EXHIBIT (g)(2)(a)
INVESTMENT COMPANY RIDER TO THE CUSTODY AGREEMENT dated October 12,
1984, as amended by the Global Custody Agreement dated March 20, 1998 (the
"Agreement") between MAINSTAY VP SERIES FUND, INC. ("Customer"), having a place
of business at New York Life Insurance and Annuity Corporation, 00 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 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. Add the following after the first sentence of Section 3 of
the Agreement:
At the request of Customer, Bank may, but need not, add to Schedule A
an Eligible Foreign Custodian (as hereinafter defined) where Bank has
not acted as Foreign Custody Manager with respect to the selection
thereof. Bank shall notify Customer in the event that it elects to add
any such entity.
Section 3. Add the following language to the end of Section 3 of the
Agreement:
(i) The term Subcustodian as used herein shall mean the following:
(a) a "U.S. Bank," which shall mean a U.S. bank as defined in rule
17f-5(a)(7) under the Investment Company Act of 1940, as amended
("Act"); and
(b) an "Eligible Foreign Custodian," which, as defined in rule
17f-5(a)(1) and (5), shall mean a (i) 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, and (ii) 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. In addition, an Eligible Foreign
Custodian shall also mean any other entity that shall have been so
qualified by exemptive order, rule or other appropriate action of the
SEC.
(ii) The term "securities depository" as used herein shall mean the
following when referring to a securities depository located:
(a) outside the U.S, an "Eligible Securities Depository" which, in
turn, shall have the same meaning as in rule 17f-7(b)(1)(i)-(vi) as the
same may be amended from time to time, or that has otherwise been made
exempt by an SEC exemptive order, rule or other appropriate SEC action,
except that prior to the compliance date with rule 17f-7 for a
particular securities depository the term "securities depository" shall
be as defined in (a)(1)(ii)-(iii) of the 1997 amendments to rule 17f-5;
and
(b) in the U.S., a "securities depository" as defined in SEC rule
17f-4(a) under the Act.
(iii) For purposes of the provisions of the Agreement imposing
liability on Bank, as Fireugb Custody Manager, the term Subcustodian shall not
include any Eligible Foreign Custodian as to which Bank has not acted as Foreign
Custody Manager. For purposes of clarity, the term Subcustodian shall not
include any securities depository.
Section 4. Add new Section 16 to the Agreement as follows:
16. COMPLIANCE WITH SECURITIES AND EXCHANGE COMMISSION RULE 17f-5
("RULE 17f-5").
(a) Customer's board of directors (or equivalent body) (hereinafter
"Board") hereby delegates to Bank, and Bank hereby accepts the delegation to it
of, the obligation to perform as Customer's "Foreign Custody Manager" (as that
term is defined in rule 17f-5(a)(3)), including for the purposes of: (i)
selecting Eligible Foreign Custodians (as that term is defined in rule
17f-5(a)(1), as the same may be amended from time to time, or that have
otherwise been exempted by SEC exemptive order, rule other appropriate SEC
action) to hold Customer's Foreign Assets as that term is defined in rule
17f-5(a)(2), and (ii) evaluating the contractual arrangements with such Eligible
Foreign Custodians (as set forth in rule 17f-5(c)(2)), and (iii) monitoring such
foreign custody arrangements (as set forth in rule 17f-5(c)(3)).
(b) In connection with the foregoing, Bank shall:
(i) provide written reports notifying Customer's Board, or its
designated agent, of the placement of Foreign Assets 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 Customer's Board at such times as the Board deems
reasonable and appropriate based on the circumstances of Customer's
foreign custody arrangements but until further notice from Customer
requesting a different schedule, such reports shall be provided not
less than quarterly in summary form, with a more detailed report
annually.
(ii) exercise such reasonable care, prudence and diligence in
performing as Customer's Foreign Custody Manager as a person having
responsibility for the safekeeping of Foreign Assets would exercise;
(iii) in selecting and placing assets with an Eligible Foreign
Custodian, first have determined that Foreign Assets 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 Assets, including, without
limitation, those factors set forth in rule 17f-5(c)(1)(i)-(iv);
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(iv) make all arrangements with the Eligible Foreign Custodian under a
written contract with the Eligible Foreign Custodian which the FCM has
determined will provide reasonable care for Foreign Assets based on the
standards applicable to custodians in the relevant market as provided
in rule 17f-5(c)(2) and will include, at a minimum, the contractual
provisions set forth in rule 17f-5(c)(2)(i); and
(v) have established a system to monitor the continued appropriateness
of maintaining Foreign Assets with a particular Eligible Foreign
Custodian and to monitor the performance of the governing contractual
arrangements; and
(vi) promptly advise Customer in the event that Bank shall have
determined that the Eligible Foreign Custodian no longer meets the
requirements of rule 17f-5 so that the Fund may withdraw the Foreign
Assets from the Eligible Foreign Custodian as soon as reasonably
practicable.
(c) Subject to (b)(i)-(v) above, Bank, in its capacity as Foreign
Custody Manager, is hereby authorized to place and maintain Foreign Assets on
behalf of Customer with Eligible Foreign Custodians pursuant to a written
contract deemed appropriate by Bank.
(d) Bank represents to Customer that it is a U.S. Bank as defined in
rule 17f-5(a)(7). Customer represents to Bank that: (1) the Assets being placed
and maintained in Bank's custody are subject to the 1940 Act as the same may be
amended from time to time; (2) its Board (or other governing body) has
determined that it is reasonable to rely on Bank to perform as Customer's
Foreign Custody Manager; and (3) its Board (or other governing body) or its
investment adviser shall have determined that Customer may maintain Foreign
Assets in each country in which Customer's Foreign Assets shall be held
hereunder and determined to accept the risks arising therefrom (including, but
not limited to, a country's financial infrastructure, prevailing custody and
settlement practices, laws applicable to the safekeeping and recovery of Foreign
Assets held in custody, and the likelihood of nationalization, currency controls
and the like, provided that country risk shall not include the custody or
settlement practices and procedures of an Eligible Foreign Custodian employed by
the Foreign Custody Manager) (collectively "Country Risk"). Nothing contained
herein shall require Bank to make any selection on behalf of Customer that would
entail consideration of Country Risk and, except as may be provided in (e)
below, to engage in any monitoring of Country Risk.
(e) Bank shall provide to Customer such information relating to Country
Risk as is specified in Appendix 1-A hereto. Customer hereby acknowledges that:
(i) such information is solely designed to inform Customer 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 to the extent consistent with its
obligation to provide reasonable care, prudence and diligence.
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Section 5. Add a new Section 17 to the Agreement as follows:
17. COMPLIANCE WITH SECURITIES AND EXCHANGE COMMISSION RULE 17f-7
("RULE 17f-7").
(a) Bank shall, for consideration by Customer, provide an analysis in
accordance with rule 17f-7(a)(1)(i)(A) of the custody risks associated with
maintaining Customer's Foreign Assets with each Eligible Securities Depository
used by Bank as of the date hereof (or, in the case of an Eligible Securities
Depository not used by Bank as of the date hereof, prior to the initial
placement of Customer's Foreign Assets at such Depository) and at which any
Foreign Assets of Customer are held or are expected to be held. The Bank should
also inform the Customer whether holding assets in particular Eligible
Securities Depositories is voluntary or compulsory. The foregoing analysis will
be provided to Customer at Bank's Website. In connection with the foregoing,
Customer shall notify Bank of any Eligible Securities Depositories at which it
does not choose to have its Foreign Assets held. Bank shall monitor the custody
risks associated with maintaining Customer's Foreign Assets at each such
Eligible Securities Depository on a continuing basis and shall promptly notify
Customer or its adviser of any material changes in such risks.
(b) Bank shall exercise reasonable care, prudence and diligence in
performing the requirements set forth in Section 17(a) above.
(c) Based on the information available to it in the exercise of
reasonable care, prudence and diligence, Bank shall determine the eligibility
under rule 17f-7(b)(1) of each depository before including it on Appendix 1-B
hereto and shall promptly advise Customer if any Eligible Securities Depository
no longer meets the requirements of rule 17f-7. (Eligible Securities
Depositories used by Bank as of the date hereof are set forth in Appendix 1-B
hereto, and as the same may be amended on notice to Customer from time to time.)
(d) In the event an Eligible Securities Depository no longer
meets the requirements of rule 17f-7, the Bank shall promptly withdraw
Customer's Foreign Assets from such depository in accordance with the
instructions provided by the Customer.
IN WITNESS WHEREOF, the parties have executed this Amendment as of July
2, 2001.
MAINSTAY VP SERIES FUND, INC. THE CHASE MANHATTAN BANK
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------- -------------------------------
Name: Xxxx X. Xxxxxxx Name: Xxxxx X. Xxxxxxxx
Title: President Title: Vice President
Date: July 31, 2001 Date: August 15, 2001
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APPENDIX 1-A
Information Regarding Country Risk
1. To aid Customer in its determinations regarding Country Risk, Bank
shall furnish annually and upon the initial placing of Foreign Assets into a
country the following information :
A. Opinions of local counsel concerning:
i. Whether applicable foreign law would restrict the
access afforded Customer'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
Customer's ability to recover its assets in the event
of the bankruptcy of an Eligible Foreign Custodian
located in that country.
iii. Whether applicable foreign law would restrict the
Customer's ability to recover assets 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 Customer's assets.
ii. Whether difficulties in converting Customer'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, (vi) market
settlement risk, (vii) Eligible Securities Depositories
(including Depository evaluation), if any.
2. Bank shall furnish the following additional information:
Market flashes, including with respect to changes in the
information in market reports.
APPENDIX 1-B
Eligible Securities Depositories
