AMENDMENT, dated May 2, 2001 to the October 9, 1996 custody
agreement ("Agreement"), between ICON Funds ("Customer"), having a place of
business at 00000 X. Xxxxxxxx Xxxx, Xxxxx XX, Xxxxxxxxx, Xxxxxxxx 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 by deleting the Investment
Company Rider thereto and inserting, in lieu thereof, the following Rider:
I. 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 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.
II. 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); and
(b) an "Eligible Foreign Custodian," which, as defined in rule
17f-5(a)(1) and (5), 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, and (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. 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 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.
(b) in the U.S., a "securities depository" as defined in SEC rule
17f-4(a).
(iii) For purposes of clarity, it is understood and agreed that the
term Subcustodian shall not include any securities depository. For purposes
of the provisions of the Agreement imposing liability on Bank, the term
Subcustodian shall not include any Eligible Foreign Custodian as to which
Bank has not acted as Foreign Custody Manager.
III. "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, 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 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 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);
(iv) determine that the written contract with the Eligible Foreign
Custodian requires that the Eligible Foreign Custodian 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
(v) have established a system to monitor the continued
appropriateness of maintaining Foreign Assets with particular
Eligible Foreign Custodians and performance of the governing
contractual arrangements; it being understood, however, that in the
event that Bank shall have determined that the existing Eligible
Foreign Custodian in a given country would no longer afford Foreign
Assets reasonable care and that no other Eligible Foreign Custodian
in that country would afford reasonable care, Bank shall promptly so
advise Customer and shall then act in accordance with the
Instructions of Customer with respect to the disposition of the
affected Foreign Assets.
Subject to (b)(i)-(v) above, Bank 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.
(c) Except as expressly provided herein and in Section 17 hereof,
Customer shall be solely responsible to assure that the maintenance of
Foreign Assets hereunder complies with the rules, regulations,
interpretations and exemptive orders promulgated by or under the authority of
the SEC.
(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 Investment Company
Act of 1940, as amended (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) (collectively ("Country Risk")). Nothing contained herein shall
require Bank to make any selection on behalf of Customer that would
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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.
IV. Add the following language to the end of the first sentence of
Section 4(d) of the Agreement: "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."
V. 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
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
diligence, Bank shall determine the eligibility under rule 17f-7 of each
depository before including it on Appendix 1-B hereto and shall promptly
advise Customer if any Eligible Securities Depository ceases to be eligible.
(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) Bank need not commence performing any of the duties set forth in
this Section 17 prior to March 31, 2001, but Bank shall advise Customer if it
is prepared to commence such duties prior to such date as to particular
depositories.
*********************
IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date first above written.
ICON FUNDS THE CHASE MANHATTAN BANK
By: /s/ E.L. Xxxxxx By: /s/ Xxxxxxx Xxxxxxxxxx
---------------------- ------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxxx Xxxxxxxxxx, VP
Title: VP & CFO Title:
Date: May 2, 2001 Date: 5/31/01
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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 (check items applicable):
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
