CUSTODY AGREEMENT
RESTATED AS OF FEBRUARY 11, 1986
AGREEMENT dated as of this 1st day of June, 1984, amended
September 1, 1985 and amended and restated as of February 10, 1986, between THE
CHASE MANHATTAN BANK, N.A. ("Chase"), having its principal place of business at
0 Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, and XXXXXXXXX FUNDS, INC.
("the Company"), a series investment company registered under the Investment
Company Act of 1940 ("Act of 1940"), having its principal place of business at
000 Xxxxxxx Xxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000, on behalf of Xxxxxxxxx World
Fund (the "Fund"), a separate mutual fund forming part of the Company.
WHEREAS, the Company wishes to appoint Chase as custodian of
the securities and assets of the Fund, and Chase is willing to act as custodian
under the terms and conditions hereinafter set forth;
NOW, THEREFORE, the Company and its successors and assigns on
behalf of the Fund and Chase and its successors and assigns, hereby agree as
follows:
1. APPOINTMENT AS CUSTODIAN. Chase agrees to act as custodian
for the Fund, as provided herein, in connection with (a) cash ("Cash") received
from time to time from, or for the account of, the Fund for credit to the Fund's
deposit account or accounts administered by Chase, Chase Branches and Domestic
Securities Depositories (as hereinafter defined), and/or Foreign Banks and
Foreign securities Depositories (as hereinafter defined) (the "Deposit Account")
and (b) all stocks, shares,
2
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 ("Securities") from time to time received by Chase and/or any
Chase Branch, Domestic Securities Depository, Foreign Bank or Foreign Securities
Depository for the account of the Fund (the "Custody Account"); and (c) original
margin and variation margin payments in a segregated account for futures
contracts, and U.S. and Canadian government obligations purchased with a
simultaneous agreement by the seller to repurchase them within 7 days plus
accrued interest deposited in a separate segregated account (the "Segregated
Accounts").
All cash held in the Deposit Account or in the Segregated Accounts in
connection with which Chase agrees to act as custodian is hereby denominated as
a special deposit which shall be held in trust for the benefit of the Fund and
to which Chase, Chase Branches and Domestic Securities Depositories and/or
Foreign Banks and Foreign Securities Depositories shall have no ownership
rights, and Chase will so indicate on its books and records pertaining to the
Deposit Account and the Segregated Accounts. All cash held in auxiliary accounts
that may be carried for the Fund with Chase (including a Money Market Account,
Redemption Account, Distribution Account and Imprest
3
Account) is not so denominated as a special deposit and title thereto is held by
Chase subject to the claims of creditors.
2. AUTHORIZATION TO USE BOOK ENTRY SYSTEM, DOMESTIC
SECURITIES DEPOSITORIES, BRANCH OFFICES, FOREIGN BANKS AND
FOREIGN SECURITIES DEPOSITORIES. Chase is hereby authorized to
appoint and utilize, subject to the provisions of Section 4
hereof:
(a) The Book Entry System and The Depository Trust Company;
and also such other Domestic Securities Depositories selected by Chase
and as to which Chase has received a certified copy of a resolution of
the Company's Board of Directors authorizing deposits therein;
(b) Chase's foreign branch offices in the United Kingdom, Hong
Kong, Singapore, and Tokyo, and such other foreign branch offices of
Chase located in countries approved by the Board of Directors of the
Company as to which Chase shall have given prior notice to the Company;
(c) Foreign Banks which Chase shall have selected, which are
located in countries approved by the Board of Directors of the Company,
and as to which banks Chase shall have given prior notice to the
Company; and
(d) Foreign Securities Depositories which Chase shall have
selected and as to which Chase has received a certified copy of a
resolution of the Company's Board of Directors authorizing deposits
therein;
4
to hold Securities and Cash at any time owned by the Company on behalf of the
Fund, it being understood that no such appointment or utilization shall in any
way relieve Chase of its responsibilities as provided for in this Agreement.
Foreign branch offices of Chase are appointed and utilized by Chase are herein
referred to as "Chase Branches." Unless otherwise agreed to in writing, (a) each
Chase Branch, each Foreign Bank and each Foreign Securities Depository shall be
selected by Chase to hold only Securities as to which the principal trading
market or principal location as to which such Securities are to be presented for
payment is located outside the United States; and (b) Chase and each Chase
Branch, Foreign Bank and Foreign Securities Depository will promptly transfer or
cause to be transferred to Chase, to be held in the United States, Securities
and/or Cash that are then being held outside the United States upon request of
the Company and/or of the Securities and Exchange Commission. Utilization by
Chase of Chase Branches, Domestic Securities Depositories, Foreign Banks and
Foreign Securities Depositories shall be in accordance with provisions as from
time to time amended, of an operating agreement to be entered into between Chase
and the Company on behalf of the Fund (the "Operating Agreement").
3. DEFINITIONS. As used in this Agreement the
following terms shall have the following meanings:
(a) "Authorized Persons of the Fund" shall mean such
officers or employees of the Company or any other person or
5
persons as shall have been designated by a resolution of the Board of Directors
of the Company, a certified copy of which has been filed with Chase, to act as
Authorized Persons hereunder. Such persons shall continue to be Authorized
Persons of the Fund, authorized to act either singly or together with one or
more other of such persons as provided in such resolution, until such time as
the Company shall have filed with Chase a written notice of the Company
supplementing, amending, or revoking the authority of such persons.
(b) "Book-Entry system" shall mean the Federal
Reserve/Treasury book-entry system for United States and federal agency
securities, its successor or successors and its nominee or nominees.
(c) "Domestic Securities Depository" shall mean The Depository
Trust Company, a clearing agency registered with the Securities and Exchange
Commission, its successor or successors and its nominee or nominees; and
(subject to the receipt by Chase of a certified copy of a resolution of the
Company's Board of Directors specifically approving deposits therein as provided
in Section 2(a) of this Agreement) any other person authorized to act as a
depository under the Act of 1940, its successor or successors and its nominee or
nominees.
(d) "Foreign Bank" shall mean any banking institution
organized under the laws of a jurisdiction other than the United States or of
any state thereof.
6
(e) A "Foreign Securities Depository" shall mean any system
for the central handling of securities abroad where all securities of any
particular class or series of any issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping without physical
delivery of the securities by any Chase Branch or Foreign Bank.
(f) "Written Instructions" shall mean instructions in writing
signed by Authorized Persons of the Fund giving such instructions, and/or such
other forms of communications as from time to time shall be agreed upon in
writing between the Company on behalf of the Fund and Chase.
4. SELECTION OF COUNTRIES IN WHICH SECURITIES MAY BE HELD.
Chase shall not cause Securities and Cash to be held in any country outside the
United States until the Company has directed the holding of the Fund's assets in
such country. Chase represents that it has been advised by the Company that in
making such a determination the Company may consider, among other factors, the
following:
(a) comparative operational efficiencies of custody;
(b) clearance and settlement and the costs thereof;
and
(c) political and other risks, other than those risks
specifically assumed by Chase.
5. RESPONSIBILITY OF CHASE TO SELECT CUSTODIANS IN
INDIVIDUAL FOREIGN COUNTRIES. The responsibility for selecting
the Chase Branch, Foreign Bank or Foreign Securities Depository
7
to hold the Fund's Securities and Cash in individual countries authorized by the
Company on behalf of the Fund shall be that of Chase. Chase generally shall
utilize Chase Branches where available. In locations where there are no Chase
Branches providing custodial services, Chase shall select as its agent a Foreign
Bank, which may be an affiliate or subsidiary of Chase. To facilitate the
clearance and settlement of securities transactions, Chase represents that,
subject to the approval of the Company, it may deposit Securities in a Foreign
Securities Depository in which Chase is a participant. In situations in which
Chase is not a participant in a Foreign Securities Depository, Chase may,
subject to the approval of the Company, authorize a Foreign Bank acting as its
subcustodian to deposit the Securities in a Foreign Securities Depository in
which the Foreign Bank is a participant. Notwithstanding the foregoing, such
selection by Chase of a Foreign Bank or Foreign Securities Depository shall not
become effective until Chase has been advised by the Company that a majority of
the Company's Board f Directors:
(i) Have approved Chase's selection of the particular
Foreign Bank or Foreign Securities Depository, as the case may
be, as consistent with the best interests of the Fund and its
Shareholders:
(ii) Have approved as consistent with the best
interests of the Fund and its Shareholders a written
8
contract prepared by Chase which will govern the manner in
which such Foreign Bank will maintain the Fund's assets.
6. CONDITIONS ON SELECTION OF FOREIGN BANK OR FOREIGN
SECURITIES DEPOSITORY. Chase shall authorize the holding of
Securities and Cash by a Chase Branch, Foreign Bank or Foreign
Securities Depository only:
(a) to the extent that the Securities and Cash are not subject
to any right, charge, security interest, lien or claim of any
kind in favor of any such Foreign Bank or Foreign Securities
Depository, except for their safe custody or administration,
and (b) to the extent that the beneficial ownership of
Securities is freely transferable without the payment of money
or value other than for safe custody or administration.
7. CHASE BRANCHES AND FOREIGN BANKS NOT AGENTS OF FUND. Chase
Branches, Foreign Banks and Foreign Securities Depositories shall be subject to
the instructions of Chase and/or the Foreign Bank and not to those of the
Company. Chase warrants and represents that all such instructions shall afford
protection to the Fund at least equal to that afforded for Securities held
directly by Chase. Any Chase Branch, Foreign Bank or Foreign Securities
Depository shall act solely as agent of Chase or of
9
such Foreign Bank.
8. CUSTODY ACCOUNT. Securities held in the Custody Account
shall be physically segregated at all times from those of any other person or
persons except that (a) with respect to Securities held by Chase Branches, such
Securities may be placed in an omnibus account for the customers of Chase, and
Chase shall maintain separate book entry records for each such omnibus account,
and such Securities shall be deemed for the purpose of this Agreement to be held
by Chase in the Custody Account; (b) with respect to Securities deposited by
Chase with a Foreign Bank, a Domestic Securities Depository or a Foreign
Securities Depository, Chase shall identify on its books as belonging to the
Fund the Securities shown on Chase's account on the books of the Foreign Bank,
Domestic Securities Depository or Foreign Securities Depository and (c) with
respect to Securities deposited by a Foreign Bank with a Foreign Securities
Depository, Chase shall cause the Foreign Bank to identify on its books as
belonging to Chase, as agent, the Securities shown on the Foreign Bank's account
on the books of the Foreign Securities Depository. All Securities of the Fund
maintained by Chase pursuant to this Agreement shall be subject only to the
instructions of Chase, Chase Branches or their agents. Chase shall only deposit
Securities with a Foreign Bank in accounts that include only assets held by
Chase for its customers.
8a. SEGREGATED ACCOUNT FOR FUTURES CONTRACTS. With
10
respect to every futures contract purchased, sold or cleared for the Custody
Account, Chase agrees, pursuant to Written Instructions, to:
(i) deposit original margin and variation margin
payments in a segregated account maintained by Chase;
and
(ii) perform all other obligations attendant to
transactions or positions in such futures contracts, as such
payments or performance may be required by law or the
executing broker.
8b. SEGREGATED ACCOUNT FOR REPURCHASE AGREEMENTS. With respect
to purchases for the Custody Account from banks (including Chase) or
broker-dealers of United States or Canadian government obligations with a
simultaneous agreement by the seller to repurchase them within no more than 7
days at the original purchase price plus accrued interest, pursuant to Written
Instructions, to:
(i) deposit such securities and repurchase
agreements in a segregated account maintained by Chase; and
(ii) promptly show on Chase's records that such securities and
repurchase agreements are being held on behalf of the Fund and deliver to the
Fund a written confirmation to that
11
effect.
9. DEPOSIT ACCOUNT. Subject to the provisions of this
Agreement, the Company authorizes Chase to establish and maintain in each
country or other jurisdiction in which the principal trading market for any
Securities is located or in which any Securities are to be presented for
payment, an account or accounts, which may include nostro accounts with Chase
Branches and omnibus accounts of Chase at Foreign Banks, for receipt of cash in
the Deposit Account, in such currencies as directed by Written Instructions. For
purposes of this Agreement, cash so held in any such account shall be evidenced
by separate book entries maintained by Chase at its office in London and shall
be deemed to be Cash held by Chase in the Deposit Account. Unless Chase receives
Written Instructions to the contrary, cash received or credited by Chase or any
other Chase Branch, Foreign Bank or Foreign Securities Depository for the
Deposit Account in a currency other than United States dollars shall be
converted promptly into United States dollars whenever it is practicable to do
so through customary banking channels (including without limitation the
effecting of such conversions at Chase's preferred rates through Chase, its
affiliates or Chase Branches), and shall be automatically transmitted back to
Chase in the United States.
10. SETTLEMENT PROCEDURES. Settlement procedures for
transactions in Securities delivered to, held in, or to be
delivered from the Custody Account in Chase Branches, Domestic
12
Securities Depositories, Foreign Banks and Foreign Securities Depositories,
including receipts and payments of cash held in any nostro account or omnibus
account for the Deposit Account as described in Section 9, shall be carried out
in accordance with the provisions of the Operating Agreement. It is understood
that such settlement procedures may vary, as provided in the Operating
Agreement, from securities market to securities market, to reflect particular
settlement practices in such markets.
Chase shall make or cause the appropriate Chase Branch or
Foreign Bank to make payments of Cash held in the Deposit Account only:
(a) in connection with the purchase of Securities for the
account of the Fund and only against the receipt of such Securities by Chase or
by another appropriate Chase Branch, Domestic Securities Depository, Foreign
Bank or Foreign Securities Depository, or otherwise as provided in the Operating
Agreement, each such payment to be made at prices confirmed by Written
Instructions, or
(b) in connection with any dividend, interim dividend
or other distribution declared by the Company on behalf of the
Fund, or
(c) as directed by the Company by Written Instructions setting
forth the name and address of the person to whom the payment is to be made and
the purpose for which the payment is to be made.
Upon the receipt by Chase of Written Instructions
13
specifying the Securities to be so transferred or delivered, which instructions
shall name the person or persons to whom transfers or deliveries of such
Securities shall be made and shall indicate the time(s) for such transfers or
deliveries, Securities held in the Custody Account shall be transferred,
exchanged, or delivered by Chase, any Chase Branch, Domestic Securities
Depository, Foreign Bank, or Foreign Securities Depository, as the case may be,
against payment in Cash or Securities, or otherwise as provided in the Operating
Agreement, only:
(a) upon sale of such Securities for the account of the Fund
and receipt of such payment in the amount shown in a broker's confirmation of
sale of the Securities or other proper authorization received by Chase before
such payment is made, as confirmed by Written Instructions;
(b) in exchange for or upon conversion into other Securities
alone or other Securities and Cash pursuant to any plan of merger,
consolidation, reorganization, recapitalization, readjustment, or tender offer;
(c) upon exercise of conversion, subscription,
purchase, or other similar rights represented by such Securities;
or
(d) otherwise as directed by the Company by Written
Instructions which shall set forth the amount and purpose of such
transfer or delivery.
Until Chase receives Written Instructions to the
14
contrary, Chase shall and shall cause each Chase Branch, Domestic Securities
Depository, Foreign Bank and Foreign Securities Depository holding Securities or
Cash to take the following actions in accordance with procedures established in
the
Operating Agreement.
(a) collect and timely deposit in the Deposit Account all
income due-or payable with respect to any Securities and take any action which
may be necessary and proper in connection with the collection and receipt of
such income;
(b) present timely for payment all Securities in the 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 and
to receive and credit to the Deposit Account Cash so paid for the account of the
Fund except that, if such Securities are convertible, such Securities shall not
be presented for payment until two business days preceding the date on which
such conversion rights would expire unless Chase previously shall have received
Written Instructions with respect thereto;
(c) present for exchange all Securities in the
Custody Account converted pursuant to their terms into other
Securities;
(d) in respect of securities in the Custody Account, execute
in the name of the Fund such ownership and other certificates as may be required
to obtain payments in respect thereto, provided that Chase shall have requested
and the Company
15
shall have furnished to Chase any information necessary in
connection with such certificates;
(e) exchange interim receipts or temporary Securities
in the Custody Account for definitive Securities; and
(f) receive and hold in the Custody Account all Securities
received as a distribution on Securities held in the Custody Account as a result
of a stock dividend, share split-up or reorganization, recapitalization,
readjustment or other rearrangement or distribution of rights or similar
Securities issued with respect to any Securities held in the Custody Account.
11. RECORDS. Chase hereby agrees that Chase and any Chase
Branch or Foreign Bank shall create, maintain, and retain all records relating
to their activities and obligations as custodian for the Fund under this
Agreement in such manner as will meet the obligations of the Company under the
Act of 1940, particularly Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, and Federal, state and foreign tax laws and other legal or
administrative rules or procedures, in each case as currently in effect and
applicable to the Company on behalf of the Fund. All records so maintained in
connection with the performance of its duties under this Agreement shall remain
the property of the Company and, in the event of termination of this Agreement,
shall be delivered in accordance with the provisions of Section 19.
Chase hereby agrees, subject to restrictions under
16
applicable laws, that the books and records of Chase and any Chase Branch
pertaining to their actions under this Agreement shall be open to the physical,
on-premises inspection and audit at reasonable times by the independent
accountants ("Accountants") employed by, or other representatives of, the
Company. Chase hereby agrees that, subject to restrictions under applicable
laws, access shall be afforded to the Accountants to such of the books and
records of any Foreign Bank, Domestic Securities Depository or Foreign
Securities Depository with respect to Securities and Cash as shall be required
by the Accountants in connection with their examination of the books and records
pertaining to the affairs of the Fund. Chase also agrees that as the Company may
reasonably request from time to time, Chase shall provide the Accountants with
information with respect to Chase's and Chase Branches' systems of internal
accounting controls as they relate to the services provided under this
Agreement, and Chase shall use its best efforts to obtain and furnish similar
information with respect to each Domestic Securities Depository, Foreign Bank
and Foreign Securities Depository holding Securities and Cash.
12. REPORTS. Chase shall supply periodically, upon
the reasonable request of the Company on behalf of the Fund, such
statements, reports, and advices with respect to Cash in the
Deposit Account and the Securities in the Custody Account and
transactions in Securities from time to time received and/or
delivered for or from the Custody Account, as the case may be, as
17
the Company shall require. Such statements, reports and advices shall include an
identification of the Chase Branch, Domestic Securities Depository, Foreign Bank
and Foreign Securities Depository having custody of the Securities and Cash, and
descriptions thereof.
13. REGISTRATION OF SECURITIES. Securities in the Custody
Account which are issued or issuable only in bearer form (except such securities
as are held in the Book-Entry System) shall be held by Chase, Chase Branches,
Domestic Securities Depositories, Foreign Banks or Foreign Securities
Depositories in that form. All other Securities in the Custody Account shall be
held in registered form in the name of Chase, or any Chase Branch, the
Book-Entry System, Domestic Securities Depository, Foreign Bank or Foreign
Securities Depository and their nominees, as custodian or nominee.
14. STANDARD OF CARE.
(a) GENERAL. Chase shall assume entire responsibility for all
Securities held in the Custody Account and Cash held in the Deposit Account,
cash or securities held in the Segregated Accounts and any of the Securities and
Cash while in the possession of Chase or any Chase Branch, Domestic Securities
Depository, Foreign Bank or Foreign Securities Depository, or in the possession
or control of any employees, agents or other personnel of Chase or any Chase
Branch, Domestic Securities Depository, Foreign Bank or Foreign Securities
Depository; and shall be liable to the Company for any loss to the Company or
the
18
Fund occasioned by any destruction of the Securities or Cash so held or while in
such possession, by any robbery, burglary, larceny, theft or embezzlement by any
employees, agents or personnel of Chase or any Chase Branch, Domestic Securities
Depository, Foreign Bank or Foreign Securities Depository, and/or by virtue of
the disappearance of any of the Securities or Cash so held or while in such
possession, with or without any fault attributable to Chase ('fault attributable
to Chase' for the purposes of this Agreement being deemed to mean any negligent
act or omission, robbery, burglary, larceny, theft or embezzlement by any
employees or agents of Chase or any Chase Branch, Domestic Securities
Depository, Foreign Bank or Foreign Securities Depository). In the event of
Chase's discovery or notification of any such loss of Securities or Cash, Chase
shall promptly notify the Company and shall reimburse the Company to the extent
of the market value of the missing Securities or Cash as at the date of the
discovery of such loss. The Company shall not be obligated to establish any
negligence, misfeasance or malfeasance on Chase's part from which such loss
resulted, but Chase shall be obligated hereunder to make such reimbursement to
the Company after the discovery or notice of such loss, destruction or theft of
such Securities or Cash. Chase may at its option insure itself against loss from
any cause but shall be under no obligation to insure for the benefit of the
Company or the Fund.
(b) COLLECTIONS. All collections of funds or other
property paid or distributed in respect of Securities held in the
19
Custody Account shall be made at the risk of the Company. Chase shall have no
liability for any loss occasioned by delay in the actual receipt of notice by
Chase (or by any Chase Branch or Foreign Bank in the case of Securities or Cash
held outside of the United States) of any payment, redemption or other
transaction regarding Securities held in the Custody Account or Cash held in the
Deposit Account in respect of which Chase has agreed to take action in the
absence of Written Instructions to the contrary as provided in Section 10 of
this Agreement, which does not appear in any of the publications referred to in
Section 16 of this Agreement.
(c) EXCLUSIONS. Notwithstanding any other provision in this
Agreement to the contrary, Chase shall not be responsible for (i) losses
resulting from war or from the imposition of exchange control restrictions,
confiscation, expropriation, or nationalization of any securities or assets of
the issuer of such securities, or (ii) losses resulting from any negligent act
or omission of the Company, the Fund or any of their affiliates, or any robbery,
theft, embezzlement or fraudulent act by any employee or agent of the Company,
the Fund or any of their affiliates. Chase shall not be liable for any action
taken in good faith upon Written Instructions of Authorized Persons of the Fund
or upon any certified copy of any resolution of the Board of Directors of the
Company, and may rely on the genuineness of any such documents which it may in
good faith believe to be validly executed.
20
(d) LIMITATION ON LIABILITY UNDER SECTION 14(A).
Notwithstanding any other Provision in this Agreement to the contrary, it is
agreed that the extent of Chase's liability to the Company on behalf of the Fund
under Section 14(a) shall not exceed $80,000,000 (as of June 1, 1984), it being
understood and agreed that the foregoing limit of $80,000,000 applies on an
aggregated basis to all losses under Section 14(a) incurred by the Fund and is
subject to annual adjustment as set forth in Section 14(e). The Company agrees
that Chase's sole responsibility with respect to losses under Section 14(a)
shall be to pay to the Company on behalf of the Fund the amount of any such loss
as provided in Section 14(a) (subject to the limitation provided in the
preceding sentence). This limitation does not apply to any liability of Chase
under Section 14(f) of this Agreement.
(e) ANNUAL ADJUSTMENT OF LIMITATION OF LIABILITY. As
--------------------------------------------
soon as Practicable after each anniversary of the original June
1, 1984 date of this Agreement the Company on behalf of the Fund
shall provide Chase with the amount of the total net assets of
the Fund as of the close of business on such anniversary date (or
if the New York Stock Exchange is closed on such anniversary
date, then in that event as of the close of business on the next
day on which the New York Stock Exchange is open for business).
It is understood by the Parties to this Agreement that,
simultaneously with this Agreement, Chase is entering into substantially similar
custody agreements as follows: an agreement
21
with the Company on behalf of Xxxxxxxxx Foreign Fund; an agreement with
Xxxxxxxxx Global Funds, Inc. on behalf of Xxxxxxxxx Global I; an agreement with
Xxxxxxxxx Global Funds, Inc. on behalf of Xxxxxxxxx Global II; and an agreement
with Xxxxxxxxx Growth Fund, Ltd., all of which Funds have as their investment
advisers companies under the control and direction of Xxxx X. Xxxxxxxxx and the
same as or affiliated with the Investment Manager of the Fund; as well as any
substantially similar custody agreements of Chase with any additional mutual
funds under Xxxxxxxxx management which may hereafter be organized. Each of such
custody agreements with each of such other Xxxxxxxxx Funds contains (or will
contain) a "Standard of Care' section similar to this Section 14, except that
the limit of Chase's liability is in varying amounts for each Fund, with the
aggregate limits of liability in all of such agreements, including this custody
agreement, amounting to $150,000,000.
On each anniversary date of the original June 1, 1984 date of
this Agreement, and of the similar custody agreements with each other Xxxxxxxxx
Fund, Chase will total the net assets reported by each one of the Xxxxxxxxx
Funds, and will calculate the percentage of the aggregate net assets of all the
Xxxxxxxxx Funds that is represented by the net asset value of this Fund.
Thereupon Chase shall allocate to this Agreement with this Fund that proportion
of its total of $150,000,000 responsibility undertaking which is substantially
equal to the proportion which this Fund's net assets bears to the total net
assets of all such
22
Xxxxxxxxx Funds subject to adjustments for claims paid as follows: all claims
previously paid to this Fund shall first be deducted from its proportionate
allocable share of the $150,000,000 Chase responsibility, and if the claims paid
to this Fund amount to more than its allocable share of the Chase
responsibility, then the excess of such claims paid to this Fund shall diminish
the balance of the $150,000,000 Chase responsibility available for the
proportionate shares of all of the other Xxxxxxxxx Funds having similar custody
agreements with Chase. Based on such calculation, and on such adjustment for
claims paid, if any, Chase thereupon shall notify the Company on behalf of the
Fund of such limit of liability under this Section 14 which will be available to
this Fund with respect to (1) losses in excess of payment allocations for
previous years and (2) losses discovered during the next year this Agreement
remains in effect and until a new determination of such limit of respon-sibility
is made on the next succeeding anniversary date.
(f) OTHER LIABILITY. Independently of Chase's liability to the
Company as provided in Section 14(a) above (it being understood that the
limitations in Section 14(d) do not apply to the provisions of this Section
14(f)), Chase shall be responsible for the performance of only such duties as
are set forth in this Agreement or contained in express instructions given to
Chase which are not contrary to the provisions of this Agreement. Chase will use
and require the same care with respect to the safekeeping of all Securities held
in the Custody Account
23
and Cash held in the Deposit Account as it uses in respect of its own similar
property, but it need not maintain any insurance for the benefit of the Company
or the Fund. With respect to Securities and Cash held outside of the United
States, Chase will be liable to the Company for any loss to the Company or the
Fund resulting from any disappearance or destruction of such Securities or Cash
while in the possession of Chase or any Chase Branch, Foreign Bank or Foreign
Securities Depository, to the same extent it would be liable to the Company if
Chase had retained physical possession of such Securities and Cash in New York.
It is specifically agreed that Chase's liability under this Section 14(f) is
entirely independent of Chase's liability under Section 14(a). Notwithstanding
any other provision in this Agreement to the contrary, in the event of any loss
giving rise to liability under this Section 14(f) that would also give rise to
liability under Section 14(a), the amount of such liability shall not be charged
against the amount of the limitation on liability provided in Section 14(d).
(g) COUNSEL; LEGAL EXPENSES. Chase shall be entitled to the
advice of counsel (who may be counsel for the Company) at the expense of the
Company in connection with carrying out Chase's duties hereunder and in no event
shall Chase be liable for any action taken or omitted to be taken by it in good
faith pursuant to advice of such counsel. If, in the absence of fault
attributable to Chase and in the course of or in connection with carrying out
its duties and obligations hereunder, any claims or
24
legal proceedings are instituted against Chase or any Chase Branch by third
parties, the Company will hold Chase harmless against any claims, liabilities,
costs, damages or expenses incurred in connection therewith and, if the Company
so elects, the Company may assume the defense thereof with counsel satisfactory
to Chase, and thereafter shall not be responsible for any further legal fees
that may be incurred by Chase, provided, however, that all of the foregoing is
conditioned upon the Company's receipt from Chase of prompt and due notice of
any such claim or proceeding.
15. EXPROPRIATION INSURANCE. Chase represents that it does not
intend to obtain any insurance for the benefit of the Fund which protects
against the imposition of exchange control restrictions on the transfer from any
foreign jurisdiction of the proceeds of sale of any Securities or against
confiscation, expropriation or nationalization of any securities or the Assets
of the issuer of such securities by a government of any foreign country in which
the issuer of such securities is organized or in which securities are held for
safekeeping either by Chase, or any Chase Branch, Foreign Bank or Foreign
Securities Depository in such country. Chase has discussed the availability of
expro-priation insurance with the Company, and has advised the Company as to its
understanding of the position of the Staff of the Commission that any investment
company investing in securities of foreign issuers has the responsibility for
reviewing the possibility of the imposition of exchange control restrictions
25
which would affect the liquidity of such investment company's assets and the
possibility of exposure to political risk, including the appropriateness of
insuring against such risk. The Company has acknowledged that it has the
responsibility to review the possibility of such risks and what, if any, action
should be taken.
16. PROXY, NOTICES, REPORTS, ETC. Chase shall watch for the
dates of expiration of (a) all purchase or sale rights (including warrants,
puts, calls and the like) attached to or inherent in any of the Securities held
in the Custody Account and (b) conversion rights and conversion price changes
for each convertible Security held in the Custody Account as published in
Telstat Services Inc., Standard & Poor's Financial Inc. and/or any other
publications listed in the Operating Agreement (it being understood that Chase
may give notice to the Company as provided in Section 21 as to any change,
addition and/or omission in the publications watched by Chase for these
purposes). If Chase or any Chase Branch; Foreign Bank or Foreign Securities
Depository shall receive any proxies, notices, reports, or other communications
relative to any of the Securities held in the Custody Account, Chase shall, on
its behalf or on the behalf of a Chase Branch, Foreign Bank or Foreign
securities Depository, promptly transmit in writing any such communication to
the Company. In addition, Chase shall notify the Company by person-to-person
collect telephone concerning any such notices relating to any matters specified
in the first sentence of this Section
26
16.
As specifically requested by the Company, Chase shall execute
or deliver or shall cause the nominee in whose name Securities are registered to
execute and deliver to such person as may be designated by the Company proxies,
consents, authorizations and any other instruments whereby the authority of the
Company as owner of any Securities in the Custody Account registered in the name
of Chase or such nominee, as the case may be, may be exercised. Chase shall vote
Securities in accordance with Written Instructions timely received by Chase, or
such other person or persons as designated in or pursuant to the Operating
Agreement.
Chase and any Chase Branch shall have no liability for any
loss or liability occasioned by delay in the actual receipt by them or any
Foreign Bank or Foreign Securities Depository of notice of any payment or
redemption which does not appear in any of the publications referred to in the
first sentence of this Section 16.
27
17. COMPENSATION. The Company on behalf of the Fund agrees to
pay to Chase 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
Chase's out-of-pocket or incidental expenses, as from time to time shall be
mutually agreed upon by Chase and the Company. The Company shall have no
responsibility for the payment of services provided by any Domestic Securities
Depository, Chase Branch, Foreign Bank or Foreign Security Depository, such fees
being paid directly by Chase. In the event of any advance of Cash for any
purpose made by Chase pursuant to any Written Instruction, or in the event that
Chase or any nominee of Chase shall incur or be assessed any taxes in connection
with the performance of this Agreement, the Company shall indemnify and
reimburse Chase therefor, except such assessment of taxes, as results from the
negligence, fraud, or willful misconduct of Chase, any Domestic Securities
Depository, Chase Branch; Foreign Bank or Foreign Securities Depository, or as
constitutes a tax on income, gross receipts or the like of any one or more of
them. Chase shall have a lien on Securities in the Custody Account and on Cash
in the Deposit Account for any amount owing to Chase from time to time under
this Agreement upon due notice to the Company.
18. AGREEMENT SUBJECT TO APPROVAL OF THE COMPANY. It
is understood that this Agreement and any amendments shall be
subject to the approval of the Company.
28
19. TERM. This Agreement shall remain in effect for a period
of one (1) year from the date of this Agreement and shall thereafter remain in
effect until terminated by either party upon 60 days' written notice to the
other, sent by registered mail. Notwithstanding the preceding sentence, however,
if at any time after the execution of this Agreement Chase shall provide written
notice to the Company, by registered mail, of the amount needed to meet a
substantial increase in the cost of maintaining its present type and level of
bonding and insurance coverage in connection with Chase's undertakings in
Section 14(a), (d) and (e) of this Agreement, said Section 14(a), (d) and (e) of
this Agreement shall cease to apply 60 days after the providing of such notice
by Chase, unless prior to the expiration of such 60 days the Company on behalf
of the Fund agrees in writing to assume the amount needed for such purpose.
Chase, upon the date this Agreement terminates pursuant to notice which has been
given in a timely fashion, shall, and/or shall cause each Domestic Securities
Depository, Chase Branch, Foreign Bank and Foreign Securities Depository to,
deliver the Securities in the Custody Account and pay the Cash in the Deposit
Account to the Company on behalf of the Fund unless Chase has received from the
Company 60 days prior to the date on which this Agreement is to be terminated
Written Instructions specifying the name(s) of the person(s) to whom the
Securities in the Custody Account shall be delivered and to whom the Cash in the
Deposit Account shall be paid. Concurrently with the delivery of such
Securities, Chase
29
shall deliver to the Company, on behalf of the Fund, or such other person as the
Company shall instruct, the records referred to in Section 11 which are in the
possession or control of Chase or any Domestic Securities Depository, Chase
Branch, Foreign Bank or Foreign Securities Depository, or in the event that
Chase is unable to obtain such records in their original form Chase shall
deliver true copies of such records.
20. AUTHORIZATION OF CHASE TO EXECUTE NECESSARY DOCUMENTS. In
connection with the performance of its duties hereunder, the Company hereby
authorizes and directs Chase and each Chase Branch acting on behalf of Chase,
and Chase hereby agrees, to execute and deliver in the name of the Fund, or
cause such other Chase Branch to execute and deliver in the name of the Fund,
such certificates, instruments, and other documents as shall be reasonably
necessary in connection with such performance, provided that the Company shall
have furnished to Chase any information necessary in connection therewith.
21. NOTICES. Any notice or other communication
authorized or required by this Agreement to be given to the
parties shall be sufficiently given (except to the extent
otherwise specifically provided) if addressed and mailed postage
prepaid or delivered to it at its office at the address set forth
below:
30
If to the Company on behalf of the Fund, then to
Xxxxxxxxx World Fund
Xxxxxxxxx Funds, Inc.
000 Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xx. Xxxxxxxxx, Treasurer
If to Chase, then to
The Chase Manhattan Bank, N.A.
1211 Avenue of the Americas
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx, V.P.
or such other person or such other address as any party shall have furnished to
the other party in writing.
22. NON-ASSIGNABILITY OF AGREEMENT. This Agreement shall not
be assignable by either party hereto; provided, however, that any corporation
into which the Company or Chase, as the case may be, may be merged or converted
or with which it may be consolidated, or any corporation succeeding to all or
substantially all of the trust business of Chase shall succeed to the respective
rights and shall assume the respective duties of the Company or of Chase, as the
case may be, hereunder.
23. GOVERNING LAW. This Agreement shall be governed
by the laws of the State of New York.
31
THE CHASE MANHATTAN BANK, N.A.
By:/s/ XXXXXXXXX X. XXX
Xxxxxxxxx X. Xxx
Vice President
XXXXXXXXX FUNDS, INC., on behalf of
XXXXXXXXX WORLD FUND
By:/s/ XXXXXX X. XXXXXXXXXX
Xxxxxx X. Xxxxxxxxxx
President
32
