DOMESTIC CUSTODY AGREEMENT
This Agreement, dated August 23, 2005, is between XX XXXXXX XXXXX BANK, N.A. (“Bank”), with a place of business at 0 Xxxxx Xxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000; and each of the open-end management investment companies listed on Exhibit 1 of this Agreement, registered with the U.S. Securities and Exchange Commission under the Investment Company Act of 1940, as amended (each a “Company”), severally and for and on behalf of each of their respective series listed on Exhibit 1 (each a “Fund”), each Company and their respective Funds with a place of business at 0000 Xxxxxxxxxx Xxxxxx, Xxxx Xxx Xxxxxx, Xxxx 00000-0000. Each Company for which Bank serves as custodian under this Agreement, shall individually be referred to as “Customer”.
1. INTENTION OF THE PARTIES; DEFINITIONS
1.1 Intention of the Parties.
(a) This Agreement sets out the terms governing custodial, settlement and certain other associated services offered by Bank to Customer. Bank will be responsible for the performance of only those duties that are set forth in this Agreement. Customer acknowledges that Bank is not providing any legal, tax or investment advice in connection with providing the services hereunder.
(b) It is the intention of the parties that the services offered by Bank under this Agreement with respect to the custody of Securities and related settlement services will be limited to Securities that are issued in the United States (“U.S.”) by an issuer that is organized under the laws of the U.S. or any state thereof, or that are both traded in the U.S. and that are eligible for deposit in a U.S. Securities Depository.
(c) Unless the context otherwise requires, any reference in this Agreement to any actions to be taken by the Customer shall be deemed to refer to any Company acting on behalf of one or more of its Funds, any reference in this Agreement to any Accounts of Customer shall be deemed to refer only to the Accounts of the applicable Fund, and duty or obligation of Bank hereunder to Customer shall be deemed to refer to duties or obligations with respect to such individual Fund and any obligations or liability of Customer or a Company hereunder shall be binding only with respect to such individual Fund and will be discharged only out of the assets of such Fund.
1.2 Definitions.
(a) As used herein, the following terms have the meaning hereinafter stated.
“Account” has the meaning set forth in Section 2.1 of this Agreement.
“Affiliate” means an entity controlling, controlled by, or under common control with, Bank.
“Applicable Law” means any statute, whether national, state or local, applicable in the United States or any other country, the rules of the treaty establishing the European Community, any other law, rule, regulation or interpretation of any governmental entity, any applicable common law, and any decree, injunction, judgment, order, ruling, or writ of any governmental entity.
“Authorized Person” means any person (including an investment manager or other agent) who has been designated by written notice from Customer or its designated agent to act on behalf of Customer hereunder. Such persons will continue to be Authorized Persons until such time as Bank receives Instructions from Customer or its designated agent that any such person is no longer an Authorized Person.
“Bank Indemnitees” means Bank, and its nominees, directors, officers, employees and agents.
“Cash Account” has the meaning set forth in Section 2.1(a)(ii) of this Agreement.
“Corporate Action” means any subscription right, bonus issue, stock repurchase plan, redemption, exchange, tender offer, or similar matter with respect to a Financial Asset in the Securities Account that requires discretionary action by the holder, but does not include proxy voting.
“Customer” means individually each Company and their respective Funds as listed on Exhibit 1 hereto.
“Entitlement Holder” means the person named on the records of a Securities Intermediary as the person having a Securities Entitlement against the Securities Intermediary.
“Financial Asset” means a Security and refers, as the context requires, either to the asset itself or to the means by which a person’s claim to it is evidenced, including a Security, a security certificate, or a Securities Entitlement. “Financial Asset” does not include cash.
“Instructions” means instructions which: (i) contain all necessary information required by Bank to enable Bank to carry out the Instructions; (ii) are received by Bank in writing or via Bank’s electronic instruction system, SWIFT, telephone, tested telex, facsimile or such other methods as are for the time being agreed by Customer (or an Authorized Person) and Bank; and (iii) Bank believes in good faith have been given by an Authorized Person or are transmitted with proper testing or authentication pursuant to terms and conditions which Bank may specify.
“Liabilities” means any liabilities, losses, claims, costs, damages, penalties, fines, obligations, or expenses of any kind whatsoever (including, without limitation, reasonable attorneys’, accountants’, consultants’ or experts’ fees and disbursements).
“Securities” means stocks, bonds, rights, warrants and other negotiable and non-negotiable instruments, whether issued in certificated or uncertificated form, that are commonly traded or dealt in on securities exchanges or financial markets. “Securities” also means other obligations of an issuer, or shares, participations and interests in an issuer recognized in the country in which it is issued or dealt in as a medium for investment and any other property as may be acceptable to Bank for the Securities Account.
“Securities Account” means each Securities custody account on Bank’s records to which Financial Assets are or may be credited pursuant hereto.
2
“Securities Depository” has the meaning set forth in Section 5.1 of this Agreement.
“Securities Entitlement” means the rights and property interests of an Entitlement Holder with respect to a Financial Asset as set forth in Part 5 of Article 8 of the Uniform Commercial Code of the State of New York, as the same may be amended from time to time.
“Securities Intermediary” means Bank, a Securities Depository, and any other financial institution which in the ordinary course of business maintains Securities custody accounts for others and acts in that capacity.
(b) All terms in the singular will have the same meaning in the plural unless the context otherwise provides and visa versa.
2. WHAT BANK IS REQUIRED TO DO
2.1 Set Up Accounts.
(a) Bank will establish and maintain the following accounts (“Accounts”):
| (i) | a Securities Account in the name of Customer on behalf of each Fund for Financial Assets, which may be received by or on behalf of Bank for the account of Customer, including as an Entitlement Holder; and |
| (ii) | an account in the name of Customer (“Cash Account”) for any and all cash received by or on behalf of Bank for the account of Customer. |
(b) At the request of Customer, additional Accounts may be opened in the future, which will be subject to the terms of this Agreement.
2.2 Cash Account.
(a) Except as otherwise provided in Instructions acceptable to Bank, all cash held in the Cash Account by Bank will be deposited during the period it is credited to the Accounts in one or more deposit accounts at Bank.
(b) With Bank’s consent, Customer may use as the Cash Account a separate demand deposit account established by Customer at Bank which is electronically linked to the Securities Account.
2.3 Segregation of Assets; Nominee Name.
(a) Bank will identify in its records that Financial Assets credited to Customer’s Securities Account belong to Customer on behalf of the relevant Fund (except as otherwise may be agreed by Bank and Customer).
(b) Bank is authorized, in its discretion:
| (i) | to hold in bearer form, such Financial Assets as are customarily held in bearer form or are delivered to Bank in bearer form; |
3
| (ii) | to hold Securities in or deposit Securities with any Securities Depository, settlement system or dematerialized book entry or similar systems; and |
| (iii) | and to register in the name of Customer, Bank, a Securities Depository, or their respective nominees, such Financial Assets as are customarily held in registered form. |
(c) Bank is authorized, when directed to do so by Customer, to hold Financial Assets at third parties and to register Financial Assets in broker “street name” or in the name of other third parties (or their nominees). Notwithstanding Section 7.1, Bank shall have no liability for any loss of Financial Assets or other damages resulting from holding or registering Financial Assets as so directed by Customer.
Customer authorizes Bank to hold Financial Assets in omnibus accounts and will accept delivery of Financial Assets of the same class and denomination as those deposited with Bank.
2.4 Settlement of Trades.
When Bank receives an Instruction directing settlement of a transaction in Financial Assets that includes all information required by Bank, Bank will use reasonable care to effect such settlement as instructed. Settlement of transactions in Financial Assets will be conducted in accordance with prevailing standards of the market in which the transaction occurs. Without limiting the generality of the foregoing, the risk of loss will be Customer’s whenever Bank delivers Financial Assets or payment in accordance with applicable market practice in advance of receipt or settlement of the expected consideration. In the case of the failure of Customer’s counterparty (or other appropriate party) to deliver the expected consideration as agreed, Bank will contact the counterparty to seek settlement and, if the settlement is not received, notify Customer but Bank will not be obligated to institute legal proceedings, file a proof of claim in any insolvency proceeding, or take any similar action.
2.5 Contractual Settlement Date Accounting.
(a) Should Customer request to have Bank’s Contractual Settlement Date Accounting Service, Bank will effect book entries on a “contractual settlement date accounting” basis as described below with respect to the settlement of trades in those markets where Bank generally offers contractual settlement date accounting and will notify Customer of those markets from time to time.
| (i) | Sales: On the settlement date for a sale, Bank will credit the Cash Account with the proceeds of the sale and transfer the relevant Financial Assets to an account pending settlement of the trade if not already delivered. |
| (ii) | Purchases: On the settlement date for the purchase (or earlier, if market practice requires delivery of the purchase price before the settlement date), Bank will debit the Cash Account with the settlement monies and credit a separate account. Bank then will post the Securities Account as awaiting receipt of the expected Financial Assets. Customer will not be entitled to the delivery of Financial Assets that are awaiting receipt until Bank actually receives them. |
4
Bank reserves the right to restrict in good faith the availability of contractual settlement date accounting for credit reasons. Bank, whenever reasonably possible, will notify Customer prior to imposing such restrictions.
(b) Bank may (in its discretion) upon at least one business days’ prior oral or written notification to Customer reverse any debit or credit made pursuant to Section 2.5(a) prior to a transaction’s actual settlement, and Customer will be responsible for any costs or liabilities resulting from such reversal. Customer acknowledges that the procedures described in this sub-section are of an administrative nature, and Bank does not undertake to make loans and/or Financial Assets available to Customer.
2.6 Actual Settlement Date Accounting.
With respect to any sale or purchase transaction that is not posted to the Account on the contractual settlement date as referred to in Section 2.5, Bank will post the transaction on the date on which the cash or Financial Assets received as consideration for the transaction is actually received by Bank.
2.7 Income Collection (Autocredit®).
(a) Bank will credit the Cash Account with income and redemption proceeds on Financial Assets in accordance with the times notified by Bank from time to time on or after the anticipated payment date, net of any taxes that are withheld by Bank or any third party. Where no time is specified for a particular market, income and redemption proceeds from Financial Assets will be credited only after actual receipt and reconciliation. Bank may reverse such credits upon at least one business days prior oral or written notification to Customer when Bank believes that the corresponding payment will not be received by Bank within a reasonable period or such credit was incorrect.
(b) Bank will make reasonable endeavors in its discretion to contact appropriate parties to collect unpaid interest, dividends or redemption proceeds, but Bank will not be obliged to file any formal notice of default, institute legal proceedings, file a proof of claim in any insolvency proceeding, or take any similar action.
2.8 Certain Ministerial Acts.
(a) Until Bank receives Instructions to the contrary, Bank will:
| (i) | present all Financial Assets for which Bank has received notice of a call for redemption or that have otherwise matured, and all income and interest coupons and other income items that call for payment upon presentation; |
| (ii) | execute in the name of Customer such certificates as may be required to obtain payment in respect of Financial Assets; and |
| (iii) | exchange interim or temporary documents of title held in the Securities Account for definitive documents of title. |
5
(b) Bank may provide information concerning the Accounts to Securities Depositories, counterparties, issuers of Financial Assets, governmental entities, securities exchanges, self-regulatory entities, and similar entities to the extent required by Applicable Law or as may be required in the ordinary course by market practice or otherwise in order to provide the services contemplated by this Agreement.
2.9 Corporate Actions.
Bank will follow Corporate Actions and advise Customer in a timely manner of those Corporate Actions of which the Bank’s central corporate actions department receives notice from the issuer or from the Securities Depository in which such Financial Assets are maintained or notice published in publications and reported in reporting services routine used by Bank for this purpose. Bank also will use its reasonable efforts to notify Customer of any class action litigation for which information is actually received by Bank’s central corporate actions department but shall not be liable for any Liabilities arising out of Bank’s failure to identify Customer’s interest in any class action litigation. Bank does not commit, however, to provide information concerning Corporate Actions or class action litigation relating to Financial Assets being held at Customer’s request in a name not subject to the control of Bank.
(a)
(b) If an Authorized Person fails to provide Bank with timely Instructions with respect to any Corporate Action or class action, neither Bank nor its nominees will take any action in relation to that Corporate Action or class action, except as otherwise agreed in writing by Bank and Customer or as may be set forth by Bank as a default action in the notification it provides under Section 2.9(a) with respect to that Corporate Action or class action.
(c) Bank may sell or otherwise dispose of fractional interests in Financial Assets arising out of a Corporate Action or class action and, to the extent necessary to protect Customer’s interest in that Corporate Action or class action, credit the Cash Account with the proceeds of the sale or disposition. If some, but not all, of an outstanding class of Financial Asset is called for redemption, Bank may allot the amount redeemed among the respective beneficial holders of such class of Financial Asset in any manner Bank deems to be fair and equitable.
(d) Notices of Corporate Actions and class actions dispatched to Customer may have been obtained from sources which Bank does not control and may have been translated or summarized. Although Bank believes such sources to be reliable, Bank has no duty to verify the information contained in such notices nor the faithfulness of any translation or summary and therefore does not guarantee its accuracy, completeness or timeliness, and shall not be liable to Customer for any loss that may result from relying on such notice.
2.10 Proxies.
(a) Subject to and upon the terms of this sub-section, Bank will provide Customer with information which it receives on matters to be voted upon at meetings of holders of Financial Assets (“Notifications”), and Bank will act in accordance with Customer’s Instructions in relation to such Notifications. If information is received by Bank at its proxy voting department too late to permit timely voting by Customer, Bank’s only obligation will be to provide, so far as reasonably practicable, a Notification (or summary information concerning a Notification) on an “information only” basis.
6
(b) Bank will act upon Instructions to vote on matters referred to in a Notification, provided Instructions are received by Bank at its proxy voting department by the deadline referred to in the relevant Notification. If Instructions are not received in a timely manner, Bank will not be obligated to provide further notice to Customer and shall not be obliged to vote . It is Customer’s obligation to monitor the agreed means of providing Notifications to determine if new Notifications have been received.
(c) Customer acknowledges that the provision of proxy voting services may be precluded or restricted under a variety of circumstances. These circumstances include, but are not limited to:
(i) the Financial Assets being on loan or out for registration;
(ii) the pendency of conversion or another Corporate Action;
(iii) Financial Assets being held at Customer’s request in a name not subject to the control of Bank;
(iv) Financial Assets being held in a margin or collateral account at Bank or another bank or broker, or otherwise in a manner which affects voting; and
(v) local market regulations or practices, or restrictions by the issuer.
(d) Notwithstanding the fact that Bank may act in a fiduciary capacity with respect to Customer under other agreements or otherwise hereunder, in performing proxy voting services Bank will be acting solely as the agent of Customer, and will not exercise any discretion with regard to such proxy voting services or vote any proxy except when directed by an Authorized Person.
2.11 Statements and Information Available On-Line.
(a) Bank will send, or make available on-line, to Customer at times mutually agreed upon, a formal statement of account in Bank’s standard format for each Account maintained by Customer with Bank, identifying the Financial Assets and cash held in each Account (each such statement a “Statement of Account”). Additionally, Bank will send (or make available on-line) to Customer an advice or notification of any transfers of cash or Financial Assets with respect to each Account. Bank will not be liable with respect to any matter set forth in those portions of any Statement of Account or any such advice or notification (or reasonably implied therefrom) to which Customer has not given Bank a written exception or objection within sixty (60) days of receipt of the Statement of Account, provided such matter is not the result of Bank’s willful misconduct or bad faith. References in this Agreement to Statements of Account include Statements of Account in electronic form.
(b) Prices and other information obtained from third parties which may be contained in any Statement of Account or other statement sent to Customer have been obtained from sources Bank believes to be reliable. Bank does not, however, make any representation as to the accuracy of such information or that the prices specified necessarily reflect the proceeds that would be received on a disposal of the relevant Financial Assets.
7
(c) Customer acknowledges that, except for Statements of Account or as otherwise expressly agreed by Bank, records and reports available to it on-line may not be accurate due to mis-postings, delays in updating Account records, and other causes. Bank will not be liable for any loss or damage arising out of the inaccuracy of any such records or reports accessed on-line.
2.12 Access to Bank’s Records.
(a) Bank will allow Customer and Customer’s independent public accountants such reasonable access to the records of Bank relating to Financial Assets as is required in connection with their examination of books and records pertaining to Customer’s affairs.
(b) Upon reasonable request of Customer, Bank shall provide Customer with a copy of Bank’s report prepared in compliance with the requirements of Statement of Auditing Standards No. 70 issued by the American Institute of Certified Public Accountants, as it may be amended from time to time.
2.13 Tax Relief Services.
Bank will provide tax relief services as provided in Section 8.2.
3. INSTRUCTIONS
3.1 Acting on Instructions; Unclear Instructions.
(a) Customer authorizes Bank to accept and act upon any Instructions received by it without inquiry. Customer will indemnify the Bank Indemnitees against, and hold each of them harmless from, any Liabilities that may be imposed on, incurred by, or asserted against the Bank Indemnitees as a result of any action or omission taken in accordance with any Instructions or other directions upon which Bank is authorized to rely under the terms of this Agreement.
(b) Unless otherwise expressly provided, all Instructions will continue in full force and effect until canceled or superseded.
(c) Bank may (in its sole discretion and without affecting any part of this Section 3.1) seek clarification or confirmation of an Instruction from an Authorized Person and may decline to act upon an Instruction if it does not receive clarification or confirmation satisfactory to it. Bank will not be liable for any loss arising from any delay while it seeks such clarification or confirmation.
(d) In executing or paying a payment order Bank may rely upon the identifying number (e.g. Fedwire routing number or account) of any party as instructed in the payment order. Customer assumes full responsibility for any inconsistency within an Instruction between the name and identifying number of any party in payment orders issued to Bank in Customer’s name.
8
3.2 Confirmation of Oral Instructions/Security Devices.
Any Instructions delivered to Bank by telephone will promptly thereafter be confirmed in writing by an Authorized Person. Each confirmation is to be clearly marked “Confirmation”. Bank will not be liable for having followed such Instructions notwithstanding the failure of an Authorized Person to send such confirmation in writing or the failure of such confirmation to conform to the telephone Instructions received. Bank will notify Customer as soon as reasonably practicable if Bank does not receive a written confirmation or if such written confirmation fails to conform to the telephone Instructions received. Either party may record any of their telephonic communications. Customer will comply with any security procedures reasonably required by Bank from time to time with respect to verification of Instructions. Customer will be responsible for safeguarding any test keys, identification codes or other security devices that Bank will make available to Customer or any Authorized Person.
3.3 Instructions; Contrary to Law/Market Practice.
Bank need not act upon Instructions which it reasonably believes to be contrary to law, regulation or market practice and Bank will be under no duty to investigate whether any Instructions comply with Applicable Law or market practice. Bank will notify Customer as soon as reasonably practicable if it does not act upon Instructions under this Section.
3.4 Cut-off Times.
Bank has established cut-off times for receipt of some categories of Instruction, which will be made available to Customer. If Bank receives an Instruction after its established cut-off time, Bank will attempt to act upon the Instruction on the day requested if Bank deems it practicable to do so or otherwise as soon as practicable on the next business day.
4. FEES, EXPENSES AND OTHER AMOUNTS OWING TO BANK
4.1 Fees and Expenses.
Customer will pay Bank for its services hereunder the fees set forth in Schedule A hereto or such other amounts as may be agreed upon in writing from time to time, together with Bank’s reasonable out-of-pocket or incidental expenses, including, but not limited to, legal fees and tax or related fees incidental to processing by governmental authorities, issuers, or their agents. Bank, with Customer’s consent, may increase such fees by not less than thirty (30) days’ notice in writing to Customer. Without prejudice to Bank’s other rights, Bank reserves the right to charge interest on overdue amounts from the due date until actual payment at such rate as Bank may reasonably determine.
4.2 Overdrafts.
Customer will have sufficient immediately available funds each day in the Cash Account (without regard to any Cash Account investments) to pay for the settlement of all Financial Assets delivered against payment to Customer and credited to the Securities Account. If a debit to the Cash Account results (or will result) in a debit balance, then Bank may, in its discretion, (i) advance an amount equal to the overdraft (ii) refuse to settle in whole or in part the transaction
9
causing such debit balance, or (iii) if any such transaction is posted to the Securities Account, reverse any such posting. If Bank elects to make such an advance, the advance shall be deemed a loan to Customer, payable on demand, bearing interest at the rate agreed by Customer and Bank for the Accounts from time to time, or in the absence of such an agreement at the rate charged by Bank from time to time, for overdrafts incurred by customers similar to Customer, from the date of such advance to the date of payment (both after as well as before judgment) and otherwise on the terms on which Bank makes similar advances available from time to time. Bank shall provide prompt electronic notice to Customer of such an advance. No prior action or course of dealing on Bank’s part with respect to the settlement of transactions on Customer’s behalf will be asserted by Customer against Bank for Bank’s refusal to make advances to the Cash Account or to settle any transaction for which Customer does not have sufficient available funds in the Cash Account.
4.3 Bank’s Right Over Securities; Set-off.
(a) Customer grants Bank a security interest in and a lien on the Financial Assets held in the Securities Account of a particular Fund as security for any and all amounts which are now or become owing to Bank with respect to that Fund under any provision of this Agreement, whether or not matured or contingent (“Indebtedness”). Such lien and security interest shall be effective only so long as such advance, overdraft, or accrued interest thereon remains outstanding and Bank shall have all the rights and remedies of a secured party under the New York Uniform Commercial Code in respect of the repayment of the advance, overdraft or accrued interest.
(b) Bank will be further entitled to set any such Indebtedness off first against any Cash Account and second against any Securities Account of a Fund with Bank of which the Fund is the beneficial owner. Bank shall notify Customer in advance of any such set-off. For this purpose, Bank shall be entitled to accelerate the maturity of any fixed term deposits of the relevant Fund.
5. SECURITIES DEPOSITORIES AND OTHER AGENTS
5.1 Use of Securities Depositories.
(a) Bank may deposit Financial Assets with, and hold Financial Assets in, any securities depository, settlement system, dematerialized book entry system or similar system (together a “Securities Depository”) on such terms as such systems customarily operate and Customer will provide Bank with such documentation or acknowledgements that Bank may require to hold the Financial Assets in such systems.
(b) Bank will not be liable for any act or omission by (or the insolvency of) any Securities Depository. In the event Customer incurs a loss due to the negligence, bad faith, willful misconduct, or insolvency of a Securities Depository, Bank will make reasonable endeavors to seek recovery from the Securities Depository, but Bank will not be obligated to institute legal proceedings, file a proof of claim in any insolvency proceeding, or take any similar action.
10
5.2 Use of Agents.
(a) Bank may provide certain services under this Agreement through third parties which may be Affiliates. Bank will not be responsible for any loss as a result of a failure by any broker or any other third party that it selects and retains using reasonable care to provide ancillary services including, without limitation, delivery services and providers of information regarding matters such as pricing, proxy voting, Corporate Actions and class action litigation that it does not customarily provide itself. Nevertheless, Bank will be liable for the performance of any such service provider selected by Bank that is an Affiliate to the same extent as Bank would have been liable if it performed such services itself.
(b) Bank may execute transactions through a broker which is an Affiliate (i) in the case of the sale under Section 2.9(c) of a fractional interest, or (ii) if an Authorized Person directs Bank to use the Affiliate broker or otherwise requests that Bank select a broker for that transaction, unless, in either case, the Affiliate does not execute similar transactions in such Financial Assets. The Affiliate broker may charge its customary commission (or retain its customary spread) with respect to any such transaction.
6. ADDITIONAL PROVISIONS RELATING TO CUSTOMER
6.1 Representations of Customer and Bank.
(a) Customer represents and warrants to Bank that (i) it has full authority and power, and has obtained all necessary authorizations and consents, to deposit and control the Financial Assets and cash in the Accounts, to use Bank as its custodian in accordance with the terms of this Agreement, to incur indebtedness, to pledge Financial Assets as contemplated by Section 4.3; (ii) assuming execution and delivery of this Agreement by Bank, this Agreement is Customer’s legal, valid and binding obligation, enforceable in accordance with its terms and it has full power and authority to enter into and has taken all necessary corporate action to authorize the execution of this Agreement; (iii) it has not relied on any oral or written representation made by Bank or any person on its behalf, and acknowledges that this Agreement sets out the duties of Bank. Bank may rely upon the above or the certification of such other facts as may be required to administer Bank’s obligations hereunder.
(b) Bank represents and warrants that (i) assuming execution and delivery of this Agreement by Customer, this Agreement is Bank’s legal, valid and binding obligation, enforceable in accordance with its terms; (ii) it has at least the minimum qualifications required by Section 17(f)(1) of the Investment Company Act of 1940 to act as custodian of the Accounts; and (iii) it has full power and authority to enter into and has taken all necessary corporate action to authorize the execution of this Agreement. Customer may rely upon the above or the certification of such other facts as may be required to administer Customer’s obligations hereunder.
6.2 Customer to Provide Certain Information to Bank.
Upon request, Customer will promptly provide to Bank such information about itself and its financial status as Bank may reasonably request, including Customer’s organizational documents and its current audited and unaudited financial statements.
11
6.3 Customer is Liable to Bank Even if it is Acting for Another Person.
If Customer is acting as an agent for a disclosed or undisclosed principal in respect of any transaction, cash, or Financial Asset, Bank nevertheless will treat Customer as its principal for all purposes under this Agreement. In this regard, Customer will be liable to Bank as a principal in respect of any transactions relating to the Account. The foregoing will not affect any rights Bank might have against Customer’s principal.
6.4 Several Obligations of the Funds.
This Agreement is executed on behalf of the Board of each Company on behalf of the respective Funds and the obligations of this Agreement are not binding upon any of the Board members or shareholders individually but are binding only upon the assets and property of the Funds. With respect to the obligations of each Fund arising hereunder, Bank shall look for payment or satisfaction of any such obligation solely to the assets of the Fund to which such obligation relates as though Bank had separately contracted by separate written instrument with respect to each Fund.
7. WHEN BANK IS LIABLE TO CUSTOMER
7.1 Standard of Care; Liability.
(a) Bank will use reasonable care in performing its obligations under this Agreement. Bank will not be in violation of this Agreement with respect to any matter as to which it has satisfied its obligation of reasonable care.
(b) Bank will be liable for Customer’s direct damages to the extent they result from Bank’s negligence, bad faith or willful misconduct in performing its duties as set out in this Agreement. Nevertheless, under no circumstances will Bank be liable for any indirect, incidental, consequential or special damages (including, without limitation, lost profits) of any form incurred by any person or entity, whether or not foreseeable and regardless of the type of action in which such a claim may be brought, with respect to the Accounts, Bank’s performance hereunder or Bank’s role as custodian.
(c) Customer will indemnify the Bank Indemnitees against, and hold them harmless from, any Liabilities that may be imposed on, incurred by or asserted against any of the Bank Indemnitees in connection with or arising out of (i) Bank’s performance under this Agreement, provided the Bank Indemnitees have not acted with negligence, bad faith or engaged in fraud or willful misconduct in connection with the Liabilities in question or (ii) any Bank Indemnitee’s status as a holder of record of Customer’s Financial Assets.
(d) Without limiting Subsections 7.1(a), (b) or (c), Bank will have no duty or responsibility to: (i) question Instructions or make any suggestions to Customer or an Authorized Person regarding such Instructions; (ii) supervise or make recommendations with respect to investments or the retention of Financial Assets; (iii) advise Customer or an Authorized Person regarding any default in the payment of principal or income of any security other than as provided in Section 2.7(b) of this Agreement; (iv) evaluate or report to Customer or an Authorized Person regarding the financial condition of any broker, agent or other party to which Bank is instructed to deliver Financial Assets or cash; or (v) except for trades settled at
12
DTC where the broker provides DTC trade confirmation and Customer provides for Bank to receive the trade instruction, review or reconcile trade confirmations received from brokers (and Customer or its Authorized Persons issuing Instructions will bear any responsibility to review such confirmations against Instructions issued to and Statements of Account issued by Bank).
7.2 Force Majeure.
Bank will maintain and update from time to time business continuation and disaster recovery procedures with respect to its custody business that it determines from time to time meet reasonable commercial standards. Bank will have no liability, however, for any damage, loss, expense or liability of any nature that Customer may suffer or incur, caused by an act of God, fire, flood, civil or labor disturbance, war, terrorism, act of any governmental authority or other act or threat of any authority (de jure or de facto), legal constraint, fraud or forgery (except by Bank or Bank Indemnitee), malfunction of equipment or software (except where such malfunction is primarily attributable to Bank’s negligence or willful misconduct in maintaining the equipment or software), failure of or the effect of rules or operations of any external funds transfer system, inability to obtain or interruption of external communications facilities, or any cause beyond the reasonable control of Bank (including without limitation, the non-availability of appropriate foreign exchange). Bank shall endeavor to promptly notify Customer when it becomes aware of any situation outlined above, but shall not be liable for failure to do so.
7.3 Bank Provides Diverse Financial Services and May Generate Profits as a Result.
Customer acknowledges that Bank or its Affiliates may have a material interest in transactions entered into by Customer with respect to the Accounts or that circumstances are such that Bank may have a potential conflict of duty or interest. For example, Bank or its Affiliates may act as a market maker in the Financial Assets to which Instructions relate, provide brokerage services to other customers, act as financial adviser to the issuer of such Financial Assets, act in the same transaction as agent for more than one customer, have a material interest in the issue of the Financial Assets; or earn profits from any of these activities. Customer further acknowledges that Bank or its Affiliates may be in possession of information tending to show that the Instructions received may not be in the best interests of Customer but that Bank is not under any duty to disclose any such information.
8. TAXATION
8.1 Tax Obligations.
(a) Customer confirms that Bank is authorized to deduct from any cash received or credited to the Cash Account any taxes or levies required by any revenue or governmental authority for whatever reason in respect of Customer’s Accounts.
(b) Customer will provide to Bank such certifications, documentation, and information as it may require in connection with taxation, and warrants that, when given, this information is true and correct in every respect, not misleading in any way, and contains all material information. Customer undertakes to notify Bank immediately if any information requires updating or correcting. Bank shall not be liable for any taxes, penalties, interest or additions to tax, payable or paid that result from (i) the inaccurate completion of documents by Customer or any Customer agent; (ii) the provision to Bank of inaccurate or misleading information by Customer; (iii) the withholding of material information by Customer; or (iv) any delay by any revenue authority or any other cause beyond Bank’s control.
13
(c) Customer will be responsible for the payment of all taxes relating to the Financial Assets in the Securities Account. Customer will indemnify and hold Bank harmless from and against any and all liabilities, penalties, interest or additions to tax with respect to or resulting from, any delay in, or failure by, Bank (i) to pay, withhold or report any U.S. federal, state or local taxes or foreign taxes imposed on, or (ii) to report interest, dividend or other income paid or credited to the Cash Account, whether such delay or failure by Bank to pay, withhold or report tax or income is the result of (x) Customer’s failure to comply with the terms of this paragraph, or (y) Bank’s own acts or omissions; provided however, Customer will not be liable to Bank for any penalty or additions to tax due as a result of Bank’s failure to pay or withhold tax or to report interest, dividend or other income paid or credited to the Cash Account solely as a result of Bank’s negligent acts or omissions.
8.2 Tax Relief Services With Respect to American Depository Receipts.
(a) Subject to the provisions of this Section, Bank will apply for a reduction of withholding tax and any refund of any tax paid or tax credits in respect of income payments on Financial Assets comprising American depository receipts credited to the Securities Account that Bank believes may be available. To defray expenses pertaining to nominal tax claims, Bank may from time-to-time set minimum thresholds as to a de minimus value of tax relief claims or reduction of withholding which it will pursue in respect of income payments under this Section 8.2.
(b) The provision of a tax relief service by Bank is conditional upon Bank receiving from Customer (i) a declaration of its identity and place of residence and (ii) certain other documentation (pro forma copies of which are available from Bank), prior to the receipt of Financial Assets comprising American depository receipts in the Account or the payment of income.
(c) Bank will perform tax relief services only with respect to taxation levied by the revenue authorities of the countries advised to Customer from time to time and Bank may, by notification in writing, in its absolute discretion, supplement or amend the countries in which the tax relief services are offered. Other than as expressly provided in this Section 8.2, Bank will have no responsibility with regard to Customer’s tax position or status in any jurisdiction.
(d) Customer confirms that Bank is authorized to disclose any information requested by any revenue authority or any governmental entity in relation to the processing of any tax relief claim.
9. TERMINATION
Either party may terminate this Agreement on sixty (60) days’ written notice to the other party. If Customer gives notice of termination, it must provide full details of the persons to whom Bank must deliver Financial Assets and cash. If Bank gives notice of termination, then Customer must, within sixty (60) days following receipt of the notice, notify Bank of details of its new custodian, failing which Bank may elect (at any time after sixty days following Customer’s receipt of the notice) either to retain the Financial Assets and cash until such details
14
are given, continuing to charge fees due (in which case Bank’s sole obligation will be for the safekeeping of the Financial Assets and cash), or deliver the Financial Assets and cash to another custodian. Bank will in any event be entitled to deduct any uncontested amounts owing to it prior to delivery of the Financial Assets and cash (and, accordingly, Bank will be entitled to deduct cash from the Cash Account in satisfaction of uncontested amounts owing to it). Customer will reimburse Bank promptly for all out-of-pocket expenses it incurs in delivering Financial Assets upon termination by Customer. Termination will not affect any of the liabilities either party owes to the other arising under this Agreement prior to such termination.
10. MISCELLANEOUS
10.1 Notices.
Notices (other than Instructions) will be served by registered mail or hand delivery to the address of the respective parties as set out on the first page of this Agreement, unless notice of a new address is given to the other party in writing. Notice will not be deemed to be given unless it has been received.
10.2 Successors and Assigns.
This Agreement will be binding on each of the parties’ successors and assigns, but the parties agree that neither party can assign its rights and obligations under this Agreement without the prior written consent of the other party, which consent will not be unreasonably withheld.
10.3 Interpretation.
Headings are for convenience only and are not intended to affect interpretation. References to sections are to sections of this Agreement and references to sub-sections and paragraphs are to sub-sections of the sections and paragraphs of the sub-sections in which they appear.
10.4 Entire Agreement.
(a) The following Rider(s) are incorporated into this Agreement:
______ Accounting Services
______ Investment Company
(b) This Agreement, including the Schedules, Exhibits, and the Riders (and any separate agreement which Bank and Customer may enter into with respect to any Cash Account), sets out the entire Agreement between the parties in connection with the subject matter, and this Agreement supersedes any other agreement, statement, or representation relating to custody, whether oral or written. Amendments must be in writing and signed by both parties.
10.5 Insurance.
Bank will not be required to maintain any insurance coverage for the benefit of Customer.
15
10.6 Confidentiality.
The parties hereto agree that each shall treat confidentially all information provided by each party to the other regarding its business and operations. All confidential information provided by a party shall be used by the other party solely for the purpose of rendering or obtaining services pursuant to this Agreement, and except as may be required in carrying out this Agreement, shall not be disclosed to any third party without the prior consent of such providing party. The foregoing shall not be applicable to any information that is publicly available when provided or thereafter becomes publicly available other than through a breach of this provision, or that is required to be disclosed by or to any regulatory authority, any external or internal accountant, auditor or counsels of the parties, by judicial or administrative process or otherwise by applicable law, or to any disclosure made by a party if such party’s counsel has advised that such party could be liable under any applicable law or any judicial or administrative order or process for failure to make such disclosure.
10.7 Governing Law and Jurisdiction.
This Agreement will be construed, regulated, and administered under the laws of the United States or State of New York, as applicable, without regard to New York’s principles regarding conflict of laws. The United States District Court for the Southern District of New York will have the sole and exclusive jurisdiction over any lawsuit or other judicial proceeding relating to or arising from this Agreement. If that court lacks federal subject matter jurisdiction, the Supreme Court of the State of New York, New York County will have sole and exclusive jurisdiction. Either of these courts will have proper venue for any such lawsuit or judicial proceeding, and the parties waive any objection to venue or their convenience as a forum. The parties agree to submit to the jurisdiction of any of the courts specified and to accept service of process to vest personal jurisdiction over them in any of these courts. The parties further hereby knowingly, voluntarily and intentionally waive, to the fullest extent permitted by Applicable Law, any right to a trial by jury with respect to any such lawsuit or judicial proceeding arising or relating to this Agreement or the transactions contemplated hereby. To the extent that in any jurisdiction Customer may now or hereafter be entitled to claim, for itself or its assets, immunity from suit, execution, attachment (before or after judgment) or other legal process, Customer shall not claim, and it hereby irrevocably waives, such immunity.
10.8 Severability; Waiver; and Survival.
(a) If one or more provisions of this Agreement are held invalid, illegal or unenforceable in any respect on the basis of any particular circumstances or in any jurisdiction, the validity, legality and enforceability of such provision or provisions under other circumstances or in other jurisdictions and of the remaining provisions will not in any way be affected or impaired.
(b) Except as otherwise provided herein, no failure or delay on the part of either party in exercising any power or right hereunder operates as a waiver, nor does any single or partial exercise of any power or right preclude any other or further exercise, or the exercise of any other power or right. No waiver by a party of any provision of this Agreement, or waiver of any breach or default, is effective unless it is in writing and signed by the party against whom the waiver is to be enforced.
16
(c) Bank’s and Customer’s rights, protections, and remedies under this Agreement shall survive for three (3) years following its termination.
10.9 Counterparts.
This Agreement may be executed in several counterparts each of which will be deemed to be an original and together shall constitute one and the same agreement.
17
10.10 No Third Party Beneficiaries.
A person who is not a party to this Agreement shall have no right to enforce any term of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
CUSTOMER:
EQUITRUST SERIES FUND, INC.
| By: | /S/ XXX XXX XXXXXXXX | By: |
/S/ XXXXXX X. XXXXXX | |||||
| Xxx Xxx Xxxxxxxx | Xxxxxx X. Xxxxxx | |||||||
| Title: Vice President of Investments & Assistant Treasurer | Title: President | |||||||
EQUITRUST MONEY MARKET FUND, INC.
| By: | /S/ XXX XXX XXXXXXXX | By: |
/S/ XXXXXX X. XXXXXX | |||||
| Xxx Xxx Xxxxxxxx | Xxxxxx X. Xxxxxx | |||||||
| Title: Vice President of Investments & Assistant Treasurer | Title: President | |||||||
EQUITRUST VARIABLE INSURANCE SERIES FUND
| By: | /S/ XXX XXX XXXXXXXX | By: |
/S/ XXXXXX X. XXXXXX | |||||
| Xxx Xxx Xxxxxxxx | Xxxxxx X. Xxxxxx | |||||||
| Title: Vice President of Investments & Assistant Treasurer | Title: President | |||||||
BANK:
XX XXXXXX XXXXX BANK, N.A.
| By: | /S/ XXXXX X. XXXXXX | |
| Xxxxx X. Xxxxxx | ||
| Title: Vice President | ||
18
SCHEDULE A
JPMORGAN CHASE
FBL FINANCIAL GROUP, INC
FEE SCHEDULE
EQUITRUST MONEY MARKET ASSETS
CUSTODY SAFEKEEPING & ADMINISTRATION
| PRODUCT TYPE |
ANNUAL FEE | |||
| Account Maintenance |
$ | 0.00 | ||
| Book Entry Issues – DTC |
7.20 | |||
| Book Entry Issues – FBE |
7.20 | |||
| Book Entry Issues – Physical |
48.00 | |||
| Euroclear Holdings |
.25 | bps | ||
| CUSTODY TRANSACTIONS |
||||
| TRANSACTION TYPE |
TRANSACTION FEE | |||
| DTC Buy / Sell – Auto Input |
$ | 4.50 | ||
| FBE Buy / Sell – Auto Input |
4.50 | |||
| DTC Buy / Sell – Manual Input |
10.00 | |||
| FBE Buy / Sell – Manual Input |
10.00 | |||
| Physical Buy /Sell – Auto Input |
20.00 | |||
| Physical Buy / Sell – Manual Input |
25.00 | |||
| Euroclear Buy / Sell |
25.00 | |||
| Switch – Book Entry |
4.50 | |||
| Switch – Physical |
10.00 | |||
| P&I Payments – Book Entry |
3.25 | |||
| P&I Payments – Physical |
10.00 | |||
| Redemptions – Book Entry |
4.50 | |||
| Redemptions – Physical |
10.00 | |||
| Called Bonds |
25.00 | |||
| Stock Dividends / Splits |
25.00 | |||
| Corporate Actions |
25.00 | |||
| Blue Sheet |
5.00 | |||
| Fed Wire |
3.75 | |||
| Book Transfer |
3.50 | |||
| JPMorgan ACCESS (Custody Reporting) |
0.00 | |||
| Xxx Files |
0.00 | |||
| DDA FEES |
||||
| Account Maintenance |
$ | 0.00 | ||
| Fed Wires |
3.75 | |||
| Book Transfers |
3.50 | |||
| ACH Transactions |
.027 | |||
| Internal Debits / Credits |
0.00 | |||
| Advices |
1.50 | |||
| Statements |
0.00 | |||
19
SCHEDULE A
JPMORGAN CHASE
FBL FINANCIAL GROUP, INC
FEE SCHEDULE
EQUITRUST MUTUAL FUND ASSETS
| CUSTODY SAFEKEEPING & ADMINISTRATION |
||||
| PRODUCT TYPE |
ANNUAL FEE | |||
| Account Maintenance |
$ | 0.00 | ||
| Book Entry Issues – DTC |
7.20 | |||
| Book Entry Issues – FBE |
7.20 | |||
| Book Entry Issues – Physical |
48.00 | |||
| Euroclear Holdings |
.25 | bps | ||
| CUSTODY TRANSACTIONS |
||||
| TRANSACTION TYPE |
TRANSACTION FEE | |||
| DTC Buy / Sell – Auto Input |
$ | 4.50 | ||
| FBE Buy / Sell – Auto Input |
4.50 | |||
| DTC Buy / Sell – Manual Input |
10.00 | |||
| FBE Buy / Sell – Manual Input |
10.00 | |||
| Physical Buy / Sell – Auto Input |
20.00 | |||
| Physical Buy / Sell – Manual Input |
25.00 | |||
| Euroclear Buy / Sell |
25.00 | |||
| Switch – Book Entry |
4.50 | |||
| Switch – Physical |
10.00 | |||
| P&I Payments – Book Entry |
3.25 | |||
| P&I Payments – Physical |
10.00 | |||
| Redemptions – Book Entry |
4.50 | |||
| Redemptions – Physical |
10.00 | |||
| Called Bonds |
25.00 | |||
| Stock Dividends / Splits |
25.00 | |||
| Corporate Actions |
25.00 | |||
| Blue Sheet |
5.00 | |||
| Fed Wire |
3.75 | |||
| Book Transfer |
3.50 | |||
| JPMorgan ACCESS (Custody Reporting) |
0.00 | |||
| Xxx Files |
0.00 | |||
| DDA FEES |
||||
| Account Maintenance |
$ | 55.00 | ||
| Fed Wires |
3.75 | |||
| Book Transfers |
3.50 | |||
| ACH Transactions |
.027 | |||
| Internal Debits / Credits |
.60 | |||
| Advices |
1.50 | |||
| Statements |
10.00 | |||
20
EXHIBIT 1
List of Funds to Domestic Custody Agreement Dated August 23, 2005
| FUND NAME |
ACCOUNT NUMBER | |
| EquiTrust Money Market Fund, Inc |
G 10543 | |
| EquiTrust Series Fund, Inc – Value Growth Portfolio |
G 10544 | |
| EquiTrust Series Fund, Inc – High Grade Bond Portfolio |
G 10545 | |
| EquiTrust Series Fund, Inc – Strategic Xxxxx Xxxxxxxxx |
X 00000 | |
| XxxxXxxxx Series Fund, Inc – Managed Portfolio |
G 10547 | |
| EquiTrust Series Fund, Inc – Money Market Portfolio |
G 10548 | |
| EquiTrust Series Fund, Inc – Blue Chip Portfolio |
G 10549 | |
| EquiTrust Variable Insurance Series Fund – Value Growth Portfolio |
G 10550 | |
| EquiTrust Variable Insurance Series Fund – High Grade Bond Portfolio |
G 10551 | |
| EquiTrust Variable Insurance Series Fund – Strategic Yield Portfolio |
G 10552 | |
| EquiTrust Variable Insurance Series Fund – Managed Portfolio |
G 10553 | |
| EquiTrust Variable Insurance Series Fund – Money Market Portfolio |
G 10554 | |
| EquiTrust Variable Insurance Series Fund – Blue Chip Portfolio |
G 10555 |
21
