U.S. INVESTMENT COMPANY
CUSTODIAL SERVICES AGREEMENT
CUSTODIAL SERVICES AGREEMENT dated as of June 30, 1996 between
CITIBANK, N.A., a national banking association, having an of office at 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Bank"), and AAL VARIABLE PRODUCT SERIES
FUND INC., a corporation organized under the laws of the State of Delaware,
having an office at 0000 Xxxxx Xxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxx 00000 (the
"Fund").
WITNESSETH:
THAT WHEREAS, the Fund represents that it is a management investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act");
WHEREAS, the Fund further represents that it is duly incorporated and
in good standing under the laws of its state of incorporation, and the
consummation of transactions contemplated hereby or directed by it hereunder
will not violate any applicable laws, regulations or orders;
WHEREAS, the Fund represents that it is authorized (a) to open and
maintain a custody account (the "Custody Account") with the Bank to hold certain
property ("Property"), including but not limited to stocks, bonds or other
securities ("Securities"), cash and other property owned or held by the Fund,
(b) to enter into this Agreement and (c) to direct all actions and transactions
contemplated hereunder;
NOW, THEREFORE in consideration of the premises and of the agreements
hereinafter set forth, the parties hereby agree as follows:
1. APPOINTMENT AND ACCEPTANCE
The Fund hereby appoints the Bank as custodian of the Property and as its agent
hereunder, and the Bank hereby agrees to act as such upon the terms and
conditions hereinafter provided.
2. DELIVERY; SAFEKEEPING
The Fund has heretofore delivered, or will deliver or cause to be delivered,
Property to the Bank, which Property the Bank agrees to safekeep as custodian
for the Fund. The Bank shall not surrender possession of Property except upon
properly authorized Instructions (as hereinafter defined) of the Fund or as may
be required by due process of applicable law.
3. IDENTIFICATION AND SEGREGATION OF ASSETS
With respect to Property in the Custody Account:
(A) The Bank shall credit and hold in a separate account the Property owned by
the Fund. The Bank may carry all Securities in fully negotiable form registered
in name of a nominee of the Bank, and hold them in the Bank's (or its
subcustodian's) trust department vaults, in the Federal Reserve Book Entry
System, or in a central clearing corporation or depository as permitted by this
Agreement. Subject to the limitations in Section 4 hereof, this will not in any
way diminish the Bank's responsibility as custodian for any assets so deposited.
The Bank shall at all times maintain a separate record of all assets owned by
the Fund. (B) The Bank shall supply to the Fund, from time to time as mutually
agreed upon, written statement duly identifying all of the Property in the
Custody Account. In the event that the Fund does not inform the Bank in writing
of any exceptions or objections within thirty (30) days after receipt of such
statement, the Fund shall be deemed to have approved such statement.
4. STANDARD OF CARE; LIMITATION OF LIABILITY; INDEMNITY
(A) The Bank shall exercise the same standard of care that it exercises over its
own assets in the safekeeping, handling, servicing and disposition of Property
in accordance with this Agreement. Notwithstanding any other provisions hereof,
in all events the Bank will exercise the due care expected of a professional
custodian for hire with respect to Property in its possession or control.
The Bank is not under any duty to supervise the investments of the Fund, or to
advise or make any recommendation to the Fund with respect to the purchase or
sale of any Securities or the investment of any funds. The Fund shall have the
sole and exclusive responsibility for the investment of Property held hereunder.
(B) Subject to paragraph (A) above, the Bank shall not be responsible for any
loss or damage suffered by the Fund as a result of the performance of the Bank's
duties hereunder unless such loss or damage arises from (i) burglary, robbery,
holdup, theft or mysterious disappearance, including loss by damage or
destruction; or (ii) acts of negligence or willful misconduct on the part of the
Bank or on the part of a branch of office, affiliate or subsidiary of the Bank
acting as its agent pursuant to the terms of this Agreement or any of officers,
employees or other agent affiliated with the Bank acting on behalf of any such
entity. In the case of any such loss or damage, the Bank's liability shall not
exceed the market value of the Property, including any dividends, interest and
other cash or non-cash distributions with respect to the Property accrued or
distributed during the period of loss, and penalties incurred by the Fund due to
any such loss or damage. The market value of the Property shall be determined as
of the time of the occurrence of the loss or damage under subsection (i) or (ii)
above, as applicable. The Bank shall provide reasonable assistance, as
reasonably requested by the Fund, in the event of any such loss or damage, with
no charge to the Fund for the Bank's internal costs and expenses.
The Fund agrees to indemnify and hold harmless the Bank from and against any
claims and liability which are incurred in connection with the Bank's
performance under this Agreement in due accordance with the properly authorized
Instructions pursuant to Section 8 of this Agreement and Service Standards, as
attached hereto and incorporated herein as Exhibit A, including, without
limitation, the carrying out of Instructions with the terms of and in the manner
provided by this Agreement
(C) In selecting and appointing Clearance Systems (as defined below), Market
Infrastructure Entities (as defined below) and Transport Systems (as defined
below), the Bank shall use reasonable care and shall be responsible only for
negligence in the selection thereof. As used herein, "Clearance Systems" shall
mean securities depositories as contemplated by Section 6 hereof and Foreign
Securities Depositories; "Market Infrastructure Entities" shall mean public
utilities, telecommunications facilities and other common carriers of electronic
and other messages, and public postal services not affiliated with the Bank;
"Transport Systems" shall mean any courier, messenger or other similar transport
system not affiliated with the Bank.
In the event the Fund suffers a loss, liability or damage attributable to any
Clearance System, Market Infrastructure Entity or Transport System, the Bank
shall, to the extent of any such loss, liability or damage and to the extent
permitted by applicable law (and with respect to Clearance Systems, to the
extent not prohibited by any contract with any such Clearance Systems), ( I )
assign the Fund to all of the rights of recovery of the Bank against any such
entity and (2) use all reasonable efforts to assist the Fund in pursuing any
claim without any charge to the Fund for the Bank's internal costs and expenses
. The Bank hereby assigns to the Fund all rights, claims, causes of action and
interests it may have against any such entity resulting from the Fund's loss,
liability or damage; provided, however, that nothing herein shall be interpreted
as granting the Fund any rights to bring any direct claim under any insurance
policy issued in favor of the Bank, or as limiting the rights of the Bank to
bring any claim against any such entity for any damages suffered by the Bank for
any action of its agent.
(D) In no event shall either party be liable to the other party for indirect,
special, consequential or general damages.
Notwithstanding the above, neither the Bank nor its parent nor any of its
branches, subsidiaries or affiliates nor the Fund shall be responsible for any
losses or damages arising from reasons or causes beyond its control, including,
without limitation, electronic, mechanical or other technical difficulties,
nationalization, expropriation, currency restrictions, acts of war, terrorism,
insurrection, revolution, civil unrest, riots or strikes, nuclear fusion or
fission or acts of God."
(E) In the event the Fund enters into triparty repurchase agreements pursuant to
which collateral therefore is to be held by a custodian other than the Bank and
the Fund instructs the Bank to deliver Property to such custodian, the Bank
shall be under no duty to determine whether such custodian satisfies the
requirements of Section 17(f)
of the Investment Company Act or the Rules promulgated thereunder. The Bank
shall have no further duties or obligations under this Agreement with respect to
such Property.
5. PERFORMANCE BY THE BANK
(A) General
The Bank's performance of its duties hereunder shall be in accordance with the
Service Standards, attached hereto as Exhibit A. Such Service Standards may be
amended from time to time in writing signed by the Fund and the Bank.
Notwithstanding the foregoing, the Bank may unilaterally amend the Service
Standards upon 10 days prior written notice, provided such amendment is the
direct result of a change in the level of service provided to the Bank by
independent third parties upon which performance of the Service Standards
depends. In no event, however, shall the unilateral amendments reduce the
standard of care of the Bank as provided under this Agreement and the Service
Standards.
(B) Receipt. Delivery and Disposal of Securities
The Bank shall, or shall instruct any other entity authorized to hold Property
in accordance with Sections 6 or 7 hereof to, receive or deliver Securities and
credit or debit the Custody Account, in accordance with properly authorized
Instructions (as hereinafter defined). The Bank or such other entity shall also
receive in custody all stock dividends, rights and similar securities issued in
connection with Securities held hereunder, shall surrender for payment, in a
timely manner, all items maturing or called for redemption, and shall take such
other action as the Fund may direct in properly authorized Instructions.
(C) Registration
Securities held hereunder may be registered in the name of the Bank, any entity
authorized to hold Property in accordance with Sections 6 or 7 hereof, or a
nominee of the Bank or any such authorized entity, and the Fund shall be
informed upon request of all such registrations. Securities in registered form
will be transferred upon request of the Fund into such names or registrations as
it may specify in properly authorized Instructions.
(D) Cash Accounts, Segregated Accounts
(i) The Bank shall, for each Portfolio of the Fund, open and maintain a
separate Bank account in the name of the Fund, subject only to draft or
order by the Bank acting pursuant to the terms of this Agreement, and
shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of the Fund
relating to such Portfolio, other than cash maintained by the Fund in a
Bank account established and used in accordance with Rule 17f-3 under
the Investment Company Act of 1940. The Bank shall clearly record in
its records the Portfolio to which each of the Fund's Bank accounts
pertains. Funds held by the Bank for the Fund may be deposited by it to
its credit as "Custodian" in the Trust and Custody Services Department
of the Bank or in such other banks or trust companies as it may, in its
discretion, deem necessary or desirable; provided, however, that every
such bank or trust company, and the funds to be deposited with each
such bank or trust company, shall be approved by vote of a majority of
the Directors of the Fund. Such funds shall be deposited by the Bank in
its capacity as Custodian and shall be withdrawable by the Bank only in
that capacity.
(ii) The Bank shall, upon receipt of properly authorized Instructions
(as hereinafter defined) from the Fund on behalf of any one or more
applicable Portfolios of the Fund, establish a segregated account for
and on behalf of each such Portfolio into which account or accounts may
be transferred cash and/or securities, including securities maintained
in an account by the Bank pursuant to Section 6 hereof, (a) in
accordance with the provisions of any agreement among the Fund, on
behalf of the Portfolio, the Bank and a broker-dealer registered under
the Securities Exchange Act and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization(s), regarding escrow or other
arrangements in connection with transactions by the Portfolio; (b) for
purposes of segregating cash or government securities in connection
with options purchased, sold or written by the Portfolio or commodity
futures contracts or options thereon purchased or sold by the
Portfolio; (c) for purposes of compliance by the Portfolio(s) with the
procedures required by Investment Company Act Release 10666, or any
subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies; (d) to hold securities subject to
repurchase agreements, to the extent that certificates for such
securities are held in physical custody; and (e) for other proper
corporate purposes, but only, in the case of clause (e), upon receipt
of, in addition to proper instructions from the Fund on behalf of the
applicable Portfolio(s), a certified copy of a resolution of the Board
of Directors or of its Executive Committee signed by an officer of the
Fund and certified by the Secretary or an Assistant Secretary, setting
forth the purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
(iii) The Bank shall receive from the Fund, from the purchaser of Fund
Shares, or from the Transfer Agent of the Fund and, on the date of
receipt, deposit into the Fund's account such payments as are received
for Shares of the Fund issued or sold from time to time by the Fund.
The Bank will make such arrangements with the Transfer Agent as will
ensure receipt by the Bank of all amounts due as payments for Shares of
the Fund.
(iv) Upon mutual agreement between the Fund and the Bank, the Bank
shall, upon the receipt of properly authorized Instructions (as
hereinafter defined):
1) invest in such instruments as may be set forth in such
Instructions on the same day as received all federal funds
received after a time agreed upon between the Fund and the
Bank: and
2) make federal funds available to the Fund as of specified
times agreed upon from time to time by the Fund and the Bank
and to the extent that monies are received in payment for
Shares of the Fund and are deposited into the Fund's Bank cash
account.
(v) The Bank shall collect on a timely basis all income and other
payments with respect to registered Securities held hereunder to which
the Fund shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and
other payments with respect to bearer Securities if, on the date of
payment by the issuer, such Securities are held by the Bank or agent
thereof or are held in a securities depository on such date of payment
and shall credit such income, as collected, to the cash account of the
appropriate Portfolio. Without limiting the generality of the
foregoing, the Bank shall detach and present for payment all coupons
and other income items requiring presentation as and when they become
due and shall collect interest when due on securities held hereunder
(vi) Upon receipt of properly authorized Instructions (as hereinafter
defined), which may be continuing instructions when deemed appropriate
by the parties, the Bank shall pay out moneys of the Fund in the
following cases only:
1) upon the purchase of Securities for the account of the
Fund, but only (a) against the delivery of such Securities to
the Bank (or any agent appointed pursuant to Section 7 hereof)
registered in the manner required for Securities to be held
pursuant to this Agreement or in proper form for transfer; (b)
in the case of a purchase effected through a securities
depository, in accordance with the conditions set forth in
Section 6 hereof; or (c) in the case of repurchase agreements,
against delivery of collateral Securities as provided in
clauses (a) or (b) above;
2) in connection with conversion, exchange or surrender of
Securities owned by the Fund as set forth in Section 2 hereof;
3) for the redemption or repurchase of Shares issued by the
Fund as set forth in Section 5(D)(viii) hereof;
4) for the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments for
the account of the Fund: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund, whether or not such expenses are to be
in whole or part capitalized or treated as deferred expenses;
5) for the payment of any dividends declared pursuant to the
governing documents of the Fund;
6) for any other proper purpose, but only upon receipt of, in
addition to proper Instructions, a certified copy of a
resolution of the Directors or of the Executive Committee of
the Fund signed by an officer of the Fund and certified by its
Secretary or an Assistant Secretary, specifying the amount of
such payment, setting forth the purpose for which such payment
is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom and the Portfolios
from which such payment is to be made.
Except to the extent that the Bank may be instructed otherwise by
certified resolution meeting the requirements of paragraph (6) of this
Section 5(D)(vi), the payment of Fund monies upon the acquisition of
Securities or the redemption or repurchase of Shares shall be charged
to the account of the Portfolio to which the transaction relates and
all other payments of monies for expenses and other purposes shall be
charged against the appropriate Portfolio in accordance with the Fund's
Articles of Incorporation and current prospectus, as in effect from
time to time.
(vii) In any and every case where payment for purchase of Securities
for the account of the Fund is made by the Bank in advance of receipt
of the Securities purchased (i.e., in advance of the time specified in
Section 5(D)(vi)(l) in the absence of specific written instructions
from the Fund to so pay in advance, the Bank shall be liable to the
Fund for losses resulting from the Bank's negligence for such
Securities to the same extent as if the Securities had been received by
the Bank, except that in the case of repurchase agreements entered into
by the Fund with a bank which is member of the Federal Reserve System
or a registered broker-dealer under the Securities Exchange Act, the
Bank may transfer funds to the account of such bank or broker-dealer
prior to the receipt of written evidence that the Securities subject to
such repurchase agreement have been transferred by book-entry into a
segregated account of the Bank maintained with a Federal Reserve Bank
or of the safe-keeping receipt, provided that such Securities have in
fact been so transferred by book-entry.
(viii) From such funds as may be available for the purpose, the Bank
shall, upon receipt of instructions from the Fund's Transfer Agent (as
such instructions may be confirmed by the Fund pursuant to the Service
Standards or any service level agreements between the parties hereto),
make funds available for payment to holders of Shares who have
delivered to the Transfer Agent a request for redemption or repurchase
of their Shares. In connection with the redemption or repurchase of
Shares of the Fund, the Bank is authorized, upon receipt of
instructions from the Transfer Agent (as such instructions may be
confirmed by the Fund pursuant to the Service Standards or any service
level agreements between the parties hereto), to wire funds to or
through a commercial bank designated by the redeeming shareholders.
(E) Reports
(i) If the Bank has in place a system for providing telecommunication
access or other means of electronic access by customers to the Bank's
reporting system for Property in the Custody Account, then, at the
Fund's election, the Bank shall provide the Fund with such instructions
and passwords as may be necessary in order for the Fund to have such
electronic access through the Fund's terminal device. Such electronic
access shall be restricted to information relating to the Custody
Account. If electronic access to such reporting system is requested by
the Fund, the Fund agrees to assume full responsibility for the
consequences of such use, including any misuse or unauthorized use of
the terminal device, instructions or passwords referred to above, and
agrees to defend and indemnify the Bank and hold the Bank harmless from
and against any and all liabilities, losses, damages, costs, counsel
fees, and other expenses of every nature suffered or incurred by the
Bank by reason of or in connection with such use by the Fund or others
of such terminal device, unless such liabilities, losses, damages,
costs, counsel fees and other expenses can be shown to be the result of
negligent or wrongful acts of the Bank, the Bank's employees or the
Bank's agents. Further, in the event the Fund elects to have electronic
access, the Bank shall provide the Fund on each business day a report
of the preceding business day's transactions relating to the Custody
Account and of the closing or net balances of each business day. If the
Fund does not choose to have electronic access, the Bank shall provide
the Fund with such reports of transactions in the Custody Account by
such means as may be mutually agreed upon.
(ii) The Bank agrees to use its best efforts to furnish the Fund with
such information regarding Property held hereunder as the Fund may
request in good faith in connection with its complying with requests of
any regulatory authorities having jurisdiction over the Fund. Upon the
request of the Fund or in compliance with applicable laws or
regulations, the Bank agrees to execute, as custodian, any necessary
declaration or certificates of ownership under the federal tax laws or
the laws or regulations of any other taxing authority now or hereafter
in effect
(iii) The Bank shall also, subject to restrictions under applicable
law, seek to obtain from any entity with which the Bank maintains the
physical possession of any of the Property in the Custody Account
records of such entity relating to the Property in the Custody Account
as may be required by the Fund or its agents in connection with an
internal examination by the Fund of its own affairs. Upon a reasonable
request from the Fund, the Bank shall use its best efforts to furnish
to the Fund reports (or portions thereof) of the external auditors of
each such entity relating directly to such entity's system of internal
accounting controls applicable to its duties under its agreement with
the Bank.
(F) Access
(i) The Bank shall submit to the auditors for the Fund, or to anyone
the Fund designates, such reports (including reports in respect of the
Bank's systems of internal accounting controls as the Fund may
reasonably request from time to time) or other information relating to
the Bank's services hereunder as such auditors or other designees may
require from time to time during the term of this Agreement in good
faith for the Fund's compliance with applicable laws, rules or
regulations. The Bank shall establish and maintain for operational and
account purposes such other accounts or records as the Fund and the
Bank may from time to time consider necessary or appropriate. The Bank
shall furnish the Fund with periodic statements of transactions and
statements of Property held for the account of the Fund as may be
directed by the Fund from time to time.
(ii) During the Bank's or its subcustodian's regular banking hours, as
the case may be, and upon receipt of reasonable notice directly from
the Fund, any officer or employee of the Fund, any independent
accountant(s) selected by the Fund, and any person designated by any
regulatory authority having jurisdiction over the Fund shall be
entitled to examine on the Bank's (or its subcustodian's) premises
Property held by the Bank on its (or its subcustodian's) premises and
the Bank's records regarding Property held hereunder or deposited with
entities authorized to hold Property in accordance with Section 6 and 7
hereof, but only upon furnishing the Bank with properly authorized
Instructions to that effect.
(iii) The Bank's reasonable costs and expenses in facilitating
an~examination or audit for the Fund's accounts on the Bank's (or its
subcustodian's) premises shall be borne by the Fund. However, such
costs and expenses shall not include the Bank's costs in providing to
the Fund such reports and documents as this Agreement contemplates that
the Bank shall normally furnish to the Fund.
(G) Voting and other Action
(i) The Bank will transmit to the Fund as soon as practicable upon
receipt, and will instruct any entities authorized to hold Property in
accordance with Sections 6 or 7 hereof to transmit to the Fund upon
receipt, all financial reports, stockholder communications, notices,
proxies and proxy soliciting materials received from issuers of
Securities, and all information relating to exchange or tender offers
received from or on behalf of offerors with respect to Securities.
Except as provided herein, the Bank is directed to cause all proxies
for Securities to be executed by the registered holder thereof and
returned to the issuer or other soliciting party with instructions to
vote the proxy in the manner favored by the issuer's management. From
time to time, the Fund may issue, and the Bank agrees to comply with
written instructions as to the voting of proxies, or specified classes
of proxies, at variance from the foregoing direction; provided that the
Bank has not voted any such proxies or classes of proxies prior to any
notification by the Fund not to vote in the manner favored by the
issuer's management. The Bank shall not be liable for any losses or
damages resulting from the voting of any proxies or classes of proxies,
except in the case of the Bank's negligence or willful misconduct in
performing its duties hereunder. The Bank shall provide prompt notice
as further stipulated in the Service Standards in respect of all
corporate announcements (e.g. stock dividends, stock splits, reverse
stock splits, calls, etc.) relating to the Securities held in the
Custody Account. For purposes of the Bank's compliance with the
requirements of Securities and Exchange Commission Rule 14b-2, the Fund
hereby advises the Bank, and the Bank acknowledges, that absent further
written Instructions to the contrary, the Fund objects to information
as to its identity and beneficial Security holdings being disclosed to
any further persons or entities, including the issuers of such
Securities.
(ii) In the event of a tender or exchange offer with respect to
Securities, the Fund will hand deliver or telecopy Instructions to the
Bank as to the action to be taken with respect thereto, specifically
designating such Instructions as relating to a tender or exchange
offer. The Fund shall hold the Bank harmless from any adverse
consequences of the Fund's use of any other method of transmitting
Instructions relating to such offers.
(iii) The Bank is authorized to accept, open and process in accordance
with this Agreement, on the Fund's behalf, all mail or communications
received by it or directed to its care.
6. USE OF SECURITIES DEPOSITORIES
The Fund authorizes the Bank, for any Securities held hereunder, to use
the services of any securities depository permitted to perform such
services for registered investment companies and their custodians under
Rule 17f-4 promulgated under the Investment Company Act, including but
not limited to, The Depository Trust Company, the Federal Reserve Book
Entry System and Participants Trust Company. The Bank will deposit
Securities held hereunder with a depository only in an account which
holds assets of customers of the Bank.
7. USE OF AGENTS
Except as otherwise specifically provided herein, the Bank may not
appoint agents to perform any of the duties of the Bank hereunder.
Notwithstanding the foregoing, the Bank shall not be prohibited from
using Clearance Systems, Market Infrastructure Entities and Transport
Systems.
8. INSTRUCTIONS
(A) The Bank is authorized to rely and act upon written instructions
("Instructions") which are signed by persons named ("Authorized
Persons") in a list provided by the Fund to the Bank from time to time.
The list must be certified by the Fund's Secretary or Assistant
Secretary and include authenticated specimen signatures of all
Authorized Persons. Such list shall separately designate (x) those
Authorized Persons who may authorize the withdrawal of Securities free
of payment, (y) those Authorized Persons who may authorize the
unconditional transfer of funds, and (z) those Authorized Persons who
may give Instructions by verbal, electronic or other means as
hereinafter provided. Bank shall be entitled to rely upon the continued
authority of any Authorized Person to give Instructions until Bank
receives notice to the contrary in accordance with this Agreement.
(B) The Fund and the Bank further agree that the Bank is also
authorized to rely and act upon:
(i) the procedures prescribed and Instructions issued in
accordance with Exhibit B, "Manual Transmission Authorization
" (including Schedule A thereof), attached hereto and
incorporated herein; and
(ii) Instructions which the Bank receives by means other than
a writing, provided that the Fund and the Bank shall have
agreed, in advance and in writing, upon the means and methods
for transmission (e.g., verbal, telephonic, telegraphic,
electronic, etc.) and authentication of such Instructions, and
further provided that the Bank, its officers, agents and
employees shall have complied, in good faith and
non-negligently, with all material requisites of such agreed
means and methods. Insofar as this Section 8(B)(ii) may be
implemented by the parties with reference to access, by
telecommunication or other electronic means, by or on behalf
of the Fund to the Bank's reporting system for Property in the
Custody Account, this section is intended to supplement, and
not to supplant, the provisions of Section 5(E) of this
Agreement; in each case, whether or not such Instructions are
validly authorized, provided the Bank believes in good faith
such Instructions have been authorized and are in material
compliance with the parties' agreed method of transmission and
authorization of such Instructions.
(C) Notwithstanding any other provisions of this Agreement, the Fund
shall have the right from time to time to appoint and remove one or
more Investment Managers to manage a part of the Property held under
this Custodial Agreement. The Fund shall also have the right to direct
the segregation of any part or all of the Property into one or more
accounts, to be known as "Investment Manager Accounts". Written notice
of any such appointment and removal of Investment Managers shall be
given to the Bank and the Investment Manager so appointed by the Fund,
along with specimen signatures of the Investment Manager(s) authorized
to give Instructions with respect to the relevant Investment Manager
Accounts. Each Investment Manager shall have authority, as an
Authorized Person, to direct the Bank with respect to the acquisition,
retention, management and disposition of all of the assets from time to
time comprising that portion of the Property segregated into an
Investment Manager Account for the Investment Manager.
(D) The Bank may in its discretion, without express authority from the
Fund:
(i) make payments (not to exceed $2000.00 in total with
respect to each Portfolio before an accounting shall be made
to the Fund) to itself or others for minor expenses of
handling Securities or other similar items relating to its
duties under this Agreement, provided that all such payments
shall be accounted for to the Fund;
(ii) surrender Securities in temporary form for Securities in
definitive form;
(iii) endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and
(iv) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with Securities and Property of
the Fund, except as otherwise directed by the Fund or as
otherwise provided herein.
9. THE FUND
(A) The Fund agrees that no printed material or other matter in any
language (including without limitation, prospectuses, statements of
additional information, notices to shareholders, annual reports and
promotional material) which mention the Bank's or Citicorp's name or
the rights, powers or duties of the custodian of the Fund shall be
issued by the Fund or of Citicorp or on the Fund's behalf unless the
Bank shall first have given its specific written consent thereto;
provided, however, that no prior consent shall be required if the only
reference to the Bank's or Citicorp's name is in identifying the Bank
as the Fund's custodian.
(B) The Fund shall give prior notice to the Bank of any change in its
place of incorporation or organization, mailing address, or sponsors,
or any significant change in management, investment objectives, fees or
redemption rights.
(C) The Fund confirms that it is, and agrees that in the future it will
be, audited at least annually by an independent accounting firm and
that it mails, and in the future will mail, an audited financial report
of the Fund to its shareholders at least annually.
10. FEES AND EXPENSES
Fees and expenses for services rendered under this Agreement shall be
those listed in Exhibit C attached hereto and incorporated herein. Fees
and expenses shall not be increased for five years from the date of
this Agreement. However, the parties may, from time to time, reduce
said fees and expenses upon written agreement between the parties.
11. PAYMENTS BY THE BANK
The parties hereto acknowledge that:
(A) the Fund is not permitted to borrow monies from the Bank in
connection with the transactions contemplated hereby; and
(B) all transactions will be pre-funded and no advances will be made by
the Bank.
12. TAX STATUS/WITHHOLDING TAXES
(A) The Fund hereby agrees to provide the U.S. Tax Identification
Numbers for each portfolio of the Fund.
(B) The Fund may be required from time to time to file such proof of
taxpayer status or residence, to execute such certificates and to make
such representations and warranties, or to provide any other
information or documents, as the Bank may deem necessary or proper to
fulfill the Bank's obligations under applicable law. The Fund shall
provide the Bank, in a timely manner, with copies of originals if
necessary and appropriate, or any such proofs of residence, taxpayer
status, beneficial ownership and any other information or documents
which the Bank may reasonably request.
(C) If any tax or other governmental charge or assessment shall become
payable with respect to any payment due to the Fund ("Taxes"), such
Taxes shall be withheld from such payment in accordance with applicable
law. The Bank may withhold any interest, any dividends or other
distributions or securities receivable in respect of Securities,
proceeds from the sale or distributions of Securities ("Payments"), or
may sell for the account of the Fund any part thereof or all of the
Securities, and may apply such Payment in satisfaction of such Taxes,
the Fund remaining liable for any deficiency. If any Taxes shall become
payable with respect to any payment made to the Fund by the Bank in a
prior year, the Bank may withhold Payments in satisfaction of such
prior year's Taxes. The Fund shall indemnify and hold harmless the
Bank, its officers, employees, agents and affiliated companies against
any Taxes, penalties, additions to tax, and interest, and costs and
expenses related thereto, arising out of claims against the Bank by any
governmentalauthority for failure to withhold Taxes or arising out of
any reclaim or refund of taxes or other tax benefit obtained by the
Bank for the Fund.
(D) This section 14 shall survive the termination of this Agreement and
continue in force until the time for assessment of all Taxes expires.
13. AMENDMENT
This Agreement may not be amended except by a written agreement among
the parties hereto.
14. TERMINATION
Either the Bank or the Fund may terminate this Agreement upon sixty
(60) days' written notice to the other party. The Fund shall be
responsible only for fees and expenses incurred through the termination
date, excluding any termination fees.
The Fund shall have a right to terminate this Agreement upon ten (10)
days' written notice following receipt of any unilateral revision to
the Service Standards, if the Fund does not reasonably agree in good
faith with the modifications to such Service Standards. In the event of
a termination, Bank shall provide reasonable assistance, as reasonably
requested by the Fund during the transition of custodial services from
the Bank to a third party. The Fund shall be responsible only for fees
and expenses incurred through the termination date, excluding any
termination fees.
15. CONFIDENTIALITY
Subject to the foregoing provisions of this Agreement and any
applicable law, the Fund and the Bank shall each use best efforts to
maintain the confidentiality of matters concerning Property in the
Custody Account.
16. NOTICES
All notices and other communications hereunder, except for Instructions
and reports relating to the Property which are transmitted through the
Bank's electronic reporting system for Property in the Custody Account,
shall be in writing, telex or telecopy or, if verbal, shall be promptly
confirmed in writing, and shall be hand-delivered, telexed, telecopied
or mailed by prepaid first class mail (except that notice of
termination, if mailed, shall be by prepaid registered or certified
mail) to each party at its address set forth above, if to the Fund,
marked "Attention Xxxx X. Xxxxxxx" and if to the Bank, marked
"Citibank, N.A. as Custodian for AAL Variable Product Series Fund
Inc.", or at such other address as either party may give notice of to
the other.
17. ASSIGNMENT
No party may assign, transfer or charge all or any of its rights and
benefits hereunder without the written consent of the other parties.
Any purported assignments made in contravention of this Section shall
be null and void and of no effect whatsoever.
18. GOVERNING LAW
This Agreement shall be governed by, and construed according to, the
laws of the State of New York. In the event of litigation, the
prevailing party shall be awarded actual attorneys fees, costs and
expenses.
19. MISCELLANEOUS
(A) This Agreement may be executed in several counterparts, each of
which shall be an original, but all of which shall constitute one and
the same instrument.
(B) This Agreement contains the entire agreement between the parties
relating to custody of Property and supersedes all prior agreements on
this subject. The parties may hereafter enter into further agreements
contemplating the effecting of loans, by the Bank to the Fund, or the
lending by the Fund of Securities to third parties with the Bank acting
as the Fund's agent.
(C) The captions of the various sections and subsections of this
Agreement have been inserted only for the purposes of convenience and
shall not be deemed in any manner to modify, explain, enlarge or
restrict any of the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized.
CITIBANK, N.A.
BY: /s/ Xxxxxx X. Xxxxxxxxxxx
----------------------------
NAME: Xxxxxx X. Xxxxxxxxxxx
Managing Director
Citibank, N.A.
111 Wall St./ 24th Flr./ Zn. 6
Xxx Xxxx, XX 00000
(000) 000-0000
Personnel #5059670
AAL VARIABLE PRODUCT SERIES FUND, INC.
BY: /s/ D. Xxxxxxx XxXxxxx
-----------------------
D. Xxxxxxx XxXxxxx
President
BY: /s/ Xxxx X. Xxxxxxx
----------------------
Xxxx X. Xxxxxxx
Treasurer
EXHIBIT A
Citibank/Aid Association for Lutherans
and AAL Variable Product Series Fund, Inc.
Custody Customer Service Standards
July 1996
Table of Contents
Page
Definitions 3
Securities Processing: Receive Instructions 4
Securities Processing: Delivery Instructions 6
Securities Processing: Delivery - Deadlines 7
Transfer/Split Registration Processing 9
Income Collection and Distribution 10
Reorganization Department 11
Other Citibank Responsibilities 13
Customer Investigations and Inquiries 15
Customer Responsibilities to Citibank 16
Definitions:
Customer Defined: For purposes of the Services Standards herein, Customer shall
mean Aid Association for Lutherans, AAL Employees' Retirement Trust, AAL Savings
Plan Trust and AAL Variable Product Series Fund, Inc.
Securities Processing: Citibank Receives
Citibank will receive securities delivered to their accounts, in either physical
or book entry form, at the following locations or routing addresses:
PHYSICAL: Citibank
00 Xxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Physical R&D Unit
Level C
Delivery instructions must include:
Customer Name: Customer Account #
With Citibank:
Aid Association for Lutherans 846647
AAL Savings Plan Trust 846648
AAL Employees Retirement Trust 846649
AAL Holdings Inc. 846656
AAL Variable Product Large Company Stock Portfolio 846650
AAL Variable Product Small Company Stock Portfolio 846651
AAL Variable Product Bond Portfolio 846652
AAL Variable Product Balanced Portfolio 846653
AAL Variable Product Money Market Portfolio 846654
FED ELIGIBLE:* Citibank/Cust
ABA #000000000
Reference Relevant Customer Name and Account # From Above
DTC ELIGIBLE:* Citibank #908
Reference Relevant Customer Name and Account # From Above
PTC ELIGIBLE:* CBANK
Reference Relevant Customer Name and Account # From Above
CEDEL(Euroclear): 80826 for Aid Association for Lutherans (Account #846647)
80914 for AAL Savings Plan Trust (Account #846648)
80915 for AAL Employees Retirement Trust (Account #846649)
NSCC ELIGIBLE: Citibank #908
It is important that Citibank be notified in advance of any securities receipts.
However, in the event that no corresponding instructions have been received
prior to Citibank's receipt of a security, the standards on the following page
will apply.
*For book entry settlements, the customer's bank/broker must include customer
name and account number in the comments field of the transaction.
Citibank will receive items against payment or free. We will apply them to the
customer's account on the same day providing Citibank had previously received a
valid faxed trade ticket. Citibank will ensure all necessary forms, documents,
etc. are attached and completed before receipt. Customer will request
re-registration and deposit as necessary as part of settlement instructions. All
physical securities will be settled and held in New York.
For Securities Received Against Payment Without Instructions:
If the Bank/Broker provides sufficient information for Citibank to identify its
customer, then Citibank will attempt to obtain those instructions through
immediate contact with the customer.
Your response to these exception items must be communicated back to Citibank at
least fifteen minutes for Book Entry and 30 minutes for Physicals prior to the
strict reclaim ("street") deadlines listed on page 7, or the items will be
returned. It is recommended that you don't wait until the deadline to
communicate and that you don't accumulate a list to respond to near the
deadlines.
There will be times when the securities received do not agree with the
customer's instructions (i.e., coupon rate or net money difference). In these
cases, the customer will be immediately contacted. Net money differences less
than $1 on all accounts, other than the AAL Variable Product Series Fund, Inc.
accounts, do not require customer contact. Citibank must receive the customer's
response within the guidelines outlined in the above paragraph.
For Securities Received Free Without Instructions:
If the Bank/Broker provides sufficient information for Citibank to identify its
customer, then Citibank will attempt to obtain those instructions through
immediate contact with the customer.
In the case of securities sent "free" by mail, if instructions or required
documentation are not received within five (5) business days of receipt and the
customer had been previously identified and notified, the securities will be
returned to the sender.
In the case of securities received "over the window" or through a depository, if
instructions or required documentation are not received within three (3)
business days of receipt and the customer had been previously identified and
notified, the securities will be returned.
Please Note:
It is a "street" requirement for amortizing mortgage-backed securities to settle
based on original face value (not the current principal value). Therefore, the
customer's instructions to Citibank should reflect the value of units to be
received or delivered as original face.
Securities Processing: Citibank Delivers
Citibank will make delivery of securities to its customer's contra parties on
the settlement date of the trade, within "street" standard window closing
deadlines, as long as the account holds deliverable securities and provided that
valid instructions have been received as specified within the standards on page
7. Citibank will communicate to the customer any necessary forms or documents
required in order to ensure timely proper settlement.
Please note that all of the times listed are New York times and that these
standards (for physical deliveries) apply to deliveries within the New York City
Financial District.
These standards do not apply to book entry securities which are requested to be
withdrawn and delivered in physical form, nor do they apply to depository
eligible securities held or received in physical form which are then requested
to be delivered out in book entry form.
See transfer/split deposit processing standards on page 9.
These standards also assume that trades will be input in a staggered fashion
prior to settlement date. If high volumes of delivery instructions are "sent" to
Citibank, by the customer, at or just prior to the stated cutoff times, these
deliveries will be made on a best effort basis (refer to instruction deadline
matrix on page 7).
Please Note:
It is a "street" requirement for amortizing mortgage-backed securities to settle
based on original face value (not the current principal value). Therefore, the
customers' instructions to Citibank should reflect the value of units to be
received or delivered as original face.
Instruction Deadlines
DELIVERIES vs. PAYMENT (all times are New York times)
If trade information is received prior to the following input deadlines, the
trade will be input by the stated service standard times.
FUNDS INPUT BY INPUT BY SERVICE STREET
INSTRUMENT TYPE CUSTOMER CITIBANK STANDARD DEADLINE
Fed Book Entry-Non Dealer FF 2:45 P.M. 2:30 P.M. Same Day 3:00 P.M.
(Gov't Bills, Bonds, Notes,
Agencies)
DTC - SDFS Settlements FF 2:45 P.M. 2:30 P.M. Same Day 3:00 P.M.
(Including Money Market
Instruments)
PTC Eligible Securities FF 2:45 P.M. 2:30 P.M. Same Day 3:00 P.M.
(GNMA's)
Physical Money Market Instruments &
Physical Governments-Non Dealer to Dealer
(BAs, CDs, CP, GNMAs, FF 1:00 P.M. 12:45 P.M. Same Day 2:15 P.M.
FHAs, etc.)
Physical Money Market Instruments &
Physical Governments-Non Dealer to Non Dealer
(BAs, CDs, CP, GNMAs, FF 1:15 P.M. 1:00 P.M. Same Day 2:30 P.M.
FHAs, etc.)
Physical Equities, Corporates, Muni's
CH 7:45 P.M. 4:00 P.M. On S/D 11:30 A.M.
on Prior Day on Prior Day
New Issues:
Physical FF/CH 2:00 P.M. 1:45 P.M. Same Day 3:15 P.M.
DTC-Same Day Funds FF 2:45 P.M. 2:30 P.M. Same Day 3:00 P.M.
Note: Sales of maturing securities within two (2) days or less of their
stated maturity date for New York Paying Agents, or within seven (7)
days or less for out-of-town agents must be communicated to your
administrator in order to avoid conflicting delivery and redemption
instructions.
S/D = Settlement Date
Same Day Trades
For same day trades for any short-term transaction such as Treasury Bills,
Commercial Paper, etc., instructions must be sent by 12:30 p.m. EST via a valid
faxed trade ticket. This deadline also applies to the AAL Variable Product
Series Fund, Inc.'s Short Term Investment Fund (STIF).
The Federal Reserve Bank Standards are not static because the Fed often grants
extensions.
Deliveries returned to Citibank (DK'd) require a customer response. Operations
will contact the customer's client administrator as soon as the item is DK'd.
The customer must respond within one business day or the instruction will be
cancelled.
Citibank's demand deposits account (DDA) capability allows for both immediately
available funds (FF) and next day funds (CH) processing. Credits or debits in
next day funds will reflect a one day delay in availability from the transaction
settlement date.
Regarding same day turnaround processing:
- The receive and delivery instructions must be input within the service
standard above. The bank/broker delivering the asset to Citibank must
present them at least 15 minutes prior to the street deadline for book
entry securities and at least 45 minutes prior to the street deadline
for physical securities.
- Same day turnarounds processed within the Federal Reserve System by
Citibank's Custody Operations cannot be delivered in the dealer time.
Transfer/Split Deposit Processing
Physical:
All physical securities required to be split or re-registered will be forwarded
by Citibank to the appropriate transfer agents within one business day of the
Bank's receipt of these instructions.
Book Entry:
Withdrawal-by-transfer instructions will be processed to the depository within
one business day of the Bank's receipt of these instructions.
Please Note:
The customer will be notified directly if any additional documentation or
registration information is required.
Customers selling securities that are already in transfer will have a high
probability of a delivery fail. However, in those situations Citibank will
contact the agent to expedite the transfer process.
Please Note:
Customers trading physical securities as a "turnaround" should use the clearance
pool transaction. This transaction type bypasses standard processing such as
re-registration and vault processing.
Securities placed out for legal transfer (those transfers requiring
documentation, i.e., letters testamentary, corporate resolutions, etc.)
extending over the settlement date of a pending trade, will not be funded by
Citibank.
All requests for re-registration/splits and associated documentation should be
addressed to:
Citibank, N.A.
WWSS Custody Division
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention:
(The name and location of customer's account administrator.)
Income Collection and Distribution
Payments of principal, interest and dividends (with the exception of physical
securities item number 3 below) are credited to customers accounts on a
contractual basis. All funds received through the custody accounts for income
and principal payments on securities whether securities are registered in
Citibank's name, Citibank's Nominee name or customer name shall be processed by
Citibank according to the Income Collection and Distribution standards as though
they were in Citibank's Nominee name.
These payments will be made by Citibank within the guidelines below:
Please Note:
Adjustments to income by the paying agent are provided to Citibank's customers
within 48 hours of that adjustment.
U.S. Government Obligations and Agencies (Fed Eligible Securities)
Payment will be in immediately available funds on payable date.
Corporate, Municipal and Equity Securities (DTC) Payment will be in immediately
available funds on payable date.
Mortgage Backed Securities (DTC)
Payment will be in immediately available funds on payable date.
GNMA I Mortgage Backed Securities (PTC)
Payment will be in immediately available funds no later than one business day
after the payable date.
GNMA II Mortgage Backed Securities (PTC)
Payment will be in immediately available funds on payable date.
Physical Securities
1-Bearer Coupon Bonds
Payment will be in immediately available funds on payable date.
2-Registered in Citibank's Nominee with a predetermined payment schedule Payment
will be in immediately available funds on payable date.
3-Registered in Citibank's Nominee without a predetermined payment schedule
Income from physical securities (e.g. FHAs, SBAs, Broker Mortgages, etc.) will
be credited to the customer's account in immediately available funds no later
than five (5) business days after payable date.
4-Registered in Customer's Name and Address See Customer responsibilities to
Citibank on page 16.
Note: For those issues that would normally be paid one business day after the
payable date, income will be credited on the last day of the month if
that is the payment date.
Reorganization Department
Functional Responsibilities Include:
Tender Offers, Conversions, Mergers, Exchanges, Maturities, Called Bonds,
Rights, Warrants, Liquidations, Bankruptcies, Class Actions, Stock Splits,
Distributions, Put Bonds, Dividend Reinvestments, Treasury Xxxx Rollover, etc.
Sources of Information:
HARD COPY: o DTC Important Notices
o DTC Participant Terminal System (PTS)
o Wall Street Journal
o New York Times
o Financial Times
o Notices from Redemption Agents
TRANSMISSIONS: o XCITEK, Inc.
o Financial Information, Inc.
TAPE FORM: o Xxxxx Information Systems
o Interactive Data Services
Customer Notification:
On all voluntary reorganization functions with an expiration date, a critical
notice (detailing all pertinent information) will be sent via fax to the
customer no later than close of business the day following the receipt by
Citibank's Reorganization Department.
The purpose of this notification is for Citibank to solicit a response from the
customer by no later than 5:00 p.m. in New York, two (2) business days prior to
the notice's expiration date, in order to be able to successfully execute the
required functions. Responses received after this deadline will be handled on a
best efforts basis.
Advance notices will be sent via fax to all customers "holding" called bonds
within two (2) days of receipt to give them the opportunity to make reinvestment
decisions as quickly as possible.
Advance notices on full-issue call redemptions will be sent via fax to clients
within two (2) days of the receipt of this information by Citibank.
In the case of partial calls, advance notices will be sent via fax within two
(2) days of the Reorganization Department establishing that the call includes
holdings at Citibank. The allocation of the call for securities held within a
depository will be performed by Citibank based upon market acceptable lottery
practices.
On puttable bonds, customer will be advised of put no later than the window
expiration date minus seven (7) business days. Response by the customer to the
put option will occur no later than two (2) business days prior to deadline.
On all non-voluntary actions, Citibank shall take prompt and appropriate action
in respect of all corporate announcements (stock dividends, splits, reverse
splits, calls, etc.) directly affecting the capitalization of the issues of any
or all securities in the custody accounts.
All notifications should be faxed in duplicate to customer (one fax to
Investment Accounting and one fax to the Investment Department for Accounts
#846647, #846648, #846649 and #846656; one fax to AAL Capital Management and one
fax to the Investment Department for Accounts #846650, #846651, #846652, #846653
and #846654).
Maturities and Redemptions:
Maturities and redemptions will be posted to customer's accounts on the
scheduled maturity date in either immediately available funds or next day funds
depending on the instrument.
Instructions to rollover maturing U.S. Treasury Bills will be accepted up to the
last day of the week preceding the maturity date of the Xxxx.
Citibank will deliver maturing physical securities (regardless of nominee name
or held within the vault through simple custody function) to the necessary
agent, trustee, etc. in advance of the maturity date, without notice from the
customer, to ensure payment on payable dates.
Cash and Asset Payments:
Cash payments will be credited to customer's accounts on the payable date of all
called bonds. If a sale is executed after the publication date of any called
bonds, or after the customer's receipt of written notification regarding tender
offers, the customer will assume full responsibility for any exposure this
action might incur.
DTC eligible puttable bonds will be credited on their put date. Other put issues
will be credited on the same day funds are received by Citibank.
Cash payments on all other corporate actions will be credited to customer
accounts on the same day that the funds are received by Citibank.
In the case of a stock split, stock dividend, or stock distribution, the shares
will be posted to customer's accounts, free, on payable date (on ex-date for
splits).
Other security distributions will be credited to customer's accounts within two
(2) business days of payable/effective date.
If the customer utilizes a Dividend Reinvestment Plan, then customer's standing
instructions will be followed. This is subject to "street" conditions and
governed by the plan sponsor.
Other Citibank Responsibilities
Payment Management:
Citibank will notify both customer and paying agent if payments on any security
held within the custody arrangement is delinquent by more than ten (10) business
days. Citibank will notify both customer and paying agent if overpayments or
underpayments occur on any security held within the custody arrangement within
five (5) business days of occurrence. Both Citibank and customer will resolve
these situations together and appropriately.
Applies to AAL Variable Products Series Fund, Inc. Only: Before responding to a
net cash disbursement request from Vantage/Continuum or any successor
third-party administrator in respect of the AAL Variable Product Series Fund,
Inc., Citibank shall request and receive (i) telephonic instructions from the
AAL Investment Accounting Department, as confirmed by (ii) facsimile bearing the
manual or stamped signature of Xxxx X. Xxxxxxx of AAL.
Reports:
Citibank will forward confirmation of all transactions that occur within any
securities depository that Citibank deposits customer's securities into,
including DTC and PTC. Citibank will timely forward to customer any report which
it receives in regards to internal control systems for DTC and PTC.
Standard Custody Reports on Citibanking will be available by 7:00 a.m. EST 100%
of the time. These reports include month-end pricing of public securities.
Month-end Investment Accounting Reports on Citibanking will be available by 7:00
a.m. EST on the fifth (5th) business day after month-end.
Automation:
Citibank shall maintain all of the software necessary to support automated
functions performed at the customer level regarding customer custody activity.
Citibank will provide support for an on-line automated transfer of equity
trading with regards to the AAL Variable Product Series Fund, Inc.
Pricing:
Pricing for all Customers, other than the AAL Variable Product Series Fund,
Inc., will be provided for securities utilizing the guidelines contained in the
chart on page 14 herein.
This chart represents the industry standards for securities pricing as
determined by the MLSPS/Bank Advisory Board.
SECURITY *PRICE PRICING PRIMARY SECONDARY SECONDARY
TYPE TOLERANCE FREQUENCY VENDOR VENDOR 1 VENDOR 2
U.S. Treasury Notes 0.00% Daily Xxxxxxx Xxxxx Interactive Data
U.S. Treasury Bonds 0.00% Daily Xxxxxxx Xxxxx Interactive Data
U.S. Treasury Bills 0.00% Daily Xxxxxxx Xxxxx Interactive Data
GNMA/FNMA/FHLMC 2.00% Daily ABSG Xxxxxxx Xxxxx Interactive Data
(Agencies-Fixed)
GNMA/FNMA/FHLMC 0.25% Daily ABSG Xxxxxxx Xxxxx Interactive Data
(Agencies-ARMS)
GNMA/FNMA/FHLMC REMICS 2.00% Daily ABSG Xxxxxxx Xxxxx Interactive Data
FHLB 2.50% Daily Xxxxxxx Xxxxx Interactive Data ***Prudential
SBA Loans/Pools 2.00% Daily Xxxxxxx Xxxxx Interactive Data ***Prudential
Domestic Corporate Bonds/Notes 2.00% Daily Xxxxxxx Xxxxx Interactive Data ***Prudential
Corp. Floating Rate Bonds/Notes 0.25% Daily Xxxxxxx Xxxxx Interactive Data ***Prudential
Medium Term Notes (Fixed Rate) 2.00% Daily Xxxxxxx Xxxxx Interactive Data ***Xxxxxx Data
Medium Term Notes (FLTG Rate) 0.25% Daily Xxxxxxx Xxxxx Interactive Data ***Xxxxxx Data
Convertible Bonds 2.00% Daily Xxxxxxx Xxxxx Interactive Data ***Prudential
Private Placements 2.00% Monthly Xxxxxxx Xxxxx Interactive Data ***Prudential
Yankee/Euro 2.00% Daily Xxxxxxx Xxxxx ***Interactive Data ***Bloomberg
CMO's 2.00% Daily ABSG **Xxxxxxx Xxxxx ***Interactive Data
Foreign Denominated Bonds 2.00% Daily EXTEL
Foreign Convertible 2.00% Daily EXTEL
Muncipal Bonds 2.00% Daily Interactive Data ***Prudential
Domestic Common Stock
Listed 0.00% Daily Interactive Data
Unlisted 2.00% Daily Interactive Data ***Prudential
Preferred Stock 2.00% Daily Interactive Data ***Prudential
Convertible Preferred Stock 2.00% Daily Interactive Data ***Prudential
Foreign Denominated Stock
Listed 0.00% Daily EXTEL
Unlisted 2.00% Daily EXTEL
Preferred Stock 2.00% Daily EXTEL
Convertible Preferred Stock 2.00% Daily EXTEL
Mutual Funds 0.00% Daily Interactive Data
ADR'S
Listed 0.00% Daily Interactive Data
Unlisted 0.25% Monthly Interactive Data
NOTE: * = Tolerance is used to determine whether override price will be used
(i.e. other price sources may be used only if outside tolerance).
** = Weekly, mid month and month end pricing source.
*** = Month end pricing source.
Customer Investigations and Inquiries
All investigations/inquiries should be forwarded to your account administrator
directly.
The minimum information required to respond to an inquiry/investigation is:
o Customer's name and account number
o Citibank's internal security number or industry CUSIP number
o Description of security
o Explanation of problem
o Reference or name to whom Citibank can direct a reply
Note: Any additional relevant information including reference numbers should
be forwarded.
All inquiries will be acknowledged by Client Services within 24 hours of their
receipt.
Customer Investigations and Inquiries will be responded to within 4 business
days provided that the age of the underlying problem is less than six months
old. Older items may require some additional time to resolve.
Items requiring more than four (4) business days to resolve will be
reacknowledged weekly via telephone as to the status of the inquiry.
Customer Responsibilities to Citibank
Citibank is dedicated to providing the highest levels of service and achieving
the greatest levels of customer satisfaction in its Custody Operations. In order
to ensure that we meet these goals, we ask our customers to abide by the
following principles for each area:
In Instruction Processing:
Ensure the completeness and accuracy of all information that is communicated to
Citibank.
Deliver instructions to Citibank before their stated cutoff times.
Advise Citibank of any amendments or cancellations immediately.
For Settlement Processing:
Follow up with broker/clearing agent on all failed trades the business day
immediately following the contractual settlement date of the trade.
For Income Collection:
Specifically advise Client Services of shares sold ex-dividend and prior to
ex-date or purchased cum-dividend after ex-date.
For Corporate Actions:
In cases where securities are registered in customer's name (i.e. they are
registered in customer name and address but held in safekeeping at Citibank),
and Citibank does not receive notice of a corporate action, it becomes the
customer's responsibility to notify Citibank of the desired course of action or
we will assume no responsibility.
Reply to Citibank before cutoff times specified in the individual corporate
action advises customer received from Citibank.
Advise Citibank of any corporate actions customer becomes aware of where
notification from Citibank has not been received.
For Tax Requirements:
Provide W9 every three years.
Provide needed documentation to satisfy legal requirements.
For Customer Inquiries:
Provide a contact list to ensure replies are directed appropriately.
Use the electronic banking reports service, where appropriate, together
historical information.
Exhibit B
To: Citibank, N.A.
Date: June 30, 1996
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(herein referred to as the "Bank")
The Bank has offered the undersigned Fund a transmission method with automated
security procedures for transmitting funds transfer instructions (including
those transfers funded by a securities sale) and other communications to the
Bank; the Fund may decline in certain circumstances (such circumstances
evidenced by the fact that the Bank receives an instruction pursuant to this
Authorization) to use such transmission method and, fully aware of the
associated risks, has requested the Bank to accept instructions and other
communications transmitted by the procedures more fully described in the Manual
Transmission Procedures attached hereto ("Manual Procedures"). In order to
induce the Bank to act upon communications and instructions transmitted by
Manual Procedures, the Fund hereby authorizes the Bank to act upon
communications and instructions received by Manual Procedures in accordance with
the following:
1. The Fund shall provide the Bank with (a) an original statement in the
form of the Manual Procedures, or an equivalent document, and (b) such
other documentation as the Bank may reasonably request evidencing that
this Authorization and all related documents have been properly
authorized and are in conformity with the organizational documents and
any other rules, regulations or laws to which the Fund may be subject.
2. The Fund may, from time to time, add or delete authorized persons by
delivering to the Bank an original statement in the form attached
hereto, or an equivalent document, which shall be effective no earlier
than the business day after receipt by the Bank, and shall not affect
the Bank's actions or omissions prior to such effective date.
3. The Fund agrees to strictly limit information about the contents of
this Authorization to its officers and employees who need to know, and
to use its best efforts to ensure that such officers and employees at
all times treat the contents hereof with strict confidentiality in
order to maintain the security of the procedures established hereby.
The Fund shall immediately notify the Bank of any breach or suspected
breach or compromise of the security established hereby.
4. The Fund acknowledges and agrees that: (a) it has expressly requested
that the Bank implement the procedures set forth in the form attached
hereto, (b) the Bank has offered a secure transmission method which the
Fund knowingly in certain circumstances may decline to use, and as long
as the Bank acts in accordance with the Manual Procedures and
reasonably believes that instructions or communications have been sent
by an authorized person, the Bank shall have no further duty to verify
the content of any communication or instruction or the identity of the
sender or confirmer thereof, and the Fund expressly agrees to be bound
by any communication or instruction, whether or not authorized, sent in
its name and accepted by the Bank. The Bank shalt have absolute
discretion, for any reason whatsoever, to act or not to act upon and/or
request verification of any communication or instruction received by
telephone;
provided, however, that the Bank shall notify the Fund promptly should
the Bank elect to defer action until the verification is delivered to
the Bank. Nothing contained herein shall require the Bank to violate
any applicable laws, rules or regulations on the transfer of funds or
data transmission.
5. The Fund hereby irrevocably agrees that, as long as the Bank acts in
compliance with this Authorization the Fund will indemnify hand hold
the Bank harmless from and against any loss, liability, claim or
expense (including reasonable legal fees and expenses) resulting from
the Bank's reliance on this Authorization, to the extent the Bank would
be entitled to be indemnified and held harmless pursuant to the
Custodial Services Agreement dated June 30, 1996, agreed upon between
the Bank and the Fund.
6. This Authorization may be terminated by either party hereto upon ten
(10) days' prior written notice to the other; provided, however, that
the Bank's agreement may be terminated immediately without notice in
the event the Bank deems that the security of the Manual Procedures
established hereby have been compromised or breached; and provided,
further, that termination by the Bank shall not affect the Bank's
rights or the Fund's obligations with respect to communications and
instructions received by the Bank prior to the termination.
7. The unenforceability or invalidity of any provision of this
Authorization shall not render any other provision unenforceable or
invalid.
8. This Authorization may not be amended except in a writing executed by
the Fund and accepted by the Bank.
9. Any notices provided for herein shall be in writing, and shall be
deemed to have been given when delivered personally, or when deposited
in the mail, certified, postage prepaid, or sent by authenticated
telecommunications, to the addresses provided below.
10. This Authorization shall in all respects be construed in accordance
with and governed by the laws of New York.
AAL Variable Product Series Fund, Inc. (Fund Name)
By: /s/ D. Xxxxxxx XxXxxxx
(Authorized Signature)
Name and Title: D. Xxxxxxx XxXxxxx President
Address for Notices: 0000 X. Xxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxx
ACCEPTED:
CITIBANK, N.A.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
Name and Title: Xxxxxx X. Xxxxxxxxxxx, Managing Director
000 Xxxx Xx. /00xx Xxx./Xx. 0
Xxx Xxxx, XX 00000 (212) 657-9152
Address for Notices: Citibank, N.A.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
MANUAL TRANSMISSION PROCEDURES
dated June 30, 1996
Fund: AAL Variable Product Series Fund, Inc.
Legal Name
Name and date of Fund Agreement or Authorization (if applicable):
-------------------------------------------------------
List each account number included in the authorization:
Account Number Account Name
846650 AAL Variable Product Large Company Stock Portfolio
846651 AAL Variable Product Small company Stock Portfolio
846652 AAL Variable Product Bond Portfolio
846653 AAL Variable Product Balanced Portfolio
846654 AAL Variable Product Money Market Portfolio
The Bank is hereby authorized to act upon instructions transmitted in the name
of each User listed below in accordance with the following Manual Procedures
(please indicated each primary transmission method):
===================================================================================================================================
Courier Phone US Fax Other (e.g. Telex, Electronic Mail)
Mail -specify
-----------------------------------------------------------------------------------------------------------------------------------
X X X X Printed Name & Title Xxxxx Xxxxx, Assistant
- - - -
Treasurer & Vice President-
Securities
Specimen Signature: /s/ Xxxxx Xxxxx
-----------------------------------------------------------------------------------------------------------------------------------
X X X X Printed Name & Title Xxxx X. Xxxxxxx
- - - -
Treasurer
Specimen Signature: /s/ Xxxx X. Xxxxxxx
-----------------------------------------------------------------------------------------------------------------------------------
X X X X Printed Name & Title R. Xxxxx Xxxxxx, Second
- - - -
Vice President-Securities
Specimen Signature: /s/ R. Xxxxx Xxxxxx
-----------------------------------------------------------------------------------------------------------------------------------
X X X X Printed Name & Title Xxxx Xxxxxx Assistant Vice
- - - -
President-Securities
Specimen Signature: /s/ Xxxx X. Xxxxxx
-----------------------------------------------------------------------------------------------------------------------------------
X X X X Printed Name & Title Xxxx Xxxxxxxxx, Assistant
- - - -
Vice President-Securities
Specimen Signature: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------------------------------------------------------------------------------------------------------------
X X X X Printed Name & Title Xxxx Xxxxxx Assistant Vice
- - - -
President-Securities
Specimen Signature: /s/ Xxxx X. Xxxxxx
===================================================================================================================================
Security Procedures:
Transactions requiring a Security Procedure: Security Procedure: Select One:
oFunds Transfer or other Payment - Telephone callback
Instructions (mandatory)
oDeliver Free (mandatory) X - Standing or Pre-defined Instructions
oOther (Please specify):__________________ - Other (Please specify):_____________
If telephone callback is chosen, instructions for the transactions
noted above received by the Bank pursuant to the Manual Procedures, will be
acted upon by the Bank only after a confirming telephone call to one of the
telephone numbers listed below:
NAME TELEPHONE
The Bank shall be entitled to rely on the names as set forth above
until receipt by the Bank, at least 10 days prior to the effective date thereof,
of written notice of revocation or modification of these Procedures, dated and
signed by an authorized signatory.
* If additional space is required, please attach a separate page, label, sign
and date it.
Executed this 30th day of June, 1996
Customer: AAL Variable Product Series Fund, Inc.
By: /s/ Xxxx X. Xxxxxxx
(Authorized Signature)
Name and Title: Xxxx X. Xxxxxxx, Treasurer
ACCEPTED:
CITIBANK, N.A.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
(Authorized Signature)
Name and Title: Xxxxxx X. Xxxxxxxxxxx
Managing Director
Citibank, N.A.
000 Xxxx Xx./00xx Xxx./Xx. 0
Xxx Xxxx, XX 00000
(000) 000-0000
Personnel #5059670
Date:
Exhibit C
WORLDWIDE SECURITIES SERVICES
U.S. CUSTODY
FEE SCHEDULE
FOR
AID ASSOCIATION FOR LUTHERANS
AAL VARIABLE PRODUCT SERIES FUND, INC.
Market value..................................0.3 basis points per year
Transactions ...................................................$5 each
Base charge........................................................$500
The above fee schedule is guaranteed for five years.
This fee agreement has been reviewed and agreed to:
AAL Variable Product Series Fund, Inc.
By: /s/ D. Xxxxxxx XxXxxxx
D. Xxxxxxx XxXxxxx
Title: President
Date:
Citibank, N.A.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
Title: Managing Director
Date: 8/30/96
