Exhibit (h)(3)
AMENDMENT
TO
TRANSFER AGENCY AND SERVICE AGREEMENT
The Transfer Agency and Service Agreement dated as of June 1, 1998, as amended
(the "Agreement") by and between Investors Bank & Trust Company (the "Bank"), a
Massachusetts trust company, and the Merrimac Series, a Delaware Trust (the
"Trust"), is hereby amended as of the date hereof in the manner set forth below:
WHEREAS, the USA PATRIOT Act of 2001 and the regulations promulgated thereunder
(collectively, the "USA PATRIOT Act") imposes anti-money laundering requirements
on financial institutions;
WHEREAS, the Trust recognizes the importance of complying with the USA PATRIOT
Act and the Trust has developed and implemented a written anti-money laundering
policy, which incorporates customer identification procedures (the "CIP") and
Office of Foreign Asset Control ("OFAC") compliance, designed to satisfy the
requirements of the U.S. Department of the Treasury and U.S. Securities and
Exchange Commission's Joint Final Rule: Customer Identification Programs For
Mutual Funds (the "Rule"), (the "Trust's AML Program");
WHEREAS, the USA PATRIOT Act authorizes a mutual fund to delegate to a service
provider, including its transfer agent, the operation of certain aspects of the
Trust's AML Program;
WHEREAS, the Bank is regulated by a federal functional regulator as that term is
used in the Rule; and
WHEREAS, the Trust desires to delegate to the Bank the performance of certain
aspects of the Trust's AML Program, in accordance with applicable law or
regulation, and the Bank desires to accept such delegation.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements hereinafter contained, the parties hereby agree to amend the
Agreement pursuant to the terms thereof by adding the following provisions:
1. Duties:
1.1 Duties of the Trust. The Trust shall perform the following functions
of its CIP:
(a) Notice. The Trust or its agent shall provide notice to the
Trust's prospective account holders that information is being
requested to verify their identity in order to combat money
laundering and terrorist financing.
1.2 Duties of the Bank. Subject to the terms and conditions set forth in
the Agreement, the Trust delegates to the Bank on behalf of the
Trust and its principal underwriter, and the Bank hereby assumes,
the functions set forth in this Section 1.2 with respect to new or
existing CIP Customers as required by the Trust's CIP, as described
in 31 C.F.R. ss. 103.131(b) and its OFAC compliance responsibilities
(the "Delegated Functions"):
(a) Information Collection. The Bank or its agent shall obtain the
following identifying information from each of its customers,
as defined in 31 C.F.R. 103.131(a), under applicable laws and
regulations (each a "CIP Customer"):
o Publicly Traded Corporation: Exchange symbol.
o Privately Held Corporation: Corporate Resolution or copy
of articles of incorporation.
o Partnership: Copy of the Partnership Agreement. Tax
identification (TIN) for the partnership or individual
tax identification number (ITIN).
o Limited Liability Company: Copy of the membership
agreement
o Trust: A copy of the pages of the trust agreement naming
the Grantor/Settlor of the trust, currently acting
trustees, the date the trust was established and the
signature page showing that the trust was created.
o Individual: Full legal name, date of birth, street
address (no P.O. boxes allowed) and social security
number.
(b) Documentary Identity Verification. To the extent the Trust's
CIP requires documentary identity verification for any CIP
Customer, such as review of government-issued identification
cards, the Bank or its agent shall be solely responsible for
obtaining and reviewing the appropriate documentation.
(1) If the Bank does not receive all CIP information
required by Section 1.2(a) or the account application is
not accompanied by the required documentation, a
customer's purchase request will not be considered in
good order. If CIP information is missing, the Bank will
attempt to collect the missing information prior to
rejecting the purchase application in the normal course
of business. The Bank will report any such rejection to
the Trust's AML Officer who will consider whether to
file a suspicious activity report (a "SAR").
(c) Non-Documentary Identity Verification. In accordance with the
Bank's Transfer Agent Anti-Money Laundering Procedures - New
Account Reviews (the "Bank's CIP Program") the Bank shall use
non-documentary methods to verify the information collected by
the Bank under Section 1.2 (a) above for each CIP Customer.
(2) If the identity of a customer cannot be reasonably
verified through non-documentary methods, the account
will be left open but all customer activity other than
redemptions will be restricted. The Bank will report any
such verification failure to the Trust's AML Officer who
will consider whether to file a SAR.
(d) OFAC Compliance. The Bank shall screen name and address
information of new and existing Trust customers against lists
of known or suspected terrorists or terrorist organizations
prepared by any federal government agency and referred to the
Bank in accordance with the Bank's CIP Program and all Federal
government directives related to such lists. These lists
include, but are not limited to, those prepared by the OFAC of
the U.S. Department of the Treasury which administers and
enforces economic and trade sanctions against targeted foreign
countries, terrorism sponsoring organizations and
international narcotics traffickers based on U.S. foreign
policy and national security goals. Such screening shall occur
nightly. In the event that a new or existing CIP Customer
matches a name contained on one of the foregoing lists and the
Bank cannot resolve such match in accordance with the Bank's
CIP Program, the Bank shall not open such customer's account,
shall freeze such customer's assets and will take such other
action as may be required by applicable law or regulation.
(e) Recordkeeping. The Bank will create and retain the required
records documenting the performance of the Delegated Functions
in accordance with, and for the periods required by,
applicable law or regulation.
2. Certification
The Bank shall certify to the Trust, on an annual basis, that the Bank has
performed the functions that it has agreed to perform set forth in Section 1.2
and 2 above. In addition, the Bank shall certify, on a quarterly basis, that:
(a) it has established and implemented policies, procedures and internal
controls reasonably designed to prevent the Bank from being used for
money laundering or the financing of terrorist activities in
connection with the services it provides to the Trusts, including,
but not limited to, all CIP related to all individuals and entities
investing in the Trust, and to achieve compliance with the USA
Patriot Act (the "Policies");
(b) it has designated an individual or individuals responsible for
implementing and monitoring the Policies;
(c) it has provided, and will continue to provide, ongoing training for
the appropriate personnel with respect to the Policies;
(d) (i) its Policies are functioning as intended, (ii) it has performed
the specified requirements of the Trust's CIP, and (iii) except as
may have been previously disclosed to the Trust's AML Compliance
Officer in writing, during the period covered by the certification,
there was no suspicious activity reportable under applicable law or
regulation with respect to the Trust and that none of the Trust's
applicants or shareholders failed any of the procedures enumerated
in its Policies;
(e) it provides for periodic testing of those Policies by its internal
auditors and will notify the Trust's AML Compliance Officer in
writing about the results of any such testing that could be adverse
to the Trust's interests; and
(f) (i) there have been no amendments to amendments to the Bank's CIP
Program or OFAC compliance procedures that may materially affect the
Trust or, alternatively, (ii) that the Bank has materially amended
the Bank's CIP Program, which amendment may affect the Trust.
3. Consent to Examination
The Bank understands and acknowledges that the Trust remains responsible
for ensuring its compliance with the USA PATRIOT Act and that the records the
Bank maintains for the Trust relating to the Trust's AML Program may be subject,
from time to time, to examination and/or inspection by federal regulators or the
Trust's auditors as part of the periodic testing of the Trust's AML Program. The
Bank hereby consents to such examination and/or inspection and agrees to
cooperate with such federal examiners and auditors in connection with their
review. For purposes of such examination and/or inspection, the Bank will use
its best efforts to make available during normal business hours, all required
records and information concerning the functions the Bank performs of the
Trust's CIP for review by such examiners and auditors. The Trust shall provide
the Bank with notice of any pending or planned examinations as soon as
practicable after the Trust is notified of such examination.
4. Limitation of Delegation
The Trust acknowledges and agrees that in accepting the delegation
hereunder, the Bank is agreeing to perform only those aspects of the Trust's AML
Program relating to the customer accounts as specified in Sections 1.2 and 2
above and the Bank is not undertaking and shall not be responsible for any other
aspect of the Trust's AML Program or for the overall compliance by the Trust
with the USA PATRIOT Act.
5. Miscellaneous
5.1 This Amendment applies solely to the matters discussed herein. In
all other regards, the terms and provisions of the Agreement shall
continue to apply with full force and effect.
5.2 In the event that the Bank materially amends its CIP program, it
shall promptly provide such amended CIP program to Trust's AML
Compliance Officer.
5.3 Each party represents to the other that the execution and delivery
of this Amendment has been duly authorized.
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be executed
in its name and behalf by its duly authorized representative as of October 1,
2003.
INVESTORS BANK & TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
Merrimac Series
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: President
