RFP_30901-62826_Amendment_1.pdf

RFP 30901-62826 Amendment 1 Page 1 of 39

STATE OF TENNESSEE

TREASURY DEPARTMENT

REQUEST FOR PROPOSALS # 30901-62826

AMENDMENT # 1

FOR INVESTMENT MASTER CUSTODY AND

RELATED SERVICES

DATE: APRIL 17, 2025

RFP # 30901-62826 IS AMENDED AS FOLLOWS:

1. This RFP Schedule of Events updates and confirms scheduled RFP dates. Any event, time, or date containing revised or new text is highlighted.

EVENT

TIME

(central time zone)

DATE

UPDATED

OR

CONFIRMED

1. RFP Issued March 10, 2025 CONFIRMED

2. Disability Accommodation Request Deadline 2:00 p.m. March 13, 2025 CONFIRMED

3. Pre-response Teleconference 10:00 a.m. March 14, 2025 CONFIRMED

4. Notice of Intent to Respond Deadline 2:00 p.m. March 17, 2025 CONFIRMED

5. Written “Questions & Comments” Deadline 2:00 p.m. April 7, 2025 CONFIRMED

6. State Response to Written “Questions & Comments” April 17, 2025 CONFIRMED

7. Second & Final Round of Written “Questions & Comments” (Follow-Up Questions & Comments Deadline. See RFP Section 1.4.4.)

2:00 p.m. April 25, 2025

CONFIRMED

8. State Response to Second & Final Round of Written “Questions & Comments” May 2, 2025 CONFIRMED

9. Technical Response and Cost Proposal Deadline 2:00 p.m. May 8, 2025 CONFIRMED

10. State Completion of Technical Response Evaluations May 22, 2025 CONFIRMED

11. State Schedules Respondent Oral Presentations (Respondent Finalists Only) May 27, 2025 –

May 28, 2025

CONFIRMED

12. Respondent Oral Presentations (Respondent Finalists Only)

8:00a.m. – 4:30 p.m.

June 2, 2025 – June 3, 2025

CONFIRMED

13. State Opening & Scoring of Cost Proposals (Finalists Only) June 4, 2025 CONFIRMED

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14. State Notice of Intent to Award Released and RFP Files Opened for Public Inspection June 11, 2025 CONFIRMED

15. End of Protest Period June 18, 2025 CONFIRMED

16. State sends contract to Contractor for signature June 19, 2025 CONFIRMED

17. Contractor Signature Deadline 2:00 p.m. June 24, 2025 CONFIRMED

2. State responses to questions and comments in the table below amend and clarify this RFP.

Any restatement of RFP text in the Question/Comment column shall NOT be construed as a change in the actual wording of the RFP document.

QUESTION / COMMENT STATE RESPONSE

1. In RFP Section:

Contract Section 4.4.1 Page 12 Assignment

Contractor requires flexibility to assign to any of its affiliates in the event of a corporate restructuring. We would propose the following language: This Agreement is not assignable by either party without the prior written consent of the other, except that (i) the Contractor may assign this Agreement to any Contractor Affiliate, and (ii) any entity, that shall by merger, consolidation, purchase, or otherwise, succeed to substantially all the institutional custody business of the Contractor shall, upon such succession and without any appointment or other action by the State, be and become successor custodian hereunder. The Contractor agrees to provide notice of such successor custodian to the State. Any assignment in violation of this provision shall be voidable at the option of the non-assigning party. This Agreement shall be binding upon, and inure to the benefit of, the State and the Contractor and their respective successors and permitted assigns.

Would this be acceptable to the State?

The State respectfully declines in as much as this would violate Tennessee state law;

specifically, Tenn. Code Ann. § 4-56- 107(b)(1)(B), which requires a contract amendment if the entity or the name of the entity with which the State is contracting changes.

2. Section 4.4.2 – 4.4.5 of the RFP Page 12

SubContractors

Would the State consider to have the term “Subcontractor” or “subcontractor” mean and only be deemed to be those third parties, if any, hired by Contractor to provide services specifically for the State pursuant to the custody agreement and not service to or for all or a substantial portion of similarly situated clients of Contractor and that for avoidance of doubt, Subcustody, Depositories, Book-Entry Systems, Data Providers and Contractor

See Item 3 below for an amendment to Section D.7 of the Pro Forma Contract (RFP Attachment 6.5).

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Affiliates shall not be deemed to constitute “subcontractors” of Contractor. Could you please confirm that the State will not consider our subcontractors any service provider that may be engaged by Contractor unless contracted exclusively for the provision of services to the State?

3. In RFP Section:

Contract Section 4.8 Page 13 Disclosure of Response Contents

Contractor will provide, as part of its Response to the RFP, information on the pricing structure it proposes to provide to the State. Would the State consider redacting this information in the event of a request for disclosure under public records statute?

No. Tennessee state law (Tenn. Code Ann. § 10-7-504(a)(7)) provides that all proposals received in response to an RFP, including evaluations, must be available for public inspection after the completion of the evaluation of the same by the State.

4. RFP Section 4.11, relative to Contract Amendment on Page 14:

Would the State consider allowing for flexibility in the addition of services that may be requested by the State to be also agreed to by the Contractor?

It is not clear what is being requested that is not already contained in Section 4.11. Section 4.11 states in general that after the contract is awarded the State may request the Contractor to perform additional services within the general scope of the Contract and this RFP, but beyond the specified Scope, and for which the Contractor may be compensated. If the State and the Contractor reach an agreement regarding the services and associated compensation, such agreement must be effected by means of a contract amendment.

5. Would the State consider the following modification Attachment 6.1, Statement of Certifications and Assurances?

Contractor proposes to revise the certifications to qualify Contractor’s agreement to comply with the provisions of the RFP as qualified by Contractor’s response and that Contractor only commits to comply with the listed statutes to the extent applicable to Contractor.

1. The Respondent will comply with all of the provisions and requirements of the RFP, as qualified by Contractor’s response.

2. The Respondent will provide all services as defined in the Scope of the RFP Attachment 6.5., Pro Forma Contract as definitely negotiated by the Contractor and the State for the total Contract Term.

3. The Respondent, except as otherwise provided in this RFP and qualified the Response, accepts and agrees to all terms and conditions set out in the RFP Attachment 6.5., Pro Forma Contract.

4. The Respondent acknowledges and agrees that a contract resulting from the RFP shall

No. As provided in Sections 1.6.1 and 1.6.2 of the RFP and as was explained during the pre-response teleconference, each potential respondent to the RFP must carefully review not only the general RFP for any comments or questions, but also the contract that is included as Attachment 6.6 of the RFP. That is the contract the State expects the successful bank to sign, unless it is amended during the written comments period. Consequently, any proposed changes had to be requested and delineated by no later than the Written Comments Deadline.

Further, Section 3.3.1. of the RFP states that “(a) response must not include alternate contract terms and conditions. If a response contains such terms and conditions, the State, at its sole discretion, may determine the response to be a non-responsive counteroffer and reject it”.

Mandatory requirement Item A.1 states that the Statement of Certifications and Assurances must be signed without exception or qualification.

RFP 30901-62826 Amendment 1 Page 4 of 39 incorporate, by reference, all proposal responses as a part of the Contract.

5. To the extent applicable to the Respondent, the Respondent will comply with:

(a) the laws of the State of Tennessee relevant to the provision of investment master custody and related services;

(b) Title VI of the federal Civil Rights Act of 1964;

(c) Title IX of the federal Education Amendments Act of 1972;

(d) the Equal Employment Opportunity Act and the regulations issued there under by the federal government; and,

(e) the Americans with Disabilities Act of 1990 and the regulations issued there under by the federal government.

6. Attachment 6.5 Page 43

A.2.c Maintenance of Accounts

Contractor proposes to revise paragraph (c) in its entirety to reflect the manner in which the Contractor utilizes Subcontractors and Depositories in the provision of custody services. Would the State consider the following language as paragraph c?

Maintenance of Accounts. Except as provided in this Subsection c. and in Subsection d. of this Section, the Contractor shall hold all Securities and cash at its premises at [ADDRESS]; or at such other affiliate of the Contractor as may be authorized by the State in writing. The Contractor shall operate as a direct participant in the Depository Trust Company of New York (DTC), the Federal Reserve Bank (FRB) and the Mortgage-Backed Securities Clearing Corporation (MBSCC), and utilize the services of DTC, FRB AND MBSCC to the fullest extent possible to fulfill its responsibilities under this Contract. The Contractor's use of DTC, FRB and MBSCC shall not relieve it of any liability under this Contract. Subject to the terms hereof, the State hereby authorizes the Contractor to utilize Subcustodians and Depositories in connection with its performance hereunder.

The Contractor will only utilize Subcustodians that have entered into an agreement with Contractor or a Contractor Affiliate, and Assets held through a Subcustodian will be held subject to the terms and conditions of such Subcustodian’s respective agreement.

See Item 11 below for an amendment to Section A.2.c. of the Pro Forma Contract. See also Item 4 below for an amendment to Section D.19 of the Pro Forma Contract and Item 5 below for an amendment to Section A.21 of the Pro Forma Contract.

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Assets deposited in a Depository will be held subject to the rules, procedures, terms and conditions of such Depository. Subcustodians may hold Assets in Depositories in which such Subcustodians participate.

Unless otherwise required by local law or practice or a particular Subcustodian agreement, Assets deposited with Subcustodians or Depositories may be held in a commingled account in the name of, as applicable, Contractor, a Contractor Affiliate or the applicable Subcustodian, for its clients.

The term “Depository” means the Depository Trust Company, Euroclear, Clearstream Banking S.A., the Canadian Depository System, CLS Bank and any other securities depository, book-entry system or clearing agency authorized to act as a system for the central handling of securities pursuant to the laws of the applicable jurisdiction, and any successors to, and/or nominees of, any of the foregoing.

The term “Subcustodian” means a bank or other financial institution (other than a Depository) that is selected and used by Contractor or a Contractor Affiliate (acting as subcustodian) in connection with the settlement of transactions and/or custody of Assets hereunder, and any successors to, and/or nominees of, any of the foregoing.

7. Given the extensive network of Subcustodians and Depositories, we cannot assure (without reviewing every single contract), that each and every Subcustodian and Depository is today, and will be into the future, subject to a foreign government agency or regulatory authority. Given this, we cannot be liable for any Losses attributable to our use of Subcustodians (other than Contractor Affiliates) unless such Losses are directly caused by our failure to exercise the Standard of Care. As such, we propose to revise paragraph (d), by revising the subparagraphs listed below, as follows:

A.2.d.4 Foreign Bank

(4) Foreign Bank. If a foreign bank is selected to act as the Contractor's subcustodian to hold such Securities, the bank is authorized to hold the Securities in any foreign securities depository in which it participates and to hold any cash received

The State respectfully declines in as much as the successful respondent chooses who the subcustodians will be, has the contractual relationship with the subcustodian and, therefore, has control.

The State respectfully declines. See response above.

RFP 30901-62826 Amendment 1 Page 6 of 39 with respect to those Securities in its account with such foreign securities depository. In the event that a foreign bank permits any of the Securities and cash entrusted to its care to be held in a foreign securities depository, such foreign bank will be required by its agreement with the Contractor to identify on its books such Securities and cash as being held for the account of the Contractor for its customers.

A.2.d.5 Contractor Responsibility

Contractor proposes to revise this provision to clearly establish that Contractor will only be liable for the actions of subcustodians that are its Affiliates. The responsibility of Contractor with respect to the actions of third-party subcustodians to be limited to instances where Contractor breaches its standard of care in the selection of subcustodians. Would the State consider the following language in lieu this provision?

(a) Contractor will exercise the Standard of Care in selecting, retaining and monitoring Subcustodians.

(b) With respect to Assets held by a Subcustodian, Contractor will be liable to the State for the activities of such Subcustodian under this Agreement to the extent that Contractor would have been liable to the State under this Agreement if Contractor had performed such activities itself in the relevant market in which such Subcustodian is located; provided, however, that with respect to Securities held by a Subcustodian that is not a Contractor Affiliate:

(i) Contractor’s liability will be limited solely to the extent resulting directly from the Contractor’s failure to exercise the Standard of Care in selecting, retaining, and monitoring such Subcustodian; and

(ii) To the extent that Contractor is not liable pursuant to Section A.2.d.5(b)(i), Contractor’s sole responsibility to the State will be to: (A) take reasonable and appropriate action to recover from such Subcustodian, and (B) forward to State any amounts so recovered (exclusive of costs and expenses incurred by Contractor in connection therewith).

A.2.d.7 Subcustodian

Would State consider revising this provision as follows? The added language is a statement of fact on the rights of our Subcustodians.

No. Except for the Optional Services described in Section A.13 of the Pro Forma Contract, the only fee the State will pay for the services rendered under this Contract will be the flat fee amount that is entered on the Cost Proposal

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Conditions. The Contractor will authorize the holding of Securities and/or cash by a foreign bank or foreign securities depository (in which Securities are held for the account of either the Contractor or a foreign bank acting as its subcustodian) only (i) to the extent that Securities and cash are not subject to any right, charge, security interest, lien or claim of any kind in favor of such bank or securities depository, 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 its creditors arising under bankruptcy, insolvency or similar law and (ii) to the extent that beneficial ownership of such Securities and cash is freely transferable without the payment of money or value. Any costs, fees or expenses associated with the safekeeping and servicing of the Securities and/or cash by a foreign bank or foreign securities depository, other than those expenses specifically set forth in Section C.3.c.

below, shall be the responsibility of the Contractor.

(RFP Attachment 6.3.) by the successful respondent. It will be the successful respondent’s responsibility to pay for any custody or administration services performed by its subcustodians.

8. Would the State consider the following modification to the Pro Forma Contract:

Attachment 6.5 Page 45 A.2.f.3 Contractor proposes to revise this provision so that the withdrawal process be accomplished at a time as mutually agreed to by the parties.

Our ability to withdraw cannot be restricted.

However, and as is stated in Section A.2.f.3. of the Pro Forma contract, the “process shall be accomplished through the use of a daily net wire sent at a mutually agreed upon time during the course of the State’s normal business hours that day. The net investable balance which will be held in the Custody Accounts on any given day shall be confirmed with the State by the Contractor at approximately 9:00 a.m. on such day. Based upon the balance, the State shall determine the value of a net wire to be received from or sent to the Contractor”.

9. A.2.h Daily Account Balances. Would the State consider the following revisions to this paragraph to clarify that such credit will apply only with respect to “swept” cash, and not to “unswept” deposits, as follows:

Daily Cash Account Balances. The Contractor agrees the State shall receive a credit monthly, with respect to cash that has been swept as directed by the State or an Investment Manager to investment vehicles offered by the Contractor or to other investment vehicles, for its daily account balances in the Custody Accounts which are in excess of applicable reserve requirements based on the rates applicable to the

The State intends that all cash will be invested at all times. The State will manage cash investments directly or will designate an investment vehicle offered by the custodian for specific portfolios. All excess cash will be swept to these vehicles daily either directly or by the custodian automatically by instruction to the extent that there will be no ‘unswept’ cash in any portfolios.

RFP 30901-62826 Amendment 1 Page 8 of 39 investment vehicles that are mutually agreed to in writing by the State and the Contractor from time to time. The State acknowledges (i) that the rates associated with the investment vehicles may fluctuate on a daily basis, but the earnings credit shall be posted to the Custody Accounts on a monthly basis and (ii) that, as part of the Contractor’s compensation, the Contractor will earn interest on unswept cash balances held by the Contractor, including disbursement balances and balances arising from purchase and sale transactions, as disclosed in the Contractor’s indirect compensation disclosures.

10. Would the State consider the following modification to the Pro Forma Contract:

A.4.b Daily Valuation Services Contractor proposes to revise this provision and replace it with Contractors Asset Calculation Service Appendix [to be provided with the Response]

The State respectfully declines to revising the language. Note: The manner by which the successful respondent will perform the NAV calculation services described in Section A.4.b will be as described in the successful respondent’s response to Section C.8 of the RFP, which is specifically incorporated into the contract through Section A.4.b.

11. A.5.d Accounting Records Audit

Contractor proposes to revise paragraph (d) to clarify the records to which the State, or its agents, would have access, to read as follows (with the added language in blue and underlined and the deleted language in red with a strike through):

d. Accounting Record Audits. The Contractor shall permit the State, or the State’s duly authorized agents, to perform audits of the material records maintained by the Contractor in the regular and ordinary course of its business relating directly and exclusively to the accounts established under this Contract (the “Account Records”) accounting records maintained by the Contractor for the State at any reasonable time and upon reasonable notice.

The State respectfully declines in as much as the State must be able to audit all of its accounting records maintained by the Contractor, regardless of whether the Contractor believes the records are material (crucial) or not.

12. A.5.e Record Maintenance

Contractor proposes to revise paragraph (e) to conform with the immediately preceding change, as follows:

e. Record Maintenance. The Contractor shall maintain the ability for the State to access all relevant Account Records transaction activity of the State through the web-based information reporting system described in Section A.5.d. above in accordance with Contractor’s record retention

The State respectfully declines.

RFP 30901-62826 Amendment 1 Page 9 of 39 schedule for a period of at least two (2) years after the close of the State’s fiscal year.

13. A.5.f Service Organization Control (SOC)

Report

Contractor proposes to delete the following language from this section: “…without requiring the State to execute any other agreements or agree to any additional confidentiality obligations.”

The State respectfully declines.

14. A.6 Performance Measurement and Risk Reporting and Analysis Services

Contractor proposes to revise the last sentence of this Section as follows:

The package(s) shall also provide the State with monthly audited performance reports on-line and in hardcopy with attribution analysis and drill-down capabilities.

Contractor also proposes to add the following provision to the end of the Section:

Contractor shall provide these services through its affiliate pursuant to the terms of a stand-alone contract with that entity, the terms of which will be included with our Response.

See Item 10 below for an amendment to Section A.6 of the Pro Forma Contract.

No. The State will not entertain entering into a contract with the successful respondent’s subcontractor. If the successful respondent proposes to use a subcontractor in fulfilling the respondent’s obligations under the contract, the respondent will be the prime contractor and will be responsible for all work performed by that subcontractor. Please see Item 3 below for the definition of a subcontractor.

15. A.17 Authorized Individuals

Contractor will provide the State a written list with the names and titles of Persons who have been assigned as the main contacts with respect to Contractor under this Agreement, including any changes to such contacts.

This is what Section A.17 of the Pro Forma Contract envisions. The successful respondent’s contacts will be inserted in Contract Attachment 2 prior to execution of the contract.

16. A.19 Changes in Ownership

Contractor’s contract standards relating to assignability require flexibility to assign contracts to affiliates in the event of a corporate restructuring of the group. Would the State consider the following language? This Agreement is not assignable by either party without the prior written consent of the other, except that (i) the Contractor may assign this Agreement to any Contractor Affiliate, and (ii) any entity, that shall by merger, consolidation, purchase, or otherwise, succeed to substantially all the institutional custody business of the Contractor shall, upon such succession and without any appointment or other action by the State, be and become successor custodian hereunder. The Contractor agrees to provide notice of such successor

See response to Question 1 above.

RFP 30901-62826 Amendment 1 Page 10 of 39 custodian to the State. Any assignment in violation of this provision shall be voidable at the option of the non-assigning party. This Agreement shall be binding upon, and inure to the benefit of, the State and the Contractor and their respective successors and permitted assigns.

17. A.21 General Liability

Contractor’s contracting standards provide that the liability of Contractor is limited to those direct damages suffered by the State as a result of Contractor’s failure to act in accordance with the Standard of Care (i.e. negligence). Would the State consider negotiating this language to provide for this?

See Item 5 below for an amendment to Section A.21 of the Pro Forma Contract.

18. A.22 Transition of Services

Contractor proposes that the last sentence of this section be revised to read as follows:

The Contractor shall remain liable to the State under this Contract for any breaches to the Standard of Care defined in Section A.20 hereof, on or prior to the date on which all property of the State and all services hereunder have been successfully transferred or converted in accordance with this Section.

See Item 6 below for an amendment to Section A.22 of the Pro Forma Contract.

19. A.23 Advancements

Would the State consider including in this provision customary lien and set off rights to secure the advances described in this provision? See below language the Contractor proposes to add:

If: (a) Contractor has advanced funds to an Account; (b) an overdraft has occurred in an Account (including overdrafts incurred in connection with the settlement of securities transactions, funds transfers or foreign exchange transactions) or (c) the State is for any other reason indebted to Contractor, the State agrees to pay Contractor (on demand or upon becoming aware thereof) the amount of such advance, overdraft or indebtedness, plus accrued interest at a rate then charged by Contractor to its institutional custody clients in the relevant currency.

In order to secure payment of the State’s obligations (whether or not matured) to Contractor or any Contractor Affiliate, relating to or arising under this Agreement or any other agreement with Contractor or any Contractor Affiliate, and in addition to any preference, lien or other rights and security

The State respectfully declines. Instead, and as provided in Section A.23, the State will repay the contractor along with the interest described in Section A.23.

RFP 30901-62826 Amendment 1 Page 11 of 39 interest to which Contractor or such Contractor Affiliate may be entitled under applicable law or any other agreement, the State hereby pledges and grants to Contractor and such Contractor Affiliate, and agrees Contractor and such Contractor Affiliate will have to the maximum extent permitted by law, a continuing first lien and security interest in: (a) all of the State’s right, title and interest in and to all Accounts in the State’s name and the Assets now or hereafter held in such Accounts (including proceeds thereof) and (b) any other property at any time held by Contractor or any Contractor Affiliate for the State; provided that the State does not hereby grant a security interest in any Securities issued by an affiliate (as defined in Section 23A of the U.S. Federal Reserve Act and related implementing regulations (Regulation W, 12 C.F.R. part 223)) of Contractor (such securities, “Affiliate Securities”) with the exception of Affiliate Securities that (i) constitute “eligible affiliated mutual fund securities” as defined in Section 223.24(c) of Regulation W (12 C.F.R. 223.24(c)) and (ii) meet the requirements in Section 223.24(c) of Regulation W (12 C.F.R. 223.24(c)). The State represents, warrants and covenants that it owns the Assets in the Accounts, and such other property at any time held by Contractor or any Contractor Affiliate for the State, free and clear of all liens, claims and security interests (except for those granted in accordance with this Agreement or as otherwise acknowledged in writing by Contractor), and that the first lien and security interest granted herein will be subject to no setoffs, counterclaims or other liens prior to or on a parity with it in favor of any third party (other than specific liens granted preferred status by statute). The State will take any additional steps required to assure Contractor of such priority security interest, including notifying third parties or obtaining their consent. Contractor will be entitled to collect from the Accounts sufficient Cash for reimbursement, and if such Cash is insufficient, to sell Securities to the extent necessary to obtain reimbursement. In this regard, Contractor will be entitled to all the rights and remedies of a pledgee, secured creditor and/or securities intermediary under applicable laws, rules and regulations as then in effect as if the State is in default.

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20. A.25 Warranty

Contractor is not able to include Most Favored Nation provisions in our contracts. As such, would the State agree to deleting the first sentence of this provision?

Materials may be owned by Contractor’s or Contractor’s suppliers and subject to intellectual property rights. As such Contractor is required to make any grant of this type of right subject to those intellectual property rights. Is this a revision the State would be willing to negotiate?

Contractor proposes to delete the last paragraph of this provision as it does not seem to be applicable to the services to be provided.

See Item 7 below for an amendment to Section A.25 of the Pro Forma Contract (RFP Attachment 6.6).

21. Would the State consider the following modification to the Pro Forma Contract:

Attachment 6.5 Page 56

A.26 Inspection and Acceptance

Contractor will issue monthly statements on the accounts opened under the contract, and the State will have a 90-day inspection period to review and notify Contractor of any objections. Would the State consider revising this provision to align with Contractor’s standards?

The State respectfully declines.

22. Section B. Term of Contract – Page 56

Could the State please confirm what is the proposed term for this contract?

If the State’s current vendor is not the successful respondent, the contract will commence on July 1, 2025 for the purpose of asset conversion and services implementation. As provided in Section A.12 of the Pro Forma Contract, the Contractor will not be paid the fees described in its cost proposal during the implementation period. The fees will be payable beginning the month the State acknowledges in writing to the Contractor that implementation is complete and authorizes the Contractor to begin performing the services contemplated under the Contract. If the State’s current vendor is the successful respondent, the contract will commence on December 1, 2025.

23. Section C.1 Maximum Liability – Page 56

Could the State please indicate what is the State’s proposed Maximum Liability?

Section C.1 is an appropriation provision that sets forth the amount of compensation the State will pay the successful respondent. It will be based on the successful respondent’s cost proposal.

24. Section C.8 Deductions

We propose to revise Section C.9 as set forth below so as to limit the right of “setoff” to any obligations under this contract:

The State reserves the right to deduct from amounts, which are or shall become due and

RFP 30901-62826 Amendment 1 Page 13 of 39 payable to the Contractor under this or any contract between the Contractor and the State of Tennessee any amounts, which are or shall become due and payable to the State of Tennessee by the Contractor.

25. Section D.2 Communications and Contacts –

Would the State consider revising this provision to provide that only notices other than routine communications in the ordinary course of providing or receiving services under the Contract (including Instructions) will be subject to these requirements (delivered either (i) by hand delivery, by certified mail, or by overnight delivery service, in each case with receipt acknowledged and postage or charges prepaid, or (ii) by email)?

This can be addressed in the Operating Procedures described in Section A.14 of the Pro Forma contract to address what is considered routine communications.

26. Section D.4 Subject to Funds Availability –

Would the State consider revising this clause to provide that in the event of termination due to unavailability of funds, Contractor be compensated for any services provided up to the date of termination?

Section D.4 already provides for payment to the Contractor for services provided up to the termination date.

27. Section D.5 Termination for convenience –

Would the State consider a mutual termination for convenience provision, requiring the terminating party to provide 90 days advance notice?

The State respectfully declines in as much as it would take a considerably longer time to draft, issue, evaluate and award a contract to a new master custodian.

28. Section D.7 Assignment and Subcontracting –

Contractor requires flexibility to assign the contract to any of its affiliates in the event of a corporate restructuring. Would the State be open to revising this provision as indicated below to allow for this flexibility in alignment with the Contractor’s standards? See comments to Section A.19 of the Pro Forma Contract and to Sections 4.4.2-4.4.5 of the RFP included herein.

Assignment and Subcontracting. The Contractor shall not assign this Contract (except that the Contractor may assign this Contract to (i) any Contractor Affiliate, and (ii) any entity, that shall by merger, consolidation, purchase, or otherwise, succeed to substantially all the institutional custody business of the Contractor shall, upon such succession and without any appointment or other action by the State, be and become successor custodian hereunder) or enter into a subcontract for any of the services performed under this Contract

See response to Question 1 above. See also Item 3 below for an amendment to Section D.7 of the Pro Forma Contract (RFP Attachment 6.5).

RFP 30901-62826 Amendment 1 Page 14 of 39 without obtaining the prior written approval of the State. If such subcontracts are approved by the State, each shall contain, at a minimum, sections of this Contract below pertaining to “Conflicts of Interest,” “Nondiscrimination,” and “Records” (as identified by the section headings).

Notwithstanding any use of approved subcontractors, the Contractor shall be the prime contractor and shall be responsible for all work performed. Notwithstanding the foregoing, it is expressly acknowledged and agreed by the parties hereto that Subcustodians, Depositories and Market Data Providers (as defined herein) utilized by Contractor shall not, for any purpose under this Contract, constitute subcontractors.

29. Section D.11 Records – Page 61

Contractor’s has a standard retention schedule for records, based on type of record and date of creation. Would the State consider revising this provision to align with Contractor’s internal practices? See below:

Records. The Contractor shall maintain documentation for all charges under this Contract.

The Account Records books, records, and documents of the Contractor, for work performed or money received under this Contract, shall be maintained in accordance with Contractor’s retention schedule for a period of five (5) full years from the date of the final payment and shall be subject to audit at any reasonable time and upon reasonable notice by the State, the Comptroller of the Treasury, or their duly appointed representatives. The financial statements shall be prepared in accordance with generally accepted accounting principles.

The State respectfully declines. This is the State’s required retention period for these type records. If the Contractor’s retention period is longer, than the Contractor’s retention period would be acceptable.

30. Section D.13 Progress Reports – Page 61

Could the State please confirm what the expected format of these reports would be?

If there will be any expected format for reports that are not otherwise specified in the contract, the format will be mutually agreed to by the parties in the Operating Procedures described in Section A.14 of the contract.

31. Section D.16 Patient Protection and Affordable Care Act – Page 61

Would the State consider deleting this provision as the PPACA would not be applicable to the services to be provided by Contractor?

The State respectfully declines. Section D.16 is a Tennessee state standard provision included in all Tennessee State contracts.

32. Section D.17 Limitation of State’s Liability –

Would the State consider making this limitation of liability clause (waiver of consequential damages)

See Item 5 below for an amendment to Section A.21 of the Pro Forma Contract.

RFP 30901-62826 Amendment 1 Page 15 of 39 mutual so that Contractor’s liability towards the State is also limited in this manner?

33. Section D.18 Limitation of Contractor’s Liability – Page 62

Contractor’s contracting standards provide that the liability of Contractor is limited to those direct damages suffered by the State as a result of Contractor’s failure to act in accordance with the Standard of Care (i.e. negligence). Would the State consider negotiating this language to provide for this? See comment to Section A.21 included herein.

See response to Question 17 above.

34. Section D.19 Hold Harmless – Page 62

Would the State consider limiting Contractor’s indemnity obligations to those direct losses arising of Contractor’s failure to act in accordance with the Standard of Care (i.e. Negligence)?

See Item 4 below for an amendment to Section D.19 of the Pro Forma Contract.

35. Section D.20 HIPAA Compliance – Page 62

Services that would be provided by Contractor are not subject to HIPAA. In the negotiation of a definitive contract, Contractor would request that this provision be deleted.

This modification is not necessary since Section D.20 does not apply to the services being provided under the contract. As stated in Section D.20, the provision applies only “if applicable”. This provision is a Tennessee state standard provision included in all Tennessee State contracts.

36. Section D.21 Tennessee Consolidated Retirement System – Page 62

Could the State please provide more detail as to how is the statutory provision cited in this clause applicable to the services to be provided by Contractor?

The provision does not apply due to the nature of the services being sought. The provision applies only if applicable. Section D.21 is a Tennessee state standard provision included in all Tennessee State contracts.

37. Section D.24 Force Majeure – Page 63

Would the State consider the following language in lieu of this provision?

The Contractor will not be responsible or liable for any failure or delay in the performance of its obligations under this Agreement to the extent caused, directly or indirectly, by natural disasters, fire, acts of God, strikes or other labor disputes, work stoppages, acts of war or terrorism, general civil unrest, actual or threatened epidemics, disease, act of any government, governmental authority or police or military authority, declared or threatened state of emergency, legal constraint, the interruption, loss or malfunction of utilities or transportation, communications or computer systems, or any other similar events beyond its reasonable control. Contractor will use commercially reasonable efforts to minimize the effect of any such events.

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38. Section D.26 Governing Law – Page 64

Contractor proposes in adding the following sentence to Section D.26 to clarify that the parties waive any right to a jury trial:

The parties hereby expressly waive, to the full extent permitted by applicable law, any right to trial by jury with respect to any judicial proceeding arising from or related to this Agreement.

The State respectfully declines.

39. Section D.30 Incorporation of Additional Documents – Page 64

Would the State consider the following revisions to this clause?

a. any amendment to this Contract, with the latter in time controlling over any earlier amendments;

b. this Contract with any attachments or exhibits (excluding the items listed at subsections c.

through f., below), which includes Contract Attachments 1-5.1 – 4;

c. any clarifications of or addenda to the Contractor’s proposal seeking this Contract;

d. the State solicitation, as may be amended, requesting responses in competition for this Contract; the Contractor’s proposal seeking this Contract;

e. any technical specifications provided to proposers during the procurement process to award this Contract the State solicitation, as may be amended, requesting proposals in competition for this Contract;; and

f. the Contractor’s response seeking this Contract.

any technical specifications provided to proposers during the procurement process to award this Contract.

The State respectfully declines. This is a required Tennessee state contract provision.

40. D.32 Insurance – Page 64-68. Would the State be amendable to the following revisions?

Contractor holds the right to amend its insurance coverage as it deems appropriate and does not grant this right to third parties. Contractor does not provide copies of its insurance policies but will provide relevant certificates of insurance within 10 days following renewal. Lastly, Contractor makes no representation or covenant regarding insurance coverage of our subcontractors.

As a result, Contractor proposes to revise this provision as indicated below:

RFP 30901-62826 Amendment 1 Page 17 of 39

Contractor shall maintain insurance coverage as specified in this Section. The State reserves the right to amend or require additional insurance coverage, coverage amounts, and endorsements required under this Contract. Contractor’s failure to maintain or submit evidence of insurance coverage, as required, is a material breach of this Contract. If Contractor loses insurance coverage, fails to renew coverage, or for any reason becomes uninsured during the Term, Contractor shall immediately notify the State. All insurance companies providing coverage must be: (a) acceptable to the State; (b) authorized by the Tennessee Department of Commerce and Insurance (“TDCI”); and (c) rated A- / VII or better by A.M. Best. All coverage must be on a primary basis and noncontributory with any other insurance or self-insurance carried by the State.

Contractor agrees to include the State as an additional insured on any insurance policy with the exception of workers’ compensation (employer liability), professional liability (errors and omissions), or crime insurance. All policies, except cyber, must contain an endorsement or policy wording for a waiver of subrogation in favor of the State. However, the State shall be named a loss payee on the Contractor’s crime policy.

Any deductible or self-insured retention (“SIR”) over fifty thousand dollars ($50,000) must be disclosed to the State. The deductible or SIR and any premiums are the Contractor’s sole responsibility. The Contractor agrees that the insurance requirements specified in this Section do not reduce any liability the Contractor has assumed under this Contract including any indemnification or hold harmless requirements.

To achieve the required coverage amounts, a combination of an otherwise deficient specific policy and an umbrella policy with an aggregate meeting or exceeding the required coverage amounts is acceptable. For example: If the required policy limit under this Contract is for two million dollars ($2,000,000) in coverage, acceptable coverage would include a specific policy covering one million dollars ($1,000,000) combined with an umbrella policy for an additional one million dollars ($1,000,000). If the deficient underlying policy is for a coverage area without aggregate limits (generally Automobile Liability and Employers’ Liability Accident), Contractor shall advise the State and allow the State to view a copy of the umbrella insurance policy documents to ensure that no aggregate limit applies to the umbrella policy for that coverage area. In the event that an umbrella policy is being

RFP 30901-62826 Amendment 1 Page 18 of 39 provided to achieve any required coverage amounts, the umbrella policy shall be accompanied by an endorsement at least as broad as the Insurance Services Office, Inc. (also known as “ISO”)

Contractor shall provide the State a certificate of insurance (“COI”) evidencing the coverages and amounts specified in this Section. The COI must be on a form approved by the TDCI (standard ACORD form preferred). The COI must list each insurer’s National Association of Insurance Commissioners (NAIC) number and be signed by an authorized representative of the insurer. The COI must list the State of Tennessee – CPO Risk Manager, 312 Rosa L. Parks Ave., 3rd floor Central Procurement Office, Nashville, TN 37243 as the certificate holder. Contractor shall provide the COI ten (10) business days prior to the Effective Date and shall endeavor to provide it again on the date of renewal or replacement of coverage, but no later than ten (10) seven (7) business days after the renewal or replacement of coverage; provided, however, in cases where professional lines are purchased in layers, it shall be provided by no later than fourteen (14) calendar days after the renewal or replacement of coverage if the Contractor provides to the State a renewal confirmation from the Contractor’s insurance broker on the effective date of the new policies. Contractor shall provide the State evidence that all subcontractors maintain the required insurance or that subcontractors are included under the Contractor’s policy. At any time, the State may require Contractor to provide a valid COI. The Parties agree that failure to provide evidence of insurance coverage as required is a material breach of this Contract. If Contractor self-insures, then a COI will not be required to prove coverage. Instead, Contractor shall provide a certificate of self-insurance or a letter, on Contractor’s letterhead, detailing its coverage, policy amounts, and proof of funds to reasonably cover such expenses. The Contractor shall permit the State to review complete copies of all required insurance policies, including endorsements required by these specifications, at any time.

41. Section D.32.d Professional Liability

Insurance – Page 68

Contractor proposes to revise subsection 1.ii and 1.iii as indicated below:

i. Insurance must be maintained, and evidence of insurance must be provided for at least five

RFP 30901-62826 Amendment 1 Page 19 of 39

(5) three (3) full years from the date of the final Contract payment; and

ii. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a retroactive date on or prior to the Contract Effective Date, the Contractor must purchase “extended reporting” or “tail coverage” for three (3) a minimum of five (5) full years from the date of the final Contract payment.

42. Section D.32.e - Page 69

Contractor proposes to revise paragraph 1 of this section, as indicated below:

e. Technology Professional Liability (Errors & Omissions)/Cyber Liability Insurance

1) The Contractor shall maintain technology professional liability (errors & omissions)/cyber liability insurance appropriate to the Contractor’s profession in an amount not less than ten million dollars ($10,000,000) per occurrence or claim and ten million dollars ($10,000,000) annual aggregate, covering all acts, claims, errors, omissions, negligence, infringement of intellectual property (including copyright, patent and trade secret); network security and privacy risks, including but not limited to unauthorized access, failure of security, information theft, damage to destruction of or alteration of electronic information, breach of privacy perils, wrongful disclosure and release of private information, collection, or other negligence in the handling of confidential information, and including coverage for related regulatory fines, defenses, and penalties.

The State respectfully decline

43. Section D.33 Major Procurement Contract Sales and Use Tax – Page 68

This provision does not seem to be applicable to the services in scope for this RFP. As such, Contractor proposes to delete this provision.

Section D.33 states that it applies only “to the extent applicable”. Consequently, and since this is a standard contract provision that is included in all Tennessee State Government personal services contracts, the State respectfully declines.

44. Section D.34 Confidentiality of Records –

Would the State be open to negotiating this provision so that it is revised to allow for disclosures as requested to be disclosed by any regulatory authority having jurisdiction over Contractor, and to allow for Contractor to share Confidential Information with its Affiliates, joint ventures and suppliers as needed for Contractor’s

See Item 8 below for an amendment to Section D.34 of the Pro Forma Contract (RFP Attachment 5.5).

RFP 30901-62826 Amendment 1 Page 20 of 39 performance under the Contract and for regulatory, accounting, marketing and other centralized functions performed by Contractor?

See proposed revisions below:

Confidentiality of Records. Strict standards of confidentiality of records and information shall be maintained in accordance with applicable state and federal law. All material and information, regardless of form, medium or method of communication, provided to the Contractor by the State or acquired by the Contractor on behalf of the State that is regarded as confidential under state or federal law shall be regarded as “Confidential Information.” Nothing in this Section shall permit Contractor to disclose any Confidential Information, regardless of whether it has been disclosed or made available to the Contractor due to intentional or negligent actions or inactions of agents of the State or third parties.

Notwithstanding the foregoing, the Contractor may: (a) disclose information regarding the State and its accounts as required by law or at the request of any governmental or regulatory authority whose request must be honored pursuant to law or regulation; (b) use the State’s Confidential Information in connection with certain functions performed on a centralized basis by the Contractor, its Affiliates and joint ventures and their service providers (including audit, accounting, risk, legal, compliance, sales, administration, product communication, relationship management, compilation and analysis of customer-related data and storage);

(b) disclose such information to its Affiliates and joint ventures and to its and…