EXHIBIT 3
Custodian Agreement Between Rydex
Advisor Variable Annuity Account and
Boston Safe Deposit and Trust Company
CUSTODY AGREEMENT
AGREEMENT dated as of November 12, 1996, between RYDEX
ADVISOR VARIABLE ANNUITY ACCOUNT, a segregated investment
account of Great American Reserve Insurance Company, a
diversified open-end management investment company organized
under Texas law (the "Separate Account"), having its principal
office and place of business at 00000 Xxxxx Xxxxxxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxx 00000, and BOSTON SAFE DEPOSIT AND
TRUST COMPANY (the "Custodian"), a Massachusetts trust company
with its principal place of business at Xxx Xxxxxx Xxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000.
W I T N E S S E T H:
That for and in consideration of the mutual promises
hereinafter set forth, the Separate Account and the Custodian
agree as follows:
1. Definitions.
Whenever used in this Agreement or in any Schedules to
this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
(a) Affiliated Person shall have the meaning of the term
within Section 2(a)3 of the 1940 Act.
(b) "Authorized Person" shall be deemed to include the
Chairman of the Board of Managers, the President, and any
Vice President, the Secretary, the Treasurer or any other
person, whether or not any such person is an officer or
employee of the Separate Account, duly authorized by the
Board of Managers of the Separate Account to give Oral
Instructions and Written Instructions on behalf of the
Separate Account and listed in the certification annexed
hereto as Appendix A or such other certification as may be
received by the Custodian from time to time.
(c) " B ook-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and
federal agency Securities, its successor or successors and
its nominee or nominees.
(d) Business Day shall mean any day on which the
Separate Account, the Custodian, the Book-Entry System and
appropriate clearing corporation(s) are open for business.
(e) "Certificate" shall mean any notice, instruction or
other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, which is
actually received by the Custodian and signed on behalf of
the Separate Account by any two Authorized Persons or any
two officers thereof.
(f) "Separate Account Rules" shall mean the rules and
regulations of the Separate Account adopted June 26, 1996
as the same may be amended from time to time.
(g) "Depository" shall mean The Depository Trust
Company ( DTC ), a clearing agency registered with the
Securities and Exchange Commission under Section 17(a) of
the Securities Exchange Act of 1934, as amended, its
successor or successors and its nominee or nominees, in
which the Custodian is hereby specifically authorized to
make deposits. The term "Depository" shall further mean
and include any other person to be named in a Certificate
authorized to act as a depository under the 1940 Act, its
successor or successors and its nominee or nominees.
(h) "Money Market Security" shall be deemed to include,
without limitation, debt obligations issued or guaranteed
as to interest and principal by the government of the
United States or agencies or instrumentalities thereof
("U.S. government securities"), commercial paper, bank
certificates of deposit, bankers' acceptances and short-
term corporate obligations, where the purchase or sale of
such securities normally requires settlement in federal
Separate Accounts on the same day as such purchase or
sale, and repurchase and reverse repurchase agreements
with respect to any of the foregoing types of securities.
(i) "Oral Instructions" shall mean verbal instructions
a c t ually received by the Custodian from a person
reasonably believed by the Custodian to be an Authorized
Person.
(j) "Prospectus" shall mean the Separate Account's
current prospectus and statement of additional information
relating to the registration of the Separate Account's
Units under the Securities Act of 1933, as amended.
(k) "Units" refers to the unit of measure used to compute
the value of interest in the Separate Account [which is
arbitrarily set at $10].
(l) "Security" or "Securities" shall be deemed to include
bonds, debentures, notes, stocks, Units, evidences of
indebtedness, and other securities, commodities interests
and investments from time to time owned by the Separate
Account.
(m) "Transfer Agent" shall mean the person which performs
t h e transfer agent, dividend disbursing agent and
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shareholder servicing agent functions for the Separate
Account.
(n) "Written Instructions" shall mean a written
communication actually received by the Custodian from a
person reasonably believed by the Custodian to be an
Authorized Person by any system, including, without
limitation, electronic transmissions, facsimile and telex.
(o) The "1940 Act" refers to the Investment Company Act of
1940, and the Rules and Regulations thereunder, all as
amended from time to time.
2. Appointment of Custodian.
(a) The Separate Account hereby constitutes and appoints
the Custodian as custodian of all the Securities and
monies at the time owned by or in the possession of the
Separate Account during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as
hereinafter set forth.
3. Compensation.
(a) The Custodian shall be entitled to receive, and the
Separate Account agrees to pay to the Custodian, such
compensation as may be agreed upon from time to time
between the Custodian and the Separate Account. The
Custodian may charge against any monies held on behalf of
the Separate Account pursuant to this Agreement such
compensation and any expenses incurred by the Custodian in
the performance of its duties pursuant to this Agreement.
The Custodian shall also be entitled to charge against any
money held on behalf of the Separate Account pursuant to
this Agreement the amount of any loss, damage, liability
or expense incurred with respect to the Separate Account,
including counsel fees, for which it shall be entitled to
reimbursement under the provisions of this Agreement. The
expenses which the Custodian may charge against such
account include, but are not limited to, the expenses of
sub-custodians and foreign branches of the Custodian
incurred in settling transactions outside of Boston,
Massachusetts or New York City, New York involving the
purchase and sale of Securities.
(b) The Separate Account will compensate the Custodian for
its services rendered under this Agreement in accordance
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with the fees set forth in the Fee Schedule annexed hereto
as Schedule A and incorporated herein. Such Fee Schedule
does not include out-of-pocket disbursements of the
Custodian for which the Custodian shall be entitled to
b i ll separately. Out-of-pocket disbursements shall
include, but shall not be limited to, the items specified
in the Schedule of Out-of-Pocket charges annexed hereto as
Schedule B and incorporated herein, which schedule may be
modified by the Custodian upon not less than thirty days
prior written notice to the Separate Account.
(c) Any compensation agreed to hereunder may be adjusted
from time to time by attaching to Schedule A of this
Agreement a revised Fee Schedule, dated and signed by an
Authorized Person or authorized representative of each
party hereto.
(d) The Custodian will xxxx the Separate Account as soon
as practicable after the end of each calendar month, and
said xxxxxxxx will be detailed in accordance with Schedule
A, as amended from time to time. The Separate Account
will promptly pay to the Custodian the amount of such
billing.
4. Custody of Cash and Securities.
(a) Receipt and Holding of Assets.
The Separate Account will deliver or cause to be delivered
to the Custodian all Securities and monies owned by it at
any time during the period of this Agreement. The
Custodian will not be responsible for such Securities and
monies until actually received by it. The Separate
Account shall instruct the Custodian from time to time in
its sole discretion, by means of Written Instructions, or,
in connection with the purchase or sale of Money Market
Securities, by means of Oral Instructions confirmed in
writing in accordance with Section 11(h) hereof or Written
Instructions, as to the manner in which and in what
amounts Securities and monies are to be deposited on
behalf of the Separate Account in the Book-Entry System or
the Depository; provided, however, that prior to the
deposit of Securities of the Separate Account in the Book-
Entry System or the Depository, including a deposit in
connection with the settlement of a purchase or sale, the
Custodian shall have received a Certificate specifically
approving such deposits by the Custodian in the Book-Entry
System or the Depository. Securities and monies of the
Separate Account deposited in the Book-Entry System or the
Depository will be represented in accounts which include
only assets held by the Custodian for customers, including
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but not limited to accounts for which the Custodian acts
in a fiduciary or representative capacity.
(b) Accounts and Disbursements. The Custodian shall
establish and maintain a separate account for the Separate
Account and shall credit to the separate account all
monies received by it for the account of such Separate
Account and shall disburse the same only:
1. In payment for Securities purchased for the
Separate Account, as provided in Section 5 hereof;
2. In payment of dividends or distributions with
respect to the Units, as provided in Section 7
hereof;
3. In payment of original issue or other taxes with
respect to the Units, as provided in Section 8
hereof;
4. In payment for Units which have been redeemed by
the Separate Account, as provided in Section 8
hereof;
5. Pursuant to Written Instructions setting forth
the name and address of the person to whom the
payment is to be made, the amount to be paid and the
purpose for which payment is to be made, provided
that in the event of disbursements pursuant to this
sub-section 4(b)(5), the Separate Account shall
indemnify and hold the Custodian harmless from any
claims or losses arising out of such disbursements in
reliance on such Written Instructions which it, in
good faith, believes to be received from duly
Authorized Persons; or
6. In payment of fees and in reimbursement of the
e x penses and liabilities of the Custodian
attributable to the Separate Account, as provided in
Sections 3 and 11(i).
(c) Confirmation and Statements. Promptly after the close
of business on each day, the Custodian shall furnish the
Separate Account with confirmations and a summary of all
transfers to or from the account of the Separate Account
during said day. Where securities purchased by the
Separate Account are in a fungible bulk of securities
registered in the name of the Custodian (or its nominee)
or shown on the Custodian's account on the books of the
Depository or the Book-Entry System, the Custodian shall
by book entry or otherwise identify the quantity of those
securities belonging to the Separate Account. At least
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monthly, the Custodian shall furnish the Separate Account
with a detailed statement of the Securities and monies
held for the Separate Account under this Agreement.
(d) Registration of Securities and Physical Separation.
All Securities held for the Separate Account which are
issued or issuable only in bearer form, except such
Securities as are held in the Book-Entry System, shall be
held by the Custodian in that form; all other Securities
held for the Separate Account may be registered in the
name of the Separate Account, in the name of the
Custodian, in the name of any duly appointed registered
nominee of the Custodian as the Custodian may from time to
time determine, or in the name of the Book-Entry System or
the Depository or their successor or successors, or their
nominee or nominees. The Separate Account reserves the
right to instruct the Custodian as to the method of
registration and safekeeping of the Securities. The
Separate Account agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or
deliver in proper form for transfer, or to register in the
name of its registered nominee or in the name of the Book-
Entry System or the Depository, any Securities which it
may hold for the account of the Separate Account and which
may from time to time be registered in the name of the
Separate Account. The Custodian shall hold all such
Securities specifically allocated to the Separate Account
which are not held in the Book-Entry System or the
Depository in a separate account for the Separate Account
in the name of the Separate Account physically segregated
at all times from those of any other person or persons.
(e) Segregated Accounts. Upon receipt of a Written
I n struction the Custodian will establish segregated
accounts on behalf of the Separate Account to hold liquid
or other assets as it shall be directed by a Written
Instruction and shall increase or decrease the assets in
such segregated accounts only as it shall be directed by
subsequent Written Instruction.
(f) Collection of Income and Other Matters Affecting
Securities. Unless otherwise instructed to the contrary
by a Written Instruction, the Custodian by itself, or
through the use of the Book-Entry System or the Depository
with respect to Securities therein deposited, shall with
respect to all Securities held for the Separate Account in
accordance with this Agreement:
1. Collect all income due or payable;
2. Present for payment and collect the amount
payable upon all Securities which may mature or be
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c a l led, redeemed, retired or otherwise become
p a y a ble. Notwithstanding the foregoing, the
C u stodian shall have no responsibility to the
Separate Account for monitoring or ascertaining any
call, redemption or retirement dates with respect to
put bonds which are owned by the Separate Account and
held by the Custodian or its nominees. Nor shall the
Custodian have any responsibility or liability to the
Separate Account for any loss by the Separate Account
for any missed payments or other defaults resulting
therefrom; unless the Custodian received timely
notification from the Separate Account specifying the
time, place and manner for the presentment of any
such put bond owned by the Separate Account and held
by the Custodian or its nominee. The Custodian shall
not be responsible and assumes no liability to the
Separate Account for the accuracy or completeness of
any notification the Custodian may furnish to the
Separate Account with respect to put bonds;
3. S u rrender Securities in temporary form for
definitive Securities;
4. Execute any necessary declarations or
certificates of ownership under the Federal income
tax laws or the laws or regulations of any other
taxing authority now or hereafter in effect; and
5. Hold directly, or through the Book-Entry System
or the Depository with respect to Securities therein
deposited, for the account of the Separate Account
all rights and similar Securities issued with respect
to any Securities held by the Custodian hereunder for
the Separate Account.
(g) Delivery of Securities and Evidence of Authority.
Upon receipt of a Written Instruction and not otherwise,
except for subparagraphs 5, 6, 7, and 8 of this section
4 ( g ) which may be effected by Oral or Written
Instructions, the Custodian, directly or through the use
of the Book-Entry System or the Depository, shall:
1. Execute and deliver or cause to be executed and
delivered to such persons as may be designated in
such Written Instructions, proxies, consents,
authorizations, and any other instruments whereby the
authority of the Separate Account as owner of any
Securities may be exercised;
2. Deliver or cause to be delivered any Securities
held for the Separate Account in exchange for other
Securities or cash issued or paid in connection with
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the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation,
or the exercise of any conversion privilege;
3. Deliver or cause to be delivered any Securities
held for the Separate Account to any protective
committee, reorganization committee or other person
in connection with the reorganization, refinancing,
merger, consolidation or recapitalization or sale of
assets of any corporation, and receive and hold under
the terms of this Agreement in the separate account
f o r the Separate Account such certificates of
deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such
delivery;
4. Make or cause to be made such transfers or
exchanges of the assets specifically allocated to the
separate account of the Separate Account and take
such other steps as shall be stated in Written
Instructions to be for the purpose of effectuating
a n y duly authorized plan of liquidation,
r e o r ganization, merger, consolidation or
recapitalization of the Separate Account;
5. Deliver Securities upon sale of such Securities
for the account of the Separate Account pursuant to
Section 5;
6. Deliver Securities upon the receipt of payment in
connection with any repurchase agreement related to
such Securities entered into by the Separate Account;
7. Deliver Securities owned by the Separate Account
to the issuer thereof or its agent when such
Securities are called, redeemed, retired or otherwise
become payable; provided, however, that in any such
case the cash or other consideration is to be
delivered to the Custodian. Notwithstanding the
foregoing, the Custodian shall have no responsibility
to the Separate Account for monitoring or
ascertaining any call, redemption or retirement dates
with respect to the put bonds which are owned by the
Separate Account and held by the Custodian or its
n o m i nee. Nor shall the Custodian have any
responsibility or liability to the Separate Account
for any loss by the Separate Account for any missed
payment or other default resulting therefrom; unless
the Custodian received timely notification from the
Separate Account specifying the time, place and
manner for the presentment of any such put bond owned
by the Separate Account and held by the Custodian or
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its nominee. The Custodian shall not be responsible
and assumes no liability to the Separate Account for
the accuracy or completeness of any notification the
Custodian may furnish to the Separate Account with
respect to put bonds;
8. Deliver Securities for delivery in connection
with any loans of Securities made by the Separate
A c c ount but only against receipt of adequate
collateral as agreed upon from time to time by the
Custodian and the Separate Account which may be in
the form of cash or U.S. government securities or a
letter of credit;
9. Deliver Securities for delivery as security in
connection with any borrowings by the Separate
Account requiring a pledge of Separate Account
assets, but only against receipt of amounts borrowed;
10. D e liver Securities upon receipt of Written
Instructions from the Separate Account for delivery
to the Transfer Agent or to the holders of Units in
connection with distributions in kind, as may be
described from time to time in the Separate Account's
Prospectus, in satisfaction of requests by holders of
Units for repurchase or redemption;
11. Deliver Securities as collateral in connection
with short sales by the Separate Account of common
stock for which the Separate Account owns the stock
o r o wns preferred stocks or debt securities
convertible or exchangeable, without payment or
further consideration, into Units of the common stock
sold short;
12. Deliver Securities for any purpose expressly
permitted by and in accordance with procedures
described in the Separate Account's Prospectus; and
13. Deliver Securities for any other proper business
purpose, but only upon receipt of, in addition to
W r i t ten Instructions, a certified copy of a
resolution of the Board of Managers signed by an
Authorized Person and certified by the Secretary of
the Separate Account, specifying the Securities to be
delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be
a proper business purpose, and naming the person or
persons to whom delivery of such Securities shall be
made.
(h) Endorsement and Collection of Checks, Etc. The
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Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money
received by the Custodian for the account of the Separate
Account.
5. Purchase and Sale of Investments of the Separate Account.
(a) Promptly after each purchase of Securities for the
Separate Account, the Separate Account shall deliver to
the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a
Written Instruction, and (ii) with respect to each
purchase of Money Market Securities, either a Written
Instruction or Oral Instruction, in either case specifying
with respect to each purchase: (1) the name of the issuer
and the title of the Securities; (2) the number of Units
or the principal amount purchased and accrued interest, if
any; (3) the date of purchase and settlement; (4) the
purchase price per unit; (5) the total amount payable upon
such purchase; (6) the name of the person from whom or the
broker through whom the purchase was made, if any; (7)
whether or not such purchase is to be settled through the
Book-Entry System or the Depository; and (8) whether the
Securities purchased are to be deposited in the Book-Entry
System or the Depository. The Custodian shall receive the
Securities purchased by or for the Separate Account and
upon receipt of Securities shall pay out of the monies
held for the account of the Separate Account the total
amount payable upon such purchase, provided that the same
conforms to the total amount payable as set forth in such
Written or Oral Instruction.
(b) Promptly after each sale of Securities of the Separate
Account, the Separate Account shall deliver to the
Custodian (i) with respect to each sale of Securities
w h i ch are not Money Market Securities, a Written
Instruction, and (ii) with respect to each sale of Money
Market Securities, either Written Instruction or Oral
Instructions, in either case specifying with respect to
such sale: (1) the name of the issuer and the title of
the Securities; (2) the number of Units or principal
amount sold, and accrued interest, if any; (3) the date of
sale; (4) the sale price per unit; (5) the total amount
payable to the Separate Account upon such sale; (6) the
name of the broker through whom or the person to whom the
sale was made; and (7) whether or not such sale is to be
settled through the Book-Entry System or the Depository.
The Custodian shall deliver or cause to be delivered the
Securities to the broker or other person designated by the
Separate Account upon receipt of the total amount payable
to the Separate Account upon such sale, provided that the
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same conforms to the total amount payable to the Separate
Account as set forth in such Written or Oral Instruction.
Subject to the foregoing, the Custodian may accept payment
in such form as shall be satisfactory to it, and may
deliver Securities and arrange for payment in accordance
with the customs prevailing among dealers in Securities.
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6. Lending of Securities.
If the Separate Account is permitted by the terms of
the Separate Account Rules and as disclosed in its
Prospectus to lend securities, within 24 hours before each
loan of Securities, the Separate Account shall deliver to
the Custodian a Written Instruction specifying with
respect to each such loan: (a) the name of the issuer and
the title of the Securities; (b) the number of Units or
the principal amount loaned; (c) the date of loan and
delivery; (d) the total amount to be delivered to the
Custodian, and specifically allocated against the loan of
the Securities, including the amount of cash collateral
and the premium, if any, separately identified; (e) the
name of the broker, dealer or financial institution to
which the loan was made; and (f) whether the Securities
loaned are to be delivered through the Book-Entry System
or the Depository.
P r o mptly after each termination of a loan of
Securities, the Separate Account shall deliver to the
Custodian a Written Instruction specifying with respect to
each such loan termination and return of Securities: (a)
the name of the issuer and the title of the Securities to
be returned; (b) the number of Units or the principal
amount to be returned; (c) the date of termination; (d)
the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus
any offsetting credits as described in said Written
Instruction); (e) the name of the broker, dealer or
financial institution from which the Securities will be
returned; and (f) whether such return is to be effected
through the Book-Entry System or the Depository. The
Custodian shall receive all Securities returned from the
broker, dealer or financial institution to which such
Securities were loaned and upon receipt thereof shall pay
the total amount payable upon such return of Securities as
set forth in the Written Instruction. Securities returned
to the Custodian shall be held as they were prior to such
loan.
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7. Payment of Dividends or Distributions.
(a) The Separate Account shall furnish to the Custodian
the vote of the Board of Managers of the Separate Account
certified by the Secretary (i) authorizing the declaration
of distributions on a specified periodic basis and
authorizing the Custodian to rely on Oral or Written
Instructions specifying the date of the declaration of
such distribution, the date of payment thereof, the record
date as of which shareholders entitled to payment shall be
d e t e rmined, the amount payable per share to the
shareholders of record as of the record date and the total
amount payable to the Transfer Agent on the payment date,
or (ii) setting forth the date of declaration of any
distribution by the Separate Account, the date of payment
thereof, the record date as of which shareholders entitled
to payment shall be determined, the amount payable per
share to the shareholders of record as of the record date
and the total amount payable to the Transfer Agent on the
payment date.
(b) Upon the payment date specified in such vote, Oral
Instructions or Written Instructions, as the case may be,
the Custodian shall pay out the total amount payable to
the Transfer Agent of the Separate Account.
8. Sale and Redemption of Units of the Separate Account.
(a) Whenever the Separate Account shall sell any Units,
the Separate Account shall deliver or cause to be
delivered to the Custodian a Written Instruction duly
specifying:
1. The number of Units sold, trade date, and price;
and
2. The amount of money to be received by the
Custodian for the sale of such Units.
The Custodian understands and agrees that Written
Instructions may be furnished subsequent to the purchase
of Units and that the information contained therein will
be derived from the sales of Units as reported to the
Separate Account by the Transfer Agent.
(b) Upon receipt of money from the Transfer Agent, the
Custodian shall credit such money to the separate account
of the Separate Account.
(c) Upon issuance of any Units in accordance with the
foregoing provisions of this Section 8, the Custodian
shall pay all original issue or other taxes required to be
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paid in connection with such issuance upon the receipt of
a Written Instruction specifying the amount to be paid.
(d) Except as provided hereafter, whenever any Units are
redeemed, the Separate Account shall cause the Transfer
Agent to promptly furnish to the Custodian Written
Instructions, specifying:
1. The number of Units redeemed; and
2. The amount to be paid for the Units redeemed.
The Custodian further understands that the information
contained in such Written Instructions will be derived
from the redemption of Units as reported to the Separate
Account by the Transfer Agent.
(e) Upon receipt from the Transfer Agent of advice setting
forth the number of Units received by the Transfer Agent
for redemption and that such Units are valid and in good
form for redemption, the Custodian shall make payment to
the Transfer Agent of the total amount specified in a
Written Instruction issued pursuant to paragraph (d) of
this Section 8.
(f) Notwithstanding the above provisions regarding the
redemption of Units, whenever such Units are redeemed
pursuant to any check redemption privilege which may from
time to time be offered by the Separate Account, the
Custodian, unless otherwise instructed by a Written
Instruction shall, upon receipt of advice from the
Separate Account or its agent stating that the redemption
is in good form for redemption in accordance with the
check redemption procedure, honor the check presented as
part of such check redemption privilege out of the monies
specifically allocated to the Separate Account in such
advice for such purpose.
9. Indebtedness.
(a) The Separate Account will cause to be delivered to the
Custodian by any bank (excluding the Custodian) from which
t h e Separate Account borrows money for temporary
administrative or emergency purposes using Securities as
collateral for such borrowings, a notice or undertaking in
the form currently employed by any such bank setting forth
the amount which such bank will loan to the Separate
Account against delivery of a stated amount of collateral.
The Separate Account shall promptly deliver to the
Custodian Written Instructions stating with respect to
each such borrowing: (1) the name of the bank; (2) the
amount and terms of the borrowing, which may be set forth
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by incorporating by reference an attached promissory note,
duly endorsed by the Separate Account, or other loan
agreement; (3) the time and date, if known, on which the
loan is to be entered into (the "borrowing date"); (4) the
date on which the loan becomes due and payable; (5) the
total amount payable to the Separate Account on the
borrowing date; (6) the market value of Securities to be
delivered as collateral for such loan, including the name
of the issuer, the title and the number of Units or the
principal amount of any particular Securities; (7) whether
the Custodian is to deliver such collateral through the
Book-Entry System or the Depository; and (8) a statement
that such loan is in conformance with the 1940 Act and the
Separate Account's Prospectus.
(b) Upon receipt of the Written Instruction referred to in
subparagraph (a) above, the Custodian shall deliver on the
borrowing date the specified collateral and the executed
promissory note, if any, against delivery by the lending
bank of the total amount of the loan payable, provided
that the same conforms to the total amount payable as set
forth in the Written Instruction. The Custodian may, at
the option of the lending bank, keep such collateral in
its possession, but such collateral shall be subject to
all rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall
deliver as additional collateral in the manner directed by
the Separate Account from time to time such Securities as
may be specified in Written Instruction to collateralize
further any transaction described in this Section 9. The
Separate Account shall cause all Securities released from
c o l lateral status to be returned directly to the
Custodian, and the Custodian shall receive from time to
time such return of collateral as may be tendered to it.
In the event that the Separate Account fails to specify in
Written Instruction all of the information required by
this Section 9, the Custodian shall not be under any
obligation to deliver any Securities. Collateral returned
to the Custodian shall be held hereunder as it was prior
to being used as collateral.
10. Persons Having Access to Assets of the Separate Account.
(a) No trustee or agent of the Separate Account, and no
officer, director, employee or agent of the Separate
A c count's investment adviser, of any sub-investment
adviser of the Separate Account, or of the Separate
Account's administrator, shall have physical access to the
assets of the Separate Account held by the Custodian or be
authorized or permitted to withdraw any investments of the
Separate Account, nor shall the Custodian deliver any
15
assets of the Separate Account to any such person. No
officer, director, employee or agent of the Custodian who
holds any similar position with the Separate Account's
investment adviser, with any sub-investment adviser of the
S e p a r ate Account or with the Separate Account's
administrator shall have access to the assets of the
Separate Account.
(b) Nothing in this Section 10 shall prohibit any duly
authorized officer, employee or agent of the Separate
A c count, or any duly authorized officer, director,
employee or agent of the investment adviser, of any sub-
investment adviser of the Separate Account or of the
S e p arate Account's administrator, from giving Oral
Instructions or Written Instructions to the Custodian or
executing a Certificate so long as it does not result in
delivery of or access to assets of the Separate Account
prohibited by paragraph (a) of this Section 10.
11. Concerning the Custodian.
(a) Standard of Conduct. Notwithstanding any other
provision of this Agreement, neither the Custodian nor its
nominee shall be liable for any loss or damage, including
counsel fees, resulting from its action or omission to act
or otherwise, except for any such loss or damage arising
out of the gross negligence or willful misconduct of the
Custodian or any of its employees, sub-custodians or
agents. The Custodian may, with respect to questions of
law, apply for and obtain the advice and opinion of
counsel to the Separate Account or of its own counsel, at
the expense of the Separate Account, and shall be fully
protected with respect to anything done or omitted by it
in good faith in conformity with such advice or opinion.
The Custodian shall not be liable to the Separate Account
for any loss or damage resulting from the use of the Book-
Entry System or the Depository.
(b) Limit of Duties. Without limiting the generality of
the foregoing, the Custodian shall be under no duty or
obligation to inquire into, and shall not be liable for:
1. The validity of the issue of any Securities
purchased by the Separate Account, the legality of
the purchase thereof, or the propriety of the amount
paid therefor;
2. The legality of the sale of any Securities by the
Separate Account or the propriety of the amount for
which the same are sold;
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3. The legality of the issue or sale of any Units,
or the sufficiency of the amount to be received
therefor;
4. The legality of the redemption of any Units, or
the propriety of the amount to be paid therefor;
5. The legality of the declaration or payment of any
distribution of the Separate Account;
6. The legality of any borrowing for temporary or
emergency administrative purposes.
(c) No Liability Until Receipt. The Custodian shall not
be liable for, or considered to be the Custodian of, any
money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it
on behalf of the Separate Account until the Custodian
actually receives and collects such money directly or by
the final crediting of the account representing the
Separate Account's interest in the Book-Entry System or
the Depository.
(d) Amounts Due from Transfer Agent. The Custodian shall
not be under any duty or obligation to take action to
effect collection of any amount due to the Separate
Account from the Transfer Agent nor to take any action to
effect payment or distribution by the Transfer Agent of
any amount paid by the Custodian to the Transfer Agent in
accordance with this Agreement.
(e) Collection Where Payment Refused. The Custodian shall
not be under any duty or obligation to take action to
effect collection of any amount, if the Securities upon
which such amount is payable are in default, or if payment
is refused after due demand or presentation, unless and
until (i) it shall be directed to take such action by a
C e r tificate and (ii) it shall be assured to its
satisfaction of reimbursement of its costs and expenses in
connection with any such action.
(f) A p pointment of Agents and Sub-Custodians. The
Custodian may appoint one or more banking institutions,
including but not limited to banking institutions located
in foreign countries, to act as Depository or Depositories
or as sub-custodian or as sub-custodians of Securities and
monies at any time owned by the Separate Account. The
Custodian shall use reasonable care in selecting a
Depository and/or sub-custodian located in a country other
than the United States ("Foreign Sub-Custodian"), and
shall oversee the maintenance of any Securities or monies
of the Separate Account by any Foreign Sub-Custodian. In
addition, the Custodian shall hold the Separate Account
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harmless from, and indemnify the Separate Account against,
any loss that occurs as a result of the failure of any
Foreign Sub-Custodian to exercise reasonable care with
respect to the safekeeping of Securities and monies of the
Separate Account. Notwithstanding the generality of the
foregoing, however, the Custodian shall not be liable for
a n y losses resulting from or caused by events or
circumstances beyond its reasonable control, including,
but not limited to, losses resulting from nationalization,
expropriation, devaluation, revaluation, confiscation,
seizure, cancellation, destruction or similar action by
any governmental authority, de facto or de jure; or
enactment, promulgation, imposition or enforcement by any
such governmental authority of currency restrictions,
e x c hange controls, taxes, levies or other charges
affecting the Separate Account's property; or acts of war,
terrorism, insurrection or revolution; or any other
similar act or event beyond the Custodian's or its agent s
control. This Section shall survive the termination of
this Agreement.
(g) No Duty to Ascertain Authority. The Custodian shall
not be under any duty or obligation to ascertain whether
any Securities at any time delivered to or held by it for
the Separate Account are such as may properly be held by
the Separate Account under the provisions of the Separate
Account Rules and the Prospectus.
(h) Reliance on Certificates and Instructions. The
Custodian shall be entitled to rely upon any Certificate,
notice or other instrument in writing received by the
Custodian and reasonably believed by the Custodian to be
genuine and to be signed by an officer or Authorized
Person of the Separate Account. The Custodian shall be
entitled to rely upon any Written Instructions or Oral
Instructions actually received by the Custodian pursuant
t o the applicable Sections of this Agreement and
reasonably believed by the Custodian to be genuine and to
be given by an Authorized Person. The Separate Account
agrees to forward to the Custodian Written Instructions
from an Authorized Person confirming such Oral
I n s tructions in such manner so that such Written
Instructions are received by the Custodian, whether by
hand delivery, telex or otherwise, by the close of
business on the same day that such Oral Instructions are
given to the Custodian. The Separate Account agrees that
the fact that such confirming instructions are not
received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the
transactions hereby authorized by the Separate Account.
The Separate Account agrees that the Custodian shall incur
no liability to the Separate Account in acting upon Oral
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Instructions given to the Custodian hereunder concerning
such transactions provided such instructions reasonably
appear to have been received from a duly Authorized
Person.
(i) Overdraft Facility and Security for Payment. In
the event that the Custodian is directed by Written
Instruction (or Oral Instructions confirmed in writing in
accordance with Section 11(h) hereof) to make any payment
or transfer of monies on behalf of the Separate Account
for which there would be, at the close of business on the
date of such payment or transfer, insufficient monies held
by the Custodian on behalf of the Separate Account, the
C u stodian may, in its sole discretion, provide an
overdraft (an "Overdraft") to the Separate Account in an
amount sufficient to allow the completion of such payment
or transfer. Any Overdraft provided hereunder: (a) shall
be payable on the next Business Day, unless otherwise
agreed by the Separate Account and the Custodian; and (b)
shall accrue interest from the date of the Overdraft to
the date of payment in full by the Separate Account at a
rate agreed upon in writing, from time to time, by the
Custodian and the Separate Account. The Custodian and the
Separate Account acknowledge that the purpose of such
Overdraft is to temporarily finance the purchase of
Securities for prompt delivery in accordance with the
terms hereof, to meet unanticipated or unusual redemption,
to allow the settlement of foreign exchange contracts or
t o m e et other emergency expenses not reasonably
foreseeable by the Separate Account. The Custodian shall
promptly notify the Separate Account in writing (an
" O v erdraft Notice") of any Overdraft by facsimile
transmission or in such other manner as the Separate
Account and the Custodian may agree in writing. To secure
payment of any Overdraft, the Separate Account hereby
grants to the Custodian a continuing security interest in
and right of setoff against the Securities and cash in the
Separate Account's account from time to time in the full
amount of such Overdraft. Should the Separate Account
fail to pay promptly any amounts owed hereunder, the
Custodian shall be entitled to use available cash in the
Separate Account's account and to liquidate Securities in
the account as is necessary to meet the Separate Account's
obligations under the Overdraft. In any such case, and
without limiting the foregoing, the Custodian shall be
entitled to take such other actions(s) or exercise such
other options, powers and rights as the Custodian now or
h e r e a f ter has as a secured creditor under the
M a ssachusetts Uniform Commercial Code or any other
applicable law.
(j) Inspection of Books and Records. The books and
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records of the Custodian shall be open to inspection and
audit at reasonable times by officers and auditors
employed by the Separate Account and by the appropriate
employees of the Securities and Exchange Commission.
The Custodian shall provide the Separate Account with
any report obtained by the Custodian on the system of
internal accounting control of the Book-Entry System or
the Depository and with such reports on its own systems of
internal accounting control as the Separate Account may
reasonably request from time to time.
12. Term and Termination.
(a) This Agreement shall become effective on the date
first set forth above (the "Effective Date") and shall
continue in effect thereafter until such time as this
Agreement may be terminated in accordance with the
provisions hereof.
(b) Either of the parties hereto may terminate this
Agreement by giving to the other party a notice in writing
specifying the date of such termination, which shall be
not less than 60 days after the date of receipt of such
notice. In the event such notice is given by the Separate
Account, it shall be accompanied by a certified vote of
the Board of Managers of the Separate Account, electing to
terminate this Agreement and designating a successor
custodian or custodians, which shall be a person qualified
to so act under the 1940 Act.
In the event such notice is given by the Custodian,
the Separate Account shall, on or before the termination
date, deliver to the Custodian a certified vote of the
Board of Managers of the Separate Account, designating a
successor custodian or custodians. In the absence of such
designation by the Separate Account, the Custodian may
designate a successor custodian, which shall be a person
qualified to so act under the 1940 Act. If the Separate
Account fails to designate a successor custodian, the
Separate Account shall upon the date specified in the
notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than
Securities held in the Book-Entry System which cannot be
delivered to the Separate Account) and monies then owned
by the Separate Account, be deemed to be its own custodian
and the Custodian shall thereby be relieved of all duties
and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book-
Entry System which cannot be delivered to the Separate
Account.
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(c) Upon the date set forth in such notice under paragraph
(b) of this Section 12, this Agreement shall terminate to
the extent specified in such notice, and the Custodian
shall upon receipt of a notice of acceptance by the
successor custodian on that date deliver directly to the
successor custodian all Securities and monies then held by
the Custodian on behalf of the Separate Account, after
deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be
entitled.
13. Limitation of Liability.
The Separate Account and the Custodian agree that the
obligations of the Separate Account under this Agreement
s h a l l not be binding upon any of the Managers,
shareholders, nominees, officers, employees or agents,
whether past, present or future, of the Separate Account,
individually, but are binding only upon the assets and
property of the Separate Account, as provided in the
Separate Account Rules. The execution and delivery of
this Agreement have been authorized by the Managers of the
Separate Account, and signed by an authorized officer of
the Separate Account, acting as such, and neither such
authorization by such Managers nor such execution and
delivery by such officer shall be deemed to have been made
by any of them or any shareholder of the Separate Account
individually or to impose any liability on any of them or
any shareholder of the Separate Account personally, but
shall bind only the assets and property of the Separate
Account as provided in the Separate Account Rules.
14. Miscellaneous.
(a) Annexed hereto as Appendix A is a certification signed
by the Secretary of the Separate Account setting forth the
names and the signatures of the present Authorized
Persons. The Separate Account agrees to furnish to the
Custodian a new certification in similar form in the event
that any such present Authorized Person ceases to be such
an Authorized Person or in the event that other or
additional Authorized Persons are elected or appointed.
Until such new certification shall be received, the
Custodian shall be fully protected in acting under the
provisions of this Agreement upon Oral Instructions or
signatures of the present Authorized Persons as set forth
in the last delivered certification.
(b) Annexed hereto as Appendix B is a certification signed
by the Secretary of the Separate Account setting forth the
21
names and the signatures of the present officers of the
Separate Account. The Separate Account agrees to furnish
to the Custodian a new certification in similar form in
the event any such present officer ceases to be an officer
of the Separate Account or in the event that other or
additional officers are elected or appointed. Until such
new certification shall be received, the Custodian shall
be fully protected in acting under the provisions of this
Agreement upon the signature of an officer as set forth in
the last delivered certification.
(c) Any notice or other instrument in writing, authorized
or required by this Agreement to be given to the
Custodian, shall be sufficiently given if addressed to the
Custodian and mailed or delivered to it at its offices at
Xxx Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 or at such
other place as the Custodian may from time to time
designate in writing.
(d) Any notice or other instrument in writing, authorized
or required by this Agreement to be given to the Separate
Account, shall be sufficiently given if addressed to the
Separate Account and mailed or delivered to it at its
offices at 00000 Xxxxx Xxxxxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxx 00000 or at such other place as the Separate
Account may from time to time designate in writing.
(e) This Agreement may not be amended or modified in any
manner except by a written agreement executed by both
parties with the same formality as this Agreement (i)
authorized, or ratified and approved by a vote of the
Board of Managers of the Separate Account, including a
majority of the members of the Board of Managers of the
Separate Account who are not "interested persons" of the
Separate Account (as defined in the 1940 Act), or (ii)
authorized, or ratified and approved by such other
procedures as may be permitted or required by the 1940
Act.
(f) This Agreement shall extend to and shall be binding
upon the parties hereto, and their respective successors
and assigns; provided, however, that this Agreement shall
not be assignable by the Separate Account without the
written consent of the Custodian, or by the Custodian
without the written consent of the Separate Account
authorized or approved by a vote of the Board of Managers
of the Separate Account provided, however, that the
Custodian may assign the Agreement to an Affiliated Person
and any attempted assignment without such written consent
shall be null and void. Nothing in this Agreement shall
give or be construed to give or confer upon any third
party any rights hereunder.
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(g) The Separate Account represents that a copy of the
Separate Account Rules is on file with the Department of
Insurance of the State of Texas.
(h) This Agreement shall be construed in accordance with
the laws of The Commonwealth of Massachusetts.
(i) The captions of the Agreement are included for
convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect
their construction or effect.
(j) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an
original, but such counterparts shall, together,
constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective representatives
duly authorized as of the day and year first above written.
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
By: /s/ Xxxxxx X. Xxxxxx, Xx.
Name: Xxxxxx X. Xxxxxx, Xx.
Title: President
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: Vice President
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APPENDIX A
I, Xxxxxx Xxxxxx, the Secretary of RYDEX ADVISOR VARIABLE
ANNUITY ACCOUNT, a segregated investment account of Great
American Reserve Insurance Company, a diversified open-end
management investment company organized under Texas law (the
"Separate Account"), do hereby certify that:
The following individuals have been duly authorized as
Authorized Persons to give Oral Instructions and Written
Instructions on behalf of the Separate Account and the
specimen signatures set forth opposite their respective names
are their true and correct signatures:
Name Signature
For purchases and sales of Securities:
Xxxxxxx Xxxxx /s/ Xxxxxxx X. Xxxxx
Xxxxx Apple /s/ Xxxxx Apple
Xxxxxx Xxxxxxx /s/ Xxxxxx Xxxxxxx
Xxxx Xxxx /s/ Xxxx Xxxx
Xxxx Xxxxx /s/ Xxxx Xxxxx
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
By: /s/ Xxxxxx Xxxxxx
Secretary: Xxxxxx Xxxxxx
Dated: November 12, 1996
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APPENDIX B
I, Xxxxxx Xxxxxx, the Secretary of RYDEX ADVISOR VARIABLE
ANNUITY ACCOUNT, a segregated investment account of Great
American Reserve Insurance Company, a diversified open-end
management investment company organized under Texas law (the
"Separate Account"), do hereby certify that:
The following individuals serve in the following positions
with the Separate Account and each individual has been duly
elected or appointed to each such position and qualified
therefor in conformity with the Separate Account's Separate
Account Rules and the specimen signatures set forth opposite
their respective names are their true and correct signatures:
Name Position Signature
Xxxxxx X. Xxxxxx Chairman of the /s/ Xxxxxx X. Xxxxxx, Xx.
Board and President
Xxxxxxx X. Xxxxx Treasurer /s/ Xxxxxxx X. Xxxxx
Xxxxxx Xxxxxx Secretary /s/ Xxxxxx Xxxxxx
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
By: /s/: Xxxxxx Xxxxxx
Secretary: Xxxxxx Xxxxxx
Dated: 11-12-96
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SCHEDULE A
BOSTON SAFE DEPOSIT AND TRUST COMPANY
CUSTODY FEE SCHEDULE
FOR
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
Boston Safe Deposit and Trust Company ("Boston Safe"), acting as custodian
for the separate account assets of Rydex, would base its compensation
according to the schedule which follows.
Boston Safe s bid is provided in one format only, that being hard dollar
basis. It is not our policy to structure custody fees on a compensation
balance relationship linked to Demand Deposit Account (DDA) balances,
activity and credits.
The compensation schedule is based upon the understanding that the Rydex
Advisor Variable Account initially will consist of seven self-managed
funds. Asset value is undetermined as each fund is a start-up.
The attached fee schedule is based upon number of accounts, asset size, and
transaction volumes. Core services include safekeeping of assets,
transaction settlement, income collection, cash availability/forecasting
and corporate action processing.
Out-of-pocket and pass-thru fees include, but are not limited to, wire
charges, courier expenses, registration fees, stamp duties, etc. Clients
are responsible for communications, hardware, and software to support data
transmission to/from Boston Safe.
The minimum annual fee for custody-related services is $10,000 for a U.S.
Dollar (USD) denominated fund. Boston Safe is willing to guarantee the
attached fee schedule for three years. However, should the nature of the
account change dramatically, Boston Safe reserves the right to re-negotiate
its compensation based on the situation that exists in the account at such
time. If non-standard or special services are requested, Boston Safe may
negotiate additional compensation accordingly.
Structural Charges:
$2,500 per domestic fund
Administrative Fee:
1.0 basis points on the first $250 million of USD assets
0.5 basis points on all USD funds thereafter
26
Transaction Charges:
Book Entry Transactions $8.00
Physical Transactions $25.00
Futures Transactions $8.00
Paydowns $5.00
Margin Variation Wire $10.00
Options Round Trip $20.00
Wire Transfers $5.00
Minimum Annual Fee:
$10,000 per Fund
On-Line Access
Boston Safe can provide real time, on-line access to Rydex via
the Executive Workbench (EWB) Lite platform. One location of EWB
Lite will be provided at no additional cost as part of your
custody service. The cost of all commercial personal computer
( P C ) hardware, software, and telecommunications is the
responsibility of the client.
Cash Sweep
Rydex can sweep excess cash into any of a number of AAA-rated
Dreyfus investment vehicles that Boston Safe makes available to
its clients. Boston Safe does not charge a fee for cash sweep
services. Prospectus information will be provided upon request.
NOTE: Boston Safe offers other services not covered under the above
schedule. These services are covered under separate fee
schedules. Additional services include: Investment Management,
Non-Collectivized Real Estate and Mortgage Custody, Back Office
and Private Label Services.
27
SCHEDULE B
The Separate Account will pay to the Custodian as soon as possible after
the end of each month all out-of-pocket expenses reasonably incurred in
connection with the assets of the Separate Account.
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