EXHIBT 99.2j
CUSTODIAN AGREEMENT
THIS AGREEMENT, dated as of May 17, 2001, between KOREA EQUITY FUND, INC.,
a closed-end management investment company organized under the laws of the State
of Maryland and registered with the Commission under the 1940 Act (the Fund),
and XXXXX BROTHERS XXXXXXXX & CO., a limited partnership formed under the laws
of the State of New York (BBH&Co. or the Custodian),
WITNESSETH:
WHEREAS, the Fund wishes to employ BBH&Co. to act as custodian for the
Fund and to provide related services, all as provided herein, and BBH&Co. is
willing to accept such employment, subject to the terms and conditions herein
set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Fund and BBH&Co. hereby agree, as follows:
1. Appointment of Custodian. The Fund hereby appoints BBH&Co. as the Fund's
custodian, and BBH&Co. hereby accepts such appointment. All Investments of the
Fund delivered to the Custodian or its agents or Subcustodians shall be dealt
with as provided in this Agreement. The duties of the Custodian with respect to
the Fund's Investments shall be only as set forth expressly in this Agreement
which duties are generally comprised of safekeeping and various administrative
duties that will be performed in accordance with Instructions and as reasonably
required to effect Instructions.
2. Representations, Warranties and Covenants of the Fund. The Fund hereby
represents, warrants and covenants each of the following:
2.1 This Agreement has been, and at the time of delivery of each
Instruction such Instruction will have been, duly authorized, executed and
delivered by the Fund. This Agreement does not violate any Applicable Law
or conflict with or constitute a default under the Fund's prospectus or
other organic document, agreement, judgment, order or decree to which the
Fund is a party or by which it or its Investments is bound.
2.2 By providing an Instruction with respect to the first
acquisition of an Investment in a jurisdiction other than the United
States of America, the Fund shall be deemed to have confirmed to the
Custodian that the Fund has (a) assessed and accepted all material Country
or Sovereign Risks and accepted responsibility for their occurrence, (b)
made all determinations required to be made by the Fund under the 1940
Act, and (iii) appropriately and adequately
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disclosed to its shareholders, other investors and all persons who have
rights in or to such Investments, all material investment risks, including
those relating to the custody and settlement infrastructure or the
servicing of securities in such jurisdiction.
2.3 The Fund shall safeguard and shall solely be responsible for the
safekeeping of any testkeys, identification codes, passwords, other
security devices or statements of account with which the Custodian
provides it. In furtherance and not limitation of the foregoing, in the
event the Fund utilizes any on-line service offered by the Custodian, the
Fund and the Custodian shall be fully responsible for the security of each
party's connecting terminal, access thereto and the proper and authorized
use thereof and the initiation and application of continuing effective
safeguards in respect thereof. Additionally, if the Fund uses any on-line
or similar communications service made available by the Custodian, the
Fund shall be solely responsible for ensuring the security of its access
to the service and for the use of the service, and shall only attempt to
access the service and the Custodian's computer systems as directed by the
Custodian. If the Custodian provides any computer software to the Fund
relating to the services described in this Agreement, the Fund will only
use the software for the purposes for which the Custodian provided the
software to the Fund, and will abide by the license agreement accompanying
the software and any other security policies which the Custodian provides
to the Fund.
3. Representation and Warranty of BBH&Co. BBH&Co. hereby represents and warrants
that this Agreement has been duly authorized, executed and delivered by BBH&Co.
and does not and will not violate any Applicable Law or conflict with or
constitute a default under BBH&Co.'s limited partnership agreement or any
agreement, instrument, judgment, order or decree to which BBH&Co. is a party or
by which it is bound.
4. Instructions. Unless otherwise explicitly indicated herein, the Custodian
shall perform its duties pursuant to Instructions. As used herein, the term
Instruction shall mean a directive initiated by the Fund, acting directly or
through its board of directors, officers or other Authorized Persons, which
directive shall conform to the requirements of this Section 4.
4.1 Authorized Persons. For purposes hereof, an Authorized Person shall be
a person or entity authorized to give Instructions for or on behalf of the Fund
by written notices to the Custodian or otherwise in accordance with procedures
delivered to and acknowledged by the Custodian, including without limitation the
Fund's Investment Adviser or Foreign Custody Manager. The Custodian may treat
any Authorized Person as having full authority of the Fund to issue Instructions
hereunder unless the notice of authorization contains explicit limitations as to
said authority. The Custodian shall be entitled to
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rely upon the authority of Authorized Persons until it receives appropriate
written notice from the Fund to the contrary.
4.2 Form of Instruction. Each Instruction shall be transmitted by such
secured or authenticated electro-mechanical means as the Custodian shall make
available to the Fund from time to time unless the Fund shall elect to transmit
such Instruction in accordance with Subsections 4.2.1 through 4.2.3 of this
Section.
4.2.1 Fund Designated Secured-Transmission Method. Instructions may
be transmitted through a secured or tested electro-mechanical means
identified by the Fund or by an Authorized Person entitled to give
Instruction and acknowledged and accepted by the Custodian; it being
understood that such acknowledgment shall authorize Custodian to receive
and process such means of delivery but shall not represent a judgment by
the Custodian as to the reasonableness or security of the method
determined by the Authorized Person.
4.2.2 Written Instructions. Instructions may be transmitted in a
writing that bears the manual signature of Authorized Persons.
4.2.3 Other Forms of Instruction. Instructions may also be
transmitted by another means determined by the Fund or Authorized Persons
and acknowledged and accepted by the Custodian (subject to the same limits
as to acknowledgements as is contained in Subsection 4.2.1, above)
including Instructions given orally or by SWIFT, telex or telefax (whether
tested or untested).
When an Instruction is given by means established under Subsections 4.2.1
through 4.2.3, it shall be the responsibility of the Custodian to use reasonable
care to adhere to any security or other procedures established in writing
between the Custodian and the Authorized Person with respect to such means of
Instruction, but such Authorized Person shall be solely responsible for
determining that the particular means chosen is reasonable under the
circumstances. Oral Instructions shall be binding upon the Custodian only if and
when the Custodian takes action with respect thereto. With respect to telefax
instructions, the parties agree and acknowledge that receipt of legible
instructions cannot be assured, that the Custodian cannot verify that authorized
signatures on telefax instructions are original or properly affixed, and that
the Custodian shall not be liable for losses or expenses incurred through
actions taken in reliance on inaccurately stated, illegible or unauthorized
telefax instructions. The provisions of Section 4A of the Uniform Commercial
Code shall apply to Funds Transfers performed in accordance with
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Instructions. The Funds Transfer Services Schedule to this Agreement shall
comprise a designation of form of a means of delivering Instructions for
purposes of this Section 4.2.
4.3 Completeness and Contents of Instructions. The Authorized Person shall
be responsible for assuring the adequacy and accuracy of Instructions.
Particularly, upon any acquisition or disposition or other dealing in the Fund's
Investments and upon any delivery and transfer of any Investment or moneys, the
person initiating such Instruction shall give the Custodian an Instruction with
appropriate detail, including, without limitation:
4.3.1 The transaction date and the date and location of settlement;
4.3.2 The specification of the type of transaction;
4.3.3 A description of the Investments or moneys in question,
including, as appropriate, quantity, price per unit, amount of money
to be received or delivered and currency information. Where an
Instruction is communicated by electronic means, or otherwise where
an Instruction contains an identifying number such as a CUSIP, SEDOL
or ISIN number, the Custodian shall be entitled to rely on such
number as controlling notwithstanding any inconsistency contained in
such Instruction, particularly with respect to Investment
description; and
4.3.4 The name of the broker or similar entity concerned with
execution of the transaction.
If the Custodian shall determine that an Instruction is either unclear or
incomplete, the Custodian may give prompt notice of such determination to the
Fund, and the Fund shall thereupon amend or otherwise reform such Instruction.
In such event, the Custodian shall have no obligation to take any action in
response to the Instruction initially delivered until redelivery of an amended
or reformed Instruction.
4.4 Timeliness of Instructions. In giving an Instruction, the Fund shall
take into consideration delays which may occur due to the involvement of a
Subcustodian or agent, differences in time zones, and other factors particular
to a given market, exchange or issuer. When the Custodian has established
specific timing requirements or deadlines with respect to particular classes of
Instruction, or when an Instruction is received by the Custodian at such a time
that it could not reasonably be expected to have acted on such instruction due
to time zone differences or other factors beyond its reasonable control,
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the execution of any Instruction received by the Custodian after such deadline
or at such time (including any modification or revocation of a previous
Instruction) shall be at the risk of the Fund.
5. Safekeeping of Fund Assets. The Custodian shall hold Investments delivered to
it or Subcustodians for the Fund in accordance with the provisions of this
Section. The Custodian shall not be responsible for (a) the safekeeping of
Investments not delivered or that are not caused to be issued to it or its
Subcustodians; or, (b) pre-existing faults or defects in Investments that are
delivered to the Custodian, or its Subcustodians. The Custodian is hereby
authorized to hold with itself or a Subcustodian, and to record in one or more
accounts, all Investments delivered to and accepted by the Custodian, any
Subcustodian or their respective agents pursuant to an Instruction or in
consequence of any corporate action. The Custodian shall hold Investments for
the account of the Fund and shall segregate Investments from assets belonging to
the Custodian and shall cause its Subcustodians to segregate Investments from
assets belonging to the Subcustodian in an account held for the Fund or in an
account maintained by the Subcustodian generally for non-proprietary assets of
the Custodian.
5.1 Use of Securities Depositories. The Custodian may deposit and maintain
Investments in any Securities Depository, either directly or through one or more
Subcustodians appointed by the Custodian. Investments held in a Securities
Depository shall be held (a) subject to the agreement, rules, statement of terms
and conditions or other document or conditions effective between the Securities
Depository and the Custodian or the Subcustodian, as the case may be, and (b) in
an account for the Fund or in bulk segregation in an account maintained for the
non-proprietary assets of the entity holding such Investments; in the
Depository. If market practice or the rules and regulations of the Securities
Depository prevent Custodian, the Subcustodian or (any agent of either) from
holding its client assets in such a separate account, the Custodian, the
Subcustodian, or other agent shall as appropriate segregate such Investments for
benefit of the Fund or for benefit of clients of the Custodian generally on its
own books.
5.2 Certificated Assets. Investments which are certificated may be held in
registered or bearer form: (a) in the Custodian's vault; (b) in the vault of a
Subcustodian or agent of the Custodian or a Subcustodian; or (c) in an account
maintained by the Custodian, Subcustodian or agent at a Securities
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Depository; all in accordance with customary market practice in the jurisdiction
in which any Investments are held.
5.3 Registered Assets. Investments which are registered may be registered
in the name of the Custodian, a Subcustodian, or in the name of the Fund or a
nominee for any of the foregoing, and may be held in any manner set forth in
paragraph 5.2 above with or without any identification of fiduciary capacity in
such registration.
5.4 Book Entry Assets. Investments which are represented by book-entry may
be so held in an account maintained by the Book-entry agent on behalf of the
Custodian, a Subcustodian or another agent of the Custodian, or a Securities
Depository.
5.5 Replacement of Lost Investments. In the event of a loss of Investments
for which the Custodian is responsible under the terms of this Agreement, the
Custodian shall replace such Investment, or in the event that such replacement
cannot be effected, the Custodian shall pay to the Fund the fair market value of
such Investment based on the last available price as of the close of business in
the relevant market on the date that a claim was first made to the Custodian
with respect to such loss, or , if less, such other amount as shall be agreed by
the parties as the date for settlement.
6. Administrative Duties of the Custodian. The Custodian shall perform the
following administrative duties with respect to Investment of the Fund.
6.1 Purchase of Investments. Pursuant to Instruction, Investments
purchased for the account of the Fund shall be paid (a) against delivery thereof
to the Custodian or a Subcustodian, as the case may be, either directly or
through a Clearing Corporation or a Securities Depository (in accordance with
the rules of such Securities Depository or such Clearing Corporation), or (b)
otherwise in accordance with an Instruction, Applicable Law, generally accepted
trade practices, or the terms of the instrument representing such Investment.
6.2 Sale of Investments. Pursuant to Instruction, Investments sold for the
account of the Fund shall be delivered (a) against payment therefor in cash, by
check or by bank wire transfer, (b) by credit to the account of the Custodian or
the applicable Subcustodian, as the case may be, with a Clearing
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Corporation or a Securities Depository (in accordance with the rules of such
Securities Depository or such Clearing Corporation), or (c) otherwise in
accordance with an Instruction, Applicable Law, generally accepted trade
practices, or the terms of the instrument representing such Investment.
6.3 Delivery and Receipt In Connection with Borrowings of the Fund or
other Collateral and Margin Requirements. Pursuant to Instruction, the Custodian
may deliver or receive Investments or cash of the Fund in connection with
borrowings or loans by the Fund and other collateral and margin requirements.
6.4 Futures and Options. If, pursuant to an Instruction, the Custodian
shall become a party to an agreement with the Fund and a futures commission
merchant regarding margin (Tri-Party Agreement), the Custodian shall (a) receive
and retain, to the extent the same are provided to the Custodian, confirmations
or other documents evidencing the purchase or sale by the Fund of
exchange-traded futures contracts and commodity options; (b) when required by
such Tri-Party Agreement, deposit and maintain in an account opened pursuant to
such Agreement (Margin Account), segregated either physically or by book-entry
in a Securities Depository for the benefit of any futures commission merchant,
such Investments as the Fund shall have designated as initial, maintenance or
variation "margin" deposits or other collateral intended to secure the Fund's
performance of its obligations under the terms of any exchange-traded futures
contracts and commodity options; and (c) thereafter pay, release or transfer
Investments into or out of the margin account in accordance with the provisions
of such Agreement. Alternatively, the Custodian may deliver Investments, in
accordance with an Instruction, to a futures commission merchant for purposes of
margin requirements in accordance with Rule 17f-6. The Custodian shall in no
event be responsible for the acts and omissions of any futures commission
merchant to whom Investments are delivered pursuant to this Section; for the
sufficiency of Investments held in any Margin Account; or, for the performance
of any terms of any exchange-traded futures contracts and commodity options.
6.5 Contractual Obligations and Similar Investments. From time to time,
the Fund's Investments may include Investments that are not ownership interests
as may be represented by certificate
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(whether registered or bearer), by entry in a Securities Depository or by book
entry agent, registrar or similar agent for recording ownership interests in the
relevant Investment. If the Fund shall at any time acquire such Investments,
including without limitation deposit obligations, loan participations,
repurchase agreements and derivative arrangements, the Custodian shall (a)
receive and retain, to the extent the same are provided to the Custodian,
confirmations or other documents evidencing the arrangements, and (b) perform on
the Fund's account in accordance with the terms of the applicable arrangement,
but only to the extent directed to do so by Instruction. The Custodian shall
have no responsibility for agreements running to the Fund as to which it is not
a party other than to retain, to the extent the same are provided to the
Custodian, documents or copies of documents evidencing the arrangement and, in
accordance with Instruction, to include such arrangements in reports made to the
Fund.
6.6 Exchange of Securities. Unless otherwise directed by Instruction, the
Custodian shall: (a) exchange securities held for the account of the Fund for
other securities in connection with any reorganization, recapitalization,
conversion, split-up, change of par value of shares or similar event, and (b)
deposit any such securities in accordance with the terms of any reorganization
or protective plan.
6.7 Surrender of Securities. Unless otherwise directed by Instruction, the
Custodian may surrender securities: (a) in temporary form for definitive
securities; (b) for transfer into the name of any entity allowable under Section
5.3; and (c) for a different number of certificates or instruments representing
the same number of shares or the same principal amount of indebtedness.
6.8 Rights, Warrants, Etc. Pursuant to Instruction, the Custodian shall
(a) deliver warrants, puts, calls, rights or similar securities to the issuer or
trustee thereof, or to any agent of such issuer or trustee, for purposes of
exercising such rights or selling such securities, and (b) deposit securities in
response to any invitation for tender thereof.
6.9 Mandatory Corporate Actions. Unless otherwise directed by Instruction,
the Custodian shall: (a) comply with the terms of all mandatory or compulsory
exchanges, calls, tenders, redemptions or similar rights of securities ownership
affecting securities held on the Fund's account and promptly
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notify the Fund of such action, and (b) collect all stock dividends, rights and
other items of like nature with respect to such securities.
6.10 Income Collection. Unless otherwise directed by Instruction, the
Custodian shall collect any amount due and payable to the Fund with respect to
Investments and promptly credit the amount collected to a Principal or Agency
Account; provided, however, that the Custodian shall not be responsible for: (a)
the collection of amounts due and payable with respect to Investments that are
in default, or (b) the collection of cash or share entitlements with respect to
Investments that are not registered in the name of the Custodian or
Subcustodians. The Custodian is hereby authorized to endorse and deliver any
instrument required to be so endorsed and delivered to effect collection of any
amount due and payable to the Fund with respect to Investments.
6.11 Ownership Certificates and Disclosure of the Fund's Interest. The
Custodian is hereby authorized to execute on behalf of the Fund ownership
certificates, affidavits or other disclosure required under Applicable Law or
established market practice in connection with the receipt of income, capital
gains or other payments by the Fund with respect to Investments, or in
connection with the sale, purchase or ownership of Investments.
With respect to securities issued in the United States of America, the
Custodian [ ] may [ ] may not release the identity of the Fund to an
issuer which requests information pursuant to the Shareholder
Communications Act of 1985 for the specific purpose of direct
communications between such issuer and the Fund. IF NO BOX IS CHECKED, THE
CUSTODIAN SHALL RELEASE SUCH INFORMATION UNTIL IT RECEIVES CONTRARY
INSTRUCTIONS FROM THE FUND. With respect to securities issued outside of
the United States of America, information shall be released in accordance
with law or custom of the particular country in which such security is
located.
6.12 Proxy Materials. The Custodian shall deliver, or cause to be
delivered, to the Fund proxy forms, notices of meeting, and any other
announcements materially affecting or relating to Investments received by the
Custodian or any nominee.
6.13 Taxes. The Custodian shall, where applicable, assist the Fund in the
reclamation of taxes withheld on dividends and interest payments received by the
Fund. In the performance of its duties with respect to tax withholding and
reclamation, the Custodian shall be entitled to rely on the advice of counsel
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and upon information and advice regarding the Fund's tax status that is received
from or on behalf of the Fund without duty of separate inquiry.
6.14 Other Dealings. The Custodian shall otherwise act as directed by
Instruction, including without limitation electing the free payments of moneys
or the free delivery of securities, provided that such Instruction shall
indicate the purpose of such payment or delivery and that the Custodian shall
record the party to whom such payment or delivery is made.
The Custodian shall attend to all nondiscretionary details in connection
with the sale or purchase or other administration of investments, except as
otherwise directed by an Instruction, and make payments to itself or others for
minor expenses of administering Investments under this Agreement; provided that
the Fund shall have the right to request an accounting with respect to such
expenses.
In fulfilling the duties set forth in Sections 6.6 through 6.10 above, the
Custodian shall provide to the Fund all material information pertaining to a
corporate action which the Custodian actually receives; provided that the
Custodian shall not be responsible for the completeness or accuracy of such
information. Any advance credit of cash or shares expected to be received as a
result of any corporate action shall be subject to actual collection and may,
when the Custodian deems collection unlikely, be reversed by the Custodian.
The Custodian may at any time or times in its discretion appoint (and may
at any time remove) agents (other than Subcustodians) to carry out some or all
of the administrative provisions of this Agreement (Agents), provided, however,
that the appointment of such agent shall not receive the Custodian of its
administrative obligations under this Agreement.
7. Cash Accounts, Deposits and Money Movements. Subject to the terms and
conditions set forth in this Section 7, the Fund hereby authorizes the Custodian
to open and maintain, with itself or with Subcustodians, cash accounts in United
States Dollars, in such other currencies as are the currencies of the countries
in which the Fund maintains Investments or in such other currencies as the Fund
shall from time to time request by Instruction.
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7.1 Types of Cash Accounts. Cash accounts opened on the books of the
Custodian (Principal Accounts) shall be opened in the name of the Fund. Such
accounts collectively shall be a deposit obligation of the Custodian and shall
be subject to the terms of this Section 7 and the general liability provisions
contained in Section 9. Cash accounts opened on the books of a Subcustodian may
be opened in the name of the Fund or the Custodian or in the name of the
Custodian for its customers generally (Agency Accounts). Such deposits shall be
obligations of the Subcustodian and shall be treated as an Investment of the
Fund. Accordingly, the Custodian shall be responsible for exercising reasonable
care in the administration of such accounts but shall not be liable for their
repayment in the event such Subcustodian, by reason of its bankruptcy,
insolvency or otherwise, fails to make repayment.
7.2 Payments and Credits with Respect to the Cash Accounts. The Custodian
shall make payments from or deposits to any of said accounts in the course of
carrying out its administrative duties, including but not limited to income
collection with respect to the Fund's Investments, and otherwise in accordance
with Instructions. The Custodian and its Subcustodians shall be required to
credit amounts to the cash accounts only when moneys are actually received in
cleared funds in accordance with banking practice in the country and currency of
deposit. Any credit made to any Principal or Agency Account before actual
receipt of cleared funds shall be provisional and may be reversed by the
Custodian in the event such payment is not actually collected. Unless otherwise
specifically agreed in writing by the Custodian or any Subcustodian, all
deposits shall be payable only at the branch of the Custodian or Subcustodian
where the deposit is made or carried.
7.3 Currency and Related Risks. The Fund bears risks of holding or
transacting in any currency. The Custodian shall not be liable for any loss or
damage arising from the applicability of any law or regulation now or hereafter
in effect, or from the occurrence of any event, which may delay or affect the
transferability, convertibility or availability of any currency in the country
(a) in which such Principal or Agency Accounts are maintained or (b) in which
such currency is issued, and in no event shall the Custodian be obligated to
make payment of a deposit denominated in a currency during the period during
which its transferability, convertibility or availability has been affected by
any such law,
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regulation or event. Without limiting the generality of the foregoing, nether
the Custodian nor any Subcustodian shall be required to repay any deposit made
at a foreign branch of either the Custodian or Subcustodian if such branch
cannot repay the deposit due to a cause for which the Custodian would not be
responsible in accordance with the terms of Section 9 of this Agreement unless
the Custodian or such Subcustodian expressly agrees in writing to repay the
deposit under such circumstances. All currency transaction in any account opened
pursuant to this Agreement are subject to exchange control regulations of the
United States and of the country where such currency is the lawful currency or
where the account is maintained. Any taxes, costs, charges or fees imposed on
the convertibility of a currency held by the Fund shall be for the account of
the Fund.
7.4 Foreign Exchange Transactions. The Custodian shall, subject to the
terms of this Section, settle foreign exchange transactions (including
contracts, futures, options and options on futures) on behalf and for the
account of the Fund with such currency brokers or banking institutions,
including Subcustodians, as the Fund may direct pursuant to Instructions. The
Custodian may act as principal in any foreign exchange transaction with the Fund
in accordance with Section 7.4.2 of this Agreement. The obligations of the
Custodian in respect of all foreign exchange transactions (whether or not the
Custodian shall act as principal in such transaction) shall be contingent on the
free, unencumbered transferability of the currency transacted on the actual
settlement date of the transaction.
7.4.1 Third Party Foreign Exchange Transactions. The Custodian shall
process foreign exchange transactions (including without limitation
contracts, futures, options, and options on futures), where any
third party acts as principal counterparty to the Fund on the same
basis it performs duties as agent for the Fund with respect to
currency on behalf of the Fund in respect of such contracts pursuant
to Instructions. The Custodian shall not be responsible for the
failure of any counterparty (including any Subcustodian) in any such
agency transaction to perform its obligations thereunder. The
Custodian (a) shall transmit cash and Instructions to and from the
currency broker or banking institution with which a foreign exchange
contract or option has been executed pursuant thereto, (b) may make
free outgoing payments of cash in the form of Dollars or foreign
currency without receiving confirmation of a foreign exchange
contract or option or confirmation that the countervalue currency
completing the foreign exchange contract has been delivered or
received or that the option has been delivered or received, and (c)
shall hold all confirmations, certificates and other documents and
agreements received by the Custodian and evidencing or relating to
such foreign exchange transactions in safekeeping. The Fund accepts
full responsibility for its use of third-party foreign exchange
dealers and for execution of said foreign exchange contracts and
options and
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understands that the Fund shall be responsible for any and all costs
and interest charges which may be incurred by the Fund or the
Custodian as a result of the failure or delay of third parties to
deliver foreign exchange.
7.4.2 Foreign Exchange with the Custodian as Principal. The
Custodian may undertake foreign exchange transactions with the Fund
as principal as the Custodian and the Fund may agree from time to
time. In such event, the foreign exchange transaction will be
performed in accordance with the particular agreement of the
parties, or in the event a principal foreign exchange transaction is
initiated by Instruction in the absence of specific agreement, such
transaction will be performed in accordance with the usual
commercial terms of the Custodian.
7.5 Delays. If no event of Force Majeure shall have occurred and be
continuing and in the event that a delay shall have been caused by the
negligence or willful misconduct of the Custodian in carrying out an Instruction
to credit or transfer cash, the Custodian shall be liable to the Fund: (a) with
respect to Principal Accounts, for interest to be calculated at the rate
customarily paid on such deposit and currency by the Custodian on overnight
deposits at the time the delay occurs for the period from the day when the
transfer should have been effected until the day it is in fact effected; and,
(b) with respect to Agency Accounts, for interest to be calculated at the rate
customarily paid on such deposit and currency by the Subcustodian on overnight
deposits at the time the delay occurs for the period from the day when the
transfer should have been effected until the day it is in fact effected. The
Custodian shall not be liable for delays in carrying out such Instructions to
transfer cash which are not due to the Custodian's own negligence or willful
misconduct.
7.6 Advances. If, for any reason in the conduct of its safekeeping duties
pursuant to Section 5 hereof or its administration of the Fund's assets pursuant
to Section 6 hereof, the Custodian or any Subcustodian advances monies to
facilitate settlement or otherwise for benefit of the Fund (whether or not any
Principal or Agency Account shall be overdrawn either during, or at the end of,
any Business Day), the Fund hereby does:
7.6.1 acknowledge that the Fund shall have no right or title to any
Investments purchased with such Advance save a right to receive such
Investments upon: (a) the debit of the Principal or Agency Account;
or, (b) if such debit would produce an overdraft in such account,
other reimbursement of the associated Advance;
7.6.2 grant to the Custodian a security interest in all Investments;
and
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7.6.3 agree that the Custodian may secure the resulting Advance by
perfecting a security interest in all Investments under the
Applicable Law.
Neither the Custodian nor any Subcustodian shall be obligated to advance
monies to the Fund, and in the event that such Advance occurs, any transaction
giving rise to an Advance shall be for the account and risk of the Fund and
shall not be deemed to be a transaction undertaken by the Custodian for its own
account and risk. If such Advance shall have been by a Subcustodian or any other
person, the Custodian may assign the security interest and any other rights
granted to the Custodian hereunder to such Subcustodian or other person. If the
Fund shall fail to repay when due the principal balance of an Advance and
accrued and unpaid interest thereon, the Custodian or its assignee, as the case
may be, shall be entitled to utilize the available cash balance in any Agency or
Principal Account and to dispose of any Investments to the extent necessary to
recover payment of all principal of, and interest on, such Advance in full. The
Custodian may assign any rights it has hereunder to a Subcustodian or third
party. Any security interest in Investments taken hereunder shall be treated as
financial assets credited to securities accounts under Articles 8 and 9 of the
Uniform Commercial Code (1997). Accordingly, the Custodian shall have the rights
and benefits of a secured creditor that is a securities intermediary under such
Articles 8 and 9.
7.7 Integrated Account. For purposes hereof, deposits maintained in all
Principal Accounts (whether or not denominated in Dollars) shall collectively
constitute a single and indivisible current account with respect to the Fund's
obligations to the Custodian, or its assignee, and balances in such Principal
Accounts shall be available for satisfaction of the Fund's obligations under
this Section 7. The Custodian shall further have a right of offset against the
balances in any Agency Account maintained hereunder to the extent that the
aggregate of all Principal Accounts is overdrawn.
8. Subcustodians and Securities Depositories. Subject to the provisions
hereinafter set forth in this Section 8, the Fund hereby authorizes the
Custodian to utilize Securities Depositories to act on behalf of the Fund and to
appoint from time to time and to utilize Subcustodians. With respect to
securities and funds held by a Subcustodian, either directly or indirectly
(including by a Securities Depository or
14
Clearing Corporation), notwithstanding any provisions of this Agreement to the
contrary, payment for securities purchased and delivery of securities sold may
be made prior to receipt of securities or payment respectively, and securities
or payment may be received in a form, in accordance with (a) governmental
regulations, (b) rules of Securities Depositories and clearing agencies, (c)
generally accepted trade practice in the applicable local market, (d) the terms
and characteristics of the particular Investment, or (e) the terms of
instructions.
8.1 Domestic Subcustodians and Securities Depositories. The Custodian may
deposit and/or maintain, either directly or indirectly or through one or more
agents appointed by the Custodian, Investments of the Fund in any Securities
Depository in the United States, including The Depository Trust Company,
provided such Depository meets applicable requirements of the Federal Reserve
Bank or of the Securities and Exchange Commission. The Custodian may, at any
time and from time to time, appoint any bank as defined in Section 2(a)(5) of
the 1940 Act meeting the requirements of a custodian under Section 17(f) of the
1940 Act and the rules and regulations thereunder, to act on behalf of the Fund
as a Subcustodian for purposes of holding Investments of the Fund in the United
States.
8.2 Foreign Subcustodians and Securities Depositories. Unless instructed
otherwise by the Fund, the Custodian may deposit and/or maintain non-U.S.
Investments of the Fund in any non-U.S. Securities Depository provided such
Securities Depository meets the requirements of an "eligible securities
depository" under Rule 17f-7 promulgated under the 1940 Act, or any successor
rule or regulation ("Rule 17f-7") or which by order of the Securities and
Exchange Commission is exempted therefrom. Prior to the time securities are
placed with such depository, but subject to the provisions of Section 8.2.4
below, the Custodian shall have prepared an assessment of the custody risks
associated with maintaining assets with the Securities Depository and shall have
established a system to monitor such risks on a continuing basis in accordance
with subsection 8.2.3 of this Section. Additionally, the Custodian may, at any
time and from time to time, appoint (a) any bank, trust company or other entity
meeting the requirements of an "eligible foreign custodian" under Rule 17f-5 or
which by order of the Securities and Exchange Commission is exempted therefrom,
or (b) any bank as defined in Section
15
2(a)(5) of the 1940 Act meeting the requirements of a custodian under Section
17(f) of the 1940 Act and the rules and regulations thereunder, to act on behalf
of the Fund as Subcustodian for purposes of holding Investments of the Fund
outside the United States. Such appointment of foreign Subcustodians shall be
subject to approval of the Fund in accordance with Subsections 8.2.1 and 8.2.2
hereof, and use of non-U.S. Securities Depositories shall be subject to the
terms of Subsections 8.2.3 and 8.2.4 hereof. An Instruction to open an account
in a given country shall comprise authorization of the Custodian to hold assets
in such country in accordance with the terms of this Agreement. The Custodian
shall not be required to make independent inquiry as to the authorization of the
Fund to invest in such country.
8.2.1 Board Approval of Foreign Subcustodians. Unless and except to
the extent that the Board has delegated to and the Custodian has accepted
delegation of review of certain matters concerning the appointment of
Subcustodians pursuant to Subsection 8.2.2., the Custodian shall, prior to
the appointment of any Subcustodian for purposes of holding Investments of
the Fund outside the Untied States, obtain written confirmation of the
approval of the Board of Trustees or Directors of the Fund with respect to
(a) the identity of a Subcustodian, and (b) the Subcustodian agreement
which shall govern such appointment, such approval to be signed by an
Authorized Person.
8.2.2 Delegation of Board Review of Subcustodians. From time to
time, the Custodian may agrees to perform certain reviews of Subcustodians
and Subcustodian Contracts as delegate of the Fund's Board. In such event,
the Custodian's duties and obligations with respect to this delegated
review will be performed in accordance with the terms of the attached
17f-5 Delegation Schedule to this Agreement.
8.2.3 Monitoring and Risk Assessment of Securities Depositories.
Prior to the placement of any assets of the Fund with a non-U.S.
Securities Depository, the Custodian: (a) shall provide to the Fund or its
authorized representative an assessment of the custody risks associated
with maintaining assets within such Securities Depository; and (b) shall
have established a system to monitor the custody risks associated with
maintaining assets with such Securities Depository on a continuing basis
and to promptly notify the Fund or its Investment Adviser of any material
changes in such risk. In performing its duties under this subsection, the
Custodian shall use reasonable care and may rely on such reasonable
sources of information as may be available including but not limited to:
(i) published ratings; (ii) information supplied by a Subcustodian that is
a participant in such Securities Depository; (iii) industry surveys or
publications; (iv) information supplied by the depository itself, by its
auditors (internal or external) or by the relevant Foreign Financial
Regulatory Authority. It is acknowledged that information procured through
some or all of these sources may not be independently verifiable by the
Custodian and that direct access to Securities Depositories is limited
under most circumstances. Accordingly, the Custodian shall not be
responsible for errors or omissions in its duties hereunder provided that
it has performed its monitoring and assessment duties with reasonable
care. The risk assessment shall be provided to the Fund or its Investment
Adviser by such means as the Custodian shall reasonably establish. Advices
of material change in such assessment may be provided by the Custodian in
the manner established as customary between the Fund and the Custodian for
transmission of material market information.
16
8.2.4 Special Transitional Rule. It is acknowledged that Rule 17f-7
has an effective date of July 1, 2001 and that the Custodian will require
a period of time to fully prepare risk assessment information and to
establish a risk monitoring system as provided in Subsection 8.2.3.
Accordingly, until July 1, 2001, the Custodian shall use reasonable
efforts to implement the measures required by Subsection 8.2.3, and shall
in the interim provide to the Fund or its Investment Advisor the
depository information customarily provided and shall promptly inform the
Fund or its Investment Advisor of any material development affecting the
custody risks associated with the maintenance of assets with a particular
Securities Depository of which it becomes aware in the course of its
general duties under this Agreement or from its duties under Section 8.2.3
as such duties have been implemented at any given time.
8.3 Responsibility for Subcustodians. With respect to securities and funds
held by a Subcustodian, either directly or indirectly (including by a Foreign
Depository, Securities System or foreign clearing agency), including demand
deposit and interest bearing deposits, currencies or other deposits and foreign
exchange contracts as referred to herein, the Custodian shall be liable to the
Fund if and only to the extent that such Subcustodian is liable to the Custodian
and the Custodian recovers under the applicable subcustodian agreement.
8.4 New Countries. The Fund shall be responsible for informing the
Custodian sufficiently in advance of a proposed investment which is to be held
in a country in which no Subcustodian is authorized to act in order that the
Custodian shall, if it deems appropriate to do so, have sufficient time to
establish a subcustodial arrangement in accordance herewith. In the event,
however, the Custodian is unable to establish such arrangements prior to the
time such investment is to be acquired, the Custodian is authorized to designate
at its discretion a local safekeeping agent, and the use of such local
safekeeping agent shall be at the sole risk of the Fund, and accordingly the
Custodian shall be responsible to the Fund for the actions of such agent if and
only to the extent the Custodian shall have recovered from such agent for any
damages caused the Fund by such agent.
9. Responsibility of the Custodian. In performing its duties and obligations
hereunder, the Custodian shall use reasonable care under the facts and
circumstances prevailing in the market where performance is effected. Subject to
the specific provisions of this Section, the Custodian shall be liable for any
direct damage incurred by the Fund in consequence of the Custodian's negligence,
bad faith or willful misconduct. In no event shall the Custodian be liable
hereunder for any special, indirect, punitive
17
or consequential damages arising out of, pursuant to or in connection with this
Agreement even if the Custodian has been advised of the possibility of such
damages. It is agreed that the Custodian shall have no duty to assess the risks
inherent in the Fund's Investments or to provide investment advice with respect
to such Investments and that the Fund as principal shall bear any risks
attendant to particular Investments such as failure of counterparty or issuer.
9.1 Limitations of Performance. The Custodian shall not be responsible
under this Agreement for any failure to perform its duties, and shall not liable
hereunder for any loss or damage in association with such failure to perform,
for or in consequence of the following causes:
9.1.1 Force Majeure. Force Majeure shall mean any circumstance or
event which is beyond the reasonable control of the Custodian, a
Subcustodian or any agent of the Custodian or a Subcustodian and which
adversely affects the performance by the Custodian of its obligations
hereunder, by the Subcustodian of its obligations under its Subcustody
Agreement or by any other of the Custodian or the Subcustodian, including
any event caused by, arising out of or involving (a) an act of God, (b)
accident, fire, water damage or explosion, (c) any computer, system or
other equipment failure or malfunction caused by any computer virus or the
malfunction or failure of any communications medium, (d) any interruption
of the power supply or other utility service, (e) any strike or other work
stoppage, whether partial or total, (f) any delay or disruption resulting
from or reflecting the occurrence of any Sovereign Risk, (g) any
disruption of, or suspension of trading in, the securities, commodities or
foreign exchange markets, whether or not resulting from or reflecting the
occurrence of any Sovereign Risk, (h) any encumbrance on the
transferability of a currency or a currency position on the actual
settlement date of a foreign exchange transaction, whether or not
resulting from or reflecting the occurrence of any Sovereign Risk, or (i)
any other cause similarly beyond the reasonable control of the Custodian.
9.1.2 Country Risk. Country Risk shall mean, with respect to the
acquisition, ownership, settlement or custody of Investments in a
jurisdiction, all risks relating to, or arising in consequence of,
systemic and markets factors affecting the acquisition, payment for or
ownership of Investments including (a) the prevalence of crime and
corruption, (b) the inaccuracy or unreliability of business and financial
information, (c) the instability or volatility of banking and financial
systems, or the absence or inadequacy of an infrastructure to support such
systems, (d) custody and settlement infrastructure of the market in which
such Investments are transacted and held, (e) the acts, omissions and
operation of any Securities Depository, (f) the risk of the bankruptcy or
insolvency of banking agents, counterparties to cash and securities
transactions, registrars or transfer agents, and (g) the existence of
market conditions which prevent the orderly execution or settlement of
transactions or which affect the value of assets.
9.2.1 Sovereign Risk. Sovereign Risk shall mean, in respect of any
jurisdiction, including the United States of America, where Investments is
acquired or held hereunder or under a Subcustody Agreement, (a) any act of
war, terrorism, riot, insurrection or civil commotion, (b) the imposition
of any investment, repatriation or exchange control restrictions by any
Governmental Authority, (c) the confiscation, expropriation or
nationalization of any Investments by any Governmental Authority, whether
de facto or de jure, (iv) any devaluation or revaluation
18
of the currency, (d) the imposition of taxes, levies or other charges
affecting Investments, (vi) any change in the Applicable Law, or (e) any
other economic or political risk incurred or experienced.
9.2 Limitations on Liability. The Custodian shall not be liable for any
loss, claim, damage or other liability arising from the following causes:
9.2.1 Failure of Third Parties. The failure of any third party
including: (a) any issuer of Investments or book-entry or other agent of
and issuer; (b) any counterparty with respect to any Investment, including
any issuer of exchange-traded or other futures, option, derivative or
commodities contract; (c) failure of an Investment Advisor, Foreign
Custody Manager or other agent of the Fund; or (d) failure of other third
parties similarly beyond the control or choice of the Custodian.
9.2.2 Information Sources. The Custodian may rely upon information
received from issuers of Investments or agents of such issuers,
information received from Subcustodians and from other commercially
reasonable sources such as commercial data bases and the like, but shall
not be responsible for specific inaccuracies in such information, provided
that the Custodian has relied upon such information in good faith, or for
the failure of any commercially reasonable information provider.
9.2.3 Reliance on Instruction. Action by the Custodian or the
Subcustodian in accordance with an Instruction, even when such action
conflicts with, or is contrary to any provision of, the Fund's declaration
of trust, certificate of incorporation or by-laws, Applicable Law, or
actions by the trustees, directors or shareholders of the Fund.
9.2.4 Restricted Securities. The limitations inherent in the rights,
transferability or similar investment characteristics of a given
Investment of the Fund.
10. Indemnification. The Fund hereby indemnifies the Custodian and each
Subcustodian, and their respective agents, nominees and the partners, employees,
officers and directors, and agrees to hold each of them harmless from and
against all claims and liabilities, including counsel fees and taxes, incurred
or assessed against any of them in connection with the performance of this
Agreement and any Instruction. If a Subcustodian or any other person indemnified
under the preceding sentence, gives written notice of claim to the Custodian,
the Custodian shall promptly give written notice to the Fund. Not more than
thirty days following the date of such notice, unless the Custodian shall be
liable under Section 8 hereof in respect of such claim, the Fund will pay the
amount of such claim or reimburse the Custodian for any payment made by the
Custodian in respect thereof.
11. Reports and Records. The Custodian shall:
11.1 create and maintain records relating to the performance of its
obligations under this Agreement;
19
11.2 make available to the Fund, its auditors, agents and employees,
during regular business hours of the Custodian, upon reasonable request
and during normal business hours of the Custodian, all records maintained
by the Custodian pursuant to paragraph 11.1 above, subject, however, to
all reasonable security requirements of the Custodian then applicable to
the records of its custody customers generally; and
11.3 make available to the Fund all Electronic Reports; it being
understood that the Custodian shall not be liable hereunder for the
inaccuracy or incompleteness thereof or for errors in any information
included therein.
The Fund shall examine all records, howsoever produced or transmitted,
promptly upon receipt thereof and notify the Custodian promptly of any
discrepancy or error therein. Unless the Fund delivers written notice of any
such discrepancy or error within a reasonable time after its receipt thereof,
such records shall be deemed to be true and accurate. It is understood that the
Custodian now obtains and will in the future obtain information on the value of
assets from outside sources which may be utilized in certain reports made
available to the Fund. The Custodian deems such sources to be reliable but it is
acknowledged and agreed that the Custodian does not verify nor represent nor
warrant as to the accuracy or completeness of such information and accordingly
shall be without liability in selecting and using such sources and furnishing
such information.
12. Miscellaneous.
12.1 Proxies, etc. The Fund will promptly execute and deliver, upon
request, such proxies, powers of attorney or other instruments as may be
necessary or desirable for the Custodian to provide, or to cause any
Subcustodian to provide, custody services.
12.2 Entire Agreement. Except as specifically provided herein, this
Agreement constitutes the entire agreement between the Fund and the Custodian
with respect to the subject matter hereof. Accordingly, this Agreement
supersedes any custody agreement or other oral or written agreements heretofore
in effect between the Fund and the Custodian with respect to the custody of the
Fund's Investments.
12.3 Waiver and Amendment. No provision of this Agreement may be waived,
amended or modified, and no addendum to this Agreement shall be or become
effective, or be waived, amended or modified, except by an instrument in writing
executed by the party against which enforcement of such
20
waiver, amendment or modification is sought; provided, however, that an
Instruction shall, whether or not such Instruction shall constitute a waiver,
amendment or modification for purposes hereof, shall be deemed to have been
accepted by the Custodian when it commences actions pursuant thereto or in
accordance therewith.
12.4 GOVERNING LAW AND JURISDICTION. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND BE GOVERNED BY THE LAWS OF, THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAW OF SUCH STATE. THE PARTIES HERETO
IRREVOCABLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK AND THE FEDERAL COURTS LOCATED IN NEW YORK CITY IN THE BOROUGH OF
MANHATTAN.
12.5 Notices. Notices and other writings contemplated by this Agreement,
other than Instructions, shall be delivered (a) by hand, (b) by first class
registered or certified mail, postage prepaid, return receipt requested, (c) by
a nationally recognized overnight courier, or (d) by facsimile transmission,
provided that any notice or other writing sent by facsimile transmission shall
also be mailed, postage prepaid, to the party to whom such notice is addressed.
All such notices shall be addressed, as follows:
If to the Fund:
Korea Equity Fund, Inc.
% Nomura Asset Management U.S.A. Inc
000 Xxxxxx Xxxx 00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attn: /s/ Xxxx X. Xxxxxxx
-------------------
Telephone: [212] 000-0000
Facsimile [212] 344-7571
If to the Custodian:
Xxxxx Brothers Xxxxxxxx & Co.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Manager, Securities Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000,
21
or such other address as the Fund or the Custodian may have designated in
writing to the other.
12.6 Headings. Paragraph headings included herein are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof.
12.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered by
the Fund and the Custodian.
12.8 Confidentiality. The parties hereto agree that each shall treat
confidentially the terms and conditions of this Agreement and all information
provided by each party to the other regarding its business and operations. All
confidential information provided by a party hereto shall be used by any other
party hereto solely for the purpose of rendering or obtaining services pursuant
to this Agreement and, except as may be required in carrying out this Agreement,
shall not be disclosed to any third party without the prior consent of such
providing party. The foregoing shall not be applicable to any information that
is publicly available when provided or thereafter becomes publicly available
other than through a breach of this Agreement, or that is required to be
disclosed by or to any bank examiner of the Custodian or any Subcustodian, any
Regulatory Authority, any auditor of the parties hereto, or by judicial or
administrative process or otherwise by Applicable Law.
12.9 Counsel. In fulfilling its duties hereunder, the Custodian shall be
entitled to receive and act upon the advice of (i) counsel regularly retained by
the Custodian in respect of such matters, (ii) counsel for the Fund or (iii)
such counsel as the Fund and the Custodian may agree upon, with respect to all
matters, and the Custodian shall be without liability for any action reasonably
taken or omitted pursuant to such advice.
12.10 Conflict. Nothing contained in this Agreement shall prevent the
Custodian and its associates from (i) dealing as a principal or an intermediary
in the sale, purchase or loan of the Fund's Investments to, or from the
Custodian or its associates; (ii) acting as a custodian, a subcustodian, a
trustee, an agent, securities dealer, an investment manager or in any other
capacity for any other client whose interests may be adverse to the interest of
the Fund; or (iii) buying, holding, lending, and dealing in any
22
way in any assets for the benefit of its own account, or for the account of any
other client whose interests may be adverse to the Fund notwithstanding that the
same or similar assets may be held or dealt in by, or for the account of the
Fund by the Custodian. The Fund hereby voluntarily consents to, and waives any
potential conflict of interest between the Custodian and/or its associates and
the Fund, and agrees that:
(a) the Custodian's and/or its associates' engagement in any such
transaction shall not disqualify the Custodian from continuing to
perform as the custodian of the Fund under this Agreement;
(b) the Custodian and/or its associates shall not be under any duty to
disclose any information in connection with any such transaction to
the Fund;
(c) the Custodian and/or its associates shall not be liable to account
to the Fund for any profits or benefits made or derived by or in
connection with any such transaction; and
(d) the Fund shall use all reasonable efforts to disclose this
provision, among other provisions in this Agreement, to its
shareholders.
13. Definitions. The following defined terms will have the respective meanings
set forth below.
13.1 Advance shall mean any extension of credit by or through the
Custodian or by or through any
Subcustodian and shall include amounts paid to third parties for account
of the Fund or in discharge of any expense, tax or other item payable by the
Fund.
13.2 Agency Account(s) shall mean any deposit account opened on the books
of a Subcustodian or other banking institution in accordance with Section 7.1.
13.3 Agent(s) shall have the meaning set forth in the last sentence of
Section 6.
13.4 Applicable Law shall mean with respect to each jurisdiction, all (a)
laws, statutes, treaties, regulations, guidelines (or their equivalents); (b)
orders, interpretations, licenses and permits; and (c) judgments, decrees,
injunctions, writs, orders and similar actions by a court of competent
jurisdiction; compliance with which is required or customarily observed in such
jurisdiction.
13.5 Authorized Person(s) shall mean any person or entity authorized to
give Instructions on behalf of the Fund in accordance with Section 4.1.
23
13.6 Book-entry Agent(s) shall mean an entity acting as agent for the
issuer of Investments for purposes of recording ownership or similar entitlement
to Investments, including without limitation a transfer agent or registrar.
13.7 Clearing Corporation shall mean any entity or system established for
purposes of providing securities settlement and movement and associated
functions for a given market.
13.8 Delegation Agreement shall mean any separate agreement entered into
between the Custodian and the Fund or its authorized representative with respect
to certain matters concerning the appointment and administration of
Subcustodians delegated to the Custodian pursuant to Rule 17f-5.
13.9 Foreign Custody Manager shall mean the Fund's foreign custody manager
appointed pursuant to Rule 17f-5 of the 1940 Act.
13.10 Foreign Financial Regulatory Authority shall have the meaning given
by Section 2(a)(50) of the 0000 Xxx.
13.11 Funds Transfer Services Schedule shall mean any separate schedule
entered into between the Custodian and the Bank or its authorized representative
with respect to certain matters concerning the processing of payment orders from
Principal Accounts of the Bank.
13.12 Instructions(s) shall have the meaning assigned in Section 4.
13.13 Investment Advisor shall mean any person or entity who is an
Authorized Person to give Instructions with respect to the investment and
reinvestment of the Fund's Investments.
13.14 Investment(s) shall mean any investment asset of the Fund, including
without limitation securities, bonds, notes, and debentures as well as
receivables, derivatives, contractual rights or entitlements and other
intangible assets.
13.15 Margin Account shall have the meaning set forth in Section 6.4
hereof.
13.16 Principal Account(s) shall mean deposit accounts of the Fund carried
on the books of BBH&Co. as principal in accordance with Section 7.
24
13.17 Safekeeping Account shall mean an account established on the books
of the Custodian or any Subcustodian for purposes of segregating the interests
of the Fund (or clients of the Custodian or Subcustodian) from the assets of the
Custodian or any Subcustodian.
13.18 Securities Depository shall mean a central or book entry system or
agency established under Applicable Law for purposes of recording the ownership
and/or entitlement to investment securities for a given market that, if a
foreign Securities Depository, meets the definitional requirements of Rule 17f-7
under the 1940 Act.
13.19 Subcustodian(s) shall mean each foreign bank appointed by the
Custodian pursuant to Section 8, but shall not include Securities Depositories.
13.20 Tri-Party Agreement shall have the meaning set forth in Section 6.4
hereof.
13.21 1940 Act shall mean the Investment Company Act of 1940.
14. Compensation. The Fund agrees to pay to the Custodian (a) a fee in an amount
set forth in the fee letter between the Fund and the Custodian in effect on the
date hereof or as amended from time to time, and (b) all out-of-pocket expenses
incurred by the Custodian, including the fees and expenses of all Subcustodians,
and payable from time to time. Amounts payable by the Fund under and pursuant to
this Section 14 shall be payable by wire transfer to the Custodian at BBH&Co. in
New York, New York.
15. Termination. This Agreement may be terminated by either party in accordance
with the provisions of this Section. The provisions of this Agreement and any
other rights or obligations incurred or accrued by any party hereto prior to
termination of this Agreement shall survive any termination of this Agreement.
15.1 Notice and Effect. This Agreement may be terminated by either party
by written notice effective no sooner than seventy-five (75) consecutive
calendar days following the date that notice to such effect shall be delivered
to other party at its address set forth in paragraph 12.5 hereof.
15.2 Successor Custodian. In the event of the appointment of a successor
custodian, it is agreed that the Investments of the Fund held by the Custodian
or any Subcustodian shall be delivered to the successor custodian in accordance
with reasonable Instructions. The Custodian agrees to cooperate
25
with the Fund in the execution of documents and performance of other actions
necessary or desirable in order to facilitate the succession of the new
custodian. If no successor custodian shall be appointed, the Custodian shall in
like manner transfer the Fund's Investments in accordance with Instructions.
15.3 Delayed Succession. If no Instruction has been given as to the
effective date of termination, Custodian may at any time on or after such
termination date and upon ten (10) consecutive calendar days' written notice to
the Fund either (a) deliver the Investments of the Fund held hereunder to the
Fund at the address designated for receipt of notices hereunder; or (b) deliver
any investments held hereunder to a bank or trust company having a
capitalization of $2,000,000 USD equivalent and operating under the Applicable
Law of the jurisdiction where such Investments are located, such delivery to be
at the risk of the Fund. In the event that Investments or moneys of the Fund
remain in the custody of the Custodian or its Subcustodians after the date of
termination owing to the failure of the Fund to issue Instructions with respect
to their disposition or owing to the fact that such disposition could not be
accomplished in accordance with such Instructions despite diligent efforts of
the Custodian, the Custodian shall be entitled to compensation for its services
with respect to such Investments and moneys during such period as the Custodian
or its Subcustodians retain possession of such items and the provisions of this
Agreement shall remain in full force and effect until disposition in accordance
with this Section is accomplished.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the date first above written.
XXXXX BROTHERS XXXXXXXX & CO. KOREA EQUITY FUND, INC.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Noboo Katayama
------------------------------------- ------------------
Name: Xxxxxxx X. Xxxxxx Name: Noboo Katayama
Title: Partner Title: President
Date: Date:
26
Korea Equity Fund, Inc.
Two World Xxxxxxxxx Xxxxxx, Xxxxxxxx X
Xxx Xxxx, Xxx Xxxx 00000
Telephone
(000) 000-0000
May 23, 2005
Xxxxx Brothers Xxxxxxxx & Co.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Ladies and Gentlemen:
Reference is hereby made to the Custodian Agreement, dated as of May 17,
2001 (the "Agreement"), currently in full force and effect between Xxxxx
Brothers Xxxxxxxx & Co. (the "Custodian") and Korea Equity Fund, Inc. (the
"Fund").
The parties hereby agree that the second sentence of Section 4.1 of the
Agreement is hereby amended to provide as follows:
"The Custodian may treat any Authorized Persons as having full
authority of the Fund to issue Instructions hereunder unless the
notice of authorization contains explicit limitations as to said
authority; provided, however, that any Instruction regarding the
payment of Fund expenses must be signed by two Authorized Persons."
The identity of current Authorized Persons approved by the Board of
Directors of the Fund is specified on Exhibit A hereto. Such exhibit shall
remain in effect until it is amended by a notice delivered to the Custodian that
specifies any changes in the list of Authorized Persons.
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Please sign and return one copy of this agreement, whereupon this
agreement shall represent an amendment to the Agreement.
Very truly yours,
Korea Equity Fund, Inc.
By: /s/ Xxxx Xxxxxx-Xxxxxxxxxx
--------------------------
Xxxx Xxxxxx-Xxxxxxxxxx
Treasurer
Agreed and accepted
as of the date specified above
Xxxxx Brothers Xxxxxxxx & Co
By: /s/ Xxxxx Xxxxxxxx
------------------
Name: Xxxxx Xxxxxxxx
Title: Managing Director
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Exhibit A
List of Authorized Persons
for Custodian Agreement (the "Agreement")
between Xxxxx Brothers Xxxxxxxx & Co. and
Korea Equity Fund, Inc. (the "Fund")
The following individuals have been approved by the Board of Directors of
the Fund as "Authorized Persons" of the Fund, within the meaning of Section 4.1
of the Agreement:
Name Initials Signature
---- -------- ---------
Xxxxxxx Xxxxxx /s/ YS /s/ Xxxxxxx Xxxxxx
Xxxxxxxx Xxxxx /s/ KI /s/ Xxxxxxxx Xxxxx
Xxxxxx X. Xxxx /s/ KM /s/ Xxxxxxx X. Xxxx
Xxxx Xxxxxx-Xxxxxxxxxx /s/ RCB /s/ Xxxx Xxxxxx-Xxxxxxxxxx
Xxxx X. Xxxxxxx /s/ ND /s/ Xxxx X. Xxxxxxx
IN WITNESS WHEREOF, the undersigned hereby certifies the information in
this Exhibit as of the 23rd day of May, 2005.
/s/ Xxxx X. Xxxxxxx
-------------------------
Xxxx X. Xxxxxxx
Secretary
Korea Equity Fund, Inc.
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