AMENDMENT, dated May 10, 1996 to the agreement ("Agreement"), between
the Xxxxxxxxx Russia Fund, Inc. ("Fund"), having its place of business at
000 Xxxxxxx Xxxxxx, Xx. Xxxxxxxxxx, XX 00000, and The Chase Manhattan Bank, N.A.
("Chase"), having a place of business at 0 Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, X.X.
00000.
It is hereby agreed as follows:
Section 1. Unless otherwise provided herein, all terms and conditions of
the Agreement are expressly incorporated herein by reference and except as
modified\ hereby, the Agreement is confirmed in all respects. Capitalizaed terms
used herein without definition shall have the ascribed to them in the Agreement.
Section 2. Section 3 of the Agreement is amended as follows by adding in
appropriate alphabetic sequence the following:
(a) "CMBI" shall mean Chase Manhattan Bank International, an indirect
whooly owned subsidiary of Chase, located in Moscow, Russia.
(b) "Direct Loss" shall mean a loss determined based on the market value
of the Russian Security that is the subject of the loss at the date of dis-
covery of such loss and without reference to any consequential damages, special
conditions or circumstances.
*(c) "International Financial Institution" shall mean any bank in the top
1,000 (together with their affiliated companies) as measured by "Tier 1" capital
or any broker/dealer in the top 100 as measured by capital.
(d) "Negligence" shall mean the failure to exercise reasonable care under
the applicable circumstances as measured by the custodial practices prevailing
in Russia of International Financial Insitutions acting as custodians for their
institutional investor clients in Russia.
(e) "No-Action Letter" shall mean the response of the Securities and
Exchange Commission's Office of Chief Counsel of Investment Management, dated
April 18, 1995, in respect of the Xxxxxxxxx Russia Fund, Inc. (SEC Ref. No.
95-151-CC, File no 811-8788) providing "no-action" relief under section 17(f)
of the Investment Company Act of 1940, as amended, and SEC Rule 17f-5 there-
under, in connection with custody of such Xxxxxxxxx Russia Fund, Inc.'s
investments in Russia Securities.
(f) "Registrat Company" shall mean any entity providing share registration
services to an issuer of Russian Securities.
(g) "Registrar Contract" shall mean a contract between CMBI and a Registrar
Company (and as the same may be amended from time to time) containing, INTER
ALIA, the contractual provisions described at paragraph (a)-(e) on pps. 5-6
of the No-Action Letter.
(h) "Russian Security" shall mean a Security issued by a Russian issuer.
(i) "Share Extract" shall mean: (1) an extract of its share registration
books issued by a Registrar Company indicating an investor's ownership of a
security; and (ii) a form prepared by Chase Moscow or its agent in those cases
where a Registrar Company is unwilling to issue a Share Extract.
Section 3(a). Section 10 of the Agreement is amended by adding a new
subsection (d) on p. 14 as follows: "Payment for Russian Securities shall not
be made prior to the issuance by the Registrar Company of the Share Extract
relating to such Russian Security.
Section 3(b). Section 10 of the Agreement is amended by adding a new
subsection (e) on p. 15 as follows: "Delivery of Securities may be made in
accordance with the customary or established securities trading or securities
processing practices and procedures in Russia. Delivery of Securities may also
be made in any manner specifically required by instructions acceptable to the
Bank.
Section 3(c). Section 10 of the Agreement is further amended by
adding a new sub-section (g) on p. 17 as follows: "It is understood and
agreed that Chase need only use its reasonable efforts with respect to per-
forming functions (a)-(f) immediately above with respect to Russian Securities."
Section 4(a). Section 14(a) of the Agreement is amended by inserting the
following at the end of the first sentence as follows: "; provided that, with
respect to Russian Securities, Chase's responsibility shall be limited to
safekeeping of relevant Share Extracts."
section 4(b). Section 14(a) of the Agreement is further amended by
inserting the following after the first sentence thereof: "Delegation by
Chase to CMBI shall not relieve Chase of any responsibility to Fund for any
loss due to such delegation, and Chase shall be liable for any loss or claim
arising out of or in connection with the performance by CMBI of such delegated
duties to the same extent as if Chase had itself provided the custody services
hereunder. In connection with the foregoing, neither Chase nor CMBI shall assume
responsibility for, and neither shall be liable for, any action in inaction of
any Registrar Company and no Registrar Company shall be, or shall be deemed to
be, Chase, CMBI, a Chase Branch, a Domestic Securities Depository, a Foreign
Bank, a Foreign Securities Depository or the employee, agent or personnel of
any of the foregoing. Anything to the contracy contained in the Agreement
notwithstanding, with respect to custodial services for Russian Securities,
neither Chase nor CMBI shall be liable to Fund except for Direct Losses to the
extent caused by their respective Negligency or willful misconduct. To the
extent that CMBI employs agents to perform any to the functions to be performed
by Chase or CMBI with respect to Russian Securities, neither Chase nor CMBI
shall be responsible for any act, omission, default or for the solvency of any
such agent unless the appointment of such agent was made with Negligence or in
bad faith, except that where Chase or CMBI uses: (i) an affiliated nominee or
(ii) an agent to perform the share registration or share confirmation functions
described at (a)-(e) on pps. 5-6 of the No-Action Letter and to the extent
applicable to CMBI, the share registration functions descdribed on pps. 2-3 of
the No-Action Letter, Chase and CMBI shall be liable to Fund as if CMBI was
responsible for performing such services itself."
Section 5. Add a new Section 25 to the Agreement as follows:
"(a) Chase will advise Fund (and will update such advice from time to
time as changes occur) of those Registrar Companies with which CMBI has entered
into a Registrar Contract. Chase shall cause CMBI to monitor each Registrar
Company and Chase shall promptly advise Fund whcn CMBI has actual knowledge of
the occurrence of any one or more of the events described in paragraphs (i)-(v)
on pps. 8-9 of the No-Action Letter with respect to a Registrar Company that
services in that capacity for any issuer the shares of which are held by Fund.
(b) Where Fund is considering investing in the Russian Securities of an
issuer as to which CMBI does not have a Registrar Contract with the issuer's
Registrar Company, Fund may request that CMBI consider whether it would be
willing to attempt to enter into such a Registrar Contract and CMBI shall advise
Fund of its willingness to do so. Where CMBI has agreed to make such an attempt
Chase will advise Fund of the occurrence of any one or more of the events
described in paragraphs (i)-(iv) on pps. 8-9 of the No-Action Letter of which
CMBI has actual knowledge.
(c) Where Fund is considering investing in the Russian Securities of an
issuer as to which CMBI has a Registratr Contract with the issuer's Registrar
Company, Fund may advise Chaseof its interest in investing in such issuers and,
in such event, Chase will advise Fund of the occurrence of any one or more of
the evenets descdribed in paragraphs (i)-(v) on pps 8-9 of the No-Action Letter
of which CMBI has actual knowledge."
Section 6. Add a new Section 26 to the Agreement as follows: "Fund
shall pay for and hold Chase and CMBI harmless from any liability or loss
resulting from the imposition or assessment of any taxes or other governmental
chargesm and any related expenses with respect to income from or Securities
in the Accounts."
Section 7. Add a new Section 27 to the Agreement as follows: "Fund
acknowledges that CMBI may not be able, in given cases and despite its reason-
able efforts, to obtain a Share Extract from a Registrar Company and CMBI shall
not be liable in any such event including with respect to any losses resulting
from such failure."
Section 8. Add a new Section 28 to the Agreement as follows: "Subject
to the cooperation of a Registrar Company, for at leaset the first two years
following CMBI's first use of a Registrar Company, Chase shall cause CMBI to
conduct share confirmations on at least a quarterly basis, although thereafter
confirmations may be conducted on a less frequent jbasis if Fund's Board of
Directors, in consultation with CMBI, determines it to be appropriate."
Section 9. Add a new Section 29 to the Agreement as follows: "Chase
shall cause CMBI to prepare for distribution to Fund's Board of Directors a
quarterly report identifying: (i) any concerns it has regarding the Russian
share registration system that should be brought to the attention of Board of
Directors; and (ii) the steps CMBI has taken during the reporting period to
ensure that Fund's interest continue to appropriately recorded."
Section 10. Add a new Section 30 to the Agreement as follows: "Fund
acknowledges tht it has received, reviewed and understands Chase's market
report dated May 1996 for Russia, including, but not limited to, the risks
described therein."
Section 11. Add a new Section 31 to the Agreement as follows: "Except
as provided in new Section 25 (b) and (c), the services to be provided by
Chase hereunde will be provided only in relation to Russian Securities for
which CMBI has entered into a Registrar Contract with the relevant Registrar
Company."
IN WITNESS WHEREOF, the parties have executed this Amendmkent as of the
date first above written.
Xxxxxxxxx Russia Fund, Inc. THE CHASE MANHATTAN BANK, N.A.
By:/s/XXXXXX X. XXXXXXX By:/s/XXXXXX VANDEN-HANDEL
----------------------- -------------------------------------
Name: Xxxxxx X. Xxxxxxx Name: Xxxxxx Vanden-Handel
Title: Secretary Title: Vice President
Date: May 10, 1996 Date: May 10, 0000
Xxxxxxxxxx Depositories used by Chase as of the date hereof are set forth in
Appendix 1-A hereto, and as the same may be amended on notice to Fund from time
to time.
(i) In connection with the foregoing, Chase shall:
(1) provide written reports notifying Fund's Board of the placement of
Securities and Cash with particular Eligible Foreign Custodians and of
any material change in the arrangements with such Eligible Foreign
Custodians, with such reports to be provided to Fund's Board at such
times as the Board deems reasonable and appropriate based on the
circumstances of Fund's foreign custody arrangements;
(2) exercise such reasonable care, prudence and diligence in performing
as Fund's Foreign Custody Manager as a person having responsibility for
the safekeeping of Securities and Cash would exercise;
(3) in selecting an Eligible Foreign Custodian, first have determined
that Securities and Cash placed and maintained in the safekeeping of
such Eligible Foreign Custodian shall be subject to reasonable care,
based on the standards applicable to custodians in the relevant market,
after having considered all factors relevant to the safekeeping of such
Securities and Cash, including, without limitation, those factors set
forth in SEC rule 17f-5(c)(1)(i)-(iv);
(4) determine that the written contract with the Eligible Foreign
Custodian (or, in the case of an Eligible Foreign Custodian that is a
non-Compulsory Depository or clearing agency, such contract, the rules
or established practices or procedures of the Depository, or any
combination of the foregoing) requires that the Eligible Foreign
Custodian will provide reasonable care for Securities and Cash based on
the standards applicable to custodians in the relevant market; and
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PAGE
(5) have established a system to monitor the continued appropriateness
of maintaining Securities and Cash with particular Eligible Foreign
Custodians and of the governing contractual arrangements. Chase shall
also monitor Compulsory Depositories and shall advise Fund of any
material negative change in the performance of, or arrangements with,
any Compulsory Depository as the same would adversely affect the
custody of assets.
Subject to (i)(1)-(5) above, Chase is hereby authorized to place and maintain
Securities and Cash on behalf of Fund with Eligible Foreign Custodians pursuant
to a written contract deemed appropriate by Chase.
(ii) Except as expressly provided herein, Fund shall be solely responsible
to assure that the maintenance of Securities and Cash hereunder complies with
the rules, regulations, interpretations and exemptive orders promulgated by or
under the authority of the SEC.
(iii) Chase represents to Fund that it is a U.S. Bank as defined in Rule
17f-5(a)(7). Fund represents to Chase that: (1) the Securities and Cash being
placed and maintained in Chase's custody are subject to the Investment Company
Act of 1940, as amended (the "1940 Act"), as the same may be amended from time
to time; (2) its Board has determined that it is reasonable to rely on Chase to
perform as Fund's Foreign Custody Manager; and (3) its Board or its investment
adviser shall have determined that Fund may maintain Securities and Cash in each
country in which Fund's Securities and Cash shall be held hereunder and
determined to accept the risks arising therefrom (including, but not limited to,
a country's financial infrastructure (and including any Compulsory Depository
operating in such country), prevailing custody and settlement practices, laws
applicable to the safekeeping and recovery of Securities and Cash held in
custody, and the likelihood of nationalization, currency controls and the like)
(collectively ("Country Risk")). Nothing contained herein shall require Chase to
make any selection that would entail consideration of Country Risk.
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(iv) Chase shall assist Fund in monitoring Country Risk by furnishing such
information relating to the Country Risk as is specified in Appendix 1-B hereto.
Fund hereby acknowledges that: (1) such information is solely designed to inform
Fund of market conditions and procedures and is not intended as a recommendation
to invest or not invest in particular markets; and (2) Chase has gathered the
information from sources it considers reliable, but that Chase shall have no
responsibility for inaccuracies or incomplete information except to the extent
negligently obtained by Chase.
Section 3. Add the following at the end of Section 3(d):
and which shall be limited to Eligible Foreign Custodians as defined in
(i)-(ii) and (v) of the definition of Eligible Foreign Custodians contained
herein; provided that, for purposes of the sections of this Agreement
addressing Chase liability (including, but not limited to, Sections 7, 10,
14, and 16-17), Foreign Bank shall not include any Foreign Bank as to which
Chase has not acted as Foreign Custody Manager.
Section 4. Add the following at the end of Section 3(e):
and which shall be limited to Eligible Foreign Custodians as
defined in (iii) and (iv)-(v) of the definition of Eligible
Foreign Custodians contained herein; provided that, for
purposes of the sections of this Agreement addressing Chase
liability (including, but not limited to, Sections 7, 10, 14,
and 16-17) the term Foreign Securities Depository shall not
include any Compulsory Depository or any non-compulsory
depository as to which Chase has not acted as Foreign Custody
Manager.
Section 5. Add the following definitions in appropriate alphabetic sequence
to Section 3 of the Agreement:
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(1) a "U.S. Bank," shall mean a U.S. bank as defined in SEC rule
17f-5(a)(7).
(2) an "Eligible Foreign Custodian," shall mean (i) a banking institution
or trust company, incorporated or organized under the laws of a country
other than the United States, that is regulated as such by that country's
government or an agency thereof, (ii) a majority-owned direct or indirect
subsidiary of a U.S. Bank or bank holding company which subsidiary is
incorporated or organized under the laws of a country other than the United
States; (iii) a securities depository or clearing agency, incorporated or
organized under the laws of a country other than the United States, that
acts as a system for the central handling of securities or equivalent
book-entries in that country and that is regulated by a foreign financial
regulatory authority as defined under section 2(a)(50) of the 1940 Act,
(iv) a securities depository or clearing agency organized under the laws of
a country other than the United States when acting as a transnational
system ("Transnational Depository") for the central handling of securities
or equivalent book-entries, and (v) any other entity that shall have been
so qualified by exemptive order, rule or other appropriate action of the
SEC.
Section 6. Delete existing Section 5 of the Agreement and, insert, in lieu
thereof, the following:
At the request of Fund, Chase may, but need not, add an Eligible
Foreign Custodian that is a U.S. Bank, a Foreign Bank or Foreign
Securities Depository where Chase has not acted as Foreign Custody
Manager with respect to the selection thereof; provided that, any such
entities shall not be included for purposes of the sections of this
Agreement addressing Chase liability (including, but not limited to,
Sections 7, 10, 14, and 16-17). Chase shall notify Fund in the event
that it elects to add any such entity.
*********************
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
TEMPLETON THE CHASE MANHATTAN BANK
By:/s/XXXXXXX X. XXXXX By:/s/XXXXXX VANDEN HANDEL
----------------------- -------------------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxx Vanden Handel
Title: Secretary Title: Vice President
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Appendix 1-A
LIST OF COMPULSORY DEPOSITORIES APPROVED BY THE BOARD
PAGE
Appendix 1-B
INFORMATION REGARDING COUNTRY RISK
1. To aid Fund's board in its determinations regarding Country Risk,
Chase shall furnish board annually and upon the initial placing of Securities
and Cash into a country the following information (check items applicable):
A Opinions of local counsel concerning:
___ i. Whether applicable foreign law would restrict the access
afforded Fund's independent public accountants to books and
records kept by an eligible foreign custodian located in that
country.
___ ii. Whether applicable foreign law would restrict the Fund's ability
to recover its assets in the event of the bankruptcy of an
Eligible Foreign Custodian located in that country.
___ iii. Whether applicable foreign law would restrict the Fund's ability
to recover assets that are lost while under the control of an
Eligible Foreign Custodian located in the country.
B. Written information concerning:
___ i. The likelihood of expropriation, nationalization, freezes, or
confiscation of Fund's assets.
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___ ii. Whether difficulties in converting Fund's cash and cash
equivalents to U.S. dollars are reasonably foreseeable.
C. A market report with respect to the following topics:
(i) securities regulatory environment, (ii) foreign ownership
restrictions, (iii) foreign exchange, (iv) securities settlement and
registration, (v) taxation, and (vi) compulsory depositories (including
depository evaluation).
2. To aid Fund's board in monitoring Country Risk, Chase shall furnish
board the following additional information:
As more fully described in the FCM procedures, market flashes,
including with respect to changes in the information in market reports.
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Schedule A
XXXXXXXXX U.S. FUNDS
As of February 28, 1998
XXXXXXXXX GROWTH FUND, INC. ("TGF") - 12/31/86
XXXXXXXXX FUNDS, INC. ("TFI") - 2/11/86
Xxxxxxxxx World Fund
Xxxxxxxxx Foreign Fund
XXXXXXXXX GLOBAL SMALLER COMPANIES FUND, INC. ("TGSCF") - 5/15/96
TEMPLETON INCOME TRUST ("TIT") - 5/15/96
Xxxxxxxxx Global Bond Fund
TEMPLETON GLOBAL REAL ESTATE FUND ("TGREF") - 5/15/96
XXXXXXXXX CAPITAL ACCUMULATOR FUND, INC. ("TCAF") - 1/14/91
XXXXXXXXX DEVELOPING MARKETS TRUST ("TDMT") - 10/16/91
XXXXXXXXX AMERICAN TRUST, INC. ("TAT") - 2/26/91
TEMPLETON INSTITUTIONAL FUNDS, INC. ("TIFI") - 1/29/96
Xxxxxxxxx Foreign Equity Series
Xxxxxxxxx Growth Series
Xxxxxxxxx Emerging Markets Series
Xxxxxxxxx Emerging Fixed Income Series
TEMPLETON GLOBAL OPPORTUNITIES TRUST ("TGOT") - 1/18/90
TEMPLETON GLOBAL INVESTMENT TRUST ("TGIT") - 5/7/95
Xxxxxxxxx Growth and Income Fund
Xxxxxxxxx Global Infrastructure Fund
Xxxxxxxxx Americas Government Securities Fund
Xxxxxxxxx Greater European Fund
Xxxxxxxxx Latin America Fund
XXXXXXXXX EMERGING MARKETS FUND, INC. ("TEMF") - 2/1/87
XXXXXXXXX GLOBAL INCOME FUND, INC. ("TGIF") - 2/29/88
TEMPLETON GLOBAL GOVERNMENTS INCOME TRUST ("TGG") - 10/22/88
XXXXXXXXX EMERGING MARKETS INCOME FUND, INC. ("TEMIF") - 9/17/93
XXXXXXXXX CHINA WORLD FUND, INC. ("TCWF") - 9/7/93
XXXXXXXXX EMERGING MARKETS APPRECIATION FUND, INC. ("TEMAF") - 4/22/94
XXXXXXXXX DRAGON FUND, INC. ("TDF") - 8/30/94
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC. ("TVF") - 9/15/94
XXXXXXXXX RUSSIA FUND, INC. ("TRF") - 6/15/95
TEMPLETONVARIABLE PRODUCTS SERIES FUND ("TVPSF") - 8/31/88 (amended & restated
2/23/96)
Templeton Money Market Fund
Templeton Bond Fund
Templeton Stock Fund
Templeton Asset Allocation Fund
Xxxxxxxxx International Fund
Xxxxxxxxx Developing Markets Fund
Mutual Discovery Investments Fund
Mutual Shares Investments Fund
Franklin Growth Investments Fund
Franklin Small Cap Investments Fund
FRANKLIN/XXXXXXXXX JAPAN FUND - 6/24/94
TEMPLETON VARIABLE ANNUITY FUND - 1/27/88
4
