Exhibit h.23
Form of
Custodian Service Agreement
FORM OF
CUSTODIAN SERVICE AGREEMENT
THIS AGREEMENT made as of the ___ day of _______________, 2000 by and
among AETNA SERIES FUND, INC. ("Fund"), MBIA INSURANCE CORPORATION ("MBIA") AND
MELLON BANK, N.A. ("Mellon").
WHEREAS, the Fund intends to establish a separate series of the Fund,
Aetna Principal Protection Fund III ("Series"), with an obligation by the Fund,
on behalf of the Series, to repay the amount initially invested by each
shareholder in the Series on a date certain ("Repayment Obligation"); and
WHEREAS, the Fund, on behalf of the Series, has entered into a
Financial Guaranty Agreement with MBIA (the "Financial Guaranty Agreement")
whereby MBIA will issue a policy to support the Repayment Obligation ("Policy");
and
WHEREAS, in connection therewith, the Fund intends to open custody
accounts with Mellon under the terms of the Custodian Agreement (the "Custodian
Agreement") between the Fund and Mellon dated as of September 1, 1992, as
amended, on behalf of the Series, to hold the Series' portfolio investments; and
WHEREAS, under the terms of the Financial Guaranty Agreement, in
consideration of MBIA's issuing the Policy, the Fund, on behalf of the Series,
has agreed to a particular investment strategy and to provide an arrangement
whereby trades executed for the Series will be monitored for conformity with
certain guidelines; and
WHEREAS, the Fund and MBIA wish for Xxxxxxx/Xxxxxx Analytical Services,
LLC ("Xxxxxxx/Mellon") to provide investment monitoring services in respect of
the
Series, and Xxxxxxx/Xxxxxx is willing to perform such services upon the terms
and conditions of an Agreement of even date herewith.
WHEREAS, the Fund and MBIA wish for Mellon to provide trade execution
services in respect of the Series, and Mellon is willing to perform such
services upon the terms and conditions.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration the parties hereto agree to the following:
1. Construction.
Unless the context of this Agreement otherwise clearly
requires, references to the plural include the singular, the singular the plural
and the part the whole and "or" has the inclusive meaning sometimes represented
by the phrase "and/or." The words "hereof," "herein," "hereunder" and similar
terms in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. The section and other headings contained
in this Agreement are for reference purposes only and shall not control or
affect the construction of this Agreement or the interpretation thereof in any
respect. Section, subsection, schedule, exhibit and attachment references are to
this Agreement unless otherwise specified.
2. Custody Services.
The Fund, on behalf of the Series, will open with Mellon one
or more custody account(s) designated "Series" (such designated custody
account(s) hereinafter referred to as "Series Account"). The Series Account will
contain the appropriate designation in its title and will be operated subject to
the terms of the Custodian Agreement between Mellon and the Fund.
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3. Notification of Event of Default/Trade Execution/Cure
Notice/Obligation to Reject Trades.
If MBIA notifies Mellon, by giving a written notice to Mellon,
with a copy to the Fund, substantially in the format of Exhibit 1 hereto, that
an Event of Default under the Financial Guaranty Agreement has occurred and
remains uncured ("Event of Default Notice"), Mellon will promptly confirm
receipt of such notice, via phone contact and facsimile to the Fund.
After or concurrently with Mellon's receipt of an Event of
Default Notice and until the end of the related DK Period (as defined below),
MBIA shall be entitled to deliver to Mellon (with a copy to the Fund) trade
instructions in the format of Attachment 1 to Exhibit 1 (for manual trade
instructions) or in the format of Attachment 2 to Exhibit 1 (for electronic
instructions) with respect to the Series Account. MBIA shall deliver to Mellon,
with a copy to the Fund, a written notice of the cure of such default,
substantially in the format of Exhibit 2 hereto, promptly upon the occurrence of
such cure (the "Cure Notice").
From 12:01 a.m. eastern time on the Business Day (defined as a
day upon which the New York Stock Exchange is open for trading and is not a
Saturday or Sunday, and is neither a legal holiday nor a day on which banking
institutions are generally authorized or obligated by law or regulation to
close) immediately following the day upon which Mellon receives an Event of
Default Notice from MBIA until 12:01 a.m. eastern time on the Business Day
immediately following the day upon which Mellon receives a Cure Notice from MBIA
(a "DK Period"), Mellon shall reject and not act upon
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any trade instructions issued directly by the Fund (or its investment adviser)
for the Series Account. With respect to the Series Account, Mellon shall, upon
the termination of a DK Period, revert to its normal method of accepting trade
instructions from the Fund (or its investment adviser) as governed by the
Custodian Agreement. Nothing herein shall be construed as authorizing Mellon to
reject for settlement securities transactions for which trade instructions were
issued prior to 12:01 a.m. eastern time on the Business Day immediately
following the day on which Mellon receives an Event of Default Notice.
From the time Mellon receives an Event of Default Notice
through the end of the related DK period, Mellon is irrevocably authorized and
instructed (i) to act upon any and all trade instructions delivered by MBIA and
(ii) to execute the transactions set forth in such instructions through a broker
or dealer selected by Mellon for the Series Account. Mellon will promptly notify
the Fund, with a copy to MBIA, of trades executed as a result of instructions
received by MBIA. Such notification will be made via transmission of a trade
execution file to the extent possible (substantially in the format of Exhibit
5), by close of business on the date such trades are executed.
4. Delivery of Documents.
The Fund and MBIA will promptly furnish to Mellon such copies,
properly certified or authenticated, of documents and other related information
that Mellon may reasonably request or require to properly discharge its duties
herein.
5. Fees and Expenses.
(a) As compensation for the services rendered to the Fund and
MBIA pursuant to this Agreement, the Fund, on behalf of the Series, shall pay
Mellon monthly fees determined as set forth in Schedule A hereto. Such fees are
to be billed monthly and
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shall be due and payable upon receipt of the invoice. The Fund and Mellon may
agree, from time to time, to a change to the fees set forth in Schedule A. Upon
any termination of the provision of services under this Agreement before the end
of any month, the fee for the part of the month before such termination shall be
prorated according to the proportion which such part bears to the full monthly
period and shall be payable upon the date of such termination.
(b) The Fund may request additional services, additional
processing, or special reports, with such specifications and requirements
documentation as may be reasonably required by the Fund or by Mellon. If Mellon
elects to provide such services or arrange for their provision, it shall be
entitled to additional fees and expenses at its customary rates and charges.
(c) All fees, out-of-pocket expenses, or additional charges of
Mellon shall be billed on a monthly basis and shall be due and payable by the
Fund, on behalf of the Series, upon receipt of the invoice.
(d) Mellon will render, after the close of each month in which
services have been furnished, a statement reflecting all of the charges for such
month. Charges remaining unpaid thirty (30) days after receipt of such statement
(with the exception of specific amounts which may be contested in good faith by
the Fund) shall bear interest in finance charges equivalent to Mellon's Prime
Rate as announced from time to time plus two (2) percent per annum and all costs
and expenses of effecting collection of any such sums, including reasonable
Attorney' fees, shall be paid by the Fund, on behalf of the Series, to Mellon.
(e) In the event that the Fund, on behalf of the Series, is
more than
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sixty (60) days delinquent in its payments of monthly xxxxxxxx in connection
with this Agreement (with the exception of specific amounts which may be
contested in good faith by the Fund), this Agreement may be terminated upon
sixty (60) days' written notice to the Fund and MBIA by Mellon. The Fund must
notify Mellon in writing of any contested amounts, with a copy to MBIA, within
thirty (30) days of receipt of a billing for such amounts. Disputed amounts are
not due and payable while they are being investigated. MBIA reserves the right
to pay the delinquent amounts thereby eliminating Mellon's right to terminate
the Agreement under this subsection.
6. Limitation of Liability and Indemnification
(a) In undertaking the performance of its obligations
hereunder, Mellon shall not be liable for any loss, damage or expense suffered
by the Fund, the Series or MBIA in connection with the matters to which this
Agreement relates or the services provided hereunder except for general damages
solely caused by or resulting from willful misfeasance, bad faith or negligence
on the part of Mellon, its officers, employees or agents, in the performance of
its or their duties under this Agreement. "General damages" means only those
damages as directly and necessarily result from such act or omission without
reference to any special conditions or circumstances of the Fund, the Series or
MBIA. In no event shall Mellon be liable for any indirect, special or
consequential losses or damages of any kind whatsoever (including but not
limited to lost profits), even if Mellon has been advised of the likelihood of
such losses or damages and regardless of the form of action through which any
such losses or damages may be claimed.
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(b) Mellon shall not be responsible for, and the Fund shall
indemnify and hold Mellon, its officers, employees and agents (collectively
"Mellon and its agents") harmless from and against any and all losses, damages,
costs, reasonable attorneys' fees and expenses, incurred by Mellon or its
agents, in the performance of its/their duties hereunder, including but not
limited to those arising out of or attributable to:
(i) any and all actions of Mellon and its agents
required to be taken pursuant to this Agreement;
(ii) the reliance on or use by Mellon and/or its
agents of information, records, or documents which are
received by Mellon and/or its agents and furnished to it or
them by or on behalf of the Fund, the Series or MBIA in
accordance with this Agreement, and which have been prepared
or maintained by the Fund, the Series or MBIA or any third
party on behalf of either the Fund, the Series or MBIA;
(iii) The Fund's or MBIA's refusal or failure to
comply with the terms of this Agreement or any agreement
between the Series, the Fund and MBIA relating to the matters
herein, or the Fund's, the Series', or MBIA's lack of good
faith, or its actions, or lack thereof, involving negligence
or willful misfeasance;
(iv) any delays, inaccuracies, errors in or omissions
from information or data provided to Mellon or its agents by
MBIA or the Series or the Fund or provided to Mellon or its
agents by data or corporate action services or vendors;
(v) the offer or sale of shares by the Fund, the
Series or MBIA
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in violation of any requirement under the Federal securities
laws or regulations or the securities laws or regulations of
any state, or in violation of any stop order or other
determinations or ruling by any Federal agency or any state
agency with respect to the offer or sale of such shares in
such state (1) resulting from activities, actions, or
omissions by the Fund, the Series or MBIA, or (2) existing or
arising out of activities, actions or omissions by or on
behalf of the Fund, the Series or MBIA prior to the effective
date of this Agreement;
(vi) all actions, omissions, or errors caused by
third parties to whom Mellon, its agents, the Fund on behalf
of the Series, or MBIA has assigned any rights and/or
delegated any duties under this Agreement at the request of or
as required by the Fund or MBIA; and
(vii) Mellon and its agents acting upon electronic or
written trade instructions given by MBIA pursuant to Section
3; provided that, in no event shall Mellon or its agents be
indemnified for its or their negligence, bad faith or willful
misfeasance in carrying out its or their duties hereunder.
(c) MBIA shall indemnify and hold Mellon, and its agents
harmless from and against any and all losses, damages, costs, reasonable
attorneys' fees and expenses, incurred by Mellon and its agents insofar as such
losses, damages or costs arise out of, or are based upon, wrongful exercise by
MBIA of its rights under the Financial Guaranty Agreement to give instructions
to Mellon pursuant to Section 3 hereof;
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provided that, in no event shall Mellon or its agents be indemnified for its or
their negligence, bad faith or willful misfeasance in carrying out its duties
hereunder.
(d) In performing its services hereunder, Mellon and its
agents shall be entitled to rely only on written instructions (oral instructions
are not permitted), notices or other communications, including electronic
transmissions, bearing or purporting to bear the manual or facsimile signature
of any person from the Series, the Fund or MBIA (an "Authorized Person") named,
and in the capacity identified, in lists (naming those persons who may authorize
the transactions in Sections 2 and 3) which are attached hereto as Exhibit 3
(for the Fund) and Exhibit 4 (for MBIA). Any changes to such lists will be
furnished to Mellon from time to time in writing and given in the manner set
forth in Section 13 hereof and will be signed by an officer of either the Fund
or MBIA, as appropriate, who shall provide Mellon with evidence of his or her
authority to make such changes. Each of the Fund, in Exhibit 3, and MBIA, in
Exhibit 4, will provide Mellon with authenticated specimen signatures of each
Authorized Person, and each of the Fund, on behalf of the Series, and MBIA shall
indemnify Mellon and its agents for any loss or expense caused by reliance upon
such authenticated specimen signatures which Mellon and its agents acting in
good faith believe to be genuine, valid and authorized, and shall be indemnified
by each of the Fund and MBIA as appropriate for any loss or expense caused by
such reliance. In addition, in performing its services hereunder, Mellon and its
agents also shall be entitled to consult with and rely on the advice and
opinions of legal counsel retained by Mellon or the Fund or MBIA, as necessary
or appropriate, including Mellon's in-house counsel, and Mellon shall not be
liable for any action taken, suffered or omitted by it in accordance with the
advice of such counsel.
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(e) In the event that Mellon or its agents shall receive
instructions, claims or demand from the Fund, the Series, or MBIA which, in
Mellon's opinion, conflict with any of the provisions of this Agreement, Mellon
shall notify the Fund, the Series, or MBIA, as the case may be, of such conflict
and shall be entitled to refrain from taking any action and its sole obligation
shall be to keep safely all assets in the Series Account until it shall receive
instructions, claims or demands from such party which, in Mellon's opinion,
conform to the provisions of this Agreement.
(f) The duties and responsibilities of Mellon hereunder shall
be determined solely by the express provisions of this Agreement, except that
the settlement and safekeeping of assets in the Series Account shall be governed
by the terms of the Custodian Agreement between Mellon and the Fund. Should
there by any conflict between the terms of the Custodian Agreement and the terms
of this Agreement regarding the services set forth in Section 3 of this
Agreement, the terms of this Agreement shall govern.
(g) Mellon shall have no responsibility to make
recommendations with respect to the purchase, retention or sale of assets
relating to the Series Account or to maintain any insurance on assets in the
Series Account for the benefit of MBIA or the Series.
(h) Mellon shall have no responsibility for any act or
omission, or for the solvency or insolvency, or notice to Mellon or any of its
affiliates or agents of the solvency or insolvency, of any broker (other than a
Mellon affiliate selected by Mellon pursuant to Section 3 hereof to execute the
trade instructions provided by MBIA).
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(i) Any liability of the Fund under this Agreement with
respect to the Series, or in connection with the transactions contemplated
herein with respect to the Series, shall be discharged only out of the assets of
the Series, and no other series of the Fund shall be liable with respect
thereto.
7. Term.
This Agreement shall become effective immediately and shall
terminate on the earlier of the termination date under the Custodian Agreement
or _________ , unless earlier terminated by any party hereto on 90 days' written
notice to the other parties. Upon termination of this Agreement, the Fund, on
behalf of the Series, shall pay to Mellon such compensation and any
out-of-pocket or other reimbursable expenses which may become due or payable
under the terms hereof as of the date of termination or after the date that the
provision of services ceases, whichever is later.
8. Representations.
(a) The Fund, on behalf of the Series, represents and warrants
that the Fund has directed the Series' investment adviser to comply with the
Guidelines and purchase for such accounts only assets conforming to the
Guidelines.
(b) Each of the parties hereto represents and warrants that:
(i) it has the legal right, power and authority to execute, deliver and perform
this Agreement and to carry out all of the transactions contemplated hereby;
(ii) it has obtained all necessary authorizations, (iii) the execution, delivery
and performance of this Agreement and the carrying out of any of the
transactions contemplated hereby will not be in conflict with, result in a
breach of or constitute a default under any agreement or other instrument to
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which it is a party or which is otherwise known to it; (iv) it does not require
the consent or approval of any governmental agency or instrumentality, except
any such consents and approvals which it has obtained; and (v) the execution and
delivery of this Agreement by it will not violate any law, regulation, charter,
by-law, order of any court or governmental agency or judgment applicable to it.
9. Notices.
Any notice required or permitted hereunder shall be in writing
and shall be deemed effective on the date of personal delivery (by private
messenger, courier service or otherwise) or upon confirmed receipt of telex or
facsimile or other electronic system acceptable to Mellon, whichever occurs
first, or upon receipt if by mail to the parties at the following address (or
such other address as a party may specify by notice to the others):
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IF TO THE FUND OR THE SERIES:
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Aetna Series Fund, Inc. WITH COPIES TO:
00 Xxxxx Xxxxx Xxxxxx, XX00 Xxxxxxxxx: Xxxxxxxxx X. XxXxxxx
Xxxxxxxx, XX 00000-0000 Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Counsel
Phone: (000) 000-0000 Attention: Xxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000 Phone: (000) 000-0000
Fax: (000) 000-0000
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IF TO MBIA: IF TO MELLON:
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MBIA Insurance Corporation One Mellon Bank Center
000 Xxxx Xxxxxx 00xx Xxxxx
Xxxxxx, Xxx Xxxx 00000 Xxxxxxxxxx, XX 00000
Attention: Xx. Xxxxx Xxxxxxxx Attention: Xxxxxxx X. Xxxxxxx
Phone: (000) 000-0000 Phone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
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10. Waiver.
The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver nor
shall it deprive such party of the right thereafter to insist upon strict
adherence to that term or any term of this Agreement. Any waiver must be in
writing signed by the waiving party.
11. Amendments.
This Agreement may be modified or amended from time to time by
mutual written agreement of the parties hereto. No provision of this Agreement
may be changed, discharged, or terminated orally, but only by an instrument in
writing signed by the parties.
12. Severability.
If any provision of this Agreement is invalid or
unenforceable, the balance of the Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance it shall nevertheless
remain applicable to all others persons and circumstances.
13. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to laws as to
conflicts of laws, and shall be binding on all the parties hereto and their
respective successors and assigns. The Fund, MBIA and Mellon hereby irrevocably
submit to the exclusive jurisdiction of the state and federal courts in the
State and County of New York for the purposes of any suit, action or other
proceedings arising out of this Agreement. The Fund, MBIA and Mellon hereby
irrevocably waive any objection on the ground of venue, forum non conveniens,
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or any similar grounds, and irrevocably consent to service of process by mail or
in any manner permitted by New York law, and irrevocably waive their respective
rights to any jury trial. The headings of the sections hereof are included for
convenience of reference only and do not form a part of this Agreement.
14. Benefit of the Parties.
This Agreement is for the exclusive benefit of the parties
hereto and shall not be relied upon by or create any beneficial interest in any
person not a party hereto including any shareholders of the Fund.
15. Counterparts.
This Agreement may be executed by the parties in a number of
counterparts each of which shall be an original and together shall constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
AETNA SERIES FUND, INC. MBIA INSURANCE CORPORATION
By: By:
---------------------------------- ----------------------------------
Name: Name:
-------------------------------- --------------------------------
Title: Title:
------------------------------- -------------------------------
MELLON BANK, N.A.
By:
----------------------------------
Name:
--------------------------------
Title:
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SCHEDULE A
FEES AND EXPENSES
-----------------
EXHIBIT 1
EVENT OF DEFAULT NOTICE
------------------------------
(1) Strike language in brackets and initial if Section 4.1(c) or (d) Event of
Default has occurred.
(2) Strike inappropriate language in brackets and initial.
EXHIBIT 1 - ATTACHMENT 1
MANUAL TRADE INSTRUCTIONS
EXHIBIT 2
CURE NOTICE
------------------------
(3) Strike language in brackets and initial if Section 4.1(c) or (d) Event of
Default has occurred.
EXHIBIT 3
AUTHORIZED PERSONS - AETNA SERIES FUND, INC.
EXHIBIT 4
AUTHORIZED PERSONS AND SIGNATURE SAMPLES - MBIA INSURANCE CORPORATION
EXHIBIT 5
TRADE EXECUTION NOTIFICATION FILE
Aetna Principal Protection Fund IV must have a header (Record Type 1), the trade
execution detail for purchases and sales (Record Type 2), hash totals (Record
Type 3)
