[CHASE LOGO] CHASE
GLOBAL CUSTODY AGREEMENT
BETWEEN
FRIENDS IVORY FUNDS
AND
THE CHASE MANHATTAN BANK
December 23, 1999
GLOBAL CUSTODY AGREEMENT
This Agreement, dated December 23, 1999 is between THE CHASE MANHATTAN BANK
("BANK"), with a place of business at 000 Xxxx Xxx., Xxx Xxxx, Xxx Xxxx
00000-0000, and FRIENDS IVORY FUNDS ("CUSTOMER") with a place of business at Xxx
Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, on behalf of the funds
set forth on Schedule 1 hereto, and as the same may be amended from time to
time.
1. INTENTION OF THE PARTIES; DEFINITIONS
1.1 INTENTION OF THE PARTIES.
(a) This Agreement sets out the terms governing custodial, settlement
and certain other associated services offered by Bank to Customer. Bank will be
responsible for the performance of only those duties that are set forth in this
Agreement or expressly contained in Instructions that are consistent with the
provisions of this Agreement and with Bank's operations and procedures. Customer
acknowledges that Bank is not providing any legal, tax or investment advice in
providing the services hereunder.
(b) Investing in foreign markets may be a risky enterprise. The
holding of Financial Assets and cash in foreign jurisdictions may involve risks
of loss or other special features. Bank will not be liable for any loss that
results from the general risks of investing or Country Risk.
1.2 DEFINITIONS.
(a) As used herein, the following terms have the meaning hereinafter
stated.
"ACCOUNT" has the meaning set forth in Section 2.1 of this Agreement.
"AFFILIATE" means an entity controlling, controlled by, or under
common control with, Bank.
"AFFILIATED SUBCUSTODIAN" means a Subcustodian that is an Affiliate.
"APPLICABLE LAW" means any statute, whether national, state or local,
applicable in the United States or any other country, the rules
of the treaty establishing the European Community, any other
law, rule, regulation or interpretation of any governmental
entity, any applicable common law, and any decree, injunction,
judgment, order, ruling, or writ of any governmental entity.
"AUTHORIZED PERSON" means any person (including an investment manager
or other agent) who has been designated by written notice from
Customer or its designated agent to act on behalf of Customer
hereunder. Such persons will continue to be Authorized Persons
until such time as Bank receives Instructions from Customer or
its designated agent that any such person is no longer an
Authorized Person.
"BANK INDEMNITEES" means Bank, its Subcustodians, and their respective
nominees, directors, officers, employees and agents.
2
"BANK'S LONDON BRANCH" means the London branch office of The Chase
Manhattan Bank.
"CASH ACCOUNT" has the meaning set forth in Section 2.1(a)(ii).
"CORPORATE ACTION" means any subscription right, bonus issue, stock
repurchase plan, redemption, exchange, tender offer, or similar
matter with respect to a Financial Asset in the Securities
Account that require discretionary action by the holder, but
does not include proxy voting.
"COUNTRY RISK" means the risk of investing or holding assets in a
particular country or market, including, but not limited to,
risks arising from: nationalization, expropriation or other
governmental actions; the country's financial infrastructure,
including prevailing custody and settlement practices; laws
applicable to the safekeeping and recovery of Financial Assets
and cash held in custody; the regulation of the banking and
securities industries, including changes in market rules;
currency restrictions, devaluations or fluctuations; and
market conditions affecting the orderly execution of
securities transactions or the value of assets.
"ENTITLEMENT HOLDER" means the person named on the records of a
Securities Intermediary as the person having a Securities
Entitlement against the Securities Intermediary.
"FINANCIAL ASSET" means, as the context requires, either the asset
itself or the means by which a person's claim to it is
evidenced, including a Security, a security certificate, or a
Securities Entitlement. "FINANCIAL ASSET" does not include
cash.
"INSTRUCTIONS" has the meaning set forth in Section 3.1 of this
Agreement.
"LIABILITIES" means any liabilities, losses, claims, costs, damages,
penalties, fines, obligations, or expenses of any kind
whatsoever (including, without limitation, reasonable
attorneys', accountants', consultants' or experts' fees and
disbursements).
"SECURITIES" means stocks, bonds, rights, warrants and other
negotiable and non-negotiable instruments, whether issued in
certificated or uncertificated form, that are commonly
traded or dealt in on securities exchanges or financial
markets. "SECURITIES" also means other obligations of an
issuer, or shares, participations and interests in an issuer
recognized in the country in which it is issued or dealt in
as a medium for investment and any other property as may be
acceptable to Bank for the Securities Account.
"SECURITIES ACCOUNT" means each Securities custody account on Bank's
records to which Financial Assets are or may be credited
pursuant hereto.
"SECURITIES DEPOSITORY" has the meaning set forth in Section 5.1 of
this Agreement.
3
"SECURITIES ENTITLEMENT" means the rights and property interest of an
Entitlement Holder with respect to a Financial Asset as set
forth in Part 5 of Article 8 of the Uniform Commercial Code of
the State of New York, as the same may be amended from time to
time.
"SECURITIES INTERMEDIARY" means Bank, a Subcustodian, a Securities
Depository, and any other financial institution which in the
ordinary course of business maintains custody accounts for
others and acts in that capacity.
"SUBCUSTODIAN" has the meaning set forth in Section 5.1 and includes
Affiliated Subcustodians.
(b) All terms in the singular will have the same meaning in the plural
unless the context otherwise provides and visa versa.
2. WHAT BANK IS REQUIRED TO DO
2.1 SET UP ACCOUNTS.
(a) Bank will establish and maintain the following accounts
("ACCOUNTS"):
(i) a Securities Account in the name of Customer for
Financial Assets, which may be received by Bank or
its Subcustodian for the account of Customer,
including as an Entitlement Holder; and
(ii) an account in the name of Customer ("CASH
ACCOUNT") for any and all cash in any currency
received by Bank or its Subcustodian for the
account of Customer.
Notwithstanding paragraph (ii), cash held in respect of those markets where
Customer is required to have a cash account in its own name held directly with
the relevant Subcustodian will be held in that manner and will not be part of
the Cash Account.
(b) At the request of Customer, additional Accounts may be
opened in the future, which will be subject to the terms of this Agreement.
2.2 CASH ACCOUNT.
Except as otherwise provided in Instructions acceptable to Bank, all
cash held in the Cash Account will be deposited during the period it is credited
to the Accounts in one or more deposit accounts at Bank or at Bank's London
Branch. Any cash so deposited with Bank's London Branch will be payable
exclusively by Bank's London Branch in the applicable currency, subject to
compliance with any applicable laws, regulations, governmental decrees or
similar orders.
4
2.3 SEGREGATION OF ASSETS; NOMINEE NAME.
(a) Bank will identify in its records that Financial Assets
credited to Customer's Securities Account belong to Customer
(except as otherwise may be agreed by Bank and Customer).
(b) Bank will require each Subcustodian to identify in its own
records that Financial Assets credited to Customer's
Securities Account belong to customers of Bank (to the
extent permitted by Applicable Law or market practice), such
that it is readily apparent that the Financial Assets do not
belong .to Bank or the Subcustodian.
(c) Bank is authorized, in its discretion, to hold in bearer
form, such Financial Assets as are customarily held in
bearer form; and to register in the name of the Customer,
Bank, a Subcustodian, a Securities Depository, or their
respective nominees, such Financial Assets as are
customarily held in registered form. Customer authorizes
Bank or its Subcustodian to hold Financial Assets in omnibus
accounts and will accept delivery of Financial Assets of the
same class and denomination as those deposited with Bank or
its Subcustodian.
2.4 SETTLEMENT OF TRADES.
When Bank receives an Instruction directing settlement of a trade in
Financial Assets that includes all information required by Bank to effect such
settlement, Bank will use reasonable care to effect such settlement as
instructed. Settlement of purchases and sales of Financial Assets will be
conducted in accordance with prevailing standards of the market in which the
transaction occurs. The risk of loss will be Customer's whenever Bank delivers
Financial Assets or payment in accordance with applicable market practice in
advance of receipt or settlement of the expected consideration. In the case of
the failure of Customer's counterparty to deliver the expected consideration as
agreed, Bank will contact the counterparty to seek settlement, but Bank will not
be obligated to institute legal proceedings, file proof of claim in any
insolvency proceeding, or take any similar action. Nevertheless, Bank shall
promptly advise Customer of such failure. (For Customer's information, Bank's
most recent assessment of settlement finality in various markets shall be
furnished upon request to Customer in a matrix captioned Settlement System
Market Practice Assessment.)
2.5 CONTRACTUAL SETTLEMENT DATE ACCOUNTING.
(a) Bank will effect book entries on a "contractual settlement
date accounting" basis as described below with respect to the settlement of
trades in those markets where Bank generally offers contractual settlement day
accounting and will notify Customer of these markets from time to time.
(i) SALES: On the settlement date for a sale, Bank
will credit the Cash Account with the sale
proceeds of the sale and transfer the relevant
Financial Assets to an account pending settlement
of the trade if not already delivered.
5
(ii) PURCHASES: On the settlement date for the purchase
(or earlier, if market practice requires delivery
of the purchase price before the settlement date),
Bank will debit the Cash Account with the
settlement monies and credit a separate account
Bank then will post the Securities Account as
awaiting receipt of the expected Financial Assets.
Customer will not be entitled to the delivery of
Financial Assets that are awaiting receipt until
Bank or a Subcustodian actually receives them.
Bank reserves the right to restrict in good faith the availability of
contractual day settlement accounting for credit reasons.
(b) Bank may (in its discretion) upon oral or written
notification to Customer reverse any debit or credit made pursuant to Section
2.5(a) prior to a transaction's actual settlement if such transaction fails to
settle within a reasonable period, and Customer will be responsible for any
costs or liabilities resulting from such reversal. Customer acknowledges that
the procedures described in this sub-section are of an administrative nature,
and Bank does not undertake to make loans and/or Financial Assets available to
Customer.
2.6 ACTUAL SETTLEMENT DATE ACCOUNTING.
With respect to any sale or purchase transaction that is not posted to
the Account on the contractual settlement date as referred to in Section 2.5,
Bank will post the transaction on the date on which the cash or Financial Assets
received as consideration for the transaction is actually received by Bank.
2.7 INCOME COLLECTION; AUTOCREDIT.
(a) Bank will credit the Cash Account with income and redemption
proceeds on Financial Assets in accordance with the times notified by Bank
from time to time on or after the anticipated payment date, net of any taxes
that are withheld by Bank or any third party. Where no time is specified for
a particular market, income and redemption proceeds from Financial Assets
will be credited only after actual receipt and reconciliation. Bank may
reverse such credits upon oral or written notification to Customer that Bank
believes that the corresponding payment will not be received by Bank within a
reasonable period or such credit was incorrect.
(b) Bank will make reasonable endeavors in its discretion to contact
appropriate parties to collect unpaid interest, dividends or redemption
proceeds, but neither Bank nor its Subcustodians will be obliged to file any
formal notice of default, institute legal proceedings, file proof of claim in
any insolvency proceeding, or take any similar action. Nevertheless, Bank shall
promptly advise Customer of such payment failure.
2.8 FRACTIONS/REDEMPTIONS BY LOT.
Bank may sell fractional interests in Financial Assets and credit the
Cash Account with the proceeds of the sale. if some, but not all, of an
outstanding class of Financial Asset is called for redemption, Bank may allot
the amount redeemed among the respective beneficial holders of such class of
Financial Asset in any manner Bank deems to be fair and equitable.
6
2.9 PRESENTATION OF COUPONS; CERTAIN OTHER MINISTERIAL ACTS.
Until Bank receives Instructions to the contrary, Bank will:
(a) present all Financial Assets for which Bank has received
notice of a call for redemption or that have otherwise
matured, and all income and interest coupons and other
income items that call for payment upon presentation;
(b) execute in the name of Customer such certificates as may be
required to obtain payment in respect of Financial Assets;
and
(c) exchange interim or temporary documents of title held in the
Securities Account for definitive documents of title.
2.10 CORPORATE ACTIONS.
(a) Bank will follow Corporate Actions and promptly advise
Customer of those Corporate Actions of which Bank's central corporate actions
department receives notice from the issuer or from the Securities Depository in
which such Financial Assets are maintained or notice published in publications
and reported in reporting services routinely used by Bank for this purpose.
(b) If an Authorized Person fails to provide Bank with timely
Instructions with respect to any Corporate Action, neither Bank nor its
Subcustodians or their respective nominees will take any action in relation to
that Corporate Action, except as otherwise agreed in writing by Bank and
Customer or as may be set forth by Bank as a default action in the advice it
provides under Section 2.10 (a) with respect to that Corporate Action.
2.11 PROXY VOTING.
(a) Subject to and upon the terms of this sub-section, Bank will
promptly provide Customer with information which it receives on matters to be
voted upon at meetings of holders of Financial Assets ("NOTIFICATIONS"), and
Bank will act in accordance with Customer's Instructions in relation to such
Notifications ("THE ACTIVE PROXY VOTING SERVICE"). If information is received by
Bank at its proxy voting department too late to permit timely voting by
Customer, Bank's only obligation is to provide, so far as reasonably
practicable, a Notification (or summary information concerning a Notification)
on an "information only" basis.
(b) The active proxy voting service is available only in certain
markets, details of which are available from Bank on request Provision of the
active proxy voting service is conditional upon receipt by Bank of a duly
completed enrollment form as well as additional documentation that may be
required for certain markets.
(c) Bank will act upon Instructions to vote on matters referred
to in a Notification, provided Instructions are received by Bank at its proxy
voting department by the deadline referred to in the relevant Notification. If
Instructions are not received in a timely manner, Bank will not be obligated to
provide further notice to Customer.
7
(d) Bank reserves the right to provide Notifications or parts
thereof in the language received. Bank will attempt in good faith to provide
accurate and complete Notifications, whether or not translated.
(e) Customer acknowledges that Notifications and other
information furnished pursuant to the active proxy voting service
("INFORMATION") are proprietary to Bank and that Bank owns all intellectual
property rights, including copyrights and patents, embodied therein.
Accordingly, Customer will not make any use of such information except in
connection with the active proxy voting service.
(f) In markets where the active proxy voting service is not
available or where Bank has not received a duly completed enrollment form or
other relevant documentation, Bank will not provide Notifications to Customer
but will endeavor to act upon Instructions to vote on matters before meetings of
holders of Financial Assets where it is reasonably practicable for Bank (or its
Subcustodians or nominees as the case may be) to do so and where such
Instructions are received in time for Bank to take timely action (the "PASSIVE
PROXY VOTING SERVICE").
(g) Customer acknowledges that the provision of proxy voting
services (whether active or passive) may be precluded or restricted under a
variety of circumstances. These circumstances include, but are not limited to:
(i) the Financial Assets being on loan or out for registration, (ii) the
pendency of conversion or another corporate action, or (iii) Financial Assets
being held at Customer's request in a name not subject to the control of Bank or
its Subcustodian, in a margin or collateral account at Bank or another bank or
broker, or otherwise in a manner which affects voting, local market regulations
or practices, or restrictions by the issuer. Customer acknowledges that in
certain countries Bank may be unable to vote individual proxies but shall only
be able to vote proxies on a net basis (E.G., a net yes or no vote given the
voting instructions received from all customers). Bank will inform Customer
where this is the case.
(h) Notwithstanding the fact that Bank may act in a fiduciary
capacity with respect to Customer under other agreements or otherwise hereunder,
in performing active or passive voting proxy services Bank will be acting solely
as the agent of Customer, and will not exercise any discretion with regard to
such proxy services or vote any proxy except when directed by an Authorized
Person.
2.12 STATEMENTS AND INFORMATION AVAILABLE ON-LINE.
(a) Bank will issue statements to Customer at times mutually
agreed identifying the Financial Assets and cash in the Accounts. Bank also will
provide additional statements containing this information upon Customer's
request. Additionally, Bank will send (or make available on-line to) Customer an
advice or notification of any transfers of cash or Financial Assets with respect
to the Accounts. Bank will be not be liable with respect to any matter set forth
in those portions of any such statement (or reasonably implied therefrom) to
which Customer has not given Bank a written exception or objection within sixty
(60) days of receipt of the statement.
(b) Prices and other information obtained from third parties
which may be contained in any statement sent to Customer have been obtained from
sources Bank reasonably believes to
8
be reliable. Bank does not, however, make any representation as to the accuracy
of such information or that the prices specified necessarily reflect the
proceeds that would be received on a disposal of the relevant Financial Assets.
References in this Agreement to statements include any statements in electronic
form.
(c) Customer acknowledges that records and unaudited reports
available to it online will be unaudited and may not be accurate due to
inaccurate pricing, delays in updating Account records, and other causes. Bank
will not be liable for any loss or damage arising out of the inaccuracy of any
such records or unaudited reports accessed on-line. Where Bank becomes aware of
any such error, it shall promptly correct the same and advise Customer of such
correction.
2.13 ACCESS TO BANK'S RECORDS.
Bank will allow Customer's independent public accountants such
reasonable access to the records of Bank relating to Financial Assets as is
required in connection with their examination of books and records pertaining to
Customer's affairs. Subject to restrictions under Applicable Law, Bank will also
obtain an undertaking to permit Customer's independent public accountants
reasonable access to the records of any Subcustodian of Securities held in the
Securities Account as may be required in connection with such examination. Bank
will maintain its records hereunder consistent with its obligations as
Customer's custodian as provided in Securities and Exchange Commission ("SEC")
rule 31a-3.
2.14 MAINTENANCE OF FINANCIAL ASSETS AT BANK AND SUBCUSTODIAN LOCATIONS.
(a) Unless Instructions (as detailed in Article 3) require
another location acceptable to Bank, Financial Assets will be held in the
country or jurisdiction in which their principal trading market is located,
where such Financial Assets may be presented for payment, where such Financial
Assets were acquired, or where such Financial Assets are held. Bank reserves the
right to refuse to accept delivery of Financial Assets or cash in countries and
jurisdictions other than those referred to in Schedule 2 to this Agreement; as
in effect from time to time and Customer shall be given prior notice of changes
to Schedule 2.
(b) Bank will not be obliged to follow an Instruction to hold
Financial Assets with, or have them registered or recorded in the name of, any
person not chosen by Bank. However, if Customer does instruct Bank to hold
Securities with or register or record Securities in the name of a person not
chosen by Bank, the consequences of doing so are at Customer's own risk and Bank
will not be liable therefor.
2.15 TAX RECLAIMS.
Bank will provide tax reclamation services as provided in Section 8.2.
2.16 FOREIGN EXCHANGE TRANSACTIONS.
To facilitate the administration of Customer's trading and investment
activity, Bank may, but will not be obliged to, enter into spot or forward
foreign exchange contracts with Customer,
9
or an Authorized Person, and may also provide foreign exchange contracts and
facilities through its Affiliates or Subcustodians. Instructions, including
standing instructions, may be issued with respect to such contracts, but Bank
may establish rules or limitations concerning any foreign exchange facility made
available. In all cases where Bank, its Affiliates or Subcustodians enter into a
master foreign exchange contract that covers foreign exchange transactions for
the Accounts, the terms and conditions of that foreign exchange contract and, to
the extent not inconsistent, this Agreement, will apply to such transactions.
3. INSTRUCTIONS
3.1 ACTING ON INSTRUCTIONS; UNCLEAR INSTRUCTIONS.
(a) Bank is authorized to act under this Agreement (or to
refrain from taking action) in accordance with the instructions received by
Bank, via telephone, telex, facsimile transmission, or other teleprocess or
electronic instruction or trade information system acceptable to Bank
("Instructions"). Bank will have no responsibility for the authenticity or
propriety of any Instructions that Bank believes in good faith to have been
given by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions that Bank may specify. Customer
authorizes Bank to accept and act without inquiry upon any Instructions received
by it which Bank believes in good faith to have been given by an Authorized
Person. Customer will indemnify the Bank Indemnitees against, and hold each of
them harmless from, any Liabilities that may be imposed on, incurred by, or
asserted against the Bank Indemnitees as a result of any action or omission
taken in accordance with any Instructions or other directions upon which Bank is
authorized to rely under the terms of this Agreement
(b) Unless otherwise expressly provided, all Instructions will
continue in full force and effect until canceled or superseded.
(c) Bank may (in its sole discretion and without affecting any
part of this Section 3.1) promptly seek clarification or confirmation of an
Instruction from an Authorized Person and may decline to act upon an Instruction
if it does not receive clarification or confirmation satisfactory to it Bank
will not be liable for any loss arising from any delay while it seeks such
clarification or confirmation.
(d) In executing or paying a payment order Bank may rely upon
the identifying number (e.g. Fedwire routing number or account) of any party as
instructed in the payment order. Customer assumes full responsibility for any
inconsistency between the name and identifying number of any party in payment
orders issued to Bank in Customer's name.
3.2 CONFIRMATION OF ORAL INSTRUCTIONS/ SECURITY DEVICES.
Any Instructions delivered to Bank by telephone will promptly
thereafter be confirmed in writing by an Authorized Person. Each confirmation is
to be clearly marked "Confirmation." Bank will not be liable for having followed
such Instructions notwithstanding the failure of an Authorized Person to send
such confirmation in writing or the failure of such confirmation to conform to
the telephone Instructions received. Either party may record any of their
telephonic communications. Customer will comply with any security procedures
reasonably required by
10
Bank from time to time with respect to verification of Instructions. Customer
will be responsible for safeguarding any test keys, identification codes or
other security devices that Bank will make available to Customer or any
Authorized Person.
3.3 INSTRUCTIONS; CONTRARY TO LAW/MARKET PRACTICE.
Bank need not act upon Instructions which it reasonably believes to be
contrary to law, regulation or market practice but will be under no duty to
investigate whether any Instructions comply with Applicable Law or market
practice. Bank shall promptly advise Customer of such failures to act and the
reasons therefor.
3.4 CUT-OFF TIMES.
Bank has established cut-off times for receipt of some categories of
Instruction, which will be made available to Customer. If Bank receives an
Instruction after its established cutoff time, it will attempt to act upon the
Instruction on the day requested if Bank deems it practicable to do so or
otherwise as soon as practicable after that day.
4. FEES, EXPENSES AND OTHER AMOUNTS OWING TO BANK
4.1 FEES AND EXPENSES.
Customer will pay Bank for its services hereunder the fees set forth
in Schedule 3 hereto or such other amounts as may be agreed upon in writing from
time to time, together with Bank's reasonable out-of-pocket or incidental
expenses, including, but not limited to, legal fees (it being understood that
reimbursement of legal fees shall not be sought where such fees are incurred for
Bank's clients generally or for Bank's clients in the particular market in which
such fees are incurred). Customer authorizes Bank to charge any Cash Accounts
for any such fees or expenses. Unless not reasonably practicable in a given
situation, Bank shall advise Customer in advance of the foregoing charges.
4.2 OVERDRAFTS.
If a debit to any currency in the Cash Account results in a debit
balance in that currency (without regard to any Cash Account investments) then
Bank may, in its discretion, advance an amount equal to the overdraft and such
an advance will be deemed a loan to Customer, payable on demand, bearing
interest at the rate charged by Bank from time to time, for overdrafts incurred
by customers similar to Customer, from the date of such advance to the date of
payment (both after as well as before judgment) and otherwise on the terms on
which Bank makes similar overdrafts available from time to time. No prior action
or course of dealing on Bank's part with respect to the settlement of
transactions on Customer's behalf will be asserted by Customer against Bank for
Bank's refusal to make advances to the Cash Account or to settle any transaction
for which Customer does not have sufficient available funds in the applicable
currency in the Account.
11
4.3 BANK'S RIGHT OVER SECURITIES; SET-OFF.
(a) Customer grants Bank a security interest in and a lien on
the Financial Assets held in the Securities Account as security for any and all
amounts which are now or become owing to Bank under any provision of this
Agreement, whether or not matured or contingent ("Indebtedness").
(b) Bank will be further entitled to set any such Indebtedness
off against any cash or deposit account with Bank or any of its Affiliates of
which Customer is the beneficial owner, regardless of the currency involved.
Bank will notify Customer in advance of any such charge unless Bank reasonably
believes that it might prejudice its interests to do so and, in such event;,
Bank will notify Customer promptly afterwards.
4.4 SEVERAL OBLIGATIONS OF THE FUNDS.
With respect to any obligations of the Customer on behalf of a given
Fund and its related Accounts arising hereunder, the Custodian shall look for
payment or satisfaction of any such obligation solely to the Assets of the Fund
and such Accounts to which such obligation relates as though the Customer had
separately contracted with the Custodian by separate written instrument with
respect to each Fund and its Accounts.
5. SUBCUSTODIANS, SECURITIES DEPOSITORIES, AND OTHER AGENTS
5.1 APPOINTMENT OF SUBCUSTODIANS; USE OF SECURITIES DEPOSITORIES.
(a) Bank is authorized under this Agreement to act through and
hold Customer's Financial Assets with subcustodians, being at the date of this
Agreement the entities listed in Schedule 2 and/or such other entities as Bank
may appoint as subcustodians ("SUBCUSTODIANS"). Bank will use reasonable care in
the selection and continued appointment of such Subcustodians. In addition, Bank
and each Subcustodian may deposit Financial Assets with, and hold Financial
Assets in, any securities depository, settlement system, dematerialized book
entry system or similar system (together a "SECURITIES DEPOSITORY") on such
terms as such systems customarily operate and Customer will provide Bank with
such documentation or acknowledgements that Bank may require to hold the
Financial Assets in such systems.
(b) Any agreement Bank enters into with a Subcustodian for
holding Bank's customers' assets shall provide that such assets shall not be
subject to any right, charge, security interest, lien or claim of any kind in
favor of such Subcustodian or its creditors except a claim of payment for their
safe custody or administration 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, and that the beneficial ownership of
such assets shall be freely transferable without the payment of money or value
other than for safe custody or administration. Where a Subcustodian deposits
Securities with a Securities Depository, Bank will cause the Subcustodian to
identify on its records as belonging to Bank, as agent, the Securities shown on
the Subcustodian's account at such Securities Depository. The foregoing will not
apply to the extent of any special agreement or arrangement made by Customer
with any particular Subcustodian.
12
(c) Bank will have no responsibility for any act or omission by
(or the insolvency of) any Securities Depository. In the event Customer incurs a
loss due to the negligence, willful misconduct, or insolvency of a Securities
Depository, Bank will make reasonable endeavors, in its discretion, to seek
recovery from the Securities Depository. (Nothing in this subsection 5.1(c)
shall reduce Bank's obligation to furnish the information concerning Eligible
Securities Depositories it has agreed to furnish in Appendix 1-B to the
Investment Company rider hereto.)
5.2 LIABILITY FOR SUBCUSTODIANS.
(a) Subject to Section 7.1(b), Bank will be liable for direct
losses incurred by Customer that result from:
(i) the failure by the Subcustodian to use reasonable
care in the provision of custodial services by it
in accordance with the standards prevailing in the
relevant market or from the fraud or willful
default of such Subcustodian in the provision of
custodial services by it, or
(ii) the insolvency of any Affiliated Subcustodian.
(b) Subject to Section 5.1(a) and Bank's duty to use reasonable
care in the monitoring of a Subcustodian's financial condition as reflected in
its published financial statements and other publicly available financial
information concerning it; Bank will not be responsible for the insolvency of
any Subcustodian which is not a branch or an Affiliated Subcustodian.
(c) Bank reserves the right to add, replace or remove
Subcustodians. Bank will give prompt notice of any such action, which will be
advance notice if practicable. Upon request by Customer, Bank will identify the
name, address and principal place of business of any Subcustodian and the name
and address of the governmental agency or other regulatory authority that
supervises or regulates such Subcustodian.
5.3 USE OF AGENTS.
(a) Bank may provide certain services under this Agreement
through third parties. These third parties may be Affiliates. Except to the
extent provided in Section 5.2 with respect to Subcustodians, Bank will not be
responsible for any loss as a result of a failure by any broker or any other
third party that it selects and retains using reasonable care to provide
ancillary services, such as pricing, proxy voting, and corporate action
services, that it does not customarily provide itself. Nevertheless, Bank will
be liable for the performance of any such service provider selected by Bank that
is an Affiliate to the same extent as Bank would have been liable if it
performed such services itself.
(b) Bank will execute transactions involving Financial Assets of
United States origin through a broker which is an Affiliate (i) in the case of
the sale under Section 2.8 of a fractional interest or (ii) if an Authorized
Person directs Bank to use the affiliated broker or otherwise requests that Bank
select a broker for that transaction, unless, in either case, the Affiliate does
not execute similar transactions in such Financial Assets. The affiliated broker
may charge no
13
more than its customary commission (or retain no more than its customary spread)
with respect to either such transaction.
6. ADDITIONAL PROVISIONS RELATING TO CUSTOMER
6.1 REPRESENTATIONS OF CUSTOMER.
Customer represents and warrants that (i) it has full authority and
power, and has obtained all necessary authorizations and consents, to deposit
and control the Financial Assets and cash in the Accounts, to use Bank as its
custodian in accordance with the terms of this Agreement and to incur
indebtedness, pledge Financial Assets as contemplated by Section 4.3, and enter
into foreign exchange transactions; and (ii) this Agreement is its legal, valid
and binding obligation, enforceable in accordance with its terms and it has full
power and authority to enter into and has taken all necessary corporate action
to authorize the execution of this Agreement Bank may rely upon the above or the
certification of such other facts as may be required to administer Bank's
obligations hereunder.
6.2 CUSTOMER TO PROVIDE CERTAIN INFORMATION TO BANK.
Upon request, Customer will promptly provide to Bank such information
about itself and its financial status as Bank may reasonably request, including
Customer's organizational documents and its current audited and unaudited
financial statements.
6.3 CUSTOMER IS LIABLE TO BANK EVEN IF IT IS ACTING FOR ANOTHER PERSON.
If Customer is acting as an agent for a disclosed or undisclosed
principal in respect of any transaction, cash, or Financial Asset, Bank
nevertheless will treat Customer as its principal for all purposes under this
Agreement In this regard, Customer will be liable to Bank as a principal in
respect of any transactions relating to the Account. The foregoing will not
affect any rights Bank might have against Customer's principal.
7. WHEN BANK IS LIABLE TO CUSTOMER
7.1 STANDARD OF CARE; LIABILITY.
(a) Bank will use reasonable care in performing its obligations
under this Agreement. Bank will not be in violation of this Agreement with
respect to any matter as to which it has satisfied its obligation of reasonable
care.
(b) Bank will be liable for Customer's direct damages to the
extent they result from Bank's negligence or willful misconduct in performing
its duties as set out in this Agreement and to the extent provided for in
Section 5.2(a). Nevertheless, under no circumstances will Bank be liable for any
indirect, consequential or special damages (including, without limitation, lost
profits) of any form, whether or not foreseeable and regardless of the type of
action in which such a claim may be brought, with respect to the Accounts or
Bank's performance hereunder or its role as custodian.
14
(c) Customer will indemnify the Bank Indemnitees against, and
hold them harmless from, any Liabilities that may be imposed on, incurred by or
asserted against any of the Bank Indemnitees in connection with or arising out
of Bank's performance under this Agreement, provided the Bank Indemnitees have
not acted with negligence or engaged in fraud or willful misconduct in
connection with the Liabilities in question. Nevertheless, Customer will not be
obligated to indemnify any Bank Indemnitee under the preceding sentence with
respect to any Liability for which Bank is liable under Section 5.2 of this
Agreement
(d) Without limiting Subsections 7.1 (a), (b) or (c), Bank will
have no duty or responsibility to: (i) question Instructions (other than to the
extent provided in Section 3.1(a) hereof) or make any suggestions to Customer or
an Authorized Person regarding such Instructions; (ii) supervise or make
recommendations with respect to investments or the retention of Financial
Assets; (iii) advise Customer or an Authorized Person regarding any default in
the payment of principal or income of any security other than as provided in
Section 2.7(b) of this Agreement; (iv) evaluate or report to Customer or an
Authorized Person regarding the financial condition of any broker, agent or
other party to which Bank is instructed to deliver Financial Assets or cash; or
(v) review or reconcile trade confirmations received from brokers (and Customer
or its Authorized Persons issuing Instructions will bear any responsibility to
review such confirmations against Instructions issued to and statements issued
by Bank).
7.2 FORCE MAJEURE.
Bank will maintain and update from time to time business continuation
and disaster recovery procedures with respect to its global custody business
that it determines from time to time meet reasonable commercial standards. Bank
will have no liability, however, for . any damage, loss, expense or liability of
any nature that Customer may suffer or incur, caused by an act of God, fire,
flood, civil or labor disturbance, war, act of any governmental authority or
other act or threat of any authority (de jure or de facto), legal constraint,
fraud or forgery, malfunction of equipment or software (except to the extent
such malfunction is primarily attributable to Bank's negligence in maintaining
the equipment or software), failure of or the effect of rules or operations of
any external funds transfer system, inability to obtain or interruption of
external communications facilities, or any cause beyond the reasonable control
of Bank (including without limitation, the non-availability of appropriate
foreign exchange).
7.3 BANK MAY CONSULT WITH COUNSEL.
Bank will be entitled to rely on, and may act upon the advice of
reputable professional advisers in relation to matters of law, regulation or
market practice (which may be the professional advisers of Customer), and will
not be liable to Customer for any action reasonably taken or omitted pursuant to
such advice.
7.4 BANK PROVIDES DIVERSE FINANCIAL SERVICES AND MAY GENERATE PROFITS AS A
RESULT.
Customer acknowledges that Bank or its Affiliates may have a material
interest in the transaction or that circumstances are such that Bank may have a
potential conflict of duty or interest. For example, Bank or its Affiliates may
act as a market maker in the Financial Assets to which Instructions relate,
provide brokerage services to other customers, act as financial adviser
15
to the issuer of such Financial Assets, act in the same transaction as agent for
more than one customer, have a material interest in the issue of the Financial
Assets; or earn profits from any of these activities. Customer acknowledges that
Bank or its Affiliates may be in possession of information tending to show that
the Instructions received may not be in the best interests of Customer. Bank is
not under any duty to disclose any such information.
8. TAXATION
8.1 TAX OBLIGATIONS.
(a) Customer confirms that Bank is authorized to deduct from any
cash received or credited to the Cash Account any taxes or levies required by
any revenue or governmental authority for whatever reason in respect of
Customer's Accounts.
(b) If Bank does not receive appropriate declarations,
documentation and information then additional United Kingdom taxation will be
deducted from all income received in respect of the Financial Assets issued
outside the United Kingdom (WHICH SHALL FOR THIS PURPOSE include United Kingdom
Eurobonds) and any applicable United States tax (including, but not limited to,
non-resident alien tax) will be deducted from United States source income.
Customer will provide to Bank such certifications, documentation, and
information as it may require in connection with taxation, and warrants that,
when given, this information is true and correct in every respect, not
misleading in any way, and contains all material information. Customer
undertakes to notify Bank immediately if any information requires updating or
correcting.
(c) Customer will be responsible for the payment of all taxes
relating to the Financial Assets in the Securities Account, and Customer will
pay, indemnify and hold Bank harmless from and against any and all liabilities,
penalties, interest or additions to tax with respect to or resulting from, any
delay in, or failure by, Bank (1) to pay, withhold or report any U.S. federal,
state or local taxes or foreign taxes imposed on, or (2) to report interest,
dividend or other income paid or credited to the Cash Account, whether such
failure or delay by Bank to pay, withhold or report tax or income is the result
of (x) Customer's failure to comply with the terms of this paragraph, or (y)
Bank's own acts or omissions; provided however, Customer will not be liable to
Bank for any penalty or additions to tax due as a result of Bank's failure to
pay or withhold tax or to report interest, dividend or other income paid or
credited to the Cash Account solely as a result of Bank's negligent acts or
omissions.
8.2 TAX RECLAIMS.
(a) Subject to the provisions of this Section, Bank will apply
for a reduction of withholding tax and any refund of any tax paid or tax credits
in respect of income payments on Financial Assets credited to the Securities
Account that Bank believes may be available.
(b) The provision of a tax reclamation service by Bank is
conditional upon Bank receiving from Customer (i) a declaration of its identity
and place of residence and (ii) certain other documentation (pro forma copies of
which are available from Bank). If Financial Assets credited to the Account are
beneficially owned by someone other than Customer, this
16
information will be necessary with respect to the beneficial owner. Customer
acknowledges that Bank will be unable to perform tax reclamation services unless
it receives this information.
(c) Bank will perform tax reclamation services only with respect
to taxation levied by the revenue authorities of the countries advised to
Customer from time to time and Bank may, by notification in writing, in its
absolute discretion, supplement or amend the countries in which the tax
reclamation services are offered. Other than as expressly provided in this
Section 8.2 Bank will have no responsibility with regard to Customer's tax
position or status in any jurisdiction.
(d) Customer confirms that Bank is authorized to disclose any
information requested by any revenue authority or any governmental body in
relation to the processing of any tax reclaim.
9. TERMINATION
Either party may terminate this Agreement on sixty days' notice in
writing to the other party. If Customer gives notice of termination, it must
provide full details of the persons to whom Bank must deliver Financial Assets
and cash. if Bank gives notice of termination, then Customer must, within sixty
days, notify Bank of details of its new custodian, failing which Bank may elect
(at any time after the sixty day notice period) either to retain the Financial
Assets and cash until such details are given, continuing to charge fees due (in
which case Bank's sole obligation will be for the safekeeping of the Financial
Assets and cash), or deliver the Financial Assets and cash to Customer. Bank
will in any event be entitled to deduct any amounts owing to it prior to
delivery of the Financial Assets and cash (and, accordingly, Bank will be
entitled to sell Financial Assets and apply the sale proceeds in satisfaction of
amounts owing to it). Customer will reimburse Bank promptly for all
out-of-pocket expenses it incurs in delivering Financial Assets upon
termination. Termination will not affect any of the liabilities either party
owes to the other arising under this Agreement prior to such termination.
10. MISCELLANEOUS
10.1 NOTICES.
Notices (other than Instructions) will be served by registered mail or
hand delivery to the address of the respective parties as set out on the first
page of this Agreement, unless notice of a new address is given to the other
party in writing. Notice will not be deemed to be given unless it has been
received.
10.2 SUCCESSORS AND ASSIGNS.
This Agreement will be binding on each of the parties' successors and
assigns, but the parties agree that neither party can assign its rights and
obligations under this Agreement without the prior written consent of the other
party, which consent will not be unreasonably withheld.
10.3 INTERPRETATION.
Headings are for convenience only and are not intended to affect
interpretation.
17
References to sections are to sections of this Agreement and references to
sub-sections and paragraphs are to sub-sections of the sections and paragraphs
of the sub-sections in which they appear.
10.4 ENTIRE AGREEMENT.
(a) The following Rider(s) are incorporated into this Agreement
Cash Trade Execution;
----------
X Investment Company
----------
Domestic
----------
(b) This Agreement, including the Schedules, Exhibits, and
Riders (and any separate agreement which Bank and Customer may enter into with
respect to any Cash Account), sets out the entire Agreement between the parties
in connection with the subject matter, and this Agreement supersedes any other
agreement, statement, or representation relating to custody, whether oral or
written. Amendments must be in writing and signed by both parties.
10.5 INFORMATION CONCERNING DEPOSITS AT BANK'S LONDON BRANCH.
Bank's London Branch is a member of the United Kingdom Deposit
Protection Scheme (the "SCHEME") established under Banking Xxx 0000 (as
amended). The Scheme provides that in the event of Bank's insolvency payments
may be made to certain customers of Bank's London Branch. Payments under the
Scheme are limited to 90% of a depositor's total cash deposits subject to a
maximum payment to any one depositor of L18,000 (or ECU 20,000 if greater).
Most deposits denominated in sterling and other European Economic Area
Currencies and ECU made with Bank within the United Kingdom are covered.
Further details of the Scheme are available on request.
10.6 CONFIDENTIALITY.
Bank will not disclose any confidential information concerning the
Financial Assets and/or cash held for Customer except as is reasonably necessary
to provide services to Customer, as required by law or regulation or the
organizational documents of the issuer of any Financial Asset, or otherwise with
the consent of Customer. Customer agrees to keep this Agreement confidential
and, except where disclosure is required by law or regulation, will only
disclose it (or any part of it) with the prior written consent of Bank.
10.7 INSURANCE.
Bank will not be required to maintain any insurance coverage for the
benefit of Customer.
18
10.8 GOVERNING LAW AND JURISDICTION. CERTIFICATION OF RESIDENCY..
This Agreement will be construed, regulated, and administered under
the laws of the United States or State of New York, as applicable, without
regard to New York's principles regarding conflict of laws. The United States
District Court for the Southern District of New York will have the sole and
exclusive jurisdiction over any lawsuit or other judicial proceeding relating to
or arising from this Agreement If that court lacks federal subject matter
jurisdiction, the Supreme Court of the State of New York, New York County will
have sole and exclusive jurisdiction. Either of these courts will have proper
venue for any such lawsuit or judicial proceeding, and the parties waive any
objection to venue or their convenience as a forum. The parties agree to submit
to the jurisdiction of any of the courts specified and to accept service of
process to vest personal jurisdiction over them in any of these courts. The
parties further hereby knowingly, voluntarily and intentionally waive, to the
fullest extent permitted by applicable law, any right to a trial by jury with
respect to any such lawsuit or judicial proceeding arising or relating to this
Agreement or the transactions contemplated hereby. Customer certifies that it is
a resident of the United States and shall notify Bank of any changes in
residency. Bank may rely upon this certification or the certification of such
other facts as may be required to administer Bank's obligations hereunder.
Customer shall indemnify Bank against all losses, liability, claims or demands
arising directly or indirectly from any such certifications.
10.9 SEVERABILITY AND WAIVER.
(a) If one or more provisions of this Agreement are held
invalid, illegal or unenforceable in any respect on the basis of any particular
circumstances or in any jurisdiction, the validity, legality and enforceability
of such provision or provisions under other circumstances or in other
jurisdictions and of the remaining provisions will not in any way be affected or
impaired.
(b) Except as otherwise provided herein, no failure or delay on
the part of either party in exercising any power or right hereunder operates as
a waiver, nor does any single or partial exercise of any power or right preclude
any other or further exercise, or the exercise of any other power or right. No
waiver by a party of any provision of this Agreement, or waiver of any breach or
default, is effective unless in writing and signed by the party against whom the
waiver is to be enforced.
10.10 COUNTERPARTS.
This Agreement may be executed in several counterparts each of which
will be deemed to be an original and together will constitute one and the same
agreement.
10.11 YEAR 2000.
Bank has developed and implemented a program to prepare its systems
and applications so that they will be capable of processing, on and after
January 1, 2000, date and date related data consistent with the functionality of
such systems and applications. In connection with this paragraph, Bank's
obligations to Customer, as respects both Bank's performance and Bank's
liability (and the limitations thereon), shall continue as and to the extent
provided elsewhere in
19
this Agreement.
10.12 ADVICES
It is understood and agreed that whenever Bank has agreed to advise
Customer of information hereunder (including, but not limited to, in Subsections
2.4, 2.7, 2.11, 2.12 and 3.3), such advice shall be given as part of a report
that shall be furnished to Customer in a manner and at such times as Customer
and Bank may agree from time to time.
20
FRIENDS IVORY FUNDS
By: /s/ Xxxxx Xxxxx Xxxx
-----------------------
Title: Vice President
Date: December 23, 0000
XXX XXXXX XXXXXXXXX BANK
By: /s/
-----------------------
Title: Vice President
Date: 24/12/99
21
Investment Company Rider to Global Custody Agreement
Between THE CHASE MANHATTAN BANK and
FRIENDS IVORY FUNDS
effective December 23, 1999
The following modifications are made to the Agreement
A. Add a new Section 2.17 to the Agreement as follows:
"2.17. COMPLIANCE WITH SEC RULE 17f-5.
(a) Customer's board of directors (or equivalent body)
(hereinafter `Board') hereby delegates to Bank, and, except as to the country or
countries as to which Bank may, from lime to time, advise Customer that it does
not accept such delegation, Bank hereby accepts the delegation to it, of the
obligation to perform as Customer's 'Foreign Custody Manager' (as that term is
defined in SEC rule 17f-5(a)(2) as promulgated under the Investment Company Act
of 1940, as amended ("1940 Act")), 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 Financial Assets and Cash 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 'Eligible Securities Depository.' An Eligible
Securities Depository for purposes hereof shall have the same meaning as in SEC
rule 17f-7 as proposed on April 29, 1999. (Eligible Securities 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 Customer from time to time.) (The parties
acknowledge that rule 17f-7 has not as yet been adopted in final form and agree
to negotiate in good faith with respect to any changes that may be required to
conform this rider to the final rule prior to the date on which compliance
therewith is mandatory.)
(b) In connection with the foregoing, Bank shall:
(i) provide written reports notifying Customer's Board of the
placement of Financial Assets and Cash 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 (and until further notice from Customer such reports
shall be provided not less than quarterly with respect to the
placement of Financial Assets and Cash with particular Eligible
Foreign Custodians and with reasonable promptness upon the occurrence
of any material change in the arrangements with such Eligible Foreign
Custodians);
(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 Financial Assets and cash would
exercise;
(iii) in selecting an Eligible Foreign Custodian, first have
determined that Financial Assets and cash 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 Financial Assets and cash, including, without
limitation, those factors set forth in SEC rule 17f-5(c)(1)(i)-(iv);
(iv) determine that the written contract with an Eligible Foreign
Custodian requires that the Eligible Foreign Custodian will provide
reasonable care for Financial Assets and Cash based on the standards
applicable to custodians in the relevant market
(v) have established a system to monitor the continued
appropriateness of maintaining Financial Assets and cash with
particular Eligible Foreign Custodians and 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 Financial
Assets and cash 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 Financial Assets and cash.
Subject to (b)(i)-(v) above, Bank is hereby authorized to place and maintain
Financial Assets and cash on behalf of Customer with Eligible Foreign Custodians
pursuant to a written contract deemed appropriate by Bank.
(c) Except as expressly provided herein, Customer shall be
solely responsible to assure that the maintenance of Financial Assets and cash
hereunder complies with the rules, regulations, interpretations and exemptive
orders as 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 Financial
Assets and cash 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: (i) has
determined that it is reasonable to rely on Bank to perform as Customer's
Foreign Custody Manager (ii) or its investment adviser shall have determined
that Customer may maintain Financial Assets and cash in each country in which
Customer's Financial Assets and cash shall be held hereunder and determined to
accept Country Risk. Nothing contained herein shall require Bank to make any
selection or to engage in any monitoring on behalf of Customer that would entail
consideration of Country Risk.
(e) Bank shall provide to Customer such information relating to
Country Risk as is specified in Appendix 1-B 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.
2
B. Add the following after the first sentence of Section 5.1(a)
of the Agreement "At the request of Customer, Bank may, but need not, add to
Schedule 2 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."
C. Add the following language as Section 5.1(d) of the
Agreement
(d) 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);
(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; and (iii) any other entity
(other than an Eligible Securities Depository)
that shall have been so qualified by exemptive
order, rule or other appropriate action of the
SEC.
For purposes of clarity, it is agreed that as used in Section 5.3(a),
the term Subcustodian shall not include any Eligible Foreign Custodian
as to which Bank has not acted as Foreign Custody Manager."
3
Appendix 1-A
DEPOSITORIES
Appendix 1-B
INFORMATION REGARDING COUNTRY RISK
1. To aid Customer in its determinations regarding Country
Risk, Bank shall furnish annually and upon the initial placing of Financial
Assets and cash 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 Financial Assets and cash 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 Financial Assets that are lost while
under the control of an Eligible Foreign Custodian located
in the country.
B. Written information concerning:
i. The foreseeability of expropriation, nationalization,
freezes, or confiscation of Customer's Financial 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, and (vi) Eligible Securities Depositories
(including depository evaluation), if any.
2. To aid Customer in monitoring Country Risk, Bank shall
furnish board the following additional information:
Market flashes, including with respect to changes in the information
in market reports.
DOMESTIC AND GLOBAL
SPECIAL TERMS AND CONDITIONS RIDER
DOMESTIC CORPORATE ACTIONS AND PROXIES
With respect to domestic U.S. and Canadian Financial Assets (the latter if held
in The Depository Trust Company), the following provisions shall apply rather
than the pertinent provisions of Sections 2.10-2.11 of the Agreement:
Bank shall promptly send to Customer or the Authorized Person for a
Custody Account, such proxies (signed in blank, if issued in the name
of Bank's nominee or the nominee of a central depository) and
communications with respect to Financial Assets in the Custody Account
as call for voting or relate to legal proceedings within a reasonable
time after sufficient copies are received by Bank for forwarding to its
customers. In addition, Bank shall follow coupon payments, redemptions,
exchanges or similar matters with respect to Financial Assets in the
Custody Account and advise Customer or the Authorized Person for such
Account of rights issued, tender offers or any other discretionary
rights with respect to such Financial Assets, in each case, of which
Bank has received notice from the issuer of the Financial Assets, or as
to which notice is published in publications routinely utilized by Bank
for this purpose.
