Exhibit (g)
(XX XXXXXX LOGO)
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GLOBAL CUSTODY AGREEMENT
BETWEEN
NEW COVENANT FUNDS
AND
JPMORGAN CHASE BANK, N.A.
March 17, 2005
GLOBAL CUSTODY AGREEMENT
TABLE OF CONTENTS
1. INTENTION OF THE PARTIES; DEFINITIONS................................................ 3
1.1 INTENTION OF THE PARTIES........................................................ 3
1.2 DEFINITIONS..................................................................... 3
2. WHAT BANK IS REQUIRED TO DO.......................................................... 5
2.1 SET UP ACCOUNTS................................................................. 5
2.2 CASH ACCOUNT.................................................................... 6
2.3 SEGREGATION OF ASSETS; NOMINEE NAME............................................. 6
2.4 SETTLEMENT OF TRADES............................................................ 6
2.5 CONTRACTUAL SETTLEMENT DATE ACCOUNTING.......................................... 7
2.6 ACTUAL SETTLEMENT DATE ACCOUNTING............................................... 7
2.7 INCOME COLLECTION (AUTOCREDIT(R))............................................... 8
2.8 CERTAIN MINISTERIAL ACTS........................................................ 8
2.9 CORPORATE ACTIONS............................................................... 8
2.10 PROXIES......................................................................... 9
2.11 STATEMENTS...................................................................... 11
2.12 ACCESS TO BANK'S RECORDS........................................................ 11
2.13 MAINTENANCE OF FINANCIAL ASSETS AT SUBCUSTODIAN LOCATIONS....................... 11
2.14 TAX RECLAIMS.................................................................... 12
2.15 FOREIGN EXCHANGE TRANSACTIONS................................................... 12
2.16 COMPLIANCE WITH SECURITIES AND EXCHANGE COMMISSION (............................ 12
2.17 COMPLIANCE WITH SEC RULE 17F-7 (................................................ 14
3. INSTRUCTIONS......................................................................... 14
3.1 ACTING ON INSTRUCTIONS; UNCLEAR INSTRUCTIONS.................................... 14
3.2 CONFIRMATION OF ORAL INSTRUCTIONS/ SECURITY DEVICES............................. 15
3.3 INSTRUCTIONS; CONTRARY TO LAW/MARKET PRACTICE................................... 15
3.4 CUT-OFF TIMES................................................................... 15
4. FEES EXPENSES AND OTHER AMOUNTS OWING TO BANK........................................ 16
4.1 FEES AND EXPENSES............................................................... 16
4.2 OVERDRAFTS...................................................................... 16
4.3 BANK'S RIGHT OVER SECURITIES; SET-OFF........................................... 16
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5. SUBCUSTODIANS, SECURITIES DEPOSITORIES AND OTHER AGENTS.............................. 17
5.1 APPOINTMENT OF SUBCUSTODIANS.................................................... 17
5.2 LIABILITY FOR SUBCUSTODIANS..................................................... 18
5.3 USE OF AGENTS................................................................... 19
6. ADDITIONAL PROVISIONS RELATING TO CUSTOMER........................................... 19
6.1 REPRESENTATIONS OF CUSTOMER AND BANK............................................ 19
6.2 CUSTOMER TO PROVIDE CERTAIN INFORMATION TO BANK................................. 20
6.3 CUSTOMER IS LIABLE TO BANK EVEN IF IT IS ACTING FOR ANOTHER PERSON.............. 20
7. WHEN BANK IS LIABLE TO CUSTOMER...................................................... 20
7.1 STANDARD OF CARE; LIABILITY..................................................... 20
7.2 FORCE MAJEURE................................................................... 21
7.3 BANK CAN CONSULT WITH COUNSEL................................................... 21
7.4 BANK PROVIDES DIVERSE FINANCIAL SERVICES AND MAY GENERATE PROFITS AS A RESULT... 21
8. TAXATION............................................................................. 22
8.1 TAX OBLIGATIONS................................................................. 22
8.2 TAX RECLAIMS.................................................................... 22
9. TERMINATION.......................................................................... 23
10. MISCELLANEOUS........................................................................ 23
10.1 NOTICES......................................................................... 23
10.2 SUCCESSORS AND ASSIGNS.......................................................... 24
10.3 INTERPRETATION.................................................................. 24
10.4 ENTIRE AGREEMENT................................................................ 24
10.5 INFORMATION CONCERNING DEPOSITS AT BANK'S LONDON BRANCH......................... 24
10.6 INSURANCE....................................................................... 25
10.7 GOVERNING LAW AND JURISDICTION.................................................. 25
10.8 SEVERABILITY; WAIVER; AND SURVIVAL.............................................. 25
10.9 COUNTERPARTS.................................................................... 25
10.10 NO THIRD PARTY BENEFICIARIES.................................................... 26
APPENDIX 1-A
SCHEDULE B
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GLOBAL CUSTODY AGREEMENT
This Agreement, dated March 17, 2005, is between JPMORGAN CHASE BANK, N.A.
("BANK"), with a place of business at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx; and
New Covenant Funds, an investment company registered as such with the U.S.
Securities and Exchange Commission and organized as a Delaware statutory trust
("CUSTOMER") with its principal place of business at 000 Xxxx Xxxxxxx Xxxxxx,
Xxxxxxxxxxxxxx, Xxxxxxx 00000.
1. INTENTION OF THE PARTIES; DEFINITIONS
1.1 INTENTION OF THE PARTIES.
(a) This Agreement sets out the terms governing custodial, settlement and
certain other associated services offered by Bank to Customer. Bank will be
responsible for the performance of only those Securities custody duties that are
set forth in this Agreement. Customer acknowledges that Bank is not providing
any legal, tax or investment advice in connection with the services hereunder.
(b) Investing in foreign markets may be a risky enterprise. The holding of
Financial Assets and cash in foreign jurisdictions may involve risks of loss or
other special considerations. Bank will not be liable for any loss that results
from the general risks of investing or Country Risk.
1.2 DEFINITIONS.
(a) As used herein, the following terms have the meaning hereinafter
stated.
"ACCOUNT" has the meaning set forth in Section 2.1 of this Agreement.
"AFFILIATE" means an entity controlling, controlled by, or under common
control with, Bank.
"AFFILIATED SUBCUSTODIAN" means a Subcustodian that is an Affiliate.
"APPLICABLE LAW" means any statute, whether national, state or local,
applicable in the United States or any other country, the rules of the treaty
establishing the European Community, any other law, rule, regulation or
interpretation of any governmental entity, any applicable common law, and any
decree, injunction, judgment, order, ruling, or writ of any governmental entity.
"AUTHORIZED PERSON" means any person who has been designated by written
notice from Customer (or by any agent designated by Customer, including, without
limitation, an investment manager) to act on behalf of Customer hereunder. Such
persons will continue to be Authorized Persons until such time as Bank receives
Instructions from Customer (or its agent) that any such person is no longer an
Authorized Person.
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"BANK INDEMNITEES" means Bank, its Subcustodians, and their respective
nominees, directors, officers, employees and agents.
"BANK'S LONDON BRANCH" means the London branch office of JPMorgan Chase
Bank, N.A.
"CASH ACCOUNT" has the meaning set forth in Section 2.1(a)(ii).
"CORPORATE ACTION" means any subscription right, bonus issue, stock
repurchase plan, redemption, exchange, tender offer, or similar matter with
respect to a Financial Asset in the Securities Account that require
discretionary action by the holder, but does not include proxy solicitations.
"COUNTRY RISK" means the risk of investing or holding assets in a
particular country or market, including, but not limited to, risks arising from
nationalization, expropriation or other governmental actions; the country's
financial infrastructure, including prevailing custody and settlement practices;
laws applicable to the safekeeping and recovery of Financial Assets and cash
held in custody; the regulation of the banking and securities industries,
including changes in market rules; currency restrictions, devaluations or
fluctuations; and market conditions affecting the orderly execution of
securities transactions or the value of assets.
"ENTITLEMENT HOLDER" means the person named on the records of a Securities
Intermediary as the person having a Securities Entitlement against the
Securities Intermediary.
"FINANCIAL ASSET" means a Security and refers, as the context requires,
either to the asset itself or to the means by which a person's claim to it is
evidenced, including a Security, a security certificate, or a Securities
Entitlement. "FINANCIAL ASSET" does not include cash.
"INSTRUCTIONS" means instructions which: (i) contain all necessary
information required by Bank to enable Bank to carry out the Instructions; (ii)
are received by Bank in writing or via Bank's electronic instruction system,
SWIFT, telephone, tested telex, facsimile or such other methods as are for the
time being agreed by Customer (or an Authorized Person) and Bank; and (iii) Bank
reasonably believes have been given by an Authorized Person in the case of
facsimile instructions or are transmitted with proper testing or authentication
pursuant to terms and conditions which Bank may specify.
"LIABILITIES" means any liabilities, losses, claims, costs, damages,
penalties, fines, obligations, or expenses of any kind whatsoever (including,
without limitation, reasonable attorneys', accountants', consultants' or
experts' fees and disbursements).
"SECURITIES" means stocks, bonds, rights, warrants and other negotiable and
non-negotiable instruments, whether issued in certificated or uncertificated
form, that are commonly traded or dealt in on securities exchanges or financial
markets. "Securities" also means other obligations of an issuer, or shares,
participations and interests in an issuer recognized in the country in which it
is
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issued or dealt in as a medium for investment and any other property as may be
acceptable to Bank for the Securities Account.
"SECURITIES ACCOUNT" means each Securities custody account on Bank's
records to which Financial Assets are or may be credited pursuant hereto.
"SECURITIES DEPOSITORY" has the meaning set forth in Section 5.1 of this
Agreement.
"SECURITIES ENTITLEMENT" means the rights and property interests of an
Entitlement Holder with respect to a Financial Asset as set forth in Part 5 of
Article 8 of the Uniform Commercial Code of the State of New York, as the same
may be amended from time to time.
"SECURITIES INTERMEDIARY" means Bank, a Subcustodian, a Securities
Depository, and any other financial institution which in the ordinary course of
business maintains Securities custody accounts for others and acts in that
capacity.
"SUBCUSTODIAN" has the meaning set forth in Section 5.1 and includes
Affiliated Subcustodians.
(b) All terms in the singular will have the same meaning in the plural
unless the context otherwise provides and visa versa.
2. WHAT BANK IS REQUIRED TO DO
2.1 SET UP ACCOUNTS.
(a) Bank will establish and maintain the following accounts ("ACCOUNTS"):
(i) a Securities Account in the name of Customer for Financial
Assets, which may be received by or on behalf of Bank or its
Subcustodian for the account of Customer, including as an
Entitlement Holder; and
(ii) an account in the name of Customer ("CASH ACCOUNT") for any and
all cash in any currency received by or on behalf of Bank for the
account of Customer.
Notwithstanding paragraph (ii), cash held in respect of those markets where
Customer is required to have a cash account in its own name held directly with
the relevant Subcustodian or a Securities Depository will be held in that manner
and will not be part of the Cash Account.
(b) At the request of Customer, additional Accounts may be opened in the
future, which will be subject to the terms of this Agreement.
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2.2 CASH ACCOUNT.
Except as otherwise provided in Instructions acceptable to Bank, all cash
held in the Cash Account will be deposited during the period it is credited to
the Accounts in one or more deposit accounts at Bank or at Bank's London Branch.
Any cash so deposited with Bank's London Branch will be payable exclusively by
Bank's London Branch in the applicable currency, subject to compliance with
Applicable Law, including, without limitation, any restrictions on transactions
in the applicable currency imposed by the country of the applicable currency.
2.3 SEGREGATION OF ASSETS; NOMINEE NAME.
(a) Bank will identify in its records that Financial Assets credited to
Customer's Securities Account belong to Customer (except as otherwise may be
agreed by Bank and Customer).
(b) To the extent permitted by Applicable Law or market practice, Bank will
require each Subcustodian to identify in its own records that Financial Assets
held at such Subcustodian by Bank on behalf of its customers belong to customers
of Bank, such that it is readily apparent that the Financial Assets do not
belong to Bank or the Subcustodian.
(c) Bank is authorized, in its discretion,
(i) to hold in bearer form, such Financial Assets as are customarily
held in bearer form or are delivered to Bank or its Subcustodian
in bearer form;
(ii) to hold Securities in or deposit Securities with any Securities
Depositary, settlement system or dematerialized book entry or
similar systems; and
(iii) to register in the name of Customer, Bank, a Subcustodian, a
Securities Depository, or their respective nominees, such
Financial Assets as are customarily held in registered form..
(d) Bank is authorized, when directed to do so by Customer, to hold
Financial Assets at third parties and to register Financial Assets in broker
"street name" or in the name of other third parties (or their nominees).
Notwithstanding Section 7.1, Bank shall have no liability for any loss of
Financial Assets or other damages resulting from holding or registering
Financial Assets as so directed by the Customer.
Customer authorizes Bank or its Subcustodian to hold Financial Assets in omnibus
accounts and will accept delivery of Financial Assets of the same class and
denomination as those with Bank or its Subcustodian.
2.4 SETTLEMENT OF TRADES.
When Bank receives an Instruction directing settlement of a transaction in
Financial Assets that includes all information required by Bank, Bank will use
reasonable care to effect such
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settlement as instructed. Settlement of transactions in Financial Assets will be
conducted in accordance with prevailing standards of the market in which the
transaction occurs. Without limiting the generality of the foregoing, the risk
of loss will be Customer's whenever Bank delivers Financial Assets or payment in
accordance with applicable market practice in advance of receipt or settlement
of the expected consideration. In the case of the failure of Customer's
counterparty (or other appropriate party) to deliver the expected consideration
as agreed, Bank will contact the counterparty to seek settlement, but Bank will
not be obligated to institute legal proceedings, file a proof of claim in any
insolvency proceeding, or take any similar action.
2.5 CONTRACTUAL SETTLEMENT DATE ACCOUNTING.
(a) Bank will effect book entries on a "contractual settlement date
accounting" basis as described below with respect to the settlement of trades in
those markets where Bank generally offers contractual settlement date accounting
and will notify Customer of those markets from time to time.
(i) SALES: On the settlement date for a sale, Bank will credit the
Cash Account with the proceeds of the sale and transfer the
relevant Financial Assets to an account at the Bank pending
settlement of the trade where not already delivered.
(ii) PURCHASES: On the settlement date for the purchase (or earlier,
if market practice requires delivery of the purchase price before
the settlement date), Bank will debit the Cash Account for the
settlement amount and credit a separate account at the Bank. Bank
then will post the Securities Account as awaiting receipt of the
expected Financial Assets. Customer will not be entitled to the
Financial Assets that are awaiting receipt until Bank or a
Subcustodian actually receives them.
Bank reserves the right to restrict in good faith the availability of
contractual settlement date accounting for credit or operational reasons.
(b) Bank may (in its absolute discretion) upon oral or written notification
to Customer reverse any debit or credit made pursuant to Section 2.5(a) prior to
a transaction's actual settlement, and Customer will be responsible for any
costs or liabilities resulting from such reversal. Customer acknowledges that
the procedures described in this sub-section are of an administrative nature,
and Bank does not undertake to make loans and/or Financial Assets available to
Customer.
2.6 ACTUAL SETTLEMENT DATE ACCOUNTING.
With respect to any sale or purchase transaction that is not posted to the
Account on the contractual settlement date as referred to in Section 2.5, Bank
will post the transaction on the date on which the cash or Financial Assets
received as consideration for the transaction is actually received by Bank.
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2.7 INCOME COLLECTION (AUTOCREDIT(R)).
(a) Bank will credit the Cash Account with income and redemption proceeds
on Financial Assets in accordance with the times notified by Bank from time to
time on or after the anticipated payment date, net of any taxes that are
withheld by Bank or any third party. Where no time is specified for a particular
market, income and redemption proceeds from Financial Assets will be credited
only after actual receipt and reconciliation. Bank may reverse such credits upon
oral or written notification to Customer that Bank believes that the
corresponding payment will not be received by Bank within a reasonable period or
such credit was incorrect.
(b) Bank will make good faith efforts in its discretion to contact
appropriate parties to collect unpaid interest, dividends or redemption
proceeds, but neither Bank nor its Subcustodians will be obliged to file any
formal notice of default, institute legal proceedings, file a proof of claim in
any insolvency proceeding, or take any similar action.
2.8 CERTAIN MINISTERIAL ACTS.
Until Bank receives Instructions to the contrary, Bank will:
(a) present all Financial Assets for which Bank has received notice of a
call for redemption or that have otherwise matured, and all income and interest
coupons and other income items that call for payment upon presentation;
(b) execute in the name of Customer such certificates as may be required to
obtain payment in respect of Financial Assets;
(c) exchange interim or temporary documents of title held in the Securities
Account for definitive documents of title; and
(d) provide information concerning the Accounts to Subcustodians,
Securities Depositories, counterparties, issuers of Financial Assets,
governmental entities, securities exchanges, self-regulatory entities, and
similar entities to the extent required by Applicable Law or as may be required
in the ordinary course by market practice or otherwise in order to provide the
services contemplated by this Agreement.
2.9 CORPORATE ACTIONS.
(a) Bank will notify Customer of any Corporate Action of which information
is either (i) received by it or a Subcustodian to the extent that Bank's central
corporate actions department has actual knowledge of the Corporate Action in
time to notify its customers in a timely manner; or (ii) published via a formal
notice in publications and reporting services routinely used by Bank for this
purpose in time for Bank to notify its customers in a timely manner. Bank also
will use its reasonable efforts to notify Customer of any class action
litigation for which information is actually received by Bank's central
corporate actions department but shall not be liable for any Liabilities arising
out of Bank's failure to identify Customer's interest in any class action
litigation. Bank does not commit, however, to provide information concerning
Corporate Actions
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or class action litigation relating to Financial Assets being held at Customer's
request in a name not subject to the control of Bank or its Subcustodian.
(b) If an Authorized Person fails to provide Bank with timely Instructions
with respect to any Corporate Action or class action, neither Bank nor its
Subcustodians or their respective nominees will take any action in relation to
that Corporate Action or class action, except as otherwise agreed in writing by
Bank and Customer or as may be set forth by Bank as a default action in the
notification it provides under Section 2.9 (a) with respect to that Corporate
Action or class action.
(c) Bank may sell or otherwise dispose of fractional interests in Financial
Assets arising out of a Corporate Action or class action litigation and, to the
extent necessary to protect Customer's interest in that Corporate Action or
class action, credit the Cash Account with the proceeds of the sale or
disposition. If some, but not all, of an outstanding class of Financial Asset is
called for redemption, Bank may allot the amount redeemed among the respective
beneficial holders of such class of Financial Asset in any manner Bank deems to
be fair and equitable.
(d) Notices of Corporate Actions and class actions dispatched to Customer
may have been obtained from sources which Bank does not control and may have
been translated or summarized. Although Bank believes such sources to be
reliable, Bank has no duty to verify the information contained in such notices
nor the faithfulness of any translation or summary and therefore does not
guarantee its accuracy, completeness or timeliness, and shall not be liable to
Customer for any loss that may result from relying on such notice.
2.10 PROXIES.
(a) Subject to and upon the terms of this sub-section, Bank will provide
Customer with information which it receives on matters to be voted upon at
meetings of holders of Financial Assets ("NOTIFICATIONS"), and Bank will act in
accordance with Customer's Instructions in relation to such Notifications ("THE
ACTIVE PROXY VOTING SERVICE"). If information is received by Bank at its proxy
voting department too late to permit timely voting by Customer, Bank's only
obligation will be to provide, so far as reasonably practicable, a Notification
(or summary information concerning a Notification) on an "information only"
basis.
(b) The active proxy voting service is available only in certain markets,
details of which are available from Bank on request. Provision of the active
proxy voting service is conditional upon receipt by Bank of a duly completed
enrollment form as well as additional documentation that may be required for
certain markets.
(c) Bank will act upon Instructions to vote on matters referred to in a
Notification, provided Instructions are received by Bank at its proxy voting
department by the deadline referred to in the relevant Notification. If
Instructions are not received in a timely manner, Bank will not be obligated to
provide further notice to Customer and shall not be obliged to vote. It is
Customer's obligation to monitor the agreed means of providing Notifications to
determine if new Notifications have been received.
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(d) Bank reserves the right to provide Notifications or parts thereof in
the language received. Bank will attempt in good faith to provide accurate and
complete Notifications, whether or not translated.
(e) Customer acknowledges that Notifications and other information
furnished pursuant to the active proxy voting service ("INFORMATION") are
proprietary to Bank and that Bank owns all intellectual property rights,
including copyrights and patents, embodied therein. Accordingly, Customer will
not make any use of such information except in connection with the active proxy
voting service.
(f) In markets where the active proxy voting service is not available or
where Bank has not received a duly completed enrollment form or other relevant
documentation, Bank will not provide Notifications to Customer but will endeavor
to act upon Instructions to vote on matters before meetings of holders of
Financial Assets where it is reasonably practicable for Bank (or its
Subcustodians or nominees as the case may be) to do so and where such
Instructions are received in time for Bank to take timely action (the "PASSIVE
PROXY VOTING SERVICE").
(g) Customer acknowledges that the provision of proxy voting services
(whether active or passive) may be precluded or restricted under a variety of
circumstances. These circumstances include, but are not limited to:
(i) the Financial Assets being on loan or out for registration,
(ii) the pendency of conversion or another corporate action;
(iii) Financial Assets being held at Customer's request in a name not
subject to the control of Bank or its Subcustodian;
(iv) in a margin or collateral account at Bank or another bank or
broker, or otherwise in a manner which affects voting;
(v) local market regulations or practices, or restrictions by the
issuer;
(vi) Bank may be required to vote all shares held for a particular
issue for all of Bank's customers on a net basis (i.e. a net yes
or no vote based on voting instructions received from all its
customers). Where this is the case, Bank will inform Customer by
means of the Notification.
(h) Notwithstanding the fact that Bank may act in a fiduciary capacity with
respect to Customer under other agreements, in performing active or passive
voting proxy services Bank will be acting solely as the agent of Customer, and
will not exercise any discretion, with regard to such proxy services or vote any
proxy except when directed by an Authorized Person.
(i) It is agreed by the parties that Customer, or its agents, will exercise
all voting responsibilities with respect to matters to be voted on at meetings
of holders of Financial Assets.
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2.11 STATEMENTS AND INFORMATION AVAILABLE ON-LINE.
(a) Bank will send, or make available on-line, to Customer, at times
mutually agreed upon, a formal statement of account in Bank's standard format
for each Account maintained by Customer with Bank, identifying the Financial
Assets and cash held in each Account (each such statement a "STATEMENT OF
ACCOUNT"). Additionally, Bank will send (or make available on-line to) Customer
an advice or notification of any transfers of cash or Financial Assets with
respect to each Account. Bank will not be liable with respect to any matter set
forth in those portions of any Statement of Account or any such advice (or
reasonably implied therefrom) to which Customer has not given Bank a written
exception or objection within sixty (60) days of receipt of the Statement of
Account, provided such matter is not the result of Bank's willful misconduct or
bad faith. References in this Agreement to Statements of Account include
Statements of Account in electronic form.
(b) Prices and other information obtained from third parties which may be
contained in any Statement of Account or other statement sent to Customer have
been obtained from sources Bank believes to be reliable. Bank does not, however,
make any representation as to the accuracy of such information or that the
prices specified necessarily reflect the proceeds that would be received on a
disposal of the relevant Financial Assets.
(c) Customer acknowledges that, except for Statements of Account or as
otherwise expressly agreed by Bank, records and reports available to it on-line
may not be accurate due to mis-postings, delays in updating Account records, and
other causes. Bank will not be liable for any loss or damage arising out of the
inaccuracy of any such records or reports accessed on-line.
2.12 ACCESS TO BANK'S RECORDS.
Bank will allow Customer's independent public accountants such reasonable
access to the records of Bank relating to Financial Assets as is required in
connection with their examination of books and records pertaining to Customer's
affairs. Subject to restrictions under Applicable Law, Bank also will obtain an
undertaking to permit Customer's independent public accountants, reasonable
access to the records of any Subcustodian of Securities held in the Securities
Account as may be required in connection with such examination.
2.13 MAINTENANCE OF FINANCIAL ASSETS AT SUBCUSTODIAN LOCATIONS.
(a) Unless Instructions require another location acceptable to Bank,
Financial Assets will be held in the country or jurisdiction in which their
principal trading market is located, where such Financial Assets may be
presented for payment, where such Financial Assets were acquired, or where such
Financial Assets are held. Bank reserves the right to refuse to accept delivery
of Financial Assets or cash in countries and jurisdictions other than those
referred to in Schedule 1 to this Agreement, as in effect from time to time.
(b) Bank will not be obliged to follow an Instruction to hold Financial
Assets with, or have them registered or recorded in the name of, any person not
chosen by Bank. However, if
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Customer does instruct Bank to hold Securities and/or cash with or register or
record Securities in the name of a person not chosen by Bank and Bank agrees to
do so, the consequences of doing so are at Customer's own risk and Bank (i) will
not be liable therefor and (ii) may not provide services under this Agreement
with respect to Securities or cash so held, including, without limitation,
services provided under Sections 2.8, 2.9, 2.10, and 8.2.
2.14 TAX RELIEF SERVICES.
Bank will provide tax relief services as provided in Section 8.2.
2.15 FOREIGN EXCHANGE TRANSACTIONS.
To facilitate the administration of Customer's trading and investment
activity, Bank may, but will not be obliged to, enter into spot or forward
foreign exchange contracts with Customer, or an Authorized Person, and may also
provide foreign exchange contracts and facilities through its Affiliates or
Subcustodians. Instructions, including standing Instructions, may be issued with
respect to such contracts, but Bank may establish rules or limitations
concerning any foreign exchange facility made available. In all cases where
Bank, its Affiliates or Subcustodians enter into a master foreign exchange
contract that covers foreign exchange transactions for the Accounts, the terms
and conditions of that foreign exchange contract and, to the extent not
inconsistent, this Agreement, will apply to such transactions.
2.16. COMPLIANCE WITH SECURITIES AND EXCHANGE COMMISSION ("SEC") RULE 17F-5
("RULE 17F-5").
(a) Customer's board of directors (or equivalent body) (hereinafter
'Board') hereby delegates to Bank, and, except as to the country or countries as
to which Bank may, from time to time, advise Customer that it does not accept
such delegation, Bank hereby accepts the delegation to it, of the obligation to
perform as Customer's 'Foreign Custody Manager' (as that term is defined in rule
17f-5(a)(3) as promulgated under the Investment Company Act of 1940, as amended
("1940 Act")), including for the purposes of: (i) selecting Eligible Foreign
Custodians (as that term is defined in rule 17f-5(a)(1), and as the same may be
amended from time to time, or that have otherwise been exempted pursuant to an
SEC exemptive order) to hold foreign Financial Assets and Cash, (ii) evaluating
the contractual arrangements with such Eligible Foreign Custodians (as set forth
in rule 17f-5(c)(2)), (iii) monitoring such foreign custody arrangements (as set
forth in rule 17f-5(c)(3)).
(b) In connection with the foregoing, Bank shall:
(i) provide written reports notifying Customer's Board of the
placement of Financial Assets and Cash with particular Eligible
Foreign Custodians and of any material change in the arrangements
with such Eligible Foreign Custodians, with such reports to be
provided to Customer's Board at such times as the Board deems
reasonable and appropriate based on the circumstances of
Customer's foreign custody arrangements (and until further notice
from Customer such reports shall be provided not less than
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quarterly with respect to the placement of Financial Assets and
Cash with particular Eligible Foreign Custodians and with
reasonable promptness upon the occurrence of any material change
in the arrangements with such Eligible Foreign Custodians);
(ii) exercise such reasonable care, prudence and diligence in
performing as Customer's Foreign Custody Manager as a person
having responsibility for the safekeeping of foreign Financial
Assets and cash would exercise;
(iii) in selecting an Eligible Foreign Custodian, first have
determined that foreign Financial Assets and cash placed and
maintained in the safekeeping of such Eligible Foreign Custodian
shall be subject to reasonable care, based on the standards
applicable to custodians in the relevant market, after having
considered all factors relevant to the safekeeping of such
foreign Financial Assets and cash, including, without limitation,
those factors set forth in rule 17f-5(c)(1)(i)-(iv);
(iv) determine that the written contract with an Eligible Foreign
Custodian requires that the Eligible Foreign Custodian shall
provide reasonable care for foreign Financial Assets and Cash
based on the standards applicable to custodians in the relevant
market.
(v) have established a system to monitor the continued
appropriateness of maintaining foreign Financial Assets and cash
with particular Eligible Foreign Custodians and of the governing
contractual arrangements; it being understood, however, that in
the event that Bank shall have determined that the existing
Eligible Foreign Custodian in a given country would no longer
afford foreign Financial Assets and cash reasonable care and that
no other Eligible Foreign Custodian in that country would afford
reasonable care, Bank shall promptly so advise Customer and shall
then act in accordance with the Instructions of Customer with
respect to the disposition of the affected foreign Financial
Assets and cash.
Subject to (b)(i)-(v) above, Bank is hereby authorized to place and maintain
foreign Financial Assets and cash on behalf of Customer with Eligible Foreign
Custodians pursuant to a written contract deemed appropriate by Bank.
(c) Except as expressly provided herein, Customer shall be solely
responsible to assure that the maintenance of foreign Financial Assets and cash
hereunder complies with the rules, regulations, interpretations and exemptive
orders as promulgated by or under the authority of the SEC.
(d) Bank represents to Customer that it is a U.S. Bank as defined in Rule
17f-5(a)(7). Customer represents to Bank that: (1) the foreign Financial Assets
and cash being placed and maintained in Bank's custody are subject to the 1940
Act, as the same may be amended from time to time; (2) its Board: (i) has
determined that it is reasonable to rely on Bank to perform as
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Customer's Foreign Custody Manager (ii) or its investment adviser shall have
determined that Customer may maintain foreign Financial Assets and cash in each
country in which Customer's Financial Assets and cash shall be held hereunder
and determined to accept Country Risk. Nothing contained herein shall require
Bank to make any selection or to engage in any monitoring on behalf of Customer
that would entail consideration of Country Risk.
(e) Bank shall provide to Customer such information relating to Country
Risk as is specified in Appendix 1 hereto. Customer hereby acknowledges that:
(i) such information is solely designed to inform Customer of market conditions
and procedures and is not intended as a recommendation to invest or not invest
in particular markets; and (ii) Bank has gathered the information from sources
it considers reliable, but that Bank shall have no responsibility for
inaccuracies or incomplete information.
2.17. COMPLIANCE WITH SEC RULE 17F-7 ("RULE 17F-7").
(a) Bank shall, for consideration by Customer, provide an analysis of the
custody risks associated with maintaining Customer's Foreign Assets with each
Eligible Securities Depository used by Bank as of the date hereof (or, in the
case of an Eligible Securities Depository not used by Bank as of the date
hereof, prior to the initial placement of Customer's foreign Assets at such
Depository) and at which any foreign Assets of Customer are held or are expected
to be held. The foregoing analysis will be provided to Customer at Bank's
Website. In connection with the foregoing, Customer shall notify Bank of any
Eligible Securities Depositories at which it does not choose to have its Foreign
Assets held. Bank shall monitor the custody risks associated with maintaining
Customer's foreign Assets at each such Eligible Securities Depository on a
continuing basis and shall promptly notify Customer or its adviser of any
material changes in such risks.
(b) Bank shall exercise reasonable care, prudence and diligence in
performing the requirements set forth in Section 2.17(a) above.
(c) Based on the information available to it in the exercise of diligence,
Bank shall determine the eligibility under rule 17f-7 of each depository before
including it on Schedule A hereto and shall promptly advise Customer if any
Eligible Securities Depository ceases to be eligible. (Eligible Securities
Depositories used by Bank as of the date hereof are set forth in Schedule A
hereto, and as the same may be amended on notice to Customer from time to time.)
3. INSTRUCTIONS
3.1 ACTING ON INSTRUCTIONS; UNCLEAR INSTRUCTIONS.
(a) Customer authorizes Bank to accept and act upon any Instructions
received by it without inquiry. Customer will indemnify the Bank Indemnitees
against, and hold each of them harmless from, any Liabilities that may be
imposed on, incurred by, or asserted against the Bank Indemnitees as a result of
any action or omission taken in accordance with any Instructions or other
directions upon which Bank is authorized to rely under the terms of this
Agreement.
15
(b) Unless otherwise expressly provided, all Instructions will continue in
full force and effect until canceled or superseded.
(c) Bank may (in its sole discretion and without affecting any part of this
Section 3.1) seek clarification or confirmation of an Instruction from an
Authorized Person and may decline to act upon an Instruction if it does not
receive clarification or confirmation satisfactory to it. Bank will not be
liable for any loss arising from any delay while it seeks such clarification or
confirmation.
(d) In executing or paying a payment order Bank may rely upon the
identifying number (e.g. Fedwire routing number or account) of any party as
instructed in the payment order. Customer assumes full responsibility for any
inconsistency between the name and identifying number of any party in payment
orders issued to Bank in Customer's name.
3.2 CONFIRMATION OF ORAL INSTRUCTIONS/ SECURITY DEVICES.
Any Instructions delivered to Bank by telephone will promptly thereafter be
confirmed in writing by an Authorized Person. Each confirmation is to be clearly
marked "Confirmation." Bank will not be liable for having followed such
Instructions notwithstanding the failure of an Authorized Person to send such
confirmation in writing or the failure of such confirmation to conform to the
telephone Instructions received. Either party may record any of their telephonic
communications. Customer will comply with any security procedures reasonably
required by Bank from time to time with respect to verification of Instructions.
Customer will be responsible for safeguarding any test keys, identification
codes or other security devices that Bank will make available to Customer or any
Authorized Person.
3.3 INSTRUCTIONS; CONTRARY TO LAW/MARKET PRACTICE.
Bank need not act upon Instructions which it reasonably believes to be
contrary to law, regulation or market practice, but Bank will be under no duty
to investigate whether any Instructions comply with Applicable Law or market
practice.
3.4 CUT-OFF TIMES.
Bank has established cut-off times for receipt of some categories of
Instruction, which will be made available to Customer. If Bank receives an
Instruction after its established cut-off time, Bank will attempt to act upon
the Instruction on the day requested if Bank deems it practicable to do so or
otherwise as soon as practicable on the next business day.
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4. FEES, EXPENSES AND OTHER AMOUNTS OWING TO BANK
4.1 FEES AND EXPENSES.
Customer will pay Bank for its services hereunder the fees set forth in
Schedule B hereto or such other amounts as may be agreed upon in writing from
time to time, together with Bank's reasonable out-of-pocket or incidental
expenses, including, but not limited to, legal fees and tax or related fees
incidental to processing by governmental authorities, issuers, or their agents.
Customer authorizes Bank to deduct amounts owing to it from the Cash Account,
for any such fees or expenses from time to time in arrears. The term of this
Agreement solely with respect to the fees set forth on Schedule B shall be three
years from the effective date of this Agreement. Without prejudice to Bank's
other rights, Bank reserves the right to charge interest on overdue amounts from
the due date until actual payment at such rate as Bank may reasonably determine.
4.2 OVERDRAFTS.
If a debit to any currency in the Cash Account results (or will result) in
a debit balance, then Bank may, in its discretion, (i) advance an amount equal
to the overdraft, (ii) or refuse to settle in whole or in part the transaction
causing such debit balance, or (iii) if any such transaction is posted to the
Securities Account, reverse any such posting. If Bank elects to make such an
advance, the advance will be deemed a loan to Customer, payable on demand,
bearing interest at the applicable rate charged by Bank from time to time, for
such overdrafts, from the date of such advance to the date of payment (both
after as well as before judgment) and otherwise on the terms on which Bank makes
similar overdrafts available from time to time. No prior action or course of
dealing on Bank's part with respect to the settlement of transactions on
Customer's behalf will be asserted by Customer against Bank for Bank's refusal
to make advances to the Cash Account or to settle any transaction for which
Customer does not have sufficient available funds in the applicable currency in
the Account.
4.3 BANK'S RIGHT OVER SECURITIES; SET-OFF.
(a) Customer grants Bank a security interest in and a lien on the Financial
Assets held in the Securities Account as security for any and all amounts which
are now or become owing to Bank under any provision of this Agreement, whether
or not matured or contingent ("Indebtedness").
(b) Without prejudice to Bank's rights under Applicable Law, Bank may set
off against any Indebtedness any amount in any currency standing to the credit
of any of Customer's accounts (whether deposit or otherwise) with any Bank
branch or office or with any Affiliate of Bank. For this purpose, Bank shall be
entitled to accelerate the maturity of any fixed term deposits and to effect
such currency conversions as may be necessary at its current rates for the sale
and purchase of the relevant currencies.
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5. SUBCUSTODIANS, SECURITIES DEPOSITORIES, AND OTHER AGENTS
5.1 APPOINTMENT OF SUBCUSTODIANS; USE OF SECURITIES DEPOSITORIES.
(a) Bank is authorized under this Agreement to act through and hold
Customer's Financial Assets with subcustodians, being at the date of this
Agreement the entities listed in Schedule 1 and/or such other entities as Bank
may appoint as subcustodians ("SUBCUSTODIANS"). At the request of Customer, Bank
may, but need not, add to Schedule 1 an Eligible Foreign Custodian where Bank
has not acted as Foreign Custody Manager with respect to the selection thereof.
Bank shall notify Customer in the event that it elects to add any such entity.
Bank will use reasonable care in the selection and continued appointment of such
Subcustodians. In addition, Bank and each Subcustodian may deposit Financial
Assets with, and hold Financial Assets in, any securities depository, settlement
system, dematerialized book entry system or similar system (together a
"SECURITIES DEPOSITORY") on such terms as such systems customarily operate and
Customer will provide Bank with such documentation or acknowledgements that Bank
may require to hold the Financial Assets in such systems.
(b) Any agreement Bank enters into with a Subcustodian for holding Bank's
customers' assets will provide that such assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian or its creditors except a claim for payment for their safe custody
or administration, or, in the case of cash deposits, except for liens or rights
in favor of creditors of the Subcustodian arising under bankruptcy, insolvency
or similar law, and that the beneficial ownership thereof will be freely
transferable without the payment of money or value other than for safe custody
or administration. Where a Subcustodian deposits Securities with a Securities
Depository, Bank will cause the Subcustodian to identify on its records as
belonging to Bank, as agent, the Securities shown on the Subcustodian's account
at such Securities Depository. This Section 5.1(b) will not apply to the extent
of any special agreement or arrangement made by Customer with any particular
Subcustodian.
(c) Bank will not be liable for any act or omission by (or the insolvency
of) any Securities Depository. In the event Customer incurs a loss due to the
negligence, willful misconduct, or insolvency of a Securities Depository, Bank
will make reasonable endeavors, in its discretion, to seek recovery from the
Securities Depository, but Bank will not be obligated to institute legal
proceedings, file a proof claim in any insolvency proceeding, or take any
similar action.
(d) The term Subcustodian as used herein shall mean the following:
(i) a 'U.S. Bank,' which shall mean a U.S. bank as defined in rule
17f-5(a)(7);
(ii) an 'Eligible Foreign Custodian,' which shall mean: (i) a banking
institution or trust company, incorporated or organized under the
laws of a country other than the United States, that is regulated
as such by that country's government or an agency thereof, and
(ii) a majority-owned direct or indirect subsidiary of a U.S.
bank or bank holding company which subsidiary is incorporated or
organized under the laws of a country other
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than the United States. In addition, an Eligible Foreign
Custodian shall also mean any other entity that shall have been
so qualified by exemptive order, rule or other appropriate action
of the SEC.
(iii) For purposes of clarity, it is agreed that as used in Section
5.2(a), the term Subcustodian shall not include any Eligible
Foreign Custodian as to which Bank has not acted as Foreign
Custody Manager.
(e) The term 'securities depository' as used herein when referring to a
securities depository located outside the U.S. shall mean:
an "Eligible Securities Depository" which, in turn, shall have the
same meaning as in rule 17f-7(b)(1)(i)-(vi) as the same may be amended
from time to time, or that has otherwise been made exempt pursuant to
an SEC exemptive order; provided that, prior to the compliance date
with rule 17f-7 for a particular securities depository the term
"securities depositories" shall be as defined in (a)(1)(ii)-(iii) of
the 1997 amendments to rule 17f-5.
(f) The term "securities depository" as used herein when referring to a
securities depository located in the U.S. shall mean a "securities depository"
as defined in rule 17f-4(a).
5.2 LIABILITY FOR SUBCUSTODIANS.
(a) Subject to Section 7.1(b), Bank will be liable for direct losses
incurred by Customer that result from:
(i) the failure by a Subcustodian to use reasonable care in the
provision of custodial services by it in accordance with the
standards prevailing in the relevant market or from the fraud or
willful misconduct of such Subcustodian in the provision of
custodial services by it; or
(ii) the insolvency of any Affiliated Subcustodian.
(b) Subject to Section 5.1(a) and Bank's duty to use reasonable care in the
monitoring of a Subcustodian's financial condition as reflected in its published
financial statements and other publicly available financial information
concerning it customarily reviewed by Bank in its oversight process, Bank will
not be responsible for the insolvency of any Subcustodian which is not a branch
or an Affiliated Subcustodian.
(c) Bank reserves the right to add, replace or remove Subcustodians. Bank
will give prompt notice of any such action, which will be advance notice if
practicable. Upon request by Customer, Bank will identify the name, address and
principal place of business of any Subcustodian and the name and address of the
governmental agency or other regulatory authority that supervises or regulates
such Subcustodian.
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5.3 USE OF AGENTS.
(a) Bank may provide certain services under this Agreement through third
parties, which may be Affiliates. Except to the extent provided in Section 5.2
with respect to Subcustodians, Bank will not be responsible for any loss as a
result of a failure by any broker or any other third party that it selects and
retains using reasonable care to provide ancillary services that it may not
customarily provide itself, including, without limitation, delivery services and
providers of information regarding matters such as pricing, proxy voting,
corporate actions and class action litigation. Nevertheless, Bank will be liable
for the performance of any such broker selected by Bank that is an Affiliate to
the same extent as Bank would have been liable if it performed such services
itself.
(b) In the case of the sale under Section 2.8 of a fractional interest (or
in other cases where Customer has requested Bank to arrange for execution of a
trade) Bank will place trades with a broker which is an Affiliate to the extent
that Bank has established a program for such trading with such Affiliate. An
affiliated broker may charge its customary commission (or retain its customary
spread) with respect to any such transaction.
6. ADDITIONAL PROVISIONS RELATING TO CUSTOMER
6.1 REPRESENTATIONS OF CUSTOMER AND BANK.
(a) Customer represents and warrants that (i) it has full authority and
power, and has obtained all necessary authorizations and consents, to deposit
and control the Financial Assets and cash in the Accounts, to use Bank as its
custodian in accordance with the terms of this Agreement, to borrow money or
otherwise incur indebtedness as contemplated by this Agreement, to pledge
Financial Assets as contemplated by Section 4.3, and to enter into foreign
exchange transactions; (ii) assuming execution and delivery of this Agreement by
Bank, this Agreement is Customer's legal, valid and binding obligation,
enforceable in accordance with its terms and it has full power and authority to
enter into and has taken all necessary corporate action to authorize the
execution of this Agreement (iii) it has not relied on any oral or written
representation made by Bank or any person on its behalf, and acknowledges that
this Agreement sets out to the fullest extent the duties of Bank; and (iv) it is
a resident of the United States and shall notify Bank of any changes in
residency.
(b) Bank represents and warrants that (i) assuming execution and delivery
of this Agreement by Customer, this Agreement is Bank's legal, valid and binding
obligation, enforceable in accordance with its terms and (ii) it has full power
and authority to enter into and has taken all necessary corporate action to
authorize the execution of this Agreement.
Bank may rely upon the above or the certification of such other facts as may be
required to administer Bank's obligations hereunder. Customer shall indemnify
Bank against all losses, liability, claims or demands arising directly or
indirectly from any such certifications.
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6.2 CUSTOMER TO PROVIDE CERTAIN INFORMATION TO BANK.
Upon request, Customer will promptly provide to Bank such information about
itself and its financial status as Bank may reasonably request, including
Customer's organizational documents and its current audited and unaudited
financial statements.
6.3 CUSTOMER IS LIABLE TO BANK EVEN IF IT IS ACTING FOR ANOTHER PERSON.
If Customer is acting as an agent for a disclosed or undisclosed principal
in respect of any transaction, cash, or Financial Asset, Bank nevertheless will
treat Customer as its principal for all purposes under this Agreement. In this
regard, Customer will be liable to Bank as a principal in respect of any
transactions relating to the Account. The foregoing will not affect any rights
Bank might have against Customer's principal.
7. WHEN BANK IS LIABLE TO CUSTOMER
7.1 STANDARD OF CARE; LIABILITY.
(a) Bank will use reasonable care in performing its obligations under this
Agreement. Bank will not be in violation of this Agreement with respect to any
matter as to which it has satisfied its obligation of reasonable care.
(b) Bank will be liable for Customer's direct damages to the extent they
result from Bank's negligence or willful misconduct in performing its duties as
set out in this Agreement and to the extent provided in Section 5.2(a).
Nevertheless, under no circumstances will Bank be liable for any indirect,
incidental, consequential or special damages (including, without limitation,
lost profits) of any form incurred by any person or entity, whether or not
foreseeable and regardless of the type of action in which such a claim may be
brought, with respect to the Accounts, Bank's performance hereunder, or Bank's
role as custodian.
(c) Customer will indemnify the Bank Indemnitees against, and hold them
harmless from, any Liabilities that may be imposed on, incurred by or asserted
against any of the Bank Indemnitees in connection with or arising out of (i)
Bank's performance under this Agreement, provided the Bank Indemnitees have not
acted with negligence or engaged in fraud or willful misconduct in connection
with the Liabilities in question or (ii) any Bank Indemnitee's status as a
holder of record of Customer's Financial Assets. Nevertheless, Customer will not
be obligated to indemnify any Bank Indemnitee under the preceding sentence with
respect to any Liability for which Bank is liable under Section 5.2 of this
Agreement.
(d) Without limiting Subsections 7.1 (a), (b) or (c), Bank will have no
duty or responsibility to: (i) question Instructions or make any suggestions to
Customer or an Authorized Person regarding such Instructions; (ii) supervise or
make recommendations with respect to investments or the retention of Financial
Assets; (iii) advise Customer or an Authorized Person regarding any default in
the payment of principal or income of any security other than as provided in
Section 2.7(b) of this Agreement; (iv) evaluate or report to Customer or an
Authorized Person
21
regarding the financial condition of any broker, agent or other party to which
Bank is instructed to deliver Financial Assets or cash; or (v) review or
reconcile trade confirmations received from brokers (and Customer or its
Authorized Persons issuing Instructions will bear any responsibility to review
such confirmations against Instructions issued to and Statements of Account
issued by Bank).
7.2 FORCE MAJEURE.
Bank will maintain and update from time to time commercially reasonable
business continuation and disaster recovery procedures with respect to its
global custody business. Except for Customer's payment obligations, neither
party shall be liable for any failure to perform under this agreement as a
result of a cause beyond its control, including any act of God, fire, flood,
currency controls, civil or labor disturbance, war, terrorism, act of any
governmental authority or other act or threat of any authority (de jure or de
facto), malfunction of equipment or software, failure of or the effect of rules
or operations of any external funds transfer system, or inability to obtain or
interruption of external communications facilities which could not have been
prevented by the non-performing party following commercially reasonable disaster
recovery and business continuation procedures or the use of reasonable care by
the Bank in situations which are not covered by the Bank's disaster recovery and
business continuation procedures.
7.3 BANK MAY CONSULT WITH COUNSEL.
Bank will be entitled to rely on, and may act upon the advice of
professional advisers in relation to matters of law, regulation or market
practice (which may be the professional advisers of Customer), and will not be
liable to Customer for any action taken or omitted pursuant to such advice.
7.4 BANK PROVIDES DIVERSE FINANCIAL SERVICES AND MAY GENERATE PROFITS AS A
RESULT.
Customer acknowledges that Bank or its Affiliates may have a material
interest in transactions entered into by Customer with respect to the Account or
that circumstances are such that Bank may have a potential conflict of duty or
interest. For example, Bank or its Affiliates may act as a market maker in the
Financial Assets to which Instructions relate, provide brokerage services to
other customers, act as financial adviser to the issuer of such Financial
Assets, act in the same transaction as agent for more than one customer, have a
material interest in the issue of the Financial Assets; or earn profits from any
of these activities. Customer further acknowledges that Bank or its Affiliates
may be in possession of information tending to show that the Instructions
received may not be in the best interests of Customer but that Bank is not under
any duty to disclose any such information.
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8. TAXATION
8.1 TAX OBLIGATIONS.
(a) Customer confirms that Bank is authorized to deduct from any cash
received or credited to the Cash Account any taxes or levies required by any
revenue or governmental authority for whatever reason in respect of Customer's
Accounts.
(b) Customer will provide to Bank such certifications, documentation, and
information as it may require in connection with taxation, and warrants that,
when given, this information is true and correct in every respect, not
misleading in any way, and contains all material information. Customer
undertakes to notify Bank immediately if any information requires updating or
correcting. Bank shall not be liable for any taxes, penalties, interest or
additions to tax, payable or paid that result from (i) the inaccurate completion
of documents by Customer or any third party; (ii) provision to Bank or a third
party of inaccurate or misleading information by Customer or any third party;
(iii) the withholding of material information by Customer or any third party; or
(iv) as a result of any delay by any revenue authority or any other cause beyond
the Bank's control.
(c) If Bank does not receive appropriate certifications, documentation and
information then, as and when appropriate and required, additional tax shall be
deducted from all income received in respect of the Financial Assets issued
(including, but not limited to, United States non-resident alien tax and/or
backup withholding tax.
(d) Customer will be responsible in all events for the timely payment of
all taxes relating to the Financial Assets in the Securities Account. Customer
will indemnify and hold Bank harmless from and against any and all liabilities,
penalties, interest or additions to tax with respect to or resulting from, any
delay in, or failure by, Bank (i) to pay, withhold or report any U.S. federal,
state or local taxes or foreign taxes imposed on, or (ii) to report interest,
dividend or other income paid or credited to the Cash Account, regardless of the
reason for such delay or failure, provided, however, that Customer will not be
liable to Bank for any penalty or additions to tax due solely as a result of
Bank's negligent acts or omissions with respect to paying or withholding tax or
reporting interest, dividend or other income paid or credited to the Cash
Account.
8.2 TAX RELIEF SERVICES.
(a) Subject to the provisions of this Section, Bank will apply for a
reduction of withholding tax and any refund of any tax paid or tax credits in
respect of income payments on Financial Assets credited to the Securities
Account that Bank believes may be available. To defray expenses pertaining to
nominal tax claims, Bank may from time-to-time set minimum thresholds as to a de
minimus value of tax reclaims or reduction of withholding which it will pursue
in respect of income payments under this section.
(b) The provision of a tax relief service by Bank is conditional upon Bank
receiving from Customer (i) a declaration of its identity and place of residence
and (ii) certain other
23
documentation (pro forma copies of which are available from Bank), prior to the
receipt of Financial assets in the Account or the payment of income.
(c) Bank will perform tax relief services only with respect to taxation
levied by the revenue authorities of the countries advised to Customer from time
to time and Bank may, by notification in writing, in its absolute discretion,
supplement or amend the countries in which the tax relief services are offered.
Other than as expressly provided in this Section 8.2 Bank will have no
responsibility with regard to Customer's tax position or status in any
jurisdiction.
(d) Customer confirms that Bank is authorized to disclose any information
requested by any revenue authority or any governmental entity in relation to the
processing of any tax relief claim.
9. TERMINATION
Either party may terminate this Agreement on ninety (90) days' written
notice to the other party. Customer may terminate this Agreement immediately in
the event that Bank terminates the electronic software license agreement between
Bank and Customer (the "ESLA") because software provided pursuant to the terms
of the ESLA infringes a patent, copyright, trade secret, trademark or service
xxxx, or any other intellectual property right of any third party. If Customer
gives notice of termination, it must provide full details of the persons to whom
Bank must deliver Financial Assets and cash. If Bank gives notice of
termination, then Customer must, within sixty days, notify Bank of details of
its new custodian, failing which Bank may elect (at any time after the sixty day
notice period) either to retain the Financial Assets and cash until such details
are given, continuing to charge fees due (in which case Bank's sole obligation
will be for the safekeeping of the Financial Assets and cash), or deliver the
Financial Assets and cash to Customer. Bank will in any event be entitled to
deduct any amounts owing to it prior to delivery of the Financial Assets and
cash (and, accordingly, Bank will be entitled to sell Financial Assets and apply
the sale proceeds in satisfaction of amounts owing to it). Customer will
reimburse Bank promptly for all out-of-pocket expenses it incurs in delivering
Financial Assets upon termination. Termination will not affect any of the
liabilities either party owes to the other arising under this Agreement prior to
such termination.
10. MISCELLANEOUS
10.1 NOTICES.
Notices (other than Instructions) will be served by registered mail or hand
delivery to the address of the respective parties as set out on the first page
of this Agreement, unless notice of a new address is given to the other party in
writing. Notice will not be deemed to be given unless it has been received.
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10.2 SUCCESSORS AND ASSIGNS.
This Agreement will be binding on each of the parties' successors and
assigns, but the parties agree that neither party can assign its rights and
obligations under this Agreement without the prior written consent of the other
party, which consent will not be unreasonably withheld.
10.3 INTERPRETATION.
Headings are for convenience only and are not intended to affect
interpretation. References to sections are to sections of this Agreement and
references to sub-sections and paragraphs are to sub-sections of the sections
and paragraphs of the sub-sections in which they appear.
10.4 ENTIRE AGREEMENT.
(a) The following Rider(s) are incorporated into this Agreement:
___ Cash Trade Execution;
___ Cash Sweep;
___ Accounting Services;
___ Mutual Fund.
(b) This Agreement, including the Schedules, Exhibits, and Riders (and any
separate agreement which Bank and Customer may enter into with respect to any
Cash Account), sets out the entire Agreement between the parties in connection
with the subject matter, and this Agreement supersedes any other agreement,
statement, or representation relating to custody, whether oral or written.
Amendments must be in writing and signed by both parties.
10.5 INFORMATION CONCERNING DEPOSITS AT BANK'S LONDON BRANCH.
The Financial Services Compensation Scheme (the "FSCS") was created under
the Financial Services and Markets Xxx 0000. The terms of the FSCS offer
protection in connection with deposits and investments in the event of the
persons to whom Bank's London Branch provides services suffering a financial
loss as a direct consequence of Bank's London Branch being unable to meet any of
its liabilities, and subject to the FSCS rules regarding eligible claimants and
eligible claims, the Customer may have a right to claim compensation from the
FSCS. Subject to the terms of the FSCS, the limit on the maximum compensation
sum payable by the FSCS in relation to investment business is L48,000 and
in relation to deposits is L31,700. A detailed description of the FSCS
(including information on how to make a claim, eligibility criteria and the
procedures involved) is available from the FSCS who can be contacted at 0xx
Xxxxx, Xxxxxx Xxxxxxxx, Xxxxxxxxx Xxxxxx, Xxxxxx, X0 0XX.
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10.6 INSURANCE.
Bank will not be required to maintain any insurance coverage for the
benefit of Customer.
10.7 GOVERNING LAW AND JURISDICTION.
This Agreement will be construed, regulated, and administered under the
laws of the United States or State of New York, as applicable, without regard to
New York's principles regarding conflict of laws. The United States District
Court for the Southern District of New York will have the sole and exclusive
jurisdiction over any lawsuit or other judicial proceeding relating to or
arising from this Agreement. If that court lacks federal subject matter
jurisdiction, the Supreme Court of the State of New York, New York County will
have sole and exclusive jurisdiction. Either of these courts will have proper
venue for any such lawsuit or judicial proceeding, and the parties waive any
objection to venue or their convenience as a forum. The parties agree to submit
to the jurisdiction of any of the courts specified and to accept service of
process to vest personal jurisdiction over them in any of these courts. The
parties further hereby knowingly, voluntarily and intentionally waive, to the
fullest extent permitted by applicable law, any right to a trial by jury with
respect to any such lawsuit or judicial proceeding arising or relating to this
Agreement or the transactions contemplated hereby. To the extent that in any
jurisdiction Customer may now or hereafter be entitled to claim, for itself or
its assets, immunity from suit, execution, attachment (before or after judgment)
or other legal process, Customer shall not claim, and it hereby irrevocably
waives, such immunity.
10.8 SEVERABILITY; WAIVER; AND SURVIVAL.
(a) If one or more provisions of this Agreement are held invalid, illegal
or unenforceable in any respect on the basis of any particular circumstances or
in any jurisdiction, the validity, legality and enforceability of such provision
or provisions under other circumstances or in other jurisdictions and of the
remaining provisions will not in any way be affected or impaired.
(b) Except as otherwise provided herein, no failure or delay on the part of
either party in exercising any power or right hereunder operates as a waiver,
nor does any single or partial exercise of any power or right preclude any other
or further exercise, or the exercise of any other power or right. No waiver by a
party of any provision of this Agreement, or waiver of any breach or default, is
effective unless it is in writing and signed by the party against whom the
waiver is to be enforced.
(c) Bank's rights, protections, and remedies under this Agreement shall
survive its termination.
10.9 COUNTERPARTS.
This Agreement may be executed in several counterparts each of which will
be deemed to be an original and together will constitute one and the same
agreement.
26
10.10 NO THIRD PARTY BENEFICIARIES.
A person who is not a party to this Agreement shall have no right to
enforce any term of this Agreement.
NEW COVENANT FUNDS
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Title: EVP Investments
---------------------------------
Date: 3/15/05
----------------------------------
JPMORGAN CHASE BANK, N.A.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Title: Vice President & Trust Officer
---------------------------------
Date: 3/17/05
----------------------------------
27
APPENDIX 1-A
Information Regarding Country Risk
1. To aid Customer in its determinations regarding Country Risk, Bank shall
furnish annually and upon the initial placing of Financial Assets and cash into
a country the following information (check items applicable):
A Opinions of local counsel concerning:
___ i. Whether applicable foreign law would restrict the access afforded
Customer's independent public accountants to books and records kept by
an eligible foreign custodian located in that country.
___ ii. Whether applicable foreign law would restrict Customer's ability to
recover its Financial Assets and cash in the event of the bankruptcy
of an Eligible Foreign Custodian located in that country.
___ iii. Whether applicable foreign law would restrict Customer's ability to
recover Financial Assets that are lost while under the control of an
Eligible Foreign Custodian located in the country.
B. Written information concerning:
___ i. The foreseeability of expropriation, nationalization, freezes, or
confiscation of Customer's Financial Assets.
___ ii. Whether difficulties in converting Customer's cash and cash
equivalents to U.S. dollars are reasonably foreseeable.
C. A market report with respect to the following topics:
(i) securities regulatory environment, (ii) foreign ownership restrictions,
(iii) foreign exchange, (iv) securities settlement and registration, (v)
taxation, and (vi) depositories (including depository evaluation), if any.
2. To aid Customer in monitoring Country Risk, Bank shall furnish board the
following additional information:
Market flashes, including with respect to changes in the information in
market reports.
28
SCHEDULE B
ELIGIBLE SECURITIES DEPOSITORIES
APPENDIX 1
JPMORGAN CHASE BANK
SECURITIES LENDING INVESTMENT GUIDELINES
SEPARATE ACCOUNT FOR
NEW COVENANT FUNDS
A. OBJECTIVE
To obtain an attractive yield on securities lending cash collateral by
investing in short term, fixed income securities (and other securities with
debt-like characteristics) that satisfy these guidelines, as applied at the
time of purchase, with the aim to be fully invested as of the close of
business on each day.
B. PERMISSIBLE INVESTMENTS
1. Instruments
Both fixed-income securities and other securities with debt-like
characteristics on a fixed rate and floating rate basis are permitted,
including:
Asset Backed Securities
Bank Notes
Bankers' Acceptances
Certificates of Deposit
Commercial Paper, including unregistered Commercial Paper
Corporate Bonds
Deposit Notes
Investment Agreements, Funding Agreements, or GICs entered into, with,
or guaranteed by an insurance company
Loan Participations
Master Notes
Medium Term Notes
Repurchase Agreements, subject to the requirements of paragraph F
Time Deposits
U.S. Government Securities, which shall include securities issued or
guaranteed as to principal and interest by the United States
Government, its agencies, instrumentalities or establishments
2. Commingled Vehicles
In addition, for purposes of these guidelines, (a) shares of a money market
mutual fund registered with the Securities and Exchange Commission as an
investment company under the Investment Company Act of 1940, as amended,
(b) shares of money market mutual funds and interest in offshore commingled
vehicles rated at least A- by any one NRSRO, and (c) units in a short term
collective investment fund managed by JPMorgan shall be: (i) permissible
investments, (ii) subject to no limitation under the Concentration
Guidelines in paragraph D, (iii) deemed to have a "Final Maturity" of one
day for purposes of the Maturity Guidelines in paragraph E, and (iv) not
subject to the Quality Guidelines in paragraph G.
3. Currency
Shall be limited to the same currency in which the loan collateral is
denominated.
4. Non-U.S. Issuers
Provided that an issuer otherwise meets the criteria set forth in these
guidelines, there is no geographic limitation.
5. Bank and Affiliate Issues
Provided that a security issued by JPMorgan or an affiliate of JPMorgan
otherwise meets the eligibility criteria set forth in these guidelines, it
shall be a permissible investment. (Purchases of eligible securities may be
made from and sales may be made to an affiliate of JPMorgan.) In addition,
shares and interests coming within B.2 (a) and (b) where issued by a
JPMorgan shall also be permissible.
6. Lender's status
While Bank acknowledges that Lender is subject to the Investment Company
Act of 1940, as amended, by approving these guidelines Lender has
authorized those investments that are permissible hereunder.
C. PROHIBITED INVESTMENTS
1. Equity Securities
Equity securities are generally prohibited, except that equity securities
that (i) have predominantly debt characteristics (such as owner trust
certificates) or (ii) are permitted under F.1 below, are not prohibited.
2. Certain Derivatives
No investment shall be made in any instrument whose coupon rate moves in
the opposite direction of the index to which such instrument is tied. In
addition, in the event that investments are made in instruments whose
coupon rate moves when the index to which such rate is tied moves, such
investments shall only be in those of such instruments whose movements in
the coupon rate are equivalent to movements in the index.
3. Floating Rate Securities
Floating rate securities with an interest rate cap, with the exception of
those capped to comply with state usury laws.
D. CONCENTRATION GUIDELINES
(i) 10% of the total assets available for investment on behalf of the
Lender, measured at the time of purchase, may be invested in the
securities of a single issuer other than U.S. Government Securities,
repurchase agreements and the commingled vehicles identified in
paragraph B, as to which there is no limitation.
(ii) With respect to these limits, par values will be used to measure
conformity to limits expressed in dollars, while purchase prices will
be used for limits expressed in percentages.
(iii) The acceptance of non-investment grade collateral for Repurchase
Agreements (F.1) shall be limited to 10% of the total assets available
for investment (see Section G.1(ii) for the definition of investment
grade).
E. MATURITY GUIDELINES
1. Fixed rate instruments: shall have a Final Maturity at the time of
purchase that does not exceed 2 years.
2. Floating rate instruments: U.S. Government Securities shall have a
Final Maturity that does not exceed 5 years, while all other floating
rate instruments shall have a Final Maturity that does not exceed 3
years.
3. Final Maturity" for purposes of these guidelines means the earliest
of: (i) the date noted on the face of the instrument as the date on
which the principal amount must be paid or (ii) in the case of an
instrument with an unconditional put or unconditional demand feature,
the date on which the principal amount of the instrument can be
recovered by demand. With respect to asset backed securities, the
expected final maturity shall be deemed to be the Final Maturity.
4. A repurchase agreement shall be deemed to have a maturity equal to the
period remaining until the date on which the repurchase of the
underlying securities is scheduled to occur or, where no date is
specified but the agreement is subject to a demand, the notice period
applicable to a demand for the repurchase of the securities.
5. The maximum weighted average maturity of all investments, excluding
investments matched to term loans, on behalf of Lender shall not
exceed 120 days at the time of purchase.
6. For purposes of calculating weighted average maturity in E. 5 above, a
floating rate instrument shall be deemed to have a maturity equal to
the period remaining until the next readjustment of the interest rate.
F. REPURCHASE AGREEMENTS
(including term)
1. Permitted Collateral
- Asset-backed securities
- Collateralized Mortgage Obligations
- Corporate obligations
- Corporate obligations (non-investment grade)
- Mortgage-backed securities, including private label issuers
- Money market instruments (including, but not limited to, certificates
of deposit, bank notes, deposit notes, bankers' acceptances and
commercial paper
- U.S. Government Securities, which shall include securities issued or
guaranteed as to principal and interest by the United States
Government, its agencies, instrumentalities or establishments
G. QUALITY GUIDELINES
1. Ratings
(i) Except with respect to permitted collateral for repurchase agreements
(F.1.) and as noted below, a permissible investment must have a minimum
short-term rating as provided by a Nationally Recognized Statistical Rating
Organization ("NRSRO") as follows:
Any one of the following: A-1 by Standard & Poors ("S&P"), P-1 by
Xxxxx'x Investor Services ("Xxxxx'x"), F-1 by Fitch (or an equivalent
rating by another NRSRO).
A security without its own rating shall be considered to be rated if the
issuer of the security is rated with respect to: (i) a class of short-term
debt obligations, in the case of short-term ratings, or (ii) a class of
long-term debt obligations, in the case of long-term ratings, or (iii) any
security of the issuer within a class the same as the unrated security that
is comparable in priority of payment to the unrated security to be
purchased.
Long-term ratings shall be used only if a security is not rated and no
security of the same issuer that is comparable in priority with such
security is rated. Where a long-term rating is used, the issuer must have a
minimum long-term rating as follows:
Any one of the following: A- by S&P, A3 by Xxxxx'x, A- by Fitch or
equivalent rating by another NRSRO
(ii) Permitted collateral for repurchase agreements (see F.1.) must have an
investment grade rating from at least two NRSROs, except non-investment
grade corporate obligations need not be rated. The term investment grade
rating shall mean a rating of at least Ba2 by Moody's or BBB by S&P or BBB
by Fitch.
2. Downgrades
Securities may not be purchased based on an S&P, Xxxxx'x, Fitch or another
NRSRO's rating where the applicable NRSRO has announced publicly that it is
examining the relevant rating for a possible downgrade. The foregoing
limitation shall not apply to securities rated A-1+ by S&P.
In the event that a security held falls below the minimum guideline as
detailed in this paragraph G as a result of being downgraded by an NRSRO,
JPMorgan shall notify the Lender and await instructions as to whether the
affected security should be sold. In the absence of a contrary instruction,
JPMorgan shall take no action in respect of the affected security. In no
event shall JPMorgan be liable for any consequences of a rating downgrade,
including, but not limited to, retention of the affected security in the
absence of a sale instruction from Lender. Lender acknowledges that any
loss from a sale shall be for its account.
H. EXTENSION TRADES
From time to time a particular holding may be sold and a different issue
purchased in its stead (an "extension trade"). An extension trade allows
the seller to realize a gain on the issue being sold, while reinvesting the
proceeds (ex the gain) into other paper. In such cases the gain, as
measured by the excess of the sale price over the amortized cost of the
holding being sold, shall be subject to the earnings sharing arrangement
between JPMorgan and Lender as set out in the Bank compensation (or
analogous) section of the Securities Lending Agreement to which these
guidelines are annexed.
****************
Each Lender should regularly analyze these guidelines to determine their
continued appropriateness, recognizing that all investments bear risk and that
return of principal is not assured. Please indicate your acceptance of these
guidelines by signing in the space provided below.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Date:
-------------------------------
APPENDIX 2
JPMORGAN CHASE BANK
SECURITIES LENDING
APPROVED BORROWERS
BORROWERS LOCATED IN THE U.S.
- ABN AMRO Inc.
- ABN AMRO Bank N.V., New York Branch
- ABN AMRO Sage Corporation
- Alpine Associates
- Abbey National Securities Inc.
- Banc of America Securities LLC
- Banc One Capital Markets, Inc.
- Barclays Capital, Inc.
- Bear Xxxxxxx & Co., Inc.
- Bear Xxxxxxx Securities Corp
- Bleichroeder (Xxxxxxx & S.), Inc.
- Xxxxxx Xxxxxxx Corp.
- BNP Paribas Securities Corp.
- Cantor, Xxxxxxxxxx Securitie
- CIBC World Markets Corp.
- Citadel Trading Group L.L.C.
- Citigroup Global Markets Inc.
- Commerzbank Capital Markets Corporation
- Credit Lyonnais Securities (USA) Inc.
- Credit Suisse First Boston LLC
- Deutsche Bank Securities Inc.
- Dresdner Kleinwort Xxxxxxxxxxx Securities LLC
- Fimat USA, Inc.
- Fortis Securities, LLC
- G.X. Xxxxxx & Co.
- Garban Corporates, LLC
- Garban LLC
- Xxxxxxx, Xxxxx & Co.
- Greenwich Capital Markets, Inc.
- HSBC Securities,(USA) Inc.
- HBK Global Securities L.P.
- ING Financial Markets LLC
- JPMorgan Chase Bank**
- JPMorgan Securities Inc. **
- Xxxxxxxxx & Company, Inc.
- KDC MERGER ARBITRAGE FUND, L.P.
- XxXxxxxxx Financial Services, Inc.
- Lazard Freres & Co. LLC
- Xxxx Xxxxx Xxxx Xxxxxx, Inc.
- Xxxxxx Brothers Inc
- Maple Securities USA Inc.
- Xxxxxxx Xxxxx Government Securities Inc.
- Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Inc.
- Mesirow Financial
- Mizuho Securities USA, Inc.
- Xxxxxx Xxxxxxx & Co. Incorporated
APPENDIX 2
JPMORGAN CHASE BANK
SECURITIES LENDING
APPROVED BORROWERS
- Xxxxxx Xxxxxxx Securities Services, Inc.
- National Financial Services LLC
- Nomura Securities International, Inc.
- Paloma Securities L.L.C.
- Paloma Securities LLC/SEB AB
- Xxxxxx Financial Services, Inc.
- Pershing LLC
- Xxxxxxx Xxxxx & Associates, Inc.
- RBC Xxxx Xxxxxxxx Incorporated
- RBC Capital Markets Corporation
- Refco Securities, LLC
- Robeco USA L.L.C.
- SG Americas Securities, LLC
- Societe Generale, New York Branch
- Southwest Securities, Inc.
- Spear, Leeds & Xxxxxxx
- Swiss American Securities Inc
- UBS Securities LLC
- Van Der Moolen Specialists USA, LLC
- Wachovia Bank, National Association
- Wachovia Capital Markets, LLC
- WACHOVIA SECURITIES,LLC
- Westdeutsche Landesbank Girozentrale (NY Branch)
- Zions First National Bank
APPENDIX 3
JPMORGAN CHASE BANK
SECURITIES LENDING
ACCEPTABLE COLLATERAL
1) CASH
2) U.S. GOVERNMENT SECURITIES
3) LETTERS OF CREDIT
APPENDIX 4
JPMORGAN CHASE BANK
SECURITIES LENDING
LETTER OF CREDIT BANKS
ABN AMRO Bank
Banco Santander Central Hispano S.A.
Bank of America NA
Bank of Montreal
Bank of New York
Bank One NA
Barclays Bank PLC
BNP Paribas
Canadian Imperial Bank of Commerce
Citibank, NA
Comerica Bank
Credit Suisse First Boston
Den Danske Bank A/S
Deutsche Bank AG
Deutsche Bank Trust Co. (formerly Bankers Trust Co.)
FleetBoston Financial Corp (formerly Fleet National Bank)
Fortis Bank NV SA
HSBC Bank PLC
HSBC Bank USA
Lloyds TSB Bank PLC
Mellon Financial (formerly Mellon Bank, N.A.)
PNC Bank, N.A.
Rabobank Nederland
Royal Bank of Canada
Royal Bank of Scotland PLC (formerly National Westminster Bank PLC)
Societe Generale
Svenska Handelsbanken
Toronto-Dominion Bank
UBS AG
1-13-04
