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EXHIBIT (9)
CUSTODIAN AGREEMENT
DATED AS OF
MARCH 2, 1995
BETWEEN
THE LATIN AMERICA DOLLAR INCOME FUND, INC.
AND
XXXXX BROTHERS XXXXXXXX & CO.
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TABLE OF CONTENTS
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ARTICLE I. APPOINTMENT OF CUSTODIAN.................................................... 1
ARTICLE II. POWERS AND DUTIES OF CUSTODIAN............................................. 1
2.1. Safekeeping................................................................... 1
2.2. Manner of Holding Securities.................................................. 1
2.3. Registered Name; Nominee...................................................... 1
2.4. Purchases by the Fund......................................................... 2
2.5. Exchanges of Securities....................................................... 2
2.6. Sales of Securities........................................................... 3
2.7. Depositary Receipts........................................................... 3
2.8. Exercise of Rights; Tender Offers............................................. 3
2.9. Stock Dividends, Rights, Etc.................................................. 3
2.10. Options and Swaps............................................................. 3
2.11. Futures and Forward Contracts................................................. 4
2.12. Borrowings.................................................................... 4
2.13. Bank Accounts................................................................. 4
2.14. Interest-Bearing Deposits..................................................... 5
2.15. Foreign Exchange Transactions................................................. 5
2.16. Securities Loans.............................................................. 6
2.17. Collections................................................................... 6
2.18. Dividends, Distributions and Redemptions...................................... 6
2.19. Proxies; Communications Relating to Portfolio Securities...................... 6
2.20. Bills......................................................................... 7
2.21. Nondiscretionary Details...................................................... 7
2.22. Deposit of Fund Assets in Securities Systems.................................. 7
2.23. Other Transfers............................................................... 8
2.24. Establishment of Segregated Accounts.......................................... 8
2.25. Custodian Advances............................................................ 8
ARTICLE III. PROPER INSTRUCTIONS, SPECIAL INSTRUCTIONS AND RELATED MATTERS.............
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3.1. Proper Instructions and Special Instructions.................................. 9
3.2. Authorized Persons............................................................ 9
3.3. Persons Having Access to Assets of the Fund................................... 9
3.4. Actions of Custodian Based on Proper Instructions and Special Instructions.... 10
ARTICLE IV. SUBCUSTODIANS.............................................................. 10
4.1. Domestic Subcustodians........................................................ 10
4.2. Foreign Subcustodians and Interim Subcustodians............................... 10
4.3. Termination of a Subcustodian................................................. 11
4.4. Agents........................................................................ 11
ARTICLE V. STANDARD OF CARE; INDEMNIFICATION........................................... 12
5.1. Standard of Care.............................................................. 12
5.2. Liability of Custodian for Actions of Other Persons........................... 12
5.3. Indemnification............................................................... 13
5.4. Investment Limitations........................................................ 14
5.5. Fund's Right to Proceed....................................................... 14
ARTICLE VI. RECORDS.................................................................... 14
6.1. Preparation of Reports........................................................ 14
6.2. Custodian's Books and Records................................................. 14
6.3. Opinion of Fund's Independent Certified Public Accountants.................... 15
6.4. Reports of Custodian's Independent Certified Public Accountants............... 15
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6.5. Calculation of Net Asset Value................................................ 15
6.6. Information Regarding Foreign Subcustodians and Foreign Depositories.......... 17
ARTICLE VII. CUSTODIAN FEES............................................................ 17
ARTICLE VIII. TERMINATION.............................................................. 18
ARTICLE IX. MISCELLANEOUS.............................................................. 18
9.1. Execution of Documents........................................................ 18
9.2. Entire Agreement.............................................................. 18
9.3. Waivers and Amendments........................................................ 18
9.4. Captions...................................................................... 18
9.5. Governing Law................................................................. 18
9.6. Notices....................................................................... 19
9.7. Successors and Assigns........................................................ 19
9.8. Counterparts.................................................................. 19
9.9. Representative Capacity; Nonrecourse Obligations.............................. 19
Appendix A Procedures Relating to Custodian's Security Interest
Appendix B Subcustodians, Foreign Countries, and Foreign Depositories
Appendix C Sources of Price Quotations
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FORM OF CUSTODIAN AGREEMENT
CUSTODIAN AGREEMENT dated as of March 2, 1995, between The Latin America
Dollar Income 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, 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
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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), 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 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
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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, 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,
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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 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 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.
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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 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
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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 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 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.
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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 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 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;
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(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 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.
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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 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 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
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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 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 Directors 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
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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 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, 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.
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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 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
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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 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 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
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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.
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 and regulations of the SEC
applicable to investment companies registered under the 1940 Act, including:
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(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.
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, recapitaliza-
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tions, 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 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 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.
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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 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
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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
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.
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.
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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:
THE LATIN AMERICA DOLLAR INCOME FUND, INC.
By:
-------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
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APPENDIX A TO THE
CUSTODIAN AGREEMENT BETWEEN
THE LATIN AMERICA DOLLAR INCOME FUND, INC. AND
XXXXX BROTHERS XXXXXXXX & CO.
DATED AS OF MARCH 2, 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 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
24
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 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.
2
25
IN WITNESS WHEREOF, each of the parties has caused this 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:
THE LATIN AMERICA DOLLAR INCOME FUND, INC.
By:
-------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
3
26
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:
27
SCHEDULE A
TO
PLEDGE CERTIFICATE
TYPE OF CERTIFICATE/CUSIP NUMBER OF
ISSUER SECURITY NUMBERS SHARES
------- -------- ----------------- ---------
28
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:
29
SCHEDULE A
TO
RELEASE CERTIFICATE
TYPE OF CERTIFICATE/CUSIP NUMBER OF
ISSUER SECURITY NUMBERS SHARES
------- --------- ----------------- ---------
