Exhibit (2)(j)(1)
DOMESTIC CUSTODY AGREEMENT
THE XXXXXX XXXXXXX HIGH YIELD FUND, INC.
UNITED STATES TRUST COMPANY OF NEW YORK
November 30, 1993
DOMESTIC CUSTODY AGREEMENT
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THIS AGREEMENT is made as of November 30, 1993, by and between THE XXXXXX
XXXXXXX HIGH YIELD FUND, INC., a Maryland corporation (the "Fund"), and UNITED
STATES TRUST COMPANY OF NEW YORK, a New York State chartered bank and trust
company ("U.S. Trust").
W I T N E S S E T H :
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WHEREAS, the Fund is registered as a closed-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund desires to retain U.S. Trust to serve as the Fund's
custodian for its assets held within the United States and U.S. Trust is willing
to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints U.S. Trust to act as custodian
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of its portfolio securities, cash and other property held within the United
States on the terms set forth in this Agreement. U.S. Trust accepts such
appointment and agrees to furnish the services herein set forth in return for
the compensation as provided in Paragraph 21 of this Agreement.
2. Delivery of Documents. The Fund will promptly furnish to U.S. Trust
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such copies, properly certified or authenticated, of contracts, documents and
other related information that U.S. Trust may request or requires to properly
discharge its duties. Such documents may include but are not limited to the
following:
(a) Resolutions of the Fund's Directors authorizing the appointment of
U.S. Trust as Custodian of the portfolio securities, cash and other property of
the Fund and approving this Agreement;
(b) Incumbency and signature certificates identifying and containing the
signatures of the Fund's officers and/or the persons authorized to sign Written
Instructions, as hereinafter defined, on behalf of the Fund;
(c) The Fund's Articles of Incorporation filed with the Department of
Assessments of the State of Maryland and all amendments thereto (such Articles
of Incorporation, as currently in effect and as they shall from time to time be
amended, are herein called the "Articles");
(d) The Fund's By-Laws and all amendments thereto (such By-Laws, as
currently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(e) Resolutions of the Fund's Directors and/or the Fund's stockholders
approving the Investment Advisory and Management Agreement between the Fund and
Xxxxxx Xxxxxxx Asset Management Inc., the Fund's investment adviser (the
"Advisory Agreement");
(f) The Advisory Agreement; and
(g) The Fund's Registration Statement on Form N-2 under the 1940 Act and
the Securities Act of 1933, as amended (the "1933 Act") as filed with, and
declared effective by, the Securities and Exchange Commission (the "SEC") and
all amendments and supplements thereto.
The Fund will furnish U.S. Trust from time to time with copies of all
amendments of or supplements to the foregoing, if any. The Fund will also
furnish U.S. Trust with a copy of the opinion of counsel for the Fund with
respect to the validity of the shares of common stock, par value $.01 per share
(the "Shares"), of the Fund and the status of such Shares under the 1933 Act as
registered with the SEC, and under any other applicable federal law or
regulation.
3. Definitions.
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(a) "Authorized Person." As used in this Agreement, the term "Authorized
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Person" means the Fund's President, Vice-President, Treasurer and any other
person, whether or not any such person is an officer or employee of the Fund,
duly authorized by the Directors of the Fund to give Written Instructions on
behalf of the Fund and listed on Attachment B hereto which may be amended from
time to time.
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(b) "Book-Entry System." As used in this Agreement, the term "Book-Entry
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System" means the Federal Reserve/Treasury book-entry system for United
States and federal agency securities, its successor or successors and its
nominee or nominees.
(c) "Property." The term "Property," as used in this Agreement, means:
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(i) any and all securities, cash, and other property of the Fund
which the Fund may from time to time deposit, or cause to be deposited,
with U.S. Trust or which U.S. Trust may from time to time hold for the
Fund;
(ii) all income in respect of any such securities or other property;
(iii) all proceeds of the sales of any of such securities or other
property; and
(iv) all proceeds of the sale of securities issued by the Fund, which
are received by U.S. Trust from time to time from or on behalf of the Fund.
(d) "Securities Depository." As used in this Agreement, the term
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"Securities Depository" shall mean The Depository Trust Company, a clearing
agency registered with the SEC, or its successor or successors and its nominee
or nominees; and shall also mean any other registered clearing agency, its
successor or successors, specifically identified in a certified copy of a
resolution of the Fund's Directors approving deposits by U.S. Trust therein.
(e) "Written Instructions." Means instructions
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(i) delivered by mail, tested telegram, cable, telex or facsimile
sending device, and received by U.S. Trust, signed by two Authorized
Persons or by persons reasonably believed by U.S. Trust to be Authorized
Persons; or
(ii) transmitted electronically through the U.S. Trust Asset
Management System or any similar electronic instruction system acceptable
to U.S. Trust.
4. Delivery and Registration of the Property. The Fund will deliver or
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cause to be delivered to U.S. Trust all Property owned by it which is held
within the United States, including cash received for the issuance of its
Shares, at any time during the period of this Agreement, except for securities
and monies to be delivered to any subcustodian appointed pursuant to Paragraph 7
hereof. U.S. Trust will not
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be responsible for such securities and such monies until actually received, by
U.S. Trust or by any subcustodian. All securities delivered to U.S. Trust or to
any such subcustodian (other than in bearer form) shall be registered in the
name of the Fund or in the name of a nominee of the Fund or in the name of U.S.
Trust or any nominee of U.S. Trust (with or without indication of fiduciary
status) or in the name of any subcustodian or any nominee of such subcustodian
appointed pursuant to Paragraph 7 hereof or shall be properly endorsed and in
form for transfer satisfactory to U.S. Trust.
5. Voting Rights. With respect to all securities, however registered, it
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is understood that the voting and other rights and powers shall be exercised by
the Fund. U.S. Trust's only duty shall be to mail to the Fund any documents
received, including proxy statements and offering circulars, with any proxies
for securities registered in a nominee name executed by such nominee. Where
warrants, options, tenders or other securities have fixed expiration dates, the
Fund understands that in order for U.S. Trust to act, U.S. Trust must receive
the Fund's instructions at its offices in New York City, addressed as U.S. Trust
may from time to time request, by no later than noon (New York City time) at
least one business day prior to the last scheduled date to act with respect
thereto (or such earlier date or time as permits the Fund a reasonable period of
time in which to respond after U.S. Trust notifies the Fund of such date or
time). Absent U.S. Trust's timely receipt of such instructions, such instruments
will expire without liability to U.S. Trust.
6. Receipt and Disbursement of Money.
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(a) U.S. Trust shall open and maintain a custody account for the Fund (the
"Account") subject only to draft or order by U.S. Trust acting pursuant to the
terms of this Agreement, and shall hold in such Account, subject to the
provisions hereof, all cash received by it from or for the Fund. U.S. Trust
shall make payments of cash to, or for the account of, the Fund from such cash
only (i) for the purchase of securities for the Fund as provided in paragraph 12
hereof; (ii) upon receipt of Written Instructions, for the payment of dividends
or other distributions of shares, or for the payment of interest, taxes,
administration, distribution or advisory fees or expenses which are to be borne
by the Fund under the terms of this Agreement, any Advisory Agreement, or any
administration agreement of the Fund; (iii)
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upon receipt of Written Instructions for payments in connection with the
conversion, exchange or surrender of securities owned or subscribed to by the
Fund and held by or to be delivered to U. S. Trust; (iv) to a subcustodian
pursuant to Paragraph 7 hereof; or (v) upon receipt of Written Instructions for
other corporate purposes.
(b) U.S. Trust is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received as custodian for the
Fund.
7. Receipt of Securities.
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(a) Except as provided by Paragraph 8 hereof, U.S. Trust shall hold all
securities and non-cash Property received by it for the Fund. All such
securities and non-cash Property are to be held or disposed of by U.S. Trust for
the Fund pursuant to the terms of this Agreement. In the absence of Written
Instructions accompanied by a certified resolution authorizing the specific
transaction by the Fund's Directors, U.S. Trust shall have no power or authority
to withdraw, deliver, assign, hypothecate, pledge or otherwise dispose of any
such securities and non-cash Property, except in accordance with the express
terms provided for in this Agreement. In connection with its duties under this
Paragraph 7, U.S. Trust may, at its own expense, enter into subcustodian
agreements with other U.S. banks or trust companies for the receipt of certain
securities and cash to be held by U.S. Trust for the account of the Fund
pursuant to this Agreement; provided that each such bank or trust company has an
aggregate capital, surplus and undivided profits, as shown by its last published
report, of not less than twenty million dollars ($20,000,000) and that such bank
or trust company agrees with U.S. Trust to comply with all relevant provisions
of the 1940 Act and applicable rules and regulations thereunder.
(b) Promptly after the close of business on each day, U.S. Trust shall
furnish the Fund with confirmations and a summary of all transfers to or from
the account of the Fund during said day. Where securities are transferred to the
account of the Fund established at a Securities Depository or the Book Entry
System pursuant to Paragraph 8 hereof, U.S. Trust shall also by book-entry or
otherwise identify as belonging to the Fund the quantity of securities that
belongs to the Fund that are part of a fungible bulk of securities registered in
the name of U.S. Trust (or its nominee) or shown in U.S. Trust's account on the
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books of a Securities Depository or the Book-Entry System. At least monthly and
from time to time, U.S. Trust shall furnish the Fund with a detailed statement
of the Property held for the Fund under this Agreement.
8. Use of Securities Depository or the Book-Entry System. The Fund shall
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deliver to U.S. Trust a certified resolution of the Directors of the Fund
approving, authorizing, and instructing U.S. Trust on a continuous and ongoing
basis until instructed to the contrary by Written Instructions actually received
by U.S. Trust (i) to deposit in a Securities Depository or the Book-Entry System
all securities of the Fund eligible for deposit therein and (ii) to utilize a
Securities Depository or the Book-Entry System to the extent possible in
connection with the performance of its duties hereunder, including without
limitation, settlements of purchases and sales of securities by the Fund, and
deliveries and returns of securities collateral in connection with borrowings.
Without limiting the generality of such use, it is agreed that the following
provisions shall apply thereto:
(a) Securities and any cash of the Fund deposited in a Securities
Depository or the Book-Entry System will at all times be segregated from any
assets and cash controlled by U.S. Trust in other than a fiduciary or custodian
capacity but may be commingled with other assets held in such capacities. U.S.
Trust will effect payment for securities and receive and deliver securities in
accordance with accepted industry practices in the place where the transaction
is settled, unless the Fund has given U.S. Trust Written Instructions to the
contrary.
(b) All Books and records maintained by U.S. Trust which relate to the
Fund's participation in a Securities Depository or the Book-Entry System will at
all times during U.S. Trust's regular business hours be open to the inspection
of the Fund's duly authorized employees or agents, and the Fund will be
furnished with all information in respect of the services rendered to it as it
may require.
9. Instructions Consistent With The Articles, etc. Unless otherwise
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provided in this Agreement, U.S. Trust shall act only upon Written Instructions.
U.S. Trust may assume that any Written Instructions received hereunder are not
in any way inconsistent with any provision of the Articles or By-Laws of the
Fund or any vote or resolution of the Fund's Directors, or any committee
thereof. U.S. Trust
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shall be entitled to rely upon any Written Instructions actually received by
U.S. Trust pursuant to this Agreement. The Fund agrees that U.S. Trust shall
incur no liability in acting in good faith upon Written Instructions given to
U.S. Trust. In accord with instructions from the Fund, as required by accepted
industry practice or as U.S. Trust may elect in effecting the execution of Fund
instructions, advances of cash or other Property made by U.S. Trust, arising
from the purchase, sale, redemption, transfer or other disposition of Property
of the Fund, or in connection with the disbursement of funds to any party, or in
payment of fees, expenses, claims or liabilities owed to U.S. Trust by the Fund,
or to any other party which has secured judgment in a court of law against the
Fund which creates an overdraft in the accounts or over-delivery of Property
shall be deemed a loan by U.S. Trust to the Fund, payable on demand, bearing
interest at such rate customarily charged by U.S. Trust for similar loans. The
Fund agrees that test arrangements, authentication methods or other security
devices to be used with respect to instructions which the Fund may give by
telephone, telex, TWX, facsimile transmission, bank wire or through an
electronic instruction system, shall be processed in accordance with terms and
conditions for the use of such arrangements, methods or devices as U.S. Trust
may put into effect and modify from time to time. The Fund shall safeguard any
test keys, identification codes or other security devices which U.S. Trust makes
available to the Fund and agrees that the Fund shall be responsible for any
loss, liability or damage incurred by U.S. Trust or by the Fund as a result of
U.S. Trust's acting in accordance with instructions from any unauthorized person
using the proper security device unless such loss, liability or damage was
incurred as a result of U.S. Trust's negligence or willful misconduct. U.S.
Trust may electronically record, but shall not be obligated to so record, any
instructions given by telephone and any other telephone discussions with respect
to the Account. In the event that the Fund uses U.S. Trust's Asset Management
System ("AMS"), the Fund agrees that U.S. Trust is not responsible for the
consequences of the failure of the AMS to perform for any reason, beyond the
reasonable control of U.S. Trust, or the failure of any communications carrier,
utility, or communications network. In the event the AMS is inoperable, the Fund
agrees that it will accept the communication of transaction instructions by
telephone,
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facsimile transmission on equipment compatible to U.S. Trust's facsimile
receiving equipment or by letter, at no additional charge to the Fund.
10. Transactions Not Requiring Instructions. U.S. Trust is authorized to
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take the following action without Written Instructions:
(a) Collection of Income and Other Payments. U.S. Trust shall:
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(i) collect and receive for the account of the Fund, all income and
other payments and distributions, including (without limitation) stock
dividends, rights, warrants and similar items, included or to be included
in the Property of the Fund, and promptly advise the Fund of such receipt
and shall credit such income, as collected, to the Fund. From time to time,
U.S. Trust may elect, but shall not be so obligated, to credit the Account
with interest, dividends or principal payments on payable or contractual
settlement date, in anticipation of receiving same from a payor, central
depository, broker or other agent employed by the Fund or U.S. Trust. Any
such crediting and posting shall be at the Fund's sole risk, and U.S. Trust
shall be authorized to reverse any such advance posting in the event U.S.
Trust does not receive good funds from any such payor, central depository,
broker or agent of the Fund.
(ii) with respect to securities of foreign issuers held in custody by
U.S. Trust hereunder, if any, effect collection of dividends, interest and
other income, and to notify the Fund of any call for redemption, offer of
exchange, right of subscription, reorganization, or other proceedings
affecting such securities, or any default in payments due thereon. It is
understood, however, that U.S. Trust shall be under no responsibility for
any failure or delay in effecting such collections or giving such notice
with respect to securities of foreign issuers, regardless of whether or not
the relevant information is published in any financial service available to
U.S. Trust unless such failure or delay is due to its negligence or willful
misconduct; provided that this sub-paragraph (ii) shall not be construed as
creating any such responsibility with respect to securities of non-foreign
issuers. Collections of income in foreign currency are, to the extent
possible, to be converted into United States Dollars unless otherwise
instructed in writing, and in
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effecting such conversion U.S. Trust may use such methods or agencies as it
may see fit, including the facilities of its own foreign division at
customary rates. All risk and expenses incident to such collection and
conversion is for the account of the Fund and U.S. Trust shall have no
responsibility for fluctuations in exchange rates affecting any such
conversion.
(iii) endorse and deposit for collection in the name of the Fund,
checks, drafts, or other orders for the payment of money on the same day as
received;
(iv) receive and hold for the account of the Fund all securities
received by the Fund 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
portfolio securities of the Fund held by U.S. Trust hereunder; and
(v) present for payment and collect the amount payable upon all
securities which may mature or be called, redeemed or retired, or otherwise
become payable on the date such securities become payable;
(vi) take any action which may be necessary and proper in connection
with the collection and receipt of such income and other payments and the
endorsement for collection of checks, drafts and other negotiable
instruments;
(vii) with respect to domestic securities, to exchange securities in
temporary form for securities in definitive form, to effect an exchange of
the shares where the par value of stock is changed, and to surrender
securities at maturity or when advised of earlier call for redemption,
against payment therefor in accordance with accepted industry practice. The
Fund understands that U.S. Trust subscribes to one or more nationally
recognized services that provide information with respect to calls for
redemption of bonds or other corporate actions. U.S. Trust shall not be
liable for failure to redeem any called bond or to take other action if
notice of such call or action was not provided by any service to which it
subscribes provided that U.S. Trust shall have acted in good faith without
negligence and in accordance with "Street Practice" (as is customary in
industry). U.S. Trust shall have no duty to notify the Fund of any rights,
duties, limitations,
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conditions or other information set forth in any security (including
mandatory or optional put, call and similar provisions), but U.S. Trust
shall forward to the Fund any notices or other documents subsequently
received in regard to any such security. When fractional shares of stock of
a declaring corporation are received as a stock distribution, unless
specifically instructed to the contrary in writing, U.S. Trust is
authorized to sell the fraction received and credit the Fund's account.
Unless specifically instructed to the contrary in writing, U.S. Trust is
authorized to exchange securities in bearer form for securities in
registered form. If any Property registered in the name of a nominee of
U.S. Trust is called for partial redemption by the issuer of such Property,
U.S. Trust is authorized to allot the called portion to the respective
beneficial holders of the Property in such manner deemed to be fair and
equitable by U.S. Trust in its sole discretion.
(b) Miscellaneous Transactions. U.S. Trust is authorized to deliver or
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cause to be delivered Property against payment or other consideration or written
receipt therefor in the following cases:
(i) for examination by a broker selling for the account of the Fund
in accordance with street delivery custom;
(ii) for the exchange of interim receipts or temporary securities for
definitive securities;
(iii) for transfer of securities into the name of the Fund or U.S.
Trust or a nominee of either, or for exchange of securities for a different
number of bonds, certificates, or other evidence, representing the same
aggregate face amount or number of units bearing the same interest rate,
maturity date and call provisions, if any; provided that, in any such case,
the new securities are to be delivered to U.S. Trust.
11. Transactions Requiring Instructions. Upon receipt of Written
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Instructions and not otherwise, U.S. Trust, directly or through the use of a
Securities Depository or the Book-Entry System, shall:
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(a) Execute and deliver to such persons as may be designated in such
Written Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any securities may be
exercised;
(b) Deliver any securities held for the Fund against receipt of other
securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any securities held for the Fund to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
corporation, against receipt of such certificates of deposit, interim receipts
or other instruments or documents as may be issued to it to evidence such
delivery;
(d) Make such transfers or exchanges of the assets of the Fund and take
such other steps as shall be stated in said instructions to be for the purpose
of effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;
(e) Release securities belonging to the Fund to any bank or trust company
for the purpose of pledge or hypothecation to secure any loan incurred by the
Fund; provided, however, that securities shall be released only upon payment to
U.S. Trust of the monies borrowed, except that in cases where additional
collateral is required to secure a borrowing already made, subject to proper
prior authorization, further securities may be released for that purpose; and
pay such loan upon redelivery to it of the securities pledged or hypothecated
therefor and upon surrender of the note or notes evidencing the loan;
(f) Deliver any securities held for the Fund upon the exercise of a
covered call option written by the Fund on such securities; and
(g) Deliver securities held for the Fund pursuant to separate security
lending agreements concerning the lending of the Fund's securities into which
the Fund may enter, from time to time.
12. Purchase of Securities. Promptly after each purchase of securities by
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the Investment Adviser (or any sub-adviser), the Fund shall deliver to U.S.
Trust (as Custodian) Written Instructions specifying with respect to each such
purchase: (a) the name of the issuer and the title of the securities, (b)
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the number of shares or the principal amount purchased and accrued interest, if
any, (c) the dates of purchase and settlement, (d) the purchase price per unit,
(e) the total amount payable upon such purchase and (f) the name of the person
from whom or the broker through whom the purchase was made. U.S. Trust shall
upon receipt of securities purchased by or for the Fund pay out of the moneys
held for the account of the Fund the total amount payable to the person from
whom or the broker through whom the purchase was made, provided that the same
conforms to the total amount payable as set forth in such Written Instructions.
13. Sales of Securities. Promptly after each sale of securities by the
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Investment Adviser, the Fund shall deliver to U.S. Trust (as Custodian) Written
Instructions, specifying with respect to each such sale: (a) the name of the
issuer and the title of the security, (b)
the number of shares or principal amount sold, and accrued interest, if any, (c)
the date of sale, (d) the sale price per unit, (e) the total amount payable to
the Fund upon such sale and (f) the name of the broker through whom or the
person to whom the sale was made. U.S. Trust shall deliver the securities upon
receipt of the total amount payable to the Fund upon such sale, provided that
the same conforms to the total amount payable as set forth in such Written
Instructions. Subject to the foregoing, U.S. Trust may accept payment in such
form as shall be satisfactory to it, and may deliver securities and arrange for
payment in accordance with the customs prevailing among dealers in securities.
14. Authorized Shares. The Fund has a fixed number of shares of each class
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of its securities.
15. Records. The books and records pertaining to the Fund which are in the
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possession of U.S. Trust shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the 1940 Act; other
applicable federal and state securities laws and rules and regulations; and, any
state or federal regulatory body having appropriate jurisdiction. The Fund, or
the Fund's authorized representatives, shall have access to such books and
records at all times during U.S. Trust's normal business hours, and such books
and records shall be surrendered to the Fund promptly upon request. Upon
reasonable request of the Fund, copies of any such books and records shall be
provided by U.S. Trust to the Fund or the Fund's authorized representative at
the Fund's expense.
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16. Cooperation with Accountants. U.S. Trust shall cooperate with the
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Fund's independent certified public accountants and shall take all reasonable
action in the performance of its obligations under this Agreement to assure that
the necessary information is made available to such accountants for the
expression of their unqualified opinion, including but not limited to the
opinion included in the Fund's semiannual report on Form N-SAR.
17. Confidentiality. U.S. Trust agrees on behalf of itself and its
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employees to treat confidentially and as the proprietary information of the Fund
all records and other information relative to the Fund and its prior, present or
potential Shareholders and relative to the investment advisers and its prior,
present or potential customers, and not to use such records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be withheld where U.S.
Trust may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Fund. Nothing contained herein,
however, shall prohibit U.S. Trust from advertising or soliciting the public
generally with respect to other products or services, regardless of whether such
advertisement or solicitation may include prior, present or potential
Shareholders of the Fund.
18. Equipment Failures. In the event of equipment failures beyond U.S.
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Trust's control, U.S. Trust shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions but shall not have liability
with respect thereto. U.S. Trust shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable provision for
back up emergency use of electronic data processing equipment to the extent
appropriate equipment is available.
19. Right to Receive Advice.
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(a) Advice of Fund. If U.S. Trust shall be in doubt as to any action to be
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taken or omitted by it, it may request, and shall receive, from the Fund
clarification or advice.
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(b) Advice of Counsel. If U.S. Trust shall be in doubt as to any question
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of law involved in any action to be taken or omitted by U.S. Trust, it may
request advice at its own cost from counsel of its own choosing (who may be
counsel for the Fund or U.S. Trust, at the option of U.S. Trust).
(c) Conflicting Advice. In case of conflict between directions or advice
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received by U.S. Trust pursuant to subparagraph (a) of this paragraph and advice
received by U.S. Trust pursuant to subparagraph (b) of this paragraph, U.S.
Trust shall be entitled to rely on and follow the advice received pursuant to
the latter provision alone.
(d) Protection of U.S. Trust. U.S. Trust shall be protected in any action
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or inaction which it takes or omits to take in reliance on any directions or
advice received pursuant to subparagraph (a) of this section which U.S. Trust,
after receipt of any such directions or advice, in good faith believes to be
consistent with such directions or advice. However, nothing in this paragraph
shall be construed as imposing upon U.S. Trust any obligation (i) to seek such
directions or advice, or (ii) to act in accordance with such directions or
advice when received, unless, under the terms of another provision of this
Agreement, the same is a condition to U.S. Trust's properly taking or omitting
to take such action. Nothing in this subparagraph shall excuse U.S. Trust when
an action or omission on the part of U.S. Trust constitutes willful misfeasance,
bad faith, gross negligence or reckless disregard by U.S. Trust of its duties
under this Agreement.
20. Compliance with Governmental Rules and Regulations. The Fund assumes
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full responsibility for insuring that the contents of its registration statement
on Form N-2, as filed with, and declared effective by, the SEC, and all
amendments thereto, comply with all applicable requirements of the 1933 Act, the
1940 Act, and any laws, rules and regulations of governmental authorities having
jurisdiction.
21. Compensation. As compensation for the services described within this
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Agreement and rendered by U.S. Trust during the term of this Agreement, the Fund
will pay to U.S. Trust, in addition to reimbursement of its out-of-pocket
expenses, monthly fees as outlined in Attachment A.
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22. Indemnification. The Fund, as sole owner of the Property, agrees to
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indemnify and hold harmless U.S. Trust and its nominees from all taxes, charges,
expenses, assessments, claims, and liabilities (including, without limitation,
liabilities arising under the 1933 Act, the Securities Exchange Act of 1934 as
amended, the 1940 Act, and any state and foreign securities and blue sky laws,
all as or to be amended from time to time) and expenses, including (without
limitation) attorney's fees and disbursements, arising directly or indirectly
(a) from the fact that securities included in the Property are registered in the
name of any such nominee or (b) without limiting the generality of the foregoing
clause (a) from any action or thing which U.S. Trust takes or does or omits to
take or do (i) at the request or on the direction of or in reliance on the
advice of the Fund given in accordance with the terms of this Agreement, or (ii)
upon Written Instructions; provided, that neither U.S. Trust nor any of its
nominees or subcustodians shall be indemnified against any liability to the Fund
or to its Shareholders (or any expenses incident to such liability) arising out
of (x) U.S. Trust's or such nominee's or subcustodian's own willful misfeasance,
bad faith, gross negligence or reckless disregard of its duties under this
Agreement or any agreement between U.S. Trust and any nominee or subcustodian or
(y) U.S. Trust's own or its subcustodian's negligent failure to perform its
duties under this Agreement. In the event of any advance of cash for any
purpose made by U.S. Trust resulting from orders or Written Instructions of the
Fund, or in the event that U.S. Trust or its nominee or subcustodian shall incur
or be assessed any taxes, charges, expenses, assessments, claims or liabilities
in connection with the performance of this Agreement, except such as may arise
from its or its nominee's or subcustodian's own negligent action, negligent
failure to act, willful misconduct, or reckless disregard of its duties under
this Agreement or any agreement between U.S. Trust and any nominee or
subcustodian, the Fund shall promptly reimburse U.S. Trust for such advance of
cash or such taxes, charges, expenses, assessments, claims or liabilities.
23. Responsibility of U.S. Trust. U.S. Trust shall be under no duty to
----------------------------
take any action on behalf of the Fund except as specifically set forth herein or
as may be specifically agreed to by U.S. Trust in writing. In the performance of
its duties hereunder, U.S. Trust shall be obligated to exercise care and
diligence and to act in good faith and to use its best efforts within reasonable
limits to insure the accuracy
15
of all services performed under this Agreement. U.S. Trust shall be responsible
for its own negligent failure or that of any subcustodian it shall appoint to
perform its duties under this Agreement but to the extent that duties,
obligations and responsibilities are not expressly set forth in this Agreement,
U.S. Trust shall not be liable for any act or omission which does not constitute
willful misfeasance, bad faith, or gross negligence on the part of U.S. Trust or
reckless disregard of such duties, obligations and responsibilities. Without
limiting the generality of the foregoing or of any other provision of this
Agreement, U.S. Trust in connection with its duties under this Agreement shall
not be under any duty or obligation to inquire into and shall not be liable for
or in respect of (a) the validity or invalidity or authority or lack thereof of
any advice, direction, notice or other instrument which conforms to the
applicable requirements of this Agreement, if any, and which U.S. Trust believes
to be genuine, (b) the validity of the issue of any securities purchased or sold
by the Fund, the legality of the purchase or sale thereof or the propriety of
the amount paid or received therefor, (c) the legality of the issue or sale of
any Shares, or the sufficiency of the amount to be received therefor, (d) the
legality of the redemption of any Shares, or the propriety of the amount to be
paid therefor, (e) the legality of the declaration or payment of any dividend or
distribution on Shares, or (f) delays or errors or loss of data occurring by
reason of circumstances beyond U.S. Trust's control, including acts of civil or
military authority, national emergencies, labor difficulties, fire, mechanical
breakdown (except as provided in Paragraph 18), flood or catastrophe, acts of
God, insurrection, war, riots, or failure of the mail, transportation systems,
communication systems or power supply.
24. Collection. All collections of monies or other property in respect, or
----------
which are to become part, of the Property (but not the safekeeping thereof upon
receipt by U.S. Trust) shall be at the sole risk of the Fund. In any case in
which U.S. Trust does not receive any payment due the Fund within a reasonable
time after U.S. Trust has made proper demands for the same, it shall so notify
the Fund in writing, including copies of all demand letters, any written
responses thereto, and memoranda of all oral responses thereto, and to
telephonic demands, and await instructions from the Fund. U.S. Trust shall not
be obliged to take legal action for collection unless and until reasonably
indemnified to its satisfaction.
16
U.S. Trust shall also notify the Fund as soon as reasonably practicable whenever
income due on securities is not collected in due course.
25. Duration and Termination. This Agreement shall be effective as of the
------------------------
date hereof and shall continue until termination by the Fund or by U.S. Trust on
90 day's written notice. Upon any termination of this Agreement, pending
appointment of a successor to U.S. Trust or a vote of the Shareholders of the
Fund to dissolve or to function without a custodian of its cash, securities or
other property, U.S. Trust shall not deliver cash, securities or other property
of the Fund to the Fund, but may deliver them to a bank or trust company of its
own selection, having aggregate capital, surplus and undivided profits, as shown
by its last published report of not less than twenty million dollars
($20,000,000) as a successor custodian for the Fund to be held under terms
similar to those of this Agreement, provided, however, that U.S. Trust shall not
be required to make any such delivery or payment until full payment shall have
been made by the Fund of all liabilities constituting a charge on or against the
properties then held by U.S. Trust or on or against U.S. Trust and until full
payment shall have been made to U.S. Trust of all of its fees, compensation,
costs and expenses, subject to the provisions of Paragraph 21 of this Agreement.
26. Notices. All notices and other communications (collectively referred
-------
to as "Notice" or "Notices" in this paragraph) hereunder shall be in writing or
by confirm in telegram, cable, telex, or facsimile sending device. Notices shall
be addressed (a) if to U.S. Trust, at U.S. Trust's address, 000 X. 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, 00000; (b) if to the Fund, at the address of the Fund, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000; or (c) if to neither of the
foregoing, at such other address as shall have been notified to the sender of
any such Notice or other communication. If the location of the sender of a
Notice and the address of the addressee thereof are, at the time of sending,
more than 100 miles apart, the Notice may be sent by first-class mail, in which
case it shall be deemed to have been given three days after it is sent, or if
sent by confirming telegram, cable, telex or facsimile sending device, it shall
be deemed to have been given immediately, and, if the location of the sender of
a Notice and the address of the addressee thereof are, at the time of sending,
not more than 100 miles apart, the Notice may
17
be sent by first-class mail, in which case it shall be deemed to have been given
two days after it is sent, of if sent by messenger, it shall be deemed to have
been given on the day it is delivered, or if sent by communicating telegram,
cable, telex or facsimile sending device, it shall be deemed to have been given
immediately. All postage, cable, telegram, telex and facsimile sending device
charges arising from the sending of a Notice hereunder shall be paid by the
sender.
27. Further Actions. Each party agrees to perform such further acts and
---------------
execute such further documents as are necessary to effectuate the purposes
hereof.
28. Amendments. This Agreement or any part hereof may be changed or waived
----------
only by an instrument in writing signed by the party against which enforcement
of such change or waiver is sought.
29. Miscellaneous. This Agreement embodies the entire Agreement and
-------------
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the parties hereto. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. This Agreement shall be deemed to be a contract made in New York and
governed by New York law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors.
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
THE XXXXXX XXXXXXX HIGH YIELD FUND, INC.
Attest: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
-------------------- ---------------------
Xxxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
---------------------
Title: President
---------------------
UNITED STATES TRUST COMPANY OF NEW YORK
Attest:/s/ Xxxxxxxxxx Xxxxxx By: /s/ Xxxxx X. Xxxxxxxxxx
--------------------- -------------------------
Vice President
Name: Xxxxx X. Xxxxxxxxxx
---------------------
Title: Senior Vice President
---------------------
19
THE XXXXXX XXXXXXX HIGH YIELD FUND, INC.
DOMESTIC CUSTODY AGREEMENT
NOVEMBER 30, 1993
ATTACHMENT A
Fees
For the services described in the Agreement, the Fund shall pay a custody
safekeeping fee and custody transaction fees as follows:
Domestic Custody Safekeeping Fees
0.01% of the average daily net assets of the Fund, computed and
payable monthly
There is no Minimum Fee for the Fund
Domestic Custody Transaction Fees
$15.00 per DTC, PTC or Fed Book Entry transaction
$40.00 per physical transaction
$40.00 per future or option wire
$8.00 per wire transfer
All out-of-pocket expenses related to the provision of services under the terms
of this Agreement will be billed to the Fund monthly and due upon billing.
A-1
THE XXXXXX XXXXXXX HIGH YIELD FUND, INC.
DOMESTIC CUSTODY AGREEMENT
NOVEMBER 30, 1993
ATTACHMENT B
Authorized Persons
B-1
DOMESTIC CUSTODY AGREEMENT
THE XXXXXX XXXXXXX HIGH YIELD FUND, INC.
Table of Contents
-----------------
Section/Paragraph Page
----------------- ----
1. Appointment.......................................................... 1
2. Delivery of Documents................................................ 1
3. Definitions.......................................................... 2
4. Delivery and Registration of the Property............................ 3
5. Voting Rights........................................................ 4
6. Receipt and Disbursement of Money.................................... 4
7. Receipt of Securities................................................ 5
8. Use of Securities Depository or the Book-Entry System................ 6
9. Instructions Consistent With The Articles, etc....................... 6
10. Transactions Not Requiring Instructions.............................. 8
11. Transactions Requiring Instructions.................................. 10
12. Purchase of Securities............................................... 11
13. Sales of Securities.................................................. 12
14. Authorized Shares.................................................... 12
15. Records.............................................................. 12
16. Cooperation with Accountants......................................... 13
17. Confidentiality...................................................... 13
18. Equipment Failures................................................... 13
19. Right to Receive Advice.............................................. 13
20. Compliance with Governmental Rules and Regulations................... 14
21. Compensation......................................................... 14
22. Indemnification...................................................... 15
i
DOMESTIC CUSTODY AGREEMENT
THE XXXXXX XXXXXXX HIGH YIELD FUND, INC.
Table of Contents(continued)
----------------------------
Section/Paragraph Page
----------------- ----
23. Responsibility of U.S. Trust......................................... 15
24. Collection........................................................... 16
25. Duration and Termination............................................. 17
26. Notices.............................................................. 17
27. Further Actions...................................................... 18
28. Amendments........................................................... 18
29. Miscellaneous........................................................ 18
Signature............................................................ 19
Attachment A -- Fees
Attachment B -- Authorized Persons
ii
