AGREEMENT BETWEEN
XXXXX BROTHERS XXXXXXXX & CO.
AND
AETNA VARIABLE PORTFOLIOS, Inc. -
AETNA INTERNATIONAL PORTFOLIO
CUSTODIAN AGREEMENT
AGREEMENT made this 10th day of December, 1997, between AETNA VARIABLE
PORTFOLIOS, Inc. - AETNA INTERNATIONAL PORTFOLIO (the "Fund") and Xxxxx Brothers
Xxxxxxxx & Co. (the "Custodian");
WITNESSETH: That in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. Employment of Custodian: The Fund hereby employs and appoints the
Custodian as a custodian for the term and subject to the provisions of this
Agreement. The Custodian shall not be under any duty or obligation to require
the Fund to deliver to it any securities or funds owned by the Fund and shall
have no responsibility or liability for or on account of securities or funds not
so delivered. The Fund will deposit with the Custodian copies of the Declaration
of Trust or Certificate 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.
2. Powers and Duties of the Custodian with respect to Property of the
Fund held by the Custodian in the United States: Except for securities and funds
held by any Subcustodians appointed pursuant to the provisions of Section 3
hereof, the Custodian shall have and perform the following powers and duties:
A. Safekeeping - To keep safely the securities and other assets of
the Fund that have been delivered to the Custodian and, on behalf of the Fund,
from time to time to receive delivery of securities for safekeeping.
B. Manner of Holding Securities - To hold securities of the Fund
(1) by physical possession of the share certificates or other instruments
representing such securities in registered or bearer form, or (2) in book-entry
form by a Securities System (as said term is defined in Section 2U).
C. Registered Name; Nominee - To hold registered securities of the
Fund (1) in the name or any nominee name of the Custodian or the Fund, or in the
name or any nominee name of any Agent appointed pursuant to Section 6F, or (2)
in street certificate form, so-called, and in any case with or without any
indication of fiduciary capacity, provided that securities are held in an
account of the Custodian containing only assets of the Fund or only assets held
as fiduciary or custodian for customers.
D. Purchases - Upon receipt of proper instructions, as defined in
Section 2X, insofar as funds are available for the purpose, to pay for and
receive securities purchased for the account of the Fund, payment being made
only upon receipt of the securities; provided, however, that the Custodian may
make payment, which may be prior to receipt of securities, and may accept
delivery of securities, including the form of securities received, in accordance
with governmental regulations, the rules of Securities Systems or other U.S.
securities depositories and clearing agencies, or generally accepted trade
practice in the applicable U.S. market. Receipt of securities on behalf of the
Fund shall be by the Custodian or a Subcustodian or by credit to an account
which one of them may have with a bank, Securities System, other U.S. securities
depositary or clearing agency, or other financial institution approved by the
Fund.
E. Exchanges - Upon receipt of proper instructions, to 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, relating to the securities or the
issuer of such securities, 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 2C, and may surrender securities for a different number of
certificates or instruments representing the same number of shares or same
principal amount of indebtedness, provided the securities to be issued are to be
delivered to the Custodian.
F. Sales of Securities - Upon receipt of proper instructions, to
make delivery of securities which have been sold for the account of the Fund but
only against payment therefor; provided, however, that the Custodian may make
delivery, which may be prior to receipt of payment, and may accept payment,
including the form of payment received, in accordance with governmental
regulations, the rules of Securities Systems or other U.S. securities
depositories and clearing agencies, or generally accepted trade practice in the
applicable U.S. market. Receipt of payment on behalf of the Fund shall be by the
Custodian or a Subcustodian or by credit to an account which one of them may
have with a bank, Securities System, other U.S. securities depositary or
clearing agency, or other financial institution approved by the Fund.
G. Depositary Receipts - Upon receipt of proper instructions, to
instruct a Subcustodian or an Agent to surrender securities to the depositary
used by an issuer of American Depositary Receipts or
International 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
Subcustodian or Agent that the depositary has acknowledged receipt of
instructions to issue with respect to such securities ADRs 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, to 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 a Subcustodian or an Agent.
H. Exercise of Rights; Tender Offers - Upon timely receipt of
proper instructions, to deliver to the issuer or trustee thereof, or to the
agent of either, warrants, puts, calls, 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, upon
receipt of proper instructions, to 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.
I. Stock Dividends, Rights, Etc. - To receive and collect all stock
dividends, rights and other items of like nature; and to deal with the same
pursuant to proper instructions relative thereto.
J. Options - Upon receipt of proper instructions, to receive and
retain confirmations or other documents evidencing the purchase of writing of an
option on a security or securities index by the Fund; to deposit and maintain in
a segregated account, either physically or by book-entry in a Securities System,
securities subject to a covered call option written by the Fund; and to release
and/or transfer such securities or other assets only in accordance with the
provisions of any agreement among the Fund, the Custodian and a broker-dealer
relating to such securities or other assets a notice or other communication
evidencing the expiration, termination or exercise of such covered option
furnished by The Options Clearing Corporation, the securities or options
exchange on which such covered option is traded or such other organization as
may be responsible for handling such options transactions.
K. Borrowings - Upon receipt of proper instructions, to deliver
securities of the Fund to lenders or their agents as collateral for borrowings
effected by the Fund, provided that such borrowed money is payable to or upon
the Custodian's order as Custodian for the Fund.
L. Demand Deposit Bank Accounts - To open and operate an account or
accounts in the name of the Fund, subject only to draft or order by the
Custodian, and to hold in such account or accounts all deposits accepted on the
Custodian's books denominated in U.S. and foreign currency, received for the
account of the Fund, other than deposits with Banking Institutions held in
accordance with the last paragraph of this Section 2.L. The obligation of the
Custodian for deposits accepted on the Custodian's books and denominated in U.S.
currency shall be that of a U. S. bank for a similar deposit. The obligation of
the Custodian for deposits denominated in any foreign currency shall have the
benefit of and be subject to the provisions of the last paragraph of Section 6.C
of the Agreement, and accordingly in the event and to the extent the Custodian
shall be unable to make payment due to a Sovereign Risk or other factor
described in said paragraph, the Custodian's obligation to repay the Fund in
respect of such foreign currency obligation shall similarly be deferred or
relieved until and to the extent the Custodian is able to make payment in the
currency in which the deposit is denominated and shall not be payable on demand
in U.S. currency.
If and when authorized by Proper Instructions, the Custodian may open
and operate an additional account(s) with such other banks, trust companies or
similar institutions as may be designated by the Fund in such proper
instructions (any such bank, trust company or similar institution so designated
by the Fund being referred to hereafter as a "Banking Institution"), and may
hold in such account or accounts deposits of the Fund denominated in U.S. or
foreign currency, provided that such account(s) (hereinafter collectively
referred to as "demand deposit bank accounts") shall be in the name of the
Custodian or a nominee of the Custodian for the account of the Fund or for the
account of the Custodian's customers generally and shall be subject only to the
Custodian's draft or order; provided that such demand deposit bank account.
Shall contain only assets held by the Custodian as a fiduciary or custodian for
the Fund and/or other customers and that the records of the Custodian shall
indicate at all times the Fund and/or other customers for which such funds are
held in such account and the respective interests therein. Such demand deposit
accounts may be opened with Banking Institutions in the United States and in
other countries and may be denominated in either U. S. Dollars or other
currencies as the Fund may determine. The records for
each such account will be maintained by the Custodian but the deposits in any
such account shall not constitute a deposit liability of the Custodian. All
such deposits, including with Subcustodians, shall be deemed to be portfolio
securities of the Fund and accordingly the responsibility of the Custodian
therefor shall be the same as and no greater than the Custodian's
responsibility in respect of other portfolio securities of the Fund. The
authorization by the Fund to appoint a Subcustodian as such shall also
constitute a proper instruction to open a demand deposit bank account subject
to the provisions of this paragraph with Subcustodian.
M. Interest Bearing Call or Time Deposits - To 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, in the name of the Custodian or a nominee of the Custodian
for the account of the Fund or the account of the Custodian's customers
generally and subject only to the Custodian's draft or order; provided that any
such deposit shall be held in an account containing only assets held by the
Custodian as a fiduciary or custodian for the Fund and/or other customers and
that the records of the Custodian shall indicate at all times the Fund and/or
other customers for which such funds are held in such account and the respective
interests therein. Deposits may be denominated in U.S. Dollars or other
currencies 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
other appropriate details, and shall retain such forms of advice or receipt
evidencing the deposit, if any, as may be forwarded to the Custodian by the
Banking Institution. Funds, other than those accepted on the Custodian's books
as a deposit, but including those placed with Subcustodians, shall be deemed
portfolio securities of the Fund and the responsibilities of the Custodian
therefor shall be the same as those for demand deposit bank accounts placed with
other banks, as described in the section 2.L. of this Agreement. The
responsibility of the Custodian for such funds accepted on the Custodian's books
as a deposit shall be that of a U.S. bank for a similar deposit.
N. Foreign Exchange Transactions and Futures Contracts - Pursuant
to proper instructions, to enter into 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. Such transactions may be undertaken by the
Custodian with such Banking Institutions, including the Custodian and
Subcustodian(s) as principals, as approved and authorized
by the Fund. Foreign exchange contracts and options other than those executed
with the Custodian, shall be deemed to be portfolio securities of the Fund and
the responsibilities of the Custodian therefor shall be the same as those for
demand deposit bank accounts placed with other banks as described in Section
2-L of this agreement. Upon receipt of proper instructions, to receive and
retain confirmations evidencing the purchase or sale of a futures contract or
an option on a futures contract by the Fund; to deposit and maintain in a
segregated account, for the benefit of any futures commission merchant or to
pay to such futures commission merchant, 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 by the Fund, in accordance
with the provisions of any agreement or agreements among any of the Fund, the
Custodian and such futures commission merchant, designated to comply with the
rules of the Commodity Futures Trading Commission and/or any contract market,
or any similar organization or organizations, regarding such margin deposits;
and to release and/or transfer assets in such margin accounts only in
accordance with any such agreements or rules.
O. Stock Loans - Upon receipt of proper instructions, to deliver
securities of the Fund, in connection with loans of securities by the Fund, to
the borrower thereof prior to receipt of the collateral, if any, for such
borrowing, provided that for stock loans secured by cash collateral the
Custodian's instructions to the Securities System require that the Securities
System may deliver the securities to the borrower thereof only upon receipt of
the collateral for such borrowing.
P. Collections - (i) To collect and receive all income, payments of
principal and other payments with respect to the securities held hereunder, and
in connection therewith to deliver the certificates or other instruments
representing the securities to the issuer thereof or its agent when securities
are called, redeemed, retired, mature or otherwise become payable; provided that
the payment is to be made in such form and at such time as is in accordance with
the terms of the agreement relating to the security, or such proper instructions
as the Custodian may receive, or governmental regulations, the rules of
Securities Systems or other U.S. securities depositories and clearing agencies,
or generally accepted trade practice in the applicable U.S. market; (ii) to
execute ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income, principal or other
payments with respect to securities of the Fund or in connection with transfer
of
securities; and (iii) pursuant to proper instructions to take such other actions
with respect to the collection or receipt of funds or transfer of securities
which involve an investment decision.
Q. Dividends, Distributions and Redemptions - Upon receipt of
proper instructions from the Fund, 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), the Custodian shall release funds or securities to the Shareholder
Servicing Agent or otherwise apply funds or securities, insofar as available,
for the payment of dividends or other distributions to Fund shareholders. Upon
receipt of proper instructions from the Fund, or upon receipt of instructions
from 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), the Custodian shall release funds or securities, insofar as
available to the Shareholder Servicing Agent or as such Agent shall otherwise
instruct for payment to Fund shareholders who have delivered to such Agent a
request for repurchase or redemption of their shares of capital stock of the
Fund.
R. Proxies, Notices, Etc. - Promptly to deliver or mail to the Fund
all forms of proxies and all notices of meetings and any other notices or
announcements affecting or relating to securities owned by the Fund that are
received by the Custodian, and upon receipt of proper instructions, to 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 nominee 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 thereto (except as otherwise
herein provided) unless ordered to do so by proper instructions.
S. Nondiscretionary Details - Without the necessity of express
authorization from the Fund, (1) to attend to all nondiscretionary details in
connection with the sale, exchange, substitution, purchase, transfer or other
dealings with securities, funds or other property of the Portfolio held by the
Custodian except as otherwise directed from time to time by the Directors or
Trustees of the Fund, and (2) to make payments to itself or others for minor
expenses of handling securities or other similar items relating to the
Custodian's duties under this Agreement, provided that all such payments shall
be accounted for to the Fund.
T. Bills - Upon receipt of proper instructions to pay or cause to
be paid, insofar as funds are available for the purpose, bills, statements, or
other obligations of the Fund.
U. Deposit of Fund Assets in Securities Systems - The Custodian may
deposit and/or maintain securities owned by the Fund in (i) The Depository Fund,
(ii) 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 O of Subpart O, or (iii) any other
domestic clearing agency registered with the Securities and Exchange Commission
under Section 17A of the Securities Exchange Act of 1934 which acts as a
securities depository and whose use the Fund has previously approved in writing
(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 Securities and Exchange Commission rules
and regulations, if any, and subject to the following provisions:
1) The Custodian may deposit and/or maintain Fund securities,
either directly or through one or more Agents appointed by the Custodian
(provided that any such agent shall be qualified to act as a custodian of the
Fund pursuant to the Investment Company Act of 1940 and the rules and
regulations thereunder), in a Securities System provided that such securities
are represented in an account ("Account") of the Custodian or such Agent in the
Securities System which shall not include any assets of the Custodian or Agent
other than assets held as a fiduciary, custodian, or otherwise for customers;
2) 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;
3) The Custodian shall pay for securities purchased for the
account of the Fund upon (i) receipt of advice from the Securities System that
such securities have been transferred to the Account, and (ii) 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 upon (i) receipt of advice from the Securities System that
payment for such securities has been transferred to the Account, and (ii) 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 or an Agent as referred to
above, 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;
4) The Custodian shall provide the Fund with any report obtained
by the Custodian or any Agent as referred to above on the Securities System's
accounting system, internal accounting control and procedures for safeguarding
securities deposited in the Securities System; and the Custodian and such Agents
shall send to the Fund such reports on their own systems of internal accounting
control as the Fund may reasonably request from time to time.
5) At the written request of the Fund, the Custodian will
terminate the use of any such Securities System on behalf of the Fund as
promptly as practicable.
V. Other Transfers - Upon receipt of proper instructions, to
deliver securities, funds and other property of the Fund to a Subcustodian or
another custodian of the Fund; and, upon receipt of proper instructions, to make
such other disposition of securities, funds or other property of the Fund in a
manner other than or for purposes other than as enumerated elsewhere in this
Agreement, provided that the instructions relating to such disposition shall
include a statement of the purpose for which the delivery is to be made, the
amount of securities to be delivered and the name of the person or persons to
whom delivery is to be made.
W. Investment Limitations - In performing its duties generally, and
more particularly in connection with the purchase, sale and exchange of
securities made by or for the Fund, the Custodian may assume unless and until
notified in writing to the contrary that proper instructions received by it are
not in conflict with or in any way contrary to any provisions of the Fund's
Declaration of Trust or Certificate of Incorporation or By-Laws (or comparable
documents) or votes or proceedings of the shareholders or Directors of the Fund.
The Custodian shall in no event be liable to the Fund and shall be indemnified
by the Fund for any violation which occurs in the course of carrying out
instructions given by the Fund of any investment limitations to which the Fund
is subject or other limitations with respect to the Fund's powers to make
expenditures, encumber securities, borrow or take similar actions affecting the
Fund.
X. Proper Instructions - Proper instructions shall mean a tested
telex from the Fund or a written request, direction, instruction or
certification signed or initialed on behalf of the Fund by one or more person
or persons as the Board of Trustees or Directors of the Fund shall have from
time to time authorized, provided, however, that no such instructions directing
the delivery of securities or the payment of funds to an authorized signatory
of the Fund shall be signed by such person. Those persons authorized to give
proper instructions may be identified by the Board of Trustees or Directors by
name, title or position and will include at least one officer empowered by the
Board to name other individuals who are authorized to give proper instructions
on behalf of the Fund. Telephonic or other oral instructions given by any one
of the above persons will be considered proper instructions if the Custodian
reasonably believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. Oral instructions will
be confirmed by tested telex or in writing in the manner set forth above but
the lack of such confirmation shall in no way affect any action taken by the
Custodian in reliance upon such oral instructions. The Fund authorizes the
Custodian to tape record any and all telephonic or other oral instructions
given to the Custodian by or on behalf of the Fund (including any of its
officers, Trustees, Directors, employees or agents) and will deliver to the
Custodian a similar authorization from any investment manager or adviser or
person or entity with similar responsibilities which is authorized to give
proper instructions on behalf of the Fund to the Custodian. Proper instructions
may relate to specific transactions or to types or classes of transactions, and
may be in the form of standing instructions.
Proper instructions may include communications effected directly
between electro-mechanical or electronic devices or systems, in addition to
tested telex, provided that the Fund and the Custodian agree to the use of such
device or system.
Y. Segregated Account - The Custodian shall upon receipt of proper
instructions 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 of the Fund, including securities maintained
by the Custodian pursuant to Section 2U hereof, (i) in accordance with the
provisions of any agreement among the Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers, Inc. (or any futures commission
merchant registered under the Commodity Exchange Act) relating to compliance
with the rules of the Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading Commission or any
registered contract market), or any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions
by the Fund, (ii) for purposes of segregating cash or securities in connection
with options purchased, sold or written by the Fund or commodity futures
contracts or options thereon purchased or sold by the Fund, (iii) for the
purposes of compliance by the Fund with the procedures required by Investment
Company Act Release No. 10666, or any subsequent release or releases of the
Securities and Exchange Commission relating to the maintenance of segregated
accounts by registered investment companies, and (iv) as mutually agreed from
time to time between the Fund and the Custodian.
3. Powers and Duties of the Custodian with Respect to the Appointment
of Subcustodians Outside the United States: Securities, funds and other property
of the Fund may be held by subcustodians appointed pursuant to the provisions of
this Section 3 (a "Subcustodian"). The Custodian may, at any time and from time
to time, appoint any bank or trust company (meeting the requirements of a
custodian or an "eligible foreign custodian" under the Investment Company Act of
1940 and the rules and regulations thereunder) to act as a Subcustodian for the
Fund, and the Custodian may also utilize directly and any Subcustodian may
utilize such securities depositories located outside the United States (as shall
be approved in writing by Fund) and as meet the requirements of an "eligible
foreign custodian" as aforesaid, provided that the Fund shall have approved in
writing (1) any such bank or trust company and the subcustodian agreement to be
entered into between such bank or trust company and the Custodian, and (2) if
the Subcustodian is a bank organized under the laws of a county other than the
United States, the country or countries in which the Subcustodian is authorized
to hold securities, cash and other property of the Fund, and (3) the securities
depositories, if any, through which the Subcustodian or the Custodian is
authorized to hold securities, cash and other property of the Fund. Upon such
approval by the Fund, the Custodian is authorized on behalf of the Fund to
notify each Subcustodian of its appointment as such. The Custodian may, at any
time in its discretion, remove any bank or trust Company that has been appointed
as a Subcustodian but will promptly notify the Fund of any such action.
Those Subcustodians, and the countries where and the securities
depositories through which they or the Custodian may hold securities, cash and
other property of the Fund which the Fund has approved to date are set forth on
Appendix A hereto. Such Appendix shall be amended from time to time as
Subcustodians, and/or countries and/or securities depositories are changed,
added or deleted. The Fund shall be responsible for informing the Custodian
sufficiently in advance of a proposed investment which is to be held in a
country not listed on Appendix
A, in order that there shall be sufficient time for the Fund to give the
approval required by the preceding paragraph and for the Custodian to put the
appropriate arrangements in place with such Subcustodian, including negotiation
of a subcustodian agreement and submission of such subcustodian agreement to
the Fund for approval.
If the Fund shall have invested in a security to be held in a country
before the foregoing procedures have been completed, such security shall be held
by such agent as the Custodian may appoint. In any event, the Custodian shall be
liable to the Fund for the actions of such agent if and only to the extent the
Custodian shall have recovered from such agent for any damages caused the Fund
by such agent. At the request of the Fund, Custodian agrees to remove any
securities held on behalf of the Fund by such agent, if practical, to an
approved Subcustodian. Under such circumstances Custodian will collect income
and respond to corporate actions on a best efforts basis.
With respect to securities and funds held by a Subcustodian, either
directly or indirectly (including by a securities depository or clearing
agency), notwithstanding any provision of this Agreement to the contrary,
payment for securities purchased and delivery of securities sold may be made
prior to receipt of the securities or payment, respectively, and securities or
payment may be received in a form, in accordance with governmental regulations,
rules of securities depositories and clearing agencies, or generally accepted
trade practice in the applicable local market.
With respect to the securities and funds held by a Subcustodian,
either directly or indirectly (including by a securities depository or a
clearing agency) including demand and interest bearing deposits, currencies or
other deposits and foreign exchange contracts as referred to in Sections 2L, 2M
or 2N, the Custodian shall be liable to the Fund for any losses caused the Fund
by any act or omission of any Subcustodian which constitutes a failure of the
Subcustodian to exercise reasonable care in the performance of its obligations
under the applicable subcustodian agreement. The Custodian hereby represents to
the Fund that each subcustodian agreement in effect while this Custodian
Agreement is in effect does and will require the Subcustodian to exercise
reasonable care in the performance of its obligations. The Custodian shall
nevertheless be liable to the Fund for its own negligence in transmitting any
instructions received by it from the Fund and for its own negligence in
connection with the delivery of any securities or funds held by it to any such
Subcustodian.
In the event that any Subcustodian appointed pursuant to the
provisions of this Section 3 fails to perform any of its obligations under the
terms and conditions of the applicable subcustodian agreement, the Custodian
shall
use its best efforts to cause such Subcustodian to perform such obligations. In
the event that the Custodian is unable to cause such Subcustodian to perform
fully its obligations thereunder, the Custodian shall forthwith upon the Fund's
request terminate such Subcustodian in accordance with the termination
provisions under the applicable subcustodian agreement and, if necessary or
desirable, appoint another subcustodian in accordance with the provisions of
this Section 3. At the election of the Fund, it shall have the right to
enforce, to the extent permitted by the subcustodian agreement and applicable
law, the Custodian's rights against any such Subcustodian for loss or damage
caused the Fund by such Subcustodian.
At the written request of the Fund, the Custodian will terminate any
subcustodian appointed pursuant to the provisions of Section 3 in accordance
with the termination provisions under the applicable subcustodian agreement. The
Custodian will not amend any subcustodian agreement or agree to change or permit
any changes thereunder except upon the prior written approval of the Fund.
The Custodian may, at any time in its discretion upon notification to
the Fund, terminate any Subcustodian of the Fund in accordance with the
termination provisions under the applicable Subcustodian Agreement, and at the
written request of the Fund, the Custodian will terminate any Subcustodian in
accordance with the termination provisions under the applicable Subcustodian
Agreement.
If necessary or desirable, the Custodian may appoint another
subcustodian to replace a Subcustodian terminated pursuant to the foregoing
provisions of this Section 3, such appointment to be made upon approval of the
successor subcustodian by the Fund's Board of Directors or Trustees in
accordance with the provisions of this Section 3.
In the event the Custodian intends to make any payment to a
Subcustodian under the indemnification provisions of any subcustodian agreement,
the Custodian shall give the Fund written notice of such intention no less than
thirty (30) days prior to the date such payment is to be made. The Fund shall be
obligated promptly to reimburse the Custodian the amount of such payment, unless
the Fund shall object in writing within twenty-one (21) days of receipt of the
Custodian's notice to such payment to the Subcustodian or to reimbursement of
the Custodian (i) because the Fund disputes the right of the Subcustodian to be
so indemnified or (ii) because the Fund believes that the Custodian is
responsible by reason of the Custodian's negligence or misconduct for the event
or occurrence giving rise to the Subcustodian's demand for indemnification. In
the event the Fund shall give the aforesaid written
notice of objection and the reasons therefor, the Custodian may nevertheless
make such payment to the Subcustodian without prejudice to the Custodian's
right to bring an action against and recover from the Fund for such
reimbursement; or in the alternative, the Custodian may refuse to pay the
indemnification demanded by the Subcustodian and the Fund shall in such event
indemnify and hold the Custodian harmless in respect of any recovery the
Subcustodian may obtain against the Custodian, together with the Custodian's
costs and expenses including reasonable attorneys' fees and out-of-pocket
expenses, of defending against any judicial or other proceeding pursuant to
which such recovery was obtained.
The Custodian shall furnish annually to the Fund information
concerning foreign subcustodians employed by the Custodian. Such information
shall be similar in kind and scope to that furnished to the Fund in connection
with the initial approval of the foreign subcustodians by the Fund's Board of
Directors. In addition, the Custodian will promptly inform the Fund in the event
that the Custodian learns of a material adverse change in the financial
conditions of a foreign subcustodian or is notified by a foreign banking
institution employed as a foreign subcustodian that there appears to be a
substantial likelihood that its shareholders' equity has declined or will
decline below the minimum shareholders' equity required by Rule 17f-5.
4. Assistance by the Custodian as to Certain: The Custodian may assist
generally in the preparation of reports to Fund shareholders and others, audits
of accounts, and other ministerial matters of like nature.
5. Powers and Duties of the Custodian with Respect to its Role as
Financial Agent: The Fund hereby also appoints the Custodian as the Fund's
financial agent. With respect to the appointment as financial agent, the
Custodian shall have and perform the following powers and duties:
A. Records - To create, maintain and retain such records relating
to its activities and obligations under this Agreement as are required under the
Investment Company Act of 1940 and the rules and regulations thereunder
(including Section 31 thereof and Rules 3la-1 and 3la-2 thereunder) and under
applicable Federal and State tax laws. 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.
B. Accounts - To keep books of account and render statements,
including interim monthly and complete quarterly financial statements, or copies
thereof, from time to time as reasonably requested by proper instructions.
C. Access to Records - The books and records maintained by the
Custodian pursuant to Sections 5A and 5B shall at all times during the
Custodian's regular business hours be open to inspection and audit by officers
of, attorneys for and auditors employed by the Fund and by employees and agents
of the Securities and Exchange Commission, provided that all such individuals
shall observe all security requirements of the Custodian applicable to its own
employees having access to similar records within the Custodian and such
regulations as may be reasonably imposed by the Custodian.
D. Calculation of Net Asset Value - To compute and determine the
net asset value per share of capital stock of the Fund as of the close of
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 (1) the provisions of the Fund's
Declaration of Trust or Certificate of Incorporation or By-Laws, as they may
from time to time be amended and delivered to the Custodian, (2) the votes of
the Board of Trustees or Directors of the Fund at the time in force and
applicable as they may from time to time be delivered to the Custodian, and (3)
proper instructions from such officers of the Fund or other persons as are from
time to time authorized by the Board of Trustees or Directors of the Fund to
give instructions with respect to computation and determination of the net asset
value. 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 and are reconciled with the Fund's
trading records.
In computing the net asset value, the Custodian may rely upon any
information furnished by proper instructions, including without limitation any
information (1) 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, (2) as
to the existence, status and proper treatment of reserves, if any, authorized by
the Fund, (3) as to the sources of quotations to be used in computing the net
asset value, including those listed in Appendix B, (4) as to the fair value to
be assigned to any securities or other property for which price quotations are
not readily available, and (5) as to the sources of information with respect to
"corporate actions" affecting portfolio securities of the Fund, including those
listed in Appendix B. (Information as to "corporate actions" shall include
information as to dividends, distributions, stock
splits, stock dividends, rights offerings, conversions, exchanges,
recapitalizations, mergers, redemptions, calls, maturity dates and similar
transactions, including the ex- and record dates and the amounts or other terms
thereof.)
In like manner, the Custodian shall compute and determine the net
asset value as of such other times as the Board of Trustees or Directors of the
Fund from time to time may reasonably request.
Notwithstanding any other provisions of this Agreement, including
Section 6C, the following provisions shall apply with respect to the Custodian's
foregoing responsibilities in this Section 5D: The Custodian shall be held to
the exercise of reasonable care in computing and determining net asset value as
provided in this Section 5D, but shall not be held accountable or liable for any
losses, damages or expenses the Fund or any shareholder or former shareholder of
the Fund may suffer or incur arising from or based upon errors or delays in the
determination of such net asset value unless such error or delay was due to the
Custodian's negligence, gross negligence or reckless or willful misconduct in
determination of such net asset value. (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.) In no event shall the Custodian
be liable or responsible to the Fund, any present or former shareholder of the
Fund or any other party for any error or delay which continued or was undetected
after the date of an audit performed by the certified public accountants
employed by the Fund if, in the exercise of reasonable care in accordance with
generally accepted accounting standards, such accountants should have become
aware of such error or delay in the course of performing such audit. 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 the
Fund shall incur 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) or communicating with shareholders or former
shareholders of the Fund affected by such error.
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, damages or expenses any of them
may suffer or incur resulting from (1) the Custodian's failure to receive timely
and suitable notification
concerning quotations or corporate actions relating to or affecting portfolio
securities of the Fund or (2) 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 (i) from a source which the
Custodian was authorized pursuant to the second paragraph of this Section 5D to
rely upon, or (ii) 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 loss 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
entitles could have been 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.
E. Disbursements - Upon receipt of proper instructions, to pay or
cause to be paid, insofar as funds are available for the purpose, bills,
statements and other obligations of the Fund (including but not limited to
interest charges, taxes, management fees, compensation to Fund officers and
employees, and other operating expenses of the Fund).
6. Standard of Care and Related Matters:
A. Liability of the Custodian with Respect to Proper Instruction;
Evidence of Authority; Etc. The Custodian shall not be liable for any action
taken or omitted in reliance upon proper instructions believed by it to be
genuine or upon any other written notice, request, direction, instruction,
certificate or other instrument believed by it to be genuine and signed by the
proper party or parties.
The Secretary or Assistant Secretary of the Fund shall certify to
the Custodian the names, signatures and scope of authority of all persons
authorized to give proper instructions or any other such notice, request,
direction, instruction, certificate or instrument on behalf of the Fund, the
names and signatures of the officers of the Fund, the name and address of the
Shareholder Servicing Agent, and any resolutions, votes, instructions or
directions of the Fund's Board of Trustees or Directors or shareholders. 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.
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement.
The Custodian shall be without liability for any action reasonably
taken or omitted pursuant to advice received from (i) counsel regularly retained
by the Custodian in respect of custodian matters, (ii) counsel for the Fund, or
(iii) such other counsel as the Fund and the Custodian may agree upon, provided,
however, 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 6C. The Custodian may be entitled, subject to prior
approval of the Fund, to seek reimbursement for such legal expenses as may be
agreed upon between the Fund and the Custodian.
B. Liability of the Custodian with Respect to Use of Securities
System - With respect to the portfolio securities, cash and other property of
the Fund held by a Securities System, the Custodian shall be liable to the Fund
only for any loss or damage to the Fund resulting from use of the Securities
System if caused by any negligence, misfeasance or misconduct of the Custodian
or any of its agents or of any of its or their employees or from any failure of
the Custodian or any such agent to enforce effectively such rights as it may
have against the
Securities System. At the election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with respect to any claim against the
Securities System or any other person which the Custodian may have as a
consequence of any such loss or damage to the Fund if and to the extent that
the Fund has not been made whole for any such loss or damage.
C. Standard of Care; Liability; Indemnification - The Custodian
shall be held only to the exercise of reasonable care and diligence in carrying
out the provisions of this Agreement, provided that the Custodian shall not
thereby be required to take any action which is in contravention of any
applicable law. The Fund agrees to indemnify and hold harmless the Custodian and
its nominees from all claims and liabilities (including counsel fees) incurred
or assessed against it or its nominees in connection with the performance of
this Agreement, except such as may arise from its or its nominee's breach of the
relevant standard of conduct set forth in this Agreement. Without limiting the
foregoing indemnification obligation of the Fund, the Fund agrees to indemnify
the Custodian and any nominee in whose name portfolio securities or other
property of the Fund is registered against any liability the Custodian or such
nominee may incur by reason of taxes assessed to the Custodian or such nominee
or other costs, liability or expense incurred by the Custodian or such nominee
resulting directly or indirectly from the fact that portfolio securities or
other property of the Fund is registered in the name of the Custodian or such
nominee.
It is also understood that the Custodian shall not be liable for any
loss involving any securities, currencies, deposits or other property of the
Fund, whether maintained by it, a Subcustodian, a securities depository, an
agent of the Custodian or a Subcustodian, a Securities System, or a Banking
Institution, or for any loss arising from a foreign currency transaction or
contract, where the loss results from a Sovereign Risk or where the entity
maintaining such securities, currencies, deposits or other property of the Fund,
whether the Custodian, a Subcustodian, a securities depository, an agent of the
Custodian or a Subcustodian, a Securities System or a Banking Institution, has
exercised reasonable care maintaining such property or in connection with the
transaction involving such property. A "Sovereign Risk" shall mean
nationalization, expropriation, devaluation, revaluation, confiscation, seizure,
cancellation, destruction or similar action by any governmental authority, de
facto or de jure; or enactment, promulgation, imposition or enforcement by any
such governmental authority of currency restrictions, exchange
controls, taxes, levies or other charges affecting the Fund's property; or acts
of war, terrorism, insurrection or revolution; or any other act or event beyond
the Custodian's control.
The Fund bears all risks that rules or procedures imposed by
Securities Depositories, exchange controls, asset freezes or other laws or
regulations shall prohibit or impose burdens on or costs relating to the
transfer of, by or for the account of the Fund's cash or currency held outside
the United States or denominated in a currency other than U.S. dollars or on the
conversion of any currency so held. The Custodian shall in no event be obligated
to substitute another currency (including U.S. dollars) for a currency whose
transferability, convertibility or availability has been affected by any such
law, regulation, rule or procedure. Provided that the Custodian and it Agents
have exercised reasonable care in the safekeeping of such currency deposits,
neither the Custodian nor any Subcustodian or other agent of the Custodian shall
be liable to the Fund for any loss or delay which results from the foregoing
events.
D. Reimbursement of Advances - The Custodian shall be entitled to
receive reimbursement from the Fund on demand, in the manner provided in Section
7, for its cash disbursements, expenses and charges (including the fees and
expenses of any Subcustodian or any Agent) in connection with this Agreement,
but excluding salaries and usual overhead expenses.
E. Security for Obligations to Custodian - If the Fund shall
require the Custodian to advance cash or securities for any purpose for the
benefit of the Fund, including in connection with foreign exchange contracts or
options (collectively, an "Advance"), or if the Custodian or any nominee thereof
shall incur or be assessed any taxes, charges, expenses, assessments claims or
liabilities in connection with the performance of this Agreement (collectively a
"Liability"), except such as may arise from its or such nominee's breach of the
relevant standard of conduct set forth in this Agreement, then in such event any
property at any time held for the account of the Fund by the Custodian or a
Subcustodian shall be security for such Advance or Liability and if the Fund
shall fail to repay or indemnify the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of the Fund's property,
including securities, to the extent necessary to obtain reimbursement or
indemnification.
F. Appointment of Agents - The Custodian may at any time or times
in its discretion appoint (and may at any time remove) any other bank or trust
company 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, however, that the appointment of such Agent (other than an Agent
appointed pursuant to the third paragraph of Section 3) shall not relieve the
Custodian of any of its responsibilities under this Agreement.
X. Xxxxxx of Attorney - 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.
7. Compensation of the Custodian: 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 Section 6D, shall
be billed to the Fund in such a manner as to permit payment by a direct cash
payment to the Custodian.
8. Termination; Successor Custodian: 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 seventy five (75) 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, funds and other
property held by it all accrued fees and unreimbursed expenses the payment of
which is contemplated by Sections 6D and 7, 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 funds and securities owned by the Fund and held by the Custodian or any
Subcustodian 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.
9. Amendment: This Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof. 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.
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.
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.
10. Governing Law: This instrument is executed and delivered in The
Commonwealth of Massachusetts and shall be governed by and construed according
to the laws of said Commonwealth.
11. Notices: Notices and other writings delivered or mailed postage
prepaid to the Fund addressed to the Fund at 000 Xxxxxxxxxx Xxxxxx, XXXX,
Xxxxxxxx, 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.
12. Binding Effect: 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 or obligations hereunder without the prior written consent of the
other party.
13. 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.
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.
AETNA VARIABLE PORTFOLIOS, Inc. -
AETNA INTERNATIONAL PORTFOLIO XXXXX BROS XXXXXXXX & Co.
By /s/ Xxxxxxxxx X. Xxxxxx By /s/ Xxxxxxx X. Xxxxxxx
---------------------------------- -----------------------------------
APPENDIX B
AETNA VARIABLE PORTFOLIOS, Inc. -
AETNA INTERNATIONAL PORTFOLIO
THE FOLLOWING AUTHORIZED SOURCES ARE TO BE USED FOR PRICING AND FOREIGN EXCHANGE
QUOTATIONS, CORPORATE ACTIONS, DIVIDENDS AND RIGHTS OFFERINGS:
AUTHORIZED SOURCES
BLOOMBERG
EXTEL (LONDON)
FUND MANAGERS
INTERACTIVE DATA CORPORATION
REPUTABLE BROKERS
REUTERS
SUBCUSTODIAN BANKS
THE CUSTODIAN
TELEKURS
VALORINFORM (GENEVA)
REPUTABLE FINANCIAL PUBLICATIONS
STOCK EXCHANGES
FINANCIAL INFORMATION INC. CARD
XX XXXXX
FRI CORPORATION
APPROVED: /s/ Xxxxxxxxx X. Xxxxxx 12/10/97
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DATE
