This Agreement, dated June 30, 2006, is between JPMORGAN CHASE BANK, N.A. (“Bank”), with
a place of business at 3 Chase MetroTech Center, Brooklyn, New York; and the Goldman Sachs
Variable Insurance Trustfunds listed on Schedule 1 (“Customer”) with a place of business at One
New York Plaza, New York, NY 10004.
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
(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.
(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.
“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
“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 believes in good faith have been given by an Authorized Person and are transmitted with proper
testing or authentication pursuant to terms and conditions which Bank may specify; provided,
however, that Instructions shall mean a writing signed or initialed by two or more persons as the
Board of Trustees of Customer shall have from time to time authorized for purposes of the payment
of Customer monies for any expense incurred by Customer, including but not limited to payments for
interest, taxes, management, accounting, transfer agent and legal fees and operating expenses.
“Liabilities” means any liabilities, losses, claims, costs, damages, penalties, fines,
obligations, or expenses of any kind whatsoever (including, without limitation, reasonable
attorneys’, accountants’, consultants’ or experts’ fees and disbursements).
“Securities” means stocks, bonds, rights, warrants, and other negotiable and non-negotiable
instruments, whether issued in certificated or uncertificated form, that are commonly traded or
dealt in on securities exchanges or financial markets. “Securities” also means other obligations
of an issuer, or shares, participations and interests in an issuer recognized in the country in
which it is issued or dealt in as a medium for investment and any other property as may be
acceptable to Bank for the Securities Account.
“Securities Account” means each Securities custody account on Bank’s records to which
Financial Assets are or may be credited pursuant hereto.
“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”):
a Securities Account in the name of Customer for each of its
investment portfolios (“Funds”) 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
an account in the name of Customer for each of its Funds
(“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.
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 each specifically identified Fund of 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,
to hold in bearer form, such Financial Assets as are
customarily held in bearer form or are delivered to Bank or its Subcustodian in
to hold Securities in or deposit Securities with any
Securities Depositary, settlement system or dematerialized book entry or
similar systems; and
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
2.4 Settlement of Trades
(a) When Bank receives an Instruction directing settlement of a transaction in Financial Assets
that includes all information required by Bank, Bank will use reasonable care to effect such
settlement as instructed. Bank shall conduct settlement of transactions in Financial Assets in
accordance with prevailing standards of the market in which the transaction occurs provided that
such standards are generally accepted by Institutional Clients. For the avoidance of doubt, such
standards shall include practices regarding delivery against receipt or delivery in advance of
receipt that may be prevailing in the applicable market for the type of transaction being settled.
Without limiting the generality of the foregoing, unless otherwise directed by Customer, the risk
of loss will be Bank’s for all transactions for which delivery versus receipt is the prevailing
standard of the market and generally accepted by Institutional Clients if Bank makes delivery
before receipt, and the risk of loss will be Customer’s whenever Bank makes delivery in accordance
with the prevailing standard of the market and generally accepted by Institutional Clients or when
directed by Customer. In the case of the failure of Customer’s counterparty (or other appropriate
party) to deliver the expected consideration as agreed, Bank will provide prompt notice to the
Customer and 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. Bank will forward to Customer’s investment manager all documentation related to
any such claim.
(b) For purposes of this Section 2.4, “Institutional Clients” means U.S. registered investment
companies, U.S.-based commercial banks, insurance companies, pension funds or substantially similar
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
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
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
2.6 Actual Settlement Date Accounting
With respect to any sale or purchase transaction that is not posted to the Account on the
contractual settlement date as referred to in Section 2.5, Bank will post the transaction on the
date on which the cash or Financial Assets received as consideration for the transaction is
actually received by Bank.
2.7 Income Collection (Autocreditâ)
(a) Bank will credit the Cash Account with income and sale 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 sale 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 to timely contact appropriate parties to collect unpaid
interest, dividends, tax reclaims 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. Bank will provide immediate notice
to Customer of unpaid income and will provide Customer’s investment manager with all documentation
related to any such claim.
2.8 Certain Ministerial Acts
Until Bank receives Instructions to the contrary, Bank will:
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
execute in the name of Customer such certificates as may be
required to obtain payment in respect of Financial Assets;
exchange interim or temporary documents of title held in the
Securities Account for definitive documents of title; and,
provide information concerning the Accounts to Subcustodians,
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
notify Customer of any class action litigation for which information is received by Bank’s central
corporate actions department. Bank shall not be liable for any Liabilities arising out of Bank’s
failure to identify Customer’s interest in any class action litigation unless Bank’s failure to
notify Customer results from Bank’s negligence, bad faith or willful misconduct. Bank does not
commit, however, to provide information concerning Corporate Actions or class action litigation
relating to Financial Assets being held at Customer’s request in a name not subject to the control
of Bank 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. Notwithstanding and in no way limiting the above, if an Authorized Person fails to provide
Bank with timely Instructions with respect to any Corporate Action, upon request by Customer Bank
shall use its best efforts to carry out such Instructions to the extent circumstances permit.
(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.
(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.
(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
(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 requesting the provision
of the active proxy voting service on behalf of the Customer, 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:
the Financial Assets being on loan or out for registration,
the pendency of conversion or another corporate action;
Financial Assets being held at Customer’s request in a name
not subject to the control of Bank or its Subcustodian;
in a margin or collateral account at Bank or another bank or
broker, or otherwise in a manner which affects voting;
local market regulations or practices, or restrictions by the
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.
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 as agreed to by Customer and Bank, from time
to time, 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, negligence 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 information available to it on-line with respect to
transactions posted after the prior business day 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 information accessed on-line. For the avoidance of doubt,
Customer may rely on the accuracy of any intraday report to the extent that such report (i)
explicitly states it is a final report or (ii) contains historical data that has been posted
prior to the current business day.
2.12 Access to Bank’s Records
Bank will allow Customer’s independent public accountants, or other designated representatives
of Customer, 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
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 A 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 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 therefore 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 Service Level Agreement
Bank agrees to be subject to written service level standards, which will be embodied in a
Service Level Agreement between Bank and Customer.
Bank shall supervise the performance by its employees or agents of custodial services provided
in connection with this Agreement. Bank shall provide appropriate training for employees and
implement supervisory procedures for all services provided hereunder by its agents and employees.
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 reasonably rely under the terms of this
(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
(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 by Customer 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
categories and cut-off times 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
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 2 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, subject to prior approval by Customer.
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.
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 A
and/or such other entities as Bank may appoint as subcustodians (“Subcustodians”). 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 that
meets the requirements of Rule 17f-4, or 17f-7 as applicable, under the Investment Company Act,
(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. Bank shall identify on its books as belonging to each applicable Fund the securities
held by each Subcustodian or 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. Bank
shall be liable to Customer for any loss or damage to Customer resulting from Bank’s use of a
Securities Depository by reason of any negligence, or willful misconduct of Bank or any of its
agents (for avoidance of doubt, a Securities Depository is not an agent of the Bank) or of any of
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:
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
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.
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
(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, 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
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 by Customer 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.
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 exercise reasonable care in treating
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, in the
absence of negligence or willful misconduct by Bank, its employees or agents. 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 provided that Bank uses reasonable care to provide prompt notice to
Customer of the circumstances and all pertinent facts related to the claim for indemnification.
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
(d) Subject to, and 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 (provided however, that the Bank will, in the case
of a faxed Instruction call another Authorized Person and read the faxed Instruction back for
confirmation); (ii) supervise or make recommendations with respect to investments or the retention
of Financial Assets; (iii) advise Customer or an Authorized Person regarding any default in the
payment of principal or income of any security other than as provided in Section 2.7(b) of this
Agreement; (iv) evaluate or report to Customer or an Authorized Person regarding the financial
condition of any broker, agent or other party to which Bank is instructed to deliver Financial
Assets or cash; or (v) except to the extent (if any) as stated in the SLA, in the ordinary course
of business, 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).
(e) If Customer acknowledges in writing that Bank is entitled to indemnification, the
Customer shall have the option to defend Bank against any claim which may be the subject of this
indemnification, and in the event that the Customer so elects, it will so notify Bank, and
thereupon Customer shall take over complete defense of the claim. In the event Customer elects to
assume the control of the defense of the claim, Bank may participate in such proceeding and retain
additional counsel but shall bear all fees and expenses of such retention of such counsel, unless
(i) Customer shall have specifically authorized the retention of such counsel, or (ii) if Customer
and Bank agree that the retention of such counsel is required as a result of a conflict of
interest. In the event Customer assumes control of any proceeding, Customer shall keep Bank
notified of the progress of such proceeding and, upon request, consult with Bank and counsel.
Customer will, upon request by Bank, either pay in the first instance or reimburse Bank for any
expense subject to indemnity hereunder. Customer shall not settle or compromise any proceeding
without the prior written consent of Bank unless (i) such settlement or compromise involves no
admission of guilt, wrongdoing, or misconduct by Bank, (ii) such settlement or compromise does not
impose any obligations or restrictions on Bank other than obligations to pay money that are
subject to indemnity under this Agreement and (iii) Customer shall have paid or made arrangements
satisfactory to Bank for payment of amounts payable by Bank in connection with such settlement.
Bank shall in no case confess any claim or make any compromise in any case which Customer will be
asked to indemnify Bank except with the Customer’s prior written consent. Bank shall be entitled
to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such advice.
7.2 Force Majeure
Bank will maintain and update from time to time business continuation
and disaster recovery procedures with respect to its global custody
business that it reasonably determines from time to time meet
reasonable commercial standards. Bank will have no liability,
however, where the Bank has otherwise exercised reasonable care, for
any damage, loss, expense or liability of any nature that Customer may
suffer or incur, caused by an act of God, fire, flood, civil or labor
disturbance, war, terrorism, act of any governmental authority or
other act or threat of any authority (de jure or de facto), legal
constraint, fraud or forgery (except where such fraud or forgery is
attributable to Bank, its agents or their employees), malfunction of
equipment or software (except where such malfunction is primarily
attributable to Bank’s negligence in maintaining the equipment or
software), failure of or the effect of rules or operations of any
external funds transfer system, inability to obtain or interruption of
external communications facilities, or any cause beyond the reasonable
control of Bank (including without limitation, the non-availability of
appropriate foreign exchange).
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 reasonably taken or omitted in good
faith 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 except as otherwise required by the performance of its
duties under this Agreement.
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 as a result of Bank’s misconduct, 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. Bank’s liability under this Section 8.1(d) shall be limited to the extent Customer’s
misconduct, negligence or omission has been contributory.
8.2 Tax Relief Services
(a) Subject to the provisions of this Section, Bank will timely and accurately apply for a
reduction of withholding tax and any refund of any tax paid or tax credits in respect of income or
gain 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
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.
Either party may terminate this Agreement on sixty (60) days’ written notice to the other
party. If Customer gives notice of termination, it must provide full details of the persons to whom
Bank must deliver Financial Assets and cash. If Bank gives notice of termination, then Customer
must, within sixty 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 reasonably 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.
Notices (other than Instructions) will be served by registered mail or other courier or mail
delivery with delivery confirmation, 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, or upon confirmed receipt of facsimile. Notice will not be deemed to be given
unless it has been received.
10.2 Successors and Assigns
This Agreement will be binding on each of the parties’ successors and
assigns, but the parties agree that neither party can assign its
rights and obligations under this Agreement without the prior written
consent of the other party, which consent will not be unreasonably
withheld. Notwithstanding this prohibition, Customer may assign the
right to recover losses to its insurer, investment manager or its
affiliates that pay for losses sustained by Customer.
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;
(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
Under U.S. federal law, deposit accounts that Customer maintains in Bank’s foreign branches
(outside of the U.S.) are not insured by the Federal Deposit Insurance Corporation. In the event
of Bank’s liquidation, foreign branch deposits have a lesser preference than U.S. deposits, and
such foreign deposits are subject to cross-border risks. However, the Financial Services
Compensation Scheme (the “FSCS”) was created under the Financial Services and Markets Act 2000.
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 £48,000 and in relation
to deposits is £31,700. 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 7th Floor, Lloyds
Chambers, Portsoken Street, London, E1 8BN.
Bank will not be required to maintain any insurance coverage for the specific benefit of
Customer. Bank agrees to maintain commercially reasonable insurance coverage for errors,
omissions, or other acts by Bank, its agents or their employees that result in losses to Customer.
10.7 Security Holding Disclosure
With respect to Securities and Exchange Commission Rule 14b-2 under The U.S Shareholder
Communications Act, regarding disclosure of beneficial owners to issuers of Securities, Bank is
instructed not to disclose the name, address or Security positions of Customer in response to
shareholder communications requests regarding the Account.
10.8 USA PATRIOT ACT Disclosure
Section 326 of the Uniting and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”) requires JPMorgan to implement
reasonable procedures to verify the identity of any person that opens a new account with JPMorgan.
Accordingly, Customer acknowledges that Section 326 of the USA PATRIOT Act and JPMorgan’s
identity verification procedures require JPMorgan to obtain certain information (“identifying
information”) from Customer or on some occasions from third parties regarding Customer. Customer
agrees to provide JPMorgan with and consents to JPMorgan obtaining from third parties any such
identifying information required as a condition of opening an account with or using any Service
provided by JPMorgan.
10.9 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, except that the foregoing shall not reduce any statutory right to choose New
York law or forum. 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. To the extent that in any jurisdiction
Customer or Bank 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, neither
Customer nor Bank shall claim, and each hereby irrevocably waives, such
10.10 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
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.
10.12 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. Notwithstanding this prohibition, this shall not limit the right to recover losses
sustained by Customer, by its insurer, investment manager or its affiliates who have paid for such
Bank shall with respect to each of the Customer’s investment portfolios create and maintain
all records relating to its activities and obligations under this Agreement during and after the
term thereof in such manner as will meet the obligations of Customer under the Investment Company
Act of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of Customer and shall at all times during the regular
business hours of Bank be open for inspection by duly authorized officers, employees or agents of
Customer and employees and agents of the Securities and Exchange Commission. Bank shall, at
Customer’s request, supply Customer with a tabulation of securities owned by each portfolio and
held by Bank and shall, when requested to do so by Customer and for such compensation as shall be
agreed upon between Customer and Bank, include certificate numbers in such tabulations.
10.14 Statutory Trust
The name “Goldman Sachs Variable Insurance Trust” is the designation of the Board of Trustees
for the time being under the Declaration of Trust and all persons dealing with Customer must look
solely to the property of Customer for the enforcement of any claims against Customer as neither
the Trustees, officers, agents, nor shareholders of Customer assume any personal liability for
obligations entered into on behalf of the Customer. No portfolio of Customer shall be liable for
any claims against any other portfolio of Customer.
10.15 Additional Portfolios
In the event that Customer establishes additional series of shares with respect to which it
desires to have Bank render services as custodian under the terms hereof, it shall so notify Bank
in writing, and if Bank agrees in writing to provide such services, such series of shares shall
become a Fund hereunder.
10.16 Use of Name
Bank agrees not to use Customer’s name nor the name of Goldman, Sachs & Co., its affiliates,
designees, or assignees in any material written in a manner not previously, specifically approved
in writing by Customer, Goldman, Sachs & Co., or its affiliates, designees, or assignees except
where required by the Securities and Exchange Commission or any federal or state agency responsible
for regulation of Bank.
10.17 Proprietary and Confidential Information
Bank agrees on its behalf and on behalf of its employees to treat confidentially and as
proprietary information of Customer, all records and other information relative to Customer and its
portfolios, and not to use such records and information for any purpose other than performance of
its responsibilities and duties hereunder, except after prior notification to and approval in
writing by Customer, which approval shall not be withheld where Bank may be exposed to civil or
criminal contempt proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by Customer. Bank agrees to comply with
Customer’s policies related to non-disclosure of portfolio holdings and the provisions of Schedule
3 hereto, Security Management.
10.18 Section 17(f)
Bank acknowledges that it satisfies the requirements for a company that maintains custody of
the investments of a registered management investment company as set forth in Section 17(f) of the
Investment Company Act.
10.19 Reports to Fund by Independent Public Accountants
Bank shall provide the Customer, on behalf of each of the portfolios at such times as the
Customer may reasonably require, which shall be at least annually, reports by independent public
accountants on the procedures for safeguarding securities, derivatives, futures contracts and
options on futures contracts, including securities deposited and/or maintained in a securities
system, relating to the services provided by Bank under this Agreement. Such reports shall be of
sufficient scope and in sufficient detail as may reasonably be required by Customer to provide
reasonable assurance that any material inadequacies would be disclosed by such examination, and, if
there are no such inadequacies, the reports shall so state.
Safekeeping and administration charges for U.S. assets are applied as set forth below.
Asset Based Fee
(in basis points)
Transaction charges for U.S. assets are applied to all transactions effected during the
billing period. Transaction prices below presume that JPMorgan receives valid instructions in an
electronic format that enables straight-through processing (STP), when applicable; trade
instructions that require manual input or repair will incur an additional surcharge.
STP Transaction Fee
Custody Transactions (DVP, RVP or free)
Repurchase Agreement (contract recording)
Internal Transfer (switch, per side)
Book Entry (DTC or FBE)
Memo Entry/Blue Sheet (asset held elsewhere)
Cancel & Correct
Cash Transaction (credit or debit)
Re-Registration (plus out-of-pocket)
Book-Entry (DTC or FBE)
STP Transaction Fee
Book-Entry (DTC or FBE)
Ad valorem safekeeping and administration charges for international assets, including U.S. assets
held for non-U.S. investors are applied to the market value of assets held at the end of the
billing period. In addition, transaction charges are applied to all securities transactions
(including receives/delivers versus payment and free, securities loans (to be paid by securities
lending agent), repos, redemptions and corporate actions) effected during the billing period.
Transaction prices below presume that JPMorgan receives valid instructions in an electronic format
that enables straight-through processing (STP), when applicable; trade instructions that require
manual input or repair will incur an additional surcharge.
Safekeeping & Administration
Annual Fee in
Safekeeping & Administration
Annual Fee in
Safekeeping & Administration
Annual Fee in
United Arab Emirates
per account credit
Received (other currencies)
Manual/Non-STP Transaction Surcharge
(in addition to applicable transaction fee)
Corporate Action Notification
Manual Corporate Action Responses
Tier A Markets (see list below)
per ballot per account
Tier B Markets (see list below)
per ballot per account
Tier C Markets (see list below)
per ballot per account
Bank and Customer also agree to establish a system whereby the fees paid hereunder may be adjusted
based upon the performance of the Bank in carrying out its responsibilities under this Agreement.
Schedule 3 — SECURITY MANAGEMENT
This Schedule specifies requirements for: Information Security, Physical Security, Backup &
Contingency Planning and Audit.
“Systems and Networks” shall mean hardware, software (including the copies of
J.P. Morgan’s proprietary technology and third party technology installed thereon) and
telecommunication facilities employed by J.P. Morgan to receive, process, maintain,
transmit and store the Data (as defined herein), whether or not such hardware, software
and telecommunications facilities are also used to host other parties’ confidential or
other information or software.
“Attempted Attack” shall mean all of the following preliminary attacker efforts
that occur for any incident: port scanning, IP address mapping and OS fingerprinting.
“Core Application” shall mean an application implemented to support the
services provided to the Funds or GS. This does NOT include desktop productivity
applications such as word processors, spreadsheets, etc.
“Data” shall mean information on J.P. Morgan applications that relates to the
confidential information and services contemplated to be provided under this Agreement.
Information Security Management
J.P. Morgan shall have a security policy that explicitly addresses and provides
guidance to employees and non-employee workers to ensure the confidentiality, integrity and
availability of information and systems maintained or processed by J.P. Morgan. The
policies shall be approved by senior management and contain penalties or sanctions for
noncompliance. J.P. Morgan’s security policy shall provide a framework for information
security management within its overall organization.
That policy must have an explicit section on the handling and management of
personal information. Explicit procedures must exist that describe how personal
information is to be managed, including disposal and destruction of data after its
J.P. Morgan shall have dedicated resources (e.g. an Information Security manager
or group) to foster and focus on information security efforts. The following details of
the individuals shall be provided to GS: contact details, a name, phone number and email
J.P. Morgan shall have a written security plan that provides a framework for
information security management within their organization. The plan should address the
following key points:
The delegation and assignment of responsibilities for security.
Management oversight for the plan and its deployment.
The means for managing security within the enterprise.
• Policies and procedures for data confidentiality and privacy.
Methods of handling sensitive or confidential information received from or with
respect to customers.
Incident response in the event of a breach of security, or unauthorized
disclosure of, customer Data
Internal Audit / Security Reviews
Periodic security audits or assessments, including testing of the system of
controls, should be performed by an independent audit group within J.P. Morgan on a
periodic basis. The audits should include testing of J.P. Morgan’s information security
procedures as well.
J.P. Morgan shall provide GS with details from its last security audit or review
conducted by a qualified third-party. The details shall include the name of the reviewing
company, the date of the review and a general statement on the overall security posture of
J.P. Morgan’s Systems and Networks, facilities and operations.
J.P. Morgan shall have a process for correcting control deficiencies that have
been identified in audits or assessments, including follow up documentation providing
evidence of such corrections.
All employees, non-employee workers, consultants, temporary workers and other persons,
such as third party J.P. Morgans and subcontractors, who may have access to J.P. Morgan’s
Systems and Networks and facilities shall be made aware of, and be required to adhere to,
the security policies of the J.P. Morgan and have training in security practices, including
the handling of sensitive or confidential customer information.
Employee Remote Electronic Access
Persons electronically accessing the J.P. Morgan’s Systems and Networks
remotely must be authenticated using 2-factor authentication.
Employee Remote Access Solutions must technically prevent the export of
Data to the person’s local computer situated outside the J.P. Morgan’s facilities.
Storage of Data on Mobile Devices
J.P. Morgan must ensure the security of data on distributed devices by
requiring the following:
No data storage devices that may contain GS Data are permitted to
leave J.P. Morgan’s facility without express written permission from J.P. Morgan.
Laptops used by J.P. Morgan personnel to conduct GS business or
provide services or products to GS must be the property of GS or J.P. Morgan. No
personal laptops owned by J.P. Morgan’s personnel may be used for such
If any laptop or other mobile hardware contains GS Data, the GS
Data shall be encrypted with a minimum 128-bit encryption key length.
All GS Data transferred to or from the mobile device must be
inventoried and logged, and J.P. Morgan shall retain the inventory files and logs
for ninety (90) days after termination or expiration of this Agreement
Suspected loss or theft of any device which may contain GS Data
must be reported immediately by J.P. Morgan personnel to J.P. Morgan, and
reported immediately by J.P. Morgan to GS.
Outsourcing/Subcontracting/Reliance by J.P. Morgan on Third Parties:
If J.P. Morgan outsources or subcontracts the provisions of services or
products provided to GS to third parties, or otherwise relies on third parties to
fulfill J.P. Morgan’s information technology or Security functions, then the J.P.
Morgan shall require the following:
Formal written agreements that require the security controls
employed by the third parties to be consistent with J.P. Morgan’s security
practices and this Exhibit. In addition, J.P. Morgan must enter into written
confidentiality agreements with such third parties.
J.P. Morgan shall review, or have an independent audit or risk
management group within J.P. Morgan assess, the third party’s security posture.
J.P. Morgan shall provide prior notice to GS in connection with
all such outsourcing, subcontracts or other reliance after the date of this
§Back-up and Business Continuity Plans
J.P. Morgan shall have a data backup and offsite storage process,
including backup/storage schedules and control requirements that address the following:
J.P. Morgan shall have business continuity plans in place which
define contingency plans and provide for the testing of such contingency plans.
J.P. Morgan shall indicate the frequency of such testing and ensure that those
plans ensure the J.P. Morgan’s Service Level commitments to GS can be met.
Data backups stored both on and off J.P. Morgan’s site shall be
maintained in a secure climate-controlled environment with sufficient controls
to ensure the backup media are actually being received by the storage facility
and that transportation boxes containing such media have not been tampered
with, diverted or lost during transport. GS Data maintained off of J.P.
Morgan’s premises for backup and contingency purposes shall be stored, using
industry standard technologies prior to being moved offsite. J.P. Morgan is
responsible for ensuring all secured Data can be recovered as necessary for
business continuity purposes or upon request by GS.
GS’s Data shall be irreversibly removed, to the extent possible
per current technology, all storage mechanisms and electronic media when such
Data is no longer needed for the provision of services or products to GS, as
reasonably determined by J.P. Morgan and in compliance with J.P. Morgan’s IT
Policies and Standards.
Security and Processing Controls
J.P. Morgan shall have standards and procedures in-place to
address system configuration, operation and management controls for
the Systems and Networks, including the following:
J.P. Morgan shall employ industry-standard security
technologies to protect GS Data, including but not limited to physical access
controls and logical access controls.
Security controls appropriate for the Systems and Networks and
their application environment as recommended by manufacturers and best
practices published by industry organizations.
Identification and patching of security vulnerabilities.
Change control process and procedures.
Incident detection, response and management.
Data access entitlement and a review process for existing
entitlements and changes to them
If J.P. Morgan connects to the Internet or other external facilities it shall have the
following in place:
Technology controls including firewalls, security monitoring
and alerting systems (i.e. Intrusion Detection Systems).
When communicating with GS, J.P. Morgan must implement GS’s
preferred security protocols, including secure email, to the extent
When communicating outside J.P. Morgan’s firm via email,
WebMail, Chat or other channels, J.P. Morgan shall implement data content and
data quantity controls to detect the leakage of GS Data outside J.P. Morgan’s
firm via those channels. Processes must be in place to monitor those controls
and follow-up suspected incidents relating to the security of such channels.
Automated transfers of GS Data from GS to J.P. Morgan shall be
secured using appropriate network and/or data controls. Upon receipt of an
automated transfer, the GS Data shall be immediately and automatically imported
exclusively into a Core Application. Logs of such receipt and importation must
be kept and retained for ninety (90) days after termination or expiration of
this Agreement. All remnants of the original GS Data data file (i.e., not the
copy imported into the Core Application) shall be purged from all locations
within twenty-four (24) hours of the GS Data’s importation into the Core
Access to GS Data held on Core Applications is restricted and
end users are permitted by policy to bulk export data out of the application
only for authorized business purposes. “Bulk export” includes, without
limitation, the creation of reports, spreadsheets and other end user documents
or files that include more than one record.
GS Data used for analysis purposes as part of, or in connection
with, the migration of GS Data to a Core Application is purged from all
locations in accordance with J.P. Morgan IT Policies and Standards. The purge
shall include GS Data maintained in email, fileshares, FTP servers, etc.
Information Storage and Processing
J.P. Morgan shall store and process production GS Data in a controlled (i.e.,
production, DR or user acceptance testing) environment only. J.P. Morgan shall ensure
that non-controlled environments used for development, testing, or any
non-controlled activity shall only use test data, and in such cases the test data
shall not contain any GS Data.
Notification & Reporting Obligations
J.P. Morgan shall notify GS of the following events without undue delay, as
soon as practicable after the event, except where immediate notice is required below:
Upon request annually, change, including by
resignation, in information security staff responsible for GS Data or J.P.
Morgan’s Systems and Networks;
Suspected breaches/compromises (beyond an Attempted
Attack) of J.P. Morgan’s Systems and Networks, and claims or threats of
such events made by any J.P. Morgan Personnel or external person (immediate
Termination of any Personnel for cause, where related
to such Personnel’s potential or actual misuse or compromise of GS Data or
J.P. Morgan’s Systems and Networks;
If permitted by applicable Law, any law enforcement or
governmental investigation or inquiry into suspected misuse or abuse of
J.P. Morgan’s Systems and Networks;
If any of the GS Data is or was left unprotected, or is
or was insufficiently protected for its level of sensitivity and risk,
irrespective of whether a security breach has occurred (immediate notice
The loss of any physical device that may have contained
GS Data (immediate notice required).
J.P. Morgan will provide reporting, as requested by GS,
to GS regarding access to GS Data maintained in the Systems and Networks.
Notice to Affected Persons of Compromise of Personal Information.
J.P. Morgan shall cooperate with GS in satisfying any
legal requirement that requires Customer or J.P. Morgan to provide notice
to a person (“Affected Person”) that a suspected breach/compromise of such
person’s information is believed to have occurred. J.P. Morgan shall
contact GS’s Information Security Department with details of the suspected
breach/compromise immediately following its discovery by J.P. Morgan. If
notice to Affected Persons is required by law, or if such notice is
contemplated by J.P. Morgan, prior to giving such notice J.P. Morgan shall
consult with GS as to notice method, content as described below. The
timing of any notice to an Affected Person shall be delayed in order to
implement any GS and J.P. Morgan measures necessary to determine the scope
of the breach/compromise or to remedy or limit the breach/compromise, or if
any law enforcement or other government agency advises GS or J.P. Morgan
that the issuance of the notice will impede a criminal or other
Method of Notice. Unless otherwise
approved by GS, J.P. Morgan shall not provide notice to an Affected
Person by unsecure means. “Unsecure means” shall include, without
limitation, unencrypted email, and publication on a public website
that does not provide a secure sockets layer session for the
Affected Person’s password-protected access. In addition, unless
otherwise approved by GS, J.P. Morgan shall not provide notice via
press release, print media or broadcast media.
Content of Notice. The content of J.P.
Morgan’s notices to the Affected Person shall be subject to GS’s
approval, which shall not be unreasonably withheld or delayed.
Cost of Notice. Customer shall not
require any notice method or notice content that requires J.P.
Morgan to incur any additional cost beyond the cost imposed upon
J.P. Morgan by law.
Survival. J.P. Morgan’s obligations
under this provision shall survive the termination and expiration of
• Examination of Records.
During the Term and for thirty (30) days after
termination or expiration of this Agreement, J.P. Morgan shall implement
and maintain backup processes sufficient to keep detailed, accurate and
up-to-date accounts and records, including computer logs, of all
information security activities carried out, and all costs and expenses for
which GS must reimburse J.P. Morgan, incurred in the performance of its
information security obligations under this Agreement. Notwithstanding the
foregoing, J.P. Morgan shall retain such audit records for the time period
required by J.P. Morgan IT Policies and Standards. Upon GS’s request, and
subject to the restrictions on Confidential Information set forth in this
Agreement, J.P. Morgan shall allow GS or its authorized representatives to
examine and copy such accounts and records as GS determines may be relevant
to information security issues and related expenses arising under this
Agreement. Such examination and copying shall occur at reasonable
intervals and upon reasonable notice during the Term and for thirty (30)
days thereafter. Upon termination or expiration of this Agreement, J.P.
Morgan shall also provide GS with a then-current “snapshot” recordation
on appropriate media of the accounts and records required to be made
available for examination under this provision.
Information Security-Related Termination Rights
GS shall have the right to terminate immediately the
GS-J.P. Morgan Agreement on the occurrence of J.P. Morgan’s failure to
comply with this Exhibit, without penalty or charge to GS.
Audit and Inspection by GS
Audit Right. J.P. Morgan shall keep detailed accounts and records of
all activities carried out, and all costs and expenses incurred, in
the performance of its obligations under this Agreement. Upon
reasonable notice to J.P. Morgan and during normal business hours, GS
or the Funds or their designee has the to audit and verify the Fund’s
Books and Records, J.P. Morgan’s operating environment and other areas
of service (including those of any subcontractors) to ensure, among
other things, that J.P. Morgan is maintaining adequate controls and
security measures, that J.P. Morgan’s billings to GS are correct, that
reports relating to J.P. Morgan’s performance are accurate and that
J.P. Morgan is otherwise complying with this Agreement. GS may
conduct audit and verification reviews itself or with the assistance
of a third party organization (provided that the third party
organization executes a confidentiality agreement that contains
protections for confidential information comparable to this
Agreement), at GS’s expense. All audits shall be performed in a
manner intended to minimize disruption to the parties’ respective
businesses. All such audits and verifications may be conducted during
the term of this Agreement and for a period of five (5) years] after
the termination of this Agreement.
Access. Without limiting the foregoing, J.P. Morgan shall provide
access, without limitation, to GS, its auditors (including internal
audit staff), inspectors, regulators, consultants, and other
representatives, to: (i) facilities where the services are being
performed; (ii) personnel and subcontractors providing any of the
services; and (iii) data and records in the possession of J.P. Morgan
relating to any of the services. The applicable GS and GS’s designees
shall adhere to J.P. Morgan’s customary security and safety policies.
Cooperation. J.P. Morgan shall assist the applicable GS’s auditors
(including internal audit staff), inspectors, regulators, consultants
and other representatives as is reasonably required. J.P. Morgan
shall cooperate fully with GS or its designees in connection with
audit functions and with regard to examinations by regulatory
authorities and shall, on a timely basis, furnish each with
Categories of Audits. Audits and inspections shall be limited to
information relating to the services, and may include: (i) J.P.
Morgan’s practices and procedures; (ii) J.P. Morgan’s computer
systems; (iii) J.P. Morgan’s controls and security measures and
procedures; (iv) J.P. Morgan’s disaster recovery and back-up
procedures; (v) any matter necessary to enable GS to meet requirements
of law; (vi) J.P. Morgan’s compliance with Applicable Levels of
Service; (vii) Books and Records; and (viii) J.P. Morgan’s procedures
to maintain the confidentiality of GS’s Confidential Information.
No interference. In no event shall GS while conducting audits and
investigations materially interfere with J.P. Morgan’s ability to
perform its obligations under this Agreement or conduct its other
operations in the ordinary course of business.
Audit Expenses. GS shall bear its expenses relating to any audit
performed under this provision; provided, however, if any such
inspection reveals any invoice or payment has not been rendered or
made in accordance with the terms of this Agreement and results in
an overcharge to GS which results in a refund or credit of the overcharge, J.P.
Morgan shall reimburse GS for its reasonable internal costs and external
expenses in connection with any audit without prejudice to any other remedies
or claims of GS.
Exit Conference. Following an audit or examination
by GS, GS may (in its sole discretion) conduct (in
the case of an internal audit), or request its
external auditors or examiners to conduct, an exit
conference with J.P. Morgan to obtain J.P. Morgan’s
factual concurrence with issues identified in the
Physical Security Procedures
Guidelines for minimum physical security measures to be implemented at service locations maintained
by J.P. Morgan for services under this Agreement (“J.P. Morgan Service Locations”).
J.P. Morgan will maintain a Corporate Security Department that will manage the security and
life safety functions of the firm. The Corporate Security Department is expected to review
the security posture of every J.P. Morgan Service Location and prepare a security plan based
upon J.P. Morgan’s corporate standards and the policies detailed in this document.
Administration/Reporting Security Responsibility
Every J.P. Morgan Service Location, regardless of size, must have one person responsible for
security matters. An appropriate employee shall be given this assignment to maintain
reliability and assurance.
Prepare a security plan (“Security Plan”) that conforms to the guidelines set forth in this
document and in those policies set forth by the Corporate Security Department.
Ensure that fire evacuation plans and any other crisis plans applicable to that J.P. Morgan
Service Location, are viable and tested as required.
Maintain a file containing any material security related problems that occur in the J.P.
Morgan Service Location; security and safety related issues in the building; and incidents
that occur in the city/country that relate to security/safety, of J.P. Morgan, its
personnel, and its clients.
Report significant incidents to J.P. Morgan corporate security in a timely manner. Track
and report on an ongoing basis those local incidents that denote a significant threat or
that may adversely affect J.P. Morgan and/or the J.P. Morgan Service Location.
Maintain the emergency contact lists for both local contacts and for internal J.P. Morgan
Reports (All Locations)
Security/safety reports shared by J.P. Morgan with and as requested by GS may
be redacted to exclude confidential customer information. However, all issues that
relate to the general security/safety environment in the J.P. Morgan Service Location
could potentially affect GS interest and should be disclosed by the J.P. Morgan.
J.P. Morgan Corporate Security shall maintain a central repository of copies of
J.P. Morgan Service Location security plans.
J.P. Morgan Corporate Security may assist any J.P. Morgan Service Location in
developing its security plan.
Physical Security Access Control
The goal of a facility access control system and its procedure is to limit access to those who have
a legitimate reason for entering and to restrict the movement of visitors and J.P. Morgan to those
parts of the facility where they have a legitimate purpose. In some cases this restriction will
apply to employees, as in the case of limiting access to a computer/equipment room, cage area or
It is highly recommended that J.P. Morgan Service Locations utilize access control systems. All
J.P. Morgan Service Locations that do not utilize and maintain functioning electronic access card
systems must be pre-approved by GS.
Electronic Access Cards:
Can be used as an ID Card when required or desired.
Creates a record of persons entering access doors at all times.
Avoids the time and cost of replacing keys, locks, etc.
All J.P. Morgan Service Locations should have a receptionist or security
officer during working hours.
All J.P. Morgan Service Locations must have some means of controlling access
after regular business hours when the receptionist or security officer is not present.
CCTV on access points.
Door locked and manually opened after hours upon presentation
of ID by visitor to security officer or other employee.
Security Officer posted at entry points.
INTRUSION ALARMS: All J.P. Morgan Service Locations must have an intrusion alarm system that, at a
minimum, protects all perimeter openings and major data center portals.
The extent of CCTV required will be site-specific and determined on a case by case basis. However,
at a minimum:
J.P. Morgan Service Location entry points and major data center portals shall
be covered by CCTV.
All cameras must be recorded with recorders located in a secure area and stored
for a reasonable period.
Visitors Reception Areas
No client or visitor should be allowed past the reception area unless they have
been positively identified and the person to be visited has verified the appointment.
Doors from reception areas to J.P. Morgan Service Location space should be kept
locked and controlled by the receptionist or opened by the person escorting.
Security Officers are a J.P. Morgan Service Location option.
J.P. Morgan shall employ procedures for hiring Security Officers.
Emergency Procedures Fire/Evacuation Plan
All J.P. Morgan Service Locations must have a Fire/Evacuation Plan and must
review it for personnel and other changes as required, minimally once a year.
Every J.P. Morgan Service Location must be familiar with the building’s fire
plan. J.P. Morgan’s plan must then take this into consideration. J.P. Morgan must
conduct tests to ensure that employees recognize the fire alarm warning system.
All J.P. Morgan Service Locations must have a fire alarm and suppression system
that complies with local fire codes.
Bomb Threat Procedure
All J.P. Morgan Service Locations must have a bomb threat response plan that
provides for a rational response to a bomb threat. The most critical phase in the
process is the assessment of the threat and the decision to evacuate.
The evacuation procedures for the bomb threat plan should mimic the fire
Emergency Contact Lists
All J.P. Morgan Service Locations must maintain up to date Emergency Contact
Lists. At a minimum these lists should be updated periodically as needed and should
contain the following information:
A list containing the local J.P. Morgan Service
Location personnel who would be involved in security problems or other
All government agencies that could lend support
during an emergency
Repair personnel, etc.
A list containing all pertinent contact
personnel at headquarters and at other regional J.P. Morgan Service
All J.P. Morgan Service Locations must have an appropriate shredding policy and
plan in place.
The following modifications are made to the Agreement:
A. Add a new Section 2.18 to the Agreement as follows:
“2.18. Compliance with Securities and Exchange Commission (“SEC”) rule 17f-5 (“rule
(a) Customer’s board of trustees (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
(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, and also provide a description of Bank’s
threshold for determination that a change in arrangements is material, 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 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); Customer considers any change that affects safe
custody, beneficial ownership or transferability of Customer’s Financial Assets and Cash to
constitute a “material change.”
(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 satisfies the
requirements of Rule 17f-5(c)(2), 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 and provides indemnification for losses arising out of or
in connection with the Eligible Foreign Custodian’s performance of its obligations.
(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 in accordance with Rule 17f-5(c)(3); 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. Bank shall also notify Customer of any other material
change in the foreign custody arrangements.
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
(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
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 and in the mode
of transmission 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 provided that Bank has used reasonable
care in gathering the information and selecting the sources.
B. Add a new Section 2.19 to the Agreement as follows:
2.19. 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 2.19(a) above.
(c) Based on the information available to it in the exercise of due diligence, Bank shall
determine the eligibility under rule 17f-7 of each depository before including it on Schedule 3
hereto and shall promptly advise Customer if any Eligible Securities Depository ceases to be
eligible by facsimile or electronic transmission of notice. (Eligible Securities Depositories used
by Bank as of the date hereof are set forth hereto, and as the same may be amended on notice to
Customer from time to time.)
C. Add the following after the first sentence of Section 5.1(a) of the Agreement: “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.”
D. Add the following language as Sections 5.1(d), (e) and (f) of the Agreement:
” (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 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).
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):
Opinions of local counsel concerning:
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
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.
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.
Written information concerning:
The foreseeability of expropriation, nationalization,
freezes, or confiscation of Customer’s Financial Assets.
Whether difficulties in converting Customer’s cash and cash
equivalents to U.S. dollars are reasonably foreseeable.
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
Market flashes, including with respect to changes in the information in market reports.
ELIGIBLE SECURITIES DEPOSITORIES
CASH SWEEP RIDER
END-OF-DAY SWEEP SERVICE INTO
NASSAU OVERNIGHT TIME DEPOSITS
As a current or new subscriber to the WSS “end-of-day” sweep service, it is important that you
understand how the WSS end-of-day sweep service is operated.
At the end of each business day, collected account balances in subscriber custody accounts will be
withdrawn automatically and credited to a WSS omnibus cash account pending deposit to a JPMorgan
Chase Nassau branch pooled U.S. Dollar deposit account (the “Pooled Nassau Deposit”). WSS maintain
records of each subscriber’s deposit interest in the Pooled Nassau Deposit. Further, WSS will
arrange for withdrawals from the Pooled Nassau Deposit necessary to cover any overdrafts to the
custody accounts based upon information available to WSS at the end of each business day.
Note that (a) funds held in the Pooled Nassau Account constitute a “deposit
payable only at an office located outside the United States” as such phrase
is defined in §204.2(t) of Federal Reserve Regulation D, and (b) such funds
therefore are not insured by the Federal Deposit Insurance Corporation.
Deposits into and withdrawals from the Pooled Nassau Deposit will be aggregated after the close of
business and reallocated accordingly, among the various sweep subscriber accounts. On those
business days when the aggregate deposits exceed the aggregate withdrawals for the Pooled Nassau
Deposit, WSS will deposit an additional amount representing the net difference. On those business
days, however, when the aggregate withdrawals exceed the aggregate fund deposits for the Pooled
Nassau Deposit, WSS will withdraw the net difference and use the proceeds to cover debit balances
in subscriber accounts.
The net deposit or withdraw for the Pooled Nassau Deposit will be processed through the omnibus
cash account on the next business day. Those custody accounts with debit balances, requiring
withdrawals from the Pooled Nassau Deposit, will receive provisionally from WSS same-day credit for
For those custody accounts making deposits, WSS will accrue interest earnings on deposits into the
Pooled Nassau Deposit as of the day funds are withdrawn from the custody account. However, for
those custody accounts withdrawing amounts from the Pooled Nassau Deposit (to cover overdrafts or
otherwise), WSS will retain the previous days interest earnings on the amount withdrawn.
Deposits in the Pooled Nassau Deposit will be reflected on monthly custody account statements as
having been made on the date the funds were withdrawn from the custody accounts by WSS. Similarly,
withdrawals from the Pooled Nassau Deposit will be reflected on monthly custody account statements
as having been made the date WSS credited the custody accounts for the payments that prompted the
withdrawal. The records of JPMorgan Chase’s Nassau branch, however, will not reflect the deposits
or withdrawals until the next business day.
Executed Hard Copy Incorporated Herein by Reference.