Exhibit 9(d)
AMENDMENT No. 2, dated as of May 22, 1998, to the September 1, 1995 custody
agreement (as amended and restated on August 1, 1997) ("Agreement"), between
Excelsior Funds, Inc. ("Fund") on behalf of the investment portfolios of the
Fund listed on Exhibit A to the Agreement (each a "Portfolio" and collectively
the "Portfolios"), having a place of business at 00 Xxxxxxx Xx., Xxxxxx, XX
00000 and The Chase Manhattan Bank ("Bank"), having a place of business at 000
Xxxx Xxx., Xxx Xxxx, X.X. 00000-0000.
It is hereby agreed as follows:
Section 1. Except as modified hereby, the Agreement is confirmed in all
respects. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Agreement.
Section 2. The Agreement is amended as follows:
A. Delete the phrase "the second paragraph of" in the seventh line of
Section 1 of the Agreement.
B. Section 3 of the Agreement is amended and restated as follows:
3. Eligible Foreign Custodians and Securities Depositories
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(a) Fund's board of directors (hereinafter "Board") on behalf of each
Portfolio hereby delegates to Bank, and Bank hereby accepts the delegation to
it, of the obligation to perform as Fund's "Foreign Custody Manager" (as that
term is defined in SEC rule 17f-5(a)(2)), both for the purpose of selecting
Eligible Foreign Custodians (as that term is defined in SEC rule 17f-5(a)(1),
and as the same may be amended from time to time, or that have otherwise been
made exempt pursuant to an SEC exemptive order) to hold Property and of
evaluating the contractual arrangements with such Eligible Foreign Custodians
(as set forth in SEC rule 17f-5(c)(2)); provided that, the term Eligible Foreign
Custodian shall not include any "Compulsory Depository." A Compulsory Depository
shall mean a securities depository or clearing agency the use of which is
compulsory because: (1) its use is required by law or regulation, (2) securities
cannot be withdrawn from the depository, or (3) maintaining securities outside
the depository is not consistent with prevailing custodial practices in the
country which the depository serves. For each Compulsory Depository used or
intended to be used by Fund of which Bank is advised, Bank shall provide Fund
from time to time with information addressing the factors set forth in SEC Rule
17f-5(c)(1) to the extent reasonably available to Bank, together with Bank's
analysis of the same (an example of which is set forth in Appendix I-C hereto)
to assist Fund in determining the appropriateness of placing Assets therein.
Compulsory Depositories used by Bank as of the date hereof are set forth in
Appendix 1-A hereto, and as the same may be amended on notice to Fund from time
to time.
(b) In connection with the foregoing, Bank shall:
(i) provide written reports notifying Fund's Board of the placement of
Property with particular Eligible Foreign Custodians and of any
material change in the arrangements
with such Eligible Foreign Custodians, with such reports to be
provided to Fund's Board at such times as the Board deems
reasonable and appropriate based on the circumstances of Fund's
foreign custody arrangements (and until further notice from Fund
such reports shall be provided not less than quarterly with respect
to the placement of Property with particular Eligible Foreign
Custodians and with reasonable promptness (but not less than
quarterly) upon the occurrence of any material change in the
contracts or arrangements with or procedures or practices of such
Eligible Foreign Custodians);
(ii) exercise such reasonable care, prudence and diligence in performing
as Fund's Foreign Custody Manager as a person having responsibility
for the safekeeping of Property would exercise;
(iii) in selecting an Eligible Foreign Custodian, first have determined
that Property placed and maintained in the safekeeping of such
Eligible Foreign Custodian shall be subject to reasonable care,
based on the standards applicable to custodians in the relevant
market, after having considered all factors relevant to the
safekeeping of such Property, including, without limitation, those
factors set forth in SEC rule 17f-5(c)(1)(i)-(iv);
(iv) determine that the written contract with the Eligible Foreign
Custodian (or, in the case of an Eligible Foreign Custodian that is
a securities depository or clearing agency, such contract, the
rules or established practices or procedures of the depository, or
any combination of the foregoing) requires that the Eligible
Foreign Custodian will provide reasonable care for Property based
on the standards applicable to custodians in the relevant market;
and
(v) have established a system to monitor the continued appropriateness
of maintaining Property with particular Eligible Foreign Custodians
and of the governing contractual arrangements.
Subject to (b)(i)-(v) above, Bank is hereby authorized to place and maintain
Property on behalf of Fund with Eligible Foreign Custodians pursuant to a
written contract deemed appropriate by Bank.
(c) Except as expressly provided herein, Fund shall be solely
responsible to assure that the maintenance of Property hereunder complies with
the rules, regulations, interpretations and exemptive orders promulgated by or
under the authority of the SEC.
(d) Bank represents to Fund that it is a U.S. Bank as defined in Rule
17f-5(a)(7). Fund, on behalf of each Portfolio, represents to Bank that: (1) the
Property being placed and maintained in Bank's custody are subject to the
Investment Company Act of 1940, as amended (the "1940 Act"), as the same may be
amended from time to time; (2) its Board has determined that it is reasonable to
rely on Bank to perform as Fund's Foreign Custody Manager; and (3) its Board or
its investment adviser shall have determined that Fund may maintain Property in
each country in which Fund's Property shall be held hereunder and determined to
accept the risks arising therefrom (including, but not limited to, a country's
financial infrastructure (and including any Compulsory Depository operating in
such country), prevailing custody and settlement practices, laws applicable to
the safekeeping and recovery of Property held in custody, and the likelihood
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of nationalization, currency controls and the like) (collectively, "Country
Risk"). Nothing contained herein shall require Bank to make any selection or to
engage in any monitoring on behalf of Fund that would entail consideration of
Country Risk.
(e) Bank shall provide to Fund such information relating to Country Risk
as is specified in Appendix I-B hereto. Fund hereby acknowledges that: (i) such
information is solely designed to inform Fund of market conditions and
procedures and is not intended as a recommendation to invest or not invest in
particular markets; and (ii) Bank has gathered the information from sources it
considers reliable, but that Bank shall have no responsibility for inaccuracies
or incomplete information.
(f) At the request of Fund, Bank may, but need not, add an Eligible
Foreign Custodian that is either a bank or a non-Compulsory Depository where
Bank has not acted as Foreign Custody Manager with respect to the selection
thereof. Bank shall notify Fund in the event that it elects to add any such
entity.
(g) The term "subcustodian" as used herein shall mean the following:
(i) a "U.S. Bank," which shall mean a U.S. bank as defined in SEC rule
17f-5(a)(7); and
(ii) an "Eligible Foreign Custodian," which shall mean (i) a banking
institution or trust company, incorporated or organized under the
laws of a country other than the United States, that is regulated
as such by that country's government or an agency thereof, (ii) a
majority-owned direct or indirect subsidiary of a U.S. bank or bank
holding company which subsidiary is incorporated or organized under
the laws of a country other than the United States; (iii) a
securities depository or clearing agency (other than a Compulsory
Depository), incorporated or organized under the laws of a country
other than the United States, that acts as a system for the central
handling of securities or equivalent book-entries in that country
and that is regulated by a foreign financial regulatory authority
as defined under section 2(a)(50) of the 1940 Act, (iv) a
securities depository or clearing agency organized under the laws
of a country other than the United States when acting as a
transnational system ("Transnational Depository") for the central
handling of securities or equivalent book-entries, and (v) any
other entity that shall have been so qualified by exemptive order,
rule or other appropriate action of the SEC.
C. In the fourth line of Section 4(e) of the Agreement replace the word
"its" with "their" and after the word "administration" add the following
language: "or, in the case of cash deposits, except for liens or rights in favor
of creditors of the subcustodian arising under bankruptcy, insolvency or similar
laws."
D. Insert the following language at the beginning of the second
sentence of Section 12(a)(i): "Except with respect to those countries as to
which the parties may from time to time in the future agree in writing
otherwise."
E. Insert the following at the beginning of Section 12(a)(ii) of the
Agreement: "Absent negligence, bad faith or willful misconduct in performing as
Fund's Foreign Custody Manager
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with respect to the affected subcustodian, Bank shall not be responsible for the
insolvency of any subcustodian which is not a branch or affiliate of Bank."
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
EXCELSIOR FUNDS, INC. THE CHASE MANHATTAN BANK
By: /s/ Xxxxxxxxx X. Xxxxxx By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxxxxx X. Xxxxxx Name: Xxxxxx Xxxxxx
Title: President and Treasurer Title: Chairman & CEO
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Appendix 1-A
COMPULSORY DEPOSITORIES
Appendix 1-B
Information Regarding Country Risk
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1. To aid Fund's board in its determinations regarding Country Risk, Bank
shall furnish board annually and upon the initial placing of Property into a
country the following information (check items applicable):
A. Opinions of local counsel concerning:
____ i. Whether applicable foreign law would restrict the access afforded
Fund's independent public accountants to books and records kept by an
eligible foreign custodian located in that country.
____ ii. Whether applicable foreign law would restrict the Fund's ability to
recover its Property in the event of the bankruptcy of an Eligible
Foreign Custodian located in that country.
____ iii. Whether applicable foreign law would restrict the Fund's ability to
recover Property that are lost while under the control of an Eligible
Foreign Custodian located in the country.
B. Written information concerning:
____ i. The likelihood of expropriation, nationalization, freezes, or
confiscation of Fund's Property.
____ ii. Whether difficulties in converting Fund's cash and cash equivalents to
U.S. dollars are reasonably foreseeable.
C. A market report with respect to the following topics:
(i) securities regulatory environment, (ii) foreign ownership restrictions,
(iii) foreign exchange, (iv) securities settlement and registration, (v)
taxation, and (vi) compulsory depositories (including depository
evaluation).
2. Bank shall furnish the following additional information:
Market flashes, including with respect to changes in the information in
market reports.
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