CUSTODY AGREEMENT
AGREEMENT dated September 15, 1986, 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 INCOME FUND (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, P. O. Xxx 00000, Xx. Xxxxxxxxxx, Xxxxxxx 00000-0000.
WHEREAS, the Fund wishes to appoint Chase as custodian of 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
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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 for futures contracts, collateral securing
the Fund's commitments to purchase new issues of debt securities offered on a
when-issued basis, borrowers' collateral securing the Fund's loans of its
portfolio securities, and/or deposits for securing other obligations, deposited
in one or more separate segregated accounts, (the "Segregated Accounts").
All cash held in the Deposit Account or in the Segregated
Accounts 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.
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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
Section 4 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 Trustees
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
Trustees 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 Trustees
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
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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
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operating agreement to be entered into between Chase and the
Fund (the "Operating Agreement").
III. 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
Trustees 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
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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 Trustees 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 deliver of the
securities by any Chase Branch or Foreign
Bank.
F. "Written Instructions" shall mean instructions
in writing signed by Authorized Persons of the
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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.
IV. SELECTION OF COUNTRIES IN WHICH SECURITIES MAY BE
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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 represents that it
has been advised by the Fund that in giving such a
direction the Fund may consider, 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.
V. RESPONSIBILITY OF CHASE TO SELECT CUSTODIANS IN
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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
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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 Trustees: 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
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govern the manner in which such Foreign Bank
will maintain the Fund's assets.
VI. 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.
VII. 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
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Chase or of such Foreign Bank.
VIII. 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
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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 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;
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(all of such items being hereinafter referred to as "collateral"), pursuant to
written instructions, to:
C. deposit the collateral for each such
obligation in a separate segregated account
maintained by Chase and
D. 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.
IX. 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
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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.
X. 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 move payments of Cash held in the Deposit Account
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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
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
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payment in Cash or Securities, or otherwise as provided in the
Operating Agreement, only:
D. 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;
E. 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;
F. upon exercise of conversion, subscription,
purchase, or other similar rights represented
by such Securities, or
G. 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:
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H. 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;
I. 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;
J. present for exchange all Securities in the
Custody Account converted pursuant to their
terms into other Securities;
K. 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
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requested and the Fund shall have furnished to
Chase any information necessary in connection
with such certificates;
L. exchange interim receipts or temporary
Securities in the Custody Account for
definitive Securities; and
M. 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.
XI. RECORDS. Chase hereby agrees that Chase and any
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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
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maintained in connection with the performance of its
duties under this Agreement shall remain the property
of the Fund and, in the event of termination of this
Agreement, shall be delivered 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.
XII. REPORTS. Chase shall supply periodically, upon the
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reasonable request of the Fund, such statements,
reports, and advices 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 advices
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.
XIII. 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.
XIV. STANDARD OF CARE.
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A. GENERAL. Effective June 1, 1987, 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 Accounts 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
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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
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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.
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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 Trustees 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
the extent of Chase's liability to the Fund
under Section 14(a) shall not exceed the
amount of the limitation provided for in
Section 14(e), it being understood and agreed
that the amount of such limitation applies on
an aggregated basis to all losses under
Section 14(a) incurred by the Fund and is
subject to annual adjustment as set forth in
Section 14(e). The Fund agrees 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). This limitation
does not apply to any liability of Chase under
Section 14(f) of this Agreement.
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E. ANNUAL ADJUSTMENT OF LIMITATION OF LIABILITY.
--------------------------------------------
As soon as practicable after June 1 of every
year (or such other date in any particular
year agreed to by all of the Xxxxxxxxx Funds),
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
that Chase has entered into substantially similar custody
agreements as follows: agreements with Xxxxxxxxx Funds, Inc.
on behalf of Xxxxxxxxx World Fund and on behalf of Xxxxxxxxx
Foreign Fund; agreements with Xxxxxxxxx Global Funds, Inc. on
behalf of Xxxxxxxxx Global I and on behalf of Xxxxxxxxx Global
II; an agreement with Xxxxxxxxx Growth Fund, Ltd., all of
which Funds have as their investment advisers companies which
are the same as, or affiliated with, the Investment Manager of
the Fund; and that Chase may enter into any substantially
similar custody agreements with additional mutual funds under
Xxxxxxxxx management which may hereafter be organized. Each of
such custody agreements with each of such other Xxxxxxxxx
Funds
- 24 -
contains (or will contain) a "Standard of Care" section
similar to this Section 14, except that the limit of Chase's
liability is 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 (or other date agreed on for any
particular year), 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
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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 Section 14(a) which will be
available to the Fund with respect to (1) losses in excess of
payment allocations or 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 (or other
agreed date).
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
Accounts as it uses in respect of its own
similar property, but it need not maintain any
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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 Sections 14(d) and 14(e).
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
- 27 -
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.
XV. 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
- 28 -
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.
XVI. 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)
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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
- 30 -
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.
XVII. 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, Chase Branch, Foreign
Bank or Foreign 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
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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.
XVIII. 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.
XIX. TERM. This Agreement shall remain in effect until
----
June 1, 1987 and shall thereafter 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
- 32 -
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, Chase Branch, Foreign Bank and
Foreign Securities Depository to deliver the
Securities in the Custody Account, to pay the Cash in
the Deposit Account, and to deliver and pay
Securities and Cash in the Segregated Accounts 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 Accounts shall be delivered
and paid. Concurrently with the delivery of such
- 33 -
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.
XX. 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.
XXI. 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
- 34 -
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 Income Fund
000 Xxxxxxx Xxxxxx,
X.X. Xxx 00000
Xx. Xxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xx. Xxxxxxxxx,
Treasurer
- 35 -
If to Chase, then to: The Chase Manhattan Bank, N.A.
1211 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx, V.P.
or such other person or such other address as any party shall have furnished to
the other party in writing.
XXII. 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.
XXIII. GOVERNING LAW. This Agreement shall be
governed by the laws of the State of New York.
- 36 -
XXIV. NO PERSONAL LIABILITY. It is understood and
expressly stipulated that neither the holders
of Shares of the Fund nor any Trustee,
officer, agent or employee of the Fund shall
be personally liable hereunder, nor shall any
resort be had to other private property for
the satisfaction of any claim or obligation
hereunder, but the Fund only shall be liable.
THE CHASE MANHATTAN BANK, N.A.
By:/s/XXXXXXXXXX X. XXX
Vice President
XXXXXXXXX INCOME FUND
By:/s/ XXXXXX X. XXXXXXXXXX
Xxxxxx X. Xxxxxxxxxx
President
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