1
CUSTODIAN AGREEMENT
Dated as of
May 21, 1995
Between
XXXXXXX NEW EUROPE FUND, INC.
and
XXXXX BROTHERS XXXXXXXX & CO.
2
TABLE OF CONTENTS
ARTICLE I
APPOINTMENT OF CUSTODIAN
ARTICLE II
POWERS AND DUTIES OF CUSTODIAN
2.1. Safekeeping 1
2.2. Manner of Holding Securities 2
2.3. Registered Name; Nominee 2
2.4. Purchases by the Fund 2
2.5. Exchanges of Securities 3
2.6. Sales of Securities 4
2.7. Depositary Receipts 4
2.8. Exercise of Rights; Tender Offers 5
2.9. Stock Dividends, Rights, Etc 5
2.10. Options 5
2.11. Futures and Forward Contracts 6
2.12. Borrowings 6
2.13. Bank Accounts 7
2.14. Interest-Bearing Deposits 7
2.15. Foreign Exchange Transactions 8
2.16. Securities Loans 9
2.17. Collections 9
2.18. Dividends, Distributions and
Redemptions 9
2.19. Proxies; Communications Relating to
Portfolio Securities 10
2.20. Bills 10
2.21. Nondiscretionary Details 11
2.22. Deposit of Fund Assets in Securities
Systems 11
2.23. Other Transfers 12
2.24. Establishment of Segregated Accounts 12
2.25. Custodian Advances 13
2
3
TABLE OF CONTENTS
ARTICLE III
PROPER INSTRUCTIONS, SPECIAL INSTRUCTIONS
AND RELATED MATTERS
3.1. Proper Instructions and Special
Instructions 13
3.2. Authorized Persons 14
3.3 Persons Having Access to Assets of the Fund 15
3.4. Actions of Custodian Based on Proper
Instructions and Special Instructions 15
ARTICLE IV
SUBCUSTODIANS
4.1. Domestic Subcustodians 15
4.2. Foreign Subcustodians and Interim
Subcustodians 16
4.3. Termination of a Subcustodian 17
4.4. Agents 18
ARTICLE V
STANDARD OF CARE; INDEMNIFICATION
5.1. Standard of Care 18
5.2. Liability of Custodian for Actions of
Other Persons 19
5.3. Indemnification 20
5.4. Investment Limitations 21
5.5. Fund's Right to Proceed 22
ARTICLE VI
RECORDS
6.1. Preparation of Reports 22
6.2. Custodian's Books and Records 22
6.3. Opinion of Fund's Independent Certified
Public Accountants 23
6.4. Reports of Custodian's Independent
Certified Public Accountants 23
6.5. Calculation of Net Asset Value 24
6.6. Information Regarding Foreign
Subcustodians and Foreign Depositories 26
3
4
TABLE OF CONTENTS
ARTICLE VII
CUSTODIAN FEES
ARTICLE VIII
TERMINATION
ARTICLE IX
MISCELLANEOUS
9.1. Execution of Documents 28
9.2. Entire Agreement 28
9.3. Waivers and Amendments 28
9.4. Captions 29
9.5. Governing Law 29
9.6. Notices 29
9.7. Successors and Assigns 29
9.8. Counterparts 29
9.9. Representative Capacity; Nonrecourse
Obligations 29
Appendix A Procedures Relating to Custodian's Security Interest
Appendix B Subcustodians, Foreign Countries, and Foreign Depositories
Appendix C Sources of Price Quotations
4
5
Form of Custodian Agreement
CUSTODIAN AGREEMENT dated as of May 21, 1995, between Xxxxxxx New Europe
Fund, Inc. (the "Fund"), a Maryland corporation, and Xxxxx Brothers Xxxxxxxx &
Co. (the "Custodian"), a New York limited partnership.
In consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
APPOINTMENT OF CUSTODIAN
The Fund hereby employs and appoints the Custodian as a custodian
for the term of and subject to the provisions of this Agreement. The Fund agrees
to deliver to the Custodian all securities, cash and other assets owned by it,
and all payments of income, payments of principal or capital distributions
received by it with respect to all securities owned by the Fund from time to
time, and the cash consideration received by it for such new or treasury shares
of capital stock of the Fund as may be issued or sold from time to time.
The Custodian shall not be under any duty or obligation to require
the Fund to deliver to it any securities, cash or other assets owned by the Fund
and shall have no responsibility or liability for or on account of securities,
cash or other assets not so delivered. The Fund will deposit with the Custodian
copies of the Articles of Incorporation and By-Laws (or comparable documents) of
the Fund and all amendments thereto, and copies of such votes and other
proceedings of the Fund as may be necessary for or convenient to the Custodian
in the performance of its duties.
ARTICLE II
POWERS AND DUTIES OF CUSTODIAN
The Custodian shall have and perform, or cause to be performed in
accordance with this Agreement, the powers and duties set forth in this Article
II. Pursuant to and in accordance with Article IV, the Custodian may appoint one
or more Subcustodians (as that term is defined in Article IV) to exercise the
powers and perform the duties of the Custodian set forth in this Article II and,
except as the context shall otherwise require, references to the Custodian in
this Article II shall include any Subcustodian so appointed.
2.1. Safekeeping. The Custodian shall keep safely the cash,
securities and other assets of the Fund that have been delivered to the
Custodian and from time to time shall accept delivery of cash,
5
6
securities and other assets for safekeeping.
2.2. Manner of Holding Securities. (a) The Custodian shall hold
securities of the Fund (i) by physical possession of the share certificates or
other instruments representing such securities in registered or bearer form, or
the broker's receipts or confirmations for forward contracts, futures contracts,
options and similar contracts and securities, or (ii) in book-entry form by a
Securities System (as that term is defined in section 2.22) or (iii) by a
Foreign Depository (as that term is defined in section 4.2(a)).
(b) The Custodian shall identify securities and other assets held by
it hereunder as being held for the account of the Fund and shall require each
Subcustodian to identify securities and other assets held by such Subcustodian
as being held for the account of the Custodian for the Fund (or, if authorized
by Special Instructions, for customers of the Custodian) or for the account of
another Subcustodian for the Fund (or, if authorized by Special Instructions,
for customers of such Subcustodian); provided that if assets are held for the
account of the Custodian or a Subcustodian for customers of the Custodian or
such Subcustodian, the records of the Custodian shall at all times indicate the
Fund and other customers of the Custodian for which such assets are held in such
account and their respective interests therein.
2.3. Registered Name; Nominee. (a) The Custodian shall hold
registered securities and other assets of the Fund (i) in the name of the
Custodian (including any Subcustodian), the Fund, a Securities System, a Foreign
Depository or any nominee of any such person or (ii) in street certificate form,
so-called, and in any case with or without any indication of fiduciary capacity,
provided that such securities and other assets of the Fund are held in an
account of the Custodian containing only assets of the Fund or only assets held
as fiduciary or custodian for customers.
(b) Except with respect to securities or other assets which under
local custom and practice generally accepted by Institutional Clients are held
in the investor's name, the Custodian shall not hold registered securities or
other assets in the name of the Fund, and shall require each Subcustodian not to
hold registered securities or other assets in the name of the Fund, unless the
Custodian or such Subcustodian promptly notifies the Fund that such registered
securities are being held in the Fund's name and causes the Securities System,
Foreign Depository, issuer or other relevant person to direct all correspondence
and payments to the address of the Custodian or such Subcustodian, as the case
may be.
2.4. Purchases by the Fund. Upon receipt of Proper Instructions (as
that term is defined in section 3.1(a)) and insofar as funds are available for
the purpose (or as funds are otherwise provided by the Custodian at its
discretion pursuant to section 2.25),
6
7
the Custodian shall pay for and receive securities or other assets purchased for
the account of the Fund, payment being made only upon receipt of the securities
or other assets (a) by the Custodian, or (b) by credit to an account which the
Custodian may have with a Securities System, clearing corporation of a national
securities exchange, Foreign Depository or other financial institution approved
by the Fund. Notwithstanding the foregoing, upon receipt of Proper Instructions:
(i) in the case of repurchase agreements entered into by the Fund in a
transaction involving a Securities System or a Foreign Depository, the Custodian
may release funds to the Securities System or Foreign Depository prior to the
receipt of advice from the Securities System or Foreign Depository that the
securities underlying such repurchase agreement have been transferred by book
entry into the Account (as defined in section 2.22) of the Custodian maintained
with such Securities System or similar account with a Foreign Depository,
provided that the instructions of the Custodian to the Securities System or
Foreign Depository require that the Securities System or Foreign Depository, as
the case may be, may make payment of such funds to the other party to the
repurchase agreement only upon transfer by book-entry of the securities
underlying the repurchase agreement into the Account, (ii) in the case of
futures and forward contracts, options and similar securities, foreign currency
purchased from third parties, time deposits, foreign currency call account
deposits, and other bank deposits, and transactions pursuant to sections 2.10,
2.11, 2.13, 2.14 and 2.15, the Custodian may make payment therefor prior to
delivery of the contract, currency, option or security without receiving an
instrument evidencing said contract, currency, option, security or deposit, and
(iii) in the case of the purchase of securities or other assets the settlement
of which occurs outside the United States of America, the Custodian may make
payment therefor and receive delivery thereof in accordance with local custom
and practice generally accepted by Institutional Clients (as defined below) in
the country in which settlement occurs, provided that in every case the
Custodian shall be subject to the standard of care set forth in Article V and to
any Special Instructions given in accordance with section 3.1(b). Except in the
cases provided for in the immediately preceding sentence, in any case where
payment for purchase of securities or other assets for the account of the Fund
is made by the Custodian in advance of receipt of the securities or other assets
so purchased in the absence of Proper Instructions to so pay in advance, the
Custodian shall be absolutely liable to the Fund for such securities or other
assets to the same extent as if the securities or other assets had been received
by the Custodian. For purposes of this Agreement, "Institutional Clients" means
U.S. registered investment companies, or major, U.S.-based commercial banks,
insurance companies, pension funds or substantially similar financial
institutions which, as a substantial part of their business operations, purchase
or sell securities and make use of custodial services.
2.5. Exchanges of Securities. Upon receipt of Proper Instructions,
the Custodian shall exchange securities held by it for the account of the Fund
for other securities in connection with any
7
8
reorganization, recapitalization, split-up of shares, change of par value,
conversion or other event, and to deposit any such securities in accordance with
the terms of any reorganization or protective plan. Without Proper Instructions,
the Custodian may surrender securities in temporary form for definitive
securities, may surrender securities for transfer into a name or nominee name as
permitted in section 2.3, and may surrender securities for a different number of
certificates or instruments representing the same number of shares or same
principal amount of indebtedness, provided that the securities to be issued are
to be delivered to the Custodian.
2.6. Sales of Securities. Upon receipt of Proper Instructions, the
Custodian shall make delivery of securities or other assets which have been sold
for the account of the Fund, but only against payment therefor (a) in cash, by a
certified check, bank cashier's check, bank credit, or bank wire transfer, or
(b) by credit to the account of the Custodian with a Securities System, clearing
corporation of a national securities exchange, Foreign Depository or other
financial institution approved by the Fund by Proper Instructions. However, (i)
in the case of delivery of physical certificates or instruments representing
securities, the Custodian may make delivery to the broker acting as agent for
the buyer of the securities, against receipt therefor, for examination in
accordance with "street delivery" custom, provided that the Custodian shall have
taken reasonable steps to ensure prompt collection of the payment for, or the
return of, such securities by the broker or its clearing agent and (ii) in the
case of the sale of securities or other assets the settlement of which occurs
outside the United States of America, such securities shall be delivered and
paid for in accordance with local custom and practice generally accepted by
Institutional Clients in the country in which settlement occurs, provided that
in every case the Custodian shall be subject to the standard of care set forth
in Article V and to any Special Instructions given in accordance with section
3.1(b). Except in the cases provided for in the immediately preceding sentence,
in any case where delivery of securities or other assets for the account of the
Fund is made by the Custodian in advance of receipt of payment for the
securities or other assets so sold in the absence of Proper Instructions to so
deliver in advance, the Custodian shall be absolutely liable to the Fund for
such payment to the same extent as if such payment had been received by the
Custodian.
2.7. Depositary Receipts. Upon receipt of Proper Instructions, the
Custodian shall surrender securities to the depositary used by an issuer of
American Depositary Receipts, European Depositary Receipts, Global Depositary
Receipts, International Depositary Receipts and other types of Depositary
Receipts (hereinafter collectively referred to as "ADRs") for such securities
against a written receipt therefor adequately describing such securities and
written evidence satisfactory to the Custodian that the depositary has
acknowledged receipt of instructions to issue ADRs with respect to such
securities in the name of the Custodian, or a nominee of the Custodian, for
delivery to the Custodian in Boston,
8
9
Massachusetts, or at such other place as the Custodian may from time to time
designate.
Upon receipt of Proper Instructions, the Custodian shall surrender
ADRs to the issuer thereof against a written receipt therefor adequately
describing the ADRs surrendered and written evidence satisfactory to the
Custodian that the issuer of the ADRs has acknowledged receipt of instructions
to cause its depositary to deliver the securities underlying such ADRs to the
Custodian.
2.8. Exercise of Rights; Tender Offers. Upon receipt of Proper
Instructions, the Custodian shall (a) deliver to the issuer or trustee thereof,
or to the agent of either, warrants, puts, calls, futures contracts, options,
rights or similar securities for the purpose of being exercised or sold,
provided that the new securities and cash, if any, acquired by such action are
to be delivered to the Custodian, and (b) deposit securities upon invitations
for tenders of securities, provided that the consideration is to be paid or
delivered or the tendered securities are to be returned to the Custodian.
Notwithstanding any provision of this Agreement to the contrary, the Custodian
shall take all necessary action, unless otherwise directed to the contrary by
Proper Instructions, to comply with the terms of all mandatory or compulsory
exchanges, calls, tenders, redemptions or similar rights of security ownership
of which the Custodian receives notice or otherwise becomes aware, and shall
promptly notify the Fund of any such action in writing by facsimile transmission
or in such other manner as the Fund and the Custodian may agree in writing.
2.9. Stock Dividends, Rights, Etc. The Custodian shall receive and
collect all stock dividends, rights and other items of like nature and shall
deal with the same as it would other deposited assets or as directed in Proper
Instructions.
2.10. Options and Swaps. Upon receipt of Proper Instructions or
instructions from a third party properly given under any Procedural Agreement,
the Custodian shall (a) receive and retain confirmations or other documents (to
the extent confirmations or other documents are provided to the Custodian)
evidencing the purchase, sale or writing of an option or swap of any type on or
in respect of a security, securities index, currency or similar form of property
by the Fund; (b) deposit and maintain in a segregated account, either physically
or by book-entry in a Securities System or Foreign Depository or with a broker,
dealer or other party designated by the Fund, securities, cash or other assets
in connection with options transactions or swap agreements entered into by the
Fund; (c) transfer securities, cash or other assets to a Securities System,
Foreign Depository, broker, dealer or other party or organization, as margin
(including variation margin) or other security for the Fund's obligations in
respect of an option or swap; and (d) pay, release and/or transfer such
securities, cash or other assets only in accordance with a notice or other
communication evidencing the expiration, termination, exercise of any such
option or default under
9
10
any such option or swap furnished by The Options Clearing Corporation, the
securities or options exchange on which such option is traded, or such other
organization, party, broker or dealer as may be responsible for handling such
options or swap transactions or have authority to give such notice or
communication under a Procedural Agreement. Subject to the standard of care set
forth in Article V (and to its safekeeping duties set forth in section 2.1), the
Custodian shall not be responsible for the sufficiency of assets held in any
segregated account established and maintained in accordance with Proper
Instructions or instructions from a third party properly given under any
Procedural Agreement or for the performance by the Fund or any third party of
its obligations under any Procedural Agreement. For purposes of this Agreement,
a "Procedural Agreement" is a procedural agreement relating to options, swaps
(including caps, floors and similar arrangements), futures contracts, forward
contracts or borrowings by the Fund to which the Fund, the Custodian and a third
party are parties.
2.11. Futures and Forward Contracts. Upon receipt of Proper
Instructions or instructions from a third party properly given under any
Procedural Agreement, the Custodian shall (a) receive and retain confirmations
or other documents (to the extent confirmations or other documents are provided
to the Custodian) evidencing the purchase or sale of a futures contract or an
option on a futures contract by the Fund or the entry into a forward contract by
the Fund; (b) deposit and maintain in a segregated account, either physically or
by book entry in a Securities System or Foreign Depository, for the benefit of
any futures commission merchant, or pay to such futures commission merchant,
securities, cash or other assets designated by the Fund as initial, maintenance
or variation "margin" deposits intended to secure the Fund's performance of its
obligations under any futures contracts purchased or sold or any options on
futures contracts written, purchased or sold by the Fund or any forward
contracts entered into, in accordance with the provisions of any Procedural
Agreement designed to comply with the rules of the Commodity Futures Trading
Commission and/or any contract market, or any similar organization or
organizations on which such contracts or options are traded; and (c) pay,
release and/or transfer securities, cash or other assets into or out of such
margin accounts only in accordance with any such agreements or rules. Subject to
the standard of care set forth in Article V, the Custodian shall not be
responsible for the sufficiency of assets held in any such margin account
established and maintained in accordance with Proper Instructions or
instructions from a third party properly given under any Procedural Agreement or
for the performance by the Fund or any third party of its obligations under any
Procedural Agreement.
2.12. Borrowings. Upon receipt of Proper Instructions or
instructions from a third party properly given under any Procedural Agreement,
the Custodian shall deliver securities of the Fund to lenders or their agents,
or otherwise establish a segregated account as agreed to by the Fund and the
Custodian, as collateral for
10
11
borrowings effected by the Fund, but only against receipt of the amounts
borrowed (or to adjust the amount of such collateral in accordance with the
Procedural Agreement), provided that if such collateral is held in book-entry
form by a Securities System or Foreign Depository, such collateral may be
transferred by book-entry to such lender or its agent against receipt by the
Custodian of an undertaking by such lender to pay such borrowed money to or upon
the order of the Fund on the next business day following such transfer of
collateral.
2.13. Bank Accounts. The Custodian shall open and operate one or
more accounts in the name of the Fund on the Custodian's books subject only to
draft or order by the Custodian. All funds received by the Custodian from or for
the account of the Fund shall be deposited in said account(s). The
responsibilities of the Custodian to the Fund for deposits accepted on the
Custodian's books shall be that of a U.S. bank for a similar deposit.
Upon receipt of Proper Instructions, the Custodian may open and
operate additional accounts in such other banks or trust companies, including
any Subcustodian, as may be designated by the Fund in such instructions (any
such bank or trust company other than the Custodian so designated by the Fund
being referred to hereafter as a "Banking Institution"), provided that any such
account shall be in the name of the Custodian for the account of the Fund (or,
if authorized by Special Instructions, for the account of the Custodian's
customers generally) and subject only to the Custodian's draft or order;
provided that if assets are held in such an account for the account of the
Custodian's customers generally, the records of the Custodian shall at all times
indicate the Fund and other customers for which such assets are held in such
account and their respective interests therein. Such accounts may be opened with
Banking Institutions in the United States and in other countries and may be
denominated in U.S. Dollars or such other currencies as the Fund may determine.
So long as the Custodian exercises reasonable care and diligence in executing
Proper Instructions, the Custodian shall have no responsibility for the failure
of any Banking Institution to make payment from such an account upon demand.
2.14. Interest-Bearing Deposits. The Custodian shall place
interest-bearing fixed term and call deposits with such banks and in such
amounts as the Fund may authorize pursuant to Proper Instructions. Such deposits
may be placed with the Custodian or with Subcustodians or other Banking
Institutions as the Fund may determine. Deposits may be denominated in U.S.
Dollars or other currencies, as the Fund may determine, and need not be
evidenced by the issuance or delivery of a certificate to the Custodian,
provided that the Custodian shall include in its records with respect to the
assets of the Fund, appropriate notation as to the amount and currency of each
such deposit, the accepting Banking Institution and all other appropriate
details, and shall retain such forms of advice or receipt evidencing such
deposits as may be forwarded to the Custodian by the
11
12
Banking Institution in question. The responsibility of the Custodian for such
deposits accepted on the Custodian's books shall be that of a U.S. bank for a
similar deposit. With respect to interest-bearing deposits other than those
accepted on the Custodian's books, (a) the Custodian shall be responsible for
the collection of income as set forth in section 2.17, and (b) so long as the
Custodian exercises reasonable care and diligence in executing Proper
Instructions, the Custodian shall have no responsibility for the failure of any
Banking Institution to make payment in accordance with the terms of such an
account. Upon receipt of Proper Instructions, the Custodian shall take such
reasonable steps as the Fund deems necessary or appropriate to cause such
deposits to be insured to the maximum extent possible by the Federal Deposit
Insurance Corporation and any other applicable deposit insurers.
2.15. Foreign Exchange Transactions. (a) Upon receipt of Proper
Instructions, the Custodian shall settle foreign exchange contracts or options
to purchase and sell foreign currencies for spot and future delivery on behalf
and for the account of the Fund with such currency brokers or Banking
Institutions as the Fund may direct pursuant to Proper Instructions. The
Custodian shall be responsible for the transmission of cash and instructions to
and from the currency broker or Banking Institution with which the contract or
option is made, the safekeeping of all certificates and other documents and
agreements received by the Custodian evidencing or relating to such foreign
exchange transactions and the maintenance of proper records as set forth in
section 6.2. In connection with such transactions, upon receipt of Proper
Instructions, the Custodian shall be authorized to make free outgoing payments
of cash in the form of U.S. Dollars or foreign currency without receiving
confirmation of a foreign exchange contract or option or confirmation that the
countervalue currency completing the foreign exchange contract has been
delivered or that the option has been delivered or received. The Custodian shall
have no authority to select third party foreign exchange dealers and, so long as
the Custodian exercises reasonable care and diligence in executing Proper
Instructions, shall have no responsibility for the failure of any such dealer to
settle any such contract or option in accordance with its terms. The Fund shall
reimburse the Custodian for any interest charges or reasonable out-of-pocket
expenses incurred by the Custodian resulting from the failure or delay of third
party foreign exchange dealers to deliver foreign exchange, other than interest
charges and expenses occasioned by or resulting from the negligence, misfeasance
or misconduct of the Custodian.
(b) The Custodian shall not be obligated to enter into foreign
exchange transactions as principal. However, if the Custodian has made available
to the Fund its services as principal in foreign exchange transactions, upon
receipt of Proper Instructions, the Custodian shall enter into foreign exchange
contracts or options to purchase and sell foreign currencies for spot and future
delivery on behalf of and for the account of the Fund with the Custodian as
principal. The responsibility of the Custodian with respect to
12
13
foreign exchange contracts and options executed with the Custodian as principal
shall be that of a U.S. bank with respect to a similar contract or option.
2.16. Securities Loans. Upon receipt of Proper Instructions, the
Custodian shall deliver securities of the Fund, in connection with loans of
securities by the Fund, to the borrower thereof in accordance with the terms of
a written securities lending agreement to which the Fund is a party or which is
otherwise approved by the Fund.
2.17. Collections. The Custodian shall promptly collect, receive and
deposit in the account or accounts referred to in section 2.13 all income,
payments of principal and other payments with respect to the securities and
other assets held hereunder, promptly endorse and deliver any instruments
required to effect such collections and in connection therewith deliver the
certificates or other instruments representing securities to the issuer thereof
or its agent when securities are called, redeemed, retired or otherwise become
payable; provided that the payment is to be made in such form and manner and at
such time, which may be after delivery by the Custodian of the instrument
representing the security, as is in accordance with the terms of the instrument
representing the security, such Proper Instructions as the Custodian may
receive, governmental regulations, the rules of the Securities System or Foreign
Depository in which such security is held or, with respect to securities
referred to in clause (iii) of the second sentence of section 2.4, in accordance
with local custom and practice generally accepted by Institutional Clients in
the market where payment or delivery occurs, but in all events subject to the
standard of care set forth in Article V. The Custodian shall promptly execute
ownership and other certificates and affidavits for all federal, state and
foreign tax purposes in connection with receipt of income or other payments with
respect to securities or other assets of the Fund or in connection with transfer
of securities or other assets. Pursuant to Proper Instructions, the Custodian
shall take such other actions, which may involve an investment decision, as the
Fund may request with respect to the collection or receipt of funds or the
transfer of securities. Except in the cases provided for in the first sentence
of this section, in any case where delivery of securities for the account of the
Fund is made by the Custodian in advance of receipt of payment with respect to
such securities in the absence of Proper Instructions to so deliver in advance,
the Custodian shall be absolutely liable to the Fund for such payment to the
same extent as if such payment had been received by the Custodian. The Custodian
shall promptly notify the Fund in writing by facsimile transmission or in such
other manner as the Fund and the Custodian may agree in writing if any amount
payable with respect to securities or other assets of the Fund is not received
by the Custodian when due.
2.18. Dividends, Distributions and Redemptions. Upon receipt of
Proper Instructions, or upon receipt of instructions from
13
14
the Fund's shareholder servicing agent or agent with comparable duties (the
"Shareholder Servicing Agent") (given by such person or persons and in such
manner on behalf of the Shareholder Servicing Agent as the Fund shall have
authorized by Proper Instructions), the Custodian shall release funds or
securities, insofar as available, to the Shareholder Servicing Agent or as such
Shareholder Servicing Agent shall otherwise instruct (a) for the payment of
dividends or other distributions to Fund shareholders or (b) for payment to the
Fund shareholders who have delivered to such Shareholder Servicing Agent a
request for repurchase or redemption of their shares of capital stock of the
Fund.
2.19. Proxies; Communications Relating to Portfolio Securities. The
Custodian shall, as promptly as is appropriate under the circumstances, deliver
or mail to the Fund all forms of proxies and all notices of meetings and any
other notices, announcements or information (including, without limitation,
information relating to pendency of calls and maturities of securities and
expirations of rights in connection therewith, notices of exercise of call and
put options written by the Fund, and notices of the maturity of futures
contracts (and options thereon) purchased or sold by the Fund) affecting or
relating to securities owned by the Fund that are received by the Custodian.
Upon receipt of Proper Instructions, the Custodian shall execute and deliver or
cause its nominee to execute and deliver such proxies or other authorizations as
may be required. Neither the Custodian nor its nominees shall vote upon any of
such securities or execute any proxy to vote thereon or give any consent or take
any other action with respect to securities or other assets of the Fund (except
as otherwise herein provided) unless ordered to do so by Proper Instructions.
The Custodian shall notify the Fund on or before ex-date (or if
later within 24 hours after receipt by the Custodian of the notice of such
corporate action) of all corporate actions affecting portfolio securities of the
Fund received by the Custodian from the issuers of the securities involved, from
third parties proposing a corporate action, from subcustodians, or from commonly
utilized sources (including proprietary sources) providing corporate action
information, a list of which will be provided by the Custodian to the Fund from
time to time upon request. Information as to corporate actions shall include
information as to dividends, distributions, stock splits, stock dividends,
rights offerings, conversions, exchanges, tender offers, recapitalizations,
mergers, redemptions, calls, maturity dates and similar transactions, including
ex-, record and pay dates and the amounts or other terms thereof. If the Fund
desires to take action with respect to any corporate action, the Fund shall
notify the Custodian within such period as will give the Custodian (including
any Subcustodian) a sufficient amount of time to take such action.
2.20. Bills. Upon receipt of Proper Instructions, the Custodian
shall pay or cause to be paid, insofar as funds are
14
15
available for the purpose, bills, statements, or other obligations of the Fund
(including but not limited to interest charges, taxes, advisory fees,
compensation to Fund officers and employees, and other operating expenses of the
Fund).
2.21. Nondiscretionary Details. Without the necessity of express
authorization from the Fund, the Custodian shall (a) attend to all
nondiscretionary details in connection with the sale, exchange, substitution,
purchase, transfer or other dealings with securities, cash or other assets of
the Fund held by the Custodian except as otherwise directed from time to time by
the Board of Directors of the Fund, and (b) make payments to itself or others
for minor expenses of handling securities or other assets and for other similar
items relating to the Custodian's duties under this Agreement, provided that all
such payments shall be accounted for to the Fund.
2.22. Deposit of Fund Assets in Securities Systems. The Custodian
may deposit and/or maintain securities owned by the Fund in (a) The Depository
Trust Company, (b) the Participants Trust Company, (c) any book-entry system as
provided in Subpart O of Treasury Circular Xx. 000, 00 XXX 000, Xxxxxxx X of 31
CFR Part 350, or the book-entry regulations of federal agencies substantially in
the form of Subpart O, or (d) any other domestic clearing agency registered with
the Securities and Exchange Commission (the "SEC") under Section 17A of the
Securities Exchange Act of 1934, as amended, which acts as a securities
depository and whose use the Fund has previously approved by Special
Instructions (as that term is defined in section 3.1(b)) (each of the foregoing
being referred to in this Agreement as a "Securities System"). Utilization of a
Securities System shall be in accordance with applicable Federal Reserve Board
and SEC rules and regulations, if any, and subject to the following provisions:
(i) The Custodian may deposit and/or maintain securities held
hereunder in a Securities System, provided that such securities are
represented in an account ("Account") of the Custodian in the Securities
System which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian, or otherwise for customers;
(ii) The records of the Custodian with respect to securities of the
Fund which are maintained in a securities System shall identify by book
entry those securities belonging to the Fund;
(iii) The Custodian shall pay for securities purchased for the
account of the Fund only upon (A) receipt of advice from the Securities
System that such securities have been transferred to the Account, and (B)
the making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The Custodian shall
transfer securities sold for the account of the Fund only upon (1) receipt
of advice from the
15
16
Securities System that payment for such securities has been transferred to
the Account, and (2) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of the
Fund. Copies of all advices from the Securities System of transfers of
securities for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be provided to the Fund at
its request. The Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund in the form of a written
advice or notice and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transactions in the Securities System for the
account of the Fund on the next business day;
(iv) The Custodian shall provide the Fund with any report obtained
by the Custodian on the Securities System's accounting system, internal
accounting control and procedures for safeguarding securities deposited in
the Securities System; and the Custodian shall send to the Fund such
reports on its own systems of internal accounting control as the Fund may
reasonably request from time to time; and
(v) Upon receipt of Special Instructions, the Custodian shall
terminate the use of any such Securities System on behalf of the Fund as
promptly as practicable and shall take all actions reasonably practicable
to safeguard the securities of the Fund that had been maintained with such
Securities System.
2.23. Other Transfers. The Custodian shall deliver securities, cash,
and other assets of the Fund to a Subcustodian as necessary to effect
transactions authorized by Proper Instructions. Upon receipt of Proper
Instructions in writing in advance, the Custodian shall make such other
disposition of securities, cash or other assets of the Fund in a manner other
than or for purposes other than as enumerated in this Agreement, provided that
such written Proper Instructions relating to such disposition shall include a
statement of the purpose for which the delivery is to be made, the amount of
funds and/or securities to be delivered and the name of the person or persons to
whom delivery is to be made.
2.24. Establishment of Segregated Accounts. Upon receipt of Proper
Instructions, the Custodian shall establish and maintain on its books a
segregated account or accounts for and on behalf of the Fund, into which account
or accounts may be transferred cash and/or securities or other assets of the
Fund, including securities maintained by the Custodian in a Securities System,
said account to be maintained (a) for the purposes set forth in sections 2.10,
2.11, 2.12 and 2.15; (b) for the purposes of compliance by the Fund with the
procedures required by Release No. 10666 under the Investment Company Act of
1940, as amended (the "1940 Act"), or any subsequent release or releases of the
SEC relating to the maintenance of segregated accounts by registered investment
companies; or (c) for such other purposes as
16
17
set forth, from time to time, in Special Instructions.
2.25. Custodian Advances. (a) In the event that the Custodian is
directed by Proper Instructions to make any payment or transfer of funds on
behalf of the Fund for which there would be, at the close of business on the
date of such payment or transfer, insufficient funds held by the Custodian on
behalf of the Fund, the Custodian may, in its discretion without further Proper
Instructions, provide an advance ("Advance") to the Fund in an amount sufficient
to allow the completion of the transaction by reason of which such payment or
transfer of funds is to be made. In addition, in the event the Custodian is
directed by Proper Instructions to make any payment or transfer of funds on
behalf of the Fund as to which it is subsequently determined that the Fund has
overdrawn its cash account with the Custodian as of the close of business on the
date of such payment or transfer, said overdraft shall constitute an Advance.
Any Advance shall be payable on demand by the Custodian, unless otherwise agreed
by the Fund and the Custodian, and shall accrue interest from the date of the
Advance to the date of payment by the Fund at a rate agreed upon in writing from
time to time by the Custodian and the Fund. It is understood that any
transaction in respect of which the Custodian shall have made an Advance,
including but not limited to a foreign exchange contract or other transaction in
respect of which the Custodian is not acting as a principal, is for the account
of and at the risk of the Fund, and not, by reason of such Advance, deemed to be
a transaction undertaken by the Custodian for its own account and risk. The
Custodian and the Fund acknowledge that the purpose of Advances is to finance
temporarily the purchase or sale of securities for prompt delivery or to meet
redemptions or emergency expenses or cash needs that are not reasonably
foreseeable by the Fund. The Custodian shall promptly notify the Fund in writing
(an "Notice of Advance") of any Advance by facsimile transmission or in such
other manner as the Fund and the Custodian may agree in writing. At the request
of the Custodian, the Fund shall pledge, assign and grant to the Custodian a
security interest in certain specified securities of the Fund, as security for
Advances provided to the Fund, under the terms and conditions set forth in
Appendix A attached hereto.
ARTICLE III
PROPER INSTRUCTIONS, SPECIAL INSTRUCTIONS
AND RELATED MATTERS
3.1. Proper Instructions and Special Instructions.
(a) Proper Instructions. As used in this Agreement, the term "Proper
Instructions" shall mean: (i) a tested telex from the Fund or the Fund's
investment manager or adviser, or a written request, direction, instruction or
certification (which may be given by facsimile transmission) signed or initialed
on behalf of the Fund by, one or more Authorized Persons (as that term is
defined in section 3.2); (ii) a telephonic or other oral communication by one or
more Authorized Persons; or (iii) a communication (other than
17
18
facsimile transmission) effected directly between electro-mechanical or
electronic devices or systems (including, without limitation, computers) by the
Fund or the Fund's investment manager or adviser or by one or more Authorized
Persons on behalf of the Fund; provided that communications of the types
described in clauses (ii) and (iii) above purporting to be given by an
Authorized Person shall be considered Proper Instructions only if the Custodian
reasonably believes such communications to have been given by an Authorized
Person with respect to the transaction involved. Instructions given in the form
of Proper Instructions under clause (i) shall be deemed to be Proper
Instructions if they are reasonably believed by the Custodian to be genuine.
Proper Instructions in the form of oral communications shall be confirmed by the
Fund in the manner set forth in clauses (i) or (iii) above, but the lack of such
confirmation shall in no way affect any action taken by the Custodian in
reliance upon such oral instructions prior to the Custodian's receipt of such
confirmation. The Fund, the Custodian and any investment manager or adviser of
the Fund each is hereby authorized to record any telephonic or other oral
communications between the Custodian and any such person. Proper Instructions
may relate to specific transactions or to types or classes of transactions,
provided that Proper Instructions may take the form of standing instructions
only if they are in writing.
(b) Special Instructions. As used in this Agreement, the term
"Special Instructions" shall mean Proper Instructions countersigned or confirmed
in writing by the Treasurer or any Assistant Treasurer of the Fund or any other
person designated by the Treasurer of the Fund in writing, which
countersignature or confirmation shall be (i) included on the instrument
containing the Proper Instructions or on a separate instrument relating thereto,
and (ii) delivered by hand, facsimile transmission, mail or courier service or
in such other manner as the Fund and the Custodian agree in writing.
(c) Address for Proper Instructions and Special Instructions. Proper
Instructions and Special Instructions shall be delivered to the Custodian at the
address and/or telephone, telecopy or telex number agreed upon from time to time
by the Custodian and the Fund.
3.2. Authorized Persons. Concurrently with the execution of this
Agreement and from time to time thereafter, as appropriate, the Fund shall
deliver to the Custodian a certificate, duly certified by the Secretary or
Assistant Secretary of the Fund, setting forth: (a) the names, titles,
signatures and scope of authority of all persons authorized to give Proper
Instructions or any other notice, request, direction, instruction, certificate
or instrument on behalf of the Fund (each an "Authorized Person"); and (b) the
names, titles and signatures of those persons authorized to issue Special
Instructions. Such certificate may be accepted and relied upon by the Custodian
as conclusive evidence of the facts set forth therein and shall be considered to
be in full force and effect until delivery to
18
19
the Custodian of a similar certificate to the contrary. Upon delivery of a
certificate which deletes the name(s) of a person previously authorized to give
Proper Instructions or to issue Special Instructions, such persons shall no
longer be considered an Authorized Person or authorized to issue Special
Instructions.
3.3. Persons Having Access to Assets of the Fund. Notwithstanding
anything to the contrary in this Agreement, the Custodian shall not deliver any
assets of the Fund held by the Custodian to or for the account of any Authorized
Person, director, officer, employee or agent of the Fund, provided that nothing
in this section 3.3 shall prohibit (a) any Authorized Person from giving Proper
Instructions, or any person authorized to issue Special Instructions from
issuing Special Instructions, provided such action does not result in delivery
of or access to assets of the Fund prohibited by this section 3.3; or (b) the
Fund's independent certified public accountants from examining or reviewing the
assets of the Fund held by the Custodian. The Fund shall provide a list of such
persons to the Custodian, and the Custodian shall be entitled to rely upon such
list and any modifications thereto that are provided to the Custodian from time
to time by the Fund.
3.4. Actions of Custodian Based on Proper Instructions and Special
Instructions. So long as and to the extent that the Custodian acts in accordance
with Proper Instructions or Special Instructions, as the case may be, and the
terms of this Agreement, the Custodian shall not be responsible for the title,
validity or genuineness of any property, or evidence of title thereof, received
or delivered by it pursuant to this Agreement.
ARTICLE IV
SUBCUSTODIANS
The Custodian may, from time to time, in accordance with the
relevant provisions of this Article IV, appoint one or more Domestic
Subcustodians, Foreign Subcustodians and Interim Subcustodians (as such terms
are defined below) to act on behalf of the Fund. For purposes of this Agreement,
all duly appointed Domestic Subcustodians, Foreign Subcustodians and Interim
Subcustodians are referred to collectively as "Subcustodians."
4.1. Domestic Subcustodians. The Custodian may, at any time and from
time to time, at its own expense, appoint any bank as defined in section 2(a)(5)
of the 1940 Act meeting the requirements of a custodian under section 17(f) of
the 1940 Act and the rules and regulations thereunder, to act on behalf of the
Fund as a subcustodian for purposes of holding cash, securities and other assets
of the Fund and performing other functions of the Custodian within the United
States (a "Domestic Subcustodian"), provided that the Custodian shall notify the
Fund in writing of the identity and qualifications of any proposed Domestic
Subcustodian at least 30 days prior to appointment
19
20
of such Domestic Subcustodian, and the Fund may, in its sole discretion, by
written notice to the Custodian executed by an Authorized Person disapprove of
the appointment of such Domestic Subcustodian. If following notice by the
Custodian to the Fund regarding appointment of a Domestic Subcustodian and the
expiration of 30 days after the date of such notice, the Fund shall have failed
to notify the Custodian of its disapproval thereof, the Custodian may, in its
discretion, appoint such proposed Domestic Subcustodian as its subcustodian.
4.2. Foreign Subcustodians and Interim Subcustodians.
(a) Foreign Subcustodians. The Custodian may, at any time and from
time to time, at its own expense, appoint: (i) any bank, trust company or other
entity meeting the requirements of an "eligible foreign custodian" under section
17(f) of the 1940 Act and the rules and regulations thereunder or exempted
therefrom by order of the SEC, or (ii) any bank as defined in section 2(a)(5) of
the 1940 Act meeting the requirements of a custodian under section 17(f) of the
1940 Act and the rules and regulations thereunder to act on behalf of the Fund
as a subcustodian for purposes of holding cash, securities and other assets of
the Fund and performing other functions of the Custodian in countries other than
the United States of America (a "Foreign Subcustodian"); provided that prior to
the appointment of any Foreign Subcustodian, the Custodian shall have obtained
written confirmation of the approval of the Board of Directors of the Fund
(which approval may be withheld in the sole discretion of such Board of
Directors) with respect to (A) the identity and qualifications of any proposed
Foreign Subcustodian, (B) the country or countries in which, and the securities
depositories or clearing agencies (meeting the requirements of an "eligible
foreign custodian" under section 17(f) of the 1940 Act and the rules and
regulations thereunder or exempted therefrom by order of the SEC) through which,
any proposed Foreign Subcustodian is authorized to hold Securities, cash and
other assets of the Fund (each a "Foreign Depository") and (C) the form and
terms of the subcustodian agreement to be entered into between such proposed
Foreign Subcustodian and the Custodian. In addition, the Custodian may utilize
directly any Foreign Depository, provided the Board of Trustees shall have
approved in writing the use of such Foreign Depository by the Custodian. Each
such duly approved Foreign Subcustodian and the countries where and the Foreign
Depositories through which it may hold securities and other assets of the Fund
and the Foreign Depositories that the Custodian may utilize shall be listed in
Appendix B, as it may be amended from time to time in accordance with the
provisions of section 9.3. The Fund shall be responsible for informing the
Custodian sufficiently in advance of a proposed investment which is to be held
in a country in which no Foreign Subcustodian is authorized to act, in order
that there shall be sufficient time for the Custodian to effect the appropriate
arrangements with a proposed Foreign Subcustodian, including obtaining approval
as provided in this section 4.2(a). The Custodian shall not agree to any
material amendment to any subcustodian agreement entered into with a Foreign
Subcustodian, or agree to permit any material
20
21
changes thereunder, or waive any material rights under such agreement, except
upon prior approval pursuant to Special Instructions. The Custodian shall
promptly provide the Fund with notice of any such amendment, change, or waiver,
whether or not material, including a copy of any such amendment. For purposes of
this subsection, a material amendment, change or waiver means an amendment,
change or waiver that may reasonably be expected to have an adverse effect on
the Fund in any material way, including but not limited to the Fund's or the
Board's obligations under the 1940 Act, including Rule 17f-5 thereunder.
(b) Interim Subcustodians. In the event that the Fund shall invest
in a security or other asset to be held in a country in which no Foreign
Subcustodian is authorized to act (whether because the Custodian has not
appointed a Foreign Subcustodian in such country and entered into a subcustodian
agreement with it or because the Board of Directors of the Fund has not approved
the Foreign Subcustodian appointed by the Custodian in such country and the
related subcustodian agreement), the Custodian shall promptly notify the Fund in
writing by facsimile transmission or in such other manner as the Fund and
Custodian shall agree in writing that no Foreign Subcustodian is approved in
such country and the Custodian shall, upon receipt of Special Instructions,
appoint any person designated by the Fund in such Special Instructions to hold
such security or other asset. Any person appointed as a Subcustodian pursuant to
this section 4.2(b) is hereinafter referred to herein as an "Interim
Subcustodian." Each Interim Custodian and the securities or assets of the Fund
that it is authorized to hold shall be set forth in Appendix B.
In the absence of such Special Instructions, such security or other
asset shall be held by such agent as the Custodian may appoint unless and until
the Fund shall instruct the Custodian to move the security or other asset into
the possession of the Custodian or a Subcustodian.
4.3. Termination of a Subcustodian. The Custodian shall (a) cause
each Domestic Subcustodian and Foreign Subcustodian to, and (b) use its best
efforts to cause each Interim Subcustodian to, perform all of its obligations in
accordance with the terms and conditions of the subcustodian agreement between
the Custodian and such Subcustodian. In the event that the Custodian is unable
to cause such Subcustodian to fully perform its obligations thereunder, the
Custodian shall forthwith, upon the receipt of Special Instructions, exercise
its best efforts to recover any Losses (as hereinafter defined) incurred by the
Fund because of such failure to perform from such Subcustodian under the
applicable subcustodian agreement and, if necessary or desirable, terminate such
subcustodian and appoint a replacement Subcustodian in accordance with the
provisions of this Agreement. In addition to the foregoing, the Custodian (i)
may, at any time in its discretion, upon written notification to the Fund,
terminate any Domestic Subcustodian, Foreign Subcustodian or Interim
Subcustodian, and (ii) shall, upon receipt of Special Instructions,
21
22
terminate any Subcustodian with respect to the Fund, in each case in accordance
with the termination provisions of the applicable subcustodian agreement.
4.4. Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank, trust company,
securities depository or clearing agency that is itself qualified to act as a
custodian under the 1940 Act and the rules and regulations thereunder, as its
agent (an "Agent") to carry out such of the provisions of this Agreement as the
Custodian may from time to time direct, provided that the appointment of one or
more Agents (other than an agent appointed to the second paragraph of section
4.2(b)) shall not relieve the Custodian of its responsibilities under this
Agreement. Without limiting the foregoing, the Custodian shall be responsible
for any notices, documents or other information, or any securities, cash or
other assets of the Fund, received by any Agent on behalf of the Custodian or
the Fund as if the Custodian had received such items itself.
ARTICLE V
STANDARD OF CARE; INDEMNIFICATION
5.1. Standard of Care.
(a) General Standard of Care. The Custodian shall exercise
reasonable care and diligence in carrying out all of its duties and obligations
under this Agreement, and shall be liable to the Fund for all Losses suffered or
incurred by the Fund resulting from the failure of the Custodian to exercise
such reasonable care and diligence. For purposes of this Agreement, "Losses"
means any losses, damages, and expenses.
(b) Actions Prohibited by Applicable Law, Etc. In no event shall the
Custodian incur liability hereunder if the Custodian or any Subcustodian or
Securities System, or any subcustodian, securities depository or securities
system utilized by any such Subcustodian or the Custodian, or any nominee of the
Custodian or any Subcustodian, is prevented, forbidden or delayed from
performing, or omits to perform, any act or thing which this Agreement provides
shall be performed or omitted to be performed, by reason of: (i) any provision
of any present or future law or regulation or order of the United States of
America, or any state thereof, or of any foreign country, or political
subdivision thereof or of any court of competent jurisdiction; or (ii) any act
of God or war or action of any de facto or de jure government or other similar
circumstance beyond the control of the Custodian, unless, in each case, such
delay or nonperformance is caused by the negligence, misfeasance or misconduct
of such person.
(c) Mitigation by Custodian. Upon the occurrence of any event which
causes or may cause any Losses to the Fund (i) the Custodian shall, and shall
cause any applicable Domestic Subcustodian or Foreign Subcustodian to, and (ii)
the Custodian shall use its best
22
23
efforts to cause any applicable Interim Subcustodian to, use all commercially
reasonable efforts and take all reasonable steps under the circumstances to
mitigate the effects of such event and to avoid continuing harm to the Fund.
(d) Advice of Counsel. The Custodian shall be entitled to receive
and act upon advice of counsel on all matters. The Custodian shall be without
liability for any action reasonably taken or omitted in good faith pursuant to
the advice of (i) counsel for the Fund, or (ii) at the expense of the Custodian,
such other counsel as the Fund may agree to, such agreement not to be
unreasonably withheld or delayed; provided that with respect to the performance
of any action or omission of any action upon such advice, the Custodian shall be
required to conform to the standard of care set forth in section 5.1(a).
(e) Expenses. In addition to the liability of the Custodian under
this Article V, the Custodian shall be liable to the Fund for all reasonable
costs and expenses incurred by the Fund in connection with any claim by the Fund
against the Custodian arising from the obligations of the Custodian hereunder
including, without limitation, all reasonable attorneys' fees and expenses
incurred by the Fund in asserting any such claim, and all reasonable expenses
incurred by the Fund in connection with any investigations, lawsuits or
proceedings relating to such claim, provided that the Fund has recovered from
the Custodian for such claim.
(f) Liability for Past Records. The Custodian shall have no
liability in respect of any Losses suffered by the Fund, insofar as such Losses
arise from the performance of the Custodian's duties hereunder by reason of the
Custodian's reliance upon records that were maintained for the Fund by entities
other than the Custodian prior to the Custodian's employment hereunder.
(g) Reliance on Certifications. The Secretary or an Assistant
Secretary of the Fund shall certify to the Custodian the names and signatures of
the officers of the Fund, the name and address of the Shareholder Servicing
Agent, and any instructions or directions to the Custodian by the Fund's Board
of Directors or shareholders. Any such certificate may be accepted and relied
upon by the Custodian as conclusive evidence of the facts set forth therein and
may be considered in full force and effect until receipt of a similar
certificate to the contrary.
5.2. Liability of Custodian for Actions of Other Persons.
(a) Domestic Subcustodians, Foreign Subcustodians and Agents. The
Custodian shall be liable for the actions or omissions of any Domestic
Subcustodian, Foreign Subcustodian or Agent (other than an agent appointed
pursuant to section 4.2(b)) to the same extent as if such action or omission
were performed by the Custodian itself pursuant to this Agreement. In the event
of any Losses suffered or incurred by the Fund caused by or resulting from the
actions or
23
24
omissions of any Domestic Subcustodian, Foreign Subcustodian or Agent (other
than an agent appointed pursuant to section 4.2(b)) for which the Custodian
would be directly liable if such actions or omissions were those of the
Custodian, the Custodian shall promptly reimburse the Fund in the amount of any
such Losses.
(b) Interim Subcustodians. Notwithstanding the provisions of section
5.1 to the contrary, the Custodian shall not be liable to the Fund for any
Losses suffered or incurred by the Fund resulting from the actions or omissions
of an Interim Subcustodian or an agent appointed pursuant to section 4.2(b)
unless such Losses are caused by, or result from, the negligence, misfeasance or
misconduct of the Custodian; provided that in the event of any Losses (whether
or not caused by or resulting from the negligence, misfeasance or misconduct of
the Custodian), the Custodian shall take all reasonable steps to enforce such
rights as it may have against such Interim Subcustodian or agent to protect the
interests of the Fund.
(c) Securities Systems and Foreign Depositories. Notwithstanding the
provisions of section 5.1 to the contrary, the Custodian shall not be liable to
the Fund for any Losses suffered or incurred by the Fund resulting from the use
by the Custodian or any Subcustodian of a Securities System or Foreign
Depository, unless such Losses are caused by, or result from, the negligence,
misfeasance or misconduct of the Custodian; provided that in the event of any
such Losses, the Custodian shall take all reasonable steps to enforce such
rights as it may have against the Securities System or Foreign Depository, as
the case may be, to protect the interests of the Fund.
(d) Reimbursement of Expenses. The Fund agrees to reimburse the
Custodian for all reasonable out-of-pocket expenses incurred by the Custodian in
connection with the fulfillment of its obligations under this section 5.2,
provided that such reimbursement shall not apply to expenses occasioned by or
resulting from the negligence, misfeasance or misconduct of the Custodian.
5.3. Indemnification.
(a) Indemnification Obligations. Subject to the limitations set
forth in this Agreement, the Fund agrees to indemnify and hold harmless the
Custodian and its nominees for all Losses suffered or incurred by the Custodian
or its nominee (including Losses suffered under the Custodian's indemnity
obligations to Subcustodians) caused by or arising from actions taken by the
Custodian in the performance of its duties and obligations under this Agreement,
provided that such indemnity shall not apply to Losses occasioned by or
resulting from the negligence, misfeasance or misconduct of the Custodian or any
Subcustodian, Securities System, Foreign Depository or their respective
nominees. In addition, the Fund agrees to indemnify the Custodian against any
liability incurred by reason of taxes assessed to the Custodian, any
Subcustodian, any Securities System, any Foreign Depository, and their
respective nominees, or other Losses incurred by such persons, resulting from
the fact that
24
25
securities and other property of the Fund are registered in the name of such
persons, provided that in no event shall such indemnification be applicable to
income, franchise or similar taxes which may be imposed or assessed against such
persons.
(b) Notice of Litigation, Right to Prosecute, etc. The Fund shall
not be liable for indemnification under this section 5.3 unless the person
seeking indemnification shall have notified the Fund in writing (i) within such
time after the assertion of any claim as is sufficient for such person to
determine that it will seek indemnification from the Fund in respect of such
claim or (ii) promptly after the commencement of any litigation or proceeding
brought against such person, in respect of which indemnity may be sought;
provided that in the case of clause (i) of this section 5.3(b) the Fund shall
not be liable for such indemnification to the extent the Fund is disadvantaged
by any such delay in notification. With respect to claims in such litigation or
proceedings for which indemnity by the Fund may be sought and subject to
applicable law and the ruling of any court of competent jurisdiction, the Fund
shall be entitled to participate in any such litigation or proceeding and, after
written notice from the Fund to the person seeking indemnification, the Fund may
assume the defense of such litigation or proceeding with counsel of its choice
at its own expense in respect of that portion of the litigation for which the
Fund may be subject to an indemnification obligation, provided that such person
shall be entitled to participate in (but not control) at its own cost and
expense, the defense of any such litigation or proceeding if the Fund has not
acknowledged in writing its obligation to indemnify such person with respect to
such litigation or proceeding. If the Fund is not permitted to participate in or
control such litigation or proceeding under applicable law or by a ruling of a
court of competent jurisdiction, such person shall reasonably prosecute such
litigation or proceeding. A person seeking indemnification hereunder shall not
consent to the entry of any judgment or enter into any settlement of any such
litigation or proceeding without providing the Fund with adequate notice of any
such settlement or judgment and without the Fund's prior written consent, which
consent shall not be unreasonably withheld or delayed. All persons seeking
indemnification hereunder shall submit written evidence to the Fund with respect
to any cost or expense for which they are seeking indemnification in such form
and detail as the Fund may reasonably request.
5.4. Investment Limitations. If the Custodian has otherwise complied
with the terms and conditions of this Agreement in performing its duties
generally, and more particularly in connection with the purchase, sale or
exchange of securities made by or for the Fund, the Custodian shall not be
liable to the Fund, and the Fund agrees to indemnify the Custodian and its
nominees, for any Losses suffered or incurred by the Custodian and its nominees
arising out of any violation of any investment or other limitation to which the
Fund is subject.
25
26
5.5. Fund's Right to Proceed. Notwithstanding anything to the
contrary contained herein, the Fund shall have, at its election upon reasonable
notice to the Custodian, the right to enforce, to the extent permitted by any
applicable agreement and applicable law, the Custodian's rights against any
Subcustodian, Securities System, Foreign Depository or other person for Losses
caused the Fund by such Subcustodian, Securities System, Foreign Depository or
other person, and shall be entitled to enforce the rights of the Custodian with
respect to any claim against such Subcustodian, Securities System, Foreign
Depository or other person which the Custodian may have as a consequence of any
such Losses, if and to the extent that the Fund has not been made whole for such
Losses. If the Custodian makes the Fund whole for such Losses, the Custodian
shall retain the ability to enforce its rights directly against such
Subcustodian, Securities System, Foreign Depository or other person. Upon the
Fund's election to enforce any rights of the Custodian under this section 5.5,
the Fund shall reasonably prosecute all actions and proceedings directly
relating to the rights of the Custodian in respect of the Losses incurred by the
Fund; provided that, so long as the Fund has acknowledged in writing its
obligation to indemnify the Custodian under section 5.3 hereof with respect to
such claim, the Fund shall retain the right to settle, compromise and/or
terminate any action or proceeding in respect of the Losses incurred by the Fund
without the Custodian's consent; and provided further that if the Fund has not
made an acknowledgement of its obligation to indemnify the Custodian, the Fund
shall not settle, compromise or terminate any such action or proceeding without
the written consent of the Custodian, which consent shall not be unreasonably
withheld or delayed. The Custodian agrees to cooperate with the Fund and take
all actions reasonably requested by the Fund in connection with the Fund's
enforcement of any rights of the Custodian. The Fund agrees to reimburse the
Custodian for all reasonable out-of-pocket expenses incurred by the Custodian in
connection with the fulfillment of its obligations under this section 5.5,
provided that such reimbursement shall not apply to expenses occasioned by or
resulting from the negligence, misfeasance or misconduct of the Custodian.
ARTICLE VI
RECORDS
6.1. Preparation of Reports. The Custodian shall, as reasonably
requested by the Fund, assist generally in the preparation of reports to Fund
shareholders, regulatory authorities and others, audits of accounts, and other
ministerial matters of like nature. The Custodian shall render statements,
including interim monthly and complete quarterly financial statements, or copies
thereof, from time to time as reasonably requested by Proper Instructions.
6.2. Custodian's Books and Records. The Custodian shall maintain
complete and accurate records with respect to securities and other assets held
for the account of the Fund as required by the rules
26
27
and regulations of the SEC applicable to investment companies registered under
the 1940 Act, including: (a) journals or other records of original entry
containing a detailed and itemized daily record of all receipts and deliveries
of securities (including certificate and transaction identification numbers, if
any), and all receipts and disbursements of cash; (b) ledgers or other records
reflecting (i) securities in physical possession, (ii) securities in transfer,
(iii) securities borrowed, loaned or collateralizing obligations of the Fund,
(iv) monies borrowed and monies loaned (together with a record of the collateral
therefor and substitutions of collateral), and (v) dividends and interest
received; and (c) cancelled checks and bank records related thereto. The
Custodian shall keep such other books and records of the Fund as the Fund shall
reasonably request. All such books and records maintained by the Custodian shall
be maintained in a form acceptable to the Fund and in compliance with the rules
and regulations of the SEC (including, but not limited to, books and records
required to be maintained under Section 31(a) of the 1940 Act and the rules and
regulations from time to time adopted thereunder), and any other applicable
Federal, State and foreign tax laws and administrative regulations. All such
records will be the property of the Fund and in the event of termination of this
Agreement shall be delivered to the successor custodian.
All books and records maintained by the Custodian pursuant to this
Agreement and any insurance policies and fidelity or similar bonds maintained by
the Custodian shall be made available for inspection and audit at reasonable
times by officers of, attorneys for, and auditors employed by, the Fund and the
Custodian shall promptly provide the Fund with copies of all reports of its
independent auditors regarding the Custodian's controls and procedures.
6.3. Opinion of Fund's Independent Certified Public Accountants. The
Custodian shall take all reasonable action as the Fund may request to obtain
from year to year favorable opinions from the Fund's independent certified
public accountants with respect to the Custodian's activities hereunder in
connection with the preparation of any periodic reports to or filings with the
SEC and with respect to any other requirements of the SEC.
6.4. Reports of Custodian's Independent Certified Public
Accountants. At the request of the Fund, the Custodian shall deliver to the Fund
a written report prepared by the Custodian's independent certified public
accountants with respect to the services provided by the Custodian under this
Agreement, including, without limitation, the Custodian's accounting system,
internal accounting control and procedures for safeguarding cash, securities and
other assets, including cash, securities and other assets deposited and/or
maintained in a Securities System or with a Subcustodian. Such report shall be
of sufficient scope and in sufficient detail as may reasonably be required by
the Fund and as may reasonably be obtained by the Custodian.
27
28
6.5. Calculation of Net Asset Value. The Custodian shall compute and
determine the net asset value per share of capital stock of the Fund as of the
close of regular business on the New York Stock Exchange on each day on which
such Exchange is open, unless otherwise directed by Proper Instructions. Such
computation and determination shall be made in accordance with (a) the
provisions of the By-Laws of the Fund and Articles of Incorporation, as they may
from time to time be amended and delivered to the Custodian, (b) the votes of
the Board of Directors of the Fund at the time in force and applicable, as they
may from time to time be delivered to the Custodian, and (c) Proper
Instructions. On each day that the Custodian shall compute the net asset value
per share of the Fund, the Custodian shall provide the Fund with written reports
which permit the Fund to verify that portfolio transactions have been recorded
in accordance with the Fund's instructions.
In computing the net asset value, the Custodian may rely upon any
information furnished by Proper Instructions, including without limitation any
information (i) as to accrual of liabilities of the Fund and as to liabilities
of the Fund not appearing on the books of account kept by the Custodian, (ii) as
to the existence, status and proper treatment of reserves, if any, authorized by
the Fund, (iii) as to the sources of quotations to be used in computing the net
asset value, including those listed in Appendix C hereto, (iv) as to the fair
value to be assigned to any securities or other assets for which price
quotations are not readily available, and (v) as to the sources of information
with respect to "corporate actions" affecting portfolio securities of the Fund,
including those listed in Appendix C. (Information as to "corporate actions"
shall include information as to dividends, distributions, stock splits, stock
dividends, rights offerings, conversions, exchanges, recapitalizations, mergers,
redemptions, calls, maturity dates and similar transactions, including the ex-
and record dates and the amounts or other terms thereof.)
In like manner, the Custodian shall compute and determine the net
asset value as of such other times as the Board of Directors of the Fund, or any
valuation committee thereof, from time to time may reasonably request.
The Custodian shall be held to the standard of care set forth in
Article V with respect to the performance of its responsibilities under this
Article VI. The parties hereto acknowledge, however, that the Custodian's
causing an error or delay in the determination of net asset value may, but does
not in and of itself, constitute negligence, gross negligence or reckless or
willful misconduct. The Custodian's liability for any such negligence, gross
negligence or reckless or willful misconduct which results in an error in
determination of such net asset value shall be limited to the direct,
out-of-pocket loss the Fund, shareholder or former shareholder shall actually
incur, measured by the difference between the actual and the erroneously
computed net asset value, and any expenses
28
29
incurred by the Fund in connection with correcting the records of the Fund
affected by such error (including charges made by the Fund's registrar and
transfer agent for making such corrections), communicating with shareholders or
former shareholders of the Fund affected by such error or responding to or
defending against any inquiry or proceeding with respect to such error made or
initiated by the SEC or other regulatory or self-regulatory body.
Without limiting the foregoing, the Custodian shall not be held
accountable or liable to the Fund, any shareholder or former shareholder thereof
or any other person for any delays or Losses any of them may suffer or incur
resulting from (A) the Custodian's failure to receive timely and suitable
notification concerning quotations or corporate actions relating to or affecting
securities of the Fund or (B) any errors in the computation of the net asset
value based upon or arising out of quotations or information as to corporate
actions if received by the Custodian either (1) from a source which the
Custodian was authorized pursuant to the second paragraph of this section 6.5 to
rely upon, or (2) from a source which in the Custodian's reasonable judgment was
as reliable a source for such quotations or information as the sources
authorized pursuant to that paragraph. Nevertheless, the Custodian will use its
best judgment in determining whether to verify through other sources any
information it has received as to quotations or corporate actions if the
Custodian has reason to believe that any such information might be incorrect.
In the event of any error or delay in the determination of such net
asset value for which the Custodian may be liable, the Fund and the Custodian
will consult and make good faith efforts to reach agreement on what actions
should be taken in order to mitigate any Losses suffered by the Fund or its
present or former shareholders, in order that the Custodian's exposure to
liability shall be reduced to the extent possible after taking into account all
relevant factors and alternatives. Such actions might include the Fund or the
Custodian taking reasonable steps to collect from any shareholder or former
shareholder who has received any overpayment upon redemption of shares such
overpaid amount or to collect from any shareholder who has underpaid upon a
purchase of shares the amount of such underpayment or to reduce the number of
shares issued to such shareholder. It is understood that in attempting to reach
agreement on the actions to be taken or the amount of the loss which should
appropriately be borne by the Custodian, the Fund and the Custodian will
consider such relevant factors as the amount of the loss involved, the Fund's
desire to avoid loss of shareholder good will, the fact that other persons or
entities could have reasonably expected to have detected the error sooner than
the time it was actually discovered, the appropriateness of limiting or
eliminating the benefit which shareholders or former shareholders might have
obtained by reason of the error, and the possibility that other parties
providing services to the Fund might be induced to absorb a portion of the loss
incurred.
Upon written notice from the Fund to the Custodian, the
29
30
Custodian's responsibilities under this Section 6.5 shall terminate, but this
Agreement shall otherwise continue in full force and effect. Upon such
termination, the fee schedule provided for under Article VII hereof shall be
adjusted by the parties in such manner as they may agree, and the Custodian will
transfer such of the Fund's books and records, and provide such other reasonable
cooperation, as the Fund may request in connection with the transfer of such
responsibilities.
6.6. Information Regarding Foreign Subcustodians and Foreign
Depositories. (a) The Custodian shall use reasonable efforts to assist the Fund
in obtaining the following with respect to any country in which any assets of
the Fund are held or proposed to be held:
(1) information concerning whether, and to what extent, applicable
foreign law would restrict the access afforded the Fund's independent
public accountants to books and records kept by a foreign custodian or
foreign securities depository used, or proposed to be used, in that
country;
(2) information concerning whether, and to what extent, applicable
foreign law would restrict the Fund's ability to recover its assets in the
event of the bankruptcy of a foreign custodian or foreign securities
depository used, or proposed to be used, in that country;
(3) information concerning whether, and to what extent, applicable
foreign law would restrict the Fund's ability to recover assets that are
lost while under the control of a foreign custodian or foreign securities
depository used, or proposed to be used, in that country;
(4) information concerning the likelihood of expropriation,
nationalization, freezes or confiscation of the Fund's assets in that
country;
(5) information concerning whether difficulties in converting the
Fund's cash and cash equivalents held in that country into U.S. Dollars
are reasonably foreseeable, including without limitation as a result of
applicable foreign currency exchange regulations;
(6) information concerning the financial strength, general
reputation and standing and ability to perform custodial services of each
foreign custodian or foreign securities depository used, or proposed to be
used, in that country;
(7) information concerning whether each foreign custodian or foreign
securities depository used, or proposed to be used, in that country would
provide a level of safeguards for maintaining the Fund's assets not
materially different from that provided by the Custodian in maintaining
the Fund's securities in the United
30
31
States;
(8) information concerning whether each foreign custodian or foreign
securities depository used, or proposed to be used, in that country has
offices in the United States in order to facilitate the assertion of
jurisdiction over and enforcement of judgments against such custodian or
depository;
(9) as to each foreign securities depository used, or proposed to be
used, in that country information concerning the number of participants
in, and operating history of, such depository; and
(10) such other information as may be requested by the Fund to
ensure compliance with Rule 17f-5 under the 1940 Act.
(b) During the term of this Agreement, the Custodian shall use
reasonable efforts to provide the Fund with prompt notice of any material
changes in the facts or circumstances upon which any of the foregoing
information or statements were based.
(c) Upon request of the Fund, the Custodian shall deliver to the
Fund a certificate stating: (i) the identity of each Foreign Subcustodian then
acting on behalf of the Custodian; and (ii) the countries in which and the
Foreign Depositories through which each such Foreign Subcustodian or the
Custodian is then holding cash, securities and other assets of the Fund.
ARTICLE VII
CUSTODIAN FEES
The Fund shall pay the Custodian a custody fee based on such fee
schedule as may from time to time be agreed upon in writing by the Custodian and
the Fund. Such fee, together with all amounts for which the Custodian is to be
reimbursed in accordance with the following sentence, shall be billed to the
Fund in such a manner as to permit payment either by a direct cash payment to
the Custodian or by placing Fund portfolio transactions with the Custodian
resulting in an agreed-upon amount of commissions being paid to the Custodian
within an agreed-upon period of time. The Custodian shall be entitled to receive
reimbursement from the Fund on demand for its cash disbursements and expenses
(including cash disbursements and expenses of any Subcustodian or Agent for
which the Custodian has reimbursed such Subcustodian or Agent) permitted by this
Agreement, but excluding salaries and usual overhead expenses, upon receipt by
the Fund of reasonable evidence thereof.
ARTICLE VIII
TERMINATION
31
32
This Agreement shall continue in full force and effect until
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid, to the other party, such termination to take effect not sooner
than sixty (60) days after the date of such delivery or mailing. In the event of
termination, the Custodian shall be entitled to receive prior to delivery of the
securities, cash and other assets held by it all accrued fees and unreimbursed
expenses the payment of which is contemplated by Article VII, upon receipt by
the Fund of a statement setting forth such fees and expenses.
In the event of the appointment of a successor custodian, it is
agreed that the cash, securities and other assets owned by the Fund and held by
the Custodian or any Subcustodian or Agent shall be delivered to the successor
custodian, and the Custodian agrees to cooperate with the Fund in execution of
documents and performance of other actions necessary or desirable in order to
substitute the successor custodian for the Custodian under this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1. Execution of Documents. Upon request, the Fund shall deliver to
the Custodian such proxies, powers of attorney or other instruments as may be
reasonable and necessary or desirable in connection with the performance by the
Custodian or any Subcustodian of their respective obligations under this
Agreement or any applicable subcustodian agreement.
9.2. Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof.
9.3. Waivers and Amendments. No provision of this Agreement may be
amended or terminated except by a statement in writing signed by the party
against which enforcement of the amendment or termination is sought, provided
that Appendix B listing the Foreign Subcustodians and Foreign Depositories
approved by the Fund and Appendix C listing quotation and information sources
may be amended from time to time to add or delete one or more of such entities
or sources by delivery to the Custodian of a revised Appendix B or C executed by
an Authorized Person, such amendment to take effect immediately upon execution
of the revised Appendix B or C by the Custodian.
In connection with the operation of this Agreement, the Custodian
and the Fund may agree in writing from time to time on such provisions
interpretative of or in addition to the provisions of this Agreement as may in
their joint opinion be consistent with the general tenor of this Agreement. No
interpretative or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Agreement.
32
33
9.4. Captions. The section headings in this Agreement are for the
convenience of the parties and in no way alter, amend, limit or restrict the
contractual obligations of the parties set forth in this Agreement.
9.5. Governing Law. This instrument shall be governed by and
construed in accordance with the laws of the State of New York.
9.6. Notices. Notices and other writings delivered or mailed postage
prepaid to the Fund addressed to the Fund at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000
or to such other address as the Fund may have designated to the Custodian in
writing, or to the Custodian at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
Attention: Manager, Securities Department, or to such other address as the
Custodian may have designated to the Fund in writing, shall be deemed to have
been properly delivered or given hereunder to the respective addressee.
9.7. Successors and Assigns. This Agreement shall be binding on and
shall inure to the benefit of the Fund and the Custodian and their respective
successors and assigns, provided that neither party hereto may assign this
Agreement or any of its rights hereunder without the prior written consent of
the other party.
9.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered by
each of the parties.
9.9. Representative Capacity; Nonrecourse Obligations. The Custodian
agrees that any claims by it against the Fund under this Agreement may be
satisfied only from the assets of the Fund; that the person executing this
Agreement has executed it on behalf of the Fund and not individually, and that
the obligations of the Fund arising out of this Agreement are not binding upon
such person or the Fund's shareholders individually but are binding only upon
the assets and property of the Fund; and that no shareholders, directors or
officers of the Fund may be held personally liable or responsible for any
obligations of the Fund arising out of this Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed in its name and behalf on the day and year first above written.
XXXXX BROTHERS XXXXXXXX & CO.
per pro _______________________________________
Name:
Title:
Xxxxxxx New Europe FUND, INC.
33
34
By: ______________________________________________
Name: Xxxxxxxx Xxxxx
Title: President
APPENDIX A TO THE
CUSTODIAN AGREEMENT BETWEEN
XXXXXXX NEW EUROPE FUND, INC. AND
XXXXX BROTHERS XXXXXXXX & CO.
DATED AS OF May 21, 1995
PROCEDURES RELATING TO CUSTODIAN'S SECURITY INTEREST
As security for any Advances (as defined in the Custodian Agreement)
of the Fund, the Fund shall pledge, assign and grant to the Custodian a security
interest in Collateral (as hereinafter defined), under the terms, circumstances
and conditions set forth in this Appendix A.
Section 1. Defined Terms. As used in this Appendix A the following terms
shall have the following respective meanings:
(a) "Business Day" shall mean any day that is not a Saturday, a Sunday or
a day on which the Custodian is closed for business.
(b) "Collateral" shall mean those securities having a fair market value
(as determined in accordance with the procedures set forth in the prospectus for
the Fund) equal to the aggregate of all Advance Obligations of the Fund that are
(i) identified in any Pledge Certificate executed on behalf of the Fund or (ii)
designated by the Custodian for the Fund pursuant to Section 3 of this Appendix
A. Such securities shall consist of marketable securities held by the Custodian
on behalf of the Fund or, if no such marketable securities are held by the
Custodian on behalf of the Fund, such other securities designated by the Fund in
the applicable Pledge Certificate or by the Custodian pursuant to Section 3 of
this Appendix A.
(c) "Advance Obligations" shall mean the amount of any outstanding
Advance(s) provided by the Custodian to the Fund together with all accrued
interest thereon.
(d) "Pledge Certificate" shall mean a Pledge Certificate in the form
attached as Exhibit 1 to this Appendix A, executed by a duly authorized officer
of the Fund and delivered by the Fund to the Custodian by facsimile transmission
or in such other manner as the Fund and the Custodian may agree in writing.
(e) "Release Certificate" shall mean a Release Certificate in the form
attached as Exhibit 2 to this Appendix A, executed by a duly authorized officer
of the Custodian and delivered by the Custodian to the Fund by facsimile
transmission or in such other
34
35
manner as the Fund and the Custodian may agree in writing.
(f) "Written Notice" shall mean a written notice executed by a duly
authorized officer of the party delivering the notice and delivered by facsimile
transmission or in such other manner as the Fund and the Custodian shall agree
in writing.
Section 2. Pledge of Collateral. To the extent that any Advance
Obligations of the Fund are not satisfied by the close of business on the first
Business Day following the Business Day on which the Fund receives a Written
Notice requesting security for such Advance Obligation and stating the amount of
such Advance Obligation, the Fund shall pledge, assign and grant to the
Custodian a first priority security interest in Collateral specified by the Fund
by delivering to the Custodian a Pledge Certificate executed by the Fund
describing such Collateral. Such Written Notice may, in the discretion of the
Custodian, be included within or accompany the Notice of Advance (as defined in
the Custodian Agreement) relating to the applicable Advance Obligation.
Section 3. Failure to Pledge Collateral. In the event that the Fund shall
fail (a) to pay the Advance Obligation described in such Written Notice, (b) to
deliver to the Custodian a Pledge Certificate pursuant to Section 2, or (c) to
identify substitute securities pursuant to Section 6 upon the sale or maturity
of any securities identified as Collateral, the Custodian may, by Written Notice
to the Fund, specify Collateral which shall secure the applicable Advance
Obligation. The Fund hereby pledges, assigns and grants to the Custodian a first
priority security interest in any and all Collateral specified in such Written
Notice; provided that such pledge, assignment and grant of security shall be
deemed to be effective only upon receipt by the Fund of such Written Notice, and
provided further that if the Custodian specifies Collateral in which a first
priority security interest has already been granted, the security interest
pledged, assigned and granted hereunder shall be a security interest that is not
a first priority security interest.
Section 4. Delivery of Additional Collateral. If at any time the Custodian
shall notify the Fund by Written Notice that the fair market value of the
Collateral securing any Advance Obligation is less than the amount of such
Advance Obligation, the Fund shall deliver to the Custodian, within one Business
Day following the Fund's receipt of such Written Notice, an additional Pledge
Certificate describing additional Collateral. If the Fund shall fail to deliver
such additional Pledge Certificate, the Custodian may specify Collateral which
shall secure the unsecured amount of the applicable Advance Obligation in
accordance with Section 3 of this Appendix A.
Section 5. Release of Collateral. Upon payment by the Fund
35
36
of any Advance Obligation secured by the pledge of Collateral, the Custodian
shall promptly deliver to the Fund a Release Certificate pursuant to which the
Custodian shall release Collateral from the lien under the applicable Pledge
Certificate or Written Notice pursuant to Section 3 having a fair market value
equal to the amount paid by the Fund on account of such Advance Obligation. In
addition, if at any time the Fund shall notify the Custodian by Written Notice
that the Fund desires that specified Collateral be released and (a) that the
fair market value of the Collateral securing any Advance Obligation exceeds the
amount of such Advance Obligation, or (b) that the Fund has delivered a Pledge
Certificate pursuant to Section 6 substituting Collateral in respect of such
Advance Obligation, the Custodian shall deliver to the Fund, within one Business
Day following the Custodian's receipt of such Written Notice, a Release
Certificate relating to the Collateral specified in such Written Notice.
Section 6. Substitution of Collateral. The Fund may substitute securities
for any securities identified as Collateral by delivery to the Custodian of a
Pledge Certificate executed by the Fund, indicating the securities pledged as
Collateral.
Section 7. Security for Fund Advance Obligations. The pledge of Collateral
by the Fund shall secure only Advance Obligations of the Fund. In no event shall
the pledge of Collateral by the Fund be deemed or considered to be security for
any other types of obligations of the Fund to the Custodian or for the Advance
Obligations or other types of obligations of any other fund.
Section 8. Custodian's Remedies. Upon (a) the Fund's failure to pay any
Advance Obligation of the Fund within thirty days after receipt by the Fund of a
Written Notice demanding security therefor, and (b) one Business Day's prior
Written Notice to the Fund, the Custodian may elect to enforce its security
interest in the Collateral securing such Advance Obligation, by taking title to
(at the then prevailing fair market value), or selling in a commercially
reasonable manner, so much of the Collateral as shall be required to pay such
Advance Obligation in full. Notwithstanding the provisions of any applicable
law, including, without limitation, the Uniform Commercial Code, the remedy set
forth in the preceding sentence shall be the only right or remedy to which the
Custodian is entitled with respect to the pledge and security interest granted
pursuant to any Pledge Certificate or Section 3. Without limiting the foregoing,
the Custodian hereby waives and relinquishes all contractual and common law
rights of set-off to which it may now or hereafter be or become entitled with
respect to any obligations of the Fund to the Custodian arising under this
Appendix A to the Custodian Agreement.
IN WITNESS WHEREOF, each of the parties has caused this
36
37
Appendix A to be executed in its name and behalf on the day and year first above
written.
XXXXX BROTHERS XXXXXXXX & CO.
per pro _______________________________________
Name:
Title:
Xxxxxxx New Europe FUND, INC.
By: ___________________________________________
Name: Xxxxxxxx Xxxxx
Title: President
37
38
EXHIBIT 1
TO
Appendix A
PLEDGE CERTIFICATE
This Pledge Certificate is delivered pursuant to the Custodian
Agreement dated as of _____________________ (the "Agreement"), between
_____________________ (the "Fund") and Xxxxx Brothers Xxxxxxxx & Co. (the
"Custodian"). Capitalized terms used herein without definition shall have the
respective meanings ascribed to them in the Agreement. Pursuant to [Section 2 or
Section 4] of Appendix A attached to the Agreement, the Fund hereby pledges,
assigns and grants to the Custodian a first priority security interest in the
securities listed on Schedule A attached to this Pledge Certificate
(collectively, the "Pledged Securities"). Upon delivery of this Pledge
Certificate, the Pledged Securities shall constitute Collateral, and shall
secure all Advance Obligations of the Fund described in that certain Written
Notice dated _______, 19__, delivered by the Custodian to the Fund. The pledge,
assignment and grant of security in the Pledged Securities hereunder shall be
subject in all respects to the terms and conditions of the Agreement, including,
without limitation, Sections 7 and 8 of Appendix A attached hereto.
IN WITNESS WHEREOF, the Fund has caused this Pledge Certificate to
be executed in its name, on behalf of the Fund this _______ day of __________,
19__.
By: _____________________
Name: _____________________
Title: _____________________
38
39
SCHEDULE A
TO
PLEDGE CERTIFICATE
Type of Certificate/CUSIP Number of
Issuer Security Numbers Shares
------ -------- ----------------- ------
39
40
EXHIBIT 2
TO
Appendix A
RELEASE CERTIFICATE
This Release Certificate is delivered pursuant to the Custodian Agreement
dated as of _________, 199_ (the "Agreement"), between _______________________
(the "Fund") and Xxxxx Brothers Xxxxxxxx & Co. (the "Custodian"). Capitalized
terms used herein without definition shall have the respective meanings ascribed
to them in the Agreement. Pursuant to Section 5 of Appendix A attached to the
Agreement, the Custodian hereby releases the securities listed on Schedule A
attached to this Release Certificate from the lien under the [Pledge Certificate
dated __________, 19 or the Written Notice delivered pursuant to Section 3 of
Appendix A dated ___________, 19 ].
IN WITNESS WHEREOF, the Custodian has caused this Release Certificate to
be executed in its name and on its behalf this ____ day of 19__.
Xxxxx Brothers Xxxxxxxx & Co.
By: _____________________
Name: _____________________
Title: _____________________
40
41
SCHEDULE A
TO
RELEASE CERTIFICATE
Type of Certificate/CUSIP Number of
Issuer Security Numbers Shares
------ -------- ----------------- ------
41
42
AMENDMENT TO THE
CUSTODIAN AGREEMENT
AMENDMENT entered into as of this 30th day of September, 1997 to the
Custodian Agreement among XXXXXXX NEW EUROPE FUND, INC. (the "Fund")and XXXXX
BROTHERS XXXXXXXX & CO. (the "Custodian") dated as of May 21, 1995 (the
"Agreement").
In consideration of the mutual covenants herein contained, the Fund and
the Custodian agree that the Agreement is hereby amended as follows:
1. The first paragraph of Section 2.13, Bank Accounts, is replaced in its
entirety with the following:
"The Custodian shall open and operate one or more accounts on the
Custodian's books, in the name of the Fund, subject only to draft or order by
the Custodian, and to hold in such account or accounts all deposits denominated
in U.S. and foreign currency, received for the account of the Fund, other than
deposits with Banking Institutions held in accordance with the last paragraph of
this Section 2.13. The responsibilities of the Custodian to the Fund for
deposits accepted on the Custodian's books and denominated in U.S. currency
shall be that of a U.S. bank for a similar deposit. The obligation of the
Custodian for any deposit denominated in any foreign currency shall have the
benefit of and be subject to the provisions of the last paragraph of Section
5.1(b) hereof, and accordingly in the event and to the extent the Custodian
shall be unable to make payment in currency in which a certain deposit is
denominated due to an act of God, sovereign event or other factor beyond its
control, the Custodian's obligation to pay the Fund in respect of such foreign
currency obligation shall be deferred or relieved until and to the extent the
Custodian is able to make payment in such currency and accordingly shall not be
payable on demand in U.S. currency."
43
2. Section 2.14, Interest-Bearing Deposits, is amended by the addition of
the following paragraph at the end of the present Section:
"The obligation of the Custodian for any interest-bearing deposit
denominated in any foreign currency shall have the benefit of and be subject to
the provisions of the last paragraph of Section 5.1(b) hereof, and accordingly
in the event and to the extent the Custodian shall be unable to make payment in
the currency in which a certain deposit is denominated due to an act of God,
sovereign event or other factor or event beyond its control, the Custodian's
obligation to pay the Fund in respect of such foreign currency obligation shall
be deferred or relieved until and to the extent the Custodian is able to make
payment in such currency and accordingly shall not be payable on demand in U.S.
currency."
Except as amended above, all the provisions of the Agreement as heretofore
in effect shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
Name: Xxxxxxxx Xxxxx
Title: President
XXXXX BROTHERS XXXXXXXX & CO.
Name:
Title:
44
XXXXX BROTHERS XXXXXXXX & CO.
April, 1994
XXXXXXX FEE SCHEDULE
SCHEDULE A
MARKET ASSET CHARGE (BP) TRANSACTION CHARGE
------ ----------------- ------------------
GROUP 1
United States 1.0 on first $100 million DTC: $10
.5 on all over $100 million Physical and Same Day
Money Market Transaction: $25
GROUP 2
Euroclear and Cedel* 3 35
GROUP 3
Canada 4 20
GROUP 4
Germany 5 30
Japan 5 00
Xxxxxxxxxxx 0 00
Xxxxxx Xxxxxxx 5 45
GROUP 5
Australia 6 50
Denmark 6 50
France 6 60
Xxxxxxxxxxx 0 00
Xxx Xxxxxxx 0 00
Xxxxxx 6 60
GROUP 6
Belgium 8 50
Finland 8 60
Hong Kong 8 75
Ireland 8 50
Italy 8 00
Xxxxxxxxxx 0 00
Xxxxxx 0 00
Xxxxxxxxx 8 75
45
MARKET ASSET CHARGE (BP) TRANSACTION CHARGE
------ ----------------- ------------------
GROUP 7
Xxxxxxx 00 00
Xxxxxxxx 00 00
Xxxxx 10 60
GROUP 8
Indonesia 15 75
Mexico 15 50
Thailand 15 75
EMERGING MARKETS
Xxxxxxxxx 00 00
Xxxxxx 00 00
Xxxxx 35 75
China 35 00
Xxxxxxxx 00 000
Xxxxxx 50 150
India 40 100 per partial
Israel 25 150
Korea 22 50
Xxxxxxxx 00 000
Xxxxxxxxxxx 00 00
Xxxxxx 50 00
Xxxxxxxx 00 000
Xxx Xxxxx 20 50
Xxxxxx 00 00
Xxxxxx 00 00
Xxxxxxx 50 150
Venezuela 35 75
2
46
CUSTODY ONLY FEE SCHEDULE
XXXXX BROTHERS XXXXXXXX & CO.
47
XXXXX BROTHERS XXXXXXXX & CO.
- Annual Minimum Custody Fee: $10,000 per account
- Automation: This schedule assumes machine readable trade instructions.
- For The Korea Fund, BBH&Co. will charge 14.5 basis points.
Out-of-Pocket Expenses
Out-of-pocket expenses including but not limited to communication
expenses, wire charges, telex, legal, telephone, postage and direct expenses
including but not limited to stamp duties, commissions, dividend and income
collection charges, taxes, certificate fees, special handling, transfer and
registration fees would be additional.
48
XXXXX BROTHERS XXXXXXXX CO.
XXXXXXX COMPLEX OF FUNDS
SCHEDULE A
FUND
XXXXXXX VARIABLE LIFE INVESTMENT FUND
International Portfolio 4/15/96
Global Discovery Portfolio 5/1/96
AARP GROWTH TRUST
AARP Global Growth Fund 2/1/96
XXXXXXX GLOBAL FUND, INC.
Xxxxxxx Emerging Markets Income Fund 2/1/96
Xxxxxxx Global Fund 3/14/95
Xxxxxxx Global Bond Fund 11/29/95
Xxxxxxx Global Discovery Fund 6/15/95
Xxxxxxx International Bond Fund 8/31/95
XXXXXXX INTERNATIONAL FUND, INC.
Xxxxxxx Emerging Markets Growth Fund 5/8/96
Xxxxxxx Greater Europe Growth Fund 10/10/94
Xxxxxxx International Fund 4/12/95
Xxxxxxx International Growth and Income Fund 6/30/97
Xxxxxxx Latin America Fund 5/17/95
Xxxxxxx Pacific Opportunities Fund 5/5/95
XXXXXXX INSTITUTIONAL FUND, INC.
Institutional International Equity Portfolio 4/3/96
The Argentina Fund, Inc. 6/13/95
The Brazil Fund, Inc. 6/6/95
The Korea Fund Inc. 8/21/95
The First Iberian Fund, Inc. 2/21/95
Xxxxxxx New Asia Fund, Inc. 7/26/95
Xxxxxxx New Europe Fund Inc. 11/29/95
The Latin American Dollar Income Fund, Inc. 1/15/96
Xxxxxxx World Income Opportunities Fund, Inc. 1/5/96
49
AMENDMENT TO THE CUSTODIAN AGREEMENT
AMENDMENT entered into as of this 10 day of July, 1998 to the
Custodian Agreement between Xxxxxxx New Europe Fund, Inc., (the "Fund") and
XXXXX BROTHERS XXXXXXXX & CO. (the "Custodian") dated as of May 21, 1995, (the
"Agreement").
In consideration of the Custodian's offering subcustodial
services to the Fund in Russia, the Fund and the Custodian agree that the
Agreement is hereby amended as follows:
1. Section 2.1, Safekeeping, is amended by the addition of the
following phrase at the end of said Section:
"provided, however, that the Custodian's responsibility for
safekeeping equity securities of Russian issuers ("Russian
Equities") hereunder shall be limited to the safekeeping of
relevant share extracts from the share registration books
maintained by the entities providing share registration
services to issuers of Russian Equities (each a "Registrar")
indicating an investor's ownership of such securities either
directly or through a Subcustodian's nominee (each a "Share
Extract")."
2. Section 2.3, Registered Name; Nominees, is amended by the addition
of the following at the end of said Section:
"However, with respect to Russian Equities, the Custodian
shall instruct a Subcustodian to assure that registration
thereof shall be reflected on the books of the issuer's
Registrar by obtaining a Share Extract for each Russian
Equity, subject to the following conditions, but shall,
provided it has exercised the standard of care set forth
herein, in no event be liable for losses or costs incurred as
a result of delays or failures in the registration process,
including without limitation the inability to enforce relevant
Share Extracts. Such registration may be in the name of a
nominee of a Subcustodian. In the event registration is in the
name of a Fund, such Fund hereby acknowledges that only the
Custodian or Subcustodian may give instructions to the
Registrar to transfer or engage in other transactions
involving the Russian Equities so registered.
50
A Subcustodian will from time to time enter into
contracts with Registrars with respect to the registration of
Russian Equities ("Registrar Contracts"). Such Registrar
Contracts will provide for (i) regular (as determined by
applicable SEC notices and announcements for investment
companies registered under the Investment Company Act of 1940)
share confirmations by the Subcustodian, (ii) reregistrations
within 72 hours of receiving necessary documentation, (iii)
use of a Subcustodian's nominee name, (iv) direct access by
auditors of the Subcustodian or its clients to share
registers, and (v) specification of the Registrar's
responsibilities as to distributions and corporate actions;
liabilities as established under the regulations applicable to
the share registration systems; and the procedures for making
a claim against and receiving compensation from the registrar
in the event a loss is incurred. It is hereby acknowledged and
agreed that the Custodian does not represent or warrant that
such Registrar Contracts are enforceable.
If a Fund instructs the Custodian to settle a
purchase of a Russian Equity, the Custodian will instruct a
Subcustodian to endeavor on a best efforts basis to reregister
the Russian Equity and obtain a Share Extract in a timely
manner; provided that neither the Custodian, the Subcustodian
nor their agents or nominees shall pay for securities
purchased until the Share Extract has been obtained. After
completion of reregistration of a Russian Equity in respect of
which a Subcustodian has entered into a Registrar Contract,
the Custodian shall instruct the Subcustodian to monitor such
registrar on a best efforts basis and to promptly notify the
Custodian upon the Subcustodian's obtaining knowledge of the
occurrence of any of the following events ("Registrar
Events"): (i) a Registrar has eliminated a shareholder from
the register or has altered registration records; (ii) a
Registrar has refused to register securities in the name of a
particular purchaser and the purchaser or seller has alleged
that the registrars refusal to so register was unlawful; (iii)
a Registrar holds for its own account shares of an issuer for
which it serves as registrar; (iv) a Registrar notifies the
Subcustodian that it will no longer be able materially to
comply with the terms of the Registrar Contract; or (v) a
Registrar has materially breached such Contract. The Custodian
shall promptly inform the Funds of the occurrence of a
Registrar Event provided the Custodian has in fact received
notice thereof from the Subcustodian.
It shall be the sole responsibility of each Fund to
contact the Custodian prior to executing any transaction in a
Russian Equity to determine whether a
2
51
Registrar Contract exists in respect of such issuer. This contract as
amended contemplates custody of Russian Equities and Ministry of
Finance bonds only. Custody of any other Russian security may require
additional documentation and or amendments as custody and settlement
practices may differ from those set forth herein."
3. Section 2.4. Purchases by the Fund, is amended by the addition of
the following at the end of said Section:
"Without limiting the generality of the foregoing, the
following provisions shall apply with respect to settlement of
purchases of securities in Russia. Unless otherwise instructed by
Proper Instructions, the Custodian shall only authorize a Subcustodian
to make payment for purchases of Russian Equities upon receipt of the
relevant Share Extract in respect of the Fund's purchases. With respect
to securities other than Russian Equities, settlement of purchases
shall be made in accordance with the prevailing securities processing
or settlement practices for companies registered under the Investment
Company Act of 1940 that invest in Russia."
4. Section 2.5, Exchanges of Securities, is amended by inserting after
the word "exchange" in the second line thereof, the following phrase:
", in accordance with the registration procedures described in
Section 2.3 of this Agreement,"
5. Section 2.6, Sales of Securities, is amended by the addition of the
following at the end of said Section:
"Without limiting the generality of the foregoing, the
following provisions shall apply with respect to settlement of sales of
securities in Russia. Unless otherwise expressly instructed by Proper
Instructions, settlement of sales of Russian Equities shall, occur in
the following manner: Russian Equities sold by the Fund will be
re-registered in the buyer's name prior to receipt of payment therefor
and accordingly, provided the Custodian has exercised the standard of
care set forth herein, risk of payment after re-registration of shares
or delivery to the buyer shall be for the account of the Fund. With
respect to securities other than Russian Equities, settlement of sales
shall be made in accordance with the prevailing securities processing
or settlement practices for companies
3
52
registered under the Investment Company Act of 1940 that invest in
Russia. Provided the Custodian has exercised the standard of care set
forth herein, the Custodian shall not be responsible for any securities
delivered from the premises of the Subcustodian from the time they
leave such premises."
6. Section 2.8, Exercise of Rights; Tender Offers, is modified by the
addition of the following at the end of said section:
"Section 2.8, Exercise of Rights Tender Offers -- With respect
to Russian securities, upon timely receipt of Proper Instructions, the
Custodian shall take any action required by the terms of a rights
offer, tender offer, put, call, merger, consolidation, reorganization
or other corporate action affecting securities held on behalf of a
Fund. The Custodian shall use reasonable efforts to act on such Proper
Instructions but will not be held liable for any losses or costs
incurred as a result of such actions or as a result of the Custodian's
inability for reasons beyond its control to take the actions requested
by such Proper Instructions."
7. Section 2.9, Stock Dividends, Rights, Etc., is modified by the
addition of the following paragraph at the end of said Section:
"With respect to Russian Equities, to request a Subcustodian
to endeavor to obtain a Share Extract with respect to all Russian
Equities issued by reason of a stock dividend, bonus issue or other
distribution resulting from a corporate action not requiring
instructions from the shareholder of the security, provided that the
Custodian shall not be responsible for its inability after exercising
its best efforts to obtain any such Share Extract or for the failure of
a Registrar or any agent thereof to record the Fund's ownership on the
issuer's records after the Subcustodian used its best efforts to cause
such action."
8. Section 4.2(a) Foreign Subcustodians, is modified by the insertion
of the following at the end of the section:
"With respect to Russia, each Fund hereby expressly
acknowledges that a Subcustodian for Russian securities may from time
to time delegate any of its
4
53
duties and responsibilities to any securities depository, clearing
agency, share registration agent of the issuer or sub-subcustodian that
is not under the control of the Custodian or Subcustodian
(collectively, "Russian Agent") in Russia, including without limitation
Rosvneshtorgbank (also called Vneshtorgbank RF) ("VTB"). Each Fund
acknowledges that the rights of the Subcustodian against any such
Russian Agent may consist only of a contractual claim against the
Russian Agent. Notwithstanding any provision of this Agreement to the
contrary, provided it has exercised the standard of care set forth
herein, neither the Custodian nor the Subcustodian shall be responsible
or liable to a Fund or its shareholders for the acts or omissions of
any such Russian Agent. In the event of a loss of securities or cash
held on behalf of a Fund through any Russian Agent, provided it, and
the Subcustodian have exercised the standard of care set forth herein,
the Custodian shall not be responsible to a Fund or its shareholders
unless and to the extent it in fact recovers from the Subcustodian."
9. Sections 5.1(a)&(b), Standard of Care are modified by the insertion
of the following:
"Section 5.1(a) Standard of Care-- The Custodian shall be held
only to the exercise of reasonable care in carrying out the provisions
of this Agreement, provided that the Custodian shall not thereby be
required to take any action which is in contravention of any applicable
law, rule or regulation or any order or judgment of any court of
competent jurisdiction. With respect to securities for settlement in
Russia, reasonable care shall mean reasonable practices under the
circumstances as measured by prevailing custodial practices among
companies registered under the Investment Company Act of 1940 that
invest in Russia, and negligence as used herein shall mean the failure
to exercise reasonable care as defined in this sentence. The Custodian
shall supply to the Fund Market Practice Manuals, daily Global Updates
and other materials which describe the settlement and custody
conventions in Russia.
"Notwithstanding the Custodian shall have no liability in
respect of any loss, damage or expense suffered by a Fund or any
shareholder of a Fund insofar as such loss, damage or expense arises
from investment risk inherent in investing in capital markets or in
holding assets in Russia including without limitation, (i) political,
legal, economic, settlement and custody infrastructure, and currency
and exchange rate risks; (ii) investment and repatriation restrictions;
(iii) a
5
54
Fund's inability to protect and enforce any local legal rights
including rights of title and beneficial ownership; (iv) corruption and
crime in the local market; (v) unreliable information which emanates
from the local market; (vi) volatility of banking and financial systems
and infrastructure; (vii) bankruptcy and insolvency risks of any and
all local banking agents, counterparties to cash and securities
transactions or registrars or transfer agents; and (vii) risk of issuer
insolvency or default.
"It is understood that no Registrar, whether or not any such
Registrar has entered into a contract or other arrangement with a
Subcustodian or Foreign Depository, is or shall be considered or deemed
to be a Foreign Depository or an agent of the Custodian or any
Subcustodian, and accordingly neither the Custodian nor the
Subcustodian shall be responsible for or liable to a Fund or to the
shareholders of a Fund for the acts or omissions of any such Registrar
provided that the Custodian has exercised the standard of care as set
forth herein."
10. Section 5.1, Standard of Care is further amended by the insertion
of a new section (h) Taxes and Related Expenses at the end of the current
section (g):
"(h) Taxes and Related Expenses -- It is also agreed that each
Fund shall be responsible for preparation and filing of tax returns,
reports and other documents on any activities it undertakes in Russia
which are to be filed with any relevant governmental or other authority
and for the payment of any taxes, levies, duties or similar liability
the Fund incurs in respect of property held or sold in Russia or of
payments or distributions received in respect thereof in Russia.
Accordingly, provided that the Custodian has exercised the standard of
care as set forth herein, each Fund hereby agrees to indemnify and hold
harmless the Custodian from any loss, cost or expense resulting from
the imposition or assessment of any such tax, duty, levy or liability
or any expenses related to the Fund's Property in Russia."
11. Section 5.2, Liability of Custodian for Actions of Other Persons
Subsection (a) Domestic Subcustodians, Foreign Subcustodians and Agents is
amended by inserting the following paragraph at the end of the current section:
6
55
"With respect to Russia, the Custodian shall be liable for the
actions or omissions of the Foreign Subcustodian or agent (other than
an agent appointed pursuant to Section 4.2(b) of the Agreement or any
Russian Agent) to the same extent as if such action or omission were
performed by the Custodian itself pursuant to this Agreement as hereby
amended."
12. Section 5.3, Indemnification, Subsection (a) Indemnification
Obligations is amended by inserting the following paragraph at the end of the
current section:
"With respect to Russia, and subject to the limitations set
forth in this Agreement, the Fund agrees to indemnify and hold harmless
the Custodian and its nominees for all Losses suffered or incurred by
the Custodian or its nominee (including Losses suffered under the
Custodian's indemnity obligations to Subcustodians) caused by or
arising from actions taken by the Custodian in the performance of its
duties and obligations under this Agreement as amended, provided that
the Custodian and Subcustodian have exercised the standard of care set
forth herein."
13. A new Section 10, Risk Disclosure Acknowledgment, is added at the
end of the present Section 9.9:
"Each Fund hereby acknowledges that it has received, has read
and has understood the Custodian's Risk Disclosure Statement, a copy of
which is attached hereto and is incorporated herein by reference. The
Fund acknowledges that the Risk Disclosure Statement is not
comprehensive. The parties hereto acknowledge that the Custodian's
offering subcustodial services in Russia is not intended to and shall
not be construed to be a recommendation by the Custodian that
investment in Russia is appropriate or inappropriate for the Fund."
Except as amended above, all the provisions of the Agreement as
heretofore effect shall remain in full force and effect.
7
56
IN WITNESS WHEREOF, the parties have executed this Amendment
as of the date first set forth above.
Xxxxxxx New Europe Fund, Inc. XXXXX BROTHERS XXXXXXXX & CO.
/s/Xxxxxxx X. Xxxxxx
----------------------------- -------------------------
Name: Name: Xxxxxxx X. Xxxxxx
Title: Title: Partner
8
