Exhibit (g)
AMENDED AND RESTATED
CUSTODY AGREEMENT
AMENDED AND RESTATED AGREEMENT effective as of June 27, 2001 between THE
CHASE MANHATTAN BANK ("Bank") and EXCELSIOR FUNDS, INC., a Maryland corporation
(the "Fund").
WITNESSETH:
WHEREAS, the Bank and the Fund entered into a Custody Agreement effective
as of September 1, 1995, which was subsequently amended and restated on August
1, 1997, and further amended by Amendment No. 1 dated as of May 22, 1998,
Amendment No. 2 dated as of May 22, 1998 and Amendment No. 3 dated as of July 1,
1998 (collectively, the "Agreement");
WHEREAS, the Bank and the Fund wish to further amend and restate the
Agreement currently in its entirety;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Agreement is hereby amended and restated as follows:
1. Custody Account. The Bank agrees to establish and maintain (a) a
separate custody account ("Custody Account") for each of the portfolios of the
Fund listed on Exhibit A hereto (each a "Portfolio" and collectively
"Portfolios") for any and all stocks, shares, bonds, debentures, notes,
mortgages or other obligations for the payment of money and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same or evidencing or representing any other rights or
interests therein and other similar property (hereinafter called
"Securities") from time to time received by the Bank or any subcustodian (as
defined in the second paragraph of Section 3 hereof) for the account of the
particular Portfolio of the Fund and (b) a separate deposit account(s) in the
name of each Portfolio of the Fund ("Deposit Account") for any and all cash and
cash equivalents in any currency received by the Bank or any subcustodian for
the account of the particular Portfolio of the Fund, which cash shall not be
subject to withdrawal by draft or check. The term "Property" as used herein
shall mean all Securities, cash, cash equivalents and other assets of the Fund.
2. Maintenance of Property Domestically and Abroad. Securities in a
Custody Account shall be held in the country or other jurisdiction in which the
principal trading market for such Securities is located or the country of other
jurisdiction in which such Securities are to be presented for payment or are
acquired for the Custody Account, and cash in a Deposit Account shall be
credited to an account in such country or other jurisdiction in which such cash
may be legally deposited or is the legal currency for the payment of public or
private debts. Cash may be held pursuant to Instructions (as defined in Section
10 hereof) in either interest or non-interest bearing accounts as may be
available for the particular currency. To the extent Instructions are issued and
the Bank can comply with such Instructions, the Bank is authorized to maintain
cash balances on deposit for the Fund with itself or one of its affiliates at
such reasonable rates of interest as may from time to time be paid on such
accounts, or in non-interest bearing accounts as the Fund may direct, if
acceptable to the Bank.
3. Eligible Foreign Custodians and Securities Depositories.
(a) The Board of Directors of the Fund (the "Board") on behalf of each
Portfolio hereby delegates to the Bank, and the Bank hereby accepts the
delegation to it of, the obligation to perform as the Fund's "Foreign Custody
Manager" (as that term is defined in SEC rule 17f-5(a)(3)) for the purposes of:
(i) selecting Eligible Foreign Custodians (as hereafter defined) to hold the
Fund's Foreign Assets (as that term is defined in SEC rule 17f-5(a)(2)), (ii)
evaluating the contractual
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arrangements with such Eligible Foreign Custodians (as set forth in SEC rule
17f-5(c)(2)), and (iii) monitoring such foreign custody arrangements (as set
forth in SEC rule 17f-5(c)(3)). An "Eligible Foreign Custodian", as defined in
SEC rule 17f-5(a)(1) and (5), 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 any
agency thereof, and (ii) a majority-owned direct or indirect subsidiary of a
U.S. Bank (as defined in rule 17f-5(a)(7) or bank holding company which
subsidiary is incorporated or organized under the laws of a country other than
the United States. In addition, an Eligible Foreign Custodian shall also mean
any other entity that shall have been so qualified by exemptive order, rule or
other appropriate action of the SEC.
(b) In connection with the foregoing, Bank shall:
(i) provide written reports notifying the Fund's Board of the
placement of Foreign Assets 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 the Fund's Board at such times as the Board
deems reasonable and appropriate based on the circumstances of the Fund's
foreign custody arrangements, but until further notice from the Fund requesting
a different schedule, such reports shall be provided not less than quarterly in
summary form, with a more detailed report annually.
(ii) exercise such reasonable care, prudence and diligence in
performing as the Fund's Foreign Custody Manager as a person having
responsibility for the safekeeping of Foreign Assets would exercise;
(iii) in selecting an Eligible Foreign Custodian, first have
determined that Foreign Assets 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
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having considered all factors relevant to the safekeeping of such Assets,
including, without limitation, those factors set forth in rule
17f-5(c)(1)(i)-(iv);
(iv) determine that the written contract with the Eligible Foreign
Custodian requires that the Eligible Foreign Custodian will provide reasonable
care for Foreign Assets based on the standards applicable to custodians in the
relevant market as provided in rule 17f-5(c)(2);
(v) Have established a system to monitor the continued
appropriateness of maintaining Foreign Assets with particular Eligible Foreign
Custodians and performance of the governing contractual arrangements; it being
understood, however, that in the event Bank shall have determined that the
existing Eligible Foreign Custodian in a given country would no longer afford
Foreign Assets reasonable care and that no other Eligible Foreign Custodian in
that country would afford reasonable care, Bank shall promptly so advise the
Fund and shall then act in accordance with the instructions of the Fund with
respect to the disposition of the affected Foreign Assets; and
(vi) The Bank shall take steps as may be required to remove any
subcustodian which has ceased to meet the requirements of Rule 17f-5.
(c) Except as expressly provided in this Section 3, the Fund shall be
solely responsible to assure that the maintenance of Foreign Assets hereunder
complies with the rules, regulations, interpretations and exemptive orders
promulgated by or under the authority of the SEC.
(d) Bank represents to the Fund that it is a U.S. Bank as defined in rule
17f-5(a)(7). Fund represents to Bank that: (1) the Property being placed and
maintained in Bank's custody is subject to the Investment Company Act of 1940,
as amended (the "1940 Act"), as the same may be amended from time to time; (2)
its Board has determined that it is reasonable to rely on Bank to perform as the
Fund's Foreign Custody Manager; (3) its Board or its investment adviser shall
have determined that the Fund may maintain Foreign Assets in each country in
which the Fund's Foreign Assets shall be held hereunder and determined to accept
the risks arising therefrom (including, but not
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limited to, a country's financial infrastructure, prevailing custody and
settlement practices, laws applicable to the safekeeping and recovery of Foreign
Assets held in custody, and the likelihood of nationalization, currency controls
and the like) (collectively, "Country Risk"). Nothing contained herein shall
require the Bank to make any selection on behalf of the Fund that would entail
consideration of Country Risk and, except as may be provided in (e) below, to
engage in any monitoring of Country Risk.
(e) Bank shall provide to the Fund such information relating to
Country Risk as is specified in Appendix 1 hereto. The Fund hereby acknowledges
that: (i) such information is solely designed to inform the Fund of market
conditions and procedures and is not intended as a recommendation to invest or
not invest in particular markets; and (ii) Bank has gathered the information
from sources it considers reliable, but that, provided it has exercised
reasonable care, prudence and diligence, Bank shall have no responsibility for
inaccuracies or incomplete information.
(f) Bank shall, for consideration by the Fund, provide an analysis in
accordance with SEC rule 17f-7(a)(1)(i)(A) of the custody risks associated with
maintaining the Fund's Foreign Assets with each Eligible Securities Depository
used by Bank as of the date hereof (or, in the case of an Eligible Securities
Depository not used by Bank as of the date hereof, prior to the initial
placement of the Fund's Foreign Assets at such Depository) and at which any
Foreign Assets of the Fund are held or expected to be held. "Eligible Securities
Depository" shall have the meaning set forth in rule 17f-7(b)(1)(i)-(vi) as the
same may be amended from time to time, or that has otherwise been made exempt by
an SEC exemptive order, rule or other appropriate SEC action. For purposes of
clarity, it is understood and agreed that the term "subcustodian" shall not
include any securities depository. For purposes of the provisions of the
Agreement imposing liability on Bank, the term "subcustodian" shall not include
any Eligible Foreign Custodian as to which Bank has not acted as Foreign Custody
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Manager. Bank shall exercise reasonable care, prudence and diligence in
performing these requirements.
(g) Based on the information available to it in the exercise of
diligence, Bank shall determine the eligibility under rule 17f-7 of each
depository before including it on Appendix 2 hereto and shall promptly advise
the Fund if any Eligible Securities Depository ceases to be eligible. (Eigible
Securities Depositories used by Bank as of the date hereof are set forth in
Appendix 2 hereto, and as the same may be amended on notice to the Fund from
time to time.)
4. Use of Subcustodians. Hereinafter the term "subcustodian" will refer
to any Bank branch, any branch of a qualified U.S. bank, any eligible foreign
custodian or any eligible foreign securities depository with which the Bank has
entered into an agreement of the type contemplated hereunder regarding
Securities and/or cash held in or to be acquired for a Custody Account or a
Deposit Account. With respect to Property which is maintained by the Bank in the
custody of a subcustodian pursuant to Section 3:
(a) The Bank will identify on its books as belonging to the particular
Portfolio of the Fund any Property held by such subcustodian.
(b) In the event that a subcustodian permits any of the Securities
placed in its care to be held in an Eligible Foreign Securities Depository, such
subcustodian will be required by its agreement with the Bank to identify on its
books such Securities as being held for the account of the Bank as a custodian
for its customers.
(c) Any Securities in a Custody Account held by a subcustodian of the
Bank will be subject only to the instructions of the Bank or its agents; and any
Securities held in an Eligible Foreign Securities Depository for the account of
a subcustodian will be subject only to the instructions of such subcustodian.
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(d) The Bank will only deposit Securities in an account with a
subcustodian which includes exclusively the assets held by the Bank for its
customers, and the Bank will cause such account to be designated by such
subcustodian as a special custody account for the exclusive benefit of customers
of the Bank.
(e) Any agreement the Bank shall enter into with a subcustodian with
respect to the holding of Securities shall require that (i) the Securities are
not subject to any right, charge, security interest, lien or claim of any kind
in favor of such subcustodian or its creditors except for a claim of payment for
its safe custody or administration and (ii) beneficial ownership of such
Securities is freely transferable without the payment of money or value other
than for safe custody or administration; provided, however, that the foregoing
shall not apply to the extent that any of the above-mentioned rights, charges,
etc. result from any compensation or other expenses arising with respect to the
safekeeping of Securities pursuant to such agreement.
(f) The Bank shall allow independent public accountants of the Fund
such reasonable access to the records of the Bank relating to Property held in a
Custody Account and a Deposit Account as required by such accountants in
connection with their examination of the books and records pertaining to the
affairs of the Fund. The Bank shall, subject to restrictions under applicable
law, also obtain from any subcustodian with which the Fund maintains the
physical possession of any Property an undertaking to permit independent public
accountants of the Fund such reasonable access to the records of such
subcustodian as may be required in connection with their examination of the
books and records pertaining to the affairs of the Fund or to supply a
verifiable confirmation of the contents of such records. The Bank shall furnish
the Fund such reports (or portions thereof) of the Bank's external auditors as
relate directly to the Bank's system of internal accounting controls applicable
to the Bank's duties under this Agreement. The Bank shall request for and
furnish
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to the Fund such similar reports as may be furnished to it with respect to each
subcustodian and securities depository holding the Fund's assets.
(g) The Bank will supply to the Fund, care of its investment adviser,
at least monthly a statement in respect to any Property in a Custody and a
Deposit Account held by each subcustodian, including an identification of the
entity having possession of such Property, and the Bank will send to the Fund an
advice or notification of any transfers of Property to or from the Custody
Account and Deposit Account, indicating, as to Property acquired for an
investment portfolio of the Fund, the identity of the entity having physical
possession of such Property. In the absence of the filing in writing with the
Bank by the Fund of exceptions or objections to any such statement within sixty
(60) days of the Fund's receipt of such statement, or within sixty (60) days
after the date that a material defect is reasonably discoverable, the Fund shall
be deemed to have approved such statement and in such case or upon written
approval of the Fund of any such statement the Bank shall, to the extent
permitted by law and provided the Bank has met the standard of care in Section
12 hereunder, be released, relieved and discharged with respect to all matters
and things set forth in such statement as though such statement has been settled
by the decree of a court of competent jurisdiction in an action in which the
Fund and all persons having any equity interest in the Fund were parties.
(h) The Bank hereby warrants to the Fund that in its opinion, after
due inquiry, the established procedures to be followed by each of its branches,
each branch of a qualified U.S. bank and each eligible foreign custodian holding
Securities of the Fund pursuant to this Agreement afford protection for such
Securities at least equal to that afforded by the Bank's established procedures
with respect to similar Securities held by the Bank (and its securities
depositories) in New York.
(i) The Bank hereby warrants to the Fund that as of the date of this
Agreement it is maintaining a Bankers Blanket Bond sufficient to cover any of
its reasonably anticipated liabilities
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hereunder and hereby agrees to notify the Fund in the event its Bankers Blanket
Bond is canceled or otherwise lapses.
5. Russian Market Custody. For purposes of this Section:
(a) Definitions:
(i) "CMBI" shall mean Chase Manhattan Bank International, an
indirect wholly-owned subsidiary of Bank, located in Moscow, Russia, and any
nominee companies appointed by it.
(ii) "International Financial Institution" shall mean any bank in the
top 1,000 (together with their affiliated companies) as measured by "Tier 1"
capital or any broker/dealer in the top 100 as measured by capital.
(iii) "Negligence" shall mean the failure to exercise "Reasonable
Care".
(iv) "No-Action Letter" shall mean the response of the Securities and
Exchange Commission's Office of Chief Counsel of Investment Management, dated
April 18, 1995, in respect of the Xxxxxxxxx Russia Fund, Inc. (SEC Ref. No.
95-151-CC, File No. 811-8788) providing "no-action" relief under (S) 17(f) of
The Investment Company Act of 1940, as amended, and SEC Rule 17f-5 thereunder,
in connection with custody of such Xxxxxxxxx Russia Fund, Inc.'s investments in
Russian Securities.
(v) "Reasonable Care" shall mean the use of reasonable custodial
practices under the applicable circumstances as measured by the custodial
practices then prevailing in Russia of International Financial Institutions
acting as custodians for their institutional investor clients in Russia.
(vi) "Registrar Company" shall mean any entity providing share
registration services to an issuer of Russian Securities.
(vii) "Registrar Contract" shall mean a contract between CMBI and a
Registrar Company (and as the same may be amended from time to time) containing,
inter alia, the contractual provisions described at paragraphs (a)-(e) on pps.
5-6 of the No-Action Letter.
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(viii) "Russian Security" shall mean an equity Security issued by a
Russian issuer.
(ix) "Share Extract" shall mean: (1) an extract of its share
registration books issued by a Registrar Company indicating an investor's
ownership of a security; and (2) a form prepared by CMBI or its agent in those
cases where a Registrar Company is unwilling to issue a Share Extract.
(b) With respect to Russia, payment for Russian Securities shall not be
made prior to the issuance and receipt of the Share Extract relating to such
Russian Security. Delivery of Russian Securities may be made in accordance with
the customary or established securities trading or securities processing
practices and procedures in Russia. Delivery of Russian Securities may also be
made in any manner specifically required by Instructions acceptable to the Bank.
Customer shall promptly supply such transaction and settlement information as
may be requested by Bank or CMBI in connection with particular transactions.
(c) For purposes of Section 13 of this Agreement relating to Bank's
standard of care, the phrase "reasonable care", wherever it appears, shall be
substituted by the phrase "Reasonable Care" in reference to transactions and
custodial services in the Russian market. Further, Bank's responsibilities with
respect to Russian securities shall be limited to safekeeping relevant Share
Extracts.
(d) Delegation by Bank to CMBI shall not relieve Bank of any
responsibility to the Fund for any loss due to such delegation, and Bank shall
be liable for any loss or claim arising out of or in connection with the
performance by CMBI of such delegated duties to the same extent as if Bank had
itself provided the custody services hereunder. In connection with the
foregoing, neither Bank nor CMBI shall assume responsibility for, and neither
shall be liable for, any action or inaction of any Registrar Company not
affiliated with Bank or CMBI and no Registrar Company shall be, or shall be
deemed to be, Bank, CMBI, a Subcustodian, a securities depository or the
employee, agent or personnel of any of the foregoing. To the extent that CMBI
employs agents unaffiliated with CMBI to perform any of the functions to be
performed by Bank or CMBI with respect to Russian Securities,
10
neither Bank nor CMBI shall be responsible for any act, omission, default or for
the solvency of any such agent unless the appointment of such agent was made
with Negligence or in bad faith, except that where Bank or CMBI uses (i) an
affiliated nominee or (ii) an agent to perform the share registration or share
confirmation functions described in paragraphs (a)-(e) on pps. 5-6 of the
No-Action Letter, and, to the extent applicable to CMBI, the share registration
functions described on pps. 2-3 of the No-Action Letter, Bank and CMBI shall be
liable to Customer as if CMBI were responsible for performing such services
itself."
(e) With respect to Russian custody, all references to "negligence" in
Section 13 of this Agreement shall be substituted with the word "Negligence".
(f) Bank will advise the Fund (and will update such advice from time to
time as changes occur) of those Registrar Companies with which CMBI has entered
into a Registrar Contract. Bank shall cause CMBI both to monitor each Registrar
Company and to promptly advise the Fund and its investment advisor when CMBI has
actual knowledge of the occurrence of any one or more of the events described in
paragraphs (i)-(v) on pps. 8-9 of the No-Action Letter with respect to a
Registrar Company that serves in that capacity for any issuer the shares of
which are held by the Fund. Where the Fund is considering investing in the
Russian Securities of an issuer as to which CMBI does not have a Registrar
Contract with the issuer's Registrar Company, the Fund may request that Bank ask
that CMBI both consider whether it would be willing to attempt to enter into
such a Registrar Contract and to advise the Fund of its willingness to do so.
Where CMBI has agreed to make such an attempt, Bank will advise the Fund of the
occurrence of any one or more of the events described in paragraphs (i)-(iv) on
pps. 8-9 of the No-Action Letter of which CMBI has actual knowledge.
(g) Where the Fund is considering investing in the Russian Securities of an
issuer as to which CMBI has a Registrar Contract with the issuer's Registrar
Company, Fund may advise Bank of its interest in investing in such issuer and,
in such event, Bank will advise Fund of the occurrence of
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any one or more of the events described in paragraphs (i)-(v) on pps. 8-9 of the
No-Action Letter of which CMBI has actual knowledge.
(h) The Fund shall pay for and hold Bank and CMBI harmless from any
liability or loss resulting from the imposition or assessment of any taxes
(including, but not limited to, state, stamp and other duties) or other
governmental charges, and any related expenses incurred by Bank, CMBI or their
respective agents with respect to income on Fund's Russian Securities.
(i) The Fund acknowledges and agrees that CMBI may not be able, in given
cases and despite its reasonable efforts, to obtain a Share Extract from a
Registrar Company and CMBI shall not be liable in any such event including with
respect to any losses resulting from such failure.
(j) The Fund acknowledges that it has received, reviewed and understands
Bank's market report for Russia, including, but not limited to, the risks
described therein.
(k) Subject to the cooperation of a Registrar Company, for at least the
first two years following CMBI's first use of a Registrar Company, Bank shall
cause CMBI to conduct share confirmations on at least a quarterly basis,
although thereafter confirmations may be conducted on a less frequent basis if
the Fund's Board of Directors, in consultation with CMBI, determines it to be
appropriate.
(l) Bank shall cause CMBI to prepare for distribution to the Fund's Board
of Directors a quarterly report identifying: (i) any concerns it has regarding
the Russian share registration system that should be brought to the attention of
the Board of Directors; and (ii) the steps CMBI has taken during the reporting
period to ensure that Fund's interests continue to be appropriately recorded.
(m) Except as provided in subsection (g) above, the services to be
provided by Bank hereunder with respect to Russian Securities will be provided
only in relation to Russian Securities for which CMBI has entered into a
Registrar Contract with the relevant Registrar Company.
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(n) Bank confirms that its procedures and arrangements as set forth herein
are designed to comply with the No-Action Letter.
6. Deposit Account Payments. Subject to the provisions of Section 7, the
Bank shall make, or cause its subcustodian to make, payments of cash credited to
a Deposit Account only:
(a) in connection with the purchase of Securities for the particular
Portfolio of the Fund involved and the delivery of such Securities to, or the
crediting of such Securities to, the particular Custody Account of the Bank or
its subcustodian, each such payment to be made at prices as confirmed by
Instructions from Authorized Persons (as defined in Section 10 hereof);
(b) for the purchase or redemption of shares of the capital
stock of the particular Portfolio of the Fund involved and the delivery to, or
crediting to the account of, the Bank or its subcustodian of such shares to be
so purchased or redeemed;
(c) for the payment for the account of the particular Portfolio of the
Fund involved of dividends, interest, taxes, management or supervisory fees,
capital distributions or operating expenses;
(d) for the payments to be made in connection with the conversion,
exchange or surrender of Securities held in a Custody Account;
(e) for spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related transactions;
(f) for other proper corporate purposes of the particular Portfolio of
the Fund involved; or
(g) upon the termination of this Custody Agreement as hereinafter set
forth.
All payments of cash for a purpose permitted by subsection (a), (b), (c),
(d) or (e) of this Section 5 will be made only upon receipt by the Bank of
Instructions from Authorized Persons which shall specify the purpose for which
the payment is to be made and the applicable subsection of this
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Section 5. In the case of any payment to be made for the purpose permitted by
subsection (f) of this Section 5, the Bank must first receive a certified copy
of a resolution of the Board of Directors of the Fund adequately describing such
payment, declaring such purpose to be a proper corporate purpose, and naming the
person or persons to whom such payment shall be made. Any payment pursuant to
subsection (g) of this Section 5 will be made in accordance with Section 17
hereof.
In the event that any payment for a Portfolio of the Fund made under this
Section 5 exceeds the funds available in that Portfolio's Deposit Account, the
Bank may, in its discretion, advance the Fund on behalf of that Portfolio an
amount equal to such excess and such advance shall be deemed a loan from the
Bank to that Portfolio payable on demand, bearing interest at the rate of
interest customarily charged by the Bank on similar loans. If the Bank causes a
Deposit Account to be credited on the payable date for interest, dividends or
redemptions, the particular Portfolio of the Fund involved will promptly return
to the Bank any such amount or property so credited upon oral or written
notification that such amount has not been received in the ordinary course of
business or that such amount was incorrectly credited. The Bank or its
subcustodian, as the case may be, shall have no duty or obligation to institute
legal proceedings, file a claim or proof of claim in any insolvency proceeding
or take any other action with respect to the collection of such amount or
property.
7. Custody Account Transactions. Subject to the provisions of Section 7,
Securities in a Custody Account will be transferred, exchanged or delivered by
the Bank or its subcustodians only:
(a) upon sale of such Securities for the particular Portfolio of the
Fund involved and receipt by the Bank or its subcustodian of payment therefor,
each such payment to be in the amount confirmed by Instructions from Authorized
Persons;
(b) when such Securities are called, redeemed or retired, or
otherwise become payable;
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(c) in exchange for or upon conversion into other Securities alone or
other Securities and cash pursuant to any plan of merger, consolidation,
reorganization, recapitalization or readjustment;
(d) upon conversion of such Securities pursuant to their terms into
other Securities;
(e) upon exercise of subscription, purchase or other similar rights
represented by such Securities;
(f) for the purpose of exchanging interim receipts or temporary
Securities for definitive Securities;
(g) or the purpose of redeeming in-kind shares of the capital stock of
the particular Portfolio of the Fund involved against delivery to the Bank or
its subcustodian of such shares to be redeemed;
(h) in connection with any borrowings by the particular Portfolio
requiring a pledge of Securities, but only against receipt of amounts borrowed;
(i) in connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any restrictions
applicable to the Fund;
(b) for delivery in accordance with the provisions of any agreement
among the Fund, the Bank and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of the National
Association of Securities Dealers, Inc. relating to compliance with the rules of
The Options Clearing Corporation and of any registered national securities
exchange, or of any similar organizations, regarding escrow or other
arrangements in connection with transactions by the particular Portfolio;
(c) for release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only upon
payment to the Bank of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the
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option, or at expiration, the Bank will receive the Securities previously
deposited from brokers. The Bank will act strictly in accordance with
Instructions in the delivery of Securities to be held in escrow and will have no
responsibility or liability for any such Securities which are not returned
promptly when due other than to make proper request for such return.
(d) for other proper corporate purposes of the particular Portfolio of
the Fund involved; or
(e) upon the termination of this Custody Agreement as hereinafter set
forth.
All transfers, exchanges or deliveries of Securities in a Custody Account
for a purpose permitted by either subsection (a), (b), (c), (d), (e) or (f) of
this Section 6 will be made, except as provided in Section 8 hereof, only upon
receipt by the Bank of Instructions from Authorized Persons which shall specify
the purpose of the transfer, exchange or delivery to be made and the applicable
subsection of this Section 6. In the case of any transfer or delivery to be made
for the purpose permitted by subsection (g) of this Section 6, the Bank must
first receive Instructions from Authorized Persons specifying the Securities
held by the Bank or its subcustodian to be so transferred or delivered and
naming the person or persons to whom transfers or delivery of such Securities
shall be made. In the case of any transfer, exchange or delivery to be made for
the purpose permitted by subsections (h) or (l) of this Section 6, the Bank must
first receive a certified copy of a resolution of the Board of Directors of the
Fund adequately describing such transfer, exchange or delivery, declaring such
purpose to be a proper corporate purpose, and naming the person or persons to
whom delivery of such Securities shall be made. Any transfer or delivery
pursuant to subsection (m) of this Section 6 will be made in accordance with
Section 17 hereof.
8. Custody Account Procedures. With respect to any transaction involving
Securities held in or to be acquired for a Custody Account, the Bank in its
discretion may cause the Deposit Account for the particular Portfolio of the
Fund involved to be credited on the contractual settlement date with
16
the proceeds of any sale or exchange of Securities from the particular Custody
Account and to be debited on the contractual settlement date for the cost of
Securities purchased or acquired for the particular Custody Account. The Bank
may reverse any such credit or debit if the transaction with respect to which
such credit or debit was made fails to settle within a reasonable period,
determined by the Bank in its discretion, after the contractual settlement date,
except that if any Securities delivered pursuant to this Section 7 are returned
by the recipient thereof, the Bank may cause any such credits and debits to be
reversed at any time. With respect to any transactions as to which the Bank does
not determine so to credit or debit the particular Deposit Account, the proceeds
from the sale or exchange of Securities will be credited and the cost of such
Securities purchased or acquired will be debited to the particular Deposit
Account on the date such proceeds or Securities are received by the Bank.
Notwithstanding the preceding paragraph and Section 6 hereof,
settlement and payment for Securities received for, and delivery of Securities
out of, a Custody Account may be effected in accordance with the customary or
established securities trading or securities processing practices and procedures
in the jurisdiction or market in which the transaction occurs, including,
without limitation, delivering Securities to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such Securities from such
purchaser or dealer.
9. Actions of the Bank. Until the Bank receives Instructions from
Authorized Persons to the contrary, the Bank will, or will instruct its
subcustodian, to:
(a) present for payment any Securities in a Custody Account which
are called, redeemed or retired or otherwise become payable and all coupons and
other income items which call for payment upon presentation to the extent that
the Bank or subcustodian is aware of such opportunities for payment, and hold
cash received upon presentation of such Securities in accordance with the
provisions of Sections 2, 3 and 4 hereof;
17
(b) in respect of Securities in a Custody Account, execute in the name
of the Fund on behalf of the particular Portfolio involved such ownership and
other certificates as may be required to obtain payments in respect thereof;
(c) exchange interim receipts or temporary Securities in a Custody
Account for definitive Securities;
(d) (if applicable) convert monies received with respect to Securities
of foreign issue into United States dollars or any other currency necessary to
effect any transaction involving the Securities whenever it is practicable to do
so through customary banking channels, using any method or agency available,
including, but not limited to, the facilities of the Bank, its subsidiaries,
affiliates or subcustodians;
(e) (if applicable) appoint brokers and agents for any transaction
involving the Securities in a Custody Account, including, without limitation,
affiliates of the Bank or any subcustodian; and
(f) apply for a reduction of withholding tax and any refund of any tax
paid or tax credits which apply in each applicable market in respect of income
payments or Securities for the benefit of each Portfolio of the Fund which the
Bank believes may be available to such Portfolio. The provision of tax reclaim
services by the Bank is conditioned upon the Bank receiving from the Fund (A) a
declaration of its identity and place of residence and (B) certain other
documentation (pro forma copies of which are available from the Bank) requested
by the Bank. The Fund shall provide to the Bank such documentation and
information as it may request in connection with taxation, and warrants that,
when given, this information shall be true and correct in every respect, not
misleading in any way, and shall contain all material information. The Fund
undertakes to notify the Bank immediately if any such information requires
updating or amendment. The Bank shall not be liable to the Fund or any third
party for any tax fines or penalties payable by the Bank or the Fund, and shall
be indemnified
18
accordingly, whether these result from the inaccurate completion of documents by
the Fund or any third party, or as a result of the provision to the Bank or any
third party of inaccurate or misleading information or the withholding of
material information by the Fund or any other third party, or as a result of any
delay of any revenue authority or any other matter beyond the control of the
Bank. The Fund confirms that the Bank is authorized to deduct from any cash
received or credited to the Deposit Account any taxes or levies required by any
revenue or governmental authority in respect of the Securities or Deposit
Accounts. The Bank shall perform tax reclaim services only with respect to
taxation levied by the revenue authorities of the countries notified to the Fund
from time to time and the Bank may, by notification in writing, at its absolute
discretion, supplement or amend the markets in which the tax reclaim services
are offered. Other than as expressly provided in this clause, the Bank shall
have no responsibility with regard to the Fund's tax position or status in any
jurisdiction. The Fund confirms that the Bank is authorized to disclose any
information requested by any revenue authority or any governmental body in
relation to the Fund or the Securities and/or cash held for the Fund. Tax
reclaim services may be provided by the Bank or, in whole or in part, by one or
more third parties appointed by the Bank (which may be affiliates of the Bank),
provided that the Bank shall be liable for the performance of any such third
party to the same extent as the Bank would have been if it performed such
services itself.
10. Instructions. As used in this Agreement, the term "Instructions" means
instructions of the Fund received by the Bank via telephone, telex, TWX,
facsimile transmission, bank wire or other teleprocess or electronic instruction
system acceptable to the Bank which the 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 which the Bank may specify.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person),
19
but the particular Portfolio of the Fund involved will hold the Bank harmless
for the Fund's (i) failure to send such confirmation in writing, or (ii) the
failure of such confirmation to conform to the telephone Instructions received.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded. If the Bank requires test
arrangements, authentication methods or other security devices to be used with
respect to Instructions, any Instructions given by the Fund thereafter shall be
given and processed in accordance with such terms and conditions for the use of
such arrangements, methods or devices as the Bank may put into effect and modify
from time to time. The Fund shall safeguard any testkeys, identification codes
or other security devices which the Bank shall make available to them. The Bank
may electronically record any Instructions given by telephone, and any other
telephone discussions, with respect to a Custody Account.
11. Authorized Persons. As used in this Agreement, the term "Authorized
Persons" means such officers or such agents of the Fund as have been designated
by a resolution of the Board of Directors of the Fund, a certified copy of which
has been provided to the Bank, to act on behalf of the Fund in the performance
of any acts which Authorized Persons may do under this Agreement. Such persons
shall continue to be Authorized Persons until such time as the Bank receives
Instructions from Authorized Persons that any such officer or agent is no longer
an Authorized Person.
12. Nominees. Securities in a Custody Account which are ordinarily held in
registered form may be registered in the name of the Bank's nominee or, as to
any Securities in the possession of an entity other than the Bank, in the name
of such entity's nominee. The particular Portfolio of the Fund involved agrees
to hold any such nominee harmless from any liability as a holder of record of
such Securities, but not if such liability is a result of such nominee's
negligence. The Bank may without notice to the Fund cause any such Securities to
cease to be registered in the name of any such nominee and to be registered in
the name of the Fund. In the event that any Securities registered in the name of
20
the Bank's nominee or held by one of its subcustodians and registered in the
name of such subcustodian's nominee are called for partial redemption by the
issuer of such Security, the Bank may allot, or cause to be allotted, the called
portion to the respective beneficial holders of such class of security in any
manner the Bank deems to be fair and equitable.
13. Standard of Care.
(a) The Bank shall be obligated to perform only such duties as are
set forth in this Agreement or expressly contained in Instructions given to Bank
which are consistent with the provisions of this Agreement.
(i) The Bank will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of Property.
The Bank shall be liable to the Fund for any loss which shall
occur as the result of the failure of a subcustodian to exercise
reasonable care with respect to the safekeeping of such Property
to the same extent that the Bank would be liable to the Fund if
the Bank were holding such Property in New York. In the event of
any loss to the Fund by reason of the failure of the Bank or its
subcustodian to exercise reasonable care, the Bank shall be
liable to the Fund only to the extent the Fund's direct damages
and expenses, to be determined based on, but not limited to, the
market value of the Property which is the subject of the loss at
the date of discovery of such loss, and without reference to any
special conditions or circumstances. For purposes of this Section
12(a)(i), the term "subcustodian" shall not include any
securities depository or clearing agency the use of which is
compulsory because: (a) its use is required by law or regulation,
(b) securities cannot be withdrawn from the depository, or (c)
maintaining securities outside the depository is not consistent
with prevailing custodial practices in the country which the
depository serves.
21
(ii) The Bank will not be responsible for any act, omission,
default or for the solvency of any broker or agent (other than as
provided herein) which it or a subcustodian appoints and uses
unless such appointment and use were made or done negligently or
in bad faith.
(iii) The Bank shall be indemnified by, and without liability to,
the Fund and the particular Portfolio of the Fund involved for
any action taken or omitted by the Bank whether pursuant to
Instructions or otherwise within the scope of this Agreement if
such act or omission was in good faith and without negligence. In
performing its obligations under this Agreement, the Bank may
rely on the genuineness of any document which it believes in good
faith to have been validly executed.
(iv) The Fund, on behalf of the particular Portfolio of the Fund
involved, agrees to cause such Portfolio to pay for and hold the
Bank harmless from any liability or loss resulting from the
imposition or assessment of any taxes or other governmental
charges, and any related expenses, with respect to income from or
Property in such Portfolio's Custody Account and Deposit Account.
(v) The Bank shall be entitled to rely, and may act upon the
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 in good faith and without negligence pursuant to
such advice.
(vi) The Bank need not maintain any insurance for the exclusive
benefit of the Fund.
(vii) Without limiting the foregoing, the Bank shall not be
liable for any loss which results from:
22
(1) the general risk of investing, or
(2) subject to Section 12(a)(i) hereof, investing or holding
Property in a particular country including, but not limited to, losses
resulting from nationalization, expropriation or other governmental
actions; regulation of the banking or securities industry; currency
restrictions, devaluations or fluctuations; and market conditions
which prevent the orderly execution of securities transactions or
affect the value of Property.
(viii) No party shall be liable to the other for any loss due to
forces beyond its control including but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear
fusion, fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty or
responsibility to:
(i) Question Instructions or make any suggestions to the Fund or an
Authorized Person regarding such Instructions;
(ii) Supervise or make recommendations with respect to investments
or the retention of Securities;
(iii) Advise the Fund or an Authorized Person regarding any default
in the payment of principal or income of any Security other than as
provided in the last paragraph of Section 5 hereof;
(iv) Subject to Section 12(a)(ii) hereof, evaluate or report to the
Fund or an Authorized Person regarding the financial condition of any
broker, agent or other party to which Securities are delivered or
payments are made pursuant to this Agreement; or
23
(v) Review or reconcile trade confirmations received from
brokers. The Fund or its Authorized Persons issuing Instructions
shall bear any responsibility to review such confirmations
against Instructions issued to and statements issued by the Bank.
(c) The Bank shall provide to the Fund, on an annual basis, a report
confirming that the arrangements hereunder remain in compliance with the rules
of the Securities and Exchange Commission governing such arrangements.
(d) The Fund authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have a
material interest in a transaction, or circumstances are such that the Bank may
have a potential conflict of duty or interest, including the fact that the Bank
or any of its affiliates may provide brokerage services to other customers, act
as financial advisor to the issuer of Securities, act as a lender to the issuer
of Securities, act in the same transaction as agent for more than one customer,
have a material interest in the issue of Securities, or earn profits from any of
the activities listed herein.
14. Compliance with Securities and Exchange Commission Rules and Orders.
Except to the extent the Bank has specifically agreed pursuant to this Agreement
or in an exemptive order to comply with a condition of Rule 17f-5 or any
interpretation or exemptive order promulgated thereunder by or under the
authority of the Securities and Exchange Commission, the Fund shall be solely
responsible to assure that the maintenance of Securities and cash under this
Agreement complies with such Rule 17f-5.
15. Corporate Actions.
(a) With respect to domestic U.S. and Canadian Securities (the latter
only when held with DTC), the Bank will send to the Fund or the Authorized
Person for a Custody Account such proxies (signed in blank, if issued in the
name of the Bank's nominee or the nominee of a central
24
depository) and communications with respect to Securities in the Custody Account
as call for voting or relate to legal proceedings within a reasonable time after
sufficient copies are received by the Bank for forwarding to its customers. In
addition, the Bank will follow coupon payments, redemptions, exchanges or
similar matters with respect to Securities in the Custody Account and advise the
Fund or the Authorized Person for such account of rights issued, tender offers
or any other discretionary rights with respect to such Securities, in each case,
of which the Bank has received notice from the issuer of the Securities, or as
to which notice is published in publications routinely utilized by the Bank for
this purpose.
(b) With respect to proxies and Corporate Actions (as defined below) not
covered by paragraph (a) of this Section 14:
(i) Whenever the Bank or its subcustodian receives information
concerning the Securities which requires discretionary action by
the beneficial owner of the Securities (other than a proxy), such
as subscription rights, bonus issues, stock repurchase plans and
rights offerings, or legal notices or other material intended to
be transmitted to securities holders ("Corporate Actions"), the
Bank will give the Fund notice of such Corporate Actions to the
extent that the Bank's central corporate actions department has
actual knowledge of a Corporate Action in time to notify its
customers.
(ii) When a rights entitlement or a fractional interest resulting
from a rights issue, stock dividend, stock split or similar
Corporate Action is received which bears an expiration date, the
Bank or its subcustodians will endeavor to obtain Instructions
from the Fund or its Authorized Persons, but if Instructions are
not received in time for the Bank to take timely action, or
actual notice of such Corporate Action was received too late to
seek Instructions, the Bank is
25
authorized to sell such rights entitlement or fractional interest
and to credit the applicable Deposit Account with the proceeds
and to take any other action it deems in good faith to be
appropriate in which case, provided it has met the standard of
care in Section 12 hereof, it shall be held harmless by the
particular Portfolio of the Fund involved for any such action.
(iii) Proxies will only be voted pursuant to special arrangements
which may have been agreed to in writing between the parties
hereto.
16. Fees and Expenses. The Fund agrees to pay the Bank from time to time
such compensation for its services pursuant to this Agreement as may be mutually
agreed upon in writing from time to time and the Bank's out-of-pocket or
incidental expenses, including (but without limitation) reasonable legal fees.
The Fund hereby agrees on behalf of its respective Portfolios to cause the
particular Portfolio of the Fund involved to hold the Bank harmless from any
liability or loss resulting from any taxes or other governmental charges, and
any expenses related thereto, which may be imposed or assessed with respect to
such Portfolio's Custody Account and also agrees on behalf of its respective
Portfolios to cause the particular Portfolio of the Fund involved to hold the
Bank, its subcustodians, and their respective nominees harmless from any
liability as a record holder of Securities in such Portfolio's Custody Account.
The Bank is authorized to charge any account of the particular Portfolio of the
Fund involved for such items specified in the previous sentence and the Bank
shall have a lien on Securities in such Portfolio's Custody Account and on cash
in such Portfolio's Deposit Account for any amount owing to the Bank in
connection with such Portfolio from time to time under this Agreement.
17. Effectiveness. This Agreement shall be effective on the date first
noted above.
18. Termination. This Agreement may be terminated by the Fund or the Bank
by 45 days' written notice to the other, sent by registered mail. If notice of
termination is given by the Bank, the
26
Fund shall, within 60 days following the giving of such notice, deliver to the
Bank a certified copy of a resolution of the Board of Directors of the Fund
specifying the names of the persons to whom the Bank shall deliver such
Securities and cash, after deducting therefrom any amounts which the Bank
determines to be owed to it under Section 15 hereof. If within 60 days following
the giving of a notice of termination by the Bank, the Bank does not receive
from the Fund a certified copy of a resolution of the Board of Directors of the
Fund specifying the names of the persons to whom the cash in each Deposit
Account shall be paid and to whom the Securities in each Custody Account shall
be delivered, the Bank, at its election, may deliver such Securities and pay
such cash to a bank or trust company doing business in the State of New York and
qualified as a custodian under the Investment Company Act of 1940 and other
applicable rules and regulations to be held and disposed of pursuant to the
provisions of this Agreement, or to Authorized Persons, or may continue to hold
such Securities and cash until a certified copy of one or more resolutions as
aforesaid is delivered to the Bank. The obligations of the parties hereto
regarding the use of reasonable care, indemnities and payment of fees and
expenses shall survive the termination of this Agreement, and the obligations of
each Portfolio of the Fund to indemnify and/or hold harmless other persons or
entities under this Agreement shall be the several (and not the joint or joint
and several) obligation of each Portfolio of the Fund.
19. Notices. Any notice or other communication from the Fund to the Bank is
to be sent to the office of the Bank at:
The Chase Manhattan Bank
Mutual Funds Service Division
0 Xxxxx XxxxxXxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
or such other address as may hereafter be given to the Fund in accordance with
the notice provisions hereunder, and any notice from the Bank to the Fund is to
be mailed postage prepaid, addressed to the
27
Fund at the addresses appearing below, or as the same may hereafter be changed
on the Bank's records in accordance with notice hereunder from the Fund.
20. Governing Law and Successors and Assigns. This Agreement shall be
governed by the law of the State of New York and shall not be assignable by any
party without the prior written consent of the other party, and shall bind the
successors and assigns of the Fund and the Bank.
21. Names. The names "Excelsior Funds, Inc." and "Board of Directors of
Excelsior Funds, Inc." refer respectively to the corporation created and the
Directors, as directors but not individually or personally, acting from time to
time under Articles of Incorporation dated August 1, 1984, which is hereby
referred to and a copy of which is on file at the office of the State Department
of Assessments and Taxation of the State of Maryland and at the principal office
of the Fund. The obligations of "Excelsior Funds, Inc." entered into in the name
or on behalf thereof by any of its Directors, representatives or agents are made
not individually, but in such capacities, and are not binding upon any of the
Directors, shareholders or representatives of the Fund personally, but bind only
the Fund's Property, and all persons dealing with any Portfolio of the Fund must
look solely to the Property belonging to such Portfolio for the enforcement of
any claims against the Portfolio.
22. Headings. The headings of the paragraphs hereof are included for
convenience of reference only and do not form a part of this Agreement.
23. Counterpart Execution. This Agreement may be executed in any number of
counterparts with the same effect as if all parties hereto had signed the same
document. All counterparts shall be construed together and shall constitute one
agreement.
23. Confidentiality. Bank agrees on behalf of itself and its employees to
treat confidentially all records and other information relative to the Fund and
its prior, present, or potential shareholders, except, after prior notification
to and approval in writing by the Fund (which approval shall not be unreasonably
withheld and may not be withheld where Bank may be exposed to civil or criminal
28
contempt proceedings for failure to comply) when requested to divulge such
information by duly constituted authorities, or when so requested by the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below effective as of the day and year
first above written.
THE CHASE MANHATTAN BANK
By:____________________
Address for record:
0 Xxxxx XxxxxXxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
EXCELSIOR FUNDS, INC.
By: /s/ Xxxxxxxxx X. Xxxxxx
-----------------------
Address for record:
Xxx Xxxxxxx Xxxxxx Xxxxx
Xxxx, Xxxxxxxxxxxx 00000
29
EXHIBIT A
Portfolios covered by the Amended and Restated Custody Agreement effective
as of June 27, 2001, between The Chase Manhattan Bank and Excelsior Funds, Inc.
Money Fund
Government Money Fund
Treasury Money Fund
Blended Equity Fund
Energy and Natural Resources Fund
Value and Restructuring Fund
Small Cap Fund International Fund
Latin America Fund
Pacific/Asia Fund
Pan European Fund
Short-Term Government Securities Fund
Intermediate-Term Managed Income Fund
Managed Income Fund
Large Cap Growth Fund
Real Estate Fund
Emerging Markets Fund
Technology Fund
Biotechnology Fund
THE CHASE MANHATTAN BANK
By:___________________________________
EXCELSIOR FUNDS, INC.
By: /s/ Xxxxxxxxx X. Xxxxxx
Dated: June 27, 2001
30
