Exhibit (j)
CNA INCOME SHARES, INC.
DOMESTIC CUSTODY AGREEMENT
To: THE CHASE MANHATTAN BANK
3 Chase MetroTech Center, 6th Floor
Brooklyn, New York 11245
Gentlemen:
We hereby request you to open and to maintain on your records a
Custody Account in our name as entitlement holder and to credit to such account
financial assets (hereinafter defined) and cash as our securities intermediary
upon the following terms and conditions.
Financial assets credited to the Custody Account shall be segregated
at all times from , and shall not become part of, your proprietary assets.
All such financial assets shall be either maintained by you or
deposited into a securities depository through one or more agents who shall be
banks or trust companies and shall be qualified to act as custodians for
investment companies.
DEFINITIONS. As used herein, the following terms shall have the
meaning hereinafter stated:
"Agreement" means this Domestic Custody Agreement.
"Custody Account" means, each securities account on your records to
which a financial asset and cash are or may be credited pursuant to
this Agreement.
"entitlement holder" means the person on the records of a securities
intermediary as the person having a security entitlement against the
securities intermediary.
"financial assets" means securities. As the context requires a
financial asset means either the interest itself or the means by which
a person's claim to it is evidenced, including a certificated or
uncertificated security, a security certificate, or a securities
entitlement.
"securities" means stocks, bonds, rights, warrants and other
negotiable and non-negotiable paper issued in certificated
("certificated securities") or book entry form ("uncertificated
securities") and commonly traded or dealt in on securities exchanges
or financial markets, and other obligations of an issuer, or shares,
participations and interests in an issuer recognized in an area in
which it is issued or dealt in as a medium for investment and any
other property as shall be acceptable to you for the Custody Account.
"securities entitlement" means the rights and property interest of a
entitlement holder with respect to a financial asset as set forth in
Part 5 of the Uniform Commercial Code.
"securities intermediary" means, you, The Chase Manhattan Bank, a
Depository, and any other financial institution which in the ordinary
course of business maintains securities accounts for others and acts
in that capacity.
"Uniform Commercial Code" means the Uniform Commercial Code of the
State of New York.
TRANSACTIONS. Unless you receive contrary written instructions from
us, and subject to the provisions of this Agreement, you are authorized:
(a) to receive all interest and dividends payable on the financial
assets credited to the Custody Account and credit such interest and dividends to
the Custody Account (except as hereinafter set forth in the section entitled
"Miscellaneous");
(b) to credit to the Custody Account all proceeds received from sales
and redemptions of financial assets credited to the Custody Account;
(c) to debit cash from the Custody Account for the cost of acquiring
financial assets for the Custody Account as provided in this Agreement;
(d) to present financial assets (including coupons) for payment upon
maturity, when called for redemption and when income payments are due;
(e) to exchange financial assets for other financial assets where the
exchange is purely ministerial as, for example, the exchange of financial assets
in temporary form for financial assets in definitive form or the mandatory
exchange of financial assets;
(f) to sell financial assets with fractional interests resulting from
a stock split or a stock dividend and to credit the Custody Account with the
proceeds thereof;
(g) to convert moneys received with respect to financial assets of
foreign issue into United States dollars whenever it is practical to do so
through customary banking channels. In effecting such conversion you may use any
method or agency available to you, including the facilities of your own
divisions, subsidiaries or affiliates. You shall incur no liability on account
of any loss suffered or expense incurred as a result of such conversion,
including, without limitation, losses arising from fluctuations in exchange
rates affecting any such conversion;
(h) to execute in our name, whenever you or your agents deem it
appropriate, such ownership and other certificates as may be required to obtain
payments with respect to, or to effect the sale, transfer or other disposition
of, financial assets in the Custody Account and to guarantee as our signature
the signature so affixed; and
(i) to receive and hold in the Custody Account financial assets which
have transfer limitations imposed upon them by the Securities Act of 1933, as
amended.
INSTRUCTIONS. You are hereby authorized to rely and act upon all
written instructions which you believe in good faith to have been given by any
two persons from the following classes of officers ("Authorized Officers") and
individuals of our company:
1. The Chairman of the Board
2. The President
3. Any Vice President
4. The Secretary
5. The Treasurer
6. The Assistant Treasurer or the Assistant Secretary
7. Such other individuals who may be authorized in writing to
you (a copy of which shall be delivered to you) by any two of the above
Authorized Officers named in the Classes 1 to 6 inclusive, both of whom may be
in Class 3 and both of whom may not be in Class 6.
You will be entitled to rely conclusively on any certificate of the
Secretary or an Assistant Secretary of ours concerning the individuals duly
elected to the offices listed above and on any certificate of any two Authorized
Officers in Classes 1 to 6 inclusive authorizing any other individuals to give
instructions (i) that the persons listed on such certificates and any persons
added from time to time by supplemental certificates of the Secretary or any two
Authorized Officers in Classes 1, 2, 3, 5 and 6 hereof, remain so authorized
until you have received notice from us of the termination of the authority of
any such individuals, and (ii) that any supplemental instructions or amendments
to this Agreement, signed by any two Authorized Officers in Classes 1 to 6
inclusive are duly authorized and valid.
We will give you signature lists for all individuals authorized to
sign written instructions to transfer funds from the Custody Account and to sign
written instructions to sell, assign, transfer, deliver, purchase or receive
financial assets for the Custody Account (the "Authorized Representatives").
We may give you original written instructions signed in accordance
with the foregoing provisions. You may also rely and act upon original written
instructions which bear or purport to bear the facsimile signatures of any of
the Authorized Representatives or Authorized Officers regardless of by whom or
by what means the actual or purported facsimile signatures thereon may have been
affixed thereto if such facsimile signatures resemble the facsimile specimens
from time to time furnished to you by any of such Authorized Officers as set
forth above.
In addition, you may rely and act upon written instructions received
by you by facsimile transmission which you believe in good faith to have been
given by Authorized Representatives; or electronic instructions transmitted
electronically through your Geopac data entry system or any similar or successor
electronic instruction system acceptable to you which are transmitted with
proper testing or authentication pursuant to terms and conditions which you may
specify from time to time in writing to us. You shall incur no liability to us
or otherwise as a result of any act or omission by you in accordance with
instructions on which you are authorized to rely pursuant to the provisions of
this paragraph. You shall incur no liability for refraining from acting upon any
instructions which for any reason you, in good faith, are unable to verify to
your own satisfaction.
The term "instruction" whether written or electronic, includes,
without limitation, instructions to sell, assign, transfer, deliver, purchase or
receive for the Custody Account, any and all financial assets or to transfer
funds held in the Custody Account. You may deliver financial assets upon our
instructions as set forth herein only against payment therefore and your
delivery orders shall note that the financial assets are being delivered for our
account, except that you may only accept an original written instruction if the
instruction is to deliver financial assets free of any payment.
Funds may be transferred from the Custody Account only upon our
instructions specifying the amount of payment and the payee: (i) against receipt
of financial assets for our account, by you or your agent in good deliverable
form or registered in our name, or to your account or the account of your agent
at a Depository, such transactions being effected upon written instructions
being signed by two Authorized Representatives or by electronic instruction;
(ii) to a properly authorized account of ours or our affiliate under repetitive
wire instructions we will provide you, signed by any two Authorized
Representatives; (iii) to a properly authorized account of ours or our affiliate
with you or your affiliates signed by any two Authorized Representatives, or
(iv) to any properly authorized account of ours at a brokerage firm which is
specified in an original written instruction signed by any two Authorized
Representatives. A "properly authorized account" as used herein means an account
which has been designated to you in writing, signed by any two Authorized
Officers from Classes 1 through 6 hereof. With respect to instructions received
hereunder to transfer funds from the Custody Account ("payment orders"), we
agree to implement any callback or other authentication method or procedure or
security device required by you at any time or from time to time. In executing
or paying a payment order you may rely upon the identifying number (e.g.,
Fedwire routing number or account number), or any party as instructed in the
payment order. We assume full responsibility for any inconsistency between the
name and identifying number of any party in payment orders issued to you in our
name by Authorized Representatives .
Unless otherwise expressly provided, all authorizations and
instructions shall continue in full force and effect until canceled or
superseded by subsequent authorizations or instructions received by your
safekeeping account administrator with reasonable opportunity to act thereon.
Your authorization to rely and act upon instructions pursuant to this paragraph
shall be in addition to, and shall not limit, any other authorization which we
may give you regarding our accounts with you.
We agree that, if you require test arrangements, authentication
methods or procedures or other security devices to be used with respect to
instructions which we may give hereunder, thereafter instructions given by us
shall be given and processed in accordance with terms and conditions for the use
of such arrangements, methods or procedures or devices as you may put into
effect and modify from time to time. We shall safeguard any identification codes
or other security devices which you make available to us and agree that we shall
be responsible for any loss, liability or damage incurred by you or by us as a
result of your acting in accordance with instructions from any unauthorized
person using the proper security device.
If you are instructed by us to purchase or sell financial assets for
the Custody Account you may enter purchase and sale orders and confirmations,
and perform any other acts incidental or necessary to the performance thereof
with brokers or dealers or similar agents selected by you, including any broker
or dealer or similar agent affiliated with you, for our account and risk in
accordance with accepted industry practices in the relevant market.
Except as may be provided otherwise in this Agreement, you are
authorized to execute our instructions and take other actions pursuant to this
Agreement in accordance with your customary processing practices for customers
similar to us and, in accordance with such practices, you may retain agents,
including The Chase Manhattan Bank and any other subsidiaries or affiliates of
yours, to perform any of your duties and responsibilities under this Agreement.
In acting upon instructions to deliver financial assets against
payment, you and your agents are authorized, in accordance with customary
securities processing practices, to deliver such financial assets to the
purchaser thereof or dealer therefor (including to an agent for any such
purchaser or dealer) against a receipt, with the expectation of collecting
payment from the purchaser, dealer or agent to whom the financial assets were so
delivered before the close of business on the same day.
REGISTRATION. Unless you receive contrary instructions from us, you
and your agents are authorized to keep financial assets in certificated or
uncertificated form registered in your name or your agents' names or in the
names of your or your agents' nominee or nominees or, where financial assets are
eligible for deposit in a Depository (hereinafter defined), you may, and are
hereby authorized to, use any such Depository and permit the registration of
registered financial assets in the name of its nominee or nominees. We agree to
hold you and the nominees harmless from any liability resting solely on their
status as holders of record. We shall accept the return or delivery of financial
assets of the same class and denomination as those deposited with you by us or
otherwise received by you for the Custody Account, and you need not retain the
particular certificates so deposited or received. "Depository" shall mean a
federal reserve bank and any "clearing corporation" as defined in the Uniform
Commercial Code.
If any of our financial assets registered in your or your agent's name
or the name of your or your agent's nominee or credited to your or your agent's
securities account with a Depository and registered in the name of the
Depository's nominee are called for partial redemption by the issuer of such
financial assets, you are authorized to allot the called portion to the
respective entitlement holders of the financial assets in any manner deemed to
be fair and equitable by you in your sole discretion.
STATEMENTS. You shall notify us daily of each financial asset
transaction effected for the Custody Account and of income on and redemptions of
financial assets credited to the Custody Account, as well as furnish us a
listing of such financial assets, at such times upon which you and we mutually
agree. Periodic statements shall be rendered to us as we may reasonably require,
but not less frequently than monthly. You shall at all times maintain proper
books and records that shall identify us as the entitlement holder of such
financial assets. Your books and records relating to the Custody Account shall
be available for inspection upon reasonable notice to you during your regular
business hours by duly authorized officers, employees, or agents of ours, or by
legally authorized regulatory officials who are then in the process of reviewing
our financial affairs upon proof to you of such official status. You agree to
use reasonable efforts to maintain records sufficient to enable us to determine
and verify information concerning the financial assets held for our account. You
agree to furnish, upon our request or the request of the Insurance Department of
any state in which we are licensed to do business, a verification certificate in
sufficient detail to permit adequate identification of the financial assets
belonging to us as entitlement holder and held by you under the terms of this
Agreement. Such certificate shall be signed by a responsible official of yours
and furnished to the requester, with a copy to us if the requester is the
Insurance Department.
Unless we shall send to you a written exception or objection to any
statement of account within 60 days of our receipt of such statement from you,
we shall be deemed to have approved such statement. In such event, or where we
have otherwise approved such statement, you shall, to the extent permitted by
law, be released, relieved and discharged with respect to all matters set forth
in such statement or reasonably implied therefrom as though it had been settled
by the decree of a court of competent jurisdiction in an action where we and all
persons having or claiming an interest in the Custody Account were parties.
CORPORATE ACTIONS. You shall send us such proxies (signed in blank, if
issued in your name or the name of your nominee or a nominee of a Depository)
and communications with respect to financial assets in the Custody Account as
call for voting or relate to legal proceedings within a reasonable time after
sufficient copies are received by you for forwarding to customers. In addition,
you shall follow coupon payments, redemptions, exchanges or similar matters with
respect to financial assets in the Custody Account and advise us of rights
issued, tender offers or any other discretionary rights with respect to such
financial assets, in each case, of which your or your agents' central corporate
actions department receives notice from the issuer or from the Depository in
which such financial assets are maintained or notice published in publications
and reported in reporting services routinely used by you or your agents for this
purpose.
CUSTODIAN RESPONSIBILITY. You shall be obligated to indemnify us for
any loss of financial assets received for, and credited to, the Custody Account
resulting from (i) the negligence or willful misconduct of you or your officers,
employees or agents (including any Depository retained by you for such financial
assets) or (ii) the burglary, robbery, hold-up, theft or mysterious
disappearance, including loss by damage or destruction. In the event of a loss
of financial assets for which you are required to indemnify us pursuant to the
immediately preceding sentence, at your option, you shall promptly replace such
financial assets (by among other means posting appropriate security or bond with
the issuer(s) of such financial assets and obtaining their reissue) or the value
thereof (determined based upon the market value of the financial assets which
are the subject of such loss as of the date of the discovery of such loss) and
the value of any loss of rights or privileges resulting from the loss of such
financial assets. The foregoing indemnity shall be your exclusive liability to
us for your loss of financial assets held for the Custody Account. In respect of
all your other duties and obligations pursuant to the terms of this Agreement,
you shall be liable to us only to the extent of our general damages suffered or
incurred as a result of any act or omission of you or your officers, employees
or agents which constitutes negligence or willful misconduct. General damage
shall mean only those damages as directly and necessarily result from such act
or omission without reference to any special conditions or circumstances of ours
or of any transaction, whether or not you have been advised of any such special
conditions or circumstances. Anything in this Agreement to the contrary
notwithstanding, in no event shall you be liable to us under this Agreement for
special, indirect or consequential loss or damage of any kind whatsoever,
whether or not you are advised as to the possibility of such loss or damage and
regardless of the form of action any such loss or damage may be claimed.
All collection and receipt of funds or financial assets and all
payment and delivery of funds or financial assets under this Agreement shall be
made by you as our agent, at our risk with respect to our actions or omissions
and those of persons other than you, including, without limitation, the risk
associated with the securities processing practice of delivering financial
assets against a receipt and the risk that the counterparty in any transaction
into which we enter will not transfer funds or financial assets or otherwise
perform in accordance with our expectation of its obligations thereunder
(including, without limitation, where, as a result of such nonperformance, a
Depository reverses, or requires repayment of, any credit given in connection
with the transfer of financial assets).
In no event shall you or your agents be responsible or liable for any
loss due to forces beyond your control, including, but not limited to, acts of
God, flood, fire, nuclear fusion, fission or radiation, war (declared or
undeclared), terrorism, insurrection, revolution, riot, strikes or work
stoppages for any reason, embargo, closure or disruption of any market,
government action, including any laws, ordinances, regulations or the like which
restrict or prohibit the providing of the services contemplated by this
Agreement, inability to obtain equipment or communications facilities or the
error in transmission of information caused by any machines or systems or the
failure of equipment or interruption of communications facilities, and other
causes whether or not of the same class or kind as specifically named above. In
the event that you are unable substantially to perform for any of the reasons
described in the immediately preceding sentence, you shall so notify us as soon
as reasonably practicable.
We understand you maintain for your own benefit Bankers' Blanket Bond
insurance coverage with respect to the financial assets you hold in custody.
Furthermore, such insurance is maintained with standard coverage and subject to
deductibles as is customary for insurance typically maintained by banks which
act as custodians. You will continue to maintain such insurance so long as we
maintain our Custody Account with you. You will provide us with such information
as we may reasonably request, and which you customarily provide to your custody
clients, regarding such insurance coverage you maintain. Should we learn that
you have terminated or changed your insurance coverage with respect to custodied
securities you hold, our sole remedy, if we elect to exercise it, shall be to
terminate this Agreement as set forth herein.
You and your agents shall be responsible for only those duties
expressly stated in this Agreement or expressly contained in instructions to
perform the services described herein given to you pursuant to the provisions of
this Agreement and accepted by you and, without limiting the foregoing, you and
your agents shall have no duty or responsibility:
(a) to supervise the investment of, or make recommendations with
respect to the purchase, retention or sale of, financial assets relating to
the Custody Account, or to maintain any insurance on financial assets in
the Custody Account for our benefit;
(b) with regard to any financial assets in the Custody Account as to
which a default in the payment of principal or interest has occurred, to
give notice of default, make demand for payment or take any other action
with respect to such default;
(c) except as otherwise specifically provided in this section under
the heading "Custodian Responsibility", for any act or omission, or for the
solvency or insolvency, or notice to us of the solvency or insolvency, of
any broker or agent which is selected by you with reasonable care or by us
or any other person to effect any transaction for the Custody Account or to
perform any service under this Agreement;
(d) to evaluate, or report to us regarding, the financial condition of
any person, firm or corporation to which you deliver financial assets or
funds pursuant to this Agreement;
(e) for any loss occasioned by delay in the actual receipt of notice
by you of any payment, redemption or other transaction in respect to which
you and your agents are authorized to take some action pursuant to this
Agreement; or
(f) for any errors or omissions made by any securities pricing
services used by you or your agents to value financial assets credited to
the Custody Account as part of any service subscribed to by us from you.
SETTLEMENTS. We agree with you that all credits of financial assets
and proceeds by you to the Custody Account on the settlement or payable date
shall be provisional when made and you shall be entitled to reverse any such
credits subject to actual receipt or collection of immediately available funds.
We shall have sufficient immediately available funds each day in the
Custody Account to pay for the settlement of all financial assets delivered
against payment to you and your agents and credited to the Custody Account.
Should we fail to have sufficient immediately available funds in the Custody
Account to settle these deliveries of financial assets pursuant to the preceding
sentence (a "Deficit"), you, in your sole discretion, may elect (i) to reject
the settlement of any or all of the financial assets delivered to you that day
to the Custody Account, (ii) to settle the deliveries on our behalf and debit
the Custody Account (A) for the amount of such Deficit and (B) for the amount of
the funding or other cost or expense incurred or sustained by you for our
failure to have sufficient immediately available funds in the Custody Account by
the applicable settlement deadline for you, or (iii) to reverse the posting of
the financial assets credited to the Custody Account.
You and your agents shall have the right upon 48 hours notice to us,
to reverse any erroneous entries or provisional credit entries for cash to the
Custody Account retroactively to the date upon which the correct entry, or no
entry, should have been made.
The foregoing rights are in addition to and not in limitation of any
other rights or remedies available to you under this Agreement or otherwise. Any
advances made by you or your agents to us in connection with the purchase, sale,
redemption, transfer or other designation of financial assets or in connection
with disbursements of funds to any party, which create or result in an overdraft
in the Custody Account shall be deemed a loan to us, payable on demand, and
subject to the terms of a netting agreement we may have with you, bear interest
on the amount of the loan each day that the loan remains unpaid at The Chase
Manhattan Bank's prime rate in effect as announced by it from time to time, plus
one percent (unless another rate has been separately agreed upon between you and
us) plus the cost of any required reserves. If you or your agents determine that
daylight overdraft charges from the Federal Reserve Bank incurred by you or your
agents, and relating to transactions effected for custody accounts maintained by
you or them, will be charged to custody account clients, you agree to give us 30
days prior notice, and we agree to bear the portion of any such overdraft
charges allocated to transactions effected for the Custody Account.
No prior action or course of dealing on the part of you or your agents
with respect to the settlement of financial assets transactions on our behalf
shall be used by or give rise to any claim or action by us against you or your
agents for your or their refusal to pay or settle for a securities transaction
we have not timely funded as required herein.
RESPONSIBLE AS PRINCIPAL. We agree that we shall be responsible to you
as a principal for all of our obligations to you arising under or in connection
with this Agreement, notwithstanding that we may be acting on behalf of other
persons, and we warrant our authority to deposit in the Custody Account any
financial assets and funds which you or your agents receive therefor and to give
instructions relative thereto. We further agree that you shall not be subject
to, nor shall your rights and obligations with respect to this Agreement and the
Custody Account be affected by, any agreement between us and any such person.
CREDITING AND DEBITING PROCEDURES. With respect to all transactions
for the Custody Account, including, without limitation, dividend and interest
payments and sales and redemptions of securities, availability of funds credited
to the Custody Account shall be based on the type of funds used in the trade
settlement or payment, including, but not limited to, same day availability for
federal or same day funds and next business day availability for clearing house
or next day funds. Furthermore, with respect to all purchases and sales of
financial assets for the Custody Account, the proceeds from the sale of
financial assets shall be credited to the Custody Account on the date proceeds
are received by you and the cost of financial assets purchased shall be debited
to the Custody Account on the date securities are received by you, unless we
request your contractual settlement service for the Custody Account in which
case the following provisions shall apply with respect to the delivery and
receipt of financial assets for the Custody Account for those financial assets
and transactions as to which you customarily offer this service.
(a) When we instruct you to deliver or receive financial assets, on
the contractual settlement date you shall credit the Custody Account with the
expected proceeds of the transaction and debit the Custody Account for the
financial assets which we have instructed you to deliver, in the case of
deliveries, and debit the Custody Account for the cost of the financial assets
which we have instructed you to receive and credit the Custody Account with such
financial assets, in the case of receives. These credits and debits are
provisional accounting entries which you shall reverse on our written
instructions and which you may reverse, even in the absence of instructions from
us, if the transaction with respect to which they were made fails to settle
within a reasonable period, determined by you in your discretion, after the
contractual settlement date, except that if you deliver financial assets which
are returned by the recipient thereof, you may reverse such credits and debits
at any time. You have no obligation to use this crediting and debiting procedure
with respect to a delivery of financial assets if we do not have actually in our
account sufficient financial assets to make the delivery.
(b) As with other transactions processed by you, your responsibility
with respect to transactions for which you use this crediting and debiting
procedure shall be governed by the provisions of this Custody Agreement,
including the section headed "Custodian Responsibility". We agree that your
using this procedure is not an assurance by you that the transaction will
actually settle on the contractual settlement date and does not impose any
additional responsibility on you with respect to the transaction. Without
limiting your right to reverse credits and debits described above, the account
statements which you furnish to us shall reflect transactions as to which you
use this procedure as if they had actually settled on the contractual settlement
date, unless prior to the date to which the statement relates, you have reversed
such credits and debits.
(c) We agree that you may terminate this contractual settlement
service to us at any time and for any reason.
With respect to financial assets or transactions as to which you do
not customarily offer this service, you shall (i) in the case of deliveries of
financial assets, credit the proceeds of the transaction to the Custody Account
on the date they are received by you and debit the financial assets from the
Custody Account on the date they are delivered by you, and (ii) in the case of
financial assets received, debit the Custody Account for the cost of such
financial assets and credit the Custody Account with such financial assets on
the date the financial assets are received by you.
TAXES. Unless we have certified to you our U.S. tax identification
number as provided for below, we shall deliver promptly to you with respect to
each Custody Account established under this Agreement, two duly completed and
executed copies of the proper United States Internal Revenue Service forms: (i)
Form W-9, if we are a U.S. citizen or resident person; and (ii) if we are a
nonresident person, Form 1001, Form 4224, Form W-8 or Form 8709 (as applicable),
certifying our status as a nonresident person, and that we are entitled to
receive United States source payments under or in connection with this Agreement
without deduction as withholding or at a reduced rate of withholding for United
States federal income taxes. We agree to provide duly executed and completed
updates of such form(s) (or successor applicable forms), on or before the date
that such form(s) expire or become obsolete or after the occurrence of an event
requiring a change in the most recent form previously delivered by us to you. We
further agree to pay, indemnify, and hold you and your agents harmless from and
against any and all liabilities, penalties, interest or additions to tax with
respect to, or resulting from, any delay in, or failure by, you or them (i) to
pay, withhold or report any Federal, state or foreign taxes imposed on, or in
respect of, the property held in the Custody Account, or this Agreement, or (ii)
to report interest, dividend or other income paid or credited to the Custody
Account, whether such failure or delay by you to pay, withhold or report tax or
income is a result of (x) our failure to comply with the terms of this
sub-paragraph, or (y) your own acts or omissions; provided, however, we shall
not be liable to you for any penalty or additions to tax due as a result of your
or your agents failure to pay or withhold tax or to report to us interest,
dividend or other income paid or credited to the Custody Account solely as a
result of your or their negligent acts or omissions.
We hereby certify that 00-0000000 is our correct tax identification
number.
OTHER ACCOUNTS. From time to time we may instruct you to open and
maintain more than one Custody Account for us. Unless we and you otherwise
expressly agree, such accounts will be governed by the provisions of this
Agreement.
FEES, INDEMNIFICATION. We agree to pay you compensation for your
services pursuant to this Agreement at the fees of which you shall notify us
from time to time. Notwithstanding the preceding sentence, you agree that all
fees related to the Custody Account shall remain fixed for a period of three
years, beginning November 1, 1996. All such compensation shall be paid by us
within 30 days from our receipt of your invoice. We also agree to hold you and
your officers, employees and agents harmless from, and to indemnify and
reimburse you and them for, all claims, liabilities, losses, damages and
expenses (including out-of-pocket and incidental expenses and legal fees)
incurred by you or them in connection with or relating to the Custody Account or
your acting under this Agreement, provided that you or they, as the case may be,
have not acted with negligence or willful misconduct with respect to the events
resulting in such claims, liabilities, losses, damages or expenses.
You shall provide us with an itemized invoice for your services at the
end of each month until such time as you and we agree to a quarterly invoice.
You will mail such invoices until further notice from us to the following
address:
Secretary
CNA Income Shares, Inc.
XXX Xxxxx 00-Xxxxx
Xxxxxxx, Xxxxxxxx 00000
SET-OFF. You may, without prior notice to us, setoff any sums held for
us or standing to the credit of any of our cash accounts with you or your
affiliate, The Chase Manhattan Bank, in or towards the satisfaction of any
amounts advanced by you to us or on our behalf in respect of financial assets
transferred from or credited to our Custody Accounts under this Agreement,
notwithstanding that the accounts may be maintained at different branches of
yours or your affiliate and may not be expressed in the same currency.
TERMINATION. Either party may terminate this Agreement at any time
upon thirty days written notice. Our obligations pursuant to the paragraphs
under the headings "Registration", "Settlements", "Liens", "Fees,
Indemnification" and "Taxes" shall survive the termination of this Agreement.
NOTICES. Notices with respect to termination, any disputes hereunder,
specification of Authorized Officers and terms and conditions for instructions
required hereunder shall be in writing, and shall be deemed to have been duly
given if delivered personally, by courier service or by mail, postage prepaid,
to the following addresses (or to such other address as either party hereto may
from time to time designate by notice duly given in accordance with this
paragraph):
To us at: Secretary
CNA Income Shares, Inc.
XXX Xxxxx - 00 Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Other Communications. You should send us other communications to the
following addresses:
Monthly Statements:
Secretary
CNA Income Shares, Inc.
XXX Xxxxx - 00 Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Periodic Asset Lists:
Secretary
CNA Income Shares, Inc.
XXX Xxxxx - 00 Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Annual Reports, Proxies and Other Materials:
Secretary
CNA Income Shares, Inc.
XXX Xxxxx - 00 Xxxxx
Xxxxxxx, Xxxxxxxx 00000
To you, to the attention of the individual designated by you as the
safekeeping account administrator for our account, at:
The Chase Manhattan Bank
Worldwide Insurance Securities Services
3 Chase XxxxxXxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
GOVERNING LAW, SUCCESSORS AND ASSIGNS, HEADINGS. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York, without regard to laws as to conflicts of laws, and shall be binding on
our and your respective successors and assigns. The headings of the paragraphs
hereof are included for convenience of reference only and do not form a part of
this Agreement.
PRIOR PROPOSALS. This Agreement (including any Riders relating to
additional services in respect of the Custody Account we may request of you)
shall contain the complete agreement of the parties hereto with respect to the
Custody Account (except as may be expressly provided to the contrary herein) and
supersedes and replaces any previously made proposals, representations,
warranties or agreements with respect thereto by either or both of the parties
hereto. This Agreement shall become effective upon execution hereof by us and
acceptance by you.
SEPARABILITY. Any provisions of this Agreement which may be determined
by competent authority to be prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
RESERVATION OF RIGHT. You shall have the right not to accept for
deposit to the Custody Account any financial assets which are in a form or
condition which you, in your sole discretion, determine not to be suitable for
the services you provide under this Agreement.
Your rights and remedies under this Agreement are in addition to, and
not in limitation of, any other rights and remedied available to you under
applicable law.
ADDITIONAL DUTIES. If we shall ask you to perform duties or
responsibilities not specifically set forth in this Agreement and you choose to
perform such additional duties or responsibilities, you shall use reasonable
care and you shall be entitled to all the protective provisions (including but
not limited to limitation of liability and indemnification) set forth herein.
COUNTERPARTS. This Agreement may be executed in several counterparts
each of which shall be deemed to be an original and together shall constitute
one and the same agreement.
MISCELLANEOUS. You will send to us all reports you receive from a
Depository or the Federal Reserve book-entry system concerning their respective
systems of internal accounting control. Upon our request, you will send the
annual report (SAS 70 Report) prepared by your external auditors or your systems
of internal accounting control of custodied financial assets.
You are not authorized to disclose, and will not disclose our name,
address or securities position to a requester of such information, except where
you, (a) are required to do so by our regulator or a regulator of yours, or by a
subpoena or other order from a court of competent jurisdiction, or (b) you
receive explicit approval from any one of the individuals identified in the
clauses 1 to 6 in the Instructions section of this Agreement.
This Agreement shall be effective as of November 26, 1996.
CNA INCOME SHARES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx
Title: Vice President and Treasurer
By: /s/ Xxxxxxx X. XxXxxx
----------------------------------
Xxxxxxx X. XxXxxx
Title: Vice President
Accepted by:
THE CHASE MANHATTAN BANK
By: /s/ Barbazra Xxxxxxx
-----------------------------------
Title: Vice President
GLOBAL CUSTODY RIDER
TO
DOMESTIC CUSTODY AGREEMENT
We hereby request you, The Chase Manhattan Bank ("CMB"), to provide to
us, Global Custody Services subject to the terms of our Domestic Custody
Agreement (the "Agreement") with you, and the terms herein. If there is any
conflict between the terms in our Domestic Custody Agreement and the terms in
this Rider with regard to your providing Global Custody Services to us, the
terms of this Rider shall govern. The terms of this Rider shall be effective as
of the date you commence to provide Global Custody Services to us.
1. MAINTENANCE OF SECURITIES AND CASH OUTSIDE THE UNITED STATES.
Unless our instructions specifically require another location
acceptable to CMB:
(a) securities shall be held in the country or other jurisdiction in
which the principal trading market for such securities are located, where such
securities are to be presented for payment or where such securities are
acquired; and
(b) cash shall be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
Cash may be held pursuant to instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent CMB can comply with our instructions to CMB, CMB is authorized to
maintain cash balances on deposit for us with CMB or one of its affiliates at
such reasonable rates of interest as may from time to time be paid on such
accounts, or in non-interest bearing accounts as we may direct, if acceptable to
CMB.
If we wish to have any of the securities held in the custody of an
institution other than the established Subcustodians as defined in Section 2
hereof (or their securities depositories), such arrangement must be authorized
by a written agreement, signed by CMB and us.
2. SUBCUSTODIANS AND DEPOSITORIES.
CMB may act under this Rider through its global network of
subcustodians listed in Schedule A hereto with which CMB has entered into
subcustodial agreements ("Subcustodians"). We authorize CMB to hold securities
recorded to the Custody Account in accounts which CMB has established with one
or more of its branches or Subcustodians. CMB and Subcustodians are authorized
to hold any of the securities in its accounts with any Depository in which CMB
or they participate.
CMB may add new, replace or remove Subcustodians. We shall be given at
least 30 days notice by CMB of any amendment to Schedule A. Upon our request,
CMB shall identify the name, address and principal place of business of any
Subcustodian of our securities and the name and address of the governmental
agency or other regulatory authority that supervises or regulates such
Subcustodian.
With respect to securities maintained outside the United States as set
forth in Section 1 hereof, "Depositories" shall mean a securities depository or
clearing agency which operates a system for the central holding of securities or
any equivalent book entries in that country or a securities depository or
clearing corporation that operates a transnational system for central holding of
securities or equivalent book entries in the country or a "Compulsory
Depository." A Compulsory Depository shall mean an eligible foreign custodian:
(a) the use of which is mandatory because (1 ) its use is required by law or
regulation, (2) securities cannot be withdrawn from the depository, or (3)
maintaining securities outside the depository is not consistent with prevailing
custodial practices.
3. USE OF SUBCUSTODIAN.
(a) CMB shall identify the securities on its books as belonging
to us.
(b) A Subcustodian shall hold our securities together with securities
belonging to other of CMB's customers in accounts identified on such
Subcustodian's books as for the exclusive benefit of CMB customers.
(c) Any securities in the accounts held by a Subcustodian shall be
subject only to the instruction of CMB or CMB's agent. Any securities held in a
Depository for the account of a Subcustodian shall be subject only to the
directions of such Subcustodian.
(d) Any agreement CMB enters into with a Subcustodian for holding
CMB's customers' assets shall provide that such assets shall not be subject to
any right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, and that the beneficial
ownership of such assets shall be freely transferable without the payment of
money or value other than for safe custody or administration. The foregoing
shall not apply to the extent of any special agreement or arrangement made by us
with any particular Subcustodian.
4. GLOBAL SECURITIES ACCOUNT TRANSACTIONS.
(a) Securities shall be transferred, exchanged or delivered by CMB or
a Subcustodian upon receipt by CMB of instructions which include all information
required by CMB. Settlement and payment for securities received for, and
delivery of securities out of, the Custody Account may be made in accordance
with the customary or established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivery of securities to a purchaser,
dealer or their agents against a receipt with the expectation of receiving later
payment and free delivery. Delivery of securities out of the Custody Account may
be made in any manner specifically required by our instructions acceptable to
CMB.
All collections of funds or other property paid or distributed in
respect of securities in the Custody Account shall be made at our risk. CMB
shall have no liability for any loss occasioned by delay in the actual receipt
of notice by CMB or by Subcustodians of any payment, redemption or other
transaction regarding securities in the Custody Account in respect of which CMB
has agreed to take any action under the Agreement.
5. CORPORATE ACTIONS; PROXIES; TAX RECLAIMS.
(a) Corporate Actions. Whenever CMB receives information concerning
the securities which requires discretionary action by the beneficial owner of
the securities (other than a proxy), such as subscription rights, bonus issues,
stock repurchase plans and rights offerings, or legal notices or other material
intended to be transmitted to securities holders ("Corporate Actions"), CMB
shall give us notice of such Corporate Actions to the extent that CMB's central
corporate actions department has actual knowledge of a Corporate Action in time
to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, CMB shall use its reasonable best
efforts to obtain instructions from us or an Authorized Individual, but if
instructions are not received in time for CMB to take timely action, or actual
notice of such Corporate Action was received too late to seek instructions, CMB
is authorized to sell such rights entitlement or fractional interest and to
credit the Custody Account with the proceeds or take any other action CMB deems,
in good faith, to be appropriate in which case CMB shall be held harmless for
any such action.
(b) Proxy Voting. CMB shall provide proxy voting services, if elected
by us, in accordance with the terms of the Proxy Voting Services Rider hereto.
Proxy voting services may be provided by CMB, or, in whole or in part, by one or
more third parties appointed by CMB (which may be its affiliates); provided that
CMB shall be liable for the performance of CMB and any such third party to the
same extent as CMB would have been if CMB performed such services itself.
(c) Tax Reclaims.
(i) Subject to the provisions hereof, CMB shall apply for a reduction
of withholding tax and any refund of any tax paid or tax credits which
apply in each applicable country in respect of income payments on
securities for our benefit which CMB believes may be available to us.
(ii) The provision of tax reclaim services by CMB is conditional upon
CMB receiving from us or to the extent beneficially owned by others,
the beneficial owner, of securities (A) a declaration of its identity
and place of residence and (B) certain other documentation (pro forma
copies of which are available from CMB). We acknowledge that, if CMB
does not receive such declarations, documentation and information,
additional United Kingdom taxation shall be deducted from all income
received in respect of securities issued outside the United Kingdom
and that U.S. non-resident alien tax or U.S. backup withholding tax
shall be deducted from U.S. source income. We shall provide to CMB
such documentation and information as CMB may require in connection
with taxation, and warrant that, when given, this information shall be
true and correct in every respect, not misleading in any way, and
contain all material information. We undertake to notify CMB
immediately if any such information requires updating or amendment.
(iii) CMB shall not be liable to us or any third party for any taxes,
fines or penalties payable by CMB or us, and shall be indemnified
accordingly whether these result from the inaccurate completion of
documents by us or any third party, or as a result of the provision to
CMB or any third party of inaccurate or misleading information or the
withholding of material information by us or any other third party, or
as a result of any delay of any revenue authority or any other matter
beyond CMB's control.
(iv) We confirm that CMB is authorized to deduct from any cash
received or credited to the Custody Account any taxes or levies
required by any revenue or governmental authority for whatever reason
in respect of the Custody Account.
(v) CMB shall perform tax reclaim services only with respect to
taxation levied by the revenue authorities of the countries notified
to us from time to time and CMB may, by notification in writing, at
your absolute discretion, supplement or amend the countries in which
the tax reclaim services are offered. Other than as expressly provided
in this sub-clause, CMB shall have no responsibility with regard to
our tax position or status in any jurisdiction.
(vi) We confirm that CMB is authorized to disclose any information
requested by any revenue authority or any governmental body in
relation to us or the securities and/or cash held for us.
(vii) Tax reclaim services may be provided by CMB or, in whole or in
part, by one or more third parties appointed by CMB (which may be your
affiliates); provided that CMB shall be liable for the performance of
any such third party to the same extent as CMB would have been if CMB
performed such services itself.
6. NOMINEES.
Securities which are ordinarily held in registered form may be
registered in a nominee name of CMB, Subcustodian or Depository, as the cases
may be. CMB may, without prior notice to us, cause any such securities to cease
to be registered in the name of any such nominee and to be registered in our
name. We agree to hold CMB, Subcustodian, Depository and CMB's and their
respective nominees harmless from any liability arising directly or indirectly
from CMB's or their status as a mere record holder of securities in the Custody
Account.
7. STANDARD OF CARE.
CMB shall be liable to us for any loss which shall occur as the direct
result of the failure of CMB or a Subcustodian to exercise reasonable care in
the provision of custodial services by it in accordance with the standards
prevailing in the market or from the willful misconduct or dishonesty of such
Subcustodian in the provision of custodial services. CMB shall not be
responsible for the insolvency of any Subcustodian which is not a branch or
affiliate of CMB. In the event of any loss to us by reason of CMB's failure or
any Subcustodian to utilize reasonable care, CMB shall be liable to us for the
loss only to the extent as set forth in the Section of the Agreement headed
"Custodian Responsibility".
8. FEES AND EXPENSES.
We agree to pay CMB for Global Custody Services hereunder the fees set
forth in Schedule B hereto or such other amounts as may be agreed upon in
writing, together with CMB's reasonable out-of-pocket or incidental expenses,
including, but not limited to, legal fees. CMB agrees that all fees related to
the Global Custody Services shall remain fixed for a period of three years,
beginning November 1, 1996.
9. MISCELLANEOUS.
(a) Foreign Exchange Transactions. To facilitate the administration of
our trading and investment activity, CMB is authorized to enter into spot or
forward foreign exchange contracts with us or an Authorized Individual for us
and may also provide foreign exchange through its subsidiaries, affiliates or
Subcustodians. Instructions including standing instructions, may be issued with
respect to such contracts but CMB may establish rules or limitations concerning
any foreign exchange facility made available. In all cases where CMB and its
subsidiaries, affiliates or Subcustodians enter into a foreign exchange contract
related to the Custody Account, the terms and conditions of the then current
foreign exchange contract used by CMB or its subsidiary, affiliate or
Subcustodian and, to the extent not inconsistent, the Agreement shall apply to
such transaction.
(b) Certification of Residency, etc. We certify that we are a resident
of the United States and agree to notify CMB of any changes in residency. CMB
may rely upon this certification or the certification of such other facts as may
be required to administer its obligations under this Rider and the Agreement. We
shall indemnify CMB against all losses, liability, damages, claims or demands
arising directly or indirectly from any such certifications.
(c) Access to Records. CMB shall allow our independent public
accountant reasonable access to records relating to the Custody Account as is
required in connection with their examination of books and records pertaining to
our affairs. Subject to restrictions under applicable law, CMB shall also obtain
an undertaking to permit our independent public accountants reasonable access to
the records of any Subcustodian which has physical possession of any securities
as may be required in connection with the examination of our books and records.
CNA INCOME SHARES, INC.
By:
-----------------------------
Xxxxxxx X. Xxxxxxxx
Vice President and Treasurer
By:
-----------------------------
Xxxxxxx X. XxXxxx
Vice President
Accepted by:
THE CHASE MANHATTAN BANK
By:
--------------------------------
Title:
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