Exhibit (g)(vi)
AMENDMENT TO THE CUSTODIAN AGREEMENT
THIS AMENDMENT, dated as of June 29, 2001, between SCHWAB CAPITAL
TRUST, an open-end management investment company organized under the laws of the
Commonwealth of Massachusetts and registered with the Commission under the 1940
Act on behalf of the Series listed on Schedule A to the Custodian Agreement
(each a FUND) and XXXXX BROTHERS XXXXXXXX & CO., a limited partnership formed
under the laws of the State of New York (BBH&CO. or the CUSTODIAN), amends the
Custodian Agreement between the parties dated October 28, 1999 (the "Custodian
Agreement").
W I T N E S S E T H:
WHEREAS, the Fund has employed BBH&Co. to act as custodian for the Fund
and to provide related services, all as provided in the Custodian Agreement;
WHEREAS, the Securities and Exchange Commission has promulgated Rules
17f-5 and 17f-7 under the Investment Company Act of 1940 which establish rules
regarding the Fund's investment held outside the United States at subcustodians
or through Securities Depositories; and
WHEREAS, BBH&Co. is willing to provide services in connection with such
Rules in accordance with the terms of this Amendment to the Custody Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Fund and BBH&Co. hereby agree, as follows:
1. That Section 8.2 of the Custody Agreement shall be amended and restated in
its entirety as follows:
8.2 FOREIGN SUBCUSTODIANS AND SECURITIES DEPOSITORIES. The Custodian shall
identify non-U.S. Securities Depositories which it determines meet the
definitional requirements of "eligible securities depository" under Rule 17f-7
promulgated under the 1940 Act, or any successor rule or regulation ("Rule
17f-7"). Unless instructed otherwise by the Fund, the Custodian may deposit
and/or maintain non-U.S. Investments of the Fund in any non-U.S. Securities
Depository provided the Custodian determines that such Securities Depository
meets the definitional requirements of an "eligible securities depository" under
Rule 17f-7 or which by order of the Securities and Exchange Commission is
exempted therefrom. Prior to the time that securities are placed with such
depository, the Custodian shall have prepared an analysis of the custody risks
associated with maintaining assets with the Securities Depository and shall have
established a system to monitor such risks on a continuing basis in accordance
with subsection 8.2.3 of this Section. Additionally, the Custodian may, at any
time and from time to time, appoint (a) any bank, trust company or other entity
meeting the requirements of an "eligible foreign custodian" under Rule 17f-5 or
which by order of the Securities and Exchange Commission is exempted therefrom,
or (b) any bank as defined in Section 2(a)(5) of the 1940 Act meeting the
requirements of a custodian under Section 17(f) of the 1940 Act and the rules
and regulations thereunder, to act on behalf of the Fund as a Subcustodian for
purposes of holding Investments of the Fund outside the United States. Such
appointment of foreign Subcustodians shall be subject to approval of the Fund in
accordance with Subsections 8.2.1 and 8.2.2 hereof, and use of non-U.S.
Securities Depositories shall be subject to the terms of Subsections 8.2.3
hereof. An Instruction to open an account in a given country shall comprise
authorization of the Custodian to hold assets in such country in accordance with
the
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terms of this Agreement. The Custodian shall not be required to make
independent inquiry as to the authorization of the Fund to invest in such
country.
8.2.1. BOARD APPROVAL OF FOREIGN SUBCUSTODIANS. Unless and
except to the extent that the Board has delegated to, and the Custodian
has accepted delegation of, review of certain matters concerning the
appointment of Subcustodians pursuant to Subsection 8.2.2, the
Custodian shall, prior to the appointment of any Subcustodian for
purposes of holding Investments of the Fund outside the United States,
obtain written confirmation of the approval of the Board of Trustees or
Directors of the Fund with respect to (a) the identity of a
Subcustodian, and (b) the Subcustodian agreement which shall govern
such appointment, such approval to be signed by an Authorized Person.
8.2.2. DELEGATION OF BOARD REVIEW OF SUBCUSTODIANS. From
time to time, the Custodian may agree to perform certain reviews of
Subcustodians and of Subcustodian Contracts as delegate of the Fund's
Board. In such event, the Custodian's duties and obligations with
respect to this delegated review will be performed in accordance with
the terms of the Amended Foreign Custody Manager Delegation Agreement.
8.2.3. MONITORING AND RISK ASSESSMENT OF SECURITIES
DEPOSITORIES. Prior to the placement of any assets of the Fund with a
Securities Depository, the Custodian: (a) shall have determined that
the Securities Depository meets the definitional requirements of an
"eligible securities depository" under Rule 17f-7; (b) shall provide to
the Fund or its authorized representative an assessment of the custody
risks associated with maintaining assets within such Securities
Depository; and (c) shall have established a system to monitor the
custody risks associated with maintaining assets with such Securities
Depository on a continuing basis and to promptly notify the Fund or its
Investment Adviser of any material changes in such risk or if the
Securities Depository no longer meets the definitional requirement of
an "eligible securities depository" under Rule 17f-7. In performing its
duties under this subsection, the Custodian shall use reasonable care
and may reasonably rely on such reasonable sources of information as
may be available including but not limited to: (i) published ratings;
(ii) information supplied by a Subcustodian that is a participant in
such Securities Depository; (iii) industry surveys or publications;
(iv) information supplied by the depository itself, by its auditors
(internal or external) or by the relevant Foreign Financial Regulatory
Authority. It is acknowledged that information procured through some or
all of these sources may not be independently verifiable by the
Custodian and that direct access to Securities Depositories is limited
under most circumstances. Accordingly, the Custodian shall not be
responsible for errors or omissions in its duties hereunder provided
that it has performed its monitoring and assessment duties with
reasonable care. The risk assessment shall be promptly provided to the
Fund or its Investment Advisor by such means as the Custodian shall
reasonably establish. Advice of material change in such assessment may
be provided by the Custodian in the manner established as customary
between the Fund and the Custodian for transmission of material market
information.
2. In addition, the definitions under the Custodian Agreement shall be amended
with the addition modification of the following:
FOREIGN FINANCIAL REGULATORY AUTHORITY shall have the meaning given by
Section 2(a)(50) of the 1940 Act.
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SECURITIES DEPOSITORY shall mean a central or book entry system or
agency established under Applicable Law for purposes of recording the
ownership and/or entitlement to investment securities for a given
market that, if a foreign Securities Depository, meets the definition
of an "eligible securities depository" under Rule 17f-7 under the 1940
Act.
All defined terms used herein shall have the meaning given in the Custodian
Agreement as amended by this Amendment.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be
duly executed as of the date first above written.
XXXXXX CAPITAL TRUST
By: \S\ Tai-Xxxx Xxxx
Name: Tai-Xxxx Xxxx
Title: Treasurer & Principal Financial Officer
By: XXXXX BROTHERS XXXXXXXX & CO.
By: \S\Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Partner
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AMENDED FOREIGN CUSTODY MANAGER DELEGATION AGREEMENT
By its execution of this Amended Foreign Custody Manager Delegation
Agreement between SCHWAB CAPITAL TRUST, a management investment company
organized under the laws of the Commonwealth of Massachusetts and registered
with the Securities and Exchange Commission (the "Commission") under the
Investment Company Act of 1940 (the "Fund"), and XXXXX BROTHERS XXXXXXXX & CO.,
a New York limited partnership with an office in Boston, Massachusetts (the
"Delegate").
WITNESSETH
WHEREAS the Fund has appointed the Delegate as custodian (the
"Custodian") of the Fund's Assets for the Funds listed on the attached Exhibit 1
pursuant to a Custodian Agreement dated October 28, 1999 (the "Custodian
Agreement");
WHEREAS the Fund may, from time to time, determine to invest and
maintain some or all of the Fund's Assets outside the United States;
WHEREAS, the Fund wishes to appoint the Delegate as Foreign Custody
Manager on the terms and conditions contained herein; and
WHEREAS, the Delegate wishes to serve as Foreign Custody Manager and to
perform the duties set forth herein on the terms and conditions contained
herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Fund and the Delegate agree as follows. Capitalized terms
shall have the meaning indicated in Section 12 unless otherwise indicated.
1. Delegation. Pursuant to the provisions of Rule 17f-5 under the
Act as amended, the Fund hereby appoints the Delegate as the Fund's Foreign
Custody Manager, and the Delegate hereby accepts such appointment and agrees to
perform the duties set forth in this Agreement concerning the safekeeping of the
Fund's Assets in the countries set forth in Schedule 1 hereto as amended from
time to time by the parties. The Delegate is hereby authorized to take such
actions on behalf of or in the name of the Fund
5
as are reasonably required to discharge its duties under this Agreement,
including, without limitation, to cause the Fund's Assets to be placed with a
particular Eligible Foreign Custodian in accordance herewith. In performing its
duties hereunder, the Delegate shall not be responsible for the decision to
invest in a given country and shall be protected in relying on an instruction
from the Fund or its investment adviser to settle a securities transaction in a
given country. Nothing in this Agreement shall require the Delegate to provide
services hereunder in any country not listed on Schedule 1 until such amended
Schedule 1 has been accepted by the Delegate in accordance herewith..
2. Selection of Eligible Foreign Custodian and Contract
Administration. The Delegate shall perform the following duties with respect to
the selection of Eligible Foreign Custodians and administration of certain
contracts governing the Fund's foreign custodial arrangements:
(a) Selection of Eligible Foreign Custodian. The Delegate shall
place and maintain the Fund's Assets with an Eligible Foreign Custodian;
provided that the Delegate shall have determined that the Fund's Assets will be
subject to reasonable care based on the standards applicable to custodians in
the relevant market after considering all factors relevant to the safekeeping of
such assets including without limitation:
(i) The Eligible Foreign Custodian's practices, procedures, and
internal controls, including, but not limited to, the physical protections
available for certificated securities (if applicable), the controls and
procedures for dealing with any securities depository, the method of
keeping custodial records, and the security and data protection practices,
and its Euro conversion safeguards, preparations and precautions;
(ii) Whether the Eligible Foreign Custodian has the requisite
financial strength to provide reasonable care for the Fund's Assets and to
take reasonable steps to procure that Fund Assets (excluding cash) are
protected in the event of an Eligible Foreign Custodian's insolvency;
(iii) The Eligible Foreign Custodian's general reputation and
standing; and
(iv) Whether the Fund will have jurisdiction over and be able to
enforce judgments against the Eligible Foreign Custodian, such as by virtue
of the
6
existence of any offices of such Eligible Foreign Custodian in the United
States or such Eligible Foreign Custodian's appointment of an agent for
service of process in the United States or consent to jurisdiction in the
United States.
(b) Contract Administration. The Delegate shall cause that the
foreign custody arrangements with an Eligible Foreign Custodian shall be
governed by a written contract that the Delegate has determined will provide
reasonable care for Fund assets based on the standards applicable to custodians
in the relevant market. Each such contract shall, except as set forth in the
last paragraph of this subsection (b), include provisions that provide:
(i) For indemnification or insurance arrangements (or any
combination of the foregoing) such that the Fund will be adequately
protected against the risk of loss of assets held in accordance with such
contract;
(ii) That the Fund's Assets will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the
Eligible Foreign Custodian or its creditors except a claim of payment for
their safe custody or administration under the contract or, in the case of
cash deposits, liens or rights in favor of creditors of such Custodian
arising under bankruptcy, insolvency or similar laws;
(iii) That beneficial ownership of each Fund's Assets will be freely
transferable without the payment of money or value other than for safe
custody or administration under the contract;
(iv) That adequate records will be maintained by the Eligible
Foreign Custodian identifying the Fund's Assets as belonging to the Fund or
as being held by a third party for the benefit of the Fund;
(v) That the Fund's independent public accountants will be given
access to those records described in (iv) above or confirmation of the
contents of such records; and
(vi) That the Delegate will receive sufficient and timely periodic
reports with respect to the safekeeping of the Fund's Assets, including,
but not limited to,
7
notification of any transfer to or from the Fund's account or a third party
account containing the Fund's Assets.
Such contract may contain, in lieu of any or all of the provisions
specified in this Section 3 (b), such other provisions that the Delegate
reasonably determines will provide, in their entirety, the same or a
greater level of care and protection for the Fund's Assets as the specified
provisions, in their entirety.
(c) Limitation to Delegated Selection. Notwithstanding anything in
this Agreement to the contrary, the duties under this Section 2 shall apply only
to Eligible Foreign Custodians selected by the Delegate and shall not apply to
any Eligible Foreign Custodian that the Delegate is directed to use pursuant to
Section 7.
3. Monitoring. The Delegate shall establish and maintain a system
to continuously monitor: (i) the appropriateness of maintaining assets with each
Eligible Foreign Custodian employed by the Fund under this Agreement; (ii) each
such Eligible Foreign Custodian's continuing compliance with the standards set
forth in Rule 17f-5 and this Agreement; and (iii) for Material Changes to the
Fund's foreign custody arrangements, as defined in paragraph 4 below (the
"Monitoring System"). The Delegate shall monitor the continuing appropriateness
of placement of the Fund's Assets in accordance with the criteria established
under Section 2(a) of this Agreement. The Delegate shall monitor the continuing
appropriateness of the contract governing the Fund's arrangements in accordance
with the criteria established under Section 2(b) of this Agreement.
4. Reporting. The Delegate shall provide to the Fund written
reports specifying the placement of Fund Assets with each Eligible Foreign
Custodian employed by the Fund and of any material changes in the Fund's foreign
custody arrangements, including, but not limited to, any withdrawal of Fund
Assets under Section 5 of this Agreement; any event that may adversely and
materially affect an Eligible Foreign Custodian's financial or operational
strength; a change in control of an Eligible Foreign Custodian; the failure of
an Eligible Foreign Custodian to comply with the standards in Rule 17f-5 or its
contract governing the Fund's foreign custody arrangements; any
8
material change in any contract governing the Fund's foreign custody
arrangements; the failure of the Delegate or a foreign custody arrangement to
meet the standards in Rule 17f-5 or the terms of this Agreement; any event that
may adversely affect the Delegate's ability to comply with the standards in Rule
17f-5 or the terms of this Agreement, and a material change in any information
provided to the Board regarding the Delegate's expertise in foreign custody
issues and risks; the Delegate's use of third party experts to perform its
foreign custody responsibilities; the Board's ability to monitor the Delegate's
performance; the Delegate's financial strength or its ability to indemnify the
Fund; the Delegate's inability to perform its duties in accordance with any
standard of care under this Agreement or any notice with respect to information
provided to the Fund under this Agreement ("Material Changes").
Reports regarding non-Material Changes, such as placement of Fund
Assets with an Eligible Foreign Custodian, shall be provided to the Board at its
regularly scheduled meeting next following the event being reported or more
frequently if reasonably requested by the Board. Reports regarding Material
Changes shall be provided promptly after the Material Change. Any report
required under this Agreement shall be sent to the Fund's Treasurer or his or
her delegate. Except as otherwise provided in this Section 4, the Delegate's
reporting responsibilities hereunder may be fulfilled through special Delegate
reports or through the Delegate's information products including without
limitation market practice reports or global update reports. Nothing in this
section shall limit the Delegate's duty to report the location of the Fund's
Assets as part of its normal reporting under the Custodian Agreement.
At least annually, the Delegate shall provide to the Fund a written
statement as may be reasonably required to document its compliance with the
terms of this Agreement as well as information regarding the following factors:
(i) the Delegate's expertise in foreign custody issues and risks; (ii) the
Delegate's use of third party experts to perform its foreign custody
responsibilities; (iii) the Board's ability to monitor the Delegate's
performance; and (iv) the Delegate's financial strength and its ability to
indemnify the Fund if necessary.
9
5. Provision of Information. The Delegate agrees to provide to
the Fund such information in its possession as is specified in Schedule 2
hereto, as such Schedule may be amended from time to time by the parties. The
Delegate shall use reasonable care in the gathering of such information however,
the Delegate shall not be deemed to warranty the completeness or specific
accuracy of such information. Notwithstanding the foregoing, the Fund agrees
that it may collect such information from other sources and seek its own legal
and tax advice with respect to it. The Delegate agrees to promptly notify the
Fund at any time that the Delegate becomes aware of a material change to the
information provided hereunder or if the Delegate learns that any information
previously provided is incomplete or inaccurate.
6. Withdrawal of Fund's Assets. If the Delegate determines that
an arrangement with a specific Eligible Foreign Custodian no longer meets the
requirements of Rule 17f-5 or this Agreement, the Delegate shall notify the Fund
and act in accordance with Proper Instructions from an Authorized Person. Under
exigent circumstances however, the Delegate is authorized to withdraw Fund
Assets if, after first notifying the Fund, twenty-four (24) hours has passed
without receiving a response to the notification from an Authorized Person.
7. Direction as to Eligible Foreign Custodian. Notwithstanding
this Delegation Agreement, the Fund may direct the Delegate to place and
maintain the Fund's Assets with a particular Eligible Foreign Custodian. In such
event, the Delegate shall be entitled to rely on any such instruction as a
Proper Instruction under the terms of the Custodian Agreement and shall have no
duties under this Delegation Agreement with respect to such arrangement save
those that it may undertake specifically in writing with respect to each
particular instance.
8. Standard of Care. In carrying out its duties under this
Agreement, the Delegate agrees to exercise reasonable care, prudence and
diligence such as a person having responsibility for safekeeping the Fund's
Assets would exercise. The Delegate agrees to promptly notify the Fund if, at
any time, the Delegate believes it cannot perform its duties hereunder in
accordance with the foregoing standard of care.
10
9. Representations. The Delegate hereby represents and warrants
that it is a U.S. Bank, that this Agreement has been duly authorized, executed
and delivered by the Delegate and is a legal, valid and binding agreement of the
Delegate, and that the Delegate has established and agrees to maintain the
Monitoring System during the term of the Delegation Agreement.
The Fund hereby represents and warrants that this Agreement has been
duly authorized, executed and delivered by the Fund and is a legal, valid and
binding agreement of the Fund.
10. Effectiveness; termination. This Agreement shall be effective
as of the date on which this Agreement shall have been accepted by the Delegate,
as indicated by the date set forth below the Delegate's signature. This
Agreement may be terminated at any time, without penalty, by written notice from
the terminating party to the non-terminating party. Such termination shall be
effective on the 30th day following the date on which the non-terminating party
shall receive the foregoing notice. The foregoing to the contrary
notwithstanding, this Agreement shall be deemed to have been terminated
concurrently with the termination of the Custodian Agreement.
11. Notices. Notices and other communications under this Agreement
are to be made in accordance with the arrangements designated for such purpose
under the Custodian Agreement unless otherwise indicated in writing referencing
this Agreement and executed by both parties.
12. Definitions. Capitalized terms in this agreement have the
following meanings:
a. Board - shall mean the board of trustees or board of
directors, as applicable, of the Fund.
b. Eligible Foreign Custodian - shall have the meaning set forth
in Rule 17f-5(a)(1).
11
c. Foreign Custody Manager - shall mean a foreign custody manager
as defined under Rule 17f-5(a)(3).
d. Fund's Assets - shall mean any of the Fund's investments
(including foreign currencies) for which the primary market is outside
the United States, and such cash and cash equivalents as are reasonably
necessary to effect the Fund's transactions in such investments.
e. Proper Instructions - shall have the meaning set forth in the
Custodian Agreement.
f. Sovereign Risk - shall have the meaning set forth in Section
9.1.3 of the Custodian Agreement.
13. Governing Law and Jurisdiction. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND BE GOVERNED BY THE LAWS OF, THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW OF SUCH STATE. THE PARTIES
HERETO IRREVOCABLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK AND THE FEDERAL COURTS LOCATED IN NEW YORK CITY IN THE BOROUGH
OF MANHATTAN, AND OF THE COURTS OF THE STATE OF CALIFORNIA AND THE FEDERAL
COURTS LOCATED IN THE CITY AND COUNTY OF SAN FRANCISCO.
14. Fees. Delegate shall perform its functions under this
agreement for the compensation determined under the Custodian Agreement.
15. Integration. This Agreement sets forth all of the Delegate's
duties with respect to the selection and monitoring of Eligible Foreign
Custodians, the administration of contracts with Eligible Foreign Custodians,
the withdrawal of assets from Eligible Foreign Custodians and the issuance of
reports in connection with such duties. The terms of the Custodian Agreement
shall apply generally as to matters not
12
expressly covered in this Agreement, including dealings with the Eligible
Foreign Custodians in the course of discharge of the Delegate's obligations
under the Custodian Agreement.
16. Limitation of liability; Satisfaction of Claims. The Delegate
shall be responsible under this Agreement for any loss, claim, damage or
liability incurred or suffered by the Fund or its officers, directors, trustees,
employees or agents that results from the Delegate's failure to exercise the
standard of care set forth in this Agreement or the Delegate's willful
misfeasance or bad faith in the performance of its duties under this Agreement,
and shall indemnify such parties therefor. The Delegate's responsibility for any
loss, claim, damage or liability caused by or resulting from the acts or
omissions of any Eligible Foreign Custodian shall be in accordance with the
applicable provisions of the Custodian Agreement.
The Delegate agrees that any claims made against a Fund under this
Agreement shall be satisfied only from assets of such Fund, and not from the
assets of any separate Fund held hereunder; that any person executing this
Agreement has executed it on behalf of the Fund and not individually, and that
the obligations of the Fund arising out of this Agreement are not binding upon
such person or the Fund's shareholders individually, but binding upon the
property and other assets of the Fund; that no shareholders, trustees, directors
or officers of the Fund may be held personally liable for and obligations of the
Fund arising out of this Agreement.
17. Most Favored Client. The Custodian intends to execute Foreign
Custody Manager Delegation Agreements with provisions which are similar to those
herein contained with all clients who intend to appoint the Custodian as Foreign
Custody Manager. In the event that the Custodian executes any such Foreign
Custody Manager Delegation Agreement with any one of its mutual fund clients
which contain a standard of care and/or liability provisions more favorable to
such client than those contained in this Agreement with respect to the Fund,
then the Custodian will promptly so notify the Fund in writing. The Fund shall
be entitled, upon written request within ninety (90) days after receipt of said
notification, to require the Custodian to substitute such provisions for
13
the standard of care and/or liability provisions contained herein. The Custodian
agrees promptly to do so by executing an amendment to the Agreement, whereupon
said amendment shall govern the relationship of the parties from and after the
execution and delivery of said amendment.
18. Euro. The Delegate hereby acknowledges that it and its
applicable Subcustodians are capable of processing instruments denominated in
and transactions effected in the Euro. In the event the foregoing ceases to be
true or accurate, the Delegate shall provide a report of Material Change in
accordance with Section 4 of this Agreement.
NOW THEREFORE, the parties have caused this Agreement to be executed by its duly
authorized representatives, effective as of the date first above written.
XXXXX BROTHERS XXXXXXXX & CO. XXXXXX CAPITAL TRUST
By: \s\ Xxxxxxx X. Xxxxxx By: \s\ Tai-Xxxx Xxxx
Name: Xxxxxxx X. Xxxxxx Name: Tai-Xxxx Xxxx
Title: Partner Title: Treasurer & Principal Financial
Officer
Date: June 14, 2001 Date: June 21, 2001
14
SCHEDULE 1
TO THE XXXXXX CAPITAL TRUST
AMENDED FOREIGN CUSTODY MANAGER DELEGATION AGREEMENT
AUSTRALIA
AUSTRIA
BELGIUM
CANADA
DENMARK
FINLAND
FRANCE
GERMANY
HONG KONG
IRELAND
ITALY
JAPAN
NETHERLANDS
NEW ZEALAND
NORWAY
PORTUGAL
SINGAPORE
SPAIN
SWEDEN
SWITZERLAND
UNITED KINGDOM
15
EXHIBIT 1
TO THE
AMENDED FOREIGN CUSTODY MANAGER DELEGATION AGREEMENT
BETWEEN
XXXXXX CAPITAL TRUST
and
XXXXX BROTHERS XXXXXXXX & CO.
Dated as of June 29, 2001
COMMUNICATIONS FOCUS FUND
SCHWAB INTERNATIONAL INDEX FUND
FINANCIAL SERVICES FOCUS FUND
HEALTH CARE FOCUS FUND
TECHNOLOGY FOCUS FUND
16
SCHEDULE 2
TO THE XXXXXX CAPITAL TRUST
AMENDED FOREIGN CUSTODY MANAGER DELEGATION AGREEMENT
1. The Delegate shall furnish the Fund, annually and upon the initial
placing of fund Assets into a country, the following information:
a. An opinion of local counsel concerning whether applicable foreign law would
restrict the: (i) access afforded the Fund's independent public accountants
to books and records kept by an Eligible Foreign Custodian located in that
country; (ii) Fund's ability to recover its Fund Assets in the event of
bankruptcy of an Eligible Foreign Custodian in that country; or (iii)
Fund's ability to recover Fund Assets that are lost while under the control
of an Eligible Foreign Custodian located in that country.
b. A market practice report which shall include without limitation 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.
c. Such information as to which the Delegate has knowledge from its ongoing
dealings in such country regarding prevailing Country Risk and Sovereign
Risk, including: (i) the likelihood of expropriation, nationalization,
freezes or confiscation of Fund Assets and, (ii) whether difficulties in
converting the Fund's cash and cash equivalents to U.S. dollars are
reasonably foreseeable.
2. Global updates which include without limitation changes in the
information contained in the above market reports.
3. With respect to the jurisdictions listed for which it provides services
as an FCM, the Delegate agrees to provide to the Board and each Fund's
investment adviser, the following information relating to Securities
Depositories; prior to the time that securities are placed with such depository,
the Custodian shall have prepared and delivered to the Fund or its investment
advisor an analysis of the custody risks associated with maintaining assets with
the Securities Depository and shall have established a system to monitor such
risks on a continuing basis in accordance with subsection 8.2.3 of the Custodian
Agreement (as amended).
4. The Delegate shall furnish additional information as the Board may
request from time to time with respect to foreign custody and settlement issues.
17
