CUSTODY AGREEMENT
AGREEMENT, dated as of May 1, 2001 between Clarion CMBS Value Fund, Inc., a
corporation organized and existing under the laws of the State of Maryland
having its principal office and place of business at c/o Clarion Capital, LLC,
000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Fund") and The Bank of New
York, a New York corporation authorized to do a banking business having its
principal office and place of business at Xxx Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 ("Custodian").
W I T N E S S E T H:
that for and in consideration of the mutual promises hereinafter set forth the
Fund and Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words shall have the
meanings set forth below:
1. "Authorized Person" shall be any person, whether or not an officer or
employee of the Fund, duly authorized by the Fund's board to execute any
Certificate or to give any Oral Instruction with respect to one or more
Accounts, such persons to be designated in a Certificate annexed hereto as
Schedule I hereto or such other Certificate as may be received by Custodian from
time to time.
2. "BNY Affiliate" shall mean any office, branch or subsidiary of The Bank
of New York Company, Inc.
3. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for receiving and delivering securities, its successors and nominees.
4. "Business Day" shall mean any day on which Custodian and relevant
Depositories are open for business.
5. "Certificate" shall mean any notice, instruction, or other instrument in
writing, authorized or required by this Agreement to be given to Custodian,
which is actually received by Custodian by letter or facsimile transmission and
signed on behalf of the Fund by an Authorized Person or a person reasonably
believed by Custodian to be an Authorized Person.
6. "Composite Currency Unit" shall mean the Euro or any other composite
currency unit consisting of the aggregate of specified amounts of specified
currencies, as such unit may be constituted from time to time.
7. "Depository" shall include (a) the Book-Entry System, (b) the Depository
Trust Company, (c) any other clearing agency or securities depository registered
with the Securities and
Exchange Commission identified to the Fund from time to time, and (d) the
respective successors and nominees of the foregoing.
8. "Foreign Depository" shall mean (a) Euroclear, (b) Clearstream Banking,
societe anonyme, (c) each Eligible Securities Depository as defined in Rule
17f-7 under the Investment Company Act of 1940, as amended, identified to the
Fund from time to time, and (d) the respective successors and nominees of the
foregoing.
9. "Instructions" shall mean communications transmitted by electronic or
telecommunications media, including S.W.I.F.T., computer-to-computer interface,
or dedicated transmission lines.
10. "Oral Instructions" shall mean verbal instructions received by
Custodian from an Authorized Person or from a person reasonably believed by
Custodian to be an Authorized Person.
11. "Series" shall mean the various portfolios, if any, of the Fund listed
on Schedule II hereto, and if none are listed references to Series shall be
references to the Fund.
12. "Securities" shall include, without limitation, any common stock and
other equity securities, bonds, debentures and other debt securities, notes,
mortgages or other obligations, and any instruments representing rights to
receive, purchase, or subscribe for the same, or representing any other rights
or interests therein (whether represented by a certificate or held in a
Depository or by a Subcustodian).
13. "Subcustodian" shall mean a bank (including any branch thereof) or
other financial institution (other than a Foreign Depository) located outside
the U.S. which is utilized by Custodian in connection with the purchase, sale or
custody of Securities hereunder and identified to the Fund from time to time,
and their respective successors and nominees.
ARTICLE II
APPOINTMENT OF CUSTODIAN; ACCOUNTS;
REPRESENTATIONS, WARRANTIES, AND COVENANTS
1. (a) The Fund hereby appoints Custodian as custodian of all Securities
and cash at any time delivered to Custodian during the term of this Agreement,
and authorizes Custodian to hold Securities in registered form in its name or
the name of its nominees. Custodian hereby accepts such appointment and agrees
to establish and maintain one or more securities accounts and cash accounts for
each Series in which Custodian will hold Securities and cash as provided herein.
Custodian shall maintain books and records segregating the assets of each Series
from the assets of any other Series. Such accounts (each, an "Account";
collectively, the "Accounts") shall be in the name of the Fund.
(b) Custodian may from time to time establish on its books and records
such sub-accounts within each Account as the Fund and Custodian may agree upon
(each a "Special Account"), and Custodian shall reflect therein such assets as
the Fund may specify in a Certificate or Instructions.
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(c) Custodian may from time to time establish pursuant to a written
agreement with and for the benefit of a broker, dealer, future commission
merchant or other third party identified in a Certificate or Instructions such
accounts on such terms and conditions as the Fund and Custodian shall agree, and
Custodian shall transfer to such account such Securities and money as the Fund
may specify in a Certificate or Instructions.
2. The Fund hereby represents and warrants, which representations and
warranties shall be continuing and shall be deemed to be reaffirmed upon each
delivery of a Certificate or each giving of Oral Instructions or Instructions by
the Fund, that:
(a) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on its business as
now conducted, to enter into this Agreement, and to perform its obligations
hereunder;
(b) This Agreement has been duly authorized, executed and delivered by
the Fund, approved by a resolution of its board, constitutes a valid and legally
binding obligation of the Fund, enforceable in accordance with its terms, and
there is no statute, regulation, rule, order or judgment binding on it, and no
provision of its charter or by-laws, nor of any mortgage, indenture, credit
agreement or other contract binding on it or affecting its property, which would
prohibit its execution or performance of this Agreement;
(c) It is conducting its business in substantial compliance with all
applicable laws and requirements, both state and federal, and has obtained all
regulatory licenses, approvals and consents necessary to carry on its business
as now conducted;
(d) It will not use the services provided by Custodian hereunder in
any manner that is, or will result in, a violation of any law, rule or
regulation applicable to the Fund;
(e) Its board or its foreign custody manager, as defined in Rule 17f-5
under the Investment Company Act of 1940, as amended (the "`40 Act"), has
determined that use of each Subcustodian (including any Replacement Custodian)
and each Depository which Custodian or any Subcustodian is authorized to utilize
in accordance with Section 1(a) of Article III hereof, satisfies the applicable
requirements of the `40 Act and Rules 17f-4 or 17f-5 thereunder, as the case may
be;
(f) The Fund or its investment adviser has determined that the custody
arrangements of each Foreign Depository provide reasonable safeguards against
the custody risks associated with maintaining assets with such Foreign
Depository within the meaning of Rule 17f-7 under the x00 Xxx.;
(g) It is fully informed of the protections and risks associated with
various methods of transmitting Instructions and Oral Instructions and
delivering Certificates to Custodian, understands that there may be more secure
methods of transmitting or delivering the same than the methods selected by the
Fund, agrees that the security procedures (if any) to be utilized provide a
commercially reasonable degree of protection in light of its particular needs
and circumstances, and acknowledges and agrees that Instructions need not be
reviewed by
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Custodian, may conclusively be presumed by Custodian to have been
given by person(s) duly authorized, and may be acted upon as given;
(h) It shall manage its borrowings, including, without limitation, any
advance or overdraft (including any day-light overdraft) in the Accounts, so
that the aggregate of its total borrowings for each Series does not exceed the
amount such Series is permitted to borrow under the `40 Act;
(i) Its transmission or giving of, and Custodian acting upon and in
reliance on, Certificates, Instructions, or Oral Instructions pursuant to this
Agreement shall at all times comply with the `40 Act;
(j) It shall impose and maintain restrictions on the destinations to
which cash may be disbursed by Instructions to ensure that each disbursement is
for a proper purpose; and
(k) It has the right to make the pledge and grant the security
interest and security entitlement to Custodian contained in Section 1 of Article
V hereof, free of any right of redemption or prior claim of any other person or
entity, such pledge and such grants shall have a first priority subject to no
setoffs, counterclaims, or other liens or grants prior to or on a parity
therewith, and it shall take such additional steps as Custodian may require to
assure such priority.
3. The Fund hereby covenants that it shall from time to time complete and
execute and deliver to Custodian upon Custodian's request a Form FR U-1 (or
successor form) whenever the Fund borrows from Custodian any money to be used
for the purchase or carrying of margin stock as defined in Federal Reserve
Regulation U.
ARTICLE III
CUSTODY AND RELATED SERVICES
1. (a) Subject to the terms hereof, the Fund hereby authorizes Custodian to
hold any Securities received by it from time to time for the Fund's account.
Custodian shall be entitled to utilize Depositories, Subcustodians, and, subject
to subsection(c) of this Section 1, Foreign Depositories, to the extent possible
in connection with its performance hereunder. Securities and cash held in a
Depository or Foreign Depository will be held subject to the rules, terms and
conditions of such entity. Securities and cash held through Subcustodians shall
be held subject to the terms and conditions of Custodian's agreements with such
Subcustodians. Subcustodians may be authorized to hold Securities in Foreign
Depositories in which such Subcustodians participate. Unless otherwise required
by local law or practice or a particular subcustodian agreement, Securities
deposited with a Subcustodian, a Depositary or a Foreign Depository will be held
in a commingled account, in the name of Custodian, holding only Securities held
by Custodian as custodian for its customers. Custodian shall identify on its
books and records the Securities and cash belonging to the Fund, whether held
directly or indirectly through Depositories, Foreign Depositories, or
Subcustodians. Custodian shall, directly or indirectly through Subcustodians,
Depositories, or Foreign Depositories, endeavor, to the extent feasible, to hold
Securities in the country or other jurisdiction in which the principal trading
market for such Securities is located, where such Securities are to be presented
for cancellation
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and/or payment and/or registration, or where such Securities are acquired.
Custodian at any time may cease utilizing any Subcustodian and/or may replace a
Subcustodian with a different Subcustodian (the "Replacement Subcustodian"). In
the event Custodian selects a Replacement Subcustodian, Custodian shall not
utilize such Replacement Subcustodian until after the Fund's board or foreign
custody manager has determined that utilization of such Replacement Subcustodian
satisfies the requirements of the `40 Act and Rule 17f-5 thereunder.
(b) Unless Custodian has received a Certificate or Instructions to the
contrary, Custodian shall hold Securities indirectly through a Subcustodian only
if (i) the Securities are not subject to any right, charge, security interest,
lien or claim of any kind in favor of such Subcustodian or its creditors or
operators, including a receiver or trustee in bankruptcy or similar authority,
except for a claim of payment for the safe custody or administration of
Securities on behalf of the Fund by such Subcustodian, and (ii) beneficial
ownership of the Securities is freely transferable without the payment of money
or value other than for safe custody or administration.
(c) With respect to each Foreign Depository, Custodian shall exercise
reasonable care, prudence, and diligence (i) to provide the Fund with an
analysis of the custody risks associated with maintaining assets with the
Foreign Depository, and (ii) to monitor such custody risks on a continuing basis
and promptly notify the Fund of any material change in such risks. The Fund
acknowledges and agrees that such analysis and monitoring shall be made on the
basis of, and limited by, information gathered from Subcustodians or through
publicly available information otherwise obtained by Custodian, and shall not
include any evaluation of Country Risks. As used herein the term "Country Risks"
shall mean with respect to any Foreign Depository: (a) the financial
infrastructure of the country in which it is organized, (b) such country's
prevailing settlement practices, (c) nationalization, expropriation or other
governmental actions, (d) such country's regulation of the banking or securities
industry, (e) currency controls, restrictions, devaluations or fluctuations, and
(f) market conditions which affect the order execution of securities
transactions or affect the value of securities.
2. Custodian shall furnish the Fund with an advice of daily transactions
(including a confirmation of each transfer of Securities) and a monthly summary
of all transfers to or from the Accounts.
3. With respect to all Securities held hereunder, Custodian shall, unless
otherwise instructed to the contrary:
(a) Receive all income and other payments and advise the Fund as
promptly as practicable of any such amounts due but not paid;
(b) Present for payment and receive the amount paid upon all
Securities which may mature and advise the Fund as promptly as practicable of
any such amounts due but not paid;
(c) Forward to the Fund copies of all information or documents that it
may actually receive from an issuer of Securities which, in the opinion of
Custodian, are intended for the beneficial owner of Securities;
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(d) Execute, as custodian, any certificates of ownership, affidavits,
declarations or other certificates under any tax laws now or hereafter in effect
in connection with the collection of bond and note coupons;
(e) Hold directly or through a Depository, a Foreign Depository, or a
Subcustodian all rights and similar Securities issued with respect to any
Securities credited to an Account hereunder; and
(f) Endorse for collection checks, drafts or other negotiable
instruments.
4. (a) Custodian shall notify the Fund of rights or discretionary actions
with respect to Securities held hereunder, and of the date or dates by when such
rights must be exercised or such action must be taken, provided that Custodian
has actually received, from the issuer or the relevant Depository (with respect
to Securities issued in the United States) or from the relevant Subcustodian,
Foreign Depository, or a nationally or internationally recognized bond or
corporate action service to which Custodian subscribes, timely notice of such
rights or discretionary corporate action or of the date or dates such rights
must be exercised or such action must be taken. Absent actual receipt of such
notice, Custodian shall have no liability for failing to so notify the Fund.
(b) Whenever Securities (including, but not limited to, warrants,
options, tenders, options to tender or non-mandatory puts or calls) confer
discretionary rights on the Fund or provide for discretionary action or
alternative courses of action by the Fund, the Fund shall be responsible for
making any decisions relating thereto and for directing Custodian to act. In
order for Custodian to act, it must receive the Fund's Certificate or
Instructions at Custodian's offices, addressed as Custodian may from time to
time request, not later than noon (New York time) at least two (2) Business Days
prior to the last scheduled date to act with respect to such Securities (or such
earlier date or time as Custodian may specify to the Fund). Absent Custodian's
timely receipt of such Certificate or Instructions, Custodian shall not be
liable for failure to take any action relating to or to exercise any rights
conferred by such Securities.
5. All voting rights with respect to Securities, however registered, shall
be exercised by the Fund or its designee. For Securities issued in the United
States, Custodian's only duty shall be to mail to the Fund any documents
(including proxy statements, annual reports and signed proxies) actually
received by Custodian relating to the exercise of such voting rights. With
respect to Securities issued outside of the United States, Custodian's only duty
shall be to provide the Fund with access to a provider of global proxy services
at the Fund's request. The Fund shall be responsible for all costs associated
with its use of such services.
6. Custodian shall promptly advise the Fund upon Custodian's actual receipt
of notification of the partial redemption, partial payment or other action
affecting less than all Securities of the relevant class. If Custodian, any
Subcustodian, any Depository, or any Foreign Depository holds any Securities in
which the Fund has an interest as part of a fungible mass, Custodian, such
Subcustodian, Depository, or Foreign Depository may select the Securities to
participate in such partial redemption, partial payment or other action in any
non-discriminatory manner that it customarily uses to make such selection.
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7. Custodian shall not under any circumstances accept bearer interest
coupons which have been stripped from United States federal, state or local
government or agency securities unless explicitly agreed to by Custodian in
writing.
8. The Fund shall be liable for all taxes, assessments, duties and other
governmental charges, including any interest or penalty with respect thereto
("Taxes"), with respect to any cash or Securities held on behalf of the Fund or
any transaction related thereto. The Fund shall indemnify Custodian and each
Subcustodian for the amount of any Tax that Custodian, any such Subcustodian or
any other withholding agent is required under applicable laws (whether by
assessment or otherwise) to pay on behalf of, or in respect of income earned by
or payments or distributions made to or for the account of the Fund (including
any payment of Tax required by reason of an earlier failure to withhold).
Custodian shall, or shall instruct the applicable Subcustodian or other
withholding agent to, withhold the amount of any Tax which is required to be
withheld under applicable law upon collection of any dividend, interest or other
distribution made with respect to any Security and any proceeds or income from
the sale, loan or other transfer of any Security. In the event that Custodian or
any Subcustodian is required under applicable law to pay any Tax on behalf of
the Fund, Custodian is hereby authorized to withdraw cash from any cash account
in the amount required to pay such Tax and to use such cash, or to remit such
cash to the appropriate Subcustodian or other withholding agent, for the timely
payment of such Tax in the manner required by applicable law. If the aggregate
amount of cash in all cash accounts is not sufficient to pay such Tax, Custodian
shall promptly notify the Fund of the additional amount of cash (in the
appropriate currency) required, and the Fund shall directly deposit such
additional amount in the appropriate cash account promptly after receipt of such
notice, for use by Custodian as specified herein. In the event that Custodian
reasonably believes that Fund is eligible, pursuant to applicable law or to the
provisions of any tax treaty, for a reduced rate of, or exemption from, any Tax
which is otherwise required to be withheld or paid on behalf of the Fund under
any applicable law, Custodian shall, or shall instruct the applicable
Subcustodian or withholding agent to, either withhold or pay such Tax at such
reduced rate or refrain from withholding or paying such Tax, as appropriate;
provided that Custodian shall have received from the Fund all documentary
evidence of residence or other qualification for such reduced rate or exemption
required to be received under such applicable law or treaty. In the event that
Custodian reasonably believes that a reduced rate of, or exemption from, any Tax
is obtainable only by means of an application for refund, Custodian and the
applicable Subcustodian shall have no responsibility for the accuracy or
validity of any forms or documentation provided by the Fund to Custodian
hereunder. The Fund hereby agrees to indemnify and hold harmless Custodian and
each Subcustodian in respect of any liability arising from any underwithholding
or underpayment of any Tax which results from the inaccuracy or invalidity of
any such forms or other documentation, and such obligation to indemnify shall be
a continuing obligation of the Fund, its successors and assigns notwithstanding
the termination of this Agreement.
9. (a) For the purpose of settling Securities and foreign exchange
transactions, the Fund shall provide Custodian with sufficient immediately
available funds for all transactions by such time and date as conditions in the
relevant market dictate. As used herein, "sufficient immediately available
funds" shall mean either (i) sufficient cash denominated in U.S. dollars to
purchase the necessary foreign currency, or (ii) sufficient applicable foreign
currency, to settle
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the transaction. Custodian shall provide the Fund with immediately available
funds each day which result from the actual settlement of all sale transactions,
based upon advices received by Custodian from Subcustodians, Depositories, and
Foreign Depositories. Such funds shall be in U.S. dollars or such other currency
as the Fund may specify to Custodian.
(b) Any foreign exchange transaction effected by Custodian in
connection with this Agreement may be entered with Custodian or a BNY Affiliate
acting as principal or otherwise through customary banking channels. The Fund
may issue a standing Certificate or Instructions with respect to foreign
exchange transactions, but Custodian may establish rules or limitations
concerning any foreign exchange facility made available to the Fund. The Fund
shall bear all risks of investing in Securities or holding cash denominated in a
foreign currency.
(c) To the extent that Custodian has agreed to provide pricing or
other information services in connection with this Agreement, Custodian is
authorized to utilize any vendor (including brokers and dealers of Securities)
reasonably believed by Custodian to be reliable to provide such information. The
Fund understands that certain pricing information with respect to complex
financial instruments (e.g., derivatives) may be based on calculated amounts
rather than actual market transactions and may not reflect actual market values,
and that the variance between such calculated amounts and actual market values
may or may not be material. Where vendors do not provide information for
particular Securities or other property, an Authorized Person may advise
Custodian in a Certificate regarding the fair market value of, or provide other
information with respect to, such Securities or property as determined by it in
good faith. Custodian shall not be liable for any loss, damage or expense
incurred as a result of errors or omissions with respect to any pricing or other
information utilized by Custodian hereunder.
10. Custodian shall promptly send to the Fund (a) any reports it receives
from a Depository on such Depository's system of internal accounting control,
and (b) such reports on its own system of internal accounting control as the
Fund may reasonably request from time to time.
ARTICLE IV
PURCHASE AND SALE OF SECURITIES;
CREDITS TO ACCOUNT
1. Promptly after each purchase or sale of Securities by the Fund, the Fund
shall deliver to Custodian a Certificate or Instructions, or with respect to a
purchase or sale of a Security generally required to be settled on the same day
the purchase or sale is made, Oral Instructions specifying all information
Custodian may reasonably request to settle such purchase or sale. Custodian
shall account for all purchases and sales of Securities on the actual settlement
date unless otherwise agreed by Custodian.
2. The Fund understands that when Custodian is instructed to deliver
Securities against payment, delivery of such Securities and receipt of payment
therefor may not be completed simultaneously. Notwithstanding any provision in
this Agreement to the contrary, settlements, payments and deliveries of
Securities may be effected by Custodian or any Subcustodian in accordance with
the customary or established securities trading or securities
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processing practices and procedures in the jurisdiction in which the transaction
occurs, including, without limitation, delivery to a purchaser or dealer
therefor (or agent) against receipt with the expectation of receiving later
payment for such Securities. The Fund assumes full responsibility for all risks,
including, without limitation, credit risks, involved in connection with such
deliveries of Securities.
3. Custodian may, as a matter of bookkeeping convenience or by separate
agreement with the Fund, credit the Account with the proceeds from the sale,
redemption or other disposition of Securities or interest, dividends or other
distributions payable on Securities prior to its actual receipt of final payment
therefor. All such credits shall be conditional until Custodian's actual receipt
of final payment and may be reversed by Custodian to the extent that final
payment is not received. Payment with respect to a transaction will not be
"final" until Custodian shall have received immediately available funds which
under applicable local law, rule and/or practice are irreversible and not
subject to any security interest, levy or other encumbrance, and which are
specifically applicable to such transaction.
ARTICLE V
OVERDRAFTS OR INDEBTEDNESS
1. If Custodian should in its sole discretion advance funds on behalf of
any Series which results in an overdraft (including, without limitation, any
day-light overdraft) because the money held by Custodian in an Account for such
Series shall be insufficient to pay the total amount payable upon a purchase of
Securities specifically allocated to such Series, as set forth in a Certificate,
Instructions or Oral Instructions, or if an overdraft arises in the separate
account of a Series for some other reason, including, without limitation,
because of a reversal of a conditional credit or the purchase of any currency,
or if the Fund is for any other reason indebted to Custodian with respect to a
Series, including any indebtedness to The Bank of New York under the Fund's Cash
Management and Related Services Agreement (except a borrowing for investment or
for temporary or emergency purposes using Securities as collateral pursuant to a
separate agreement and subject to the provisions of Section 2 of this Article),
such overdraft or indebtedness shall be deemed to be a loan made by Custodian to
the Fund for such Series payable on demand and shall bear interest from the date
incurred at a rate per annum ordinarily charged by Custodian to its
institutional customers, as such rate may be adjusted from time to time. In
addition, the Fund hereby agrees that Custodian shall to the maximum extent
permitted by law have a continuing lien, security interest, and security
entitlement in and to any property, including, without limitation, any
investment property or any financial asset, of such Series at any time held by
Custodian for the benefit of such Series or in which such Series may have an
interest which is then in Custodian's possession or control or in possession or
control of any third party acting in Custodian's behalf. The Fund authorizes
Custodian, in its sole discretion, at any time to charge any such overdraft or
indebtedness together with interest due thereon against any balance of account
standing to such Series' credit on Custodian's books.
2. If the Fund borrows money from any bank (including Custodian if the
borrowing is pursuant to a separate agreement) for investment or for temporary
or emergency purposes using Securities held by Custodian hereunder as collateral
for such borrowings, the Fund shall deliver to Custodian a Certificate
specifying with respect to each such borrowing: (a) the Series
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to which such borrowing relates; (b) the name of the bank, (c) the amount of the
borrowing, (d) the time and date, if known, on which the loan is to be entered
into, (e) the total amount payable to the Fund on the borrowing date, (f) the
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities, and (g) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in conformance with the `40 Act and the Fund's prospectus. Custodian shall
deliver on the borrowing date specified in a Certificate the specified
collateral against payment by the lending bank of the total amount of the loan
payable, provided that the same conforms to the total amount payable as set
forth in the Certificate. Custodian may, at the option of the lending bank, keep
such collateral in its possession, but such collateral shall be subject to all
rights therein given the lending bank by virtue of any promissory note or loan
agreement. Custodian shall deliver such Securities as additional collateral as
may be specified in a Certificate to collateralize further any transaction
described in this Section. The Fund shall cause all Securities released from
collateral status to be returned directly to Custodian, and Custodian shall
receive from time to time such return of collateral as may be tendered to it. In
the event that the Fund fails to specify in a Certificate the Series, the name
of the issuer, the title and number of shares or the principal amount of any
particular Securities to be delivered as collateral by Custodian, Custodian
shall not be under any obligation to deliver any Securities.
ARTICLE VI
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any shares issued by the Fund ("Shares") it
shall deliver to Custodian a Certificate or Instructions specifying the amount
of money and/or Securities to be received by Custodian for the sale of such
Shares and specifically allocated to an Account for such Series.
2. Upon receipt of such money, Custodian shall credit such money to an
Account in the name of the Series for which such money was received.
3. Except as provided hereinafter, whenever the Fund desires Custodian to
make payment out of the money held by Custodian hereunder in connection with a
redemption of any Shares, it shall furnish to Custodian a Certificate or
Instructions specifying the total amount to be paid for such Shares. Custodian
shall make payment of such total amount to the transfer agent specified in such
Certificate or Instructions out of the money held in an Account of the
appropriate Series.
4. Notwithstanding the above provisions regarding the redemption of any
Shares, whenever any Shares are redeemed pursuant to any check redemption
privilege which may from time to time be offered by the Fund, Custodian, unless
otherwise instructed by a Certificate or Instructions, shall, upon presentment
of such check, charge the amount thereof against the money held in the Account
of the Series of the Shares being redeemed, provided, that if the Fund or its
agent timely advises Custodian that such check is not to be honored, Custodian
shall return such check unpaid.
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ARTICLE VII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. Whenever the Fund shall determine to pay a dividend or distribution on
Shares it shall furnish to Custodian Instructions or a Certificate setting forth
with respect to the Series specified therein the date of the declaration of such
dividend or distribution, the total amount payable, and the payment date.
2. Upon the payment date specified in such Instructions or Certificate,
Custodian shall pay out of the money held for the account of such Series the
total amount payable to the dividend agent of the Fund specified therein.
ARTICLE VIII
CONCERNING CUSTODIAN
1. (a) Except as otherwise expressly provided herein, Custodian shall not
be liable for any costs, expenses, damages, liabilities or claims, including
attorneys' and accountants' fees (collectively, "Losses"), incurred by or
asserted against the Fund, except those Losses arising out of Custodian's own
negligence or willful misconduct. Custodian shall have no liability whatsoever
for the action or inaction of any Depositories, or, except to the extent such
action or inaction is a direct result of the Custodian's failure to fulfill its
duties hereunder, of any Foreign Depositories. With respect to any Losses
incurred by the Fund as a result of the acts or any failures to act by any
Subcustodian (other than a BNY Affiliate), Custodian shall take appropriate
action to recover such Losses from such Subcustodian; and Custodian's sole
responsibility and liability to the Fund shall be limited to amounts so received
from such Subcustodian (exclusive of costs and expenses incurred by Custodian).
In no event shall Custodian be liable to the Fund or any third party for
special, indirect or consequential damages, or lost profits or loss of business,
arising in connection with this Agreement, nor shall BNY or any Subcustodian be
liable: (i) for acting in accordance with any Certificate or Oral Instructions
actually received by Custodian and reasonably believed by Custodian to be given
by an Authorized Person; (ii) for acting in accordance with Instructions without
reviewing the same; (iii) for conclusively presuming that all Instructions are
given only by person(s) duly authorized; (iv) for conclusively presuming that
all disbursements of cash directed by the Fund, whether by a Certificate, an
Oral Instruction, or an Instruction, are in accordance with Section 2(i) of
Article II hereof; (v) for holding property in any particular country,
including, but not limited to, Losses resulting from nationalization,
expropriation or other governmental actions; regulation of the banking or
securities industry; exchange or currency controls or restrictions, devaluations
or fluctuations; availability of cash or Securities or market conditions which
prevent the transfer of property or execution of Securities transactions or
affect the value of property; (vi) for any Losses due to forces beyond the
control of Custodian, including without limitation strikes, work stoppages, acts
of war or terrorism, insurrection, revolution, nuclear or natural catastrophes
or acts of God, or interruptions, loss or malfunctions of utilities,
communications or computer (software and hardware) services; (vii) for the
insolvency of any Subcustodian (other than a BNY Affiliate), any Depository, or,
except to the extent such action or inaction is a direct result of the
Custodian's failure to fulfill its duties hereunder, any Foreign Depository; or
(viii) for any Losses arising from the applicability of any law or regulation
now or hereafter in effect, or from the
-11-
occurrence of any event, including, without limitation, implementation or
adoption of any rules or procedures of a Foreign Depository, which may affect,
limit, prevent or impose costs or burdens on, the transferability,
convertibility, or availability of any currency or Composite Currency Unit in
any country or on the transfer of any Securities, and in no event shall
Custodian be obligated to substitute another currency for a currency (including
a currency that is a component of a Composite Currency Unit) whose
transferability, convertibility or availability has been affected, limited, or
prevented by such law, regulation or event, and to the extent that any such law,
regulation or event imposes a cost or charge upon Custodian in relation to the
transferability, convertibility, or availability of any cash currency or
Composite Currency Unit, such cost or charge shall be for the account of the
Fund, and Custodian may treat any account denominated in an affected currency as
a group of separate accounts denominated in the relevant component currencies.
(b) Custodian may enter into subcontracts, agreements and
understandings with any BNY Affiliate, whenever and on such terms and conditions
as it deems necessary or appropriate to perform its services hereunder. No such
subcontract, agreement or understanding shall discharge Custodian from its
obligations hereunder.
(c) The Fund agrees to indemnify Custodian and hold Custodian harmless
from and against any and all Losses sustained or incurred by or asserted against
Custodian by reason of or as a result of any action or inaction, or arising out
of Custodian's performance hereunder, including reasonable fees and expenses of
counsel incurred by Custodian in a successful defense of claims by the Fund;
provided however, that the Fund shall not indemnify Custodian for those Losses
arising out of Custodian's own negligence or willful misconduct. This indemnity
shall be a continuing obligation of the Fund, its successors and assigns,
notwithstanding the termination of this Agreement.
2. Without limiting the generality of the foregoing, Custodian shall be
under no obligation to inquire into, and shall not be liable for:
(a) Any Losses incurred by the Fund or any other person as a result of
the receipt or acceptance of fraudulent, forged or invalid Securities, or
Securities which are otherwise not freely transferable or deliverable without
encumbrance in any relevant market;
(b) The validity of the issue of any Securities purchased, sold, or
written by or for the Fund, the legality of the purchase, sale or writing
thereof, or the propriety of the amount paid or received therefor;
(c) The legality of the sale or redemption of any Shares, or the
propriety of the amount to be received or paid therefor;
(d) The legality of the declaration or payment of any dividend or
distribution by the Fund;
(e) The legality of any borrowing by the Fund;
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(f) The legality of any loan of portfolio Securities, nor shall
Custodian be under any duty or obligation to see to it that any cash or
collateral delivered to it by a broker, dealer or financial institution or held
by it at any time as a result of such loan of portfolio Securities is adequate
security for the Fund against any loss it might sustain as a result of such
loan, which duty or obligation shall be the sole responsibility of the Fund. In
addition, Custodian shall be under no duty or obligation to see that any broker,
dealer or financial institution to which portfolio Securities of the Fund are
lent makes payment to it of any dividends or interest which are payable to or
for the account of the Fund during the period of such loan or at the termination
of such loan, provided, however that Custodian shall promptly notify the Fund in
the event that such dividends or interest are not paid and received when due;
(g) The sufficiency or value of any amounts of money and/or Securities
held in any Special Account in connection with transactions by the Fund; whether
any broker, dealer, futures commission merchant or clearing member makes payment
to the Fund of any variation margin payment or similar payment which the Fund
may be entitled to receive from such broker, dealer, futures commission merchant
or clearing member, or whether any payment received by Custodian from any
broker, dealer, futures commission merchant or clearing member is the amount the
Fund is entitled to receive, or to notify the Fund of Custodian's receipt or
non-receipt of any such payment; or
(h) Whether any Securities at any time delivered to, or held by it or
by any Subcustodian, for the account of the Fund and specifically allocated to a
Series are such as properly may be held by the Fund or such Series under the
provisions of its then current prospectus and statement of additional
information, or to ascertain whether any transactions by the Fund, whether or
not involving Custodian, are such transactions as may properly be engaged in by
the Fund.
3. Custodian may, with respect to questions of law specifically regarding
an Account, obtain the advice of counsel and shall be fully protected with
respect to anything done or omitted by it in good faith in conformity with such
advice.
4. Custodian shall be under no obligation to take action to collect any
amount payable on Securities in default, or if payment is refused after due
demand and presentment.
5. Custodian shall have no duty or responsibility to inquire into, make
recommendations, supervise, or determine the suitability of any transactions
affecting any Account.
6. The Fund shall pay to Custodian the fees and charges as may be
specifically agreed upon from time to time and such other fees and charges at
Custodian's standard rates for such services as may be applicable. The Fund
shall reimburse Custodian for all costs associated with the conversion of the
Fund's Securities hereunder and the transfer of Securities and records kept in
connection with this Agreement. The Fund shall also reimburse Custodian for
out-of-pocket expenses which are a normal incident of the services provided
hereunder.
-13-
7. Custodian has the right to debit any cash account for any amount payable
by the Fund in connection with any and all obligations of the Fund to Custodian.
In addition to the rights of Custodian under applicable law and other
agreements, at any time when the Fund shall not have honored any of its
obligations to Custodian, Custodian shall have the right without notice to the
Fund to retain or set-off, against such obligations of the Fund, any Securities
or cash Custodian or a BNY Affiliate may directly or indirectly hold for the
account of the Fund, and any obligations (whether matured or unmatured) that
Custodian or a BNY Affiliate may have to the Fund in any currency or Composite
Currency Unit. Any such asset of, or obligation to, the Fund may be transferred
to Custodian and any BNY Affiliate in order to effect the above rights.
8. The Fund agrees to forward to Custodian a Certificate or Instructions
confirming Oral Instructions by the close of business of the same day that such
Oral Instructions are given to Custodian. The Fund agrees that the fact that
such confirming Certificate or Instructions are not received or that a contrary
Certificate or contrary Instructions are received by Custodian shall in no way
affect the validity or enforceability of transactions authorized by such Oral
Instructions and effected by Custodian. If the Fund elects to transmit
Instructions through an on-line communications system offered by Custodian, the
Fund's use thereof shall be subject to the Terms and Conditions attached as
Appendix I hereto, and Custodian shall provide user and authorization codes,
passwords and authentication keys only to an Authorized Person or a person
reasonably believed by Custodian to be an Authorized Person.
9. The books and records pertaining to the Fund which are in possession of
Custodian shall be the property of the Fund. Such books and records shall be
prepared and maintained as required by the `40 Act and the rules thereunder. The
Fund, or its authorized representatives, shall have access to such books and
records during Custodian's normal business hours. Upon the reasonable request of
the Fund, copies of any such books and records shall be provided by Custodian to
the Fund or its authorized representative. Upon the reasonable request of the
Fund, Custodian shall provide in hard copy or on computer disc any records
included in any such delivery which are maintained by Custodian on a computer
disc, or are similarly maintained.
10. It is understood that Custodian is authorized to supply any information
regarding the Accounts which is required by any law, regulation or rule now or
hereafter in effect. The Custodian shall provide the Fund with any report
obtained by the Custodian on the system of internal accounting control of a
Depository, and with such reports on its own system of internal accounting
control as the Fund may reasonably request from time to time.
11. Custodian shall have no duties or responsibilities whatsoever except
such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied against Custodian in
connection with this Agreement.
ARTICLE IX
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving to
the other party a notice in writing specifying the date of such termination,
which shall be not less than
-14-
ninety (90) days after the date of giving of such notice. In the event such
notice is given by the Fund, it shall be accompanied by a copy of a resolution
of the board of the Fund, certified by the Secretary or any Assistant Secretary,
electing to terminate this Agreement and designating a successor custodian or
custodians, each of which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits. In the event such
notice is given by Custodian, the Fund shall, on or before the termination date,
deliver to Custodian a copy of a resolution of the board of the Fund, certified
by the Secretary or any Assistant Secretary, designating a successor custodian
or custodians. In the absence of such designation by the Fund, Custodian may
designate a successor custodian which shall be a bank or trust company having
not less than $2,000,000 aggregate capital, surplus and undivided profits. Upon
the date set forth in such notice this Agreement shall terminate, and Custodian
shall upon receipt of a notice of acceptance by the successor custodian on that
date deliver directly to the successor custodian all Securities and money then
owned by the Fund and held by it as Custodian, after deducting all fees,
expenses and other amounts for the payment or reimbursement of which it shall
then be entitled.
2. If a successor custodian is not designated by the Fund or Custodian in
accordance with the preceding Section, the Fund shall upon the date specified in
the notice of termination of this Agreement and upon the delivery by Custodian
of all Securities (other than Securities which cannot be delivered to the Fund)
and money then owned by the Fund be deemed to be its own custodian and Custodian
shall thereby be relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities which cannot be
delivered to the Fund to hold such Securities hereunder in accordance with this
Agreement.
ARTICLE X
MISCELLANEOUS
1. The Fund agrees to furnish to Custodian a new Certificate of Authorized
Persons in the event of any change in the then present Authorized Persons. Until
such new Certificate is received, Custodian shall be fully protected in acting
upon Certificates or Oral Instructions of such present Authorized Persons.
2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to Custodian, shall be sufficiently given if
addressed to Custodian and received by it at its offices at 000 Xxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, or at such other place as Custodian may from time to
time designate in writing.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and received by it at its offices at c/o Clarion Capital, LLC, 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as the Fund may
from time to time designate in writing.
4. Each and every right granted to either party hereunder or under any
other document delivered hereunder or in connection herewith, or allowed it by
law or equity, shall be cumulative and may be exercised from time to time. No
failure on the part of either party to
-15-
exercise, and no delay in exercising, any right will operate as a waiver
thereof, nor will any single or partial exercise by either party of any right
preclude any other or future exercise thereof or the exercise of any other
right.
5. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any exclusive jurisdiction, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected thereby. This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties, except that any
amendment to the Schedule I hereto need be signed only by the Fund and any
amendment to Appendix I hereto need be signed only by Custodian. This Agreement
shall extend to and shall be binding upon the parties hereto, and their
respective successors and assigns; provided, however, that this Agreement shall
not be assignable by either party without the written consent of the other.
6. This Agreement shall be construed in accordance with the substantive
laws of the State of New York, without regard to conflicts of laws principles
thereof. The Fund and Custodian hereby consent to the jurisdiction of a state or
federal court situated in New York City, New York in connection with any dispute
arising hereunder. The Fund hereby irrevocably waives, to the fullest extent
permitted by applicable law, any objection which it may now or hereafter have to
the laying of venue of any such proceeding brought in such a court and any claim
that such proceeding brought in such a court has been brought in an inconvenient
forum. The Fund and Custodian each hereby irrevocably waives any and all rights
to trial by jury in any legal proceeding arising out of or relating to this
Agreement.
7. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
-16-
IN WITNESS WHEREOF, the Fund and Custodian have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the day
and year first above written.
CLARION CMBS VALUE FUND, INC.
By:
---------------------------------
Title:
Tax Identification No: 00-0000000
THE BANK OF NEW YORK
By:
---------------------------------
Title:
-17-
SCHEDULE I
CERTIFICATE OF AUTHORIZED PERSONS
(The Fund - Oral and Written Instructions)
The undersigned hereby certifies that he/she is the duly elected and acting
Treasurer of Clarion CMBS Value Fund, Inc. (the "Fund"), and further certifies
that the following officers or employees of the Fund have been duly authorized
in conformity with the Fund's Articles of Incorporation and By-Laws to deliver
Certificates and Oral Instructions to The Bank of New York ("Custodian")
pursuant to the Custody Agreement between the Fund and Custodian dated May 1,
2001, and that the signatures appearing opposite their names are true and
correct:
-------------------- -------------------- --------------------
Name Title Signature
-------------------- -------------------- --------------------
Name Title Signature
-------------------- -------------------- --------------------
Name Title Signature
-------------------- -------------------- --------------------
Name Title Signature
-------------------- -------------------- --------------------
Name Title Signature
-------------------- -------------------- --------------------
Name Title Signature
-------------------- -------------------- --------------------
Name Title Signature
-------------------- -------------------- --------------------
Name Title Signature
This certificate supersedes any certificate of Authorized Persons you may
currently have on file.
[seal] By:
---------------------------------
Title:
Date
