AGREEMENT
DEPOSITORY AND CUSTODIAL AGREEMENT made as of this 23rd day of June 2004,
between American Express Certificate Company, a Delaware corporation hereinafter
referred to as "AECC", and American Express Trust Company, a Minnesota state
chartered bank ("Custodian").
In consideration of the mutual agreements herein made, AECC and
Custodian agree as follows:
I. SAFEKEEPING
A. Required Reserves
AECC agrees to deliver to and maintain with Custodian certain assets,
including qualified investments having at any time an aggregate value at least
equal to the required certificate reserves as computed under the provisions of
ss.28(a) of the Investment Company Act of 1940, as amended ("xxx 0000 Xxx").
Provided, however, that the amount of qualified investments maintained on
deposit in separate accounts as required by any state, but not to exceed the
amount of reserves required under ss.28(a) for the certificates held by or
issued to residents of such state, shall be deducted from the amount of
qualified investments required to be maintained on deposit with Custodian.
B. Qualified Investments
"Qualified investments" as used herein are investments of a kind which
life insurance companies are permitted to invest in or hold under the provisions
of the Code of the District of Columbia, as amended, and other investments as
the Securities and Exchange Commission (the "SEC") shall by rule, regulation, or
order authorize as qualified investments. Such assets shall be valued for the
purpose of determining compliance with the deposit requirements in accordance
with the District of Columbia Code where applicable, and otherwise as prescribed
by the SEC. Any asset deposited with Custodian shall be accompanied by a
statement made by an authorized person from AECC (as provided in Section VII.A.
below) that in the opinion of that person the asset is qualified and giving the
value thereof.
C. Deposits and Withdrawals
Custodian agrees to hold, either physically in its own safekeeping room
or with Depository Trust Company or a domestic bank meeting the requirements of
the 1940 Act, (for all Federal Reserve Bank eligible securities), securities
belonging to AECC delivered to it by AECC or others for AECC, and pursuant to
AECC's written order, in the case of securities purchases, to charge AECC and
pay designated persons against delivery of such securities, and, in the case of
securities sales, to remit proceeds to AECC and deliver securities against
payment for such securities. Upon written order Custodian shall return to AECC
or designated third persons securities held hereunder, but only to the extent
that such withdrawal shall not, after adding the value of any qualified
investments which AECC may deposit in substitution for the securities withdrawn,
decrease the aggregate value of qualified investments below the required reserve
amount as provided in Subsection A of this Section. AECC's written order must
include a certification by an authorized person stating the facts entitling it
to make such withdrawal. Notwithstanding the foregoing, AECC may from time to
time request access to mortgage related documents and may temporarily borrow
them from Custodian for copying, examination, title searches and similar
purposes. AECC shall leave written evidence of such borrowing with Custodian and
shall promptly return the securities when it has finished using them.
D. "Certificate" Defined
Whenever used in this Agreement, the term "certificate" shall mean a
"face-amount certificate" as that term is defined in Section 2(a)(15) of the
1940 Act.
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II. HANDLING OF SECURITIES
A. Transfer, Etc.
Custodian agrees to transfer, exchange or deliver, when provided with
appropriate written orders from AECC, together with instruments enabling
Custodian to hold or deliver in proper form for transfer, securities held
thereunder as directed and at least in the following cases:
1. Deliveries of securities sold by AECC.
2. Deliveries of securities to the issuer thereof, its transfer
agent or other proper agent, or to any committee or other
organization to be exchanged for other securities in
connection with a reorganization or recapitalization of the
issuer or any split-up or similar transaction involving such
securities.
3. Deliveries of securities upon conversion thereof pursuant to
their terms into other securities.
4. Deliveries of warrants and similar securities upon exercise or
sale of the rights evidenced thereby.
5. Exchange securities in temporary form for permanent or
definite securities.
B. Custodian's Acts Without Instructions
Unless and until Custodian receives contrary authorized instructions
from AECC, Custodian shall:
1. Detach from and present at the proper time for payment all
coupons and other income items which require presentation
and which are held by Custodian hereunder. All items of
income from dividends and interest on securities which are
depository eligible (i.e., depositable with Depository Trust
Company and/or Federal Reserve Book Entry) shall be credited
to AECC's account and made available in federal funds on the
date succeeding the date such items are payable without
regard to actual receipt by Custodian; income on
non-eligible securities, physically held in Custodian vault,
shall be credited to AECC's account upon receipt of funds
from the paying agent. Custodian shall undertake at its own
expense such procedures as may be necessary to collect such
items of income as are not actually received by Custodian
and the credit of such items to AECC's account shall be
subject to final payment. Provided, however, that AECC shall
collect all interest and principal payments made on
mortgages and real estate properties.
2. Present for payment all securities which may mature or be
called, redeemed, retired or which may otherwise become
payable and credit the proceeds thereof, and any other
principal payments, to the account of AECC and furnish AECC
with a description of the source of each such payment. AECC
shall be credited, and federal funds made available of on the
maturity date of short-term securities customarily settled on
a "same-day" basis. Redemptions shall be credited to the
account of AECC upon collection and federal funds made
available on the next business day.
C. Liability
Whenever, according to written order from AECC, Custodian shall be
required to make any delivery of securities against the receipt of the sale
price, Custodian shall make delivery in accordance with AECC's authorized
instructions against payment, receipt of the sums payable thereon or against
interim
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receipts or other proper delivery receipts and credit to the account of AECC
such sums as authorized by AECC with appropriate advice to AECC showing the
source of such payments.
Custodian shall, at a minimum, be obligated to exercise due care in
accordance with reasonable commercial standards in discharging its duty to
obtain and maintain financial assets for AECC.
AECC hereby agrees to be responsible for all fees and expenses as set
forth in the fee schedule, and, except in cases where Custodian has failed to
exercise due care in accordance with reasonable commercial standards, to
indemnify and hold harmless Custodian or nominee from all taxes, expenses
(including counsel fees), assessments, liabilities, claims, damages, actions,
suits, or other charges incurred by or assessed against Custodian or nominee in
connection with this account. It is expressly understood and agreed that
Custodian shall have no lien at any time upon any funds, deposits or property in
its possession or control, except as provided in Section V.
D. Deregistration of Securities
All securities in registered form deposited with and held physically by
Custodian hereunder shall be registered in the name of a nominee of AECC or a
nominee of Custodian acceptable to AECC unless otherwise directed by order of
AECC.
E. Segregation of Securities
Except as to securities in transit or in connection with other
transactions necessary or appropriate in the ordinary course of business
relating to the management of the securities, Custodian agrees to place and hold
all securities in its custody under this agreement in such place or places and
in such facility or facilities and to safeguard the securities in substantially
the same manner as like securities of Custodian. Such securities shall be all
times be physically segregated from the securities of Custodian and of other
persons, firms or corporations and of other accounts so that at all times such
securities may be identified as belonging solely to AECC, except for those
securities permitted to be deposited with a clearing corporation as defined in
and in accordance with Minnesota law.
III. HANDLING OF ASSETS
Custodian agrees to take the following actions only as provided in
authorized instructions from AECC:
A. Receive assets from persons other than AECC, and, if the same are in proper
form for transfer or are in bearer form, cause payment to be made therefore, in
the amount provided and in the names directed by the authorized instructions of
AECC and thereafter hold such securities subject to this Agreement.
B. Deliver assets to brokers or others upon and in accordance with AECC's
authorized instructions against payment, receipt of the sums payable thereon or
against interim receipts or other proper delivery receipts and credit to the
account of AECC such sums as authorized by AECC with appropriate information to
AECC showing the source of such payments.
C. Provide settlement of all purchases and sales under III A and III B when the
actual deliveries take place.
D. Remit principal and income cash from custodianship accounts in accordance
with authorized instructions from AECC.
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IV. REPORTS AND
INSPECTIONS
A. Statements / Reports by Custodian
Custodian shall furnish to AECC a daily transaction and a monthly
position holdings interface report. Custodian will also furnish an inventory at
such reasonable times as requested by AECC.
Custodian shall maintain control accounts for the assets of AECC and
shall update the control records of these accounts for all securities payments.
Upon AECC's written request, Custodian shall furnish AECC or AECC's
public accountants or other examiners with a certified inventory of all assets
then held hereunder at Custodian's premises or on its agents' premises and/or
make assets available for inspection in connection with AECC's annual audits or
other periodic examinations. However, to the extent that assets are placed with
other depositories as authorized by AECC or with a clearing corporation as
defined and in accordance with Minnesota law, those assets are not available for
physical inspection.
AECC and Custodian shall agree on a net cash settlement amount prior to
9:30 a.m. on each business day for Article II and Article III items and
settlement shall be made in Federal funds. A second daily net settlement may be
required for "same day settlement" transactions.
Custodian agrees to provide, promptly upon request by AECC, such reports
as are available concerning its internal accounting controls and financial
strength.
B. Statements by AECC
AECC shall make monthly reports to Custodian stating, as of the last day
of the preceding month:
1) the aggregate value of qualified investments on deposit with
Custodian,
2) the aggregate amount of reserves required to be maintained in respect
of all outstanding certificates, and
3) the amount of reserves required to be deposited in separate accounts
by various states in respect of the certificates issued to or held by
the residents thereof, as well as the value of qualified assets actually
deposited pursuant to such requirements.
The first monthly statement every year shall be made and certified by an
independent public accountant and the others shall be verified by an authorized
person from AECC. Custodian may conclusively rely upon such statements, unless
it has knowledge or notice that such statements are not true.
Custodian shall promptly examine the monthly statements filed by AECC
and compare the amount of required reserves, after subtracting the required
amounts of qualified investments on deposit with the states, to the value of
assets actually on deposit with it. If it appears that the amount of assets on
deposit with Custodian are less than required hereunder, it shall within 30 days
of ascertaining such fact notify AECC and the SEC in writing of such deficiency.
C. Proxies
Custodian shall deliver immediately to AECC all proxies, notices and
communications with relation to securities held by it hereunder, which it may
receive from sources other than AECC. Unless otherwise directed by written order
from AECC, proxies will be executed in blank by the registered holder of such
securities (if registered in the name of Custodian or its nominee) without
indicating the manner in which such proxies are to be voted.
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V. PROCEDURES IN CASE OF DEFAULT BY AECC
A. Collateral Security
The assets maintained with Custodian shall be held and kept, subject to
the right of withdrawal, by Custodian so long as any liability exists upon any
of the certificates secured thereby. Said assets shall be deemed delivered to
Custodian as collateral security for the payment by AECC to certificate holders
of cash payments due under the terms and conditions of such certificates,
provided that a certificate holder on whose behalf a separate deposit is
maintained pursuant to a state deposit requirement shall not be entitled to
participate in the proceeds of the deposit maintained by Custodian until the
separate deposit has been exhausted. In the event of a general liquidation of
AECC by judicial proceedings, such certificate holder shall not receive any
dividend from the proceeds of the deposit maintained with Custodian hereunder
except upon such basis that the percentage of his claim received from both
deposits shall not exceed that received by the holders of certificates secured
only by the deposit maintained with Custodian hereunder.
B. Curing Defaults
If AECC fails to make any cash payment provided in any outstanding
certificate, Custodian shall, upon the written request of the holder, and after
giving thirty days' written notice of its intention to do so, use so much of the
assets maintained with it as is necessary to pay and discharge the liability if
not cured by the end of the thirty day period. To that end, Custodian shall have
the right to sell any asset then held by it and not due at probate sale, or at
public auction, giving AECC at least ten days' written notice of the time,
place, and manner of sale; to collect any asset then due or which becomes due
during the continuance of said default, with or without suit, and to foreclose
any asset then subject to foreclosure in Custodian's name or in that of AECC,
giving to AECC at least five days' written notice of the time and place of the
sale. Custodian shall apply the proceeds realized, or so much as shall be
necessary, to the discharge of the liability in default. If AECC in good faith
disputes the right of any person under any certificate to receive it or the
amount claimed and so notifies Custodian in writing thereof, no default, for the
purposes of this section, shall be deemed to arise until such dispute is settled
between the parties thereto or is determined by final judgment of a court of
competent jurisdiction.
C. Notification
If Custodian shall determine to apply any asset maintained with it to
the discharge of a default by the collection, sale or foreclosure of the same,
it shall forthwith notify AECC in writing of its intention so to do, identifying
the asset or assets, and shall thereafter be entitled to all then unpaid
interest, dividends or other income due or to become due thereon, provided that
if any of said assets be not sold, collected or foreclosed, AECC, upon the
discharge of the default, shall become entitled to any such interest, dividends
or other income not applied in the discharge of such default.
D. Attorney-in-Fact
For the purpose of realizing the amount necessary to discharge the
default, AECC does hereby irrevocably make, constitute and appoint Custodian its
attorney-in-fact in respect to assets maintained with it to complete and to make
or execute any assignments, transfers, endorsements, cancellations,
satisfactions, collections, and settlements, in the name of AECC or otherwise,
and to do any and all acts appropriate in the premises.
E. Bankruptcy
Should said AECC be adjudged a bankrupt under the Federal Bankruptcy
Act or insolvent by final judgment or decree of any court of competent
jurisdiction, and a trustee in bankruptcy or a general receiver be appointed,
Custodian shall, if and when authorized by an order of the court, surrender and
deliver all
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assets then maintained with it hereunder, subject to any legal claims which it
may have thereon for compensation for services or for reimbursement for unpaid
expenses or advancements, to such trustee or receiver, and shall thereupon be
relieved of any and all further duties in respect thereto. Provided, however,
that such surrender and delivery shall be without prejudice to any rights which
certificate holders may have in said assets to have them applied according to
the usual rules and principles of law applicable to collateral security.
VI. CUSTODIAN FEES
AECC shall pay quarterly to Custodian the fees and charges set forth in
Exhibit A of this Agreement and such fees and charges as shall be agreed to in
writing from time to time thereafter by Custodian and AECC.
VII. NAMES AND SIGNATURES OF AUTHORIZED PERSONS
A. Authorized Persons
AECC shall file with Custodian a certified list designating the person
or persons authorized to act hereunder for and on behalf of AECC along with
specimen signatures and the title of said person or persons. Custodian is
authorized to rely and act upon orders signed by such person or persons in the
form described in paragraph B, as were so designated in the most recent
certified list from AECC which has been delivered to Custodian and received by
it.
B. Form of Order
Orders shall be deemed to include orders sent to Custodian by telecopy
facsimile, video (CRT) terminals, or similar means of communication as may be
agreed upon between the parties from time to time. Telephonic orders may be
transmitted for commercial instruments bearing maturity dates of one year or
less, by any person named in the certified list of authorized personnel referred
to in paragraph "A", to be followed by written verification in the same manner
described hereinafter. All other orders by AECC under this Custodial Agreement
shall be in writing addressed to Custodian and signed on behalf of AECC by any
two persons named in the certified list, provided at least one of them is an
officer.
VIII. AMENDMENT AND TERMINATION OF AGREEMENT
A. Amendments
This Agreement may be amended by mutual agreement of the parties hereto.
B. Termination
AECC may terminate this Agreement at any time by written notice thereof
and appoint a successor Custodian. The written notice of termination must be
delivered together with a copy of the Resolution of AECC's Board of Directors
authorizing such termination, and certified by the Secretary and Assistant
Secretary of AECC, by registered mail to Custodian.
Custodian may resign as Custodian by giving AECC sixty days' written
notice of such termination by registered mail addressed to AECC at its principal
place of business. AECC shall appoint a successor Custodian within six months of
receiving the notice of resignation. If AECC fails to so appoint a successor,
Custodian may petition any competent court for the appointment of a successor
Custodian. If the appointee and AECC fail to agree upon the compensation to be
paid to the appointee, the court may fix the amount.
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No substitution or resignation shall become effective until a successor
Custodian has been appointed and has accepted such appointment. Upon service of
written notice of such appointment and acceptance, Custodian shall deliver all
securities belonging to AECC held by it to the successor Custodian.
Any successor Custodian appointed hereunder must be a bank with an
aggregate capital, surplus and undivided profits of at least $500,000, pursuant
to ss.26(a)(1) of the 1940 Act.
IX. SUCCESSOR CUSTODIAN
A. Automatic Succession
Any bank or trust company into which Custodian or any successor
Custodian may be merged or converted or with which it or any successor Custodian
may be consolidated or any bank or trust company resulting from any merger,
conservation or consolidation to which Custodian or any successor Custodian
shall be a party or any bank or trust company succeeding to the business of
Custodian or any successor Custodian, shall be substituted as successor
Custodian under this Agreement and any amendments thereof without the execution
of any instrument or any further act on the part of AECC or Custodian or any
successor Custodian.
X. Xxxxxx
Any such successor Custodian shall have all powers, duties, and
obligations of the preceding Custodian under this Agreement and any amendments
thereof shall succeed to all the exemptions and privileges of the preceding
Custodian under this Agreement and any amendments thereof.
X. DISCLOSURE OF INFORMATION
AECC and Custodian agree that the information communicated by either party to
this Agreement to the other will be regarded as having been disclosed in
confidence and that neither party will use such information except in rendering
the services covered in this Agreement. If an inspection of documents and/or
securities or for the provision of information is made pursuant to an order of a
court of competent jurisdiction or made by a governmental agency, Custodian
shall have no liability for complying with such request.
XI. CONSTRUCTION OF AGREEMENT
Custodian and AECC acknowledge that they have read this Agreement,
including Exhibit A, physically attached and made a part hereof, and agree that
this Agreement constitutes the entire understanding, agreement and contract
between them and supersedes any and all prior or contemporaneous oral or written
communications or representations with respect to their rights and obligations
and the subject matter hereof, and any and all such prior or contemporaneous
oral or written communications or representations are merged herein. This
Agreement shall not be modified, interpreted, supplemented or amended or in any
way revised or altered, except by an instrument in writing signed by the duly
authorized officers of the parties hereto. It is understood that this Agreement
shall be governed by and construed in accordance with the laws of the State of
Minnesota.
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XII. NOTICES
All notices, requests, or other communications ("notices") herein
required or provided for hereunder shall be in writing and shall be deemed to
have been duly given four days after mailing, if mailed by United States
certified or registered mail, postage prepaid, return receipt requested, to the
parties or the representatives at the following addresses:
For Custodian American Express Trust Company
200 AXP Financial Center
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxx Xxxxx
For AECC: American Express Certificate Company
200 AXP Financial Center
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
XIII. SUBCUSTODIANS
The Custodian may make arrangements, where appropriate, with other banks
meeting the requirements of the 1940 Act, for the custody of securities. Any
such bank selected by the Custodian to act as subcustodian shall be deemed to be
the agent of the Custodian.
Consistent with the requirements of Rule 17f-4 of the 1940 Act,
Custodian agrees to require any subcustodian, at a minimum, to exercise due care
in accordance with reasonable commercial standards in discharging its duty as a
securities intermediary to obtain and thereafter maintain financial assets
corresponding to the security entitlements of its entitlement holders.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
AMERICAN EXPRESS TRUST COMPANY
/s/ Xxxx Xxxxx
-------------------------
Xxxx Xxxxx
Vice President
AMERICAN EXPRESS CERTIFICATE COMPANY
/s/ Xxxxx X. Xxxxx
--------------------------
Xxxxx X. Xxxxx
President
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EXHIBIT A
American Express Certificate Company
Annual Fee Schedule
1. Maintenance Charge Per Account $.05 per $1000 of assets
2. Transaction Charge - Debt/Equity Issue $ 20.00 per transaction
Commercial Paper $ 20.00 per transaction
Securities Loan -
a. DTC Receive/Deliver $ 20.00 per transaction
b. Physical Receive/Deliver $ 25.00 per transaction
c. Exchange Collateral $ 15.00 per transaction
A transaction consists of the receipt or
withdrawals of securities and commercial
paper and/or a change in the security position.
3. Mortgage Safekeeping No charge
4. Coupon Bonds -
Monitoring and processing coupons No charge
5. Out-of-Pocket Charges -
Included but are not limited to:
Postage
Shipping
Insurance
Courier Service
Wire Charges
Transfer Fees
Foreign Sub-Custody
Charges
