Chase
_______________________________________________________
DOMESTIC CUSTODY AGREEMENT
BETWEEN
_________________________________________________
AND
THE CHASE MANHATTAN BANK
October 1, 1999
________________
DOMESTIC CUSTODY AGREEMENT
TABLE OF CONTENTS
1. INTENTION OF THE PARTIES; DEFINITIONS 1
1.1 Intention of the Parties. 1
1.2 Definitions 1
2. WHAT BANK IS REQUIRED TO DO 3
2.1 Set Up Accounts 3
2.2 Cash Account 3
2.3 Segregation of Assets; Nominee 4
2.4 Settlement of Trades 4
2.5 Contractual Settlement Date 4
2.6 Actual Settlement Date 5
2.7 Income Collection; Autocredit 5
2.8 Fractions/ Redemptions by Lot 6
2.9 Presentation of Coupons; Certain Other Ministerial Acts 6
2.10 Corporate Actions 6
2.11 Proxy Voting 6
2.12 Statements and Information Available On-Line 7
2.13 Access to Bank's Records 8
3. INSTRUCTIONS 8
3.1 Acting on Instructions; Unclear Instructions 8
3.2 Confirmation of Oral Instructions/ Security Devices 8
3.3 Instructions; Contrary to Law/Market Practice 9
3.4 Cut-off Times 10
4. FEES EXPENSES AND OTHER AMOUNTS OWING TO BANK 10
4.1 Fees and Expenses 10
4.2 Overdrafts 10
4.3 Bank's Right Over Securities; Set-off 10
5. SECURITIES DEPOSITORIES AND AGENTS
5.1 Use of Depositories 11
5.2 Use of Agents 11
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6. ADDITIONAL PROVISIONS RELATING TO CUSTOMER 11
6.1 Representations of Customer
6.2 Customer to Provide Certain Information to Bank 12
6.3 Customer is Liable to Bank Even if it is Acting for Another Person. 12
7. WHEN BANK IS LIABLE TO CUSTOMER 12
7.1 Standard of Care; Liability 12
7.2 Force Majeure 13
7.3 Bank May Consult With Counsel 13
7.4 Bank Provides Diverse Financial Services and May Generate Profits as a Result 13
8. TAXATION 14
8.1 Tax Obligations 14
8.2 Tax Reclaims 14
9. TERMINATION 16
10 MISCELLANEOUS 16
10.1 Notices 16
10.2 Successors and Assigns 16
10.3 Interpretation 16
10.4 Entire Agreement 16
10.5 Confidentiality 17
10.6 Insurance 17
10.7 Governing Law and Jurisdiction 17
10.8 Severability and Waiver 17
10.9 Counterparts 18
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DOMESTIC CUSTODY AGREEMENT
This Agreement, dated October 1, 1999, is between THE CHASE
MANHATTAN BANK ("Bank"), with a place of business at
0 Xxx Xxxx Xxxxx, Xxx Xxxx, XX 00000; and First Defined Portfolio Fund, LLC
("Customer") a company registered under the
Investment Company Act of 1940, as amended, with a place of business at
0000 Xxxxxxxxxxx Xxxx
Xxxxx, XX 00000
1. Intention of the Parties; DEFINITIONS
1.1 Intention of the Parties.
(a) This Agreement sets out the terms governing custodial,
settlement and certain other associated services offered by Bank to
Customer. Bank will be responsible for the performance of only those
duties that are set forth in this Agreement or expressly contained in
Instructions that are consistent with the provisions of this Agreement
and with Bank's operations and procedures. Customer acknowledges that
Bank is not providing any legal, tax or investment advice in providing
the services hereunder.
(b) It is the intention of the parties that the services offered
by Bank under this Agreement with respect to the custody of Securities
and related settlement services will be limited to Securities that are
issued in the United States ("U.S.") by an issuer that is organized
under the laws of the U.S. or any state thereof, or that are both traded
in the U.S. and that are eligible for deposit at a U.S. Securities
Depository.
1.2 Definitions.
(a) As used herein, the following terms have the meaning
hereinafter stated.
"Account" has the meaning set forth in Section 2.1 of this Agreement.
"Affiliate" means an entity controlling, controlled by, or under common
control with, Bank.
"Applicable Law" means any statute, whether national, state or local,
applicable in the United States or any other country, the rules of the
treaty establishing the European Community, any other law, rule,
regulation or interpretation of any governmental entity, any applicable
common law, and any decree, injunction, judgment, order, ruling, or writ
of any governmental entity.
"Authorized Person" means any person (including an investment manager or
other agent) who has been designated by written notice from Customer or
its designated agent to act on behalf of Customer hereunder. Such
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persons will continue to be Authorized Persons until such time as Bank
receives Instructions from Customer or its designated agent that any
such person is no longer an Authorized Person.
"Bank Indemnitees" means Bank, and its nominees, directors, officers,
employees and agents.
"Cash Account" has the meaning set forth in Section 2.1(a)(ii).
"Corporate Action" means any subscription right, bonus issue, stock
repurchase plan, redemption, exchange, tender offer, or similar matter
with respect to a Financial Asset in the Securities Account that require
discretionary action by the holder, but does not include proxy voting.
"Entitlement Holder" means the person named on the records of a
Securities Intermediary as the person having a Securities Entitlement
against the Securities Intermediary.
"Financial Asset" means, as the context requires, either the asset
itself or the means by which a person's claim to it is evidenced,
including a Security, a security certificate, or a Securities
Entitlement. "Financial Asset" does not include cash.
"Instructions" has the meaning set forth in Section 3.1 of this Agreement.
"Liabilities" means any liabilities, losses, claims, costs, damages,
penalties, fines, obligations, or expenses of any kind whatsoever
(including, without limitation, reasonable attorneys', accountants',
consultants' or experts' fees and disbursements).
"Securities" means stocks, bonds, rights, warrants and other negotiable
and non-negotiable instruments, whether issued in certificated or
uncertificated form, that are commonly traded or dealt in on securities
exchanges or financial markets. "Securities" also means other
obligations of an issuer, or shares, participations and interests in an
issuer recognized in the country in which it is issued or dealt in as a
medium for investment and any other property as may be acceptable to
Bank for the Securities Account.
"Securities Account" means each Securities custody account on Bank's
records to which Financial Assets are or may be credited pursuant hereto.
"Securities Depository" has the meaning set forth in Section 5.1 of this
Agreement.
"Securities Entitlement" means the rights and property interest of an
Entitlement Holder with respect to a Financial Asset as set forth in
Part 5 of Article 8 of the Uniform Commercial Code of the State of New
York, as the same may be amended from time to time.
"Securities Intermediary" means Bank, a Securities Depository, and any
other financial institution which in the ordinary course of business
maintains custody accounts for others and acts in that capacity.
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(b) All terms in the singular will have the same meaning in the
plural unless the context otherwise provides and visa versa.
2. WHAT BANK IS REQUIRED TO DO
2.1 Set Up Accounts.
(a) Bank will establish and maintain the following accounts
("Accounts"):
(i) a Securities Account in the name of Customer for Financial Assets,
which may be received by Bank for the account of Customer, including as
an Entitlement Holder; and
(ii) an account in the name of Customer ("Cash Account") for any and all
cash received by Bank for the account of Customer.
(b) At the request of Customer, additional Accounts may be opened
in the future, which will be subject to the terms of this Agreement,
including a segregated Account or Accounts:
in accordance with the provisions of an agreement among Customer and a
broker-dealer (registered under the Securities and Exchange Act of 1934
("Exchange Act") and a member of the National Association of Securities
Dealer, Inc. ("NASD"), or any futures commission merchant registered
under the Commodity Exchange Act, relating to compliance with the rules
of the Options Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization, regarding
escrow or other arrangements in connection with transactions by us;
for the purpose of segregating cash or Financial Assets with options
purchased or sold by Customer; and
for any other corporate purposes as per the Instruction of an Authorized
Person.
2.2 Cash Account.
Except as otherwise provided in Instructions acceptable to Bank,
all cash held in a Cash Account established or maintained by Bank will
be held during the period it is credited to the Accounts in one or more
deposit accounts at Bank in which cash shall not be subject to
withdrawal by check or draft. Funds credited to the Cash Account will
be transferred by Bank by means of Instruction ("payment order") to a
Bank administrator assigned to Customer. Payment orders and
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Instructions seeking to cancel payment orders or to amend payment orders
which are issued by telephone, telecopier or in writing shall be subject
to a mutually agreed security procedure and Bank may execute or pay
payment orders issued in Customer's name when verified by and Authorized
Person in accordance with such procedure.
2.3 Segregation of Assets; Nominee Name.
(a) Bank will identify in its records that Financial Assets
credited to Customer's Securities Account belong to Customer (except as
otherwise may be agreed by Bank and Customer).
(b) Bank is authorized, in its discretion, to hold in bearer form,
such Financial Assets as are customarily held in bearer form and to
register in the name of the Customer, Bank, a Securities Depository, or
their respective nominees, such Financial Assets as are customarily held
in registered form. Customer authorizes Bank to hold Financial Assets in
omnibus accounts and will accept delivery of Financial Assets of the
same class and denomination as those deposited with Bank.
2.4 Settlement of Trades.
When Bank receives an Instruction directing settlement of a trade
in Financial Assets that includes all information required by Bank, Bank
will use reasonable care to effect such settlement as instructed.
Settlement of purchases and sales of Financial Assets will be conducted
in accordance with prevailing standards of the market in which the
transaction occurs. The risk of loss will be Customer's whenever Bank
delivers Financial Assets or payment in accordance with applicable
market practice in advance of receipt or settlement of the expected
consideration. In the case of the failure of Customer's counterparty to
deliver the expected consideration as agreed, Bank will contact the
counterparty to seek settlement, but Bank will not be obligated to
institute legal proceedings, file proof of claim in any insolvency
proceeding, or take any similar action.
2.5 Contractual Settlement Date Accounting.
(a) Should Customer request to have Bank's Contractual Settlement
Date Accounting Service, Bank will effect book entries on a "contractual
settlement date accounting" basis as described below with respect to the
settlement of trades in those markets where Bank generally offers
contractual settlement day accounting and will notify Customer of these
markets from time to time.
(i) Sales: On the settlement date for a sale, Bank will credit the Cash
Account with the sale proceeds of the sale and transfer the relevant
Financial Assets to an account pending settlement of the trade if not
already delivered.
(ii) Purchases: On the settlement date for the purchase (or earlier, if
market practice requires delivery of the purchase price before the
settlement date), Bank will debit the Cash Account with the settlement
monies and credit a separate account. Bank then will post the Securities
Account as awaiting receipt of the expected Financial Assets. Customer
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will not be entitled to the delivery of Financial Assets that are
awaiting receipt until Bank or its Securities Intermediary actually
receives them.
Bank reserves the right to restrict in good faith the availability of
contractual day settlement accounting for credit reasons.
(b) Bank may (in its absolute discretion) upon oral or written
notification to Customer reverse any debit or credit made pursuant to
Section 2.5(a) prior to a transaction's actual settlement, and Customer
will be responsible for any costs or liabilities resulting from such
reversal. Customer acknowledges that the procedures described in this
sub-section are of an administrative nature, and Bank does not undertake
to make loans and/or Financial Assets available to Customer.
2.6 Actual Settlement Date Accounting.
With respect to any sale or purchase transaction that is not posted
to the Account on the contractual settlement date as referred to in
Section 2.5, Bank will post the transaction on the date on which the
cash or Financial Assets received as consideration for the transaction
is actually received by Bank.
2.7 Income Collection; Autocredit.
(a) Bank will credit the Cash Account with income and redemption
proceeds on Financial Assets in accordance with the times notified by
Bank from time to time on or after the anticipated payment date, net of
any taxes that are withheld by Bank or any third party. Where no time
is specified for a particular market, income and redemption proceeds
from Financial Assets will be credited only after actual receipt and
reconciliation. Bank may reverse such credits upon oral or written
notification to Customer that Bank believes that the corresponding
payment will not be received by Bank within a reasonable period or such
credit was incorrect.
(b) Bank will make reasonable endeavors in its discretion to
contact appropriate parties to collect unpaid interest, dividends or
redemption proceeds, but Bank will not be obliged to file any formal
notice of default, institute legal proceedings, file proof of claim in
any insolvency proceeding, or take any similar action.
2.8 Fractions/ Redemptions by Lot.
Bank may sell fractional interests in Financial Assets and credit
the Cash Account with the proceeds of the sale. If some, but not all,
of an outstanding class of Financial Asset is called for redemption,
Bank may allot the amount redeemed among the respective beneficial
holders of such class of Financial Asset in any manner Bank deems to be
fair and equitable.
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2.9 Presentation of Coupons; Certain Other Ministerial Acts.
Until Bank receives Instructions to the contrary, Bank will:
(i) present all Financial Assets for which Bank has received notice of
a call for redemption or that have otherwise matured, and all income and
interest coupons and other income items that call for payment upon
presentation;
(ii) execute in the name of Customer such certificates as may be
required to obtain payment in respect of Financial Assets; and
(iii)exchange interim or temporary documents of title held in the
Securities Account for definitive documents of title.
2.10 Corporate Actions.
(a) Bank will follow Corporate Actions and advise the Customer of
those Corporate Actions of which Bank's central corporate actions
department receives notice from the issuer or from the Securities
Depository in which such Financial Assets are maintained or notice
published in publications and reported in reporting services routinely
used by Bank for this purpose.
(b) If an Authorized Person fails to provide Bank with timely
Instructions with respect to any Corporate Action, neither Bank nor its
nominees will take any action in relation to that Corporate Action,
except as otherwise agreed in writing by Bank and Customer or as may be
set forth by Bank as a default action in the advice it provides under
Section 2.10 (a) with respect to that Corporate Action.
2.11 Proxy Voting.
(a) Subject to and upon the terms of this sub-section, Bank will
provide Customer with information which it receives on matters to be
voted upon at meetings of holders of Financial Assets ("Notifications"),
and Bank will act in accordance with Customer's Instructions in relation
to such Notifications. If information is received by Bank at its proxy
voting department too late to permit timely voting by Customer, Bank's
only obligation is to provide, so far as reasonably practicable, a
Notification (or summary information concerning a Notification) on an
"information only" basis.
(b) Bank will act upon Instructions to vote on matters referred to
in a Notification, provided Instructions are received by Bank at its
proxy voting department by the deadline referred to in the relevant
Notification. If Instructions are not received in a timely manner, Bank
will not be obligated to provide further notice to Customer.
(c) Customer acknowledges that the provision of proxy voting
services may be precluded or restricted under a variety of
circumstances. These circumstances include, but are not limited to: (i)
the Financial Assets being on loan or out for registration ; (ii) the
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pendency of conversion or another corporate action; or (iii) Financial
Assets being held at Customer's request in a name not subject to the
control of Bank, in a margin or collateral account at Bank or another
bank or broker, or otherwise in a manner which affects voting, local
market regulations or practices, or restrictions by the issuer.
(d) Notwithstanding the fact that Bank may act in a fiduciary
capacity with respect to Customer under other agreements or otherwise
hereunder, in performing voting proxy services Bank will be acting
solely as the agent of Customer, and will not exercise any discretion
with regard to such proxy services or vote any proxy except when
directed by an Authorized Person.
2.12 Statements and Information Available On-Line.
(a) Bank will issue statements to Customer at times mutually
agreed identifying the Financial Assets and cash in the Accounts. Bank
also will provide additional statements containing this information upon
Customer's request. Additionally, Bank will send (or make available on-
line to) Customer an advice or notification of any transfers of cash or
Financial Assets with respect to the Accounts. Bank will be not be
liable with respect to any matter set forth in those portions of any
such statement (or reasonably implied therefrom) to which Customer has
not given Bank a written exception or objection within sixty (60) days
of receipt of the statement.
(b) Prices and other information obtained from third parties which
may be contained in any statement sent to Customer have been obtained
from sources Bank believes to be reliable. Bank does not, however, make
any representation as to the accuracy of such information or that the
prices specified necessarily reflect the proceeds that would be received
on a disposal of the relevant Financial Assets. References in this
Agreement to statements include any statements in electronic form.
(c) Customer acknowledges that records and unaudited reports
available to it on-line will be unaudited and may not be accurate due to
inaccurate pricing, delays in updating Account records, and other
causes. Bank will not be liable for any loss or damage arising out of
the inaccuracy of any such records or unaudited reports accessed on-line.
2.13 Access to Bank's Records.
Bank will allow Customer's independent public accountants such
reasonable access to the records of Bank relating to Financial Assets as
is required in connection with their examination of books and records
pertaining to Customer's affairs.
3. Instructions
3.1 Acting on Instructions; Unclear Instructions.
(a) Bank is authorized to act under this Agreement (or to refrain
from taking action) in accordance with the instructions received by
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Bank, via telephone, telex, facsimile transmission, or other teleprocess
or electronic instruction or trade information system acceptable to Bank
("Instructions"). Bank will have no responsibility for the authenticity
or propriety of any Instructions that Bank believes in good faith to
have been given by Authorized Persons or which are transmitted with
proper testing or authentication pursuant to terms and conditions that
Bank may specify. Customer authorizes Bank to accept and act upon any
Instructions received by it without inquiry. Customer will indemnify
Bank Indemnitees against, and hold each of them harmless from, any
Liabilities that may be imposed on, incurred by, or asserted against
Bank Indemnitees as a result of any action or omission taken in
accordance with any Instructions or other directions upon which Bank is
authorized to rely under the terms of this Agreement.
(b) Unless otherwise expressly provided, all Instructions will continue
in full force and effect until canceled or superseded.
(c) Bank may (in its sole discretion and without affecting any part of
this Section 3.1) seek clarification or confirmation of an Instruction
from an Authorized Person and may decline to act upon an Instruction if
it does not receive clarification or confirmation satisfactory to it.
Bank will not be liable for any loss arising from any delay while it
seeks such clarification or confirmation.
(d) In executing or paying a payment order Bank may rely upon the
identifying number (e.g. Fedwire routing number or account) of any party
as instructed in the payment order. Customer assumes full
responsibility for any inconsistency between the name and identifying
number of any party in payment orders issued to Bank in Customer's name.
3.2 Confirmation of Oral Instructions/ Security Devices.
Any Instructions delivered to Bank by telephone will promptly
thereafter be confirmed in writing by an Authorized Person. Each
confirmation is to be clearly marked "Confirmation." Bank will not be
liable for having followed such Instructions notwithstanding the failure
of an Authorized Person to send such confirmation in writing or the
failure of such confirmation to conform to the telephone received.
Either party may record any of their telephonic communications.
Customer will comply with any security procedures reasonably required by
Bank from time to time with respect to verification of Instructions.
Customer will be responsible for safeguarding any test keys,
identification codes or other security devices that Bank will make
available to Customer or any Authorized Person.
3.3 Instructions; Contrary to Law/Market Practice.
Bank need not act upon Instructions which it reasonably believes to
be contrary to law, regulation or market practice but will be under no
duty to investigate whether any Instructions comply with Applicable Law
or market practice.
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Cut-off Times.
Bank has established cut-off times for receipt of some categories of
Instruction, which will be made available to Customer. If Bank receives
an Instruction after its established cut-off time, it will attempt to
act upon the Instruction on the day requested if Bank deems it
practicable to do so or otherwise as soon as practicable after that day.
4. Fees, Expenses and Other Amounts Owing to Bank
4.1 Fees and Expenses.
Customer will pay Bank for its services hereunder the fees set
forth in Schedule A hereto or such other amounts as may be agreed upon
in writing from time to time, together with Bank's reasonable out-of-
pocket or incidental expenses, including, but not limited to, legal
fees. Customer authorizes Bank to charge any Cash Accounts, for any such
fees or expenses.
4.2 Overdrafts.
Customer will have sufficient immediately available funds each day
in the Cash Account (without regard to any Cash Account investments) to
pay for the settlement of all Financial Assets delivered against payment
to Customer and credited to the Securities Account. If a debit to the
Cash Account results (or will result) in a debit balance, then Bank may,
in its discretion, (i) advance an amount equal to the overdraft, (ii) or
reject the settlement in whole or in any part, or (iii) if posted to the
Securities Account, reverse the posting of the Financial Assets credited
to the Securities Account. If Bank elects to make such an advance, the
advance will be deemed a loan to Customer, payable on demand, bearing
interest at the rate charged by Bank from time to time, for overdrafts
incurred by customers similar to Customer, from the date of such advance
to the date of payment (both after as well as before judgment) and
otherwise on the terms on which Bank makes similar overdrafts available
from time to time. No prior action or course of dealing on Bank's part
with respect to the settlement of transactions on Customer's behalf will
be asserted by Customer against Bank for Bank's refusal to make advances
to the Cash Account or to settle any transaction for which Customer does
not have sufficient available funds in the Account.
4.3 Bank's Right Over Securities; Set-off.
(a) Customer grants Bank a security interest in and a lien on the
Financial Assets held in the Securities Account as security for any and
all amounts which are now or become owing to Bank under any provision of
this Agreement, whether or not matured or contingent ("Indebtedness").
(b) Bank will be further entitled to set any such Indebtedness off
against any cash or deposit account with Bank or any of its Affiliates
of which Customer is the beneficial owner. Bank will notify Customer in
advance of any such charge unless Bank reasonably believes that it might
prejudice its interests to do so and, in such event, Bank will notify
Customer promptly afterwards.
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5. SECURITIES DEPOSITORIES AND OTHER AGENTS
5.1 Use of Depositories.
Bank may deposit Financial Assets with, and hold Financial Assets
in, any securities depository, settlement system, dematerialized book
entry system or similar system (together a "Securities Depository") on
such terms as such systems customarily operate and Customer will provide
Bank with such documentation or acknowledgements that Bank may require
to hold the Financial Assets in such systems. Bank will have no
responsibility for any act or omission by (or the insolvency of) any
Securities Depository. In the event Customer incurs a loss due to the
negligence, willful misconduct, or insolvency of a Securities
Depository, Bank will make reasonable endeavors, in its discretion, to
seek recovery from the Securities Depository.
5.2 Use of Agents.
(a) Bank may provide certain services under this Agreement through
third parties. These third parties may be Affiliates. Bank will not be
responsible for any loss as a result of a failure by any broker or any
other third party that it selects and retains using reasonable care to
provide ancillary services, such as pricing, that it does not
customarily provide itself. Nevertheless, Bank will be liable for the
performance of any such service provider selected by Bank that is an
Affiliate to the same extent as Bank would have been liable if it
performed such services itself.
(b) Bank will execute transactions involving Financial Assets
through a broker which is an Affiliate (i) in the case of the sale under
Section 2.8 of a fractional interest or (ii) if an Authorized Person
directs Bank to use the affiliated broker or otherwise requests that
Bank select a broker for that transaction. The affiliated broker may
charge its customary commission (or retain its customary spread) with
respect to either such transaction.
6. ADDITIONAL PROVISIONS RELATING TO CUSTOMER
6.1 Representations of Customer.
Customer represents and warrants that (i) it has full authority and
power, and has obtained all necessary authorizations and consents, to
deposit and control the Financial Assets and cash in the Accounts, to
use Bank as its custodian in accordance with the terms of this
Agreement, to incur indebtedness and to pledge Financial Assets as
contemplated by Section 4.3; and (ii) this Agreement is Customer's
legal, valid and binding obligation, enforceable in accordance with its
terms and it has full power and authority to enter into and has taken
all necessary corporate action to authorize the execution of this
Agreement. Bank may rely upon the above or the certification of such
other facts as may be required to administer Bank's obligations
hereunder Bank may rely upon the above or the certification of such
other facts as may be required to administer Bank's obligations hereunder.
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6.2 Customer to Provide Certain Information to Bank.
Upon request, Customer will promptly provide to Bank such
information about itself and its financial status as Bank may reasonably
request, including Customer's organizational documents and its current
audited and unaudited financial statements.
6.3 Customer is Liable to Bank Even if it is Acting for Another Person.
If Customer is acting as an agent for a disclosed or undisclosed
principal in respect of any transaction, cash, or Financial Asset, Bank
nevertheless will treat Customer as its principal for all purposes under
this Agreement. In this regard, Customer will be liable to Bank as a
principal in respect of any transactions relating to the Account. The
foregoing will not affect any rights Bank might have against Customer's
principal.
7. When Bank is liable to Customer
7.1 Standard of Care; Liability.
(a) Bank will use reasonable care in performing its obligations
under this Agreement. Bank will not be in violation of this Agreement
with respect to any matter as to which it has satisfied its obligation
of reasonable care.
(b) Bank will be liable for Customer's direct damages to the
extent they result from Bank's negligence or willful misconduct in
performing its duties as set out in this Agreement. Nevertheless, under
no circumstances will Bank be liable for any indirect, consequential or
special damages (including, without limitation, lost profits) of any
form, whether or not foreseeable and regardless of the type of action in
which such a claim may be brought, with respect to the Accounts or
Bank's performance hereunder or its role as custodian.
(c) Customer will indemnify Bank Indemnitees against, and hold
them harmless from, any Liabilities that may be imposed on, incurred by
or asserted against any of Bank Indemnitees in connection with or
arising out of Bank's performance under this Agreement, provided Bank
Indemnitees have not acted with negligence or engaged in fraud or
willful misconduct in connection with the Liabilities in question.
(d) Without limiting Subsections 7.1 (a), (b) or (c), Bank will have
no duty or responsibility to: (i) question Instructions or make any sug-
gestions to Customer or an Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments or the
retention of Financial Assets; (iii) advise Customer or an Authorized
Person regarding any default in the payment of principal or income of
any security other than as provided in Section 2.7(b) of this Agreement;
(iv) evaluate or report to Customer or an Authorized Person regarding
the financial condition of any broker, agent or other party to which
Bank is instructed to deliver Financial Assets or cash; or (v) review or
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reconcile trade confirmations received from brokers (and Customer or its
Authorized Persons issuing Instructions will bear any responsibility to
review such confirmations against Instructions issued to and statements
issued by Bank).
7.2 Force Majeure.
Bank will maintain and update from time to time business continuation
and disaster recovery procedures with respect to its custody business
that it determines from time to time meet reasonable commercial
standards. Bank will have no liability, however, for any damage, loss,
expense or liability of any nature that Customer may suffer or incur,
caused by an act of God, fire, flood, civil or labor disturbance, war,
act of any governmental authority or other act or threat of any
authority (de jure or de facto), legal constraint, fraud or forgery,
malfunction of equipment or software (except to the extent such
malfunction is primarily attributable to Bank's negligence in
maintaining the equipment or software), failure of or the effect of
rules or operations of any external funds transfer system, inability to
obtain or interruption of external communications facilities, or any
cause beyond the reasonable control of Bank (including without
limitation, the non-availability of appropriate foreign exchange).
7.3 Bank May Consult With Counsel.
Bank will be entitled to rely on, and may act upon the advice of
professional advisers in relation to matters of law, regulation or
market practice (which may be the professional advisers of Customer),
and will not be liable to Customer for any action reasonably taken or
omitted pursuant to such advice.
7.4 Bank Provides Diverse Financial Services and May Generate Profits
as a Result.
Customer acknowledges that Bank or its Affiliates may have a
material interest in the transaction or that circumstances are such that
Bank may have a potential conflict of duty or interest. For example,
Bank or its Affiliates may act as a market maker in the Financial Assets
to which Instructions relate, provide brokerage services to other
customers, act as financial adviser to the issuer of such Financial
Assets, act in the same transaction as agent for more than one customer,
have a material interest in the issue of the Financial Assets; or earn
profits from any of these activities. Customer acknowledges that Bank
or its Affiliates may be in possession of information tending to show
that the Instructions received may not be in the best interests of
Customer. Bank is not under any duty to disclose any such information.
8. TAXATION
8.1 Tax Obligations.
(a) Customer confirms that Bank is authorized to deduct from any
cash received or credited to the Cash Account any taxes or levies
required by any revenue or governmental authority for whatever reason in
respect of Customer's Accounts.
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(b) Customer will provide to Bank such certifications,
documentation, and information as it may require in connection with
taxation, and warrants that, when given, this information is true and
correct in every respect, not misleading in any way, and contains all
material information. Customer undertakes to notify Bank immediately if
any information requires updating or correcting.
(c) Customer will be responsible for the payment of all taxes
relating to the Financial Assets in the Securities Account, and Customer
will pay, indemnify and hold Bank harmless from and against any and all
liabilities, penalties, interest or additions to tax with respect to or
resulting from, any delay in, or failure by, Bank (1) to pay, withhold
or report any U.S. federal, state or local taxes or foreign taxes
imposed on, or (2) to report interest, dividend or other income paid or
credited to the Cash Account, whether such failure or delay by Bank to
pay, withhold or report tax or income is the result of (x) Customer's
failure to comply with the terms of this paragraph, or (y) Bank's own
acts or omissions; provided however, Customer will not be liable to Bank
for any penalty or additions to tax due as a result of Bank's failure to
pay or withhold tax or to report interest, dividend or other income paid
or credited to the Cash Account solely as a result of Bank's negligent
acts or omissions.
8.2 Tax Reclaims.
(a) Subject to the provisions of this Section, Bank will apply for
a reduction of withholding tax and any refund of any tax paid or tax
credits in respect of income payments on Financial Assets comprising
American Depository Receipts credited to the Securities Account that
Bank believes may be available.
(b) The provision of a tax reclamation service by Bank is
conditional upon Bank receiving from Customer (i) a declaration of its
identity and place of residence and (ii) certain other documentation
(pro forma copies of which are available from Bank). If Financial
Assets comprising American Depository Receipts credited to the Account
are beneficially owned by someone other than Customer, this information
will be necessary with respect to the beneficial owner. Customer
acknowledges that Bank will be unable to perform tax reclamation
services unless it receives this information.
(c) Bank will perform tax reclamation services only with respect
to taxation levied by the revenue authorities of the countries advised
to Customer from time to time and Bank may, by notification in writing,
in its absolute discretion, supplement or amend the countries in which
the tax reclamation services are offered. Other than as expressly
provided in this Section 8.2 Bank will have no responsibility with
regard to Customer's tax position or status in any jurisdiction.
(d) Customer confirms that Bank is authorized to disclose any
information requested by any revenue authority or any governmental body
in relation to the processing of any tax reclaim.
Page 13
9. Termination
Either party may terminate this Agreement on sixty days' notice in
writing to the other party. If Customer gives notice of termination, it
must provide full details of the persons to whom Bank must deliver
Financial Assets and cash. If Bank gives notice of termination, then
Customer must, within sixty days, notify Bank of details of its new
custodian, failing which Bank may elect (at any time after the sixty day
notice period) either to retain the Financial Assets and cash until such
details are given, continuing to charge fees due (in which case Bank's
sole obligation will be for the safekeeping of the Financial Assets and
cash), or deliver the Financial Assets and cash to Customer. Bank will
in any event be entitled to deduct any amounts owing to it prior to
delivery of the Financial Assets and cash (and, accordingly, Bank will
be entitled to sell Financial Assets and apply the sale proceeds in
satisfaction of amounts owing to it). Customer will reimburse Bank
promptly for all out-of-pocket expenses it incurs in delivering
Financial Assets upon termination. Termination will not affect any of
the liabilities either party owes to the other arising under this
Agreement prior to such termination.
10. Miscellaneous
10.1 Notices.
Notices (other than Instructions) will be served by registered mail
or hand delivery to the address of the respective parties as set out on
the first page of this Agreement, unless notice of a new address is
given to the other party in writing. Notice will not be deemed to be
given unless it has been received.
10.2 Successors and Assigns.
This Agreement will be binding on each of the parties' successors
and assigns, but the parties agree that neither party can assign its
rights and obligations under this Agreement without the prior written
consent of the other party, which consent will not be unreasonably
withheld.
10.3 Interpretation.
Headings are for convenience only and are not intended to affect
interpretation. References to sections are to sections of this
Agreement and references to sub-sections and paragraphs are to sub-
sections of the sections and paragraphs of the sub-sections in which
they appear.
10.4 Entire Agreement.
This Agreement, including the Schedules, Exhibits, and any riders (and
any separate agreement which Bank and Customer may enter into with
respect to any Cash Account), sets out the entire Agreement between the
parties in connection with the subject matter, and this Agreement
Page 14
supersedes any other agreement, statement, or representation relating to
custody, whether oral or written. Amendments must be in writing and
signed by both parties.
10.5 Confidentiality.
Bank will not disclose any confidential information concerning the
Financial Assets and/or cash held for Customer except as is reasonably
necessary to provide services to Customer, as required by law or
regulation or the organizational documents of the issuer of any
Financial Asset, or with the consent of Customer. Customer agrees to
keep this Agreement confidential and, except where disclosure is
required by law or regulation, will only disclose it (or any part of it)
with the prior written consent of Bank.
10.6 Insurance.
Bank will not be required to maintain any insurance coverage for
the benefit of Customer.
10.7 Governing Law and Jurisdiction.
This Agreement will be construed, regulated, and administered under
the laws of the United States or State of New York, as applicable,
without regard to New York's principles regarding conflicts of law. The
United States District Court for the Southern District of New York will
have the sole and exclusive jurisdiction over any lawsuit or other
judicial proceeding relating to or arising from this Agreement. If that
court lacks federal subject matter jurisdiction, the Supreme Court of
the State of New York, New York County will have sole and exclusive
jurisdiction. Either of these courts will have proper venue for any
such lawsuit or judicial proceeding, and the parties waive any objection
to venue or their convenience as a forum. The parties agree to submit
to the jurisdiction of any of the courts specified and to accept service
of process to vest personal jurisdiction over them in any of these
courts. The parties further hereby knowingly, voluntarily and
intentionally waive, to the fullest extent permitted by applicable law,
any right to a trial by jury with respect to any such lawsuit or
judicial proceeding arising or relating to this Agreement or the
transactions contemplated hereby.
10.8 Severability and Waiver.
(a) If one or more provisions of this Agreement are held invalid,
illegal or unenforceable in any respect on the basis of any particular
circumstances or in any jurisdiction, the validity, legality and
enforceability of such provision or provisions under other circumstances
or in other jurisdictions and of the remaining provisions will not in
any way be affected or impaired.
(b) Except as otherwise provided herein, no failure or delay on
the part of either party in exercising any power or right hereunder
operates as a waiver, nor does any single or partial exercise of any
power or right preclude any other or further exercise, or the exercise
of any other power or right. No waiver by a party of any provision of
this Agreement, or waiver of any breach or default, is effective unless
in writing and signed by the party against whom the waiver is to be
enforced.
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10.09 Counterparts.
This Agreement may be executed in several counterparts each of
which will be deemed to be an original and together will constitute one
and the same agreement.
_________________________________________
By: /s/ Xxxxx X. Xxxxx
_______________________________________
Title: President
_______________________________________
Date: 10/1/99
_______________________________________
THE CHASE MANHATTAN BANK
By: /s/ Xxxxxxx Xxxxxxx
_______________________________________
Title: Vice President
Date: 10/1/99
_______________________________________
Page 16
GLOBAL CUSTODY RIDER
TO
DOMESTIC CUSTODY AGREEMENT
BETWEEN
THE CHASE MANHATTAN BANK
AND
GLOBAL CUSTODY RIDER
TO
DOMESTIC CUSTODY AGREEMENT
1. INTENTION OF THE PARTIES; DEFINITIONS
Intention of the Parties.
(a) This Rider together with the Domestic Custody Agreement sets
out the terms governing the custody, settlement and certain associated
services offered by Bank with respect to Global Securities (i.e.
Securities other than U.S. Securities, which are governed exclusively by
the terms of the Domestic Custody Agreement). To the extent there are
any inconsistencies between the terms of the Domestic Custody Agreement
and the terms of this Rider, the terms of this Rider shall govern.
(b) Investing in foreign markets may be a risky enterprise. The
holding of Financial Assets and cash in foreign jurisdictions may
involve risks of loss or other special features. Bank will not be
liable for any loss that results from the general risks of investing or
Country Risk.
1.2 Definitions.
All capitalized terms used in this Rider unless defined herein shall
have the meanings given to such terms as set forth in the Domestic
Custody Agreement.
"Affiliated Subcustodian" means a Subcustodian that is an Affiliate.
"Bank" means The Chase Manhattan Bank.
"Bank's London Branch" means the London branch office of The Chase
Manhattan Bank.
"Country Risk" means the risk of investing or holding assets in a
particular country or market, including, but not limited to, risks
arising from; nationalization, expropriation or other governmental
actions; the country's financial infrastructure including prevailing
custody and settlement practices, laws applicable to the safekeeping and
recovery of Financial Assets and cash held in custody; regulation of
banking and securities industries, including changes in market rules;
currency restrictions, devaluations or fluctuations; and market
conditions affecting the orderly execution of securities transactions or
the value of assets.
"Customer" means _______________________________________________________.
"Domestic Custody Agreement" or "DCA" means the Domestic Custody
Agreement between Bank and Customer.
Page 17
"Eligible Foreign Custodian" means: (i) a banking institution or trust
company, incorporated or organized under the laws of a country other
than the United States, that is regulated as such by that country's
government or an agency thereof; (ii) a majority-owned direct or
indirect subsidiary of a U.S. bank or bank holding company which
subsidiary is incorporated or organized under the laws of a country
other than the United States; and (iii) any other entity (other than an
Eligible Securities Depository) that shall have been so qualified by
exemptive order, rule or other appropriate action of the SEC.
"Eligible Securities Depository" has the meaning as set forth in
paragraph (a) of Section 2.10 of this Rider.
"Financial Assets" as used in this Rider shall relate exclusively to
Global Securities.
"Foreign Custody Manager" has the meaning as set forth in paragraph (a)
of Section 2.10 of this Rider.
"Global Securities" has the meaning as set forth in paragraph (a) of
Section 1.1 of this Rider.
"Subcustodian" has the meaning set forth in paragraph (a) of Section 5.1
of this Rider and includes Affiliated Subcustodians. Subcustodians are
Securities Intermediaries. Bank Indemnitees shall include Subcustodians
and their nominees, directors, officers, employees and agents.
"U.S. Bank" means a U.S. bank as defined in SEC rule 17f-5(a) (7) of the
1940 Act.
"1940 Act" means Investment Company Act of 1940, as amended.
2. WHAT THE BANK IS REQUIRED TO DO
2.1 Cash Accounts.
For the purpose of this Rider, Cash Accounts mean one or more deposits
accounts in the name of Customer at Bank's London Branch. Any cash so
deposited with Bank's London Branch shall be payable exclusively by
Bank's London Branch in the applicable currency, subject to compliance
with any applicable laws, regulations, governmental decrees or similar
orders.
(b) Notwithstanding paragraph (a) hereof, cash held in respect of
those markets where Customer is required to have a cash account in its
own name held directly with the relevant Subcustodian will be held in
that manner and will not be part of the Cash Account.
2.2 Segregation of Assets; Nominee Name.
Bank will require each Subcustodian to identify in its own records that
Financial Assets credited to Customer's Securities Account belong to
customers of Bank (to the extent permitted by Applicable Law or market
practice), such that it is readily apparent that the Financial Assets do
not belong to Bank or Subcustodian.
(b) Bank and Subcustodian are authorized to register in the name of
Subcustodian such Financial Assets as are customarily held in registered
form. Customer authorizes Bank or its Subcustodian to hold Financial
Assets in omnibus accounts and will accept delivery of Financial Assets
of the same class and denomination as those deposited with Bank or its
Subcustodian.
2.3 Income Collection; Autocredit.
Bank shall provide income collection and autocredit service for Global
Securities as set for in Section 2.7 of the DCA, but neither Bank nor
Page 18
its Subcustodians shall be obligated to file any formal notice of
default, institute legal proceedings, file proof of claim in any
insolvency proceeding, or take any similar action in respect of any
Global Securities.
Contractual Settlement Date Accounting.
If Customer has elected to have contractual settlement date accounting
service for the Global Securities credited to its Securities Accounts,
Bank will provides such service with respect to settlement of trades in
those global markets where the service is offered as provided in Section
2.5 of the DCA.
2.5 Proxy Voting with respect to Global Securities.
(a) Subject to and upon the terms of this sub-section, Bank will
provide Customer with information which it receives on matters to be
voted upon at meetings of holders of Financial Assets ("Notifications"),
and Bank will act in accordance with Customer's Instructions in relation
to such Notifications ("the active proxy voting service"). If
information is received by Bank at its proxy voting department too late
to permit timely voting by Customer, Bank's only obligation is to
provide, so far as reasonably practicable, a Notification (or summary
information concerning a Notification) on an "information only" basis.
(b) The active proxy voting service is available only in certain
markets, details of which are available from Bank on request. Provision
of the active proxy voting service is conditional upon receipt by Bank
of a duly completed enrollment form as well as additional documentation
that may be required for certain markets.
(c) Bank will act upon Instructions to vote on matters referred to in a
Notification, provided Instructions are received by Bank at its proxy
voting department by the deadline referred to in the relevant
Notification. If Instructions are not received in a timely manner, Bank
will not be obligated to provide further notice to Customer.
(d) Bank reserves the right to provide Notifications or parts thereof
in the language received. Bank will attempt in good faith to provide
accurate and complete Notifications, whether or not translated.
(e) Customer acknowledges that Notifications and other information
furnished pursuant to the active proxy voting service ("information")
are proprietary to Bank and that Bank owns all intellectual property
rights, including copyrights and patents, embodied therein.
Accordingly, Customer will not make any use of such information except
in connection with the active proxy voting service.
(f) In markets where the active proxy voting service is not available
or where Bank has not received a duly completed enrollment form or other
relevant documentation, Bank will not provide Notifications to Customer
but will endeavor to act upon Instructions to vote on matters before
meetings of holders of Financial Assets where it is reasonably
practicable for Bank (or its Subcustodians or nominees as the case may
be) to do so and where such Instructions are received in time for Bank
to take timely action (the "passive proxy voting service").
Page 19
(g) Customer acknowledges that the provision of proxy voting services
(whether active or passive) may be precluded or restricted under a
variety of circumstances. These circumstances include, but are not
limited to: (i) the Financial Assets being on loan or out for
registration, (ii) the pendency of conversion or another corporate
action, or (iii) Financial Assets being held at Customer's request in a
name not subject to the control of Bank or its Subcustodian, in a margin
or collateral account at Bank or another bank or broker, or otherwise in
a manner which affects voting, local market regulations or practices, or
restrictions by the issuer. Additionally, in some cases Bank may be
required to vote all shares held for a particular issue for all of
Bank's customers in the same way. Bank will inform Customer where this
is the case.
(h) Notwithstanding the fact that Bank may act in a fiduciary capacity
with respect to Customer under other agreements or otherwise hereunder,
in performing active or passive voting proxy services Bank will be
acting solely as the agent of Customer, and will not exercise any
discretion with regard to such proxy services or vote any proxy except
when directed by an Authorized Person.
2.6 Access to Subcustodian's Records.
Subject to restrictions under Applicable Law, Bank will obtain an
undertaking to permit Customer's independent public accountants
reasonable access to the records of any Subcustodian in respect of any
Financial Assets credited to the Securities Account as may be required
in connection with such examination.
2.7 Maintenance of Financial Assets at Subcustodian Locations.
(a) Unless Instructions require another location acceptable to Bank,
Financial Assets will be held in the country or jurisdiction in which
their principal trading market is located, where such Financial Assets
may be presented for payment, where such Financial Assets were acquired,
or where such Financial Assets are held. Bank reserves the right to
refuse to accept delivery of Financial Assets or cash in countries and
jurisdictions other than those referred to in Schedule 1 to this
Agreement, as in effect from time to time.
(b) Bank will not be obliged to follow an Instruction to hold Financial
Assets with, or have them registered or recorded in the name of, any
person not chosen by Bank. However, if Customer does instruct Bank to
hold Global Securities with or register or record Global Securities in
the name of a person not chosen by Bank, the consequences of doing so
are at Customer's own risk and Bank will not be liable therefor.
2.8 Tax Reclaims.
Bank will provide for Global Securities as set forth in Section 8.2
of the DCA, the same tax reclamation services that Bank provides for
American Depository Receipts.
2.9 Foreign Exchange Transactions.
Page 20
To facilitate the administration of Customer's trading and investment
activity, Bank may, but will not be obliged to, enter into spot or
forward foreign exchange contracts with Customer, or an Authorized
Person, and may also provide foreign exchange contracts and facilities
through its Affiliates or Subcustodians. Instructions, including
standing instructions, may be issued with respect to such contracts, but
Bank may establish rules or limitations concerning any foreign exchange
facility made available. In all cases where Bank, its Affiliates or
Subcustodians enter into a master foreign exchange contract that covers
foreign exchange transactions for the Accounts, the terms and conditions
of that foreign exchange contract and, to the extent not inconsistent,
this Agreement, will apply to such transactions.
2.10 Compliance with SEC rule 17f-5.
(a) Customer's board of directors (or equivalent body) (hereinafter
`Board') hereby delegates to Bank, and, except as to the country or
countries as to which Bank may, from time to time, advise Customer that
it does not accept such delegation, Bank hereby accepts the delegation
to it, of the obligation to perform as Customer's "Foreign Custody
Manager" (as that term is defined in SEC rule 17f-5(a)(2) as promulgated
under the 1940 Act, both for the purpose of selecting Eligible Foreign
Custodians (as that term is defined in SEC rule 17f-5(a)(1), and as the
same may be amended from time to time, or that have otherwise been made
exempt pursuant to an SEC exemptive order) to hold Financial Assets and
Cash and of evaluating the contractual arrangements with such Eligible
Foreign Custodians (as set forth in SEC rule 17f-5(c)(2)); provided
that, the term Eligible Foreign Custodian shall not include any
"Eligible Securities Depository." An Eligible Securities Depository for
purposes hereof shall have the same meaning as in SEC rule 17f-7 as
proposed on April 29, 1999. (Eligible Securities Depositories used by
Bank as of the date hereof are set forth in Appendix 1-A hereto, and as
the same may be amended on notice to Customer from time to time.)
(b) In connection with the foregoing, Bank shall:
(i) provide written reports notifying Customer's Board of the placement
of Financial Assets and Cash with particular Eligible Foreign Custodians
and of any material change in the arrangements with such Eligible
Foreign Custodians, with such reports to be provided to Customer's Board
at such times as the Board deems reasonable and appropriate based on the
circumstances of Customer's foreign custody arrangements (and until
further notice from Customer such reports shall be provided not less
than quarterly with respect to the placement of Financial Assets and
Cash with particular Eligible Foreign Custodians and with reasonable
promptness upon the occurrence of any material change in the
arrangements with such Eligible Foreign Custodians);
(ii) exercise such reasonable care, prudence and diligence in performing
as Customer's Foreign Custody Manager as a person having responsibility
for the safekeeping of Financial Assets and cash would exercise;
(iii) in selecting an Eligible Foreign Custodian, first have determined
that Financial Assets and cash placed and maintained in the safekeeping
of such Eligible Foreign Custodian shall be subject to reasonable care,
based on the standards applicable to custodians in the relevant market,
after having considered all factors relevant to the safekeeping of such
Financial Assets and cash, including, without limitation, those factors
set forth in SEC rule 17f-5(c)(1)(i)-(iv);
(iv) determine that the written contract with an Eligible Foreign
Custodian requires that the Eligible Foreign Custodian will provide
reasonable care for Financial Assets and Cash based on the standards
applicable to custodians in the relevant market.
(v) have established a system to monitor the continued appropriateness
of maintaining Financial Assets and cash with particular Eligible
Foreign Custodians and of the governing contractual arrangements; it
being understood, however, that in the event that Bank shall have
Page 21
determined that the existing Eligible Foreign Custodian in a given
country would no longer afford Financial Assets and cash reasonable care
and that no other Eligible Foreign Custodian in that country would
afford reasonable care, Bank shall promptly so advise Customer and shall
then act in accordance with the Instructions of Customer with respect to
the disposition of the affected Financial Assets and cash.
Subject to (b)(i)-(v) above, Bank is hereby authorized to place and
maintain Financial Assets and cash on behalf of Customer with Eligible
Foreign Custodians pursuant to a written contract deemed appropriate by
Bank.
(c) Except as expressly provided herein, Customer shall be solely
responsible to assure that the maintenance of Financial Assets and cash
hereunder complies with the rules, regulations, interpretations and
exemptive orders promulgated by or under the authority of the SEC.
(d) Bank represents to Customer that it is a U.S. Bank as defined
in Rule 17f-5(a)(7). Customer represents to Bank that: (1) the
Financial Assets and cash being placed and maintained in Bank's custody
are subject to the 1940 Act, as the same may be amended from time to
time; (2) its Board: (i) has determined that it is reasonable to rely on
Bank to perform as Customer's Foreign Custody Manager (ii) or its
investment adviser shall have determined that Customer may maintain
Financial Assets and cash in each country in which Customer's Financial
Assets and cash shall be held hereunder and determined to accept the
Country Risks arising therefrom. Nothing contained herein shall require
Bank to make any selection or to engage in any monitoring on behalf of
Customer that would entail consideration of Country Risk.
(e) Bank shall provide to Customer such information relating to
Country Risk as is specified in Appendix 1-B hereto. Customer hereby
acknowledges that: (i) such information is solely designed to inform
Customer of market conditions and procedures and is not intended as a
recommendation to invest or not invest in particular markets; and (ii)
Bank has gathered the information from sources it considers reliable,
but that Bank shall have no responsibility for inaccuracies or
incomplete information.
3. INSTRUCTIONS
Bank will act upon all Instructions received from Customer with
respect to the Financial Assets and cash held for the Accounts in
accordance with Article 3 of the DCA and this Rider.
FEES EXPENSES AND OTHER AMOUNTS OWING TO BANK
4.1 Fees and Expenses.
Customer will pay Bank for its services hereunder the fees set forth in
Schedule B hereto or such other amounts as may be agreed upon in writing
from time to time, together with Bank's reasonable out-of-pocket or
incidental expenses, including, but not limited to, legal fees. Customer
authorizes Bank to charge any Cash Accounts, for any such fees or
expenses.
4.2 Overdrafts.
If a debit to any currency in the Cash Account results (or will result)
in a debit balance in that currency, then Bank may, in its discretion,
(i) advance an amount equal to the overdraft, (ii) or reject the
settlement in whole or in any part, or (iii) if posted to the Securities
Account, reverse the posting of the Financial Assets credited to the
Securities Account. If Bank elects to make such an advance, the advance
will be deemed a loan to Customer, payable on demand, bearing interest
Page 22
at the rate charged by Bank from time to time, for overdrafts incurred
by customers similar to Customer, from the date of such advance to the
date of payment (both after as well as before judgment) and otherwise on
the terms on which Bank makes similar overdrafts available from time to
time. No prior action or course of dealing on Bank's part with respect
to the settlement of transactions on Customer's behalf will be asserted
by Customer against Bank for Bank's refusal to make advances to the Cash
Account or to settle any transaction for which Customer does not have
sufficient available funds in the Account.
5. SUBCUSTODIANS
5.1 Appointment of Subcustodians.
(a) Bank is authorized under this Rider to act through and hold
Customer's Financial Assets with subcustodians, being at the date of
this Rider the entities listed in Schedule 1 and/or such other entities
as Bank may appoint as subcustodians ("Subcustodians"). Bank will use
reasonable care in the selection and continued appointment of such
Subcustodians. In addition, Bank and each Subcustodian may deposit
Financial Assets with, and hold Financial Assets in, any Securities
Depository on such terms as such systems customarily operate and
Customer will provide Bank with such documentation or acknowledgements
that Bank may require to hold the Financial Assets in such systems. At
the request of Customer, Bank may, but need not, add to Schedule 1-A an
Eligible Foreign Custodian where Bank has not acted as Foreign Custody
Manager with respect to the selection thereof. Bank shall notify
Customer in the event that it elects to add any such entity.
(b) Any agreement Bank enters into with a Subcustodian for holding
Bank's customers' assets will provide that such assets will not be
subject to any right, charge, security interest, lien or claim of any
kind in favor of such Subcustodian except for safe custody or
administration, and, in the case of Financial Assets, that beneficial
ownership will be freely transferable without the payment of money or
value other than for safe custody or administration. Where a
Subcustodian deposits Securities with a Securities Depository, Bank will
cause the Subcustodian to identify on its records as belonging to Bank,
as agent, the Securities shown on the Subcustodian's account at such
Securities Depository. The foregoing will not apply to the extent of
any special agreement or arrangement made by Customer with any
particular Subcustodian.
5.2 Liability of Subcustodians.
(a) Subject to the limitations of liability of Bank set forth in
paragraph (b) of Section 7.1 of the DCA, but exclusive of the
limitations of liability in respect of Agents as set forth in Section
5.2 of the DCA, Bank will be liable for direct losses incurred by
Customer that result from:
(i) the failure by the Subcustodian to use reasonable care in the
provision of custodial services by it in accordance with the standards
Page 23
prevailing in the relevant market or from the fraud or willful default
of such Subcustodian in the provision of custodial services by it; or
(ii) the insolvency of any Affiliated Subcustodian.
(b) Subject to paragraph (a)(i) of Section 5.2 of this Rider, Bank's
duty to use reasonable care in the monitoring of a Subcustodian's
financial condition as reflected in its published financial statements
and other publicly available financial information concerning it, Bank
will not be responsible for the insolvency of any Subcustodian which is
not a branch or an Affiliated Subcustodian.
(c) Bank reserves the right to add, replace or remove Subcustodians.
Bank will give prompt notice of any such action, which will be advance
notice if practicable. Upon request by Customer, Bank will identify the
name, address and principal place of business of any Subcustodian and
the name and address of the governmental agency or other regulatory
authority that supervises or regulates such Subcustodian.
WHEN BANK IS LIABLE TO CUSTOMER
Bank shall be entitled to all the protective provisions of Article
7 of the DCA in the performance of its duties and obligations under this
Rider. Subcustodians shall be entitled to indemnification under
paragraph (c) of Section 7.1 as Bank Indemnitees. Nevertheless Customer
shall not be obligated to indemnify any Subcustodian under Section
7.1(c) as Bank's agent with respect to any Liability for which Bank is
liable under Section 5.2 of this Rider. For purposes of clarity, it is
agreed that as used in paragraph (a) of Section 5.2 of this Rider, the
term Subcustodian shall not include any Eligible Foreign Custodian as to
which Bank has not acted as Foreign Custody Manager.
7. ADDITIONAL TAX OBLIGATIONS
In addition to Customer's obligations under Section 8.1 of the DCA,
if Bank does not receive appropriate declarations, documentation and
information then additional United Kingdom taxation will be deducted
from all income received in respect of Global Securities issued outside
the United Kingdom and United States non-resident alien tax will be
deducted from United States source income. Customer will provide to
Bank such certifications, documentation, and information as it may
require in connection with taxation, and warrants that, when given, this
information is true and correct in every respect, not misleading in any
way, and contains all material information. Customer undertakes to
notify Bank immediately if any information requires updating or
correcting.
8. MISCELLANEOUS
8.1 Information Concerning Deposits at Bank's London Branch.
Page 24
Bank's London Branch is a member of the United Kingdom Deposit
Protection Scheme (the "Scheme") established under Banking Xxx 0000 (as
amended). The Scheme provides that in the event of Bank's insolvency
payments may be made to certain customers of Bank's London Branch.
Payments under the Scheme are limited to 90% of a depositor's total cash
deposits subject to a maximum payment to any one depositor of
18,000 Pounds (or ECU 20,000 if greater). Most deposits denominated
in sterling and other European Economic Area Currencies and ECU made
with Bank within the United Kingdom are covered. Further details of the
Scheme are available on request.
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8.2 Severability and Waiver.
(a) If one or more provisions of this Rider are held invalid, illegal
or unenforceable in any respect on the basis of any particular
circumstances or in any jurisdiction, the validity, legality and
enforceability of such provision or provisions under other circumstances
or in other jurisdictions and of the remaining provisions will not in
any way be affected or impaired.
(b) Except as otherwise provided herein, no failure or delay on the
part of either party in exercising any power or right hereunder operates
as a waiver, nor does any single or partial exercise of any power or
right preclude any other or further exercise, or the exercise of any
other power or right. No waiver by a party of any provision of this
Rider, or waiver of any breach or default, is effective unless in
writing and signed by the party against whom the waiver is to be enforced.
8.3 Sections Incorporated by Reference.
For the avoidance of doubt, the entire Article 10 of the DCA is
incorporated by reference into this Rider. All references to
"Agreement" therein shall be read to include "Rider".
Termination.
This Rider may be terminated by either party on 60 days written notice
to the other party. This Rider shall automatically terminate with the
termination of the DCA. Article 9 of the DCA, to the extent applicable,
shall apply to any such termination of this Rider.
____________________________________(Customer)
By: /s/ Xxxxx X. Xxxxx
________________________________
Title: President
_____________________________
Date: 10/1/99
______________________________
THE CHASE MANHATTAN BANK (Bank)
By: /s/ Xxxxxxx Xxxxxxx
_________________________________
Title: Vice President
______________________________
Date: 10/1/99
_______________________________
Page 26
Appendix 1-A
ELIGIBLE SECURITIES DEPOSITORIES
Page 27
Appendix 1-B
Information Regarding Country Risk
1. To aid Customer in its determinations regarding Country Risk,
Bank shall furnish annually and upon the initial placing of Financial
Assets and cash into a country the following information (check items
applicable):
A Opinions of local counsel concerning:
___ i. Whether applicable foreign law would restrict the access
afforded Customer's independent public accountants to books and records
kept by an eligible foreign custodian located in that country.
___ ii. Whether applicable foreign law would restrict the Customer's
ability to recover its Financial Assets and cash in the event of the
bankruptcy of an Eligible Foreign Custodian located in that country.
___ iii. Whether applicable foreign law would restrict the Customer's
ability to recover Financial Assets that are lost while under the
control of an Eligible Foreign Custodian located in the country.
B. Written information concerning:
___ i. The foreseeability of expropriation, nationalization, freezes,
or confiscation of Customer's Financial Assets.
___ ii. Whether difficulties in converting Customer's cash and cash
equivalents to U.S. dollars are reasonably foreseeable.]
C. A market report with respect to the following topics:
(i) securities regulatory environment, (ii) foreign ownership
restrictions, (iii) foreign exchange, (iv) securities settlement and
registration, (v) taxation, and (vi) depositories (including depository
evaluation), if any.
2. To aid Customer in monitoring Country Risk, Bank shall furnish
board the following additional information:
Market flashes, including with respect to changes in the
information in market reports
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