EXCHANGE TRADED FUND CUSTODY AGREEMENT
THIS AGREEMENT is made this 7th day of September, 2001 by and between
NUVEEN CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND 3, a closed-end investment
company organized as a Massachusetts business trust (the "Fund"), and THE CHASE
MANHATTAN BANK, a New York banking corporation ("Chase").
W I T N E S S E T H
WHEREAS, the Fund is registered as a closed-end diversified, management
investment company under the Investment Company act of 1940 (the "1940 Act")
WHEREAS, the Fund desires to retain Chase to serve as the Fund's custodian
and Chase is willing to act as custodian hereunder.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints Chase to act as custodian of its
portfolio securities, cash and other property on the terms set forth in this
Agreement. Chase accepts such appointment and agrees to furnish the services
herein set forth in return for the compensation as provided in Section 23 of
this Agreement.
2. Delivery of Documents. The Fund has furnished Chase with copies
properly certified or authenticated of each of the following:
(a) Resolutions of the Fund's Board of Trustees authorizing the appointment
of Chase as Custodian of the portfolio securities, cash and other property of
the Fund and approving this Agreement;
(b) Incumbency and signature certificates identifying and containing the
signatures of the Fund's officers and/or the persons authorized to sign Proper
Instructions, as hereinafter defined, on behalf of the Fund;
(c) The Fund's Declaration of Trust filed with the Commonwealth of
Massachusetts and all amendments thereto (such Declaration of Trust as currently
in effect and from time to time, be amended, are herein called the
"Declaration");
(d) The Fund's By-Laws and all amendments thereto (such By-Laws, as
currently in effect and as they shall from time to time be amended, are herein
called the "By-Laws"),
(e) Resolutions of the Fund's Board of Trustees appointing the investment
advisor of the Fund and resolutions of the Fund's Board of Trustees and the
Fund's Shareholders
1
approving the proposed Investment Advisory Agreement between the Fund and the
advisor (the "Advisory Agreement");
(f) The Advisory Agreement
(g) The Fund's Notification of Registration filed pursuant to Section 8(a)
of the 1940 Act and the Securities Act of 1933, as amended ("xxx 0000 Xxx") with
the SEC; and
(h) The Fund's most recent prospectus and statement including all
amendments and supplements thereto (the "Prospectus").
Upon request the Fund will furnish Chase with copies of all amendments of
or supplements to the foregoing, if any. The Fund will also furnish Chase upon
request with a copy of the opinion of counsel for the Fund with respect to the
validity of the Shares of the Fund and the status of such Shares under the 1933
Act filed with the SEC, and any other applicable federal law or regulation.
3. Definitions.
(a) "Authorized Person". As used in this Agreement, the term "Authorized
Person" means the Fund's President, Treasurer and any other person, whether or
not any such person is an officer or employee of the Fund, duly authorized by
the Board of Trustees of the Fund to give Proper Instructions on behalf of the
Fund as set forth in resolutions of the Fund's Board of Trustees.
(b). "Book-Entry System". As used in this Agreement, the term "Book-Entry
System" means a book-entry system authorized by the U.S. Department of Treasury,
its successor or successors and its nominee or nominees.
(c) "Proper Instructions". Proper Instructions as used herein means a
writing signed or initialed by two or more persons as the Board of Trustees
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if Chase reasonably believes them to have
been given by a person authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all such oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Trustees and Chase are satisfied that such procedures afford adequate safeguards
for the Fund's assets. For purposes of this Section, Proper Instructions shall
include instructions received by Chase pursuant to any three-party agreement
which requires a segregated asset account in accordance with Section 9.
2
(d) "Property". The term "Property", as used in this Agreement, means:
(i) any and all securities and other property of the Fund which
the Fund may from time to time deposit, or cause to be deposited, with Chase or
which Chase may from time to time hold for the Fund;
(ii) all income in respect of any such securities or other
property; and
(iii) all proceeds of the sales of any of such securities or other
property.
(e) "Securities Depository". As used in this Agreement, the term
"Securities Depository" shall mean The Depository Trust Company, a clearing
agency registered with the SEC or its successor or successors and its nominee or
nominees; and shall also mean any other registered clearing agency, its
successor or successors specifically identified in a certified copy of a
resolution of the Company's Board of Trustees approving deposits by Chase
therein.
4. Delivery and Registration of the Property. The Fund will deliver or
cause to be delivered to Chase all securities and all moneys owned by it,
including payments of interest, principal and capital distributions and cash
received by it from the issuance of its Shares, at any time during the period of
this Agreement, except for securities and monies to be delivered to any
subcustodian appointed pursuant to Section 7 hereof. Chase will not be
responsible for such securities and such monies until actually received by it.
All securities delivered to Chase or to any such subcustodian (other than in
bearer form) shall be registered in the name of the Fund or in the name of a
nominee of the Fund or in the name of Chase or any nominee of Chase (with or
without indication of fiduciary status) or in the name of any subcustodian or
any nominee of such subcustodian appointed pursuant to Paragraph 7 hereof, or
with a Securities Depository or its nominee pursuant to Section 8 hereof, or
shall be properly endorsed and in form for transfer satisfactory to Chase.
5. Voting Rights. With respect to all securities, however registered, it
is understood that the voting and other rights and powers shall be exercised by
the Fund. Chase's only duty shall be to mail for delivery on the next business
day to the Fund any documents received, including proxy statements and offering
circulars, with any proxies for securities registered in a nominee name executed
by such nominee. Where warrants, options, tenders or other securities have
fixed expiration dates, the Fund understands that in order for Chase to act,
Chase must receive the Fund's instructions at its offices in New York, addressed
as Chase may from time to time request, by no later than noon (NY City time) at
least two business days prior to the last scheduled date to act with respect
thereto (or such earlier date or time as Chase may reasonably notify the Fund).
Absent Chase's timely receipt of such instructions, such instruments will expire
without liability to Chase.
3
6. Receipt and Disbursement of Money.
(a) Chase shall open and maintain a custody account for the Fund, subject
only to draft or order by Chase acting pursuant to the terms of this Agreement,
and shall hold in such account, subject to the provisions hereof, all cash
received by it from or for the Fund other than cash maintained by the Fund in a
bank account established and used in accordance with Rule 17f-3 under the 1940
Act. Funds held by Chase for the Fund may be deposited by Chase to the Fund's
credit at Chase or in such other banks or trust companies as Chase may in its
discretion deem necessary or desirable; provided, however, that every such bank
or trust company shall be qualified to act as a custodian under the 1940 Act,
and that each such bank or trust company shall be approved by vote of a majority
of the Board of Trustees of the Fund. Such funds shall be deposited by Chase in
its capacity as Custodian and shall be withdrawable by Chase only in that
capacity.
(b) Upon receipt of Proper Instructions (which may be continuing
instructions as deemed appropriate by the parties) Chase shall make payments of
cash to, or for the account of, the Fund from such cash only (i) for the
purchase of securities, options, futures contracts or options on futures
contracts for the Fund as provided in Section 13 hereof; (ii) in the case of a
purchase of securities effected through a Book-Entry System or Securities
Depository, in accordance with the conditions set forth in Section 8 hereof;
(iii) in the case of repurchase agreements entered into between the Fund and
Chase, or another bank, or a broker-dealer which is a member of The National
Association of Securities Dealers, Inc. ("NASD"), either (a) against delivery of
the securities either in certificate form or through an entry crediting Chase's
account at the Federal Reserve Bank with such securities or (b) against delivery
of the receipt evidencing purchase by the Fund of securities owned by Chase
along with written evidence of the agreement by Chase to repurchase such
securities from the Fund; (iv) for transfer to a time deposit account of the
Fund in any bank, whether domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker and/or the applicable bank
pursuant to Proper Instructions from the Fund; (v) for the payment of dividends
or other distributions on shares declared pursuant to the governing documents of
the Fund, or for the payment of interest, taxes, administration, distribution or
advisory fees or expenses which are to be borne by the Fund under the terms of
this Agreement, any Advisory Agreement, or any administration agreement; (vi)
for payments in connection with the conversion, exchange or surrender of
securities owned or subscribed to by the Fund and held by or to be delivered to
Chase; (vii) to a subcustodian pursuant to Section 7 hereof; (viii) for such
common expenses incurred by the Fund in the ordinary course of its business,
including but not limited to printing and mailing expenses, legal fees,
accountants fees, exchange fees; or (ix) for any other proper purpose, but only
upon receipt of Proper Instructions.
(c) Chase is hereby authorized to endorse and collect all checks, drafts
or other orders for the payment of money received as custodian for the Fund.
4
6A. Advances by Custodian. The Fund may from time to time purchase
securities for settlement payable in "next day" funds and provide for payment
for such transactions by selling securities for settlement in "same day" funds
settling on the day after settlement of the Fund's purchase transaction. Under
these circumstances the Fund may require the Custodian to advance funds in
amounts not exceeding 20% of the value of the Fund's assets at the time of the
advance for payment of the securities purchase transaction, and the Custodian
shall recover an amount equal to its advance, with interest at the rate it
customarily charges for such transactions, from the proceeds of the securities
sale. In addition to the foregoing, the Custodian may from time to time agree
to advance cash to the Fund, with interest, for the Fund's other proper
corporate purposes. If the Custodian advances cash for any purpose, the Fund
shall and hereby does grant to the Custodian a security interest in Fund
securities equal in value to the amount of the cash advance but in no event
shall the value of securities in which a security interest has been granted
exceed 20% of the value of the Fund's total assets at the time of the pledge;
should the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to reasonably dispose of any securities
in which it has a security interest to the extent necessary to obtain
reimbursement.
7. Receipt and Delivery of Securities.
(a) Except as provided by Section 8 hereof, Chase shall hold and
physically segregate all securities and noncash Property received by it for the
Fund. All such securities and non-cash Property are to be held or disposed of
by Chase for the Fund pursuant to the terms of this Agreement. In the absence
of Proper Instructions, Chase shall have no power or authority to withdraw,
deliver, assign, hypothecate, pledge or otherwise dispose of any such securities
and investments, except in accordance with the express terms provided for in
this Agreement. In no case may any trustee, officer, employee or agent of the
Fund withdraw any securities. In connection with its duties under this Section
7, Chase may, at its own expense, enter into subcustodian agreements with other
banks or trust companies for the receipt of certain securities and cash to be
held by Chase for the account of the Fund pursuant to this Agreement; provided
that each such bank or trust company has an aggregate capital, surplus and
undivided profits, as shown by its last published report, of not less than
twenty million dollars ($20,000,000. Chase will be liable for acts or omissions
of any subcustodian. Chase shall employ sub-custodians upon receipt of Proper
Instructions.
(b) Promptly after the close of business on each day Chase shall furnish
the Fund with confirmations and a summary of all transfers to or from the
account of the Fund during said day. Where securities are transferred to the
account of the Fund established at a Securities Depository or Book Entry System
pursuant to Section 8 hereof, Chase shall also by book-entry or otherwise
identify as belonging to such Fund the quantity of securities in a fungible bulk
of securities registered in the name of Chase (or its nominee)
5
or shown in Chase's account on the books of a Securities Depository or Book-
Entry System. At least monthly and from time to time, Chase shall furnish the
Fund with a detailed statement of the Property held for the Fund under this
Agreement.
8. Use of Securities Depository or Book-Entry System. The Fund shall
deliver to Chase a certified resolution of the Board of Trustees of the Fund
approving, authorizing and instructing Chase on a continuous and ongoing basis
until instructed to the contrary by Proper Instructions actually received by
Chase (i) to deposit in a Securities Depository or Book-Entry System all
securities of the Fund eligible for deposit therein and (ii) to utilize a
Securities Depository or Book-Entry System to the extent possible in connection
with the performance of its duties hereunder, including without limitation
settlements of purchases and sales of securities by the Fund, and deliveries and
returns of securities collateral in connection with borrowings. Without
limiting the generality of such use, it is agreed that the following provisions
shall apply thereto:
(a) Securities and any cash of the Fund deposited in a Securities
Depository or Book-Entry System will at all times (1) be represented in an
account of Chase in the Securities Depository or Book Entry System (the
"Account") and (2) be segregated from any assets and cash controlled by Chase in
other than a fiduciary or custodian capacity but may be commingled with other
assets held in such capacities. Chase will effect payment for securities and
receive and deliver securities in accordance with accepted industry practices as
set forth in (b) below, unless the Fund has given Chase Proper Instructions to
the contrary. The records of Chase with respect to securities of the Fund
maintained in a Securities Depository or Book Entry System shall identify by
book entry those securities belonging to the Fund.
(b) Chase shall pay for securities purchased for the account of the Fund
upon (i) receipt of advice from the Securities Depository or Book Entry System
that such securities have been transferred to the Account, and (ii) the making
of an entry on the records of Chase to reflect such payment and transfer for the
account of the Fund. Upon receipt of Proper Instructions, Chase shall transfer
securities sold for the account of the Fund upon (i) receipt of advice from the
Securities Depository or Book Entry System that payment for such securities has
been transferred to the Account, and (ii) the making of an entry on the records
of Chase to reflect such transfer and payment for the account of the Fund.
Copies of all advices from the Securities Depository or Book Entry System of
transfers of securities for the account of the Fund shall identify the Fund, be
maintained for the Fund by Chase and be provided to the Fund at its request.
Upon request, Chase shall furnish the Fund confirmation of each transfer to or
from the account of the Fund in the form of a written advice or notice and shall
furnish to the Fund copies of daily transaction sheets reflecting each day's
transactions in a Securities Depository or Book Entry System for the account of
the Fund.
(c) Chase shall provide the Fund with any report obtained by Chase on the
Securities Depository or Book Entry System's accounting system, internal
accounting
6
control and procedures for safeguarding securities deposited in the Securities
Depository or Book Entry System.
(d) All Books and records maintained by Chase which relate to the Fund
participation in a Securities Depository or Book-Entry System will at all times
during Chase's regular business hours be open to the inspection of the Fund's
duly authorized employees or agents, and the Fund will be furnished with all
information in respect of the services rendered to it as it may require.
(e) Anything to the contrary in this Agreement notwithstanding, Chase
shall be liable to the Fund for any loss or damage to the Fund resulting from
any negligence, misfeasance or misconduct of Chase or any of its agents or of
any of its or their employees in connection with its or their use of the
Securities Depository or Book Entry Systems or from failure of Chase or any such
agent to enforce effectively such rights as it may have against such Securities
Depository or Book Entry System.
9. Segregated Account. Chase shall upon receipt of Proper Instructions
establish and maintain a segregated account or accounts for and on behalf of the
Fund, into which account or accounts may be transferred cash and/or securities,
including securities maintained in an account by Chase pursuant to Section 8
hereof, (i) in accordance with the provisions of any agreement among the Fund,
Chase and a broker dealer registered under the Securities and Exchange Act of
1934 and a member of the NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities exchange
(or the Commodity Futures Trading Commission or any registered contract market),
or of any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund, (ii) for purposes of
segregating cash or government securities in connection with options purchased,
sold or written by the Fund or commodity futures contracts or options thereon
purchased or sold by the Fund, and (iii) for other proper corporate purposes,
but only, in the case of clause (iv), upon receipt of Proper Instructions.
10. Instructions Consistent With The Declaration, etc.
(a) Unless otherwise provided in this Agreement, Chase shall act only
upon Proper Instructions. Chase may assume that any Proper Instructions
received hereunder are not in any way inconsistent with any provision of the
Declaration or By-Laws or any vote or resolution of the Fund's Board of Trustees
or any committee thereof. Chase shall be entitled to rely upon any Proper
Instructions actually received by Chase pursuant to this Agreement. The Fund
agrees that Chase shall incur no liability for following Proper Instructions
given to Chase regardless of any allegation or claim by the Fund or its Trsutee
or any third party that Chase's compliance therewith constituted negligence or
was otherwise wrongful, it being understood nevertheless, that Chase will be
responsible
7
to the extent provided in Section 25 of this Agreement for its execution or
performance of Proper Instructions. In accord with instructions from the Fund,
as required by accepted industry practice or as Chase may elect in effecting the
execution of Fund instructions, advances of cash or other Property made by
Chase, arising from the purchase, sale, redemption, transfer or other
disposition of Property of the Fund, or in connection with the disbursement of
funds to any party, or in payment of fees, expenses, claims or liabilities owed
to Chase by the Fund, or to any other party which has secured judgment in a
court of law against the Fund which creates an overdraft in the accounts or
over-delivery of Property, shall be deemed a loan by Chase to the Fund, payable
on demand, bearing interest at such rate customarily charged by Chase for
similar loans.
(b) The Fund agrees that test arrangements, authentication methods or
other security devices to be used with respect to instructions which the Fund
may give by telephone, telex, TWX, facsimile transmission, bank wire or other
teleprocess, or through an electronic instruction system, shall be processed in
accordance with terms and conditions for the use of such arrangements, methods
or devices as Chase may put into effect and modify from time to time. The Fund
shall safeguard any test keys, identification codes or other security devices
which Chase makes available to the Fund and agrees that the Fund shall be
responsible for any loss, liability or damage incurred by Chase or by the Fund
as a result of Chase's acting in accordance with instructions from any
unauthorized person using the proper security device, unless such unauthorized
use is a result of Chase's negligence or willful misconduct. Chase may
electronically record, but shall not be obligated to so record, any instructions
given by telephone and any other telephone discussions with respect to the Fund.
In the event that the Fund uses Chase's Asset Management system or any successor
electronic communications or information system, the Fund agrees that Chase is
not responsible for the consequences of the failure of that system to perform
for any reason, beyond the reasonable control of Chase, or the failure of any
communications carrier, utility, or communications network. In the event that
system is inoperable, the Fund agrees that it will accept the communication of
transaction instructions by telephone, facsimile transmission on equipment
compatible to Chase's facsimile receiving equipment or by letter, at no
additional charge to the Fund.
(c) Chase shall transmit promptly to the Fund all written information
received by Chase's Corporate Actions Department from issuers of the securities
being held for the Fund. With respect to tender or exchange offers, Chase shall
transmit promptly by facsimile to the Fund all written information received by
Chase's Corporate Actions Department from issuers of the securities whose tender
or exchange is sought and from the party (or his agents) making the tender or
exchange offer. If the Fund desires to take action with respect to any tender
offer, exchange offer or any other similar transaction, the Fund shall notify
Chase's Corporate Actions Department at least three business days prior to the
date on which Chase is to take such action or upon the date such notification is
first received by the Fund, if later. If any Property registered in the name of
a nominee of Chase is called for partial redemption by the issuer of such
property, Chase is authorized to allot the called portion to the respective
beneficial holders of the Property in such manner deemed to be fair and
equitable by Chase in its sole discretion.
8
11. Transactions Not Requiring Instructions. Chase is authorized to take
the following action without Proper Instructions:
(a) Collection of Income and Other Payments. Chase shall:
(i) collect and receive on a timely basis for the account of the
Fund, all income and other payments and distributions, including (without
limitation) stock dividends, rights, warrants and similar items, included or to
be included in the Property of the Fund, and promptly advise the Fund of such
receipt and shall credit such income, as collected, to the Fund. From time to
time, Chase may elect, but shall not be obligated, to credit the account with
interest, dividends or principal payments on payable or contractual settlement
date, in anticipation of receiving same from a payor, central depository, broker
or other agent employed by the Fund or Chase. Any such crediting and posting
shall be at the Fund's sole risk, and Chase shall be authorized to reverse any
such advance posting in the event it does not receive good funds from any such
payor, central depository, broker or agent of the Customer. Chase agrees to
promptly notify the Fund of the reversal of any such advance posting;
(ii) endorse and deposit for collection in the name of the Fund,
checks, drafts, or other orders for the payment of money on the same day as
received;
(iii) receive and hold for the account of the Fund all securities
received by the Fund as a result of a stock dividend, share split-up or
reorganization, merger, recapitalization, readjustment or other rearrangement or
distribution of rights or similar securities issued with respect to any
portfolio securities of the Fund held by Chase hereunder;
(iv) present for payment and collect the amount payable upon all
securities which may mature or be called, redeemed or retired, or otherwise
become payable on the date such securities become payable;
(v) take any action which may be necessary and proper in connection
with the collection and receipt of such income and other payments and the
endorsement for collection of checks, drafts and other negotiable instruments;
and
(vi) to effect an exchange of the securities where the par value is
changed, and to surrender securities at maturity or upon an earlier call for
redemption, or when securities otherwise become payable, against payment
therefore in accordance with accepted industry practice. If any Property
registered in the name of a nominee of Chase is called for partial redemption by
the issuer of such property, Chase is authorized to allot the called portion to
the respective beneficial holders of the Property in such manner deemed to be
fair and equitable by Chase in its sole discretion.
9
(b) Miscellaneous Transactions. Chase is authorized to deliver or cause
to be delivered Property against payment or other consideration or written
receipt therefor for examination by a dealer selling for the account of the Fund
in accordance with street delivery custom.
12. Transactions Requiring Instructions. In addition to the actions
requiring Proper Instructions set forth herein, upon receipt of Proper
Instructions and not otherwise, Chase, directly or through the use of a
Securities Depository or Book-Entry System, shall:
(a) Execute and deliver to such persons as may be designated in such
Proper Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any securities may be
exercised;
(b) Deliver any securities held for the Fund against receipt of other
securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
issuer of securities or corporation, or the exercise of any conversion
privilege;
(c) Deliver any securities held for the Fund to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
issuer of securities or corporation, against receipt of such certificates of
deposit, interim receipts or other instruments or documents, and cash, if any,
as may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the Fund and take
such other steps as shall be stated in said instructions to be for the purpose
of effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;
(e) Release securities belonging to the Fund to any bank or trust company
for the purpose of pledge or hypothecation to secure any loan incurred by the
Fund; provided, however, that securities shall be released only upon payment to
Chase of the monies borrowed, or upon receipt of adequate collateral as agreed
upon by the Fund and Chase which may be in the form of cash or obligations
issued by the U.S. government, its agencies or instrumentalities, except that in
cases where additional collateral is required to secure a borrowing already
made, subject to proper prior authorization, further securities may be released
for that purpose; and pay such loan upon re-delivery to it of the securities
pledged or hypothecated therefore and upon surrender of the note or notes
evidencing the loan;
(f) Deliver securities in accordance with the provisions of any agreement
among the Fund, Chase and a broker-dealer registered under the Securities
Exchange Act of 1934
10
(the "Exchange Act") and a member of The National Association of Securities
Dealers, Inc. ("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities exchange, or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Funds;
(g) Deliver securities in accordance with the provisions of any agreement
among the Fund, Chase and a Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in connection with
transactions by the Fund;
(h) Deliver securities against payment or other consideration or written
receipt therefore for transfer of securities into the name of the Fund or Chase
or a nominee of either, or for exchange or securities for a different number of
bonds, certificates, or other evidence, representing the same aggregate face
amount or number of units bearing the same interest rate, maturity date and call
provisions, if any; provided that, in any such case, the new securities are to
be delivered to Chase;
(i) Exchange securities in temporary form for securities in definitive
form;
(j) Surrender, in connection with their exercise, warrants, rights or
similar securities, provided that in each case, the new securities and cash, if
any, are to be delivered to Chase;
(k) Deliver securities upon receipt of payment in connection with any
repurchase agreement related to such securities entered into by the Fund; and
(l) Deliver securities pursuant to any other proper corporate purpose, but
only upon receipt of, in addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees or of the Executive Committee signed by an
officer of the Funds and certified by the Secretary or an Assistant Secretary,
specifying the securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made.
13. Purchase of Securities. Promptly after each purchase of securities,
options, futures contracts or options on futures contracts by the investment
advisor, the Fund shall deliver to Chase (as Custodian) Proper Instructions
specifying with respect to each such purchase: (a) the name of the issuer and
the title of the securities, (b) the number of shares of the principal amount
purchased and accrued interest, if any, (c) the dates of purchase and
settlement, (d) the purchase price per unit, (e) the total amount payable upon
such purchase, (f) the name of the person from whom or the broker through whom
the purchase was made and (g) the Fund name. Chase shall upon receipt of
11
securities purchased by or for the Fund registered in the name of the Fund or in
the name of a nominee of Chase or of the Fund or in proper form for transfer or
upon receipt of evidence of title to options, futures contracts or options on
futures contracts purchased by the Fund, pay out of the moneys held for the
account of the Fund the total amount payable to the person from whom or the
broker through whom the purchase was made, provided that the same conforms to
the total amount payable as set forth in such Proper Instructions. Except as
specifically stated otherwise in this Agreement, in any and every case where
payment for purchase of securities for the account of the Fund is made by Chase
in advance of receipt of the securities purchased in the absence of specific
written instructions from the Fund to so pay in advance, Chase shall be
absolutely liable to the Fund for such securities to the same extent as if the
securities had been received by Chase.
14. Sale of Securities. Promptly after each sale of securities by the
Fund at the instruction of the investment advisor, the Fund shall deliver to
Chase (as Custodian) Proper Instructions, specifying with respect to each such
sale; (a) the name of the issuer and the title of the security, (b) the number
of shares or principal amount sold, and accrued interest, if any, (c) the date
of sale, (d) the sale price per unit, (e) the total amount payable to the Fund
upon such sale, (f) the name of the broker through whom or the person to whom
the sale was made and (g) the Fund name. Chase shall deliver the securities
upon receipt of the total amount payable to the Fund upon such sale, provided
that the same conforms to the total amount payable as set forth in such Proper
Instructions. Subject to the foregoing, Chase may accept payment in such form
as shall be satisfactory to it, and may deliver securities and arrange for
payment in accordance with the customs prevailing among dealers in securities.
15. Not in Use.
16. Records. Chase shall preserve the books and records relating to the
Fund's securities for the period required by Rule31a-2 of the 1940 Act. The
Fund, or the Fund's authorized representative, shall have access to such books
and records at all times during Chase's normal business hours. Upon reasonable
request of the Fund and at the Fund's expense, copies of any such books and
records shall be provided by Chase to the Fund or the Fund's authorized
representative.
17. Cooperation with Accountants. Chase shall cooperate with the Fund's
independent certified public accountants and shall take all reasonable action in
the performance of its obligations under this Agreement to assure that the
necessary information is made available to such accountants for the expression
of their unqualified opinion, including but not limited to the opinion included
in the Fund's Form N-1A, Form
12
N-SAR and other reports to the Securities and Exchange Commission and with
respect to any other requirement of such Commission.
18. Reports to Fund by Independent Public Accountants. Chase shall
provide the Fund, at such times as the Fund may reasonably require, with reports
by independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a Securities Depository or Book Entry System, relating to the services
provided by Chase under this Agreement; such reports, shall be of sufficient
scope and in sufficient detail, as may reasonably be required by the Fund to
provide reasonable assurance that any material inadequacies would be disclosed
by such examination, and, if there are no such inadequacies, the reports shall
so state.
19. Confidentiality. Chase agrees on behalf of itself and its employees
to treat confidentially and as the proprietary information of the Fund all
information relative to the Fund's assets held under this Agreement, and not to
use such information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where Chase may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Fund.
20. Equipment Failures. In the event of equipment failures beyond
Chase's control, Chase shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions but shall not have liability
with respect thereto. Chase shall maintain a disaster recovery program, that
includes back-up systems, reasonably designed to minimize the interruption of
custody service to clients.
21. Right to Receive Advice.
(a) Advice of Fund. If Chase shall be in doubt as to any action to be
taken or omitted by it, it may request, and shall receive, from the Fund
clarification or advice.
(b) Advice of Counsel. If Chase shall be in doubt as to any question of
law involved in any action to be taken or omitted by Chase, it may request
advice at its own cost from counsel of its own choosing (who may be counsel for
the Fund or Chase, at the option of Chase).
(c) Conflicting Advice. In case of conflict between directions or advice
received by Chase pursuant to sub-paragraph (a) of this paragraph and advice
received by Chase
13
pursuant to subparagraph (b) of this paragraph, Chase shall be entitled to rely
on and follow the advice received pursuant to the latter provision alone.
(d) Protection of Chase. Chase shall be protected in any action or
inaction which it takes or omits to take in reliance on any directions or advice
received pursuant to subparagraphs (a) or (b) of this section which Chase, after
receipt of any such directions or advice, in good faith believes to be
consistent with such directions or advice. However, nothing in this paragraph
shall be construed as imposing upon Chase any obligation (i) to seek such
directions or advice, or (ii) to act in accordance with such directions or
advice when received, unless, under the terms of another provision of this
Agreement, the same is a condition to Chase's properly taking or omitting to
take such action. Nothing in this subsection shall excuse Chase when an action
or omission on the part of Chase constitutes willful misfeasance, bad faith,
negligence or reckless disregard by Chase of its duties under this Agreement.
22. Not in Use.
23. Compensation. As compensation for the services rendered by Chase
during the term of this Agreement, the Fund will pay to Chase, in addition to
reimbursement of its out-of-pocket expenses, monthly fees as outlined in Exhibit
A.
24. Indemnification; Limitation of Liability.
(a) The Fund, as sole owner of the Property, agrees to indemnify and
hold Chase and Chase's directors, officers, agents and employees (collectively
the "Indemnitees") harmless from and against any and all claims, liabilities,
losses, damages, fines, penalties, and expenses, including out-of-pocket and
incidental expenses and legal fees ("Losses") that may be imposed on, incurred
by, or asserted against, the Indemnitees or any of them for following any
instructions or other directions upon which Chase is authorized to rely pursuant
to the terms of this Agreement.
(b) In addition to and not in limitation of paragraph (a) immediately
above, the Fund also agrees to indemnify and hold the Indemnitees and each of
them harmless from and against any and all Losses that may be imposed on,
incurred by, or asserted against, the Indemnitees or any of them in connection
with or arising out of Chase's performance under this Agreement, provided the
Indemnitees have not acted with negligence or bad faith or engaged in willful
misconduct.
(c) Chase shall indemnify and hold the Fund harmless from and against
any and all Losses, but excluding attorneys' fees and expenses, arising out of
or attributable to Chase's breach of any material terms of this Agreement or
Chase's bad
14
faith, negligence or willful misconduct; provided the Fund in respect of such
Losses, has not acted in bad faith or with negligence or engaged in willful
misconduct.
(d) Anything in this Agreement to the contrary notwithstanding in no
event shall Chase be liable for incidental, indirect, special, or consequential
losses or damages of any kind whatsoever, even if Chase is advised of the
likelihood of any such loss or damage and regardless of the form of action in
which any such loss or damage may be claimed.
25. Responsibility of Chase. In the performance of its duties hereunder,
Chase shall be obligated to exercise care and diligence and to act in good faith
to insure the accuracy and completeness of all services performed under this
Agreement. Chase shall be responsible for its own negligent failure or that of
any subcustodian it shall appoint to perform its duties under this Agreement.
Chase shall not be liable for any act or omission which does not constitute
willful misconduct, bad faith, or negligence on the part of Chase or such
subcustodian or reckless disregard of such duties, obligations and
responsibilities. Chase shall not be under any duty or obligation to inquire
into and shall not be liable for or in respect of (a) the validity or invalidity
or authority or lack thereof of any advice, direction, notice or other
instrument which conforms to the applicable requirements of this Agreement, if
any, and which Chase believes to be genuine, (b) the validity of the issue of
any securities purchased or sold by the Fund, the legality of the purchase or
sale thereof or the propriety of the amount paid or received therefor, (c) the
legality of the issue or sale of any Shares of the Fund, or the sufficiency of
the amount to be received therefore, (d) the legality of the redemption of any
Shares of the Fund, or the propriety of the amount to be paid therefor, (e) the
legality of the declaration or payment of any dividend or distribution on
Shares, or (f) delays or errors or loss of data occurring by reason of
circumstances beyond Chase's control, including acts of civil or military
authority, national emergencies, labor difficulties, fire, mechanical breakdown
(except as provided in Section 20), flood or catastrophe, acts of God,
insurrection, war, riots, or failure of the mail, transportation, communication
or power supply.
26. Collection of Income. Chase shall collect on a timely basis all income
and other payments with respect to registered securities held hereunder to which
the Fund shall be entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and other payments with
respect to bearer securities if, on the date of payment by the issuer, such
securities are held by Chase or its agent thereof and shall credit such income,
as collected, to the Fund's custodian account. Without limiting the generality
of the foregoing, Chase shall detach and present for payment all coupons and
other income items requiring presentation as and when they become due and shall
collect interest when due on securities held hereunder. Income due the Fund on
securities loaned pursuant to the provisions of Section 9 shall be the
responsibility of the Fund. Chase will have no duty or responsibility in
connection therewith, other than to provide the Fund with such information or
data as may be
15
necessary to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Fund is properly entitled.
27. Ownership Certificates for Tax Purposes. Chase shall execute ownership
and other certificates and affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with respect to securities
of the Fund held by it and in connection with transfers of securities.
28. Effective Period; Termination and Amendment. This Agreement shall
become effective as of its execution, shall continue in full force and effect
until terminated as hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid to the other party,
such termination to take effect not sooner than thirty (30) days after the date
of such delivery or mailing.
Upon termination of the Agreement, the Fund shall pay to Chase such
compensation as may be due as of the date of such termination and shall likewise
reimburse Chase for its costs, expenses and disbursements.
29. Successor Custodian If a successor custodian shall be appointed by the
Board of Trustees of the Fund, Chase shall, upon termination, deliver to such
successor custodian at the office of the custodian, duly endorsed and in the
form for transfer, all securities then held by it hereunder and shall transfer
to an account of the successor custodian all of the Fund's securities held in a
Securities Depository or Book Entry System.
If no such successor custodian shall be appointed, Chase shall, in like
manner, upon receipt of a certified copy of a vote of the Board of Trustees of
the Fund, deliver at the office of the Custodian and transfer such securities,
funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
Chase on or before the date when such termination shall be come effective, then
Chase shall have the right to deliver to a bank or trust company, which is a
"bank" as defined in the 1940 Act, doing business in New York, New York, of its
own selection, having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by Chase and all instruments held by
Chase relative thereto and all other property held by it under this Agreement
and to transfer to an account of such successor custodian all of the Fund's
securities held in any Securities Depository or Book Entry System. Thereafter,
such bank or trust company shall be the successor of the Custodian under this
Agreement.
In the event that securities, funds and other properties remain in the
possession of Chase after the date of termination hereof owing to failure of the
Fund to procure the certified copy of the vote referred to or of the Board of
Trustees to appoint a successor custodian, Chase's sole obligation to the Fund
shall be to safekeep the Fund's assets until
16
they are transferred as directed by the Fund and Chase shall be entitled to fair
compensation for its services during such period as Chase retains possession of
such securities, funds and other properties and the provisions of this Agreement
relating to the Chase's rights shall remain in full force and effect.
30. Notices. All notices and other communications (collectively referred
to as "Notice" or "Notices") in this section hereunder shall be in writing and
shall be first sent by telegram, cable, telex, or facsimile sending device and
thereafter by overnight mail for delivery on the next business day. Notices
shall be addressed (a) if to Chase, at Chase's address, 0 Xxx Xxxx Xxxxx, 0xx
xxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention Mutual Fund Custody, facsimile number
(000) 000-0000; (b) if to the Fund, at the address of the Fund Attention:
Portfolio Manager, facsimile number (000) 000-0000; or (c) if to neither of the
foregoing, at such other address as shall have been notified to the sender of
any such Notice or other communication. Notices sent by overnight mail shall be
deemed to have been given the next business day. Notices sent by messenger shall
be deemed to have been given on the day delivered, and notices sent by
confirming telegram, cable, telex or facsimile sending device shall be deemed to
have been given immediately. All postage, cable, telegram, telex and facsimile
sending device charges arising from the sending of a Notice hereunder shall be
paid by the sender.
31 Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
32. Amendments. This Agreement or any part hereof may be changed or waived
only by an instrument in writing signed by the party against which enforcement
of such change or waiver is sought.
33. Miscellaneous. This Agreement embodies the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. This Agreement shall be deemed to be a contract made in New York and
governed by New York law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall insure to the benefit of the parties hereto and their respective
successors.
34. The Fund's Declaration of Trust is on file with the Secretary of the
Commonwealth of Massachusetts. This agreement is executed on behalf of the Fund
by the Fund's officers and not individually and the obligations imposed upon the
Fund by
17
this Agreement are not binding upon any of the Fund's Trustees, officers or
shareholders individually but are binding only upon the assets and property of
the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
THE CHASE MANHATTAN BANK
Attest: /s/ Xxxxxx X. XxXxxxxx By: /s/ Xxxxx X. Xxxxx
---------------------- ------------------
Vice President Vice President
NUVEEN CALIFORNIA DIVIDEND
ADVANTAGE MUNICIPAL FUND 3
Attest: /s/ Xxxxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------- ------------------------
Assistant Secretary Vice President
18
