate and Customer will provide Bank with such documentation or
acknowledgements that Bank may require to hold the Financial Assets in such
systems.
(b) Any agreement Bank enters into with a Subcustodian for holding Bank's
customers' assets shall provide that such assets shall not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian or its creditors except a claim of payment for their safe custody
or administration or, in the case of cash deposits, except for liens or rights
in favor of creditors of the Subcustodian arising under bankruptcy, insolvency
or similar laws, and that the beneficial ownership of such assets shall be
freely transferable without the payment of money or value other than for safe
custody or administration. Where a Subcustodian deposits Securities with a
Securities Depository, Bank will cause the Subcustodian to identify on its
records as belonging to Bank, as agent, the Securities shown on the
Subcustodian's account at such Securities Depository. The foregoing will not
apply to the extent of any special agreement or arrangement made by Customer
with any particular Subcustodian.
(c) Bank will have no responsibility for any act or omission by (or the
insolvency of) any Securities Depository. In the event Customer incurs a loss
due to the negligence, willful misconduct, or insolvency of a Securities
Depository, Bank will make reasonable endeavors, in its discretion, to seek
recovery from the Securities Depository.
5.2 LIABILITY FOR SUBCUSTODIANS.
(a) Subject to Section 7.1(b), Bank will be liable for direct losses
incurred by Customer that result from:
(i) the failure by the Subcustodian to use reasonable care in the
provision of custodial services by it in accordance with the
standards prevailing in the relevant market or from the fraud or
willful default of such Subcustodian in the provision of
custodial services by it; or
(ii) the insolvency of any Affiliated Subcustodian.
(b) Subject to Section 5.1(a) (i) and Bank's duty to use reasonable care
in the monitoring of a Subcustodian's financial condition as reflected in its
published financial statements and other publicly available financial
information concerning it, Bank will not be responsible for the insolvency of
any Subcustodian which is not a branch or an Affiliated Subcustodian.
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(c) Bank reserves the right to add, replace or remove Subcustodians. Bank
will give prompt notice of any such action, which will be advance notice if
practicable. Upon request by Customer, Bank will identify the name, address and
principal place of business of any Subcustodian and the name and address of the
governmental agency or other regulatory authority that supervises or regulates
such Subcustodian.
5.3 USE OF AGENTS.
(a) Bank may provide certain services under this Agreement through third
parties. These third parties may be Affiliates. Except to the extent provided in
Section 5.2 with respect to Subcustodians, Bank will not be responsible for any
loss as a result of a failure by any broker or any other third party that it
selects and retains using reasonable care to provide ancillary services, such as
pricing, proxy voting, and corporate action services, that it does not
customarily provide itself. Nevertheless, Bank will be liable for the
performance of any such service provider selected by Bank that is an Affiliate
to the same extent as Bank would have been liable if it performed such services
itself.
(b) Bank will execute transactions involving Financial Assets of United
States origin through a broker which is an Affiliate (i) in the case of the sale
under Section 2.8 of a fractional interest or (ii) if an Authorized Person
directs Bank to use the affiliated broker or otherwise requests that Bank select
a broker for that transaction, unless, in either case, the Affiliate does not
execute similar transactions in such Financial Assets. The affiliated broker may
charge its customary commission (or retain its customary spread) with respect to
either such transaction.
6. ADDITIONAL PROVISIONS RELATING TO CUSTOMER
6.1 REPRESENTATIONS OF CUSTOMER.
Customer represents and warrants that (i) it has full authority and power,
and has obtained all necessary authorizations and consents, to deposit and
control the Financial Assets and cash in the Accounts, to use Bank as its
custodian in accordance with the terms of this Agreement and to incur
indebtedness, pledge Financial Assets as contemplated by Section 4.3, and enter
into foreign exchange transactions; and (ii) this Agreement is its legal, valid
and binding obligation, enforceable in accordance with its terms and it has full
power and authority to enter into and has taken all necessary corporate action
to authorize the execution of this Agreement. Bank may rely upon the above or
the certification of such other facts as may be required to administer Bank's
obligations hereunder.
6.2 CUSTOMER TO PROVIDE CERTAIN INFORMATION TO BANK.
Upon request, Customer will promptly provide to Bank such information about
itself and its financial status as Bank may reasonably request, including
Customer's organizational documents and its current audited and unaudited
financial statements.
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6.3 CUSTOMER IS LIABLE TO BANK EVEN IF IT IS ACTING FOR ANOTHER PERSON.
If Customer is acting as an agent for a disclosed or undisclosed principal
in respect of any transaction, cash, or Financial Asset, Bank nevertheless will
treat Customer as its principal for all purposes under this Agreement. In this
regard, Customer will be liable to Bank as a principal in respect of any
transactions relating to the Account. The foregoing will not affect any rights
Bank might have against Customer's principal.
7. WHEN BANK IS LIABLE TO CUSTOMER
7.1 STANDARD OF CARE; LIABILITY.
(a) Bank will use reasonable care in performing its obligations under
this Agreement. Bank will not be in violation of this Agreement with respect to
any matter as to which it has satisfied its obligation of reasonable care.
(b) Bank will be liable for Customer's direct damages to the extent they
result from Bank's negligence or willful misconduct in performing its duties as
set out in this Agreement and to the extent provided for in Section 5.2(a).
Nevertheless, under no circumstances will Bank be liable for any indirect,
consequential or special damages (including, without limitation, lost profits)
of any form, whether or not foreseeable and regardless of the type of action in
which such a claim may be brought, with respect to the Accounts or Bank's
performance hereunder or its role as custodian.
(c) Customer will indemnify the Bank Indemnitees against, and hold them
harmless from, any Liabilities that may be imposed on, incurred by or asserted
against any of the Bank Indemnitees in connection with or arising out of Bank's
performance under this Agreement, provided the Bank Indemnitees have not acted
with negligence or engaged in fraud or willful misconduct in connection with the
Liabilities in question. Nevertheless, Customer will not be obligated to
indemnify any Bank Indemnitee under the preceding sentence with respect to any
Liability for which Bank is liable under Section 5.2 of this Agreement.
(d) Without limiting Subsections 7.1 (a), (b) or (c), Bank will have no
duty or responsibility to: (i) question Instructions or make any suggestions to
Customer or an Authorized Person regarding such Instructions; (ii) supervise or
make recommendations with respect to investments or the retention of Financial
Assets; (iii) advise Customer or an Authorized Person regarding any default in
the payment of principal or income of any security other than as provided in
Section 2.7(b) of this Agreement; (iv) evaluate or report to Customer or an
Authorized Person regarding the financial condition of any broker, agent or
other party to which Bank is instructed to deliver Financial Assets or cash; or
(v) review or reconcile trade confirmations received from brokers (and Customer
or its Authorized Persons
15
issuing Instructions will bear any responsibility to review such confirmations
against Instructions issued to and statements issued by Bank).
7.2 FORCE MAJEURE.
Bank will maintain and update from time to time business continuation and
disaster recovery procedures with respect to its global custody business that it
determines from time to time meet reasonable commercial standards. Bank will
have no liability, however, for any damage, loss, expense or liability of any
nature that Customer may suffer or incur, caused by an act of God, fire, flood,
civil or labor disturbance, war, act of any governmental authority or other act
or threat of any authority (de jure or de facto), legal constraint, fraud or
forgery, malfunction of equipment or software (except to the extent such
malfunction is primarily attributable to Bank's negligence in maintaining the
equipment or software), failure of or the effect of rules or operations of any
external funds transfer system, inability to obtain or interruption of external
communications facilities, or any cause beyond the reasonable control of Bank
(including without limitation, the non-availability of appropriate foreign
exchange).
7.3 BANK MAY CONSULT WITH COUNSEL.
Bank will be entitled to rely on, and may act upon the advice of
professional advisers in relation to matters of law, regulation or market
practice (which may be the professional advisers of Customer), and will not be
liable to Customer for any action reasonably taken or omitted pursuant to such
advice.
7.4 BANK PROVIDES DIVERSE FINANCIAL SERVICES AND MAY GENERATE PROFITS AS A
RESULT.
Customer acknowledges that Bank or its Affiliates may have a material
interest in the transaction or that circumstances are such that Bank may have a
potential conflict of duty or interest. For example, Bank or its Affiliates may
act as a market maker in the Financial Assets to which Instructions relate,
provide brokerage services to other customers, act as financial adviser to the
issuer of such Financial Assets, act in the same transaction as agent for more
than one customer, have a material interest in the issue of the Financial
Assets; or earn profits from any of these activities. Customer acknowledges that
Bank or its Affiliates may be in possession of information tending to show that
the Instructions received may not be in the best interests of Customer. Bank is
not under any duty to disclose any such information.
8. TAXATION
8.1 TAX OBLIGATIONS.
(a) Customer confirms that Bank is authorized to deduct from any cash
received or credited to the Cash Account any taxes or levies required by any
revenue or governmental authority for whatever reason in respect of Customer's
Accounts.
16
(b) If Bank does not receive appropriate declarations, documentation and
information then additional United Kingdom taxation will be deducted from all
income received in respect of the Financial Assets issued outside the United
Kingdom (WHICH SHALL FOR THIS PURPOSE include United Kingdom Eurobonds) and any
applicable United States tax (including, but not limited to, non-resident alien
tax) will be deducted from United States source income. Customer will provide to
Bank such certifications, documentation, and information as it may require in
connection with taxation, and warrants that, when given, this information is
true and correct in every respect, not misleading in any way, and contains all
material information. Customer undertakes to notify Bank immediately if any
information requires updating or correcting.
(c) Customer will be responsible for the payment of all taxes relating to
the Financial Assets in the Securities Account, and Customer will pay, indemnify
and hold Bank harmless from and against any and all liabilities, penalties,
interest or additions to tax with respect to or resulting from, any delay in, or
failure by, Bank (1) to pay, withhold or report any U.S. federal, state or local
taxes or foreign taxes imposed on, or (2) to report interest, dividend or other
income paid or credited to the Cash Account, whether such failure or delay by
Bank to pay, withhold or report tax or income is the result of (x) Customer's
failure to comply with the terms of this paragraph, or (y) Bank's own acts or
omissions; provided however, Customer will not be liable to Bank for any penalty
or additions to tax due as a result of Bank's failure to pay or withhold tax or
to report interest, dividend or other income paid or credited to the Cash
Account solely as a result of Bank's negligent acts or omissions.
8.2 TAX RECLAIMS.
(a) Subject to the provisions of this Section, Bank will apply for a
reduction of withholding tax and any refund of any tax paid or tax credits in
respect of income payments on Financial Assets credited to the Securities
Account that Bank believes may be available.
(b) The provision of a tax reclamation service by Bank is conditional
upon Bank receiving from Customer (i) a declaration of its identity and place of
residence and (ii) certain other documentation (pro forma copies of which are
available from Bank). If Financial Assets credited to the Account are
beneficially owned by someone other than Customer, this information will be
necessary with respect to the beneficial owner. Customer acknowledges that Bank
will be unable to perform tax reclamation services unless it receives this
information.
(c) Bank will perform tax reclamation services only with respect to
taxation levied by the revenue authorities of the countries advised to Customer
from time to time and Bank may, by notification in writing, in its absolute
discretion, supplement or amend the countries in which the tax reclamation
services are offered. Other than as expressly provided in this Section 8.2 Bank
will have no responsibility with regard to Customer's tax position or status in
any jurisdiction.
17
(d) Customer confirms that Bank is authorized to disclose any information
requested by any revenue authority or any governmental body in relation to the
processing of any tax reclaim.
9. TERMINATION
Either party may terminate this Agreement on sixty days' notice in writing
to the other party. If Customer gives notice of termination, it must provide
full details of the persons to whom Bank must deliver Financial Assets and cash.
If Bank gives notice of termination, then Customer must, within sixty days,
notify Bank of details of its new custodian, failing which Bank may elect (at
any time after the sixty day notice period) either to retain the Financial
Assets and cash until such details are given, continuing to charge fees due (in
which case Bank's sole obligation will be for the safekeeping of the Financial
Assets and cash), or deliver the Financial Assets and cash to Customer. Bank
will in any event be entitled to deduct any amounts owing to it prior to
delivery of the Financial Assets and cash (and, accordingly, Bank will be
entitled to sell Financial Assets and apply the sale proceeds in satisfaction of
amounts owing to it). Customer will reimburse Bank promptly for all
out-of-pocket expenses it incurs in delivering Financial Assets upon
termination. Termination will not affect any of the liabilities either party
owes to the other arising under this Agreement prior to such termination.
10. MISCELLANEOUS
10.1 NOTICES.
Notices (other than Instructions) will be served by registered mail or hand
delivery to the address of the respective parties as set out on the first page
of this Agreement, unless notice of a new address is given to the other party in
writing. Notice will not be deemed to be given unless it has been received.
10.2 SUCCESSORS AND ASSIGNS.
This Agreement will be binding on each of the parties' successors and
assigns, but the parties agree that neither party can assign its rights and
obligations under this Agreement without the prior written consent of the other
party, which consent will not be unreasonably withheld.
10.3 INTERPRETATION.
Headings are for convenience only and are not intended to affect
interpretation. References to sections are to sections of this Agreement and
references to sub-sections and paragraphs are to sub-sections of the sections
and paragraphs of the sub-sections in which they appear.
18
10.4 ENTIRE AGREEMENT.
(a) The following Rider(s) are incorporated into this Agreement:
Cash Trade Execution;
-----
X Mutual Fund
-----
Domestic
-----
(b) This Agreement, including the Schedules, Exhibits, and Riders (and
any separate agreement which Bank and Customer may enter into with respect to
any Cash Account), sets out the entire Agreement between the parties in
connection with the subject matter, and this Agreement supersedes any other
agreement, statement, or representation relating to custody, whether oral or
written. Amendments must be in writing and signed by both parties.
10.5 INFORMATION CONCERNING DEPOSITS AT BANK'S LONDON BRANCH.
Bank's London Branch is a member of the United Kingdom Deposit Protection
Scheme (the "SCHEME") established under Banking Xxx 0000 (as amended). The
Scheme provides that in the event of Bank's insolvency payments may be made to
certain customers of Bank's London Branch. Payments under the Scheme are limited
to 90% of a depositor's total cash deposits subject to a maximum payment to any
one depositor of (pound)18,000 (or ECU 20,000 if greater). Most deposits
denominated in sterling and other European Economic Area Currencies and ECU made
with Bank within the United Kingdom are covered. Further details of the Scheme
are available on request.
10.6 CONFIDENTIALITY.
Bank will not disclose any confidential information concerning the
Financial Assets and/or cash held for Customer except as is reasonably necessary
to provide services to Customer, as required by law or regulation or the
organizational documents of the issuer of any Financial Asset, or otherwise with
the consent of Customer. Customer agrees to keep this Agreement confidential
and, except where disclosure is required by law or regulation, will only
disclose it (or any part of it) with the prior written consent of Bank.
10.7 INSURANCE.
Bank will not be required to maintain any insurance coverage for the
benefit of Customer.
10.8 GOVERNING LAW AND JURISDICTION. CERTIFICATION OF RESIDENCY. .
This Agreement will be construed, regulated, and administered under the
laws of
19
the United States or State of New York, as applicable, without regard to New
York's principles regarding conflict of laws. The United States District Court
for the Southern District of New York will have the sole and exclusive
jurisdiction over any lawsuit or other judicial proceeding relating to or
arising from this Agreement. If that court lacks federal subject matter
jurisdiction, the Supreme Court of the State of New York, New York County will
have sole and exclusive jurisdiction. Either of these courts will have proper
venue for any such lawsuit or judicial proceeding, and the parties waive any
objection to venue or their convenience as a forum. The parties agree to submit
to the jurisdiction of any of the courts specified and to accept service of
process to vest personal jurisdiction over them in any of these courts. The
parties further hereby knowingly, voluntarily and intentionally waive, to the
fullest extent permitted by applicable law, any right to a trial by jury with
respect to any such lawsuit or judicial proceeding arising or relating to this
Agreement or the transactions contemplated hereby. (B) Customer certifies that
it is a resident of the United States and shall notify Bank of any changes in
residency. Bank may rely upon this certification or the certification of such
other facts as may be required to administer Bank's obligations hereunder.
Customer shall indemnify Bank against all losses, liability, claims or demands
arising directly or indirectly from any such certifications.
10.9 SEVERABILITY AND WAIVER.
(a) If one or more provisions of this Agreement are held invalid, illegal
or unenforceable in any respect on the basis of any particular circumstances or
in any jurisdiction, the validity, legality and enforceability of such provision
or provisions under other circumstances or in other jurisdictions and of the
remaining provisions will not in any way be affected or impaired.
(b) Except as otherwise provided herein, no failure or delay on the part
of either party in exercising any power or right hereunder operates as a waiver,
nor does any single or partial exercise of any power or right preclude any other
or further exercise, or the exercise of any other power or right. No waiver by a
party of any provision of this Agreement, or waiver of any breach or default, is
effective unless in writing and signed by the party against whom the waiver is
to be enforced.
10.10 COUNTERPARTS.
This Agreement may be executed in several counterparts each of which will
be deemed to be an original and together will constitute one and the same
agreement.
FRIENDS IVORY & SIME FUNDS
20
By:
---------------------------------
Title:
Date:
THE CHASE MANHATTAN BANK
By:
---------------------------------
Title:
Date:
21
Investment Company Rider to Global Custody Agreement
Between THE CHASE MANHATTAN BANK and
FRIENDS IVORY & SIME FUNDS
effective November , 1999
The following modifications are made to the Agreement:
A. Add a new Section 2.17 to the Agreement as follows:
"2.17. COMPLIANCE WITH SEC RULE 17F-5.
(a) Customer's board of directors (or equivalent body) (hereinafter
`Board') hereby delegates to Bank, and, except as to the country or countries as
to which Bank may, from time to time, advise Customer that it does not accept
such delegation, Bank hereby accepts the delegation to it, of the obligation to
perform as Customer's `Foreign Custody Manager' (as that term is defined in
Securities and Exchange Commission ("SEC") rule 17f-5(a)(2) as promulgated under
the Investment Company Act of 1940, as amended ("1940 Act")), both for the
purpose of selecting Eligible Foreign Custodians (as that term is defined in SEC
rule 17f-5(a)(1), and as the same may be amended from time to time, or that have
otherwise been made exempt pursuant to an SEC exemptive order) to hold Financial
Assets and Cash and of evaluating the contractual arrangements with such
Eligible Foreign Custodians (as set forth in SEC rule 17f-5(c)(2)); provided
that, the term Eligible Foreign Custodian shall not include any `Eligible
Securities Depository.' An Eligible Securities Depository for purposes hereof
shall have the same meaning as in SEC rule 17f-7 as proposed on April 29, 1999.
(Eligible Securities Depositories used by Bank as of the date hereof are set
forth in Appendix 1-A hereto, and as the same may be amended on notice to
Customer from time to time.)
(b) In connection with the foregoing, Bank shall:
(i) provide written reports notifying Customer's Board of the placement of
Financial Assets and Cash with particular Eligible Foreign Custodians and
of any material change in the arrangements with such Eligible Foreign
Custodians, with such reports to be provided to Customer's Board at such
times as the Board deems reasonable and appropriate based on the
circumstances of Customer's foreign custody arrangements (and until further
notice from Customer such reports shall be provided not less than quarterly
with respect to the placement of Financial Assets and Cash with particular
Eligible Foreign Custodians and with reasonable promptness upon the
occurrence of any material change in the arrangements with such Eligible
Foreign Custodians);
(ii) exercise such reasonable care, prudence and diligence in performing as
Customer's Foreign Custody Manager as a person having responsibility for
the safekeeping of Financial Assets and cash would exercise;
22
(iii) in selecting an Eligible Foreign Custodian, first have determined
that Financial Assets and cash placed and maintained in the safekeeping of
such Eligible Foreign Custodian shall be subject to reasonable care, based
on the standards applicable to custodians in the relevant market, after
having considered all factors relevant to the safekeeping of such Financial
Assets and cash, including, without limitation, those factors set forth in
SEC rule 17f-5(c)(1)(i)-(iv);
(iv) determine that the written contract with an Eligible Foreign Custodian
requires that the Eligible Foreign Custodian will provide reasonable care
for Financial Assets and Cash based on the standards applicable to
custodians in the relevant market.
(v) have established a system to monitor the continued appropriateness of
maintaining Financial Assets and cash with particular Eligible Foreign
Custodians and of the governing contractual arrangements; it being
understood, however, that in the event that Bank shall have determined that
the existing Eligible Foreign Custodian in a given country would no longer
afford Financial Assets and cash reasonable care and that no other Eligible
Foreign Custodian in that country would afford reasonable care, Bank shall
promptly so advise Customer and shall then act in accordance with the
Instructions of Customer with respect to the disposition of the affected
Financial Assets and cash.
Subject to (b)(i)-(v) above, Bank is hereby authorized to place and maintain
Financial Assets and cash on behalf of Customer with Eligible Foreign Custodians
pursuant to a written contract deemed appropriate by Bank.
(c) Except as expressly provided herein, Customer shall be solely
responsible to assure that the maintenance of Financial Assets and cash
hereunder complies with the rules, regulations, interpretations and exemptive
orders as promulgated by or under the authority of the SEC.
(d) Bank represents to Customer that it is a U.S. Bank as defined in Rule
17f-5(a)(7). Customer represents to Bank that: (1) the Financial Assets and cash
being placed and maintained in Bank's custody are subject to the 1940 Act, as
the same may be amended from time to time; (2) its Board: (i) has determined
that it is reasonable to rely on Bank to perform as Customer's Foreign Custody
Manager (ii) or its investment adviser shall have determined that Customer may
maintain Financial Assets and cash in each country in which Customer's Financial
Assets and cash shall be held hereunder and determined to accept Country Risk.
Nothing contained herein shall require Bank to make any selection or to engage
in any monitoring on behalf of Customer that would entail consideration of
Country Risk.
(e) Bank shall provide to Customer such information relating to Country
Risk as is specified in Appendix 1-B hereto. Customer hereby acknowledges that:
(i) such information is solely designed to inform Customer of market conditions
and procedures and is not intended as a recommendation to invest or not invest
in particular markets; and
23
(ii) Bank has gathered the information from sources it considers reliable, but
that Bank shall have no responsibility for inaccuracies or incomplete
information.
B. Add the following after the first sentence of Section 5.1(a) of the
Agreement: "At the request of Customer, Bank may, but need not, add to Schedule
1-A an Eligible Foreign Custodian where Bank has not acted as Foreign Custody
Manager with respect to the selection thereof. Bank shall notify Customer in the
event that it elects to add any such entity."
C. Add the following language as Section 5.1(d) of the Agreement:
" (d) The term Subcustodian as used herein shall mean the following:
(i) a `U.S. Bank,' which shall mean a U.S. bank as defined in SEC rule
17f-5(a)(7);
(ii) an `Eligible Foreign Custodian,' which shall mean: (i) a banking
institution or trust company, incorporated or organized under the laws
of a country other than the United States, that is regulated as such
by that country's government or an agency thereof, (ii) a
majority-owned direct or indirect subsidiary of a U.S. bank or bank
holding company which subsidiary is incorporated or organized under
the laws of a country other than the United States; and (iii) any
other entity (other than an Eligible Securities Depository) that shall
have been so qualified by exemptive order, rule or other appropriate
action of the SEC.
For purposes of clarity, it is agreed that as used in Section 5.3(a), the term
Subcustodian shall not include any Eligible Foreign Custodian as to which Bank
has not acted as Foreign Custody Manager."
24
Appendix 1-A
DEPOSITORIES
Appendix 1-B
INFORMATION REGARDING COUNTRY RISK
1. To aid Customer in its determinations regarding Country Risk, Bank shall
furnish annually and upon the initial placing of Financial Assets and cash into
a country the following information (check items applicable):
A Opinions of local counsel concerning:
i. Whether applicable foreign law would restrict the access afforded
Customer's independent public accountants to books and records kept by
an eligible foreign custodian located in that country.
ii. Whether applicable foreign law would restrict the Customer's ability
to recover its Financial Assets and cash in the event of the
bankruptcy of an Eligible Foreign Custodian located in that country.
iii. Whether applicable foreign law would restrict the Customer's ability
to recover Financial Assets that are lost while under the control of
an Eligible Foreign Custodian located in the country.
B. Written information concerning:
i. The foreseeability of expropriation, nationalization, freezes, or
confiscation of Customer's Financial Assets.
ii. Whether difficulties in converting Customer's cash and cash
equivalents to U.S. dollars are reasonably foreseeable.]
C. A market report with respect to the following topics:
(i) securities regulatory environment, (ii) foreign ownership
restrictions, (iii) foreign exchange, (iv) securities settlement and
registration, (v) taxation, and (vi) depositories (including
depository evaluation), if any.
2. To aid Customer in monitoring Country Risk, Bank shall furnish board
the following additional information:
Market flashes, including with respect to changes in the information in
market reports.
DOMESTIC AND GLOBAL
SPECIAL TERMS AND CONDITIONS RIDER
DOMESTIC CORPORATE ACTIONS AND PROXIES
With respect to domestic U.S. and Canadian Financial Assets (the latter if held
in The Depository Trust Company), the following provisions shall apply rather
than the pertinent provisions of Sections 2.10-2.11 of the Agreement:
Bank shall send to Customer or the Authorized Person for a Custody
Account, such proxies (signed in blank, if issued in the name of
Bank's nominee or the nominee of a central depository) and
communications with respect to Financial Assets in the Custody Account
as call for voting or relate to legal proceedings within a reasonable
time after sufficient copies are received by Bank for forwarding to
its customers. In addition, Bank shall follow coupon payments,
redemptions, exchanges or similar matters with respect to Financial
Assets in the Custody Account and advise Customer or the Authorized
Person for such Account of rights issued, tender offers or any other
discretionary rights with respect to such Financial Assets, in each
case, of which Bank has received notice from the issuer of the
Financial Assets, or as to which notice is published in publications
routinely utilized by Bank for this purpose.
