CITIBANK
GLOBAL CUSTODIAL SERVICES AGREEMENT
TABLE OF CONTENTS
1. DEFINITIONS 1
2. APPOINTMENT OF CUSTODIAN 3
3. PROPERTY ACCEPTED 3
4. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS 3
5. INSTRUCTIONS 4
6. PERFORMANCE BY THE CUSTODIAN 5
7. POOLING, REGISTRATION AND OTHER ACTION 6
8. CUSTODY CASH ACCOUNT PAYMENTS 7
9. ASSURED INCOME PAYMENT SERVICE 8
10. WITHDRAWAL AND DELIVERY 8
11. ACCESS AND RECORDS 8
12. USE OF AGENTS 9
13. CITICORP ORGANIZATION INVOLVEMENT 9
14. SCOPE OF RESPONSIBILITY 10
15. LITIGATION; INDEMNITY 11
16. XXXX 00
00. FEES AND EXPENSES 13
18. TAX STATUS/WITHHOLDING TAXES 13
19. TERMINATION 13
20. ASSIGNMENT 14
21. JOINT AND SEVERAL LIABILITY 14
22. DISCLOSURE 14
23. NOTICES 15
24. GOVERNING LAW AND JURISDICTION 15
25. MISCELLANEOUS 15
THIS GLOBAL CUSTODIAL SERVICES AGREEMENT is made on the ______ day
of ________ 1998, by and between THE AAL MUTUAL FUNDS, a mutual fund organized
under the laws of Massachusetts, acting on its own behalf and/or as agent on
behalf of its customers, (the "Client"), having its principal place of business
at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxx 00000-0000 and CITIBANK, N.A.,
acting as a custodian hereunder through its office located at 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (the "Custodian").
1. DEFINITIONS
"Agreement" means this Global Custodial Services Agreement, as amended from
time to time, and any other terms and conditions agreed upon by the Client and
the Custodian in writing from time to time in connection with this Agreement.
"Assured Income Payment Service" means the Custodian's services in which
interest, dividends or other such periodic income, to which the Client is
entitled, on Securities specified by the Custodian from time to time at its
absolute discretion, are credited to the Custody Cash Account in respect of such
Securities.
"Assured Income Payment Standards" means the terms and conditions governing
the Assured Income Payment Service, as such terms and conditions are amended
and/or supplemented from time to time by, and at the absolute discretion of, the
Custodian.
"Assured Payment" means, in relation to those Securities specified by the
Custodian under the Assured Income Payment Service, an amount equal to the
interest, dividends or periodic income that is due to the Client in respect of
such Securities less any taxes, duties, levies, charges or any other withholding
payments payable in respect of such interest, dividends or periodic income.
"Assured Payment Date" means, in relation to the payment of any interest,
dividend or periodic income of any particular Securities specified by the
Custodian under the Assured Income Payment Service, the date on which such
interest, dividend or periodic income is normally payable in respect of such
Securities or such other date as may be notified by the Custodian to the Client
from time to time.
"Authorized Person" means (i) any person who has been authorized by the
Client, by notice in writing to the Custodian, to act on its behalf in the
performance of any act, discretion or duty under this Agreement, or (ii) any
other person holding a duly executed power of attorney from the Client which is
in a form acceptable to the Custodian (including, for avoidance of doubt, any
officer or employee of such agent or person).
"Branch" means any branch or office of Citibank, N.A.
"Citicorp Organization" means Citicorp and any company of which Citicorp
is, now or hereafter, directly or indirectly a shareholder or owner. For the
purposes of this Agreement, each Branch shall be deemed to be a separate member
of the Citicorp Organization.
"Clearance System" means The Federal Reserve Bank of New York, The
Depository Trust Company, Participants Trust Company, Cedel Bank, S.A., the
Euroclear System operated by Xxxxxx Guaranty Trust Company of New York, the
CREST system operated by CREST CO. Limited, the Central Money Markets Office,
the Central Gilts Office and such other clearing agency, settlement system or
depository as may from time to time be used in connection with transactions
relating to Securities, and any nominee, clearing agency, or depository for any
of the foregoing.
"Custody Account" means the custody account or accounts in the name of the
Client and/or such other name as the Client may reasonably designate, for the
deposit of any Property (other than cash) from time to time received by the
Custodian for the account of the Client.
"Custody Cash Account" means the cash account or accounts, which, at the
discretion of the Client, may be either a subaccount(s) of the Custody Account
or a demand deposit account(s), in the name of the Client and/or such other name
as the Client may reasonably designate, for the deposit of cash in any currency
received by the Custodian from time to time for the account of the Client,
whether by way of deposit or arising out of or in connection with any Property
in the Custody Account.
"Fee Agreement" means the agreement between the Custodian and the Client
setting forth the fees, costs and expenses to be paid by the Client to the
Custodian in connection with the custodial services provided pursuant to this
Agreement, as such fee agreement may be amended at the Custodian's reasonable
discretion from time to time by prior written notice to the Client.
"Instructions" means any and all instructions received by the Custodian
from, or reasonably believed by the Custodian in good faith to be from, any
Authorized Person, including any instructions communicated through any manual or
electronic medium or system agreed between the Client and the Custodian and on
such terms and conditions as the Custodian may specify from time to time.
"Person" means any person, firm, company, corporation, government, state or
agency of a state, or any association or partnership (whether or not having
separate legal personality) of two or more of the foregoing.
"Property" means, as the context requires, all or any part of any
Securities, cash, or any other property from time to time held for the Client
under the terms of this Agreement.
"Rules" means any rules and regulations (whether of a local regulatory
authority, stock exchange or other entity) in any jurisdiction with which the
Custodian may from time to time be required to comply in the provision of its
services hereunder.
"Securities" means bonds, debentures, notes, stocks, shares, securities or
other financial assets acceptable to the Custodian and all moneys, rights or
property which may at any time accrue or be offered (whether by way of bonus,
redemption, preference, option or otherwise) in respect of any of the foregoing
and any certificates, receipts, warrants or other instruments (whether in
registered or unregistered form) representing rights to receive, purchase or
subscribe for any of the foregoing or evidencing or representing any other
rights or interests therein (including, without limitation, any of the foregoing
not constituted, evidenced or represented by a certificate or other document but
by an entry in the books or other permanent records of the issuer, a trustee or
other fiduciary thereof, a Clearance System or other person).
"Service Standards" means any written service standards governing the day
to day operations of the custodial services which may be provided to the Client
or modified by the Custodian by notice to the Client from time to time.
"Subcustodian" means a subcustodian (other than a Clearance System)
appointed by the Custodian for the safe-keeping, administration, clearance and
settlement of Securities.
"Taxes" means all taxes, levies, imposts, charges, assessments, deductions,
withholdings and related liabilities, including additions to tax, penalties and
interest imposed on or in respect of the Property, the transactions effected
under this Agreement or the Client; PROVIDED THAT Taxes does not include income
or franchise taxes imposed on or measured by the net income of the Custodian or
its agents.
2. APPOINTMENT OF CUSTODIAN
(A) The Client hereby appoints the Custodian to act as its custodian in
accordance with the terms hereof and authorizes the Custodian to establish on
its books, on the terms of this Agreement, the Custody Account, to be designated
to show that the Securities belong to the Client and are segregated from the
Custodian's assets and the Client Cash Account.
(B) Subject to the express terms of this Agreement, the Client understands and
agrees that the obligations and duties hereunder of the Custodian shall be
performed only by the Custodian or its agents, and shall not be deemed
obligations or duties of any other member of the Citicorp Organization. The
Client agrees that the Custodian may register or record legal title to any
Securities in the name of a nominee company or a Subcustodian in the Citicorp
Organization and may appoint a member of the Citicorp Organization to be a
Subcustodian.
(C) The Client agrees to take any such action which may be necessary and to
execute further documents and provide such materials and information as may be
reasonably requested by the Custodian to enable the Custodian to perform the
duties and obligations under this Agreement, including participation in any
relevant Clearance System, and will notify the Custodian as soon as it becomes
aware of any inaccuracy in such materials or information.
(D) All custody services by the Custodian hereunder shall be provided in
accordance with the Service Standards, a copy of which the Custodian may supply
to the Client from time to time. In the event of any conflict between any term
of this Global Custodial Services Agreement and any term of the Service
Standards, the Global Custodial Services Agreement shall prevail with respect to
such term.
(E) The Client agrees to comply with any relevant security procedures relating
to the provision of custody services under this Agreement which may be specified
by the Custodian or imposed on the Client by any relevant Clearance System.
3. PROPERTY ACCEPTED
(A) Subject to Section 3(C) below, the Custodian agrees to accept for custody in
the Custody Account any Securities, which are capable of deposit under the terms
of this Agreement.
(B) Subject to Section 3(C) below, the Custodian agrees to accept for deposit in
the Client Cash Account, cash in any currency (which shall, if necessary, be
credited by the Custodian to different accounts in the currencies concerned),
such cash to be owed to the Client by the Custodian as banker.
(C) The Custodian may in its reasonable discretion refuse to accept (in whole or
in part) any proposed deposit in either the Custody Account or the Custody Cash
Account if the Custodian reasonably believes that the acceptance of such deposit
would violate any law, rule, regulation, practice or policy to which the
Custodian is subject.
4. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
(A) The Client hereby represents, warrants and undertakes to the Custodian that:
(i) it is duly organized and validly existing under the laws of the
jurisdiction of its organization;
(ii) during the term of this Agreement it (and any person on whose behalf
it may act as agent or otherwise in a representative capacity) has and
will continue to have, or will take all action necessary to obtain,
full capacity and authority to enter into this Agreement and to carry
out the transactions contemplated herein, and has taken and will
continue to take all action (including, without limitation, the
obtaining of all necessary governmental consents in any applicable
jurisdiction) to authorize the execution, delivery and performance of
obligations of the Client, and the validity and enforceability of such
obligations and the rights of the Custodian, under this Agreement;
(iii)it will not assert any interest in Property held by the Custodian in
any Clearance System in any way which could present a transfer of
title to a unit of such Property by the Custodian (or by any other
person) where such transfer is required by the Clearance System;
(iv) this Agreement is legal, valid and binding on the Client;
(v) on or prior to the execution of this Agreement, the Client has
provided to the Custodian certified true copies of evidence of the due
authorization for the execution, delivery and performance of this
Agreement;
(vi) except as provided in Clause 16 of this Agreement, all Property
deposited with the Custodian shall, at all times, be free from all
charges, mortgages, pledges or other such encumbrances; and
(vii)the Client shall, at all times, be entitled or otherwise duly
authorized to deal with, and dispose of, all or any part of the
Property, whether through a relevant Clearance System or otherwise.
The Client agrees to inform the Custodian promptly if any statement set forth in
this Section 4(A) ceases to be true and correct as of any date after the date
hereof.
(B) The Custodian hereby represents, warrants and undertakes to the Client that:
(i) it is duly organized and validly existing under the laws of the
jurisdiction of its organization;
(ii) during the term of this Agreement it has and will continue to have, or
will take all action necessary to obtain, full capacity and authority
to enter into this Agreement and to carry out the transactions
contemplated herein, and has taken and will continue to take all
action (including, without limitation, the obtaining of all necessary
governmental consents in any applicable jurisdiction) to authorize the
execution, delivery and performance of this Agreement; and
(iii) this Agreement is legal, valid and binding on the Custodian.
The Custodian agrees to inform the Client promptly if any statement set forth in
this Section 4(B) ceases to be true and correct as of any date after the date
hereof.
5. INSTRUCTIONS
(A) The Custodian may, in its absolute discretion and without liability on its
part, rely and act upon (and the Client shall be bound by) any Instructions.
Instructions shall continue in full force and effect until canceled or
superseded; PROVIDED THAT any Instruction canceling or superseding a prior
Instruction must be received by the Custodian at a time and in a manner that
accords the Custodian a reasonable opportunity to act upon such Instruction. The
Custodian shall be entitled to rely upon the continued authority of any
Authorized Person to give Instructions until the Custodian receives notice from
the Client to the contrary.
(B) Instructions shall be governed by and carried out subject to the prevailing
laws, rules, operating procedures and market practice of any relevant stock
exchange, Clearance System or market where or through which they are to be
executed or carried out, and shall be acted upon only during banking hours
(including applicable cut-off times) and on banking days when the applicable
financial markets are open for business.
(C) Instructions delivered to the Custodian by telephone or facsimile shall be
promptly confirmed in writing, by tested telex, SWIFT, letter, the Custodian's
proprietary electronic banking system or as provided in the Service Standards,
such confirmation shall, where relevant, be made by an Authorized Person.
However, the Custodian may, in its absolute discretion, rely and act upon
telephone or facsimile Instructions before the written confirmation is received.
(D) The Custodian has offered the Client security procedures for the
transmission of Instructions to the Custodian (and the Client acknowledges that
it has received the same and agrees that the security procedures mutually agreed
to by the Client and the Custodian are commercially reasonable). As long as the
Custodian acts in compliance with such security procedures and this Section 5,
it shall have no further duty to verify the identity or authority of the person
giving or confirming, or the genuineness or contents of, any Instruction.
(E) The Custodian is authorized to rely upon any Instructions received by any
means, provided that the Custodian and the Client have agreed upon the means of
transmission and the method of identification for such Instructions.
(F) Instructions are to be given in the English language. The Custodian may in
its reasonable discretion and without any liability on its part, act upon what
it reasonably believes in good faith such Instructions to be; notwithstanding
any other provision hereof, the Custodian shall have the right, in its
reasonable discretion to refuse to execute any such Instruction, in which event
the Custodian shall notify the Client of such refusal without undue delay.
(G) The Client agrees to be bound by any Instructions, whether or not
authorized, given to the Custodian in the Client's name and accepted by the
Custodian in accordance with the provisions of this Section 5.
6. PERFORMANCE BY THE CUSTODIAN
(A) Custodial duties not requiring further Instructions. In the absence of
contrary Instructions, the Custodian is authorized by the Client to, and where
applicable, the Custodian shall, carry out the following actions in relation to
the Property:
(i) except as otherwise provided in this Agreement, separately identify
the Property on its records as being held for the account of the
Client and segregate all Property held on behalf of the Client by the
Custodian from the assets of the Custodian;
(ii) sign any affidavits, certificates of ownership or other certificates
relating to the Property which may be required by any tax or
regulatory authority or under the laws of any relevant jurisdiction,
whether governmental or otherwise, and whether relating to ownership,
or income, capital gains or other tax, duty or levy (and the Client
further agrees to ratify and to confirm or to do, or to procure the
doing of, such things as may be necessary or appropriate to complete
or evidence the Custodian's actions under this Section 6(A)(ii) or
otherwise under the terms of this Agreement);
(iii)collect and receive, for the account of the Client, all income,
payments and distributions in respect of the Property, and credit the
same to the Custody Cash Account;
(iv) take any action which is necessary and proper in connection with the
receipt of income, payments and distributions as are referred to in
Section 6(A)(iii) above, including, without limitation, the
presentation of coupons and other interest items;
(v) collect, receive and hold for the account of the Client any capital
arising out of or in connection with the Property whether as a result
of it being called or redeemed or otherwise becoming payable and
credit the same to the Custody Cash Account;
(vi) take any action which is necessary and proper in connection with the
receipt of any capital as is referred to in Section 6(A)(v) above,
including, without limitation, the presentation for payment of any
Property which becomes payable as a result of its being called or
redeemed or otherwise becoming payable and the endorsement for
collection of checks, drafts and other negotiable instruments;
(vii)take any action which is necessary and proper to enable the Custodian
to provide services to the Client within, and to observe and perform
its obligations in respect of, any relevant Clearance System;
(viii) receive and hold for the account of the Client all Securities
received by the Custodian as a result of a stock dividend, share
sub-division or reorganization, capitalization of reserves or
otherwise;
(ix) exchange interim or temporary receipts for definitive certificates,
and old or overstamped certificates for new certificates and hold such
definitive and/or new certificates in the Custody Account;
(x) make cash disbursements for any expenses incurred in handling the
Property and for similar items in connection with the Custodian's
duties under this Agreement in accordance with the Fee Agreement, and
debit the same to the Client Cash Account or any other account of the
Client with the Custodian; and
(xi) deliver to the Client transaction advices and/or regular statements of
account showing the Property held at such intervals as may be agreed
between the parties hereto but subject always to applicable Rules.
(B) Custodial duties requiring Instructions. The Custodian is authorized by the
Client to, and where applicable, the Custodian shall, carry out the following
actions in relation to the Property only upon receipt of and in accordance with
specific Instructions:
(i) make payment for and receive Property, or deliver or dispose of
Property;
(ii) (subject to Section 7(D)) deal with subscription, rights, bonus or
scrip issues, conversions, options, warrants and other similar
interests or any other discretionary right in connection with the
Property; and
(iii)subject to the agreement of the Custodian, to carry out any action
other than those mentioned in Section 6(A) above.
7. POOLING, REGISTRATION AND OTHER ACTION
(A) Subject to applicable laws, rules and regulations, any Property may be
pooled with other property of the Custodian's customers, like with like, and the
Client is beneficially entitled to such portion of the property that has been
pooled as shall correspond to the Property deposited with the Custodian by the
Client (as increased or diminished by subsequent sales or purchases from time to
time);
(B) The Client understands and agrees that, except as may be specified in the
Service Standards, Property shall be registered as the Custodian may direct
either in the name of the Custodian, Subcustodian or Clearance System, or
nominee of any of them, in the jurisdiction where the Property is required to be
registered or otherwise held. Where feasible, the Custodian will arrange on
written, request by the Client for the registration of Property with the issuer
or its agent in the name of the Client or its nominee. The Client understands
and agrees, however, that the Custodian shall have discretion to determine
whether such direct registration is feasible.
(C) The Custodian shall, to the extent reasonably possible, notify, make
available or deliver to the Client, in a timely manner, all official notices,
circulars, reports and announcements that are received by the Custodian in such
capacity concerning the Securities held on the Client's behalf that require
discretionary action.
(D) The Custodian shall provide proxy services to the Client only where there is
a separate agreement in relation to proxy services between the Custodian and the
Client.
(E) Upon receipt of each transaction advice and/or statement of account, the
Client shall examine the same and notify the Custodian within thirty (30) days
of the date of any such advice or statement of any discrepancy between
Instructions given and the situation shown in the transaction advice and/or
statement, and/or of any other errors therein. In the event that the Client does
not inform the Custodian in writing of any exceptions or objections within
thirty (30) days after the date of such transaction advice and/or statement, the
Client shall be deemed to have approved such transaction advice and/or
statement.
8. CUSTODY CASH ACCOUNT PAYMENTS
(A) Except as otherwise provided herein, the Custodian shall make, or cause its
agents to make, payments of cash credited to the Custody Cash Account:
(i) in connection with the purchase of Property (other than cash) for the
account of the Client in accordance with Instructions;
(ii) in payment for the account of the Client of (A) all Taxes, claims,
liabilities, fees, costs and expenses incurred by the Custodian or its
agents under or in connection with the terms of this Agreement, and
(B) all amounts owed to the Custodian pursuant to the Fee Agreement;
(iii)for payments to be made in connection with the conversion, exchange
or surrender of Property held in the Custody Account;
(iv) pursuant to assured payment obligations incurred in the capacity of
settlement bank on behalf of the Client within a relevant Clearance
System;
(v) for other purposes as may be specified by the Client in its
Instructions; or
(vi) upon the termination of this Agreement on the terms hereof;
PROVIDED THAT, unless otherwise agreed, the payments referred to above
shall not exceed the funds available in the Custody Cash Account at any time.
The Client shall promptly reimburse the Custodian for any advance of cash or any
such taxes, charges, expenses, assessments, claims or liabilities upon request
for payment. Notwithstanding the foregoing, nothing in this Agreement shall
obligate the Custodian to extend credit, grant financial accommodation or
otherwise advance moneys to the Client or assume financial risk on behalf of the
Client for the purpose of meeting any such payments or otherwise carrying out
any Instructions.
(B) Unless otherwise provided herein, the proceeds from the sale or exchange of
Property will be credited to the Custody Cash Account on the date the proceeds
are actually received by the Custodian.
9. ASSURED INCOME PAYMENT SERVICE
(A) The Custodian may, at its absolute discretion, offer the Client an Assured
Income Payment Service in respect of specific Securities, as may be notified by
the Custodian to the Client from time to time. In relation to any such
Securities, the Custodian may, at its absolute discretion, cause the Custody
Cash Account to be credited with an Assured Payment on the Assured Payment Date
relevant thereto; PROVIDED THAT the Custodian shall be entitled to reverse any
credit (in whole or in part) made in respect of that Assured Payment if the
Custodian fails to receive the full amount corresponding to such Assured Payment
within a reasonable time, as determined by the Custodian in its absolute
discretion, after the relevant Assured Payment Date, for any reason whatsoever
other than as a result of the negligence or willful default of the Custodian.
The Assured Income Payment Service shall be provided by the Custodian in
accordance with the Assured Income Payment Standards.
(B) Where the Custodian acts as a settlement bank in any relevant Clearance
System:
(i) upon the Custodian incurring any assured payment obligation, the
Client shall reimburse the Custodian for such amount, and the
Custodian may debit the Client Cash Account with such amount;
(ii) the Custodian may without notice set, revise or disable debit caps in
respect of the maximum aggregate amount of assured payment obligations
it will incur on behalf of the Client; and
(iii)if another settlement bank in such Clearance System defaults on an
assured payment obligation owed to the Custodian wholly or partially,
the Custodian has no liability to make good the loss and will, where
appropriate, attribute the loss pro rata between all Clients on whose
behalf such payment should have been received by the Custodian.
10. WITHDRAWAL AND DELIVERY
Subject to the terms of this Agreement, the Client may at any time demand
withdrawal of all or any part of the Property in the Custody Account and/or the
Custody Cash Account. Delivery of any Property will be made without undue delay
at the expense of the Client at such location as the parties hereto may agree;
PROVIDED THAT if the Custodian has effected any transaction on behalf of the
Client the settlement of which is likely to occur after a withdrawal pursuant to
this Section 10, then the Custodian shall be entitled in its absolute discretion
to close out or complete such transaction and to retain sufficient funds from
the Property for that purpose.
11. ACCESS AND RECORDS
(A) Access to the Custodian's Records. Except as otherwise provided in this
Agreement, during the Custodian's regular business hours and upon receipt of
reasonable notice from the Client, any officer or employee of the Client, any
independent public accountant(s) selected by the Client and any person
designated by any regulatory authority having jurisdiction over the Client shall
be entitled to examine on the Custodian's premises Property held by the
Custodian and the Custodian's records regarding Property deposited with entities
authorized to hold Property in accordance with Section 12 hereof, but only upon
the Client's furnishing the Custodian with Instructions to that effect; PROVIDED
THAT such examination shall be consistent with the Custodian's obligations of
confidentiality to other parties. The Custodian's reasonable costs and expenses
in facilitating such examinations, including but not limited to the cost to the
Custodian of providing personnel in connection with examinations, shall be borne
by the Client.
(B) Access to Third Party Records. The Custodian shall also, subject to
restrictions under applicable laws and regulations, seek to obtain from any
entity with which the Custodian maintains the physical possession or book-entry
record of any of the Property in the Custody Account or the Custody Cash Account
such records as may be required by the Client or its agents.
12. USE OF AGENTS
(A) The Custodian is authorized subject to any relevant Rules, to appoint agents
(each an "agent", which term includes, without limitation, service providers and
Subcustodians, but not Clearance Systems, and which agents may be a member or
members of the Citicorp Organization) and to participate in Clearance Systems,
whether in its own name or that of the Client, and whether by participation as a
member, sponsor or settlement bank within the Clearance System, to perform any
of the duties of the Custodian under this Agreement. The Custodian may delegate
to any such agent or Clearance System any of its functions under this Agreement,
including, without limitation, the collection of any payment or payments,
whether of an income or a capital nature, due on the Property.
(B) In the selection and use of such agents and participation in such Clearance
Systems, the Custodian shall comply with any relevant Rules, and shall be
responsible only for the negligence in the selection of such agents and
Clearance Systems but shall otherwise have no responsibility for the performance
by such agents or Clearance System of any of the duties delegated to them under
this Agreement; notwithstanding the foregoing, the Custodian shall be
responsible for the negligence, fraud or willful default of any Subcustodian
that is a Branch or subsidiary of Citibank, N.A., and shall have the same level
of responsibility to the Client for any nominee company controlled by the
Custodian or by any of the Custodian's affiliated companies as the Custodian has
for itself.
(C) Subject to any relevant Rules and regulations, the Property may be deposited
with any Subcustodian deemed appropriate by the Custodian or in any Clearance
System deemed appropriate by the Custodian or a Subcustodian, as the case may
be. Property held in any Clearance System shall be subject to the rules or
operating procedures of such Clearance System, including rules regarding
supervision or termination of membership of such Clearance System, and such
further information provided by the Custodian to the Client, or acknowledgments
or agreements which may be required from the Client, for the purposes of this
Section 12(C) in connection with use of a Clearance System from time to time.
The Custodian will direct each Subcustodian and Clearance System to separately
identify on its books Securities held by it pursuant to this Agreement as being
held for the account of the Custodian's customers. The Custodian will direct
each Subcustodian and Clearance System to segregate any such Securities held by
such entity from the assets of the Custodian and such entity.
The Client is hereby advised that, where the Custodian arranges for any
Property to be held overseas, there may be different settlement, legal and
regulatory requirements in overseas jurisdictions from those applying in the
United States, together with different practices for the separate identification
of the Client's Property.
13. CITICORP ORGANIZATION INVOLVEMENT
(A) To the extent permitted by applicable law, the Client hereby authorizes the
Custodian without the need for the Custodian to obtain the Client's prior
consent:
(i) when acting on Instructions to purchase and/or sell Property (other
than cash) from, to or through itself or any other member of the
Citicorp Organization and from and/or to any other customer of the
Custodian or any other member of the Citicorp Organization; and
(ii) to obtain and keep, without being liable to account to the Client, any
commission payable by any third party or any other member of the
Citicorp Organization in connection with dealings arising out of or in
connection with the Custody Account and/or the Custody Cash Account.
(B) The Client agrees and understands that if in accordance with Instructions,
an investment is made in any property, held, issued or managed by any member of
the Citicorp Organization, then such member of the Citicorp Organization may
retain a profit arising therefrom (in addition to the charges, commissions and
fees payable by the Client under this Agreement) without being liable to account
to the Client for such profit.
(C) The Client agrees and understands that (i) the Custodian and other members
of the Citicorp Organization may have banking or other business relationships
with issuers of Securities held in the Custody Account or Securities purchased
and sold for the Custody Account, and (ii) the Custodian shall not have any
obligations to the Client as a result of such relationships.
14. SCOPE OF RESPONSIBILITY
(A) Subject to the terms hereof, the Custodian shall use all reasonable care in
the performance of its duties under this Agreement and will exercise the due
care of a professional custodian for hire with respect to the Property in its
possession or control. The Custodian shall not be responsible for any loss or
damage suffered by the Client as a result of the Custodian performing such
duties unless the same results from an act of fraud, negligence or willful
default on the part of the Custodian and as provided in Section 12(B) hereof; in
which event the liability of the Custodian in connection with any Property shall
not exceed the market value of the Property, to which such loss or damage
relates, at the time of such fraud, negligence or willful default plus interest
at the rate applicable to the base currency of the Custody Cash Account accruing
from the date of such fraud, negligence or willful default until the date of
discharge. Notwithstanding the foregoing, in no event shall the Custodian be
liable to the Client for indirect, special or consequential damages, even if
advised of the possibility of such damages.
(B) The Custodian is not obliged to maintain any insurance on the Property held
under the terms of this Agreement.
(C) In the event that any law, regulation, decree, order, government act,
custom, procedure or practice to which the Custodian, or any Subcustodian or
Clearance System is subject, or to which the Property is subject, prevents or
limits the performance of the duties and obligations of the Custodian, or any
Subcustodian or Clearance System, then until such time as the Custodian,
Subcustodian or Clearance System is again able to perform such duties and
obligations hereunder, such duties and obligations of the Custodian,
Subcustodian or Clearance System shall be suspended.
(D) Neither the Custodian nor any member of the Citicorp Organization shall be
responsible for any loss or damage, or failure to comply or delay in complying
with any duty or obligation, under or pursuant to this Agreement arising as a
direct or indirect result of any reason, cause or contingency beyond its
reasonable control, including (without limitation) natural disasters,
nationalization, currency restrictions, act of war, act of terrorism, act of
God, postal or other strikes or industrial actions, or the failure, suspension
or disruption of any relevant stock exchange, Clearance System or market.
(E) Subject to Section 14(A) above, the Custodian shall not be liable for any
loss resulting from, or caused by, the collection of any Property and/or any
funds or other property paid or distributed in respect of the Property.
(F) The Custodian does not warrant or guarantee the authenticity or validity of
any Security or other Property received by the Custodian, or any other entity
authorized to hold Property under this Agreement. If the Custodian becomes aware
of any defect in title or forgery of any Property, the Custodian shall promptly
notify the Client.
(G) The Client shall be responsible for all filings, tax returns and reports on
any transactions undertaken pursuant to this Agreement, or in respect of the
Property or collections relating to the Property as may be requested by any
relevant authority, whether governmental or otherwise, and for the payment of
all unpaid calls, Taxes (including without limitation any value added tax),
imposts, levies or duties due on or with respect to any principal, interest or
other collections, or any other liability or payment arising out of or in
connection with the Property, and in so far as the Custodian is under any
obligation (whether of a governmental nature or otherwise) to pay the same on
behalf of the Client it may do so out of any Property held by the Custodian
pursuant to the terms of this Agreement.
(H) The Custodian is not acting under this Agreement as an investment manager,
nor as an investment, legal or tax adviser to the Client and the Custodian's
duty is solely to act as a custodian in accordance with the terms of this
Agreement.
(I) Nothing herein shall obligate the Custodian to perform any obligation or to
allow, take or omit taking any action which will breach any relevant Rules, or
any law, rule, regulation or practice of any relevant government, stock
exchange, Clearance System, self-regulatory organization or market.
(J) The Custodian may at any time suspend or terminate its participation and
holding of assets in a Clearance System, and will give reasonable notice to the
Client of any such action. In such case, or in the event of suspension as
contemplated in Section 14(C) above, the Custodian may arrange for the relevant
Securities to be held in certificated form.
(K) The Custodian shall not be responsible for the acts or omissions, default or
insolvency of any broker, counterparty, issuer of Securities or, except as
provided in Section 12(B), Subcustodian, agent or Clearance System.
(L) The Custodian shall not be responsible for the accuracy, content or
translation of any notice, circular, report, announcement or other material
forwarded to the Client.
(M) The Custodian shall only have such duties and responsibilities as are
specifically set forth or referred to in this Agreement, and no covenant or
obligation shall be implied in this Agreement against the Custodian.
15. LITIGATION; INDEMNITY
(A) The Custodian or any of its agents, as the case may be, may (but without
being under any duty or obligation to) institute or defend legal proceedings, or
take any other action arising out of or in connection with the Property and the
Client shall indemnify the Custodian or agent against any costs and expenses,
including without limitation any reasonable attorneys' fees and disbursements,
arising from such proceedings or other action and make available to the
Custodian such security in respect of such costs and expenses as the Custodian
or agent in its absolute discretion deems necessary or appropriate.
(B) In the event the Custodian does not institute or defend legal proceedings,
or take any other action arising out of or in connection with the Property, the
Custodian hereby agrees that the Client shall, to the extent of any loss of the
Client's interest in the Property and to the extent permitted by applicable law
and not prohibited by contract, be subrogated to all of the rights of recovery
of the Custodian therefor against any third party person or entity; PROVIDED
THAT nothing herein shall be interpreted as granting the Client any rights to
bring any direct action under any insurance policy issued in favor of the
Custodian or as limiting the Custodian's right to bring any action against any
such third party for any damages suffered by the Custodian. Notwithstanding any
other provision hereof, in no event shall the Custodian be obliged to bring suit
in its own name or be obliged to allow suit to be brought in its name. Subject
to the terms of this Section 15(B) and to the extent permitted by law, the
Custodian shall execute and deliver any and all such instruments and documents
which the Client may reasonably request and take such other actions as
reasonably necessary or appropriate to assist the Client in the exercise of such
rights of recovery and to enable the Client to recover against any and all such
third party persons or entities. The Client shall reimburse the Custodian for
any reasonable out-of-pocket costs incurred in connection with the actions
contemplated by this Section 15(B).
(C) The Client agrees to indemnify the Custodian and to defend and hold the
Custodian harmless against all losses, liabilities, claims, expenses and Taxes,
including any reasonable legal fees and disbursements, (each referred to as a
"LOSS") arising directly or indirectly:
(i) from the fact that the Property is registered in the name of or held
by the Custodian or any nominee or agent of the Custodian or any
Clearance System;
(ii) without limiting the generality of Section 15(C)(i), from any act
which the Custodian or any nominee or agent performs or permits
(including the provision of any overdraft or other financial
accommodation which arises on the books of the Custodian, whether on
an advised or unadvised basis, in relation to the Property pursuant to
this Agreement or any Instructions;
(iii)from the Custodian or any such nominee, agent or Clearance System
carrying out any Instructions pursuant to the terms of this Agreement,
including, without limitation, Instructions transmitted orally, by
telephone, telex, facsimile transmission or any other means agreed by
the Client and the Custodian from time to time or otherwise;
(iv) from any reclaim or refund of Taxes effected by the Custodian or any
agent for the Client; and
(v) from the Custodian's reliance or action on any information provided by
the Client in connection with this Agreement;
PROVIDED THAT the Custodian shall not be indemnified against or held
harmless from any liability arising out of the Custodian's negligence, fraud or
willful default.
(D) The disclosure by the Client to the Custodian that the Client has entered
into this Agreement as the agent or representative of another person shall not
prevent the Custodian from being entitled to treat the Client as incurring all
obligations as principal under this Agreement.
(E) The Custodian shall give notice of any Loss in respect of which the Client
is obliged to provide indemnification pursuant to this Agreement. Such notice
shall describe the Loss in reasonable detail, and shall indicate the amount
(estimated, if necessary, and to the extent feasible) of the Loss that has been
or may be suffered by Custodian.
16. LIEN AND SET-OFF
(A) In addition to any remedies available to the Custodian under applicable law,
the Custodian shall have, and the Client hereby grants, a continuing general
lien on all Property (other than cash) until the satisfaction of all liabilities
(whether actual or contingent) of the Client to the Custodian, including any
fees and expenses or credit exposures incurred in the performance of services
under this Agreement. Notwithstanding anything to the contrary in this Agreement
and to the extent applicable, no liabilities or obligations the Client has
arising out of or constituting Purpose Credit shall be secured by, and the
Custodian shall have no lien upon, any Margin Stock, and any such lien or
security interest being hereby expressly disclaimed by the Custodian. "Purpose
Credit" and "Margin Stock", shall have the same meaning set forth in Regulation
U and X of the Board of Governors of the Federal Reserve System of the United
States of America.
(B) In addition to any other remedies available to the Custodian under
applicable law, the Custodian may, without prior notice to the Client, set off
any payment obligation owed to it by the Client against any payment obligation
(whether or not matured) owed by it to the Client regardless of the place of
payment or currency of either obligation (and for such purposes may make any
currency conversion necessary). If any obligation is unliquidated or
unascertained the Custodian may set off an amount estimated by it in good faith
to the amount of that obligation.
17. FEES AND EXPENSES
Without prejudice to any of its liabilities and obligations under this
Agreement, the Client agrees to pay to the Custodian from time to time such fees
and commissions for its services pursuant to this Agreement as determined in
accordance with the terms of the Fee Agreement, together with any applicable
taxes or levies, including, without limitation, all those items referred to in
Section 8(ii) hereof. The Custodian is further authorized to debit (as well
after as before the date of any termination pursuant to Section 19 hereof) any
account of the Client with the Custodian, including, without limitation, the
Custody Cash Account, for any amount owing to the Custodian from time to time
under this Agreement.
18. TAX STATUS/WITHHOLDING TAXES
(A) The Client will provide the Custodian with information as to its tax status
as reasonably requested by the Custodian from time to time.
(B) The Client may be required from time to time to file such proof of taxpayer
status or residence, to execute such certificates and to make such
representations and warranties, or to provide any other information or documents
in respect of the Property, as the Custodian or any of its agents may deem
necessary or proper to fulfill the obligations of the Custodian or its agents
under applicable law. The Client shall provide the Custodian or its agents, as
appropriate, in a timely manner, with copies, or originals if necessary and
appropriate, of any such proofs of residence, taxpayer status or identity,
beneficial ownership of Property and any other information or documents which
the Custodian or its agents may reasonably request.
(C) If any Taxes shall become payable with respect to any payment due to the
Client, such Taxes may be withheld from such payment in accordance with
applicable law. The Custodian and any agents may withhold any interest, any
dividends or other distributions or securities receivable in respect of
Securities, proceeds from the sale or distribution of Securities ("Payments"),
or may sell for the account of the Client any part thereof or all of the
Securities, and may apply such Payment and/or cash from the Custody Cash Account
in satisfaction of such Taxes, the Client remaining liable for any deficiency.
If any Taxes shall become payable with respect to any payment made to the Client
by the Custodian or its agents in a prior year, the Custodian or its agents may
withhold Payments in satisfaction of such prior year's Taxes.
(D) In the event the Client requests that the Custodian provide tax relief
services and the Custodian agrees to provide such services, the Custodian or any
of its agents, shall apply for appropriate tax relief (either by way of reduced
tax rates at the time of an income payment or retrospective tax reclaims in
certain markets as agreed from time to time); PROVIDED THAT the Client provides
to the Custodian such documentation and information as is necessary to secure
such tax relief. In no event shall the Custodian or any of its agents be
responsible for the difference between the statutory rate of withholding and the
treaty rate of withholding if the Custodian or any of its agents are unable to
secure tax relief.
19. TERMINATION
(A) Either of the parties hereto may terminate this Agreement by giving not less
than 60 days' prior written notice to the other party; PROVIDED THAT within 60
days of such notice, the Client shall provide the Custodian with Instructions
specifying the person to whom the Custodian shall deliver the Property in the
Custody Account and Custody Cash Accounts; PROVIDED FURTHER THAT if the
Custodian has effected any transaction on behalf of the Client the settlement of
which is likely to extend beyond the expiration of such notice, then the
Custodian shall be entitled in its absolute discretion to close out or complete
such transaction and to retain sufficient funds from the Property for that
purpose. If within 60 days following termination, the Client fails to give the
Custodian Instructions specifying the person to whom the Custodian shall deliver
the Property in the Custody Account and Custody Cash Account, the Custodian
shall deliver the Property to the Client at its address set out above.
(B) The rights and obligations contained in Sections 15, 16, 17 and 18 of this
Agreement shall survive the termination of this Agreement.
20. ASSIGNMENT
This Agreement shall bind and enure for the benefit of the parties hereto
and their respective successors and permitted assigns, and the Client shall not
assign, transfer or charge all or any rights or benefits hereunder without the
written consent of the Custodian. The Custodian may not assign, transfer or
charge all or any of its rights or benefits hereunder without the written
consent of the Client; PROVIDED HOWEVER that this Agreement may be assigned by
the Custodian to another member of the Citicorp Organization with prior written
notice to the Client, and such assignee shall, without the execution or filing
of any consents or other documents, succeed to and be substituted for the
Custodian with like effect as though such assignee had been originally named as
the Custodian hereunder. Any purported assignment, transfer or charge made in
contravention of this Section shall be null and void and of no effect
whatsoever.
21. JOINT AND SEVERAL LIABILITY
Where the Client comprises two or more persons, all obligations and
liabilities under this Agreement shall be deemed to be joint and several, and
any notice served on any one of such persons shall be deemed to have been served
on such other person or persons, as the case may be.
22. DISCLOSURE
(A) The Client agrees and understands that the Custodian or its agents may
disclose information regarding the Custody Account and/or the Custody Cash
Account if required to do so (i) to establish under the laws of any relevant
jurisdiction the nominee (or similar) status of the Custodian or its agents with
respect to Property in the Custody Account and/or Custody Cash Account for the
purpose of performing or discharging its duties and obligations under this
Agreement, (ii) to enable auditors to perform auditing services, (iii) to make
the required tax certifications in the relevant jurisdictions, (iv) by any
applicable law, statute or regulation or court order or similar process in any
relevant jurisdiction, (v) by order of an authority having power over the
Custodian or its agents within the jurisdiction of such authority, whether of a
governmental nature or otherwise, or (vi) where required by the operating rules
of any relevant Clearance System.
(B) The Client hereby authorizes (i) the collection, storage and processing of
any information relating to the Client by the Custodian and the Branches,
subsidiaries, affiliates and agents of; or Clearance Systems used by, Citibank,
N.A.; and (ii) the transfer of any information relating to the Client to and
between the Branches, subsidiaries, affiliates and agents of, or Clearance
Systems used by, Citibank, N.A. and third parties selected by any of them,
wherever situated, for confidential use in connection with the provision of
services to the Client, and further acknowledges that any such Branch,
subsidiary, affiliate, agent, third party or Clearance System shall be entitled
to transfer any such information as required by any law, court, legal process or
as requested by any authority in accordance with which it is required to act, as
it shall reasonably determine.
(C) The Client agrees that the terms of this Agreement shall be kept strictly
confidential and no printed materials or other matter in any language (including
without limitation, prospectuses, statements of additional information, notices
to shareholders, annual reports and promotional materials) which mention
Citicorp, Citibank, N.A. or the Custodian's name, or the rights, powers or
duties of the Custodian, shall be issued by the Client or on the Client's behalf
unless Citibank, N.A. and/or the Custodian (as applicable) shall first have
given its specific written consent thereto; PROVIDED THAT no prior consent shall
be required if the only reference to the Custodian's name is in identifying the
Custodian as one of the Client's custodians.
(D) The Client agrees that the Custodian or its agents may, upon reasonable
request, review the Client's premises, and security controls and procedures,
where necessary for the performance of the Custodian's obligations regarding any
relevant Clearance System.
23. NOTICES
All notices and communications to be given by one party to the other under
this Agreement shall be in writing in the English language and (except for
notices, reports and information from the Custodian, and Instructions given by
electronic means) shall be made either by telex or facsimile, other electronic
means agreed to by the parties or by letter addressed to the party concerned at
the addresses set out above (or at such other addresses as may be notified in
writing by either party to the other from time to time). Any such notice or
communication hereunder shall be effective upon actual receipt.
24. GOVERNING LAW AND JURISDICTION
(A) This Agreement shall be governed by and construed in accordance with the
internal laws (and not the laws of conflict) of the state of New York. The
Client agrees for the benefit of the Custodian and, without prejudice to the
right of the Custodian to take any proceedings in relation hereto before any
other court of competent jurisdiction, that the courts of the State of New York
shall have jurisdiction to hear and determine any suit, action or proceeding,
and to settle any disputes, which may arise out of or in connection with this
Agreement and, for such purposes, irrevocably submits to the non-exclusive
jurisdiction of such courts.
(B) Each party hereto waives any objection it may have at any time to the laying
of venue of any actions or proceedings brought in a court of the State of New
York, waives any claim that such actions or proceedings have been brought in an
inconvenient forum and further waives the right to object that such court does
not have jurisdiction over such party.
(C) The Client irrevocably waives, to the fullest extent permitted to itself and
its revenues and assets (irrespective of their use or intended use), all
immunity on the grounds of sovereignty or similar grounds from (i) suit, (ii)
jurisdiction of any court, (iii) relief by way of injunction, order for specific
performance or for recovery of property, (iv) attachment of its assets (whether
before or after judgment), and (v) execution or enforcement of any judgment to
which it or its revenues or assets might otherwise be entitled in any actions or
proceedings in such courts, and irrevocably agrees, to the fullest extent
permitted by applicable law, that it will not claim such immunity in any such
actions or proceedings.
(D) The Client hereby understands and agrees that the opening of, the holding of
all or any part of the Property in, and the delivery of any Securities and other
Property to or from, the Custody Account and Custody Cash Account and the
performance of any activities contemplated in this Agreement by the Custodian,
including acting on any Instructions, are subject to the relevant local laws,
regulations, decrees, orders, government acts, customs, procedures and practices
(i) to which the Custodian, or any Subcustodian or Clearance System, is subject
and (ii) as exist in the country in which the Property is held.
25. MISCELLANEOUS
(A) This Agreement shall not be amended except by a written agreement and any
purported amendment made in contravention of this Section shall be null and void
and of no effect whatsoever.
(B) This Agreement shall constitute the entire agreement between the Client and
the Custodian and, unless otherwise expressly agreed in writing, shall supersede
all prior agreements relating to global custodial services, written or oral,
between the parties hereto.
(C) The parties hereto agree that (i) the rights, powers, privileges and
remedies stated in this Agreement are cumulative and not exclusive of any
rights, powers, privileges and remedies provided by law, unless specifically
waived, and (ii) any failure or delay in exercising any right power, privilege
or remedy will not be deemed to constitute a waiver thereof and a single or
partial exercise of any right, power, privilege or remedy will not preclude any
subsequent or further exercise of that or any other right, power, privilege or
remedy.
(D) In the event that any provision of this Agreement, or the application
thereof to any person or circumstances, shall be determined by a court of proper
jurisdiction to be invalid or unenforceable to any extent, the remaining
provisions of this Agreement, and the application of such provisions to persons
or circumstances other than those as to which it is held invalid or
unenforceable, shall be unaffected thereby and such provisions shall be valid
and enforced to the fullest extent permitted by law in such jurisdiction.
(E) Titles to Sections of this Agreement are included for convenience of
reference only and shall be disregarded in construing the language contained in
this Agreement.
(F) This Agreement may be executed in several counterparts, each of which shall
be an original, but all of which together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized.
Citibank, N.A., New York Office
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxx, VP
WWSS/North American Custody
000 Xxxx Xxxxxx/00xx Floor/Zone 4
(000) 000-0000
Title: Vice President
THE AAL MUTUAL FUNDS
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
