CUSTODY AGREEMENT
AGREEMENT dated June 15, 1995 between THE CHASE MANHATTAN BANK, N.A.
("Chase"), having its principal place of business at 0 Xxxxx Xxxxxxxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, and XXXXXXXXX RUSSIA FUND, INC. (the "Fund"), an
investment company registered under the Investment Company Act of 1940 ("Act of
1940"), having its principal place of business at 000 Xxxxxxx Xxxxxx, Xx.
Xxxxxxxxxx, Xxxxxxx 00000.
WHEREAS, the Fund wishes to appoint Chase as custodian to its securities
and assets and Chase is willing to act as custodian under the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the Fund and its successors and assigns and Chase and its
successors and assigns, hereby agree as follows:
1. APPOINTMENT AS CUSTODIAN. Chase agrees to act as custodian for the Fund,
as provided herein, in connection with (a) cash ("Cash") received from time to
time from, or for the account of, the Fund for credit to the Fund's deposit
account or accounts administered by Chase, Chase Branches and Domestic
Securities Depositories (as hereinafter defined), and/or Foreign Banks and
Foreign Securities Depositories (as hereinafter defined) (the "Deposit
Account"); (b) all stocks, shares, bonds, debentures, notes, mortgages, or other
obligations for the payment of money and any certificates, receipts, warrants,
or other instruments representing rights to receive, purchase, or subscribe for
the same or evidencing or representing any other rights or interests therein and
other similar property ("Securities") from time to time received by Chase and/or
any Chase Branch, Domestic Securities Depository, Foreign Bank or Foreign
Securities Depository for the account of the Fund (the "Custody Account"); and
(c) original margin and variation margin payments in a segregated account for
futures contracts (the "Segregated Account").
All cash held in the Deposit Account or in the Segregated Account in
connection with which Chase agrees to act as custodian is hereby denominated as
a special deposit which shall be held in trust for the benefit of the Fund and
to which Chase, Chase Branches and Domestic Securities Depositories and/or
Foreign Banks and Foreign Securities Depositories shall have no ownership
rights, and Chase will so indicate on its books and records pertaining to the
Deposit Account and the Segregated Account. All cash held in auxiliary accounts
that may be carried for the Fund with Chase (including a Money Market Account,
Redemption Account, Distribution Account and Imprest Account) is not so
denominated as a special deposit and title thereto is held by Chase subject to
the claims of creditors.
2. AUTHORIZATION TO USE BOOK ENTRY SYSTEM, DOMESTIC SECURITIES
DEPOSITORIES, BRANCH OFFICES, FOREIGN BANKS AND FOREIGN SECURITIES DEPOSITORIES.
Chase is hereby authorized to appoint and utilize, subject to the provisions of
Sections 4 and 5 hereof:
A. The Book Entry System and The Depository Trust Company; and also
such other Domestic Securities Depositories selected by Chase and as
to which Chase has received a certified copy of a resolution of the
Fund's Board of Directors authorizing deposits therein;
X. Xxxxx'x foreign branch offices in the United Kingdom, Hong Kong,
Singapore, and Tokyo, and such other foreign branch offices of Chase
located in countries approved by the Board of Directors of the Fund as
to which Chase shall have given prior notice to the Fund;
C. Foreign Banks which Chase shall have selected, which are located in
countries approved by the Board of Directors of the Fund, and as to
which banks Chase shall have given prior notice to the Fund; and
D. Foreign Securities Depositories which Chase shall have selected and
as to which Chase has received a certified copy of a resolution of the
Fund's Board of Directors authorizing deposits therein;
to hold Securities and Cash at any time owned by the Fund, it being understood
that no such appointment or utilization shall in any way relieve Chase of its
responsibilities as provided for in this Agreement. Foreign branch offices of
Chase appointed and utilized by Chase are herein referred to as "Chase
Branches." Unless otherwise agreed to in writing, (a) each Chase Branch, each
Foreign Bank and each Foreign Securities Depository shall be selected by Chase
to hold only Securities as to which the principal trading market or principal
location as to which such Securities are to be presented for payment is located
outside the United States; and (b) Chase and each Chase Branch, Foreign Bank and
Foreign Securities Depository will promptly transfer or cause to be transferred
to Chase, to be held in the United States, Securities and/or Cash that are then
being held outside the United States upon request of the Fund and/or of the
Securities and Exchange Commission. Utilization by Chase of Chase Branches,
Domestic Securities Depositories, Foreign Banks and Foreign Securities
Depositories shall be in accordance with provisions as from time to time
amended, of an operating agreement to be entered into between Chase and the Fund
(the "Operating Agreement").
3. DEFINITIONS. As used in this Agreement, the following terms shall have
the following meanings:
(a) "Authorized Persons of the Fund" shall mean such officers or
employees of the Fund or any other person or persons as shall have
been designated by a resolution of the Board of Directors of the Fund,
a certified copy of which has been filed with Chase, to act as
Authorized Persons hereunder. Such persons shall continue to be
Authorized Persons of the Fund, authorized to act either singly or
together with one or more other of such persons as provided in such
resolution, until such time as the Fund shall have filed with Chase a
written notice of the Fund supplementing, amending, or revoking the
authority of such persons.
(b) "Book-Entry system" shall mean the Federal Reserve/Treasury
book-entry system for United States and federal agency securities, its
successor or successors and its nominee or nominees.
(c) "Domestic Securities Depository" shall mean The Depository Trust
Company, a clearing agency registered with the Securities and Exchange
Commission, its successor or successors and its nominee or nominees;
and (subject to the receipt by Chase of a certified copy of a
resolution of the Fund's Board of Directors specifically approving
deposits therein as provided in Section 2(a) of this Agreement) any
other person authorized to act as a depository under the Act of 1940,
its successor or successors and its nominee or nominees.
(d) "Foreign Bank" shall mean any banking institution organized under
the laws of a jurisdiction other than the United States or of any
state thereof.
(e) A "Foreign Securities Depository" shall mean any system for the
central handling of securities abroad where all securities of any
particular class or series of any issuer deposited within the system
are treated as fungible and may be transferred or pledged by
bookkeeping without physical delivery of the securities by any Chase
Branch or Foreign Bank.
(f) "Written Instructions" shall mean instructions in writing signed
by Authorized Persons of the Fund giving such instructions, and/or
such other forms of communications as from time to time shall be
agreed upon in writing between the Fund and Chase.
4. SELECTION OF COUNTRIES IN WHICH SECURITIES MAY BE HELD. Chase shall not
cause Securities and Cash to be held in any country outside the United States
until the Fund has directed the holding of its assets in such country. Chase
will be provided with a copy of a resolution of the Fund's Board of Directors
authorizing such custody in any country outside of the United States, which
resolution shall be based upon, among other factors, the following:
(a) comparative operational efficiencies of custody;
(b) clearance and settlement and the costs thereof; and
(c) political and other risks, other than those risks
specifically assumed by Chase.
5. RESPONSIBILITY OF CHASE TO SELECT CUSTODIANS IN INDIVIDUAL FOREIGN
COUNTRIES. The responsibility for selecting the Chase Branch, Foreign Bank or
Foreign Securities Depository to hold the Fund's Securities and Cash in
individual countries authorized by the Fund shall be that of Chase. Chase
generally shall utilize Chase Branches where available. In locations where there
are no Chase Branches providing custodial services, Chase shall select as its
agent a Foreign Bank, which may be an affiliate or subsidiary of Chase. To
facilitate the clearance and settlement of securities transactions, Chase
represents that, subject to the approval of the Fund, it may deposit Securities
in a Foreign Securities Depository in which Chase is a participant. In
situations in which Chase is not a participant in a Foreign Securities
Depository, Chase may, subject to the approval of the Fund, authorize a Foreign
Bank acting as its subcustodian to deposit the Securities in a Foreign
Securities Depository in which the Foreign Bank is a participant.
Notwithstanding the foregoing, such selection by Chase of a Foreign Bank or
Foreign Securities Depository shall not become effective until Chase has been
advised by the Fund that a majority of its Board of Directors:
(a) Has approved Chase's selection of the particular Foreign Bank or
Foreign Securities Depository, as the case may be, as consistent with the
best interests of the Fund and its Shareholders;
(b) Has approved as consistent with the best interests of the Fund and its
Shareholders a written contract prepared by Chase which will govern the
manner in which such Foreign Bank will maintain the Fund's assets.
6. CONDITIONS ON SELECTION OF FOREIGN BANK OR FOREIGN SECURITIES
DEPOSITORY. Chase shall authorize the holding of Securities and Cash by a Chase
Branch, Foreign Bank or Foreign Securities Depository only:
(a) to the extent that the Securities and Cash are not subject to any
right, charge, security interest, lien or claim of any kind in favor of any
such Foreign Bank or Foreign Securities Depository, except for their safe
custody or administration, and
(b) to the extent that the beneficial ownership of Securities is freely
transferable without the payment of money or value other than for safe
custody or administration.
7. CHASE BRANCHES AND FOREIGN BANKS NOT AGENTS OF THE FUND. Chase Branches,
Foreign Banks and Foreign Securities Depositories shall be subject to the
instructions of Chase and/or the Foreign Bank, and not to those of the Fund.
Chase warrants and represents that all such instructions shall afford protection
to the Fund at least equal to that afforded for Securities held directly by
Chase. Any Chase Branch, Foreign Bank or Foreign Securities Depository shall act
solely as agent of Chase or of such Foreign Bank.
8. CUSTODY ACCOUNT. Securities held in the Custody Account shall be
physically segregated at all times from those of any other person or persons
except that (a) with respect to Securities held by Chase Branches, such
Securities may be placed in an omnibus account for the customers of Chase, and
Chase shall maintain separate book entry records for each such omnibus account,
and such Securities shall be deemed for the purpose of this Agreement to be held
by Chase in the Custody Account; (b) with respect to Securities deposited by
Chase with a Foreign Bank, a Domestic Securities Depository or a Foreign
Securities Depository, Chase shall identify on its books as belonging to the
Fund the Securities shown on Chase's account on the books of the Foreign Bank,
Domestic Securities Depository or Foreign Securities Depository; and (c) with
respect to Securities deposited by a Foreign Bank with a Foreign Securities
Depository, Chase shall cause the Foreign Bank to identify on its books as
belonging to Chase, as agent, the Securities shown on the Foreign Bank's account
on the books of the Foreign Securities Depository. All Securities of the Fund
maintained by Chase pursuant to this Agreement shall be subject only to the
instructions of Chase, Chase Branches or their agents. Chase shall only deposit
Securities with a Foreign Bank in accounts that include only assets held by
Chase for its customers.
8a. SEGREGATED ACCOUNT FOR FUTURES CONTRACTS. With respect to every
futures contract purchased, sold or cleared for the Custody Account, Chase
agrees, pursuant to Written Instructions, to:
(a) deposit original margin and variation margin payments in a
segregated account maintained by Chase; and
(b) perform all other obligations attendant to transactions or
positions in such futures contracts, as such payments or
performance may be required by law or the executing broker.
8b. SEGREGATED ACCOUNT FOR REPURCHASE AGREEMENTS.
With respect to purchases for the Custody Account from banks (including Chase)
or broker-dealers of United States or foreign government obligations subject to
repurchase agreements, Chase agrees, pursuant to Written Instructions, to:
(a) deposit such securities and repurchase agreements in a
segregated account maintained by Chase; and
(b) promptly show on Chase's records that such securities and
repurchase agreements are being held on behalf of the Fund and
deliver to the Fund a written confirmation to that effect.
8c. SEGREGATED ACCOUNTS FOR DEPOSITS OF COLLATERAL. Chase agrees, with
respect to (i) cash or high quality debt securities to secure the Fund's
commitments to purchase new issues of debt obligations offered on a when-issued
basis; (ii) cash, U.S. government securities, or irrevocable letters of credit
of borrowers of the Fund's portfolio securities to secure the loan to them of
such securities; and/or (iii) cash, securities or any other property delivered
to secure any other obligations; (all of such items being hereinafter referred
to as "collateral"), pursuant to Written Instructions, to:
(a) deposit the collateral for each such obligation in a separate
segregated account maintained by Chase; and
(b) promptly to show on Chase's records that such collateral is
being held on behalf of the Fund and deliver to the Fund a
written confirmation to that effect.
9. DEPOSIT ACCOUNT. Subject to the provisions of this Agreement, the Fund
authorizes Chase to establish and maintain in each country or other jurisdiction
in which the principal trading market for any Securities is located or in which
any Securities are to be presented for payment, an account or accounts, which
may include nostro accounts with Chase Branches and omnibus accounts of Chase at
Foreign Banks, for receipt of cash in the Deposit Account, in such currencies as
directed by Written Instructions. For purposes of this Agreement, cash so held
in any such account shall be evidenced by separate book entries maintained by
Chase at its office in London and shall be deemed to be Cash held by Chase in
the Deposit Account. Unless Chase receives Written Instructions to the contrary,
cash received or credited by Chase or any other Chase Branch, Foreign Bank or
Foreign Securities Depository for the Deposit Account in a currency other than
United States dollars shall be converted promptly into United States dollars
whenever it is practicable to do so through customary banking channels
(including without limitation the effecting of such conversions at Chase's
preferred rates through Chase, its affiliates or Chase Branches), and shall be
automatically transmitted back to Chase in the United States.
10. SETTLEMENT PROCEDURES. Settlement procedures for transactions in
Securities delivered to, held in, or to be delivered from the Custody Account in
Chase Branches, Domestic Securities Depositories, Foreign Banks and Foreign
Securities Depositories, including receipts and payments of cash held in any
nostro account or omnibus account for the Deposit Account as described in
Section 9, shall be carried out in accordance with the provisions of the
Operating Agreement. It is understood that such settlement procedures may vary,
as provided in the Operating Agreement, from securities market to securities
market, to reflect particular settlement practices in such markets.
Chase shall make or cause the appropriate Chase Branch or Foreign Bank to
make payments of Cash held in the Deposit Account only:
(a) in connection with the purchase of Securities for the account
of the Fund and only against the receipt of such Securities by
Chase or by another appropriate Chase Branch, Domestic Securities
Depository, Foreign Bank or Foreign Securities Depository, or
otherwise as provided in the Operating Agreement, each such
payment to be made at prices confirmed by Written Instructions,
or
(b) in connection with any dividend, interim dividend or other
distribution declared by the Fund, or
(c) as directed by the Fund by Written Instructions setting forth
the name and address of the person to whom the payment is to be
made and the purpose for which the payment is to be made.
Upon the receipt by Chase of Written Instructions specifying the
Securities to be so transferred or delivered, which instructions shall name the
person or persons to whom transfers or deliveries of such Securities shall be
made and shall indicate the time(s) for such transfers or deliveries, Securities
held in the Custody Account shall be transferred, exchanged, or delivered by
Chase, any Chase Branch, Domestic Securities Depository, Foreign Bank, or
Foreign Securities Depository, as the case may be, against payment in Cash or
Securities, or otherwise as provided in the Operating Agreement, only:
(a) upon sale of such Securities for the account of the Fund and
receipt of such payment in the amount shown in a broker's
confirmation of sale of the Securities or other proper
authorization received by Chase before such payment is made, as
confirmed by Written Instructions;
(b) in exchange for or upon conversion into other Securities
alone or other Securities and Cash pursuant to any plan of
merger, consolidation, reorganization, recapitalization,
readjustment, or tender offer;
(c) upon exercise of conversion, subscription, purchase, or other
similar rights represented by such Securities; or
(d) otherwise as directed by the Fund by Written Instructions
which shall set forth the amount and purpose of such transfer or
delivery.
Until Chase receives Written Instructions to the contrary, Chase
shall, and shall cause each Chase Branch, Domestic Securities Depository,
Foreign Bank and Foreign Securities Depository holding Securities or Cash to,
take the following actions in accordance with procedures established in the
Operating Agreement:
(a) collect and timely deposit in the Deposit Account all income
due or payable with respect to any Securities and take any action
which may be necessary and proper in connection with the
collection and receipt of such income;
(b) present timely for payment all Securities in the Custody
Account which are called, redeemed or retired or otherwise become
payable and all coupons and other income items which call for
payment upon presentation and to receive and credit to the
Deposit Account Cash so paid for the account of the Fund except
that, if such Securities are convertible, such Securities shall
not be presented for payment until two business days preceding
the date on which such conversion rights would expire unless
Chase previously shall have received Written Instructions with
respect thereto;
(c) present for exchange all Securities in the Custody Account
converted pursuant to their terms into other Securities;
(d) in respect of securities in the Custody Account, execute in
the name of the Fund such ownership and other certificates as may
be required to obtain payments in respect thereto, provided that
Chase shall have requested and the Fund shall have furnished to
Chase any information necessary in connection with such
certificates;
(e) exchange interim receipts or temporary Securities in the
Custody Account for definitive Securities; and
(f) receive and hold in the Custody Account all Securities
received as a distribution on Securities held in the Custody
Account as a result of a stock dividend, share split-up or
reorganization, recapitalization, readjustment or other
rearrangement or distribution of rights or similar Securities
issued with respect to any Securities held in the Custody
Account.
11. RECORDS. Chase hereby agrees that Chase and any Chase Branch or Foreign
Bank shall create, maintain, and retain all records relating to their activities
and obligations as custodian for the Fund under this Agreement in such manner as
will meet the obligations of the Fund under the Act of 1940, particularly
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder, and Federal, state and
foreign tax laws and other legal or administrative rules or procedures, in each
case as currently in effect and applicable to the Fund. All records so
maintained in connection with the performance of its duties under this Agreement
shall, in the event of termination of this Agreement, be preserved and
maintained by Chase as required by regulation, and shall be made available to
the Fund or its agent upon request, in accordance with the provisions of Section
19.
Chase hereby agrees, subject to restrictions under applicable laws, that
the books and records of Chase and any Chase Branch pertaining to their actions
under this Agreement shall be open to the physical, on-premises inspection and
audit at reasonable times by the independent accountants ("Accountants")
employed by, or other representatives of, the Fund. Chase hereby agrees that,
subject to restrictions under applicable laws, access shall be afforded to the
Accountants to such of the books and records of any Foreign Bank, Domestic
Securities Depository or Foreign Securities Depository with respect to
Securities and Cash as shall be required by the Accountants in connection with
their examination of the books and records pertaining to the affairs of the
Fund. Chase also agrees that as the Fund may reasonably request from time to
time, Chase shall provide the Accountants with information with respect to
Chase's and Chase Branches' systems of internal accounting controls as they
relate to the services provided under this Agreement, and Chase shall use its
best efforts to obtain and furnish similar information with respect to each
Domestic Securities Depository, Foreign Bank and Foreign Securities Depository
holding Securities and Cash.
12. REPORTS. Chase shall supply periodically, upon the reasonable request
of the Fund, such statements, reports, and advice with respect to Cash in the
Deposit Account and the Securities in the Custody Account and transactions in
Securities from time to time received and/or delivered for or from the Custody
Account, as the case may be, as the Fund shall require. Such statements, reports
and advice shall include an identification of the Chase Branch, Domestic
Securities Depository, Foreign Bank and Foreign Securities Depository having
custody of the Securities and Cash, and descriptions thereof.
13. REGISTRATION OF SECURITIES. Securities in the Custody Account which are
issued or issuable only in bearer form (except such securities as are held in
the Book-Entry System) shall be held by Chase, Chase Branches, Domestic
Securities Depositories, Foreign Banks or Foreign Securities Depositories in
that form. All other Securities in the Custody Account shall be held in
registered form in the name of Chase, or any Chase Branch, the Book-Entry
System, Domestic Securities Depository, Foreign Bank or Foreign Securities
Depository and their nominees, as custodian or nominee.
14. STANDARD OF CARE.
(a) GENERAL. Chase shall assume entire responsibility for all
Securities held in the Custody Account, Cash held in the Deposit
Account, Cash or Securities held in the Segregated Account and
any of the Securities and Cash while in the possession of Chase
or any Chase Branch, Domestic Securities Depository, Foreign Bank
or Foreign Securities Depository, or in the possession or control
of any employees, agents or other personnel of Chase or any Chase
Branch, Domestic Securities Depository, Foreign Bank or Foreign
Securities Depository; and shall be liable to the Fund for any
loss to the Fund occasioned by any destruction of the Securities
or Cash so held or while in such possession, by any robbery,
burglary, larceny, theft or embezzlement by any employees, agents
or personnel of Chase or any Chase Branch, Domestic Securities
Depository, Foreign Bank or Foreign Securities Depository, and/or
by virtue of the disappearance of any of the Securities or Cash
so held or while in such possession, with or without any fault
attributable to Chase ("fault attributable to Chase" for the
purposes of this Agreement being deemed to mean any negligent act
or omission, robbery, burglary, larceny, theft or embezzlement by
any employees or agents of Chase or any Chase Branch, Domestic
Securities Depository, Foreign Bank or Foreign Securities
Depository). In the event of Chase's discovery or notification of
any such loss of Securities or Cash, Chase shall promptly notify
the Fund and shall reimburse the Fund to the extent of the market
value of the missing Securities or Cash as at the date of the
discovery of such loss. The Fund shall not be obligated to
establish any negligence, misfeasance or malfeasance on Chase's
part from which such loss resulted, but Chase shall be obligated
hereunder to make such reimbursement to the Fund after the
discovery or notice of such loss, destruction or theft of such
Securities or Cash. Chase may at its option insure itself against
loss from any cause but shall be under no obligation to insure
for the benefit of the Fund.
(b) COLLECTIONS. All collections of funds or other property paid
or distributed in respect of Securities held in the Custody
Account shall be made at the risk of the Fund. Chase shall have
no liability for any loss occasioned by delay in the actual
receipt of notice by Chase (or by any Chase Branch or Foreign
Bank in the case of Securities or Cash held outside of the United
States) of any payment, redemption or other transaction regarding
Securities held in the Custody Account or Cash held in the
Deposit Account in respect of which Chase has agreed to take
action in the absence of Written Instructions to the contrary as
provided in Section 10 of this Agreement, which does not appear
in any of the publications referred to in Section 16 of this
Agreement.
(c) EXCLUSIONS. Notwithstanding any other provision in this
Agreement to the contrary, Chase shall not be responsible for (i)
losses resulting from war or from the imposition of exchange
control restrictions, confiscation, expropriation, or
nationalization of any securities or assets of the issuer of such
securities, or (ii) losses resulting from any negligent act or
omission of the Fund or any of its affiliates, or any robbery,
theft, embezzlement or fraudulent act by any employee or agent of
the Fund or any of its affiliates. Chase shall not be liable for
any action taken in good faith upon Written Instructions of
Authorized Persons of the Fund or upon any certified copy of any
resolution of the Board of Directors of the Fund, and may rely on
the genuineness of any such documents which it may in good faith
believe to be validly executed.
(d) LIMITATION ON LIABILITY UNDER SECTION 14(A). Notwithstanding
any other provision in this Agreement to the contrary, it is
agreed that Chase's sole responsibility with respect to losses
under Section 14(a) shall be to pay the Fund the amount of any
such loss as provided in Section 14(a) (subject to the limitation
provided in Section 14(e) of this Agreement). This limitation
does not apply to any liability of Chase under Section 14(f) of
this Agreement.
(e) ANNUAL ADJUSTMENT OF LIMITATION OF LIABILITY. As soon as
practicable after June 1 of every year, the Fund shall provide
Chase with the amount of its total net assets as of the close of
business on such date (or if the New York Stock Exchange is
closed on such date, then in that event as of the close of
business on the next day on which the New York Stock Exchange is
open for business).
It is understood by the parties to this Agreement (1) that Chase
has entered into substantially similar custody agreements with
other Xxxxxxxxx Funds, including, but not necessarily limited to,
Xxxxxxxxx Funds, Inc. on behalf of Xxxxxxxxx World Fund and
Xxxxxxxxx Foreign Fund; Xxxxxxxxx Growth Fund, Inc.; Xxxxxxxxx
Emerging Markets Fund, Inc.; Xxxxxxxxx Global Income Fund, Inc.;
Templeton Income Trust on behalf of Templeton Money Fund and
Xxxxxxxxx Income Fund; Templeton Global Governments Income Trust;
Templeton Global Utilities, Inc.; Templeton Smaller Companies
Growth Fund, Inc.; Templeton Real Estate Securities Fund;
Templeton Global Opportunities Trust; Templeton Institutional
Funds, Inc. on behalf of Xxxxxxxxx Foreign Equity Series,
Xxxxxxxxx Growth Series, Xxxxxxxxx Emerging Market Series,
Templeton Smaller Companies Series, Templeton Global Fixed Income
Series and Xxxxxxxxx Foreign Equity (South Africa Free) Series;
Templeton American Trust, Inc.; Xxxxxxxxx Developing Markets
Trust; Xxxxxxxxx Capital Accumulator Fund, Inc.; Templeton
Variable Annuity Fund; Templeton Global Investment Trust on
behalf of its series Templeton Global Rising Dividends Fund,
Templeton Global Infrastructure Fund and Templeton Americas
Income Fund; Franklin/Xxxxxxxxx Japan Fund; Xxxxxxxxx Emerging
Markets Income Fund, Inc.; Xxxxxxxxx China World Fund, Inc.;
Xxxxxxxxx Emerging Markets Appreciation Fund, Inc.; and Templeton
Variable Products Series Fund on behalf of Templeton Money Market
Fund, Templeton Bond Fund, Templeton Stock Fund, Templeton Asset
Allocation Fund and Xxxxxxxxx International Fund, all of which
Funds have as their investment adviser either the Investment
Manager of the Fund or companies which are affiliated with the
Investment Manager; and (2) that Chase may enter into
substantially similar custody agreements with additional mutual
funds under Templeton management which may hereafter be
organized. Each of such custody agreements with each of such
other Xxxxxxxxx Funds contains (or will contain) a "Standard of
Care" section similar to this Section 14, except that the limit
of Chase's liability is (or will be) in varying amounts for each
Fund, with the aggregate limits of liability in all of such
agreements, including this Agreement, amounting to $150,000,000.
On each June 1, Chase will total the net assets reported by each
one of the Xxxxxxxxx Funds, and will calculate the percentage of
the aggregate net assets of all the Xxxxxxxxx Funds that is
represented by the net asset value of this Fund. Thereupon Chase
shall allocate to this Agreement with this Fund that proportion
of its total of $150,000,000 responsibility undertaking which is
substantially equal to the proportion which this Fund's net
assets bears to the total net assets of all such Xxxxxxxxx Funds
subject to adjustments for claims paid as follows: all claims
previously paid to this Fund shall first be deducted from its
proportionate allocable share of the $150,000,000 Chase
responsibility, and if the claims paid to this Fund amount to
more than its allocable share of the Chase responsibility, then
the excess of such claims paid to this Fund shall diminish the
balance of the $150,000,000 Chase responsibility available for
the proportionate shares of all of the other Xxxxxxxxx Funds
having similar custody agreements with Chase. Based on such
calculation, and on such adjustment for claims paid, if any,
Chase thereupon shall notify the Fund of such limit of liability
under this Section 14 which will be available to the Fund with
respect to (1) losses in excess of payment allocations for
previous years and (2) losses discovered during the next year
this Agreement remains in effect and until a new determination of
such limit of responsibility is made on the next succeeding June
1.
(f) OTHER LIABILITY. Independently of Chase's liability to the
Fund as provided in Section 14(a) above (it being understood that
the limitations in Sections 14(d) and 14(e) do not apply to the
provisions of this Section 14(f)), Chase shall be responsible for
the performance of only such duties as are set forth in this
Agreement or contained in express instructions given to Chase
which are not contrary to the provisions of this Agreement. Chase
will use and require the same care with respect to the
safekeeping of all Securities held in the Custody Account, Cash
held in the Deposit Account, and Securities or Cash held in the
Segregated Account as it uses in respect of its own similar
property, but it need not maintain any insurance for the benefit
of the Fund. With respect to Securities and Cash held outside of
the United States, Chase will be liable to the Fund for any loss
to the Fund resulting from any disappearance or destruction of
such Securities or Cash while in the possession of Chase or any
Chase Branch, Foreign Bank or Foreign Securities Depository, to
the same extent it would be liable to the Fund if Chase had
retained physical possession of such Securities and Cash in New
York. It is specifically agreed that Chase's liability under this
Section 14(f) is entirely independent of Chase's liability under
Section 14(a). Notwithstanding any other provision in this
Agreement to the contrary, in the event of any loss giving rise
to liability under this Section 14(f) that would also give rise
to liability under Section 14(a), the amount of such liability
shall not be charged against the amount of the limitation on
liability provided in Section 14(d).
(g) COUNSEL; LEGAL EXPENSES. Chase shall be entitled to the
advice of counsel (who may be counsel for the Fund) at the
expense of the Fund in connection with carrying out Chase's
duties hereunder and in no event shall Chase be liable for any
action taken or omitted to be taken by it in good faith pursuant
to advice of such counsel. If, in the absence of fault
attributable to Chase and in the course of or in connection with
carrying out its duties and obligations hereunder, any claims or
legal proceedings are instituted against Chase or any Chase
Branch by third parties, the Fund will hold Chase harmless
against any claims, liabilities, costs, damages or expenses
incurred in connection therewith and, if the Fund so elects, the
Fund may assume the defense thereof with counsel satisfactory to
Chase, and thereafter shall not be responsible for any further
legal fees that may be incurred by Chase, provided, however, that
all of the foregoing is conditioned upon the Fund's receipt from
Chase of prompt and due notice of any such claim or proceeding.
15. EXPROPRIATION INSURANCE. Chase represents that it does not
intend to obtain any insurance for the benefit of the Fund which protects
against the imposition of exchange control restrictions on the transfer from any
foreign jurisdiction of the proceeds of sale of any Securities or against
confiscation, expropriation or nationalization of any securities or the assets
of the issuer of such securities by a government of any foreign country in which
the issuer of such securities is organized or in which securities are held for
safekeeping either by Chase, or any Chase Branch, Foreign Bank or Foreign
Securities Depository in such country. Chase has discussed the availability of
expropriation insurance with the Fund, and has advised the Fund as to its
understanding of the position of the staff of the Securities and Exchange
Commission that any investment company investing in securities of foreign
issuers has the responsibility for reviewing the possibility of the imposition
of exchange control restrictions which would affect the liquidity of such
investment company's assets and the possibility of exposure to political risk,
including the appropriateness of insuring against such risk. The Fund has
acknowledged that it has the responsibility to review the possibility of such
risks and what, if any, action should be taken.
16. PROXY, NOTICES, REPORTS, ETC. Chase shall watch for the dates of
expiration of (a) all purchase or sale rights (including warrants, puts, calls
and the like) attached to or inherent in any of the Securities held in the
Custody Account and (b) conversion rights and conversion price changes for each
convertible Security held in the Custody Account as published in Telstat
Services, Inc., Standard & Poor's Financial Inc. and/or any other publications
listed in the Operating Agreement (it being understood that Chase may give
notice to the Fund as provided in Section 21 as to any change, addition and/or
omission in the publications watched by Chase for these purposes). If Chase or
any Chase Branch, Foreign Bank or Foreign Securities Depository shall receive
any proxies, notices, reports, or other communications relative to any of the
Securities held in the Custody Account, Chase shall, on its behalf or on behalf
of a Chase Branch, Foreign Bank or Foreign Securities Depository, promptly
transmit in writing any such communication to the Fund. In addition, Chase shall
notify the Fund by person-to-person collect telephone concerning any such
notices relating to any matters specified in the first sentence of this Section
16.
As specifically requested by the Fund, Chase shall execute or deliver or
shall cause the nominee in whose name Securities are registered to execute and
deliver to such person as may be designated by the Fund proxies, consents,
authorizations and any other instruments whereby the authority of the Fund as
owner of any Securities in the Custody Account registered in the name of Chase
or such nominee, as the case may be, may be exercised. Chase shall vote
Securities in accordance with Written Instructions timely received by Chase, or
such other person or persons as designated in or pursuant to the Operating
Agreement.
Chase and any Chase Branch shall have no liability for any loss or
liability occasioned by delay in the actual receipt by them or any Foreign Bank
or Foreign Securities Depository of notice of any payment or redemption which
does not appear in any of the publications referred to in the first sentence of
this Section 16.
17. COMPENSATION. The Fund agrees to pay to Chase from time to time such
compensation for its services pursuant to this Agreement as may be mutually
agreed upon in writing from time to time and Chase's out-of-pocket or incidental
expenses, as from time to time shall be mutually agreed upon by Chase and the
Fund. The Fund shall have no responsibility for the payment of services provided
by any Domestic Securities Depository, such fees being paid directly by Chase.
In the event of any advance of Cash for any purpose made by Chase pursuant to
any Written Instruction, or in the event that Chase or any nominee of Chase
shall incur or be assessed any taxes in connection with the performance of this
Agreement, the Fund shall indemnify and reimburse Chase therefor, except such
assessment of taxes as results from the negligence, fraud, or willful misconduct
of Chase, any Domestic Securities Depository, Chase Branch, Foreign Bank or
Foreign Securities Depository, or as constitutes a tax on income, gross receipts
or the like of any one or more of them. Chase shall have a lien on Securities in
the Custody Account and on Cash in the Deposit Account for any amount owing to
Chase from time to time under this Agreement upon due notice to the Fund.
18. AGREEMENT SUBJECT TO APPROVAL OF THE FUND. It is understood that this
Agreement and any amendments shall be subject to the approval of the Fund.
19. TERM. This Agreement shall remain in effect until terminated by either
party upon 60 days' written notice to the other, sent by registered mail.
Notwithstanding the preceding sentence, however, if at any time after the
execution of this Agreement Chase shall provide written notice to the Fund, by
registered mail, of the amount needed to meet a substantial increase in the cost
of maintaining its present type and level of bonding and insurance coverage in
connection with Chase's undertakings in Section 14(a), (d) and (e) of this
Agreement, said Section 14(a), (d) and (e) of this Agreement shall cease to
apply 60 days after the providing of such notice by Chase, unless prior to the
expiration of such 60 days the Fund agrees in writing to assume the amount
needed for such purpose. Chase, upon the date this Agreement terminates pursuant
to notice which has been given in a timely fashion, shall, and/or shall cause
each Domestic Securities Depository to, deliver the Securities in the Custody
Account, pay the Cash in the Deposit Account, and deliver and pay Securities and
Cash in the Segregated Account to the Fund unless Chase has received from the
Fund 60 days prior to the date on which this Agreement is to be terminated
Written Instructions specifying the name(s) of the person(s) to whom the
Securities in the Custody Account shall be delivered, the Cash in the Deposit
Account shall be paid, and Securities and Cash in the Segregated Account shall
be delivered and paid. Concurrently with the delivery of such Securities, Chase
shall deliver to the Fund, or such other person as the Fund shall instruct, the
records referred to in Section 11 which are in the possession or control of
Chase, any Chase Branch, or any Domestic Securities Depository, or any Foreign
Bank or Foreign Securities Depository, or in the event that Chase is unable to
obtain such records in their original form Chase shall deliver true copies of
such records.
20. AUTHORIZATION OF CHASE TO EXECUTE NECESSARY DOCUMENTS. In connection
with the performance of its duties hereunder, the Fund hereby authorizes and
directs Chase and each Chase Branch acting on behalf of Chase, and Chase hereby
agrees, to execute and deliver in the name of the Fund, or cause such other
Chase Branch to execute and deliver in the name of the Fund, such certificates,
instruments, and other documents as shall be reasonably necessary in connection
with such performance, provided that the Fund shall have furnished to Chase any
information necessary in connection therewith.
21. NOTICES. Any notice or other communication authorized or required by
this Agreement to be given to the parties shall be sufficiently given (except to
the extent otherwise specifically provided) if addressed and mailed postage
prepaid or delivered to it at its office at the address set forth below:
If to the Fund, then to
Xxxxxxxxx Russia Fund, Inc.
000 Xxxxxxx Xxxxxx, X.X. Xxx 00000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Secretary
If to Chase, then to
The Chase Manhattan Bank, N.A.
1211 Avenue of the Americas
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Global Custody Division Executive
or such other person or such other address as any party shall have furnished to
the other party in writing.
22. NON-ASSIGNABILITY OF AGREEMENT. This Agreement shall not be assignable
by either party hereto; provided, however, that any corporation into which the
Fund or Chase, as the case may be, may be merged or converted or with which it
may be consolidated, or any corporation succeeding to all or substantially all
of the trust business of Chase, shall succeed to the respective rights and shall
assume the respective duties of the Fund or of Chase, as the case may be,
hereunder.
23. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New York.
THE CHASE MANHATTAN BANK, N.A.
By:/s/XXXX XXXXXX
------------------------------------
Senior Vice President
XXXXXXXXX RUSSIA FUND, INC.
By:\s\XXXXXX X. XXXXXXX
------------------------------------
Xxxxxx X. Xxxxxxx
Secretary
