Exhibit (h)(5)
AMENDMENT TO TRANSFER AGENCY AND SERVICE AGREEMENT
THIS AMENDMENT TO TRANSFER AGENCY AND SERVICE AGREEMENT is effective as of
January 1, 2006, by and among BARCLAYS GLOBAL INVESTOR FUNDS, a Delaware
statutory trust (the "Trust"), and INVESTORS BANK & TRUST COMPANY, a
Massachusetts trust company (the "Bank").
WHEREAS, the Trust and the Bank (together, the "Parties") entered into a
Transfer Agency and Service Agreement dated February 27, 1998, as amended from
time to time (the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement as set forth below.
NOW, THEREFORE, in consideration of the premises set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
1. Amendments.
(a) The following new Section 1A shall be added to the Agreement following
Section 1 thereof:
"1A. Definitions
"Key Performance Indicators" or "KPIs" mean the targets for specific key
Service Levels specified in Appendix B hereto;
"Service Levels" means the service levels set out in the Service Level
Agreements between the Trust, Barclays Global Investors, N.A. and the Bank."
(b) Section 19 of the Agreement is hereby deleted in its entirety and replaced
with the following:
"19. Term, Termination and Transition Assistance.
19.1 Term and Termination.
(a) Term. The initial term of this Agreement shall be February 27, 1998,
through December 31, 2005 (the "Initial Term"). The first renewal term
of this Agreement shall be January 1, 2006 through April 30, 2013 (the
"First Renewal Term"). Upon expiration of any Renewal Term (as defined
below), the Parties, upon mutual agreement no later than one hundred
eighty (180) days prior to the expiration of the First Renewal Term or
of any Renewal Term, as the case may be, may renew this Agreement for
successive terms (each, including the First Renewal Term, a "Renewal
Term").
(b) Termination. The Trust may terminate this Agreement in whole or in
part (for example, as to any Fund) prior to the expiration of any
Renewal Term upon sixty (60) days' prior written notice in the form of
Proper Instructions specifying the date upon which termination is to
occur ("Termination Notice") in the event that a conservator or
receiver is appointed for the Bank in accordance with 12 USC
(S)1821(c) or similar and successor provisions.
(c) Further Termination. The Trust may terminate this Agreement in whole
or in part (for example, as to any Fund) prior to the expiration of
any Renewal Term in the event:
(i) that Bank fails to meet the criteria defined in each of six
(6) separate Key Performance Indicators, each for four
consecutive months, in any rolling twelve month period. For
avoidance of doubt, this right shall only apply if the failure
by the Bank to meet the Service Level as defined in the
relevant KPI is not (a) the result of force majeure, (b) caused
by the Trust or a direct result of a specific request by the
Trust, (c) a direct result of a specific request by a duly
authorized agent of Trust, (d) caused by a third party other
than an agent of Bank or (e) the result of an agreement by the
Parties;
(ii) of a material breach of a material provision of the Agreement;
(iii) the Board of the Fund votes to liquidate the Fund and terminate
its registration with the Securities and Exchange Commission
other than in connection with a merger or acquisition of the
Fund or the Fund's investment adviser; or
(iv) Barclays Global Investors, N.A. terminates its Custodial, Fund
Accounting and Services Agreement (as amended) with the Bank
pursuant to the fiduciary capacity provision in
Section 13.1(b)(ii) of such agreement;
provided that Trust shall not exercise its rights under subsections
(c)(i) or (ii) above unless Trust has first provided written notice to
Bank of its intent to terminate under such subsection, and Bank:
(x) does not present a plan to remedy or cure the KPI or breach that
is reasonably acceptable to the Trust, which plan will be provided as
soon as practicable, and in any event not later than ten (10) days
after such notice, and (y) has not made substantial progress toward
curing or remedying that KPI or breach in material respects to the
reasonable satisfaction of the Trust, within thirty (30) days of
presenting such plan to the Trust.
(d) Assessment of Fee Schedule. Ninety days prior to November 1, 2009, the
Parties shall assess the Fee Schedule relating hereto, the current
state, and future strategic direction of, the Trust, the Bank and
their respective industries. The parties will negotiate in good faith
on amendments to the Fee Schedule arising from such assessment, and if
the parties are unable to agree by November 1, 2009, the Trust may in
its sole discretion terminate the Agreement.
(e) Trust shall advise the Bank of any service level, practice, policy,
circumstance or any breach by the Bank of which it becomes aware from
time to time that, if unaddressed, would permit the termination of the
Agreement under any of the bases set forth in this Section 19.1.
19.2 Transition Assistance.
(a) In the event the Trust or any Fund terminates the Agreement in
accordance with Section 19.1(b), 19.1(c)(i)-(iv) or 19.1(d), or upon
the expiration and non-renewal of the Agreement:
(i) the Bank will immediately upon receipt of notice of termination
or non-renewal, commence and prosecute diligently to completion
the transfer of all cash and the delivery of all assets in the
Trust's (or Fund's) accounts as to which the Agreement is
terminated, duly endorsed, and all records maintained under the
terms hereof and of the Service Level Agreements directly to
such successor custodian appointed by the Trust ("Transfer");
(ii) the Bank will provide such reasonably necessary transition
assistance (the "Transition Assistance"). The Bank will fully
cooperate with the Trust and will provide such reasonable
assistance as directed by Trust to effectively transition the
services provided by the Bank to the Trust under this Agreement
to a successor entity (or entities) as designated by the Trust
in its sole discretion, including but not limited to using its
commercially reasonable efforts to provide for an orderly
transition of the funds from Bank's custody to the successor's
custody. During such transition period, the Trust will continue
to pay the Bank the fees applicable to such services set forth
in the then-current Fee Schedule, plus an amount calculated
based on additional time and materials outside the usual
services provided under this Agreement and required to effect
the conversion of the services to a successor service provider.
The Bank shall provide Transition Services for a period of up
to twenty-four (24) months as requested by the Trust;
(iii) Bank and Trust shall negotiate in good faith to agree on a plan
for the orderly transition of the Trust to a successor service
provider by no later than sixty (60) days after the date of
termination or non-renewal;
(iv) Trust shall, in the event Transition Assistance is required for
more than twenty-four (24) months from the date of termination,
pay the Bank an annual bonus on a monthly basis in an amount
equal to 5% of the aggregate fees being charged as of the date
of termination; and
(v) The Trust and the Bank will take all reasonably necessary steps
as mutually agreed by the Parties, to assure the retention of
key employees of Bank involved in the provision of Transition
Services.
19.3 Release.
Upon Transfer of a Fund or completion of the Transition Assistance, as the
case may be, the Bank shall be released from any and all further obligations
under this Agreement with respect to the Fund as to which this Agreement is
terminated; provided that Bank shall continue to be responsible for services
normally provided by transfer agents post-conversion in the normal course of
business at the Bank's then current rates.
19.4 Survival
Notwithstanding anything to the contrary in this Agreement, each Party's
obligations under Sections 13, 17 and 26 hereof shall continue and remain in
full force and effect after the termination of this Agreement.
(c) The following new Sections 26, 27 and 28 shall be inserted at the end of
the Agreement:
"26.Service Levels
(a) Service Credits. Only during the period in which the Bank is providing
Transition Assistance:
(i) In the event Bank fails to meet the criteria defined in the
relevant Key Performance Indicator for two consecutive months,
the Trust shall receive a "Service Credit". "Service Credit"
shall mean: a five percent (5%) reduction of fees, only for the
service to which the uncured KPI relates, for the month in
which the uncured KPI failures occurred, and only for the Fund
affected by the uncured KPI failures. For avoidance of doubt,
this right shall only apply if the failure by the Bank to meet
the Service Level as defined in the relevant KPI is not (a) the
result of force majeure, (b) caused by the Trust or a direct
result of a specific request by the Trust, (c) a direct result
of a specific request by an agent of the Trust, (d) caused by a
third party other than an agent of Bank or (e) the result of
agreement by the Parties.
(ii) Service Credits shall be calculated on a monthly basis, and the
Service Credits shall be payable as an offset against current
or future fees owed by the Trust, and upon termination,
expiration or non-renewal of the Agreement, all unused Service
Credits shall be paid in cash to the Trust.
(iii) The Bank shall not be deemed to have failed to meet a monthly
KPI where such failure arises from a single underlying cause
that is promptly remedied by the Bank, without the occurrence
of which, the Bank would not have failed to meet that KPI in
that month.
(iv) Time periods referenced in this section 26 shall begin to run
as of the date Bank knows, reasonably should have known, or is
notified of the relevant failure.
(v) The Bank shall earn back 100% of any Service Credit, provided
that the Bank achieves the applicable KPI requirement the
failure of which led to the Service Credit for two consecutive
months beginning in the month following the month in which the
Service Credit is earned. For example, if the Bank fails to
meet a particular KPI for January and February of a year, the
Bank shall earn back 100% of the associated Service Credit if
the Bank meets that KPI in the months of March and April.
(vi) Bank acknowledges that its failure to meet the minimum levels
set forth in the Key Performance Indicators would have a
material adverse effect on the Trust's business. Bank further
acknowledges that the Service Credits represent a reduction in
the fees payable by the Trust hereunder which, in turn,
reflects Bank's provision of a lower level of services than
that required by the Trust. Bank further acknowledges that the
Service Credits are reasonably proportionate to the loss likely
to be suffered by the Trust as a result of the failure by Bank
to meet the applicable KPIs.
(vii) The level of Service Credits payable in any calendar year will
not exceed in aggregate 5% of the aggregate fees payable under
the Agreement for that year.
(viii) The Trust shall not be entitled to recover as part of any
damages claim any sums credited or paid as Service Credits if
the damages claim arose from a KPI failure,
provided the damages to which the Trust is otherwise entitled
arose from the same services to which the KPI failure relates,
for the same Fund, and for the same underlying event.
(b) Customized Technology Deliverables. Bank will deliver into escrow for
the benefit of the Trust copies of all final requirements documentation
related to any builds, features or functionality customized for the Fund,
that are incorporated into or used in connection with the provision of
services under this Agreement (the "Requirements Documentation"), within
thirty (30) days after such builds, features or functionality have been
incorporated into or used in connection with the provision of services. Such
Requirements Documentation shall be in the form customarily produced by the
Bank in connection with such projects generally. The Fund shall have access
to such Requirements Documentation only in the event of the termination of
this Agreement other than by reason of breach by the Fund. Bank hereby
grants to the Fund a worldwide, irrevocable, royalty-free, fully paid-up,
non-transferable and non-exclusive license, solely for the purpose of the
Fund's or the Fund's third party supplier assuming performance obligations
for the Services previously performed by Bank hereunder.
27.Service Enhancements.
Market Leader: Bank hereby commits that it will use commercially reasonable
efforts to continue to develop and provide to the Trust service enhancements
that will enable the Trust to maintain the Trust's market leader position in
product innovation, information technology, and service delivery (collectively,
"Market Efforts"). The Trust acknowledges that Bank has been successful in
providing Market Efforts during the Initial Term. Bank agrees that its Market
Efforts will be and will continue to be during the Renewal Term no less
favorable than those being offered at that time by Bank to any other customer
purchasing services of a type substantially similar to the services provided
hereunder relating to funds in aggregate substantially similar in scope (even
if smaller in asset size) to the Funds. Bank shall, upon written request,
review and have an officer of its company certify its compliance with this
section to the Trust. If Bank at any time offers other customers or brokers
processes, discounts and/or other cost reduction methods or improved services
more favorable than those provided to the Bank pursuant to this Agreement such
that the foregoing terms of this subsection become untrue, Bank shall promptly
offer these to the Trust prospectively from the date such more favorable terms
were offered to other customers or brokers, unless Bank is prevented from doing
so in a reasonable manner due to third party patent related restrictions. Bank
acknowledges that the requirements of this paragraph 25 are a material
provision of this Agreement.
28.Dispute Resolution.
(a) In the event of any dispute under the Agreement, each Party will appoint a
designated representative whose task will be to resolve the dispute (the
"Representatives"). The Representatives will have five (5) business days
to meet and discuss in good faith a resolution to the dispute. During the
course of such discussions, each Party will honor the other Party's
reasonable requests for relevant information, including but not limited to
providing copies of relevant documents. The specified format for such
discussions will be left to the discretion of the Representatives, but may
include the preparation and delivery of statements of facts or written
statements of positions.
(b) If the Representatives are unable to resolve the dispute within such five
(5) day period, the Representatives will refer the dispute to their
respective CEO, President or COO (the "Managers"). Such Managers will have
ten (10) business days to meet and discuss in good faith a resolution of
the dispute. If the Managers are unable to resolve the dispute within such
ten (10) day period, the Parties may elect to extend the time for such
dispute resolution, or proceed in accordance with their respective rights
under this Agreement or otherwise.
(c) If the Parties are unable to resolve the dispute as set forth herein, the
Parties may, upon mutual agreement, seek to resolve the dispute through
mediation."
2. Miscellaneous.
a) Except as amended hereby, the Agreement shall remain in full force
and effect.
b) This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective duly authorized officers as of the day and year
first written above.
BARCLAYS GLOBAL INVESTOR FUNDS INVESTORS BANK & TRUST COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Secretary/Treasurer Title: President
BGI Funds and MIP
By: /s/ Raman Suri
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Name: Raman Suri
Title: Assistant Treasurer
Appendix C - Key Performance Indicators
Service Category Task Criteria
----------------- ------------------- ------------------------------------------------------------------------------------
1 Fund Accounting Unit Value Accuracy Achieve an accuracy rate of at least 99.8%.
2 Fund Accounting Unit Value Delivery Achieve a timeliness rate of SLA plus 1 hour at a rate of at least 98% for CTFs and
SLA plus 2 hours at rate of 98% for iShares and MIPs.
3 Fund Accounting Cash Projection Achieve an accuracy rate of at least 99.75% for CTFs and 99.7% for iShares and
Accuracy MIPs.
4 Fund Accounting Cash Projection Achieve a timeliness rate of SLA plus 1 hour at a rate of at least 99%.
Delivery
5 TA Distributions Distributions will be processed into client's accounts, by Payable Date + 2, with no
Delivery more than 4 exceptions per month.
6 IT Services SWIFT 535 and 950 Achieve a timeliness rate of SLA plus 3 hours with no more than 4 exceptions per
messages and SEI month per message type.
Client Holdings and
Transactions Report
Delivery
7 Fund Accounting Unit Settlement Achieve a timeliness rate of SLA plus 2 hours with no more than 4 exceptions per
Delivery month..
8 Fund Accounting PRV Accuracy Achieve an accuracy rate of at least 99.7%.
9 Corporate Actions Corporate Actions Achieve SLA requirements for these activities at an accuracy rate of 99%.
Notification/
Processing/ Posting
for Vaulted Assets
10 TA Trade Wires Achieve a timeliness rate of SLA+1 hour at a rate of at least 99%.
11 TA MIP Order Flow Achieve a timeliness rate of SLA plus 2 hours at a rate of at least 99%.
12 Directed Loan Ops Securities Loan Settlement percentage of 99%.
Movements