Exhibit 8
---------
CUSTODY AGREEMENT BETWEEN
THE XXXXXX RIVER TRUST
AND
THE CHASE MANHATTAN BANK, N.A.
This Agreement is dated August 25, 1988 by and between THE XXXXXX
RIVER TRUST, a business trust organized and existing under the laws of the
Commonwealth of Massachusetts (the "Trust"), and THE CHASE MANHATTAN BANK,
N.A., a national banking association organized under the laws of the United
States (the "Bank").
WITNESSETH:
-----------
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as a diversified, open-end management
investment company; and
WHEREAS, the Trust is a "series" type of mutual fund, and as such
issues separate classes of stock each of which represents a separate portfolio
(a "Portfolio") of investments; and
WHEREAS, the Trust desires that the securities and cash of each of its
Portfolios shall be hereafter held by the Bank pursuant to the terms of this
Agreement;
WHEREAS, the Trust, the Bank and Integrity Life Insurance Company
entered into a Custody Agreement, dated January 27, 1986, which will be
terminated upon the execution of this agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Trust and the Bank hereby agree as follows:
Section 1. Definitions
A. The word "securities" as used herein includes short term money
market instruments and government obligations, and stocks, shares, bonds,
debentures, notes, bank certificates of deposit or other obligations and any
certificates of deposit or other obligations and any certificates, receipts,
options, warrants or other instruments representing rights to receive,
purchase, or subscribe for the same, or evidencing or representing any other
rights or interests therein, or in any property or assets, and all other
negotiable or non-negotiable paper.
B. The words "Authorized Instruction" shall mean (i) a request,
direction, notice or certification from any Authorized Person to the Bank in
writing or via telephone, TWX, facsimile transmission, bank wire, the Bank's
Securities InfoCash or Customer
Data Entry System or other teleprocess or electronic instruction system
acceptable to the Bank which the Bank believes in good faith to have been given
by an Authorized Person or which is transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify or
(ii) a DTC Instruction (as defined in paragraph D of this Section 1). An
Authorized Instruction given by telephone shall be confirmed by an Authorized
Person within twenty four hours thereafter in writing or by facsimile
transmission. However, the Bank shall not be liable for the failure of an
Authorized Person to send such confirmation. Unless otherwise expressly
provided, an Authorized Instruction shall continue in full force and effect
until cancelled or superseded by a subsequent Authorized Instruction received
by the Bank. If the Bank requires test arrangements, authentication methods or
other security devices to be used with respect to an Authorized Instruction,
any Authorized Instruction given by the Trust thereafter shall be given and
processed in accordance with such terms and conditions for the use of such
arrangements, methods or devices as the Bank may put into effect and modify
from time to time. The Trust shall safeguard any testkeys, identification codes
or other security devices which the Bank shall make available to it and shall
hold the Bank harmless from any loss incurred by the Trust except to the extent
that such loss resulted from negligent action, negligent failure to act or
willful misconduct of the Bank or any of its nominees, agents or subcustodians
in allowing the use of such security device by an unauthorized person. The Bank
may electronically record any telephone discussions with respect to the
securities and cash held pursuant to this Agreement.
C. The words "Authorized Person" shall mean (a) the President, any
Vice President, the Secretary, the Treasurer, the Controller, any Assistant
Vice President, any Assistant Secretary, any Assistant Treasurer and any
Assistant Controller of the Trust whose names are specified in an incumbency
certificate substantially in the form annexed hereto as Appendix A, and (b) any
other person, whether or not any such person is an officer or employee of the
Trust, who is duly authorized by the Board of Trustees of the Trust (the
"Board") or the custody committee thereof (the "Custody Committee") to give, on
behalf of the Trust, Authorized Instructions, and whose name is specified in a
designation certificate substantially in the form annexed hereto as Appendix B.
D. The words "DTC Instruction" shall mean a deliver or receive
instruction received by the Bank on the Eligible Trade Report or the Ineligible
Trade Report through the Depository Trust Company's institutional delivery
system that contains a bank account number assigned by the Bank to a Portfolio
of the Trust in the defined "agent internal account number" field.
-2-
Section 2. Names, Titles and Signatures
A. Annexed hereto as Appendix A is an incumbency certificate signed by
two of the present officers of the Trust setting forth the names, positions and
signatures of the present officers of the Trust. The Trust agrees to furnish to
the Bank a new such certificate in the event any such present officer ceases to
be an officer or the Trust, or in the event other or additional officers are
elected or appointed and the Trust desires that they be able to issue
Authorized Instructions.
B. Annexed hereto as Appendix B is a designation certificate signed by
two of the present officers of the Trust setting forth the names and the
signatures of the persons, other than officers of the Trust, who are presently
authorized to issue an Authorized Instruction. The Trust agrees to furnish to
the Bank a new such certificate in the event that any such present
Authorization Person ceases to be so authorized or in the event that other or
additional persons are so authorized.
Section 3. Receipt and Disbursement of Money
A. The Bank is hereby authorized to receive cash and to endorse and
collect all checks, drafts or other orders for the payment of money received by
the Bank for the Portfolios of the Trust.
B. The Bank may cause the account of a Portfolio of the Trust to be
credited on the payable date for interest, dividends or redemptions, and if the
Bank so elects and subsequently is unable to collect such amount or property in
the ordinary course of transactions, the Trust will return to the Bank such
amount or property credited promptly upon receipt of the Bank's oral or written
notification by the Trust. The Bank shall have no duty to institute legal
proceedings, file a claim or proof of claim in any insolvency proceeding or
take any action beyond its ordinary collection procedures to collect such
amounts or property, but this Agreement shall not limit or waive any rights
which the Trust may have against any other person.
C. Subject to the provisions of Section 10, the Bank shall make, or
cause its subcustodians to make, payments of cash held under this Agreement
only
(a) for the purchase of securities for a Portfolio of the Trust
and upon the delivery of such securities to, or the crediting of such
securities to the account of, the Bank or its subcustodian, each such
payment to be made at prices as specified by an Authorized
Instruction;
(b) for the purchase or redemption of shares of the capital stock
of the Trust and upon the delivery to the Bank or its subcustodian of
such shares to be so purchased or redeemed;
-3-
(c) for the payment for the account of a Portfolio of the Trust
of dividends, interest, taxes, management or supervisory fees, capital
distributions, operating expenses or other expenses customarily
associated with securities trading or securities processing;
(d) for the payments to be made in connection with the
conversion, exchange or surrender of securities held under this
Agreement;
(e) in the case of a purchase effected through the Depository
Trust Company or under the Federal Reserve/Treasury book-entry systems
(collectively "Securities System"), on a "daily net" basis;
(f) in connection with repurchase agreements entered into by a
Portfolio, against delivery of the underlying securities;
(g) for the purchase of put options by a Portfolio of the Trust
on securities held under this Agreement for such Portfolio upon
receipt of notice of the transaction;
(h) for other proper corporate purposes of the Trust; or
(i) upon the termination of this Agreement as hereinafter set
forth.
All payments of cash for the purpose permitted by subsection (a) through (g) of
this paragraph C shall be made only upon receipt by the Bank of an Authorized
Instruction. In the case of any payment to be made for the purpose permitted by
subsection (h) of this paragraph C, the Trust shall first furnish to the Bank
and the Bank must first receive a certified copy of a resolution of the Custody
Committee or the Board describing such payment, declaring the purpose of such
to be a proper corporate purpose, and naming the person or persons to whom such
payment is to be made. Any payment pursuant to subsection (i) of this paragraph
C will be made in accordance with Section 18.
D. In the event that any payment for clearance of securities
transactions made under paragraph C of this Section 3 for a Portfolio of the
Trust exceed the available cash held for such Portfolio under this Agreement,
the Bank may, in its discretion, advance such Portfolio an amount equal to such
excess and such advance shall be deemed a loan, payable on demand, from the
Bank to the Trust, and, in the event of such a loan, the Bank may cause the
account of such Portfolio to be debited for interest in an amount calculated
using the rate of interest customarily charged by the Bank on similar loans.
E. Whenever the Trust shall sell or redeem any shares of any Portfolio
of the Trust, the Trust shall deliver to the Bank an Authorized Instruction
duly specifying (a) the name of the insurance
-4-
company separate account (in unit investment trust form) to which the shares
are sold and from which money is to be received, or, in the case of a
redemption, to which payment is to be made, (b) the Portfolio to which the
shares relate and (c) the amount of money, in the case of a sale, to be
received by the Bank, or, in the case of a redemption, to be paid by the Bank
and the manner/mode in which such payment shall be made. Upon receipt of money
from the sale of shares of a Portfolio, the Bank shall credit such money to the
Trust account in the name of such Portfolio. Upon receipt of an Authorized
Instruction from the Trust the Bank shall make payment as provided in paragraph
C of Section 3 out of the cash held by the Bank for such Portfolio to which the
redeemed shares relate.
Section 4. Receipt and Disposition of Securities
All securities received by the Bank for a Portfolio of the Trust shall
be held by the Bank in a separate account or accounts physically segregated at
all times from securities of any other Portfolio of the Trust or of any other
person, firm, or corporation, unless deposited pursuant to Section 9 of this
Agreement. All such securities are to be held or disposed of by the Bank for
each Portfolio pursuant to the terms of this Agreement. The Bank shall have no
power or authority to assign, hypothecate, pledge or otherwise dispose of any
such securities, except pursuant to an Authorized Instruction, as provided in
Section 5 or as provided in paragraph A of Section 11.
Section 5. Custody Account Transaction
Subject to the provisions of Section 10, securities held under this
Agreement will be transferred, exchanged or delivered by the Bank or its
subcustodians only:
(a) upon sale of such securities for a Portfolio of the Trust and
receipt by the Bank or its subcustodian of payment therefor, each such
payment to be in the amount specified by an Authorized Instruction;
(b) when such securities are called, redeemed or retired, or
otherwise become payable;
(c) in exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, recapitalization or readjustment;
(d) upon conversion of such securities pursuant to their terms
into other securities;
(e) upon exercise of subscription, purchase or other similar
rights represented by such securities;
(f) for the purpose of exchanging interim receipts or temporary
securities for definitive securities;
-5-
(g) in the case of a sale effected through a Securities System,
on a "daily net" basis;
(h) against payment under any repurchase agreement entered into
by a Portfolio related to such securities;
(i) in connection with the writing of a covered call option, upon
receipt of an Authorized Instruction and payment of the premium due,
the Bank shall (i) where the underlying securities are physically held
by the Bank, cause an escrow receipt to be issued with respect to the
underlying securities and shall hold such securities in a segregated
account in accordance with the terms of the receipt or, (ii) where the
underlying securities are maintained at a Securities System, cause a
depository receipt to be issued requiring the Securities System to
pledge the underlying securities to the Option Clearing Corporation
(the "OCC"). At the expiration of a call option, the Bank shall (i)
where the underlying securities are physically held by the Bank, take
reasonable steps to obtain the return or release and cancellation of
any escrow receipt; provided, however, that the Bank shall thereafter
be under no liability for failure to obtain such return or release if
the Bank promptly notifies the Trust of such failure, and upon the
receipt of such release or upon the expiration or such escrow receipt
in accordance with its terms, shall release such securities from the
segregated account or (ii) where the underlying securities are
maintained at Securities System, issue a release of deposit and
deliver copies of such release to the subject OCC clearing member and
to the OCC.
(j) upon exercise of a call option written by a Portfolio of the
Trust on securities held under this Agreement for such Portfolio,
against the receipt of payment of the strike price therefor, and (i)
where the underlying securities are physically held by the Bank,
receipt by the Bank of documentation releasing and cancelling the
escrow receipt previously issued by the Bank in connection with the
transaction or, (ii) where the underlying securities are maintained at
a Securities System, upon the issuance by the Bank of a release of
deposit together with its representation that it will deliver such
securities upon payment of the strike price.
(k) upon exercise of a put option by a Portfolio of the Trust on
securities held under this Agreement for such Portfolio, against a
receipt of payment of the strike price therefor;
(1) for other proper corporate purposes of the Trust;
-6-
(m) upon the termination of this Agreement as hereinafter set
forth.
All transfers, exchanges or deliveries of securities held under this Agreement
for a purpose permitted by subsections (a) through (k) of this Section 5, will
be made, only upon receipt by the Bank of an Authorized Instruction. In case of
any transfer, exchange, or delivery to be made for the purpose permitted by
subsection (1) of this Section 5, the Trust shall first furnish to the Bank and
the Bank must first receive a certified copy of a resolution of the Custody
Committee or the Board describing such transfer, exchange or delivery,
declaring the purpose of such to be a proper corporate purpose, and naming the
person or persons to whom delivery of such securities shall be made. Any
transfer or delivery pursuant to subsection (m) of this Section 5 will be made
in accordance with Section 18.
Section 6. Maintenance of Securities Abroad
Securities held pursuant to this Agreement shall be held in the United
States or in any other country or other jurisdiction as shall be specified from
time to time in an Authorized Instruction. Cash held pursuant to this Agreement
shall be credited to an account in such amounts and in the country or other
jurisdiction as shall be specified from time to time in an Authorized
Instruction, provided that such country or other jurisdiction shall be one in
which such cash is legal currency for the payment of public or private debts.
Section 7. Eligible Foreign Custodians and Securities Depositories
The Bank is authorized to hold the securities and the cash held
pursuant to this Agreement in custody and deposit accounts, respectively, which
have been established by the Bank with one of its branches, a branch of a U.S.
bank, an eligible foreign custodian or an eligible foreign securities
depository; provided, however, that the Board has approved the use of, and the
Bank's contract with, such eligible foreign custodian or eligible foreign
securities depository by resolution, and a certified copy of such resolution
has been provided to the Bank. Furthermore, if one of its branches, a branch of
a qualified U.S. bank or an eligible foreign custodian is selected to act as
the Bank's subcustodian to hold any of the securities or cash held pursuant to
this Agreement, such entity may be authorized by resolution of the Board to
hold such securities or cash in its account with any eligible foreign
securities depository in which it participates. For purposes of this Agreement
(a) "qualified U.S. bank" shall mean a qualified U.S. bank as defined in Rule
17f-5 under Section 17(f) of the 1940 Act having aggregate capital, surplus,
and undivided profits of not less than one hundred million dollars
($100,000,000); (b) "eligible foreign custodian" 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 that
-7-
has shareholders' equity in excess of two hundred million dollars
($200,000,000) in U.S. currency (or a foreign currency equivalent thereof),
(ii) a majority owned direct or indirect subsidiary of a qualified U.S. bank
holding company that is incorporated or organized under the laws of a country
other than the United States and that has shareholder's equity in excess of one
hundred million dollars ($100,00,000) in U.S. currency (or a foreign currency
equivalent thereof) or (iii) a banking institution or trust company
incorporated or organized under the laws of a country other than the United
States or a majority owned direct or indirect subsidiary of a qualified U.S.
bank or bank holding company that is incorporated or organized under the laws
of a country other than the United States which has such other qualifications
as shall be specified in Authorized Instructions and approved by the Bank; and
(c) "eligible foreign securities depository" shall mean a securities depository
or clearing agency, incorporated or organized under the laws of a country other
than the United States, which operates (i) the central system for handling of
securities or equivalent book-entries in the country or (ii) a transnational
system for the central handling of securities or equivalent book-entries.
Herein the term "subcustodian" will refer to any branch of a qualified
U.S. bank, any eligible foreign custodian or any eligible foreign securities
depository with which the Bank has entered into an agreement of the type
contemplated hereunder regarding securities and cash held or to be held
pursuant to this Agreement.
Section 8. Use of Subcustodian
With respect to securities and cash which are maintained by the Bank
in the custody of a subcustodian pursuant to Section 7 (as used in this Section
8, the term "Securities" means such securities and cash):
(a) The Bank shall identify on its books as belonging to a
particular Portfolio of the Trust any Securities held by such
subcustodian.
(b) In the event that a subcustodian permits any of the
Securities placed in its care to be held in any eligible foreign
securities depository, such subcustodian shall be required by its
agreement with the Bank to identify on its books such Securities as
being held for the account of the Bank as a custodian for its
customers.
(c) Any Securities held by a subcustodian of the Bank shall be
subject only to the instructions of the Bank or its agents on behalf
of the Trust; and any Securities held in an eligible foreign
securities depository for the account of a subcustodian shall be
subject only to the instructions on behalf of the Trust of such
subcustodian or, if permitted by the terms of the agreement between
the Bank and such subcustodian, the Bank or its agents.
-8-
(d) The Bank shall deposit Securities only in an account with a
subcustodian which includes exclusively the assets held by the Bank
for its customers, and the Bank shall cause such account to be
designated by such subcustodian as a special custody account for the
exclusive benefit of customers of the Bank.
(e) Unless otherwise stated in an agreement approved by the
Board, any agreement the Bank shall enter into with a subcustodian
with respect to the holding of Securities shall require that (i) the
Securities are not subject to any right, charge, security interest,
lien or claim of any kind in favor of such subcustodian except for
their safe custody or administration and (ii) beneficial ownership of
such Securities is freely transferable without the payment of money or
value other than for safe custody or administration; provided,
however, that the foregoing shall not apply to the extent that any of
the above-mentioned rights, charges, etc. result from any arrangements
made by the Trust with any such subcustodian.
(f) Upon request of the Trust, the Bank shall identify the name,
address and principal place of business of any subcustodian of the
Trust's securities and, as furnished to the Bank by such subcustodian,
the name and address of the governmental agency or other regulatory
authority that supervises or regulates such subcustodian.
(g) The Bank hereby warrants to the Trust that it shall not enter
into an agreement with a subcustodian with respect to the holding of
Securities, unless, in its opinion, after due inquiry, the established
procedures to be followed by each subcustodian afford protection for
such Securities at least equal to that afforded by the Bank's
established procedures with respect to similar securities held by the
Bank (and its securities depositories) in New York.
Section 9. Deposits by the Bank
A. The Bank is authorized to deposit all or any part of the securities
held by it pursuant to this Agreement in a "Securities depository" as defined
in Rule 17f-4 under Section 17(f) of the 1940 Act including, without
limitation, in the Federal Reserve/Treasury book-entry system for United States
and Federal agency securities, the Depository Trust Company book-entry system
or their successors and nominees, provided that such deposit is made in
accordance with the provisions of such rule.
B. The Bank is authorized to deposit options held by it pursuant to
this Agreement with the OCC, provided:
-9-
(a) The Bank shall deposit the options with the OCC clearing
member used to effect transactions relating to such options (the
"Clearing Member") in an account that includes only assets held by the
Bank for its customers.
(b) Where options are transferred to the account of a Portfolio
of the Trust, the Bank shall, by book-entry or otherwise, identify as
belonging to such Portfolio a quantity of options in a tangible bulk
of options (i) registered in the name of the Bank or its nominee or
(ii) shown on the Bank's account on the books of the Clearing Member.
(c) The Bank shall promptly send to the Trust any reports it
receives from OCC or any Clearing Member used on their respective
systems of internal accounting control.
(d) The Bank shall have received a certified copy of a resolution
of the Custody Committee or the Board approving the arrangements
regarding the use of OCC.
Section 10. Custody Account Procedures
A. With respect to all transactions for securities and cash held
pursuant to this Agreement, including, without limitation, dividend and
interest payments and sales and redemptions of securities, availability of
funds credited to an account of a Portfolio will be based on the type of funds
used in the trade settlement or payment, including, but not limited to, same
day availability for federal or same day funds and next business day
availability for clearing house or next day funds. Subject to the preceding
sentence, with respect to any transaction involving securities held or to be
held hereunder for a Portfolio of the Trust for which the Bank customarily
offers this service, the Bank may in its discretion cause the account of such
Portfolio to be credited on the contractual settlement date with the proceeds
of any sale of such securities and to be debited on contractual settlement date
for the cost of any of such securities purchased. The Trust agrees that the
Bank's providing of this service is conditional upon the Trust maintaining a
satisfactory business relationship with the Bank and a financial condition
acceptable to the Bank. The amount of available cash held hereunder shall be
calculated daily for each Portfolio of the Trust and shall be determined at the
end of a particular day by aggregating (i) the amount of the cash held
hereunder at the end of the prior day and (ii) the difference between the total
credits and total debits applied to the cash held hereunder for that day. These
debit and credit entries are provisional accounting entries which the Bank
shall reverse in accordance with an Authorized Instruction and which the Bank
may reverse if a transaction with respect to which any such credit or debit was
made fails to settle within a reasonable period, determined by the Bank in its
discretion, after the contractual settlement date, except that if any
securities delivered pursuant to this Section 10 are returned by the recipient
thereof, the Bank may reverse any such credits and debits at any time.
-10-
The Bank has no obligation to use this crediting and debiting procedure with
respect to a delivery of securities if the Trust does not have actually in its
account sufficient securities to make the delivery. As with other transactions
processed hereunder, the Bank's responsibility with respect to transactions for
which it uses this crediting and debiting procedure shall be governed by the
provisions of this Agreement, including Section 15. The Trust agrees that the
Bank's using this procedure is not an assurance by it that the transaction will
actually settle on the contractual settlement date and does not impose
responsibility on the Bank with respect to the transaction. Without limiting
the Bank's right to reverse credits and debits described above, the account
statements which it furnishes to the Trust shall reflect transactions as to
which the Bank uses this procedure as if they had actually settled on the
contractual settlement date, unless, prior to the date to which the statement
relates, the Bank has reversed such credits and debits.
B. With respect to any transaction as to which the Bank does not
determine so to credit or debit the account of a Portfolio of the Trust, the
proceeds from the sale or exchange of securities will be credited and the cost
of such securities purchased or acquired will be debited to the account of such
Portfolio on an actual basis, together with any other transactions of such
Portfolio, on the date such proceeds or securities are received by the Bank.
C. Notwithstanding the preceding paragraphs A and B, settlement and
payment for securities received for, and delivery of securities out of, the
account of a Portfolio of the Trust may be effected in accordance with the
customary or established securities trading or securities processing practices
and procedures in the jurisdiction or market in which the transaction occurs,
including, without limitation, delivering securities or depository or escrow
receipts to the purchaser thereof or to a dealer therefor (or to an agent for
such purchaser or dealer) against a receipt with the expectation of receiving
later payment for such securities from such purchaser or dealer (or agent
therefor). Provided that the Bank did not select the party to which securities
were delivered against a receipt in accordance with the preceding sentence, it
shall not bear the risk of collection of the funds or other property paid or
distributed in respect of such securities.
Section 11. Certain Duties of the Bank
A. Unless and until the Bank receives an Authorized Instruction to the
contrary, the Bank shall, or shall instruct or authorize the appropriate
subcustodian to, (a) present for payment all securities held under this
Agreement which are called, redeemed or retired or otherwise become payable and
all coupons and other income items held by it for the appropriate Portfolio of
the Trust which call for payment upon presentation and hold the cash received
by it upon such payment for such Portfolio in accordance with the terms of this
Agreement; (b) receive interest and cash dividends and credit the same to the
appropriate Portfolio of the Trust; (c) hold for the appropriate Portfolio of
the Trust all stock dividends,
-11-
rights and similar securities issued with respect to any securities held by it;
and (d) exchange interim receipts or temporary securities held under this
Agreement for the definitive securities issued in exchange therefor.
B. Upon receipt of an Authorized Instruction, the Bank shall (a)
convert money of foreign issue into United States dollars or any other currency
necessary to effect any transaction involving securities held or to be held
pursuant to this Agreement whenever it is practicable to do so through
customary banking channels, using the method or agency, designated in the
Authorized Instruction, if any, and if no method is designated, using any
method or agency available, including, but not limited to, the facilities of
the Bank, its subsidiaries, affiliates or subcustodians; and (b) execute as
agent on behalf of the Trust all ownership certificates in such form and manner
as such Authorized Instruction shall direct.
Section 12. Registration of Securities
A. Except as otherwise directed by an Authorized Instruction, the Bank
shall register all securities, except such as are in bearer form, (i) in the
name of a nominee or nominees which are either a "dba" of the Bank or, if a
separate legal entity, subject to the legal and operational control of the
Bank, (ii) as to any securities maintained at a securities depository, in the
name of a nominee or nominees appointed by such a securities depository or
(iii) as to any securities held by a subcustodian, in the name of a nominee or
nominees appointed by such subcustodian. The specific securities held by the
Bank hereunder shall be at all times identifiable in its records. If any
securities registered in the name of such nominee or nominees are called for
partial redemption by the issuer of such securities, the Bank may allot the
called portion to the respective beneficial holders of such securities in a
manner customarily used by the Bank with respect to such allotments. In
consideration of the registration of any stocks, bonds, securities, and other
property, in the name of the Bank's nominees or the nominees of a depository or
subcustodian, the Trust agrees to pay on demand to the Bank or the nominees the
amount of any loss or liability for stockholder's assessments, or otherwise,
claimed or asserted against the Bank, the subcustodian or the nominees by
reason of such registration.
B. The Trust shall from time to time, as necessary, furnish to the
Bank appropriate instruments to enable the Bank to hold or deliver in proper
form for transfer, or to register in the name of a nominee as specified above,
any securities which it may hold for the Trust and which may from time to time
be registered in the name of the Trust.
-12-
Section 13. Voting and Other Action
A. Neither the Bank nor any nominee nor any securities depository nor
any subcustodian shall vote any of the securities held hereunder for the Trust,
except in accordance with the instructions contained in an Authorized
Instruction. The Bank shall promptly deliver, or cause to be executed and
delivered, to the Trust all notices, proxies and proxy soliciting materials
received by the Bank or any nominee with relation to such securities, such
proxies to be executed by the registered holder of such securities (if
registered otherwise than in the name of the Trust) but without indicating the
manner in which such proxies are to be voted.
B. The Bank shall transmit promptly to the Trust all written
information (including, without limitation, pendency of calls and maturities of
securities and expiration of rights in connection therewith) received by the
Bank or any nominee from issuers of the securities being held for a Portfolio
of the Trust. With respect to tender or exchange offers, the Bank shall
transmit promptly to the Trust all written information received by the Bank or
any nominee from issuers of the securities whose tender or exchange is sought
and from the party (or the party's agents) making the tender or exchange offer.
Section 14. Transfer Taxes and Other Disbursements
A. The Bank is authorized and directed, unless otherwise advised in
particular transactions, to claim exemption from transfer taxes on all
transfers and deliveries of securities held under this Agreement. The Trust
shall pay or reimburse the Bank from time to time for any transfer taxes or
other charges paid by the Bank upon transfers of securities made hereunder, and
for all other necessary and proper out of pocket disbursements and expenses
made or incurred by the Bank in the performance of this Agreement.
B. Upon receipt of an Authorized Instruction, the Bank shall execute
and deliver such certificates as may reasonably be requested by an Authorized
Person in connection with securities delivered to it or by it under this
Agreement in such form and manner as such Authorized Instruction shall direct.
Section 15. Concerning the Banking
A. The Bank shall be paid by the Trust as compensation for its
services pursuant to this Agreement such compensation as may from time to time
be agreed upon in writing between the Trust and the Bank.
B. The Trust agrees to indemnify and hold harmless the Bank and any of
its nominees, agents and subcustodians from any and all losses, liabilities,
claims, demands, damages, and cost and expenses (including, without limitation,
counsel fees and expenses) (collectively, "Losses") incurred or assessed
against it or them in connection with the performance of this Agreement, except
such as may
-13-
arise from negligent action, negligent failure to act or willful misconduct of
the Bank or any of its nominees, agents or subcustodians.
C. The Bank agrees to indemnify and hold harmless the Trust from any
general damages arising out of any inability of the Trust to transfer
securities or cash held by subcustodian appointed by the Bank pursuant to
Section 7, where such inability results from any dispute between the Bank and
such subcustodian; provided, however, the Bank shall not be liable under this
paragraph C if it acts in good faith in connection with such dispute.
D. The Bank shall not be liable for any action taken in good faith
pursuant to an Authorized Instruction or a certified copy of any resolution of
the Custody Committee or the Board and may rely on the genuineness of any such
document which it may in good faith believe to have been validly executed. In
addition, the Bank shall not be liable for any losses to the extent that such
losses resulted from, or were caused by, nationalization, expropriation,
currency restrictions, acts of war or terrorism, insurrection, revolution,
hurricane, tornado, earthquake or nuclear fusion, fission or radiation
("Intervening Forces").
E. With respect to all securities and cash held under this Agreement,
the Bank shall maintain safeguards and controls in conformity with current and
established banking and depository practices and usages. The Bank shall use
reasonable care with respect to the safekeeping of property under this
Agreement.
F. Subject to paragraph G of this Section 15 and notwithstanding
paragraph E of this section 15, the Bank shall be strictly liable to the Trust
for any loss of securities or cash held pursuant to the Agreement resulting
from robbery, theft, burglary, fire or mysterious disappearance while such
securities and cash are in the Bank's custody or the custody of a nominee,
central depository or agent retained by the Bank. In addition, the Bank will be
liable to the Trust for losses of such securities or cash which result from the
Bank's negligence or willful misconduct or the negligence or willful misconduct
of its officers, employees and agents, including nominees or central
depositories retained by the Bank. The Bank shall have the burden of proving
lack of such negligence or willful misconduct. In the event of a loss of
securities or cash while in the custody of the Bank or the custody of a
nominee, depository or agent other than a loss resulting from Intervening
Forces, the Bank shall (i) remit the amount of such cash to the Trust and (ii)
replace any such securities with securities of like kind and quality, together
with any rights and privileges pertaining thereto, or if acceptable to the
Trust remit cash equal to the market value of such securities as of the date of
discovery of the loss; provided, however, that the Trust shall reimburse the
Bank for any such replacement of securities or remission of cash if the Bank is
not liable to the Trust in accordance with this section 15.
-14-
G. Notwithstanding the provisions of paragraph F, as to securities or
cash held by a subcustodian, or an eligible foreign securities depository
engaged by such subcustodian, the Bank shall only be liable to the Trust for
losses which shall occur as a result of the failure of such subcustodian or
eligible foreign securities depository to exercise reasonable care with respect
to the custody of securities and cash held pursuant to this Agreement;
provided, however, that the Bank shall not be liable for any loss of such
securities or cash to the extent that such loss resulted from, or was caused
by, the direction of the Trust to maintain custody of any securities or cash in
a foreign country including, without limitation, losses resulting from acts of
God or Intervening Forces. In the event that the Bank is liable to the Trust
for a loss of securities or cash held pursuant to this Agreement, the Bank
shall (i) remit the amount of such cash to the Trust and (ii) replace such
securities with securities of like kind and quality, together with any rights
and privileges pertaining thereto, or if acceptable to the Trust, remit cash
equal to the market value of such securities as of the date of discovery of
such loss.
H. Upon request by the Trust, any reasonable costs and expenses
incurred by the Trust in defending or preparing to defend any investigation,
suit or other proceeding initiated by a third party as a result of a loss of
securities or cash held under this Agreement for which the Bank is liable will
be paid by the Bank to the Trust in a current manner as such costs and expenses
are paid by the Trust.
I. Subject to its obligations set forth above, the Bank will be liable
to the Trust only to the extent of its general damages suffered or incurred for
which liability is imposed upon the Bank by a court of law or under the terms
of this Agreement. General damages shall mean only those damages as directly
and necessarily result from such act or omission without reference to any
special conditions or circumstances of the Trust or of any transaction.
J. The Bank shall be responsible only for those duties stated in this
Agreement or contained in an Authorized Instruction and, without limiting the
foregoing, the Bank shall have no duty or responsibility:
(a) to supervise the investment of, or make recommendations with
respect to the purchase, retention or sale of, securities or other
property relating to the account of any Portfolio of the Trust or to
maintain any insurance for the benefit of the Trust on property held
under this Agreement;
(b) with regard to any security held under this Agreement as to
which a default in the payment of principal or interest has occurred,
to give notice of default, make demand for payment or take any other
action with respect to such default;
-15-
(c) for any act or omission, or for the solvency or notice to the
Trust of the solvency, of any broker or dealer which is selected by
the Trust or any other person other than the Bank, its officers,
employees it agents, to effect any transaction for any Portfolio of
the Trust;
(d) to evaluate, or report to the Trust regarding, the financial
condition of any party to which the Trust delivers securities or
payment pursuant to this Agreement, except if selected by the Bank,
its officers, employees or agents; or
(e) for any loss occasioned by delay in the actual receipt of
notice by the Bank of any payment, redemption or other transaction in
respect to which the Bank is authorized to take some action pursuant
to this Agreement.
K. The Bank represents and warrants that it currently maintains a
banker's blanket bond which provides standard fidelity and non-negligent loss
coverage in the amount of one hundred million dollars ($100,000,000) with
respect to the securities and cash which may be held pursuant to this
Agreement. The Bank agrees that if at any time it for any reason discontinues
or reduces such coverage, it shall provide prior written notice of such fact to
the Trust. The Bank need not maintain any insurance specifically for the
benefit of the Trust.
Section 16. Reports by the Bank and Access for Examination
A. The Bank shall furnish to the Trust at the close of each month
statements (which, if requested by the Trust, are to be certified by a duly
authorized officer of the Bank) showing (i) the number of shares or other units
or the principal amounts held, as the case may be, of the securities held by it
for each of the Portfolios of the Trust and by each subcustodian, including an
identification of the entity having custody of the securities hereunder, and
(ii) details of each of the debit and credit entries made for each of the
Portfolios of the Trust, which statement shall identify the entity which has or
had custody of the underlying securities. The Bank shall also furnish to the
Trust such daily or special reports as reasonably required by the Trust in
respect of any of the assets held hereunder by the Bank or by a subcustodian.
B. With respect to securities or cash held by a' subcustodian, in the
absence of the filing in writing with the Bank by the Trust of exceptions or
objections to any statement furnished pursuant to paragraph A of this Section
16 within twelve months of the receipt by the Trust of such statement, the
Trust shall be deemed to have approved any such statement; and in such case or
upon written approval of the Trust of any such statement the Bank shall, to the
extent permitted by law, be released, relieved and discharged with respect to
all matters and things set forth in such statement as though such statement has
been settled by the decree of a court of
-16-
competent jurisdiction in an action in which the Trust and all persons having
an equity interest in the Trust were parties.
C. The books and records of the Bank pertaining to its actions under
this Agreement shall be open at reasonable times for inspection and audit by
members of the Board, Authorized Persons, the independent auditors for the
Trust, and other persons designated by or pursuant to resolutions of the
Custody Committee or the Board. In addition, the Bank shall submit to all
regulatory and administrative bodies having jurisdiction over the operations of
the Trust, present or future, any information reports or other material which
any such body by reason of this Agreement may request or require pursuant to
applicable laws or regulations. The Bank shall, subject to restrictions under
applicable law, also obtain from any subcustodian with which the Bank maintains
the custody of any securities held pursuant to this Agreement an undertaking to
provide such access to its books and records and such information as the Bank
has agreed to provide in this paragraph C.
D. Upon a reasonable request from the Trust, the Bank shall furnish to
the Trust such reports (or portions thereof) of the Bank's external auditors as
relate directly to the Bank's system of internal accounting controls applicable
to the Bank's duties under this Agreement. The Bank shall use its best efforts
to obtain and furnish the Trust with such similar reports as the Trust may
reasonably request with respect to each eligible foreign custodian and eligible
foreign securities depository holding securities pursuant to this Agreement.
Section 17. Authority
The Trust warrants its authority to deposit pursuant to this Agreement
any securities and cash which the Bank or its agents receive for deposit and
give instructions relative thereto.
Section 18. Termination or Assignment
This Agreement may be terminated by the Trust or the Bank on sixty
(60) days' notice, given in writing and sent by registered mail to each of the
other parties. Upon any termination of the Agreement, pending appointment of a
successor to the Bank or a determination by the Board to function without a
bank custody arrangement for the securities of the Trust or to operate the
Trust in any other form permitted of the Trust or to operate the Trust in any
other form permitted by law not requiring a custodian of such securities, the
Bank may deliver the securities held by it pursuant to this Agreement to a bank
or trust company in the city of New York of its own selection having an
aggregate capital, surplus and undivided profits, as shown by its last
published report, of not less than one hundred million dollars ($100,000,000)
as a safekeeper for the Trust to be held under terms similar to those of this
Agreement. The obligations of the parties hereto regarding the exercise of care
with respect to any securities or cash of a Portfolio of the Trust
-17-
then held by the Bank, indemnities and payment of fees and expenses shall
survive the termination of this Agreement.
Section 19. Governing Law and Successors and Assigns
This Agreement shall be governed by the laws of the State of New York.
This Agreement may not be assigned by either the Trust or the Bank, but shall
bind the successors in interest of the Trust and the Bank.
Section 20. Notice to Parties
All written notices required under this Agreement shall be deemed duly
given to the parties if personally delivered or mailed to the parties at their
respective addresses set forth below (unless written notice of change of
address shall have been given):
To the Trust: The Xxxxxx River Trust
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: J. Xxxxx Xxx
The Xxxxxx River Trust
0000 Xxxxxxxx, 0X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx
To the Bank: The Chase Manhattan Bank, N.A.
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Section 21. Prior Proposals
This agreement contains the complete agreement of the parties hereto
with respect to the holding of the securities and cash of each of the
Portfolios of the Trust (except as may be expressly provided to the contrary
herein) and supercedes and replaces any previously made proposals,
representations, warranties or agreements with respect thereto by either or
both parties hereto.
-18-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
as of the date first above written.
Executed in several counterparts, each of which is an original.
ATTEST: THE XXXXXX RIVER TRUST
/s/ Xxxxx Xxxxx By: /s/ Xxxxxxxx X. Xxxxxxx
------------------------ -------------------------
Secretary Vice President
ATTEST: THE CHASE MANHATTAN BANK, N.A.
/s/ Xxxxx Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx
------------------------ -------------------------
-19-
