BTCW WisdomTree Bitcoin Fund

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): November 20, 2024

 

 

WISDOMTREE BITCOIN FUND

 

(Exact name of registrant as specified in its charter)

 

 

Delaware		1-03480		99-6119726
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

250 West 34th Street, 3rd Floor

New York, New York 10119

(Address of principal executive offices, including zip code)

 

(866) 909-9473 

(Registrant's telephone number, including area code)

 

formerly WisdomTree Bitcoin Trust

 

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares of Beneficial Interest of WisdomTree Bitcoin Fund	BTCW	Cboe BZX Exchange, Inc.

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter):
 

Emerging growth company x
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

On November 20, 2024, WisdomTree Bitcoin Fund (the “Trust”) entered into the following agreements with the Bank of New York Mellon (“BNY Mellon”):

 

-

A Custody Agreement (the “Custody Agreement”), a form of which is attached hereto as Exhibit 10.4, pursuant to which BNY Mellon will act as a custodian of certain assets of the Trust.

-

A Fund Administration and Accounting Agreement (the “FAA Agreement”), a form of which is attached hereto as Exhibit 10.5, pursuant to which BNY Mellon will provide certain accounting, administrative, legal, financial reporting, and other services for the maintenance and operations of the Trust.

-

A Transfer Agency and Service Agreement (the “TA Agreement”), a form of which is attached hereto as Exhibit 10.6, pursuant to which BNY Mellon will provide certain transfer agency services associated with receiving and processing creation and redemption orders and matters related to the transfer of the Trust’s shares.

 

Each of the Custody Agreement, the FAA Agreement and the TA Agreement (collectively, the “Agreements”) will be subject to an initial three-year term that will automatically renew for additional one-year terms unless either party provides written notice of termination at least ninety days prior to the end of the initial term or any then-effective renewal term. Each of the foregoing descriptions of the Agreements are not complete and are qualified in their entirety by reference to the full text of the Agreements described.

 

Item 9.01. Financial Statements and Exhibits.

Exhibit Number		Description
10.4		Custody Agreement, dated November 15, 2024, effective November 25, 2024 by and between the Trust and BNY Mellon.
10.5		Fund Administration and Accounting Agreement, dated November 15, 2024, effective November 25, 2024 by and between the Trust and BNY Mellon.
10.6		Transfer Agency and Service Agreement, dated November 15, 2024, effective November 25, 2024 by and between the Trust and BNY Mellon.
104		Cover Page Interactive Data File (embedded within Inline XBRL document).

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	WISDOMTREE BITCOIN FUND
Date: November 26, 2024	By:	/s/ Jeremy Schwartz
		Jeremy Schwartz
		Chief Executive Officer*

 

*Registrant is a trust and the identified person signing this report is signing in their capacity as an authorized officer of WisdomTree Digital Commodity Services, LLC, the Sponsor of the registrant. 

 

 

 

 

Exhibit 10.4

 

CUSTODY AGREEMENT

 

By and Between

 

THE BANK OF NEW YORK MELLON

 

And

 

WISDOMTREE BITCOIN FUND

 

 

TABLE OF CONTENTS
1.	DEFINITIONS		1
2.	APPOINTMENT OF CUSTODIAN; ACCOUNTS		3
	2.1	Appointment of Custodian	3
	2.2	Establishment of Accounts	4
3.	AUTHORIZED PERSONS AND INSTRUCTIONS; ELECTRONIC ACCESS		4
	3.1	Authorized Persons	4
	3.2	Instructions	4
	3.3	BNY Actions Without Instructions	5
	3.4	Funds Transfers	6
	3.5	Electronic Access	6
4.	AGENTS		6
	4.1	Use of Agents	6
5.	TAX MATTERS		6
	5.1	Responsibility for Taxes	6
	5.2	Payments	6
6.	CREDITS AND ADVANCES		6
	6.1	Advances	6
	6.2	Repayment	7
	6.3	Securing Repayment	7
	6.4	Setoff	7
7.	STATEMENTS; BOOKS AND RECORDS; THIRD PARTY DATA		8
	7.1	Statements	8
	7.2	Books and Records	8
	7.3	Third Party Data	8
8.	DISCLOSURES		9
	8.1	Foreign Exchange Transactions	9
	8.2	Investment of Cash	9
9.	REGULATORY MATTERS		9
	9.1	USA PATRIOT Act	9
	9.2	Sanctions; Anti-Money Laundering	10
	9.3	Notice of Certain Regulatory Matters	11
10.	COMPENSATION		11
	10.1	Fees and Expenses	11
	10.2	Other Compensation	11
11.	REPRESENTATIONS, WARRANTIES AND COVENANTS		12
	11.1	BNY	12
	11.2	Customer	12
12.	LIABILITY		13
	12.1	Standard of Care	13
	12.2	Limitation of Liability	13

 

 

	12.3	Force Majeure	14
	12.4	Indemnification and Insurance	14
13.	CONFIDENTIALITY		15
	13.1	Confidentiality Obligations	15
	13.2	Exceptions	16
	13.3	Information Security	17
14.	TERM AND TERMINATION		17
	14.1	Term	17
	14.2	Termination	17
	14.3	Effect of Termination	18
	14.4	Survival	19
15.	GENERAL		19
	15.1	Assignment	19
	15.2	Amendment	20
	15.3	Governing Law/Forum	20
	15.4	Business Continuity/Disaster Recovery	20
	15.5	Non-Fiduciary Status	20
	15.6	Notices	21
	15.7	Entire Agreement	21
	15.8	No Third Party Beneficiaries	21
	15.9	Counterparts	21
	15.10	Interpretation	21
	15.11	No Waiver	22
	15.12	Headings	22
	15.13	Severability	22

 

 

CUSTODY AGREEMENT

 

 

This Custody Agreement is made and entered into as of November 15, 2024 by and between THE BANK OF NEW YORK MELLON, a New York state chartered bank (“BNY”), and WISDOMTREE BITCOIN FUND, a Delaware statutory trust (“Customer”). BNY and Customer are collectively referred to as the “Parties” and individually as a “Party”. This Agreement shall be effective on November 25, 2024 or on such other date as the Parties may agree in writing (the “Effective Date”).

 

RECITALS

 

WHEREAS, Customer wishes to appoint BNY as the custodian of certain of its assets, and BNY is willing to provide such services on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and intending to be legally bound, the Parties agree as follows.

 

1.

DEFINITIONS

 

Whenever used in this Agreement, the following words have the meanings set forth below:

 

“Account” or “Accounts” has the meaning set forth in Section 2.2.

 

“Affiliate” means, with respect to any entity, any other entity that directly or indirectly controls, is controlled by or under common control with such entity.

 

“Agreement” means, collectively, this Custody Agreement, any Appendices and Exhibits hereto and any other documents incorporated herein by reference.

 

“Anti-Money Laundering Laws” means all anti-money laundering and counter-terrorist financing laws, rules, regulations, executive orders and requirements administered by any governmental authority of the United States (including the U.S. Bank Secrecy Act, the U.S.A. PATRIOT Act, the Money Laundering Control Act, and regulations of the U.S. Treasury Department which implement such acts) or any other applicable domestic or foreign authority with jurisdiction over Customer.

 

“Assets” has the meaning set forth in Section 2.1(a).

 

“Authorized Person” has the meaning set forth in Section 3.1.

 

“BNY” has the meaning set forth in the introductory paragraph.

 

“Breach Notice” has the meaning set forth in Section 16.2(a).

 

“Breach Termination Notice” has the meaning set forth in Section 16.2(a).

 

“Cash” means the money and currency of any jurisdiction which BNY accepts for deposit in an Account.

 

 

“Confidential Information” means, with respect to a Party, the terms of this Agreement and all non-public business and financial information of such Party (including, with respect to Customer, information regarding the Accounts and including, with respect to BNY, information regarding its practices and procedures related to the services provided hereunder) disclosed to the other Party in connection with this Agreement.

 

“Customer” has the meaning set forth in the introductory paragraph.

 

“Data Terms Website” means http://www.bnymellon.com/products/assetservicing/vendoragreement.pdf or any successor website the address of which is provided by BNY to Customer.

 

“Defaulting Party” has the meaning set forth in Section 16.2(a).

 

“Effective Date” has the meaning set forth in the introductory paragraph.

 

“Electronic Access Services” means such services made available by BNY or a BNY Affiliate to Customer to electronically access information relating to the Accounts and/or transmit Instructions.

 

“Electronic Signature” means an image, representation or symbol inserted into an electronic copy of the Agreement by electronic, digital or other technological methods.

 

“Instructions” means, with respect to this Agreement, instructions issued to BNY by way of (a) one of the following methods (each as and to the extent specified by BNY as available for use in connection with the services hereunder): (i) the Electronic Access Services; (ii) third-party electronic communication services containing, where applicable, appropriate authorization codes, passwords or authentication keys, or otherwise appearing on their face to have been transmitted by an Authorized Person or (iii) third-party institutional trade matching utilities used to effect transactions in accordance with such utility’s customary procedures or (b) such other method as may be agreed upon by the Parties and that appear on their face to have been transmitted by an Authorized Person.

 

“Key Personnel” means (i) the designated primary relationship individual and service individual assigned to Customer as of the Effective Date, (ii) the BNY personnel identified by BNY as the primary points of contact for each BNY function, and (iii) such other personnel as assigned from time to time in accordance with Section 13.1 of this Agreement.

 

“Market Data” means pricing, valuations or other commercially sourced data applicable to any Security. Market Data also includes security identifiers, bond ratings and classification data.

 

“Market Data Providers” means vendors and analytics providers and any other Person providing Market Data to BNY.

 

“Non-Defaulting Party” has the meaning set forth in Section 14.2(a).

 

“Non-Renewal Notice” has the meaning set forth in Section 14.1(b).

 

 

“Oral Instructions” means, with respect to this Agreement, spoken instructions received by BNY under permissible circumstances agreed by Customer and BNY, all in such manner and in accordance with such testing and authentication procedures as the Parties shall agree upon from time to time, and reasonably believed by BNY to be from an Authorized Person.

 

“Party” or “Parties” has the meaning set forth in the introductory paragraph.

 

“Person” or “Persons” means any entity or individual.

 

“Regulatory Matters” has the meaning set forth in Section 9.3.

 

“Renewal Term” has the meaning set forth in Section 14.1(b).

 

“Sanctions” means all economic sanctions laws, rules, regulations, executive orders and requirements administered by any governmental authority of the United States (including the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury) or any other applicable domestic or foreign authority with jurisdiction over Customer.

 

“Standard of Care” has the meaning set forth in Section 12.1.

 

“Tax Obligations” means taxes, withholding, certification and reporting requirements, claims for exemptions or refund, interest, penalties, additions to tax and other related expenses.

 

“Third Party Data” has the meaning set forth in Section 9.3(a).

 

2.

APPOINTMENT OF CUSTODIAN; ACCOUNTS

 

2.1

Appointment of Custodian

 

(a)

Customer hereby appoints BNY as custodian of all Cash to be held under, and in accordance with the terms of, this Agreement (the “Assets”), and BNY hereby accepts such appointment. BNY agrees to perform its duties under this Agreement in accordance with the provisions of this Agreement and in accordance with statutes, laws, rules and regulations applicable to BNY ’s performance of the services set forth in this Agreement. The Parties acknowledge and agree that BNY’s duties pursuant to such appointment will be limited solely to those duties expressly undertaken pursuant to this Agreement.

 

(b)

Notwithstanding the foregoing, BNY has no obligation:

 

(i)

With respect to any Assets until they are actually received in an Account;

 

(ii)

To inquire into, make recommendations, supervise or determine the suitability of any transactions affecting any Account or to question any Instructions;

 

(iii)

To determine the adequacy of title to, or the validity or genuineness of, any Assets received by it or delivered by it pursuant to this Agreement; or

 

(iv)

With respect to any matters related to: the establishment, maintenance operation or termination of Customer; or the offer, sale or distribution of the shares of, or interests in, Customer.

 

 

(c)

Operational terms, procedures and processes supporting the services described herein are set out in a separate service level description, a current version of which will be available upon request at any time.

 

(d)

Certain service level agreements are set forth in a Service Level Agreement executed as of the Effective Date. Additional appropriate service levels will be negotiated in the course of onboarding as the requirements of Customer are worked through by the respective service and operational teams at Customer and BNY Mellon.

 

(e)

Cash held hereunder may be subject to additional deposit terms and conditions issued by BNY from time to time, including rates of interest and deposit account access.

 

2.2

Establishment of Accounts

 

BNY will establish and maintain a separate account or accounts for the Trust in which BNY will hold Assets relating to the Trust as provided herein (each, an “Account,” and collectively, the “Accounts”).

 

3.

AUTHORIZED PERSONS AND INSTRUCTIONS; ELECTRONIC ACCESS

 

3.1

Authorized Persons

 

Promptly following the Effective Date, Customer and/or its designee (including any of Customer’s investment managers) will furnish BNY with one or more written lists or other documentation acceptable to BNY specifying the names and titles of, or otherwise identifying, all Persons authorized to act on behalf of Customer (with respect to a particular Series, if applicable) with respect to this Agreement (each, an “Authorized Person”). Customer will be responsible for keeping such lists and/or other documentation current, and will update such lists and/or other documentation, as necessary from time to time, pursuant to Instructions.

 

3.2

Instructions

 

(a)

Except as otherwise expressly provided in this Agreement, BNY will have no obligation to take any action hereunder unless and until it receives Instructions issued in accordance with this Agreement.

 

(b)

Customer will be responsible for ensuring that (i) only Authorized Persons issue Instructions to BNY and (ii) all Authorized Persons safeguard and treat with extreme care any user and authorization codes, passwords and authentication keys used in connection with the issuance of Instructions.

 

(c)

Where Customer may or is required to issue Instructions, such Instructions will be issued by any Authorized Person.

 

BNY will be entitled to deal with any Authorized Person until notified otherwise pursuant to Instructions, and will be entitled to act in accordance with and rely upon any Instruction received by BNY.

 

 

(d)

All Instructions must include all information necessary, and must be delivered using such methods as are described in the definition of “Instructions” and in such format as BNY may reasonably require and be received within BNY’s established cut-off times and otherwise in sufficient time, to enable BNY to act upon such Instructions).

 

(e)

BNY may in its sole discretion decline to act upon any Instructions that do not comply with requirements set forth in Section 3.2(d) or that conflict with applicable law or regulations or BNY’s operating policies and practices, in which event BNY will promptly notify Customer unless prevented from doing so by applicable law.

 

(f)

Customer acknowledges that while it is not part of BNY’s normal practices and procedures to accept Oral Instructions, BNY may in certain limited circumstances accept Oral Instructions. In such event, such Oral Instructions will be deemed to be Instructions for purposes of this Agreement. An Authorized Person issuing such an Oral Instruction will promptly confirm such Oral Instruction to BNY in writing. Notwithstanding the foregoing, Customer agrees that the fact that such written confirmation is not received by BNY, or that such written confirmation contradicts the Oral Instruction, will in no way affect (i) BNY’s reliance on such Oral Instruction or (ii) the validity or enforceability of transactions authorized by such Oral Instruction and effected by BNY.

 

(g)

Customer acknowledges and agrees that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to BNY and that there may be more secure methods of transmitting Instructions than the method selected by the sender. Customer agrees that the security procedures, if any, to be followed by Customer and BNY with respect to the transmission and authentication of Instructions provide to Customer a commercially reasonable degree of protection in light of its particular needs and circumstances.

 

3.3

BNY Actions Without Instructions

 

Notwithstanding anything to the contrary set forth in this Agreement, Customer hereby authorizes BNY, without Instructions, to take any administrative or ministerial actions with respect to the Accounts that it deems reasonably necessary or appropriate to perform its obligations under this Agreement, including the following:

 

(a)

Receive income and other payments due to the Accounts;

 

(b)

Endorse for collection checks, drafts or other negotiable instruments received for the Accounts; and

 

(c)

Execute and deliver, solely in its capacity as custodian, certificates, documents or instruments incidental to BNY’s performance under this Agreement.

 

 

3.4

Funds Transfers

 

With respect to each Instruction for a Cash transfer, when the Instruction is to credit or pay a party by both a name and a unique numeric or alpha-numeric identifier (e.g., IBAN or ABA or account number), BNY and any other bank participating in the Cash transfer will be entitled to rely solely on such numeric or alpha-numeric identifier, even if it identifies a party different from the party named. Such reliance on an identifier will apply to beneficiaries named in the Instruction, as well as any financial institution that is designated in the Instruction to act as an intermediary in such Cash transfer. To the extent permitted by applicable law, the Parties will be bound by the rules of any transfer system used to effect a Cash transfer under this Agreement.

 

3.5

Electronic Access

 

If Customer elects to use the Electronic Access Services in connection with this Agreement, the use thereof will be subject to any terms and conditions contained in a separate written agreement between the Parties or their Affiliates. However, if an Authorized Person elects, with BNY’s prior consent, to transmit Instructions through a third-party electronic communications service, BNY will not be responsible or liable for the reliability or availability of any such service.

 

4.

AGENTS

 

4.1

Use of Agents

 

BNY may appoint agents, including BNY Affiliates, on such terms and conditions as it reasonably deems appropriate to perform its obligations hereunder. Except as otherwise specifically provided herein, no such appointment will discharge BNY from its obligations hereunder.

 

5.

TAX MATTERS

 

5.1

Responsibility for Taxes

 

(a)

Customer will be responsible for understanding its Tax Obligations, and will be solely responsible and liable for all Tax Obligations with respect to any Assets held on behalf of Customer and any transaction related thereto.

 

(b)

Customer acknowledges and agrees that none of BNY nor any BNY Affiliate is a tax adviser and none of BNY nor any BNY Affiliate will, under any circumstances, provide tax advice to Customer. Customer will obtain its own independent tax advice for any tax-related matters or Tax Obligations.

 

5.2

Payments

 

Where BNY receives Instructions to make distributions or transfers out of an Account in order to pay Customer’s third party service providers, Customer acknowledges that in making such payments BNY is acting in an administrative capacity, and not as the payor, for tax information reporting and withholding purposes.

 

6.

CREDITS AND ADVANCES

 

6.1

Advances

 

If BNY receives an Instruction that, if processed, would result in an overdraft in an Account, BNY may, in its sole discretion, advance funds in any currency hereunder; however, BNY will have no obligation to advance its own funds.

 

 

6.2

Repayment

 

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

 

6.3

Securing Repayment

 

In order to secure repayment of Customer’s obligations and liabilities (whether or not matured) to BNY or any BNY Affiliate, relating to or arising under this Agreement or any other agreement with BNY or any BNY Affiliate, and in addition to any preference, lien or other rights and security interest to which BNY or such BNY Affiliate may be entitled under applicable law or any other agreement, Customer hereby pledges and grants to BNY and such BNY Affiliate, and agrees BNY and such BNY Affiliate will have to the maximum extent permitted by law, a continuing first lien and security interest in: (a) all of Customer’s right, title and interest in and to the Account and the Assets now or hereafter held in such Account (including proceeds thereof) and (b) any other property at any time held by BNY or any BNY Affiliate for the Customer; provided that Customer 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 BNY (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)). Customer represents, warrants and covenants that it owns the Assets in the Accounts, and such other property at any time held by BNY or any BNY Affiliate relating to Customer, 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 BNY), and that the first lien and security interest granted herein with respect to the Customer 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). Customer will take any additional steps required to assure BNY of such priority security interest, including notifying third parties or obtaining their consent. BNY will be entitled to collect from the relevant Account sufficient Cash for reimbursement. In this regard, BNY 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 Customer is in default.

 

6.4

Setoff

 

BNY has the right to debit any Cash for any amount payable by Customer in connection with any and all obligations (whether or not matured) of Customer to BNY or any BNY Affiliate, relating to or arising under this Agreement or any other agreement with BNY or any BNY Affiliate. In addition to the rights of BNY or such BNY Affiliate under applicable law or any other agreement, at any time when Customer has not honored any of its obligations to BNY or such BNY Affiliate, BNY will have the right without notice to Customer to retain or set-off against any obligations relating to the Customer any cash BNY or any BNY Affiliate may directly or indirectly hold with respect to the Customer, and any obligations (whether or not matured) that BNY or any BNY Affiliate may have with respect to the Customer in any currency. Any such cash or obligation relating to the Customer may be transferred to BNY and any BNY Affiliate in order to effect the above rights.

 

 

7.

STATEMENTS; BOOKS AND RECORDS; THIRD PARTY DATA

 

7.1

Statements

 

BNY will make available to Customer, through the Electronic Access Services, a monthly statement (or report for such other time period as the Parties may agree upon from time to time) reflecting all transfers to or from the Accounts during such month and all holdings in the Accounts as of the last business day of such month (or as of such other date(s) as the Parties may agree upon from time to time). Customer will promptly review each such statement and, within ninety (90) days of when such statement is made available by BNY, notify BNY of any exception or objection thereto. Notwithstanding the foregoing, Customer may notify BNY of any such exceptions or objections at any time; provided, however, that BNY will not be responsible or liable for any losses that could have been mitigated had such notice been provided during such ninety (90) day period.

 

7.2

Books and Records

 

The books and records, directly pertaining to the Accounts, which are in the possession of BNY will be the property of Customer. Such books and records will be prepared and maintained as required by applicable law, rules and regulations. In addition, upon notification by Customer that it is in receipt of or otherwise subject to a court order, regulatory request or order, subpoena, or other similar action or context necessitating the preservation of certain records maintained by BNY for the Customer, BNY shall promptly implement reasonable measures to preserve such records in accordance with the duration or other direction specified by the Customer in accordance with BNY ’s policies and procedures and cooperate in the provision to Customer of such records; provided, however, that if BNY is not able to accommodate any such request, it will reasonably assist Customer in its efforts to preserve such records, including by transmitting such records to Customer. BNY will identify on its books and records the Assets belonging to Customer with respect to each Series. Customer and its authorized representatives will have the right, at Customer’s own expense and with reasonable prior written notice to BNY, to have reasonable access to those books and records directly pertaining to the Accounts. Copies of all such records shall be furnished promptly to the Fund upon request from Customer, including in connection with any regulatory request or examination, and shall at all times during the regular business hours of BNY be open for inspection by duly authorized officers or employees of the Fund. Any such access will be subject to BNY’s applicable security policies and procedures.

 

7.3

Third Party Data

 

(a)

Customer acknowledges that BNY will be receiving, utilizing and relying on Market Data and other data provided by Customer and/or by third parties in connection with its performance of the services hereunder (collectively, “Third Party Data”). BNY is entitled to rely without inquiry on all Third Party Data provided to BNY hereunder (and all Instructions related to Third Party Data), and BNY makes no assurances or warranties in relation to the accuracy or completeness of Third Party Data and will not be responsible or liable for any losses or damages incurred as a result of any Third Party Data that is inaccurate or incomplete. BNY may follow Instructions with respect to Third Party Data, even if such Instructions direct BNY to override its usual procedures and data sources or if BNY, in performing services for itself or others (including services similar to performed for Customer), receives different Third Party Data.

 

 

(b)

Certain Market Data may be the intellectual property of Market Data Providers, which impose additional terms and conditions upon Customer’s use of such Market Data. Such additional terms and conditions can be found on the Data Terms Website. Customer agrees to those terms and conditions as they are posted on the Data Terms Website from time to time. BNY shall promptly notify, by posting to the Data Terms Website, Customer of any new postings or changes to the terms of any conditions previously posted in the Data Terms Website.

 

8.

DISCLOSURES

 

8.1

Foreign Exchange Transactions

 

In connection with this Agreement, Customer may enter into foreign exchange transactions (including foreign exchange hedging transactions) with BNY or a BNY Affiliate acting as a principal through customary channels. Customer may issue standing Instructions with respect to any such foreign exchange transactions, subject to any terms, rules or limitations that apply to any foreign exchange facility made available to Customer. With respect to any such foreign exchange transactions, BNY or such BNY Affiliate is acting as a principal counterparty on its own behalf which may retain any profits from such foreign exchange transactions, and is not acting as a fiduciary or agent for, or on behalf of, Customer, a Series, an investment manager or any Account.

 

8.2

Investment of Cash

 

In connection with this Agreement, Customer may issue standing Instructions to invest Cash in one or more sweep investment vehicles. Such investment vehicles may be offered by a BNY Affiliate or by a client of BNY, and BNY may receive compensation therefrom. By making investment vehicles available, BNY will not be deemed to have recommended, endorsed or guaranteed any such investment vehicle in any way or otherwise to have acted as a fiduciary or agent for, or on behalf of, Customer, its investment manager or any Account under this Agreement. BNY will have no liability for any loss under this Agreement incurred on any such investments. Customer understands that Cash may be uninvested if it is received or reconciled to an Account after the applicable deadline to be swept into Customer’s selected investment vehicle.

 

9.

REGULATORY MATTERS

 

9.1

USA PATRIOT Act

 

Section 326 of the U.S. Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (including its implementing regulations) requires BNY to implement a customer identification program pursuant to which BNY must obtain certain information from Customer in order to verify Customer’s identity prior to establishing an Account. Accordingly, prior to establishing an Account, Customer will be required to provide BNY with certain information, including Customer’s name, physical address, tax identification number and other pertinent identifying information, to enable BNY to verify Customer’s identity. Customer acknowledges that BNY cannot establish an Account unless and until BNY has successfully performed such verification.

 

 

9.2

Sanctions; Anti-Money Laundering

 

(a)

Throughout the term of this Agreement, Customer: (i) will have in place and will implement policies and procedures designed to prevent violations of Sanctions, including measures to accomplish effective and timely scanning of all relevant data with respect to its clients (to the extent the Assets are client assets) and with respect to incoming or outgoing assets or transactions relating to this Agreement; (ii) will ensure that neither Customer nor any of its Affiliates, directors, officers, employees or clients (to the extent the Assets are client assets) is an individual or entity that is, or is owned or controlled by an individual or entity that is: (A) the target of Sanctions or (B) located, organized or resident in a country or territory that is, or whose government is, the target of Sanctions and (iii) will not, directly or indirectly, use the Accounts in any manner that would result in a violation by Customer or BNY of Sanctions.

 

(b)

Customer acknowledges and agrees that, in connection with the services provided by BNY under this Agreement, each of Customer’s authorized participants is not a customer or joint customer with BNY. Customer (and not BNY) has the responsibility to, and will, fulfill any compliance requirement or obligation with respect to each of its authorized participants under all Anti-Money Laundering Laws. Without limiting any obligation imposed on Customer by Anti-Money Laundering Laws, throughout the term of this Agreement, Customer will maintain a compliance program with respect to its authorized participants that includes the following: (i) a know-your-customer program in order to understand and verify the identity of each authorized participant, in accordance with the requirements of the Bank Secrecy Act and the relevant regulations thereunder, (ii) a transaction surveillance and monitoring program, and (iii) a policy for identifying and reporting any suspicious transactions and/or activities with respect to each authorized participant to the appropriate law enforcement and regulatory authorities and to BNY where related to the services provided by BNY hereunder.

 

(c)

Customer will promptly provide to BNY such information as BNY reasonably requests in connection with the matters referenced in this Section 9.2, including information regarding (i) the Accounts, (ii) the Assets and the source thereof, (iii) the identity of any individual or entity having or claiming an interest therein, and (iv) Customer’s anti-money laundering and Sanctions compliance programs and any related records and/or transaction information, including with respect to any authorized participant, regardless of whether such request is made under USA PATRIOT Act Section 314(b) (where applicable). Customer will cooperate with BNY and provide assistance reasonably requested by BNY in connection with any anti-money laundering and terrorist financing or Sanctions inquiries. Prior to delivering to BNY the assets of any authorized participant, Customer will obtain from each such authorized participant, and will continue to maintain in effect throughout the term of this Agreement, any consents or waivers that may be required under applicable law in order to comply with the foregoing obligations.

 

(d)

BNY may decline to act or provide services in respect of any Account, and take such other actions as it, in its reasonable discretion, deems necessary or advisable, in connection with the matters referenced in this Section 11.2. If BNY declines to act or provide services as provided in the preceding sentence, except as otherwise prohibited by applicable law or official request, BNY will inform Customer as soon as reasonably practicable.

 

 

9.3

Notice of Certain Regulatory Matters

 

At the request of the Customer, and provided that disclosure by BNY is not prohibited by applicable law, rule or agreement between BNY and any governmental authority, BNY will make available to the Customer publicly filed information regarding a criminal or regulatory investigation of BNY. Customer acknowledges and agrees that BNY’s failure to make any such information available to Customer shall not be deemed to be a breach of this Agreement.

 

10.

COMPENSATION

 

10.1

Fees and Expenses

 

In consideration of BNY’s services provided hereunder, Customer will (a) pay to BNY the fees set forth in the fee schedule as agreed in good faith and as amended from time to time on the mutual agreement of the parties and (b) reimburse BNY for such reasonable out-of-pocket and incidental expenses incurred by BNY in connection therewith. Unless otherwise agreed by the Parties, such amounts will be payable to BNY within thirty (30) calendar days of Customer’s receipt of the relevant invoice. Customer shall notify BNY in writing within thirty (30) calendar days following receipt of an invoice if Customer is disputing any amounts in good faith. Without limiting BNY’s other rights set forth in this Agreement, BNY may charge interest on undisputed amounts that are overdue at a rate then charged by BNY to its institutional custody clients in the relevant currency. The Parties agree that any new fees and/or expenses to be charged to the Customer that are related to any changes to the services required by any new applicable law, rule or regulation shall be agreed upon in advance.

 

10.2

Other Compensation

 

Customer acknowledges that, as part of BNY’s compensation, BNY Mellon will earn interest on Cash balances held by BNY (including disbursement balances, balances arising from purchase and sale transactions and when Cash otherwise remains uninvested) as provided in BNY’s compensation disclosures.

 

(a)

Where an error or omission has occurred in this Agreement that results in an unintended gain, any such gain will be promptly reported to, and solely for the account of, the Customer.

 

 

11.

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

11.1

BNY

 

(a)

BNY represents and warrants that: (a) it is duly organized, validly existing and in good standing in its jurisdiction of organization; (b) it has the requisite corporate power and authority to enter into and to carry out the transactions contemplated by this Agreement; (c) the individual executing this Agreement on its behalf has the requisite authority to bind BNY to this Agreement including by Electronic Signature, and any such Electronic Signature represents an intent to enter into this Agreement and an agreement with its terms; (d) no legal or administrative proceedings have been instituted or threatened which would materially impair BNY ’s ability to perform its duties and obligations under this Agreement; (e) its entrance into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of BNY or any law or regulation applicable to it; and, (f) it has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement, it will use adequate numbers of qualified personnel with suitable training, education, experience and skill to perform the services under this Agreement, and it is skilled and experienced in providing services similar to the services under this Agreement for customers other than the Series.

 

(b)

BNY shall provide the Customer, as it may reasonably request, with a SOC 1 report (or any comparable successor report thereto) by independent public accountants on BNY ’s system, relating to the services provided by BNY under this Agreement.

 

(c)

BNY will make commercially reasonable efforts to not remove or replace with any other person, any Key Personnel without providing notice to Customer unless such Key Personnel is being terminated or suspended or notification is not practicable under the circumstances.

 

(d)

The Customer may reasonably request the replacement of Key Personnel during the Term, and BNY shall comply with such requests except as prohibited by applicable law and on a commercially reasonable basis within a reasonable amount of time. The Parties may agree upon other conditions relating to Key Personnel from time to time.

 

(e)

BNY will establish a governance structure for the provision of services to the Series and will consult with Customer with respect to the appointment of persons to the positions for internal face-off on day-to-day matters.

 

11.2

Customer

 

(a)

Customer represents and warrants that: (i) it is duly organized, validly existing and in good standing in its jurisdiction of organization; (ii) it has the requisite corporate power and authority to enter into and to carry out the transactions contemplated by this Agreement; and (iii) the individual executing this Agreement on its behalf has the requisite authority to bind Customer to this Agreement including by Electronic Signature, and any such Electronic Signature represents an intent to enter into this Agreement and an agreement with its terms.

 

(b)

Customer represents and warrants that all actions taken, or to be taken, by or on behalf of Customer in connection with establishing, maintaining, operating or terminating Customer (including, any offer, sale or distribution of the shares of, or interest in, Customer) shall be done in compliance with all applicable U.S. state and federal securities laws and regulations and all other applicable laws and regulations of all applicable jurisdictions.

 

 

12.

LIABILITY

 

12.1

Standard of Care

 

In performing its duties under this Agreement, BNY will exercise the standard of care and diligence that a prudent professional custodian responsible for providing custodial and similar services to registered investment companies would observe in these affairs taking into account the prevailing rules, practices, procedures and circumstances in the relevant market and shall act without bad faith, negligence, willful misconduct, willful misfeasance, fraud, or reckless disregard of its duties and obligations under this Agreement (“Standard of Care”).

 

12.2

Limitation of Liability

 

(a)

In no event will a party be liable for any indirect, incidental, consequential, exemplary, punitive or special losses or damages, or for any loss of revenues, profits or business opportunity, arising out of or relating to this Agreement (whether or not foreseeable and even if such party has been advised of the possibility of such losses or damages).

 

(b)

BNY’s liability arising out of or relating to this Agreement will be limited solely to those direct damages that are caused by BNY’s failure to perform its obligations under this Agreement in accordance with the Standard of Care. Notwithstanding anything to the contrary set forth in this Agreement, in no event will BNY be liable for any losses or damages arising out of any of the following:

 

(i)

Customer’s or an Authorized Person’s decision to invest in or hold Assets in any particular country, including any losses or damages arising out of or relating to: (A) the financial infrastructure of a country; (B) a country’s prevailing custody and settlement practices; (C) nationalization, expropriation or other governmental actions; (D) a country’s regulation of the banking or securities industry; (E) currency and exchange controls, restrictions, devaluations, redenominations, fluctuations or asset freezes; (F) laws, rules, regulations or orders that at any time prohibit or impose burdens or costs on the transfer of Assets to, by or for the account of Customer or (G) market conditions which affect the orderly execution of securities transactions or affect the value of securities;

 

(ii)

BNY’s reliance on and acting in accordance with Instructions;

 

(iii)

For any matter with respect to which BNY is required to act only upon the receipt of Instructions, (A) BNY’s failure to act in the absence of such Instructions or (B) Instructions that are late or incomplete or do not otherwise satisfy the requirements of Section 3.2(d), whether or not BNY acted upon such instructions;

 

(iv)

BNY receiving or transmitting any data to or from Customer or any Authorized Person via any non-secure method of transmission or communication selected by Customer;

 

(v)

Customer’s or an Authorized Person’s decision to hold Cash in any currency;

 

 

(vi)

The insolvency of any Person.

 

(c)

If BNY is in doubt as to any action it should or should not take, either pursuant to, or in the absence of, Instructions, BNY may obtain the advice of either reputable counsel of its own choosing or counsel to Customer. To the extent BNY notifies Customer of such advice and Customer, acting reasonably and in good faith, concurs that reliance on such advice is reasonable as it relates to Customer, BNY will not be liable for acting in accordance with such advice.

 

12.3

Force Majeure

 

BNY 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. BNY will promptly notify the Customer upon the occurrence of any such event and will use commercially reasonable efforts to minimize the effect of any such events. For the avoidance of doubt, the occurrence of any such event will not relieve BNY of its obligations to execute its business continuity and/or disaster recovery plans as described in Section 15.4.

 

In the event that the Customer reasonably believes that the occurrence of any such event will substantially prevent, hinder or delay performance of the services contemplated by this Agreement for more than three (3) consecutive business days, the Customer may take commercially reasonable actions to mitigate the impact of such services not being provided, including, but not limited to, at the Customer’s expense, contracting with another service provider to provide such services during such period; provided, that the Customer shall consult with BNY in good faith in connection with any such mitigation and BNY shall provide Customer reasonable assistance in good faith in connection therewith; provided, further, that BNY shall resume providing, and the Customer shall pay for, such services when BNY resumes providing them, unless the Customer has terminated this Agreement pursuant to the terms of Section 14.2. Notwithstanding anything set forth in this Section 12.3, (a) in no event shall the Customer be obligated to pay any fees under this Agreement to BNY with respect to any services not actually provided during any event described in this Section 12.3, and (b) the Customer shall have no responsibility to pay BNY for services temporarily performed by a third party service provider.

 

12.4

Indemnification and Insurance

 

(a)

Customer will indemnify and hold harmless BNY from and against direct losses, costs, expenses, damages and liabilities (including reasonable counsel fees and expenses) incurred by BNY arising out of or relating to BNY’s performance under this Agreement, except to the extent resulting from BNY’s failure to perform its obligations under this Agreement in accordance with the Standard of Care. The Parties agree that the foregoing will include reasonable counsel fees and expenses incurred by BNY in its successful defense of claims that are asserted by Customer against BNY arising out of or relating to BNY’s performance under this Agreement.

 

 

(b)

Subject to the limitations of liability in Section 12.2, BNY will indemnify and hold harmless the Customer from and against direct losses, costs, expenses, damages and liabilities (including reasonable counsel fees and expenses) incurred by the Customer as the direct result of BNY’s failure to perform its obligations under this Agreement in accordance with the Standard of Care.

 

(c)

Upon the occurrence of any event directly arising out of the services provided by BNY under this Agreement that causes any loss, cost, expense, damage or liability to the Customer, BNY will promptly notify the Customer of the occurrence of such event and use commercially reasonable efforts to attempt to mitigate the detrimental effects of such event and limit or avoid continuing harm to the Customer. In order that the indemnification provisions contained in this Section 14.4 shall apply, upon the assertion of a claim for which either Party may be required to indemnify the other, the Party seeking indemnification shall promptly notify the other Party of such assertion, and shall keep the other Party advised with respect to all material developments concerning such claim. The Party who may be required to indemnify shall have the right to control the defense of the claim, and the party seeking indemnification shall have the option to participate in the defense of such claim, at its own cost and expense. The Party seeking indemnification will cooperate reasonably, at the indemnifying Party’s expense, with the indemnifying Party in the defense of such claim; provided, however, that the Party seeking indemnification shall not be required to take any action that would impair any claim it may have against the indemnifying Party. The Party seeking indemnification shall in no case confess any claim or make any compromise in any case in which the other Party may be required to indemnify it except with the other Party’s prior written consent. The indemnifying Party shall not settle or compromise any claim or consent to the entry of any judgment with respect to which indemnification is being sought hereunder without the prior written consent of the Party seeking indemnification, which consent shall not be unreasonably withheld, delayed or conditioned.

 

(d)

BNY will maintain, at its own cost, at all times during the term of this Agreement, errors and omissions insurance, fidelity bonds and such other insurance as BNY may deem appropriate, in each case in a commercially reasonable amount deemed by BNY to be sufficient to cover its potential liabilities under this Agreement, including without limitation cyber-liability insurance coverage deemed by BNY to be appropriate. Upon request, BNY agrees to provide the Customer with certificates of insurance.

 

13.

CONFIDENTIALITY

 

13.1

Confidentiality Obligations

 

Each Party agrees to use the Confidential Information of the other Party solely to accomplish the purposes of this Agreement and, except in connection with such purposes or as otherwise permitted herein, not to disclose such information to any other Person without the prior written consent of the other Party. Notwithstanding the foregoing, BNY may: (a) use Customer’s Confidential Information in connection with certain functions performed on a centralized basis by BNY, 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 their service providers who are subject to confidentiality obligations and (c) store the names and business contact information of Customer’s employees and representatives relating to this Agreement on the systems or in the records of its Affiliates and joint ventures and its and their service providers. In addition, BNY may aggregate information regarding Customer and the Accounts on an anonymized basis with other similar client data for BNY’s and its Affiliates’ reporting, research, product development and distribution, and marketing purposes provided that BNY shall not distribute the aggregated data in a format that identifies customer-related data with respect to Customer or any particular Series.

 

 

BNY will employ reasonable safeguards designed to protect Customer’s Confidential Information, which may include but are not limited to the use of encryption technologies, passwords and any other safeguards BNY may choose to employ. To the extent that BNY’s affiliates or other permitted agents or subcontractors have access to Confidential Information, BNY shall require that such entities are subject to terms governing confidentiality and security of such information that are substantially similar to those set forth in this Agreement. At all times, BNY shall remain responsible and liable for such entities’ compliance with the terms of Section 13.1. BNY agrees to notify promptly the Customer of any breach of this Section 13.1 and to provide the Customer with details as to the nature and extent of the breach, including, but not limited to, the type of confidential or personal information disclosed and the identity of the recipients of such information.

 

13.2

Exceptions

 

The Parties’ respective obligations under Section 13.1 will not apply to any such information: (a) that is, as of the time of its disclosure or thereafter becomes, part of the public domain through a source other than the receiving Party; (b) that was known to the receiving Party as of the time of its disclosure and was not otherwise subject to confidentiality obligations; (c) that is independently developed by the receiving Party without reference to such information; (d) that is subsequently learned from a third party not known to be under a confidentiality obligation to the disclosing Party or (e) that is required to be disclosed pursuant to applicable law, rule, regulation, requirement of any law enforcement agency, court order or other legal process or at the request of a regulatory authority. The Parties acknowledge that the existence and terms of this Agreement are required to be publicly disclosed by the Series pursuant to applicable law.

 

Without limiting the generality of the preceding paragraphs, BNY acknowledges and agrees that Customer is prohibited by law from making selective public disclosure of information regarding portfolio holdings, that disclosure of any and all such information to BNY Mellon hereunder is made strictly under the conditions of confidentiality set forth in Section 13.1 hereof and solely for the purposes of the performance of custodial services hereunder, that any unauthorized disclosure or misuse of such information (including by BNY or any of its employees or agents, or any trading on the basis of such information by anyone in receipt of such information) may constitute a criminal offense of trading on or tipping of material inside information regarding publicly traded securities, that access to and use of any and all such information shall be restricted as described in Section 13.1 hereof, and that BNY shall apprise all such persons having access of the obligation hereunder and under applicable law to prevent unauthorized disclosure of such Confidential Information.

 

 

The Parties acknowledge and agree that any breach of Section 13.1 hereof would cause not only financial damage, but irreparable harm to the other Party, for which money damages will not provide an adequate remedy. Accordingly, in the event of a breach of Section 13.1 hereof, the non-breaching Party shall (in addition to all other rights and remedies they may have pursuant to this Agreement and at law or in equity) be entitled to an injunction, without the necessity of posting any bond or surety, to restrain disclosure or misuse, in whole or in part, of any information in violation of Section 13.1 hereof.

 

13.3

Information Security

 

(a)

BNY will establish, implement, maintain and periodically test systems, plans and procedures relating to data and cyber security, data privacy, disaster recovery and business continuity with respect to the services provided pursuant to this Agreement.

 

(b)

BNY will implement an information security program consistent with the Information Security Program Set forth in Exhibit A for the protection of information received from Customer in connection with this Agreement.

 

14.

TERM AND TERMINATION

 

14.1

Term

 

(a)

This Agreement will commence on the Effective Date and, unless terminated pursuant to its terms, will continue in effect until 11:59 PM (Eastern time) on the date which is the third anniversary of the Effective Date (the “Initial Term”), at which time this Agreement shall terminate, unless renewed in accordance with the terms hereof.

 

(b)

This Agreement shall automatically renew for successive terms of one (1) year each (each, a “Renewal Term”), unless Customer or BNY gives written notice to the other Party of its intent not to renew not less than ninety (90) days prior to the expiration of the Initial Term or the then-current Renewal Term (a “Non-Renewal Notice”). In the event a Party provides a Non-Renewal Notice, this Agreement shall terminate with respect to Customer at 11:59 PM (Eastern time) on the last day of the Initial Term or Renewal Term, as applicable.

 

14.2

Termination

 

(a)

Notwithstanding Section 14.1, if Customer or BNY materially breaches this Agreement (a “Defaulting Party”) the other Party (on one hand, BNY; on the other hand, Customer) (the “Non-Defaulting Party”) may give written notice thereof to the Defaulting Party (BNY or Customer) (“Breach Notice”), and if such material breach shall not have been remedied within thirty (30) days after the Breach Notice is given, then the Non-Defaulting Party may terminate this Agreement by giving at least sixty (60) days’ written notice of termination to the Defaulting Party. If any such notice is provided by the Customer or by BNY (a “Breach Termination Notice”), this Agreement shall terminate as of 11:59 PM (Eastern time) on the last day of the applicable notice period following the date the Breach Termination Notice is given by the Non-Defaulting Party, or such later date as may be specified in the Breach Termination Notice (but not later than the last day of the Initial Term or then-current Renewal Term, as appropriate). In all cases, termination by the Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting Party of any other rights it might have under this Agreement or otherwise against the Defaulting Party.

 

 

(b)

To the extent BNY receives a Red, Amber, Green (“RAG”) rating of “red” for a given Key Performance Indicator (“KPI”) as specified in the Service Level Agreement for two consecutive months (or other measurement period for such Service Level, if applicable), this shall constitute a “Service Level Deep Default.” BNY shall have a period of two (2) months (or two (2) consecutive measurement periods, if applicable) in which to cure the Service Level Deep Default (the “Cure Period”). If, during the Cure Period, BNY receives two or more red RAG ratings for the KPI that triggered a Service Level Deep Default, the Customer may terminate the Agreement with respect to that service upon thirty (30) days’ written notice to BNY.

 

(c)

Notwithstanding any other provision of this Agreement, BNY or Customer may terminate this Agreement immediately by sending notice thereof to the other Party upon the happening of any of the following: (i) the other Party commences as debtor any case or proceeding under any bankruptcy, insolvency or similar law, or there is commenced against such other Party any such case or proceeding, (ii) the other Party commences as debtor any case or proceeding seeking the appointment of a receiver, conservator, trustee, custodian or similar official for such Party or any substantial part of its property or there is commenced against such other Party any such case or proceeding, (iii) the other Party makes a general assignment for the benefit of creditors, or (iv) the other Party admits in any recorded medium, written, electronic or otherwise, its inability to pay its debts as they come due. BNY or Customer may exercise its termination right under this Section 14.2(b) at any time after the occurrence of any of the foregoing events notwithstanding that such event may cease to be continuing prior to such exercise, and any delay in exercising this right shall not be construed as a waiver or other extinguishment of that right. Any exercise by BNY or Customer of its termination right under this Section 14.2(b) shall be without any prejudice to any other remedies or rights available to BNY or Customer and shall not be subject to any fee or penalty, whether monetary or equitable. Notwithstanding the provisions of Section 15.7 below, notice of termination under this Section 14.2(b) shall be considered given and effective when given, not when received.

 

(d)

Customer may terminate this Agreement at any time upon ninety (90) days’ prior written notice in the event that the Sponsor determines to liquidate the Trust. BNY may terminate this Agreement at any time upon ninety (90) days’ written notice for any reason and upon thirty (30) days’ written notice in the event of a breach of the Customer’s representations contained in Section 11.2.

 

14.3

Effect of Termination

 

(a)

Upon termination hereof, Customer will pay to BNY such compensation as may be due to BNY, and will reimburse BNY for other amounts payable or reimbursable to BNY hereunder, through the date of termination. BNY will follow such reasonable Instructions as Customer issues concerning the transfer of custody of records, Assets and other items; provided that (a) BNY will have no responsibility or liability for shipping and insurance costs associated therewith and (b) full payment has been made to BNY of its compensation, costs, expenses and other amounts to which it is entitled hereunder.

 

 

(b)

Notwithstanding any provision of this Section 14 to the contrary, in the event that this Agreement is terminated in its entirety the Parties agree to continue operating under the terms of this Agreement as if this Agreement remained in full force and effect for up to one (1) year (up to 180 days in the event of termination under Sections 14.2(a)-(d)) or for such shorter period of time as the Parties mutually agree is necessary for BNY to transfer the custody records, Assets and other items to a successor custodian pursuant to Instructions (the “Transition Period”); provided, that during any such Transition Period, BNY will be entitled to compensation for BNY’s Transition Period services pursuant to Section 10 and the provisions of this Agreement relating to the duties and obligations of BNY will remain in full force and effect. If any Assets remain in any Account after the Transition Period, BNY Mellon may deliver to Customer such Assets.

 

14.4

Survival

 

Any and all provisions of this Agreement which by their nature or effect are required or intended to be observed, kept or performed after the expiration or termination of this Agreement will survive the expiration or any termination of this Agreement and remain binding upon and for the Parties’ benefit, including Section 11 (Representations, Warranties and Covenants); Section 12 (Liability); Section 13 (Confidentiality); Section 14.3 (Effect of Termination); Section 14.4 (Survival) and Section 15.3 (Governing Law/Forum).

 

15.

GENERAL

 

15.1

Assignment

 

(a)

Neither Party may, without the other Party’s prior written consent, assign any of its rights or delegate any of its duties under this Agreement (whether by change of control, operation of law or otherwise). Notwithstanding the foregoing, BNY may, without the prior written consent of Customer, assign this Agreement or any of its rights, or delegate any of its duties hereunder: (a) to any BNY Affiliate or to any successor to the business of BNY to which this Agreement relates in connection with a sale or transfer of a majority or more of its assets, equity interests, or voting control; provided, that (i) BNY provides notice of such assignment or transfer to a BNY Affiliate or successor to Customer, and (ii) such assignment or transfer does not impair the provision of services under this Agreement in any material respect provided further, that if BNY assigns or transfers this Agreement pursuant to this Section 15.1(a) to a non-BNY Affiliate without the written consent of Customer, Customer shall have the option, exercisable for ninety (90) days after receiving written notice of such assignment or transfer (or for such longer period as may be mutually agreed by the Parties), to terminate this Agreement; or (b) as otherwise permitted in this Agreement; provided further, that any entity to which this Agreement is assigned by BNY without the prior written consent of Customer pursuant to a foregoing item (a) or (b) will satisfy the requirements for serving as a custodian for registered investment companies. Any purported assignment or delegation by a Party in violation of this provision will be voidable at the option of the other Party. This Agreement will be binding upon, and inure to the benefit of, the Parties and their respective permitted successors and assigns. BNY shall notify Customer promptly following the execution of any agreement that would result in, or would be expected to result in, a change of control of BNY; provided that such information is publicly available information and that BNY makes such information available to its clients generally.

 

 

15.2

Amendment

 

This Agreement may be amended or modified only in a written agreement signed by an authorized representative of each Party, provided that BNY shall not unreasonably withhold, delay or condition its agreement to the addition of a Series of Customer to the list of Series serviced under this Agreement. For purposes of the foregoing, email exchanges between the Parties will not be deemed to constitute a written agreement.

 

15.3

Governing Law/Forum

 

(a)

The substantive laws of the state of New York (without regard to its conflicts of law provisions) will govern all matters arising out of or relating to this Agreement, including the establishment and maintenance of the Accounts and for purposes of the Uniform Commercial Code and all issues specified in Article 2(1) of the Hague Securities Convention.

 

(b)

Each Party irrevocably agrees that all legal actions or proceedings brought by it against the other Party arising out of or relating to this Agreement will be brought solely and exclusively before the state or federal courts situated in New York City, New York. Each Party irrevocably submits to personal jurisdiction in such courts and waives any objection which it may now or hereafter have based on improper venue or forum non conveniens. The Parties hereby unconditionally waive, to the fullest extent permitted by applicable law, any right to a jury trial with respect to any such actions or proceedings.

 

15.4

Business Continuity/Disaster Recovery

 

BNY has implemented and shall maintain in effect at all times during the terms of this Agreement, business continuity and disaster recovery plans designed to minimize interruptions of service and ensure recovery of systems and applications used to provide the services under this Agreement. Such plans will cover the facilities, systems, applications and employees that are critical to the provision of the services hereunder, and will be tested at least annually to validate whether the recovery strategies, requirements, and protocols are viable and sustainable.

 

Such plans will, at a minimum, make reasonable provision for (i) periodic back-up of the computer files and data with respect to Customer and (ii) emergency use of electronic data processing equipment to provide services under this Agreement. Upon reasonable request, BNY shall provide a high-level presentation summarizing such plan. BNY represents that its business continuity plan is appropriate for its business as a provider of custody services.

 

15.5

Non-Fiduciary Status

 

Customer hereby acknowledges and agrees that BNY is not a fiduciary by virtue of accepting and carrying out its obligations under this Agreement and has not accepted any fiduciary duties, responsibilities or liabilities with respect to its services hereunder, including with respect to the management, investment advisory or sub-advisory functions of Customer.

 

 

15.6

Notices

 

Other than routine communications in the ordinary course of providing or receiving services hereunder (including Instructions), notices given hereunder will be: (a) addressed to BNY or Customer at the address set forth below (or such other address as either Party may designate in writing to the other Party) and (b) 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 (as a signed attachment) with confirmation of email receipt. All notices given in accordance with this Section will be effective upon receipt.

 

To the Customer:		WisdomTree Digital Commodity Services, LLC
		250 West 34th Street, 3rd Floor New York, New York 10119
		Email: legalnotice@wisdomtree.com
To BNY :
		The Bank of New York Mellon 240 Greenwich St. New York, NY 10286 Attn: Legal Department

 

15.7

Entire Agreement

 

This Agreement constitutes the sole and entire agreement among the Parties with respect to the matters dealt with herein, and merges, integrates and supersedes all prior and contemporaneous discussions, agreements and understandings between the Parties, whether oral or written, with respect to such matters.

 

15.8

No Third Party Beneficiaries

 

This Agreement is entered into solely between, and may be enforced only by, the Parties. Each Party intends that this Agreement will not, and no provision of this Agreement will be interpreted to, benefit, or create any right or cause of action in or on behalf of, any party or entity other than the Parties.

 

15.9

Counterparts

 

This Agreement may be executed in any number of counterparts, either manually or by Electronic Signature, each of which will be deemed an original, and said counterparts when taken together will constitute one and the same instrument and may be sufficiently evidenced by one set of counterparts. Executed counterparts may be delivered by facsimile or email.

 

15.10

Interpretation

 

The terms and conditions of this Agreement are the result of negotiations between the Parties. The Parties intend that this Agreement will not be construed in favor of or against a Party by reason of the extent to which such Party or its professional advisors participated in the preparation or drafting of this Agreement.

 

 

15.11

No Waiver

 

No failure or delay by a Party to exercise any right, remedy or power it has under this Agreement will impair or be construed as a waiver of such right, remedy or power. A waiver by a Party of any provision or any breach of any provision will not be construed to be a waiver by such Party of such provision in any other instance or any succeeding breach of such provision or a breach of any other provision. All waivers will be in writing and signed by an authorized representative of the waiving Party.

 

15.12

Headings

 

All section and subsection headings in this Agreement are included for convenience of reference only and will not be considered in the interpretation of the scope or intent of any provision of this Agreement.

 

15.13

Severability

 

The invalidity, illegality or unenforceability of any provision of this Agreement will not affect the validity, legality or enforceability of any other provision, and if any provision is held to be unenforceable as a matter of law, the other provisions will remain in full force and effect. In such case, the Parties will negotiate in good faith to replace each illegal, invalid or unenforceable provision with a valid, legal and enforceable provision that fulfills as closely as possible the original intent of the Parties.

 

15.14

Limitation of Liability

 

This Agreement has been entered into by the Customer and was executed and delivered by an officer of Customer’s sponsor, on behalf of the Customer, which officer was acting solely in his or her capacity as an officer of the sponsor and not in his or her individual capacity and which sponsor was acting solely in its capacity as sponsor of the Customer and not in its individual capacity. It is expressly acknowledged and agreed that the obligations of the Customer hereunder shall not be binding upon any of the shareholders, trustees, officers, employees or agents of the Customer or its sponsor, personally, but shall bind only the property of the Customer, as provided in the Customer’s Trust Agreement.

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

 

 

THE BANK OF NEW YORK MELLON			WISDOMTREE BITCOIN FUND By: WisdomTree Digital Commodity Services, LLC, its Sponsor
By:	/s/Robert M. Stein Jr		By:	/s/Jeremy Schwartz
Name:	Robert M. Stein Jr		Name:	Jeremy Schwartz
Title:	Vice President		Title:	Chief Executive Officer
Date:	November 20, 2024		Date:	November 20, 2024

 

 

Exhibit A

Information Security Program

 

Capitalized terms not defined herein shall have the meaning set forth in the Agreement.

 

 

I.

Information Security Program Overview.

 

A.       “Services” means the services provided under the Agreement.

 

B.       During the term of the Agreement, BNY will implement and maintain an information security program ("ISP") with written policies and procedures reasonably designed to protect the confidentiality and integrity of Customer’s Confidential Information provided to BNY in accordance with the Agreement and when in BNY ’s possession or under BNY ’s control (“Customer Data”). The ISP will include administrative, technical and physical safeguards, appropriate to the type of Customer Data concerned, reasonably designed to: (i) maintain the integrity, confidentiality and availability of Customer Data; (ii) protect against anticipated threats or hazards to the security or integrity of Customer Data; (iii) protect against unauthorized access to or use of Customer Data that could result in substantial harm or inconvenience to Customer or its clients, and (iv) provide for secure disposal of Customer Data.

 

C.       BNY ’s program is dynamic and may be modified to address technological changes or changes in the threat landscape, BNY ’s business activities or other factors. BNY reserves the right to modify the ISP at any time, provided that BNY shall not diminish the overall level of protection this Exhibit is intended to provide.

 

II.

Security Incident Response and Notice.

 

A.       BNY will maintain a documented incident management process designed to ensure timely detection of security events and response thereto.

 

B.       In the event of a declared Security Incident, BNY will (i) promptly notify Customer, (ii) provide updates to Customer regarding BNY ’s response and (iii) use reasonable efforts to implement measures designed to prevent a reoccurrence of Security Incidents of a similar nature.

 

C.       “Security Incident” means any known loss or unauthorized access, disclosure, use, alteration or destruction of Customer Data.

 

III.       Governance. BNY shall upon request (i) provide a copy of its most recent SSAE-18 or equivalent external audit report to Customer, which Customer may disclose solely to its internal or external auditors that are subject to written confidentiality obligations to use reasonable care to safeguard the report and not to disclose the report to any third party or use the report for any purpose other than evaluating BNY ’s security controls; (ii) engage a third party provider to perform penetration testing of BNY systems used to provide the Services and, upon request, provide Customer confirmation of such testing, and (iii) participate in Customer’s reasonable information security due diligence questionnaire process.

 

A. BNY shall also, no more than once in any 12 month period and upon request, on a mutually agreed date during business hours and subject to BNY ’s facility security policies and availability of personnel:

 

(i) meet with Customer subject matter experts in a BNY clean room to review information security policies, procedures and similar related information; provided that no documentation may be copied, disclosed to any third party, or transmitted or removed from BNY premises except as mutually agreed in writing; and

 

(ii) permit access to a BNY data center used to process Customer Data and provide the Services by no more than three Customer representatives, including employees of a regulatory or supervisory authority of Customer that is also a regulatory or supervisory authority of BNY , for a maximum of 3 hours in order to conduct a visual inspection of the environment and its controls.

 

 

Notwithstanding any provision in the Agreement to the contrary, Customer shall not disclose any verbal or written information obtained during the foregoing meetings described in above subsections (i)-(ii) to any third party or use it for any purpose other than evaluating BNY ’s security controls, without BNY ’s prior written consent. Customer shall reimburse BNY for any costs and expenses reasonably incurred in connection with Customer’s review (including that of the regulatory or supervisory authority personnel) of BNY ’s security controls and data center.

 

IV.

Network and Communications Security.

 

A.       Asset Management. BNY will maintain an inventory of its system components, hardware and software used to provide the Services, and will review and update such inventory in accordance with the ISP.

 

B.       Change Management. BNY shall require that changes to its network or software used to provide the Services are tested and applied pursuant to a documented change management process.

 

C.       Security Monitoring. BNY will monitor cyber threat intelligence feeds daily. BNY will deploy Denial of Service (DoS) and Distributed DoS solutions.

 

D.       Network Segmentation. BNY ’s infrastructure utilizes a multi-tier architecture, including a DMZ, to isolate the internal infrastructure from external networks. Traffic from external sources will traverse firewalls and pass through multiple layers of malware protection prior to processing. BNY ’s production environment used to provide the Services will be segregated from pre-production regions and BNY ’s internal segment.

 

E.       Vulnerability Management. BNY will maintain a documented process to identify and remediate security vulnerabilities affecting its systems used to provide the Services. BNY will classify security vulnerabilities using industry recognized standards and conduct continuous monitoring and testing of its networks, hardware and software including regular penetration testing and ethical hack assessments. BNY will remediate identified security vulnerabilities in accordance with its process.

 

F.       Malicious Code. BNY will deploy industry standard malicious code protection and identification tools across its systems and software used to provide the Services.

 

G.       Communications. BNY will protect electronic communications used in the provision of Services, including instant messaging and email services, using industry standard processes and technical controls and in accordance with the ISP.

 

V.       Application Security. The ISP will require that in-house application development be governed by a documented secure software development life cycle methodology, which will include deployment rules for new applications and changes to existing applications in live production environments.

 

VI.        Logging. The ISP will require the maintenance of network and application logs as part of BNY ’s security information and event management processes. Logs are retained in accordance with law applicable to BNY ’s provision of the Services as well as BNY ’s applicable policies. BNY uses various tools in conjunction with such logs, which may include behavioral analytics, security monitoring case management, network traffic monitoring and analysis, IP address management and full packet capture.

 

 

VII.

Data Security.

 

A.       Identity & Access Management. BNY will implement reasonable and industry recognized user access rules for users accessing Customer Data based on the need to know and the principle of least privilege, and including user ID and password requirements, session timeout and re-authentication requirements, unsuccessful login attempt limits, privileged access limits and multifactor authentication or equivalent safeguard where risk factors indicate that single factor authentication is inadequate.

 

B.       Data Segregation. The ISP will require that (i) Customer Data is stored in either physically or logically segregated databases from other BNY data and (ii) different databases are maintained for development, testing, staging and production environments used in the provision of Services.

 

C.       Encryption. BNY will (i) encrypt Customer Data in transit to an external network using transport layer security or other encryption method and (ii) protect Customer Data at rest, in each case as BNY determines to be appropriate in accordance with the ISP and law applicable to BNY ’s provision of the Services.

 

D.       Remote Access. The ISP will restrict remote access to BNY systems to authorized users using multifactor authentication or equivalent safeguard, and will require such access to be logged.

 

E.       Devices. BNY will restrict the transfer of Customer Data from its network to mass storage devices. BNY will use a mobile device management system or equivalent tool when mobile computing is used to provide the Services. Applications on such authenticated devices will be housed within an encrypted container and BNY will maintain the ability to remote wipe the contents of the container.

 

F.       Data Leakage Prevention (DLP). BNY will deploy DLP tools reasonably designed to help detect and prevent unauthorized transfers of Customer Data outside BNY ’s network.

 

G.       Disposal. BNY will maintain chain of custody procedures and require that any Customer Data requiring disposal be rendered inaccessible, cleaned or scrubbed from such hardware and/or media using industry recognized methods.

 

VIII.     Personnel. BNY will undertake background checks during the recruitment process of personnel involved in the provision of the Services, subject to applicable laws, and require its personnel involved in the provision of Services to undertake annual training on the aspects of the ISP applicable to the personnel’s job function.

 

IX.        Physical Security. BNY will deploy perimeter security such as barrier access controls around its facilities processing or storing Customer Data. The ISP will include (i) procedures for validating visitor identity and authorization to enter the premises, which may include identification checks, issuance of identification badges and recording of entry purpose of visit and (ii) physical security policies for personnel, such as a “clean desk” policy. In accordance with its ISP and applicable law, BNY will install closed circuit television (“CCTV”) systems and CCTV recording systems to monitor and record access to controlled areas, such as data centers and server rooms.

 

X.       Subcontracting. BNY will implement a third party governance program designed to provide oversight over unaffiliated third parties used to provide the Services (“Subcontractors”).

 

XI.        BCP/DR. BNY will implement business continuity and disaster recovery plans designed to minimize interruptions of service and ensure recovery of systems and applications used to provide the Services. Such plans shall cover the facilities, systems, applications and employees that are critical to the provision of the Services, and will be tested at least annually to validate that the recovery strategies, requirements and protocols are viable and sustainable.

 

 

26

 

 

 

Exhibit 10.5

 

FUND ADMINISTRATION AND ACCOUNTING AGREEMENT

 

THIS AGREEMENT is made as of November 15, 2024 by and between WisdomTree Bitcoin Fund, a Delaware Statutory Trust (hereinafter the “Trust”), having its principal office and place of business at 250 West 34^th Street, 3^rd Floor, New York, New York 10119, and The Bank of New York Mellon (“BNY Mellon”), a New York corporation authorized to do a banking business. BNY Mellon and the Trust are collectively referred to as the “Parties” and individually as a “Party.” This Agreement shall be effective on November 25, 2024 or such other date as the Trust and BNY Mellon may agree in writing (the “Effective Date”).

 

W I T N E S S E T H :

 

WHEREAS, the Trust will issue shares pursuant to the 1933 Act (as defined below);

 

WHEREAS, The Trust desires to retain BNY Mellon to provide the services described herein and on Schedule I hereto, and BNY Mellon is willing to provide such services, all as more fully set forth below;

 

NOW, THEREFORE, in consideration of the mutual promises and agreements contained herein, the parties hereby agree as follows:

 

1.

Definitions.

 

Whenever used in this Agreement, unless the context otherwise requires, the following words shall have the meanings set forth below:

 

“1933 Act” means the Securities Act of 1933, as amended.

 

“1934 Act” means the Securities Exchange Act of 1934, as amended.

 

“Anti-Money Laundering Laws” means all anti-money laundering and counter-terrorist financing laws, rules, regulations, executive orders and requirements administered by any governmental authority of the United States (including the U.S. Bank Secrecy Act, the U.S.A. PATRIOT Act, and regulations of the U.S. Treasury Department which implement such acts) or any other applicable domestic or foreign authority over the Trust.

 

 

“Authorized Person” shall mean each person, whether or not an officer or an employee of the Trust or the Sponsor, duly authorized to execute this Agreement and to give Instructions on behalf of the Trust as set forth in Exhibit A hereto and each Authorized Person’s scope of authority may be limited by setting forth such limitation in a written document signed by both parties hereto. From time to time the Trust may deliver a new Exhibit A to add or delete any person and BNY Mellon shall be entitled to rely on the last Exhibit A actually received by BNY Mellon.

 

“BNY Mellon Affiliate” shall mean any office, branch, or subsidiary of The Bank of New York Mellon Corporation.

 

“Confidential Information” shall have the meaning given in Section 18 of this Agreement.

 

“Documents” shall mean such other documents, including but not limited to, resolutions of the Sponsor authorizing the execution, delivery and performance of this Agreement by the Trust, and opinions of outside counsel, as BNY Mellon may reasonably request from time to time, in connection with its provision of services under this Agreement.

 

“Electronic Access Services” means such services made available by BNY Mellon or a BNY Mellon Affiliate to the Trust to electronically access information relating to the Accounts and/or transmit Instructions.

 

“Instructions” shall mean, with respect to this Agreement, instructions issued to BNY Mellon by way of (a) one of the following methods (each as and to the extent specified by BNY Mellon as available for use in connection with the services hereunder): (i) the Electronic Access Services; (ii) third-party electronic communication services containing, where applicable, appropriate authorization codes, passwords or authentication keys, or otherwise appearing on their face to have been transmitted by an Authorized Person or (iii) third-party institutional trade matching utilities used to effect transactions in accordance with such utility’s customary procedures or (b) such other method as may be agreed upon by the Parties and that appear on their face to have been transmitted by an Authorized Person.

 

“Key Personnel” means (i) the designated primary relationship individual and service individual assigned to the Trust as of the Effective Date, (ii) the BNY Mellon personnel identified by BNY Mellon as the primary points of contact for each BNY Mellon function, and (iii) such other personnel as assigned from time to time in accordance with Sections 5(q) and 5(r) of this Agreement.

 

 

“Net Asset Value” shall mean the per share value of the Trust, calculated in the manner described in the Trust’s Offering Materials.

 

“Offering Materials” shall mean the Trust’s currently effective prospectus and most recently filed registration statement with the SEC relating to shares of the Trust , including any amendments and supplements thereto.

 

“Oral Instructions” shall mean, with respect to this Agreement, spoken instructions received by BNY Mellon under permissible circumstances agreed by the Trust and BNY Mellon, all in such manner and in accordance with such testing and authentication procedures as the Parties shall agree upon from time to time, and reasonably believed by BNY Mellon to be from an Authorized Person.

 

“Organizational Documents” shall mean certified copies of the Trust’s articles of incorporation, certificate of incorporation, certificate of formation or organization, certificate of limited partnership, declaration of trust, trust instrument, bylaws, limited partnership agreement, memorandum of association, limited liability company agreement, operating agreement, confidential offering memorandum, material contracts, Offering Materials, all SEC exemptive orders issued to the Trust, required filings or similar documents of formation or organization, as applicable, delivered to and received by BNY Mellon.

 

“Sanctions” means all economic sanctions laws, rules, regulations, executive orders and requirements administered by any governmental authority of the United States (including the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury) or any other applicable domestic or foreign authority with jurisdiction over the Trust.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Securities Laws” means the 1933 Act and the 1934 Act.

 

 

“Shares” means the shares of beneficial interest of any series or class of the Trust.

 

“Sponsor” shall mean WisdomTree Digital Commodity Services, LLC, the Trust’s sponsor.

 

2.       Appointment.

 

The Trust hereby appoints BNY Mellon as its agent for the term of this Agreement to perform the services described herein. BNY Mellon hereby accepts such appointment and agrees to perform the duties hereinafter set forth.

 

3.       Representations and Warranties; Covenants.

 

(a)       (i) The Trust hereby represents and warrants to BNY Mellon, which representations and warranties shall be deemed to be continuing, that:

 

I.       It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;

 

II.       This Agreement has been duly authorized, executed and delivered by the Trust in accordance with all requisite action and constitutes a valid and legally binding obligation of the Trust, enforceable in accordance with its terms;

 

III.       The Sponsor is in good standing and qualified to do business in each jurisdiction in which the nature or conduct of its business requires such qualification;

 

IV.       It is conducting its business in compliance with all applicable laws and regulations, both state and federal, has made and will continue to make all necessary filings including tax filings and has obtained all regulatory licenses, approvals and consents necessary to carry on its business as now conducted; there is no statute, regulation, rule, order or judgment binding on it and no provision of its Organizational Documents, nor of any mortgage, indenture, credit agreement or other contract binding on it or affecting its property which would prohibit its execution or performance of this Agreement;

The Trust will maintain policies and procedures reasonably designed to ensure that all investments for the Trust are conducted in compliance with anti-corruption laws, Anti-Money Laundering Laws, and Sanctions applicable to the Trust. The Trust shall cooperate with BNY Mellon and provide assistance reasonably requested by BNY Mellon in connection with any anti-money laundering, terrorist financing or sanctions-related inquiries.

 

 

V.       The method of valuation of the assets of the Trust and the method of computing the Net Asset Value shall be as set forth in the Offering Materials of the Trust. To the extent the performance of any Valuation Support and Computation Accounting services described in Schedule I attached hereto by BNY Mellon in accordance with the then effective Offering Materials for the Trust would violate any applicable laws or regulations, the Trust shall immediately so notify BNY Mellon in writing and thereafter shall either furnish BNY Mellon with the appropriate values of Trust assets, net asset value or other computation, as the case may be, or, instruct BNY Mellon in writing to value Trust assets and/or compute Net Asset Value or other computations in a manner the Trust specifies in writing, and either the furnishing of such values or the giving of such instructions shall constitute a representation by the Trust that the same is consistent with all applicable laws and regulations and with its Offering Materials, all subject to confirmation by BNY Mellon as to its capacity to act in accordance with the foregoing;

 

VI.       Each person named on Exhibit A hereto is duly authorized by the Trust to be an Authorized Person hereunder;

 

VII.       It has implemented, and will act in accordance with, procedures reasonably designed to ensure that it will disseminate to all market participants, other than Authorized Participants (as defined in its Prospectus), each calculation of net asset value provided by BNY Mellon hereunder to Authorized Participants at the time BNY Mellon provides such calculation to Authorized Participants.

 

IX.       Without limiting the provisions of Section 18 below, the Trust shall treat as confidential the terms and conditions of this Agreement and shall not disclose nor authorize disclosure thereof to any other person, except (A) to its employees, regulators, examiners, internal and external accountants, auditors, and counsel, (B) for a summary description of this Agreement in the Offering Materials with the prior written approval of BNY Mellon (such approval not to be unreasonably withheld), (C) to any other person when required by applicable law, a court order or legal process, (D) as agreed in writing by BNY Mellon or (E) whenever advised by its counsel that it would be liable for a failure to make such disclosure. The Trust shall instruct its employees, regulators, examiners, internal and external accountants, auditors, and counsel who may be afforded access to such information of the Trust’s obligations of confidentiality hereunder; and

 

 

X.       The Trust shall promptly notify BNY Mellon in writing of any and all legal proceedings or securities investigations filed or commenced against the Trust or the Sponsor that are related to this Agreement or that might materially adversely impact the Trust’s ability to perform its obligations under the Agreement.

 

(b)       BNY Mellon hereby represents and warrants to the Trust, which representations and warranties shall be deemed to be continuing, that:

 

I.       It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;

 

II.       This Agreement has been duly authorized, executed and delivered by BNY Mellon in accordance with all requisite corporate action and constitutes a valid and legally binding obligation of BNY Mellon, enforceable in accordance with its terms;

 

III.       It is in compliance, in all material respects, with laws and regulations applicable to BNY Mellon in its capacity as a service provider hereunder;

 

IV.       No legal or administrative proceedings have been instituted or threatened which would materially impair BNY Mellon’s ability to perform its duties and obligations under this Agreement and BNY will notify the Trust, except as may be prohibited by applicable law, rule or agreement between BNY Mellon and any governmental authority, of any publicly filed legal, regulatory or administrative proceedings that have been instituted, which would materially impair BNY Mellon’s ability to perform its duties and obligations under this Agreement;

 

V.       BNY Mellon’s entrance into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of BNY Mellon or any law or regulation applicable to it; and

 

VI.       BNY Mellon has and will continue to have access to the necessary facilities, equipment and personnel with suitable training, education, experience and skill to perform the services under this Agreement.

 

 

4.       Delivery of Documents.

 

The Trust shall promptly provide, deliver, or cause to be delivered, from time to time, to BNY Mellon the Trust’s Organizational Documents, and Documents and other materials used in the distribution of Shares, and all amendments thereto, as may be necessary for BNY Mellon to perform its duties hereunder. BNY Mellon shall not be deemed to have notice of any information (other than information supplied by BNY Mellon) contained in such Organizational Documents, Documents or other materials until they are actually received by BNY Mellon.

 

5.       Matters Regarding BNY Mellon.

 

(a)       Subject to the direction of the Sponsor and the provisions of this Agreement, BNY Mellon shall provide to the Trust the administrative services and the valuation and computation services listed on Schedule I attached hereto.

 

(b)       Certain service level agreements are set forth in the Service Level Agreement executed as of the Effective Date.

 

(c)       In performing hereunder, BNY Mellon shall provide, at its expense, office space, facilities, equipment and personnel necessary to provide its services hereunder.

 

(d)       BNY Mellon shall not provide any services relating to the management, investment advisory or sub-advisory functions of the Trust, distribution of shares of the Trust, maintenance of the Trust’s financial records other than as specifically provided in this Agreement or other services normally performed by the Trust’s counsel or independent auditors and the services provided by BNY Mellon do not constitute, nor shall they be construed as constituting, legal advice or the provision of legal services for or on behalf of the Trust or any other person, and the Trust acknowledges that BNY Mellon does not provide public accounting or auditing services or advice and will not be making any tax filings, or doing any tax reporting on its behalf, other than those specifically agreed to hereunder. The scope of services provided by BNY Mellon under this Agreement shall not be increased as a result of new or revised regulatory or other requirements that may become applicable with respect to the Trust, unless the parties hereto expressly agree in writing to any such increase in the scope of services.

 

 

The Parties agree that any new fees to be charged to the Trust that are related to any changes to the services required by any new or revised regulatory or other requirements shall be agreed upon in advance. The Trust shall cause its officers, advisors, Sponsor, distributor, legal counsel, independent auditors and accountants, current administrator (if any), transfer agent, and any other service provider (except if any such service provider is BNY Mellon or a BNY Mellon Affiliate) to cooperate with BNY Mellon and to provide BNY Mellon, upon its reasonable request, with such information, documents and advice relating to the Trust as is within the possession or knowledge of such persons and which, in the opinion of BNY Mellon, is reasonably necessary in order to enable BNY Mellon to perform its duties hereunder. In connection with its duties hereunder, BNY Mellon shall not be responsible for, under any duty to inquire into, or be deemed to make any assurances with respect to the accuracy, validity or propriety of any information, documents or advice provided to BNY Mellon by any of the aforementioned persons. BNY Mellon shall not be liable for any loss, damage or expense resulting from or arising out of the failure of the Trust to provide any information, documents or advice, or the failure of the Trust to cause any information, documents or advice to be provided to BNY Mellon as provided herein and shall be held harmless by the Trust when acting in accordance with such information, documents or advice relating to the Trust. All fees or costs charged by such persons shall be borne by the Trust. In the event that any services performed by BNY Mellon hereunder rely, in whole or in part, upon information obtained from a third-party service utilized or subscribed to by BNY Mellon which BNY Mellon in its reasonable judgment deems reliable, BNY Mellon shall not have any responsibility or liability for, be under any duty to inquire into, or be deemed to make any assurances with respect to, the accuracy or completeness of such information.

 

(e)       Nothing in this Agreement shall limit or restrict BNY Mellon, any BNY Mellon Affiliate or any officer or employee thereof from acting for or with any third parties, and providing services similar or identical to some or all of the services provided hereunder.

 

 

(f)       The Trust shall furnish BNY Mellon with any and all Instructions, explanations, information, specifications and documentation reasonably deemed necessary by BNY Mellon in the performance of its duties hereunder, including, without limitation, the amounts or written formula for calculating the amounts and times of accrual of Trust liabilities and expenses. BNY Mellon shall not be required to include as Trust liabilities and expenses, nor as a reduction of Net Asset Value, any accrual for any federal, state, or foreign income taxes unless the Trust shall have specified to BNY Mellon in Instructions the precise amount of the same to be included in liabilities and expenses or used to reduce Net Asset Value or the appropriate tax accrual rate to be applied and to be used by BNY Mellon to calculate such amount. The Trust shall also furnish BNY Mellon with valuations for assets of the Trust if BNY Mellon notifies the Trust that (i) the same are not available to BNY Mellon from a pricing service utilized, or subscribed to, by BNY Mellon which the Trust directs BNY Mellon to utilize, and which (ii) BNY Mellon in its reasonable judgment deems reliable at the time such information is required for calculations hereunder. At any time and from time to time, the Trust also may furnish BNY Mellon with valuations for assets of the Trust and instruct BNY Mellon in Instructions to use such information in its calculations hereunder. BNY Mellon shall at no time be required or obligated to commence or maintain any utilization of, or subscriptions to, any pricing service. In no event shall BNY Mellon be required to determine, or have any obligations with respect to, whether a market price represents any fair or true value, nor to adjust any price to reflect any events or announcements, including, without limitation, those with respect to the issuer thereof, it being agreed that all such determinations and considerations shall be solely for the Trust.

 

(g)       BNY Mellon may apply to an Authorized Person of the Trust for Instructions with respect to any matter arising in connection with BNY Mellon’s performance hereunder, and BNY Mellon shall not be liable for any action taken or omitted to be taken by it consistent with the Standard of Care and in accordance with such Instructions. Such application for Instructions may, at the option of BNY Mellon, set forth in writing any action proposed to be taken or omitted to be taken by BNY Mellon with respect to its duties or obligations under this Agreement and the date on and/or after which such action shall be taken. BNY Mellon shall not be liable for any action taken or omitted to be taken in accordance with a proposal included in any such application on or after the date specified therein unless prior to taking or omitting to take any such action, BNY Mellon has received Instructions from an Authorized Person in response to such application specifying the action to be taken or omitted.

 

(h)       BNY Mellon may consult with counsel to the Trust or its own counsel. To the extent BNY Mellon notifies the Trust of such advice, and the Trust, acting reasonably and in good faith, concur that reliance on such advice is reasonable as it relates to the Trust, BNY Mellon shall be fully protected with respect to anything done or omitted by it in good faith in accordance with the advice or opinion of such counsel.

 

 

(i)       Notwithstanding any other provision contained in this Agreement or Schedule I attached hereto, BNY Mellon shall have no duty or obligation with respect to, including, without limitation, any duty or obligation to determine, or advise or notify the Trust of: (i) the taxable nature of any distribution or amount received or deemed received by, or payable to, the Trust, (ii) the taxable nature or effect on the Trust or its shareholders of any corporate actions, class actions, tax reclaims, tax refunds or similar events, (iii) the taxable nature or taxable amount of any distribution or dividend paid, payable or deemed paid, by the Trust to its shareholders; or (iv) the effect under any federal, state, or foreign income tax laws of the Trust making or not making any distribution or dividend payment, or any election with respect thereto.

 

(j)       BNY Mellon shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement and Schedule I attached hereto, and no covenant or obligation shall be implied against BNY Mellon in connection with this Agreement.

 

(k)       BNY Mellon, in performing the services required of it under the terms of this Agreement, shall be entitled to rely fully on the accuracy and validity of any and all Instructions, explanations, information, specifications, Documents and documentation furnished to it by or on behalf of the Trust and shall have no duty or obligation to review the accuracy, validity or propriety of such Instructions, explanations, information, specifications, Documents or documentation, including, without limitation, evaluations of assets; the amounts or formula for calculating the amounts and times of accrual of the Trust’s liabilities and expenses; the amounts receivable and the amounts payable on the sale or purchase of Trust assets; and the amounts receivable or the amounts payable for the sale or redemption of Trust Shares effected by or on behalf of the Trust.  In the event BNY Mellon’s computations hereunder rely, in whole or in part, upon information, including, without limitation, bid, offer or market values of securities or other assets of the Trust, or accruals of interest or earnings thereon, from a pricing or similar service utilized, or subscribed to, by BNY Mellon which the Trust directs BNY Mellon to utilize, and which BNY Mellon in its judgment deems reliable, BNY Mellon shall not be responsible for, under any duty to inquire into, or deemed to make any assurances with respect to, the accuracy or completeness of such information. Without limiting the generality of the foregoing, BNY Mellon shall not be required to inquire into any valuation of any Trust assets by the Trust or any third party described in this sub-section even though BNY Mellon in performing services similar to the services provided pursuant to this Agreement for others may receive different valuations of Trust assets.

 

 

(l)        BNY Mellon, in performing the services required of it under the terms of this Agreement, shall not be responsible for determining whether any interest accruable to the Trust is or will be actually paid, but will accrue such interest until otherwise instructed by the Trust.

 

(m)       BNY Mellon shall not be responsible for damages or be liable for any failure or delay in the performance of its obligations under this Agreement to the extent caused, directly or indirectly, by any event beyond its reasonable control, including, without limitation, labor difficulties within or without BNY Mellon, mechanical breakdowns, flood or catastrophe, acts of God, failures of transportation, interruptions, loss, or malfunctions of utilities, action or inaction of civil or military authority, national emergencies, public enemy, war, terrorism, riot, sabotage, failure of the mails, communications or computer (hardware or software) services, or functions or malfunctions of the internet, firewalls, encryption systems or security devices caused by any of the above.  BNY Mellon will promptly notify the Trust upon the occurrence of any such event and will use commercially reasonable efforts to minimize the effect of any such events. For the avoidance of doubt, the occurrence of any such event will not relieve BNY Mellon of its obligations to execute its business continuity and/or disaster recovery plans as described in Section 5(n), Section 5(o) and Exhibit B. In the event that the Trust reasonably believes that the occurrence of any such event will substantially prevent, hinder or delay performance of the services contemplated by this Agreement for more than three (3) consecutive business days, the Trust may take commercially reasonable actions to mitigate the impact of such services not being provided, including, but not limited to, at the Trust’s expense, contracting with another service provider to provide such services during such period and/or engaging the Sponsor or an affiliate of the Sponsor to perform such services during such period; provided, that the Trust shall consult with BNY Mellon in good faith in connection with any such mitigation and BNY Mellon shall provide the Trust reasonable assistance in good faith in connection therewith; provided, further, that BNY Mellon shall resume providing, and the Trust shall pay for, such services when BNY Mellon resumes providing them, unless the Trust has terminated this Agreement pursuant to the terms of Section 12(c). Notwithstanding anything set forth in this Section 5(m), (i) in no event shall the Trust be obligated to pay any fees under this Agreement to BNY Mellon with respect to any services not actually provided during any event described in this Section 5(m), and (ii) the Trust shall have no responsibility to pay BNY Mellon for services temporarily performed by the Sponsor or a third party service provider. BNY Mellon shall not be responsible for delays or failures to supply the information or services specified in this Agreement where such delays or failures are caused by the failure of any person(s) other than BNY Mellon to supply any instructions, explanations, information, specifications or documentation reasonably deemed necessary by BNY Mellon in the performance of its duties under this Agreement.

 

 

(n)       BNY Mellon has implemented and shall maintain in effect at all times during the terms of this Agreement, business continuity and disaster recovery plans designed to minimize interruptions of service and ensure recovery of systems and applications used to provide the services under this Agreement. Such plans will cover the facilities, systems, applications and employees that are critical to the provision of services hereunder, and will be tested at least annually to validate whether the recovery strategies, requirements, and protocols are viable and sustainable. Such plans will, at a minimum, make reasonable provision for (i) periodic back-up of the computer files and data with respect to the Trust, (ii) emergency use of electronic data processing equipment to provide services under this Agreement. Upon reasonable request, BNY Mellon shall provide a high-level presentation summarizing such plan.

 

(o)       BNY Mellon will establish, implement, maintain and periodically test systems, plans and procedures relating to data and cyber security, data privacy, disaster recovery and business continuity with respect to the services provided pursuant to this Agreement. BNY Mellon will implement an information security program consistent with the Information Security Program set forth in Exhibit B for the protection of information received from the Trust in connection with this Agreement.

 

(p)       BNY Mellon shall provide the Trust, as it may reasonably request, with a SOC 1 report (or any comparable successor report thereto) by independent public accountants on BNY Mellon’s system, relating to the services provided by BNY Mellon under this Agreement.

 

(q)       BNY Mellon will make commercially reasonable efforts to not remove or replace with any other person, any Key Personnel without providing notice to the Trust, unless such Key Personnel is being terminated or suspended or notification is not practicable under the circumstances.

 

 

(r)       The Trust may reasonably request the replacement of Key Personnel during the term of this Agreement, and BNY Mellon will comply with such requests except as prohibited by applicable law and on a commercially reasonable basis within a reasonable amount of time. The Parties may agree upon other conditions relating to Key Personnel from time to time.

 

(s)       BNY Mellon will establish a governance structure for the provision of services to the Trust and will consult with the Trust with respect to the appointment of persons to the positions for internal face-off on day-to-day matters.

 

(t)       It is understood and agreed by the parties hereto that under no circumstances will the services performed by BNY Mellon pursuant to this Agreement include any service, function or activity that would constitute a “virtual currency business activity” for purposes of the regulations issued by the Superintendent of the New York State Department of Financial Services (23 N.Y.C.R.R. Part 200).

 

6.       Allocation of Expenses.

 

Except as otherwise provided herein, all costs and expenses arising or incurred in connection with the performance of this Agreement shall be paid by the Trust, including but not limited to, organizational costs and costs of maintaining corporate existence, taxes, interest, brokerage fees and commissions, insurance premiums, compensation and expenses of Sponsor, officers or employees, legal, accounting and audit expenses, management, advisory, sub-advisory, administration and shareholder servicing fees, charges of custodians, transfer and dividend disbursing agents, expenses (including clerical expenses) incident to the issuance, redemption or repurchase of Trust shares or membership interests, as applicable, fees and expenses incident to the registration or qualification under the Securities Laws and state and other applicable securities laws of the Trust or its shares or membership interests, as applicable, costs (including printing and mailing costs) of preparing and distributing Offering Materials, reports, notices and proxy materials to the Trust’s shareholders or members, as applicable, all expenses incidental to holding meetings of Trust’s shareholders, and extraordinary expenses as may arise, including litigation affecting the Trust and legal obligations relating thereto for which the Trust may have to indemnify its officers, managers, and/or members, as may be applicable.

 

 

7.       Standard of Care; Indemnification; Insurance.

 

(a)       In no event will a Party be liable for any indirect, incidental, consequential, exemplary, punitive or special losses or damages, or for any loss of revenues, profits or business opportunity, arising out of or relating to this Agreement (whether or not foreseeable and even if such party has been advised of the possibility of such losses or damages).

 

(b)       In performing its duties under this Agreement, BNY Mellon will exercise the standard of care and diligence that a prudent professional administrator responsible for providing administrative, compliance, valuation and computation services to 1933 Act registered Bitcoin Exchange Traded Products would observe in these affairs and shall act without bad faith, negligence, willful misconduct, willful misfeasance, fraud, or reckless disregard of its duties and obligations under this Agreement (the “Standard of Care”), and except as otherwise provided herein, BNY Mellon and any BNY Mellon Affiliate shall not be liable for any costs, expenses, damages, liabilities or claims (including attorneys’ and accountants’ fees) incurred by or asserted against the Trust, except those costs, expenses, damages, liabilities or claims to the extent arising out of BNY Mellon’s or any BNY Mellon Affiliate’s failure to meet the Standard of Care. BNY Mellon and any BNY Mellon Affiliate shall not be liable for any loss, damage or expense, including counsel fees and other costs and expenses of a defense against any claim or liability, resulting from, arising out of, or in connection with its performance hereunder, including its actions or omissions, the incompleteness or inaccuracy of any specifications or other information furnished by the Trust, or for delays caused by circumstances beyond BNY Mellon’s reasonable control, unless such loss, damage or expense arises out of BNY Mellon’s or any BNY Mellon Affiliate’s failure to meet the Standard of Care. Except as may otherwise be provided in an agreement between the parties, BNY Mellon’s cumulative maximum liability to the Trust and all persons claiming through the Trust for any losses whatsoever (including but not limited to those arising out of or related to this Agreement in any respect) and regardless of the form of action or legal theory shall not exceed the cumulative fees received by BNY Mellon for services provided by BNY Mellon hereunder during the twelve months immediately prior to the date of the first reported loss.

 

 

(c)       The Trust shall indemnify and hold harmless BNY Mellon and any BNY Mellon Affiliate from and against any and all costs, expenses, damages, liabilities and claims (including claims asserted by the Trust), and reasonable attorneys’ and accountants’ fees relating thereto, which are sustained or incurred or which may be asserted against BNY Mellon or any BNY Mellon Affiliate, by reason of or as a result of any action taken or omitted to be taken by BNY Mellon or any BNY Mellon Affiliate in accordance with the Standard of Care or in reliance upon (i) any law, act, regulation or interpretation of the same even though the same may thereafter have been altered, changed, amended or repealed, (ii) the Trust’s Offering Materials or Documents (excluding information provided by BNY Mellon), (iii) any Instructions, or (iv) any opinion of legal counsel for the Trust or BNY Mellon (consistent with sub-section 5(h)), or arising out of transactions or other activities of the Trust which occurred prior to the commencement of this Agreement, provided, that the Trust shall not indemnify BNY Mellon nor any BNY Mellon Affiliate for costs, expenses, damages, liabilities or claims for which BNY Mellon or any BNY Mellon Affiliate is liable under the preceding sub-section 7(b). This indemnity shall be a continuing obligation of the Trust, its successors and assigns, notwithstanding the termination of this Agreement. Without limiting the generality of the foregoing, the Trust shall indemnify BNY Mellon and any BNY Mellon Affiliate against and save BNY Mellon and any BNY Mellon Affiliate harmless from any loss, damages or expenses, including counsel fees and other costs and expenses of a defense against any claim or liability, arising from any one or more of the following:

 

I.       Errors in records or instructions, explanations, information, specifications or documentation of any kind, as the case may be, supplied to BNY Mellon by or on behalf of the Trust, by an Authorized Person, or by an authorized third party on behalf of the Trust;

 

II.       Any action or inaction reasonably taken or omitted to be taken by BNY Mellon or any BNY Mellon Affiliate pursuant to Instructions of the Trust or otherwise in accordance with the Standard of Care;

 

III.       Any action taken or omitted to be taken by BNY Mellon in good faith in accordance with the advice or opinion of counsel for the Trust or its own counsel (consistent with sub-section 5(h));

 

IV.       Any use by the Trust, the Sponsor or their agents, of any valuations or computations supplied by BNY Mellon pursuant to this Agreement that is in contravention of law or contractual arrangements applicable to the Trust, the Sponsor or their agents;

 

 

V.       The method of valuation of the assets of the Trust and the method of computing the Trust’s net asset value as set forth in the Offering Materials of the Trust, provided that BNY Mellon has adhered to such method in accordance with the Standard of Care;

 

VI.       Any valuation provided by the Trust with respect to Trust assets or any net asset value provided by the Trust; or

 

VII.       Any action or inaction reasonably taken or omitted to be taken in reliance on Instructions or upon any information, order, indenture, stock certificate, membership certificate, power of attorney, assignment, affidavit or other instrument believed by BNY Mellon in good faith to be from an Authorized Person, or upon the opinion of legal counsel for the Trust or its own counsel (consistent with sub-section 5(h)), shall be conclusively presumed to have been taken or omitted in good faith.

 

(d)       Subject to the limitations of liability set forth in Sections 7(a) and 7(b) with respect to BNY Mellon, BNY Mellon shall indemnify and hold harmless the Trust from and against losses, costs, expenses, damages, and liabilities (including reasonable attorneys’ fees and expenses), incurred by the Trust, as the result of BNY Mellon’s or a BNY Mellon Affiliate’s failure to meet the Standard of Care. This indemnity shall be a continuing obligation of BNY Mellon, its successors and assigns, notwithstanding the termination of this Agreement.

(e)       BNY Mellon will maintain, at all times during the term of this Agreement, errors and omissions insurance, fidelity bonds and such other insurance as BNY Mellon may deem appropriate, in each case in a commercially reasonable amount deemed by BNY Mellon to be sufficient to cover its potential liabilities under this Agreement, including without limitation cyber-liability insurance coverage deemed by BNY Mellon to be appropriate. Upon request, BNY Mellon agrees to provide the Trust with certificates of insurance.

 

 

(f)       In order that the indemnification provisions contained in this Section 7 shall apply, upon the assertion of a claim for which either Party may be required to indemnify the other, the Party seeking indemnification shall promptly notify the other Party of such assertion, and shall keep the other Party advised with respect to all material developments concerning such claim. The Party who may be required to indemnify shall have the right to control the defense of the claim, and the Party seeking indemnification shall have the option to participate in the defense of such claim, at its own cost and expense. The Party seeking indemnification will cooperate reasonably, at the indemnifying Party’s expense, with the indemnifying Party in the defense of such claim; provided, however, that the Party seeking indemnification shall not be required to take any action that would impair any claim it may have against the indemnifying Party. The Party seeking indemnification shall in no case confess any claim or make any compromise in any case in which the other Party may be required to indemnify it except with the other Party’s prior written consent. The indemnifying Party shall not settle or compromise any claim or consent to the entry of any judgment with respect to which indemnification is being sought hereunder without the prior written consent of the Party seeking indemnification, which consent shall not be unreasonably withheld, delayed or conditioned.

 

8.       Compensation.

 

For the services provided hereunder, the Trust agrees to pay BNY Mellon such compensation as is mutually agreed to in writing by the Trust and BNY Mellon from time to time and such reasonable out-of-pocket expenses (e.g., postage and delivery charges, costs of independent compliance reviews, record retention costs, reproduction charges and transportation and lodging costs) as are incurred by BNY Mellon in performing its duties hereunder. Except as hereinafter set forth, compensation shall be calculated and accrued daily and paid monthly and shall be due and payable promptly after receipt of the invoice. Upon termination of this Agreement before the end of any month, the compensation for such part of a month shall be prorated according to the proportion which such period bears to the full monthly period and shall be payable upon the effective date of termination of this Agreement. For the purpose of determining compensation payable to BNY Mellon, the Trust’s Net Asset Value shall be computed at the times and in the manner specified in the Trust’s Offering Materials and its current valuation policy.

 

9.       Records; Site Visits.

 

(a)       The books and records pertaining to the Trust which are in the possession or under the control of BNY Mellon shall be the property of the Trust. The Trust, and Authorized Persons shall have access to such books and records at all times during BNY Mellon’s normal business hours. Upon the reasonable request of the Trust, copies of any such books and records shall be provided by BNY Mellon to the Trust or to an Authorized Person including in connection with any regulatory request or examination, at the Trust’s expense.

 

 

(b)       BNY Mellon shall keep all books and records with respect to the services to be performed by BNY Mellon hereunder in the form and manner required by applicable law, rules and regulations. In addition, upon notification by the Trust that it is in receipt of or otherwise subject to a court order, regulatory request or order, subpoena, or other similar action or context necessitating the preservation of certain records maintained by BNY Mellon for the Trust, BNY Mellon shall promptly implement reasonable measures to preserve such records in accordance with the duration or other direction specified by the Trust in accordance with BNY Mellon’s policies and procedures and cooperate in the provision to the Trust of such records; provided, however, that if BNY Mellon is not able to accommodate any such request, it will reasonably assist the Trust in its efforts to preserve such records, including by transmitting such records to the Trust.

 

(e)       In addition to the foregoing, during the term of the Agreement, authorized representatives of the Trust may conduct periodic site visits of BNY Mellon’s facilities and inspect BNY Mellon’s records and procedures solely as they pertain to BNY Mellon’s services for the Trust under or pursuant to the Agreement. Such inspections shall occur during BNY Mellon’s regular business hours and shall be subject to availability of personnel to facilitate such site visits and to BNY Mellon’s confidentiality and security requirements.

 

10.       Term of Agreement.

 

(a)       This Agreement shall commence on the Effective Date and, unless terminated pursuant to its terms, shall continue in effect until 11:59 PM (Eastern time) on the date which is the third anniversary of the Effective Date (the “Initial Term”), at which time this Agreement shall terminate, unless renewed in accordance with the terms hereof.

 

(b)       This Agreement shall automatically renew for successive terms of one (1) year each (each, a “Renewal Term”), unless the Trust or BNY Mellon gives written notice to the other Party of its intent not to renew and such notice is received by the other Party not less than ninety (90) days prior to the expiration of the Initial Term or the then-current Renewal Term (a "Non-Renewal Notice"). In the event a Party provides a Non-Renewal Notice, this Agreement shall terminate with respect to the Trust at 11:59 PM (Eastern time) on the last day of the Initial Term or Renewal Term, as applicable.

 

 

(c)       Notwithstanding Sections 10(a) and (b), if the Trust or BNY Mellon materially breaches this Agreement (a “Defaulting Party”), the other Party (the “Non-Defaulting Party”) may give written notice thereof to the Defaulting Party ("Breach Notice"), and if such material breach shall not have been remedied within thirty (30) days after the Breach Notice is given, then the Non-Defaulting Party may terminate this Agreement by giving at least thirty (30) days’ written notice of termination to Defaulting Party (a "Breach Termination Notice"), in which case this Agreement shall terminate as of 11:59 PM (Eastern time) on the last day of the applicable notice period following the date the Breach Termination Notice is given by the Non-Defaulting Party, or such later date as may be specified in the Breach Termination Notice (but not later than the last day of the Initial Term or then-current Renewal Term, as appropriate). In all cases, termination by the Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting Party of any other rights it might have under this Agreement or otherwise against the Defaulting Party.

 

(d)       To the extent BNY Mellon receives a Red, Amber, Green (“RAG”) rating of “red” for a given Key Performance Indicator (“KPI”) as specified in the Service Level Agreement for two consecutive months (or other measurement period for such Service Level, if applicable), this shall constitute a “Service Level Deep Default.” BNY Mellon shall have a period of two (2) months (or two (2) consecutive measurement periods, if applicable) in which to cure the Service Level Deep Default (the “Cure Period”). If, during the Cure Period, BNY receives two or more red RAG ratings for the KPI that triggered a Service Level Deep Default, the Funds may terminate the Agreement with respect to that service upon thirty (30) days’ written notice to BNY Mellon.

 

(e)       Notwithstanding any other provision of this Agreement, BNY Mellon or the Trust may in its sole discretion terminate this Agreement immediately by sending notice thereof to the other Party upon the happening of any of the following: (i) the other Party commences as debtor any case or proceeding under any bankruptcy, insolvency or similar law, or there is commenced against such other Party any such case or proceeding; (ii) the other Party commences as debtor any case or proceeding seeking the appointment of a receiver, conservator, trustee, custodian or similar official for such Party or any substantial part of its property or there is commenced against such other Party any such case or proceeding; (iii) the other Party makes a general assignment for the benefit of creditors; or (iv) the other Party admits in any recorded medium, written, electronic or otherwise, its inability to pay its debts as they come due. BNY Mellon or the Trust may exercise their termination right under this Section 10(d) at any time after the occurrence of any of the foregoing events notwithstanding that such event may cease to be continuing prior to such exercise, and any delay in exercising this right shall not be construed as a waiver or other extinguishment of that right. Any exercise by BNY Mellon or the Trust of their termination right under this Section 10(d) shall be without any prejudice to any other remedies or rights available to BNY Mellon or the Trust and shall not be subject to any fee or penalty, whether monetary or equitable. Notwithstanding the provisions of Section 16 below, notice of termination under this Section 10(d) shall be considered given and effective when given, not when received.

 

 

(f)       Notwithstanding any provision of this Section 10 to the contrary, in the event that this Agreement is terminated in its entirety the Parties agree to continue operating under the terms of this Agreement as if this Agreement remained in full force and effect for up to one (1) year (up to 180 days in the event of termination under Sections 10(c)-(e) and 10(g)) or for such shorter period of time as the Parties mutually agree is necessary for BNY Mellon to transfer the books and records pertaining to the Fund or Funds which are in BNY Mellon’s possession or control to a successor service provider (the “Transition Period”); provided, that during any such Transition Period, BNY Mellon will be entitled to compensation for BNY Mellon’s Transition Period services pursuant to Section 8 and the provisions of this Agreement relating to the duties and obligations of BNY Mellon will remain in full force and effect.

 

(g)       The Trust may terminate this Agreement at any time upon ninety (90) days’ prior written notice in the event that the Sponsor determines to liquidate the Trust. BNY Mellon may terminate this Agreement at any time upon ninety (90) days’ written notice for any reason and upon thirty (30) days’ written notice in the event of a breach of the Trust’s representations contained in Section 3(i)(e) hereof.

 

11.       Amendment.

 

(a)       This Agreement may not be amended, changed or modified in any manner except by a written agreement duly executed by BNY Mellon and the Trust.

 

 

12.       Assignment; Subcontracting.

 

(a)       This Agreement shall extend to and shall be binding upon the Parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable or delegable by the Trust without the written consent of BNY Mellon, or by BNY Mellon without the written consent of the Trust. For the avoidance of doubt, (i) this Section 12(a) shall not apply to the merger, reorganization or consolidation of the Trust with another entity to which BNY Mellon provides administrative, compliance, valuation or computation services or similar services, the sale by the Trust of all, or substantially all of, its assets to another entity to which BNY Mellon provides administrative, compliance, valuation or computation services or similar services, or the liquidation or dissolution of the Trust and the distribution of the Trust’s assets, and (ii) without limiting the provisions of the first sentence of this Section 12(a), BNY Mellon shall have no right to prevent the merger, reorganization or consolidation of the Trust with another entity. BNY Mellon shall notify the Trust promptly following the execution of any agreement that would result in, or would be expected to result in, a change of control of BNY Mellon; provided that such information is publicly available information and that BNY Mellon makes such information available to its clients generally.

 

(b)       Notwithstanding the foregoing, and subject to any separate agreement between the parties, (i) BNY Mellon may assign or transfer this Agreement to any BNY Mellon Affiliate or transfer this Agreement in connection with a sale or transfer of a majority or more of its assets, equity interests or voting control, provided that (A) BNY Mellon gives the Trust at least ninety (90) days' prior written notice (or such shorter notice as may be commercially practicable under the circumstances, as determined by BNY Mellon in good faith) of such assignment or transfer, (B) such assignment or transfer, in any such case, does not impair the provision of services under this Agreement in any material respect, , and (C) the assignee or transferee agrees to be bound by all terms of this Agreement in place of BNY Mellon, provided further, that if BNY Mellon assigns or transfers this Agreement pursuant to this Section 12(b)(i) to a non-BNY Mellon Affiliate without the written consent of the Trust, the Trust shall have the option, exercisable for ninety (90) days after receiving written notice of such assignment or transfer (or for such longer period as may be mutually agreed by the parties), to terminate this Agreement with respect to the Trust, (ii) BNY Mellon may subcontract with, hire, engage or otherwise outsource to any BNY Mellon Affiliate or to any unaffiliated third party with respect to the performance of any one or more of the functions, services, duties or obligations of BNY Mellon under this Agreement but any such subcontracting, hiring, engaging or outsourcing shall not relieve BNY Mellon of any of its liabilities hereunder; and (iii) BNY Mellon, in the course of providing certain additional services requested by the Trust, including but not limited to, Typesetting or eBoard Book services (“Vendor Eligible Services”), as further described in Schedule I, may in its sole discretion, enter into an agreement or agreements with a financial printer, or electronic services provider (“Vendor”) to provide BNY Mellon with the ability to generate certain reports or provide certain functionality. BNY Mellon shall not be obligated to perform any of the Vendor Eligible Services unless an agreement between BNY Mellon and the Vendor for the provision of such services is then currently in effect, and shall only be liable for the failure to reasonably select the Vendor. Upon request, BNY Mellon will disclose the identity of the Vendor and the status of the contractual relationship, and the Trust is free to attempt to contract directly with the Vendor for the provision of the Vendor Eligible Services.

 

 

(c)       As compensation for the Vendor Eligible Services rendered by BNY Mellon pursuant to this Agreement, the Trust will pay to BNY Mellon such fees as may be agreed to in writing by the Trust and BNY Mellon. In turn, BNY Mellon will be responsible for paying the Vendor’s fees. For the avoidance of doubt, BNY Mellon anticipates that the fees it charges hereunder will be more than the fees charged to it by the Vendor, and BNY Mellon will retain the difference between the amount paid to BNY Mellon hereunder and the fees BNY Mellon pays to the Vendor as compensation for the additional services provided by BNY Mellon in the course of making the Vendor Eligible Services available to the Trust.

 

13.       Governing Law; Consent to Jurisdiction.

 

This Agreement shall be construed in accordance with the laws of the State of New York, without regard to conflict of laws principles thereof. the Trust hereby consents to the jurisdiction of a state or federal court situated in New York City, New York in connection with any dispute arising hereunder, and waives to the fullest extent permitted by law its right to a trial by jury. To the extent that in any jurisdiction the Trust may now or hereafter be entitled to claim, for itself or its assets, immunity from any suit, execution, attachment (before or after judgment) or other legal process, the Trust irrevocably agrees not to claim, and it thereby waives, such immunity.

 

 

14.       Severability.

 

In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations shall not in any way be affected or impaired thereby, and if any provision is inapplicable to any person or circumstances, it shall nevertheless remain applicable to all other persons and circumstances.

 

15.       No Waiver.

 

Each and every right granted to BNY Mellon or the Trust hereunder or under any other document delivered hereunder or in connection herewith, or allowed it by law or equity, shall be cumulative and may be exercised from time to time. No failure on the part of BNY Mellon or the Trust to exercise, and no delay in exercising, any right will operate as a waiver thereof, nor will any single or partial exercise by BNY Mellon or the Trust of any right preclude any other or future exercise thereof or the exercise of any other right.

 

16.       Notices.

 

Other than routine communications in the ordinary course of providing or receiving services hereunder (including Instructions), notices given hereunder will be: (a) addressed to BNY Mellon or the Trust at the address or email address set forth below (or such other address as either Party may designate in writing to the other Party) and (b) 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 (as a signed attachment) with confirmation of email receipt. All notices given in accordance with this Section will be effective upon receipt.

 

if to the Trust, at:

 

WisdomTree Digital Commodity Services, LLC

250 West 34^th Street, 3^rd Floor

New York, New York 10119

Email: legalnotice@wisdomtree.com

 

 

if to BNY Mellon, at:

 

BNY Mellon
240 Greenwich Street
New York, New York 10286
Attention: ETF Operations

 

with a copy to:

 

The Bank of New York Mellon
240 Greenwich Street
New York, New York 10286
Attention: Legal Dept. – Asset Servicing

 

17.       Counterparts/Headings.

 

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original; but such counterparts together shall constitute only one instrument. All headings in this Agreement are for reference purposes only and not intended to affect in any way the interpretation or meaning of this Agreement.

 

 

18.       Confidentiality.

 

(a)       BNY Mellon shall keep confidential any information relating to the Trust’s business and the Trust shall keep confidential any information relating to BNY Mellon’s business (each, “Confidential Information”), except as expressly agreed in writing by the protected Party. Confidential Information shall include (i) any data or information that is competitively sensitive material, and not generally known to the public, including, but not limited to, information about product plans, marketing strategies, finances, operations, customer relationships, customer profiles, customer lists, sales estimates, business plans, and internal performance results relating to the past, present or future business activities of the Trust or BNY Mellon and their respective subsidiaries and affiliated companies; (ii) any scientific or technical information, design, process, procedure, formula, or improvement that is commercially valuable and secret in the sense that its confidentiality affords the Trust or BNY Mellon a competitive advantage over its competitors; (iii) all confidential or proprietary concepts, documentation, reports, data, specifications, computer software, source code, object code, flow charts, databases, inventions, know-how, and trade secrets, whether or not patentable or copyrightable; and (iv) anything designated as confidential. Notwithstanding the foregoing, information shall not be Confidential Information and shall not be subject to such confidentiality obligations if it: (A) is already known to the receiving Party at the time it is obtained; (B) is or becomes publicly known or available through no wrongful act of the receiving Party; (C) is rightfully received from a third party who, to the best of the receiving Party’s knowledge, is not under a duty of confidentiality; (D) is released by the protected Party to a third party without restriction; (E) is requested or required to be disclosed by the receiving Party pursuant to a court order, subpoena, governmental or regulatory authority request or law; (F) is relevant to the defense of any claim or cause of action asserted against the receiving Party; (G) is Trust information provided by BNY Mellon in connection with an independent third party compliance or other review at the request of the Trust; (h) is released in connection with the provision of services under this Agreement; or (i) has been or is independently developed or obtained by the receiving Party. The Parties acknowledge that the existence and the terms of this Agreement may be publicly disclosed by the Trust pursuant to applicable law. Except as otherwise provided in this Agreement, nothing herein is intended to transfer ownership of the Trust’s Confidential Information to BNY Mellon. Provisions authorizing the disclosure of information shall survive any termination of this Agreement. The obligations set forth in this Section 18 shall survive any termination of this Agreement for a period of one (1) year after such termination.

 

(b)       Without limiting the generality of the preceding paragraph (a), BNY Mellon acknowledges and agrees that the Trust is prohibited by law from making selective public disclosure of information regarding holdings, that disclosure of any and all such information to BNY Mellon hereunder is made strictly under the conditions of confidentiality set forth in Section 18(a) hereof and solely for the purposes of the performance of accounting and administration services hereunder and that BNY Mellon shall apprise all such persons having access of the obligation hereunder and under applicable law to prevent unauthorized disclosure of such confidential information.

 

(c)       The parties acknowledge and agree that any breach of Section 18(a) hereof would cause not only financial damage, but irreparable harm to the other party, for which money damages will not provide an adequate remedy. Accordingly, in the event of a breach of Section 18(a) hereof, the non-breaching Party shall (in addition to all other rights and remedies they may have pursuant to this Agreement and at law or in equity) be entitled to an injunction, without the necessity of posting any bond or surety, to restrain disclosure or misuse, in whole or in part, of any information in violation of Section 18(a) hereof.

 

 

(d)       The Bank of New York Mellon Corporation is a global financial organization that provides services to clients through its affiliates and subsidiaries in multiple jurisdictions (the “BNY Mellon Group”). The BNY Mellon Group may centralize functions including audit, accounting, risk, legal, compliance, sales, administration, product communication, relationship management, storage, compilation and analysis of customer-related data, and other functions (the “Centralized Functions”) in one or more affiliates, subsidiaries and third-party service providers. Solely in connection with the Centralized Functions, (i) The Trust consents to the disclosure of and authorizes BNY Mellon to disclose information regarding the Trust (“Customer-Related Data”) to the BNY Mellon Group and to its third-party service providers who are subject to confidentiality obligations with respect to such information and (ii) BNY Mellon may store the names and business contact information of the Trust’s employees and representatives on the systems or in the records of the BNY Mellon Group or its service providers. The BNY Mellon Group may aggregate Customer-Related Data with other data collected and/or calculated by the BNY Mellon Group, and notwithstanding anything in this Agreement to the contrary the BNY Mellon Group will own all such aggregated data, provided that the BNY Mellon Group shall not distribute the aggregated data in a format that identifies Customer-Related Data with a particular customer. The Trust confirms that it is authorized to consent to the foregoing.

 

19.       Disclosure of Certain Regulatory Matters.

 

At the request of the Trust, and provided that disclosure by BNY Mellon is not prohibited by applicable law, rule or agreement between BNY Mellon and any governmental authority BNY Mellon will make available to the Trust such publicly filed information regarding a criminal or regulatory investigation of BNY Mellon as it makes available to its clients generally. In each case, the Trust acknowledges and agrees that BNY Mellon’s failure to make any such information available to the Trust shall not be deemed a breach of this Agreement.

 

 

20.       Limitation of Liability.

 

This Agreement has been entered into by the Trust and was executed and delivered by an officer of its Sponsor, on behalf of the Trust, which officer was acting solely in his or her capacity as an officer of the Sponsor and not in his or her individual capacity and which Sponsor was acting solely in its capacity as sponsor of the Trust and not in its individual capacity. It is expressly acknowledged and agreed that the obligations of the Trust hereunder shall not be binding upon any of the shareholders, trustees, officers, employees or agents of the Trust or the Sponsor, personally, but shall bind only the property of the Trust, as provided in the Trust’s Trust Agreement.

 

[Signature page follows.]

 

 

IN WITNESS WHEREOF, the Parties hereto have caused the foregoing instrument to be executed by their duly authorized officers and their seals to be hereunto affixed, all as of the date first written above.

 

 

 

	WISDOMTREE BITCOIN FUND
	By:	/s/Jeremy Schwartz
	Name:	Jeremy Schwartz
	Title:	Chief Executive Officer
	Date:	November 20, 2024
	THE  BANK OF NEW YORK MELLON
	By:	/s/Robert M. Stein Jr
	Name:	Robert M. Stein Jr
	Title:	Vice President
	Date:	November 20, 2024

 

 

EXHIBIT A

 

I,       [Name]                       , of [Trust Name], a [Delaware trust] (the “Trust”), do hereby certify that:

 

The following individuals serve in the following positions with the Trust, and each has been duly elected or appointed by the Trust to each such position and qualified therefor in conformity with the Trust’s Organizational Documents, and the signatures set forth opposite their respective names are their true and correct signatures. Each such person is designated as an Authorized Person under the Fund Administration and Accounting Agreement dated as of ___________________, 202__, between the Trust and The Bank of New York Mellon.

 

Name		Position		Signature

 

 

EXHIBIT B

 

Information Security Program

 

Capitalized terms not defined herein shall have the meaning set forth in the Agreement.

I.       Information Security Program Overview.

 

A.       “Services” means the services provided under the Agreement.

 

B.       During the term of the Agreement, BNY Mellon will implement and maintain an information security program ("ISP") with written policies and procedures reasonably designed to protect the confidentiality and integrity of Customer’s Confidential Information provided to BNY Mellon in accordance with the Agreement and when in BNY Mellon’s possession or under BNY Mellon’s control (“Customer Data”). The ISP will include administrative, technical and physical safeguards, appropriate to the type of Customer Data concerned, reasonably designed to: (i) maintain the integrity, confidentiality and availability of Customer Data; (ii) protect against anticipated threats or hazards to the security or integrity of Customer Data; (iii) protect against unauthorized access to or use of Customer Data that could result in substantial harm or inconvenience to Customer or its clients, and (iv) provide for secure disposal of Customer Data.

 

C.       BNY Mellon’s program is dynamic and may be modified to address technological changes or changes in the threat landscape, BNY Mellon’s business activities or other factors. BNY Mellon reserves the right to modify the ISP at any time, provided that BNY Mellon shall not diminish the overall level of protection this Exhibit is intended to provide.

 

II.       Security Incident Response and Notice.

 

A.       BNY Mellon will maintain a documented incident management process designed to ensure timely detection of security events and response thereto.

 

B.       In the event of a declared Security Incident, BNY Mellon will (i) promptly notify Customer, (ii) provide updates to Customer regarding BNY Mellon’s response and (iii) use reasonable efforts to implement measures designed to prevent a reoccurrence of Security Incidents of a similar nature.

 

C.       “Security Incident” means any known loss or unauthorized access, disclosure, use, alteration or destruction of Customer Data.

 

III.       Governance. BNY Mellon shall, upon request, (i) provide a copy of its most recent SSAE-18 or equivalent external audit report to Customer, which Customer may disclose solely to its internal or external auditors that are subject to written confidentiality obligations to use reasonable care to safeguard the report and not to disclose the report to any third party or use the report for any purpose other than evaluating BNY Mellon’s security controls; (ii) engage a third party provider to perform penetration testing of BNY Mellon systems used to provide the Services and, upon request, provide Customer confirmation of such testing, and (iii) participate in Customer’s reasonable information security due diligence questionnaire process.

 

A. BNY Mellon shall also, no more than once in any 12 month period and upon request, on a mutually agreed date during business hours and subject to BNY Mellon’s facility security policies and availability of personnel:

 

(i) meet with Customer subject matter experts in a BNY Mellon clean room to review information security policies, procedures and similar related information; provided that no documentation may be copied, disclosed to any third party, or transmitted or removed from BNY Mellon premises except as mutually agreed in writing; and

 

(ii) permit access to a BNY Mellon data center used to process Customer Data and provide the Services by no more than three Customer representatives, including employees of a regulatory or supervisory authority of Customer that is also a regulatory or supervisory authority of BNY Mellon, for a maximum of 3 hours in order to conduct a visual inspection of the environment and its controls.

 

 

Notwithstanding any provision in the Agreement to the contrary, Customer shall not disclose any verbal or written information obtained during the foregoing meetings described in above subsections (i)-(ii) to any third party or use it for any purpose other than evaluating BNY Mellon’s security controls, without BNY Mellon’s prior written consent. Customer shall reimburse BNY Mellon for any costs and expenses reasonably incurred in connection with Customer’s review (including that of the regulatory or supervisory authority personnel) of BNY Mellon’s security controls and data center.

 

IV.       Network and Communications Security.

 

A.       Asset Management. BNY Mellon will maintain an inventory of its system components, hardware and software used to provide the Services, and will review and update such inventory in accordance with the ISP.

 

B.       Change Management. BNY Mellon shall require that changes to its network or software used to provide the Services are tested and applied pursuant to a documented change management process.

 

C.       Security Monitoring. BNY Mellon will monitor cyber threat intelligence feeds daily. BNY Mellon will deploy Denial of Service (DoS) and Distributed DoS solutions.

 

D.       Network Segmentation. BNY Mellon’s infrastructure utilizes a multi-tier architecture, including a DMZ, to isolate the internal infrastructure from external networks. Traffic from external sources will traverse firewalls and pass through multiple layers of malware protection prior to processing. BNY Mellon’s production environment used to provide the Services will be segregated from pre-production regions and BNY Mellon’s internal segment.

 

E.       Vulnerability Management. BNY Mellon will maintain a documented process to identify and remediate security vulnerabilities affecting its systems used to provide the Services. BNY Mellon will classify security vulnerabilities using industry recognized standards and conduct continuous monitoring and testing of its networks, hardware and software including regular penetration testing and ethical hack assessments. BNY Mellon will remediate identified security vulnerabilities in accordance with its process.

 

F.       Malicious Code. BNY Mellon will deploy industry standard malicious code protection and identification tools across its systems and software used to provide the Services.

 

G.       Communications. BNY Mellon will protect electronic communications used in the provision of Services, including instant messaging and email services, using industry standard processes and technical controls and in accordance with the ISP.

 

V.       Application Security. The ISP will require that in-house application development be governed by a documented secure software development life cycle methodology, which will include deployment rules for new applications and changes to existing applications in live production environments.

 

VI.       Logging. The ISP will require the maintenance of network and application logs as part of BNY Mellon’s security information and event management processes. Logs are retained in accordance with law applicable to BNY Mellon’s provision of the Services as well as BNY Mellon’s applicable policies. BNY Mellon uses various tools in conjunction with such logs, which may include behavioral analytics, security monitoring case management, network traffic monitoring and analysis, IP address management and full packet capture.

 

VII.       Data Security.

 

A.       Identity & Access Management. BNY Mellon will implement reasonable and industry recognized user access rules for users accessing Customer Data based on the need to know and the principle of least privilege, and including user ID and password requirements, session timeout and re-authentication requirements, unsuccessful login attempt limits, privileged access limits and multifactor authentication or equivalent safeguard where risk factors indicate that single factor authentication is inadequate.

 

 

B.       Data Segregation. The ISP will require that (i) Customer Data is stored in either physically or logically segregated databases from other BNY Mellon data and (ii) different databases are maintained for development, testing, staging and production environments used in the provision of Services.

 

C.       Encryption. BNY Mellon will (i) encrypt Customer Data in transit to an external network using transport layer security or other encryption method and (ii) protect Customer Data at rest, in each case as BNY Mellon determines to be appropriate in accordance with the ISP and law applicable to BNY Mellon’s provision of the Services.

 

D.       Remote Access. The ISP will restrict remote access to BNY Mellon systems to authorized users using multifactor authentication or equivalent safeguard, and will require such access to be logged.

 

E.       Devices. BNY Mellon will restrict the transfer of Customer Data from its network to mass storage devices. BNY Mellon will use a mobile device management system or equivalent tool when mobile computing is used to provide the Services. Applications on such authenticated devices will be housed within an encrypted container and BNY Mellon will maintain the ability to remote wipe the contents of the container.

 

F.       Data Leakage Prevention (DLP). BNY Mellon will deploy DLP tools reasonably designed to help detect and prevent unauthorized transfers of Customer Data outside BNY Mellon’s network.

 

G.       Disposal. BNY Mellon will maintain chain of custody procedures and require that any Customer Data requiring disposal be rendered inaccessible, cleaned or scrubbed from such hardware and/or media using industry recognized methods.

 

VIII.       Personnel. BNY Mellon will undertake background checks during the recruitment process of personnel involved in the provision of the Services, subject to applicable laws, and require its personnel involved in the provision of Services to undertake annual training on the aspects of the ISP applicable to the personnel’s job function.

 

IX.       Physical Security. BNY Mellon will deploy perimeter security such as barrier access controls around its facilities processing or storing Customer Data. The ISP will include (i) procedures for validating visitor identity and authorization to enter the premises, which may include identification checks, issuance of identification badges and recording of entry purpose of visit and (ii) physical security policies for personnel, such as a “clean desk” policy. In accordance with its ISP and applicable law, BNY Mellon will install closed circuit television (“CCTV”) systems and CCTV recording systems to monitor and record access to controlled areas, such as data centers and server rooms.

 

X.       Subcontracting. BNY Mellon will implement a third party governance program designed to provide oversight over unaffiliated third parties used to provide the Services (“Subcontractors”).

 

XI.       BCP/DR. BNY Mellon will implement business continuity and disaster recovery plans designed to minimize interruptions of service and ensure recovery of systems and applications used to provide the Services. Such plans shall cover the facilities, systems, applications and employees that are critical to the provision of the Services, and will be tested at least annually to validate that the recovery strategies, requirements and protocols are viable and sustainable.

 

 

SCHEDULE I

 

Schedule of Services

 

All services provided in this Schedule of Services are subject to the review and approval of the appropriate Trust officers, Trust counsel and accountants of the Trust, as may be applicable. The services included on this Schedule of Services may be provided by BNY Mellon or a BNY Mellon Affiliate, collectively referred to herein as “BNY Mellon”.

 

VALUATION AND COMPUTATION ACCOUNTING SERVICES

 

BNY Mellon shall provide the following valuation and computation accounting services for the Trust:

 

§

Journalize investment, capital share and income and expense activities;

§

Maintain individual ledgers for Trust assets;

§

Maintain certain financial books and records for the Trust, including creation and redemption books and records, and Trust accounting records;

§

Maintain historical tax lots for Trust assets;

§

Reconcile cash (if applicable) and investment balances of the Trust with the Trust’s custodian(s);

§

Record and reconcile capital stock activity with the transfer agent;

§

Accrue and calculate daily contractual expenses;

§

Calculate daily income and amortization

§

Calculate capital gains and losses;

§

Obtain quotes from pricing services as directed and approved by the Sponsor, or if such quotes are unavailable, then obtain such prices from the Sponsor, and in either case, calculate the market value of the Trust’s assets in accordance with the Trust's valuation policies or guidelines; provided, however, that BNY Mellon shall not under any circumstances be under a duty to independently price or value any of the Trust's assets itself or to confirm or validate any information or valuation provided by the Sponsor or any other pricing source, nor shall BNY Mellon have any liability relating to inaccuracies or otherwise with respect to such information or valuations provided by pricing services or the Sponsor;

§

Compute daily net asset value and daily net asset value per share, calculated in the manner described in the Trust’s Offering Materials;

§

Transmit or make available a copy of the daily portfolio valuation to the Sponsor and as otherwise instructed by the Sponsor;

§

Timely record corporate action events pursuant to specific instructions received from the Sponsor;

·

Publish basket to NSCC on each day on which trading occurs on the primary exchange on which the Trust’s shares trade.

 

FINANCIAL REPORTING

 

BNY Mellon shall provide the following financial reporting services for the Trust:

 

Financial Statement Preparation & Review

·

Prepare financial statements for the Trust;

 

 

·

Prepare the Trust’s periodic shareholder reports (including Forms 10-Q and 10-K), including certain information furnished by the Trust to BNY Mellon, as required pursuant to the Securities and Exchange Act of 1934; and

 

Prepare, circulate and maintain the Trust’s financial reporting production calendar;

 

TAX SERVICES

 

BNY Mellon shall provide the following tax services for the Trust:

·

Prepare annual grantor trust tax reporting statements for client review and approval.

·

Participate in discussions of potential tax issues with the Trust and the Trust’s audit firm.

 

FUND ADMINISTRATION SERVICES

 

BNY Mellon shall provide the following fund administration services for the Trust:

 

§

Establish appropriate expense accruals and compute expense ratios, maintain expense files and coordinate the payment of Trust approved invoices;

§

Calculate Trust approved income and per share amounts required for periodic distributions to be made by the Trust;

§

Calculate total return information in accordance with applicable U.S. securities and commodities laws and regulations;

§

Coordinate the annual audit of the Trust’s financial statements by the Trust’s independent accountants to be included in the Trust’s Form 10-K, including the preparation of supporting audit work papers and other schedules.;

§

Supply various normal and customary portfolio and Trust statistical data as requested on an ongoing basis; and

§

Provide sub-certifications in connection with the certification requirements of the Sarbanes-Oxley Act of 2002 with respect to the services provided by BNY Mellon

 

CIRCULAR 230 DISCLOSURE:

 

To ensure compliance with requirements imposed by the Internal Revenue Service, BNY Mellon informs the Trust that any U.S. tax advice contained in any communication from BNY Mellon to the Trust (including any future communications) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein or therein.

 

 

2

 

Exhibit 10.6

 

TRANSFER AGENCY AND SERVICE AGREEMENT

 

THIS AGREEMENT is made as of the 15th day of November, 2024, by and between WisdomTree Bitcoin Fund , a Delaware Statutory Trust (the “Trust”), having its principal office and place of business at 250 West 34^th Street, 3^rd Floor, New York, New York 10119, and THE BANK OF NEW YORK MELLON, a New York corporation authorized to do a banking business having its principal office and place of business at 240 Greenwich Street, New York, New York 10286 (the “Bank”). This Agreement shall be effective on November 25, 2024 or such other date as the Trust and the Bank may agree in writing (the “Effective Date”). The term “Agreement” shall mean this Transfer Agency and Service Agreement as constituted on the Effective Date, and thereafter as it may be amended from time to time as provided for herein.

 

WHEREAS, the Trust will ordinarily issue for purchase and redeem shares of the Trust (the “Shares) only in aggregations of Shares known as “Creation Units” (each a “Creation Unit”);

 

WHEREAS, only those entities (“Authorized Participants”) that have entered into an Authorized Participant Agreement with the Trust and WisdomTree Digital Commodity Services, LLC, the Trust’s sponsor (the “Sponsor”), are eligible to place orders for Creation Units;

 

WHEREAS, The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York (“DTC”), or its nominee (Cede & Co.), will be the record or registered owner (the “Shareholder”) of all outstanding Shares; and

 

WHEREAS, the Trust desires to appoint the Bank as its transfer agent, dividend disbursing agent, and agent in connection with certain other activities, and the Bank desires to accept such appointment;

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows:

 

1.       Terms of Appointment; Duties of the Bank

 

1.1       Subject to the terms and conditions set forth in this Agreement, the Trust hereby employs and appoints the Bank to act as, and the Bank agrees to act as, its transfer agent for the authorized and issued Shares, and as the Trust’s dividend disbursing agent.

 

1.2       Pursuant to such appointment, the Bank agrees that it will perform the following services:

 

(a)       In accordance with the terms and conditions of this Agreement and Participant Agreements prepared by the Sponsor, a form of which is attached hereto as Exhibit A, and any other procedures established from time to time by agreement between the Trust and the Bank, the Bank shall:

 

(i)       Perform and facilitate the performance of purchases and redemptions of Creation Units;

 

(ii)       Prepare and transmit by means of DTC’s book-entry system payments for dividends and distributions on or with respect to the Shares declared by the Trust;

 

(iii)       Maintain the record of the name and address of the Shareholder and the number of Shares issued by the Trust and held by the Shareholder;

 

 

(iv)       Record the issuance of Shares of the Trust and maintain a record of the total number of Shares of the Trust which are outstanding, and authorized, based upon data provided to it by the Trust, the total number of authorized Shares, and provide the Trust on a regular basis with such information. The Bank shall have no obligation, when recording the issuance of Shares, to monitor the issuance of such Shares or to take cognizance of any laws relating to the issue or sale of such Shares, which functions shall be the sole responsibility of the Trust;

 

(v)       Prepare and transmit to the Trust and the Trust’s administrator and to any applicable securities exchange (as specified to the Bank by the Trust or its administrator) information with respect to purchases and redemptions of Shares;

 

(vi)       On days that the Trust may accept orders for purchases or redemptions, calculate and transmit to the Sponsor and the Trust’s administrator the number of outstanding Shares;

 

(vii)       On days that the Trust may accept orders for purchases or redemptions (pursuant to the Participant Agreement), transmit to the Bank, the Trust and DTC the amount of Shares purchased on such day;

 

(viii)       Confirm to DTC the number of Shares issued to the Shareholder, as DTC may reasonably request;

 

(ix)       Prepare and deliver other reports, information and documents to DTC as DTC may reasonably request;

 

(x)       Extend the voting rights to the Shareholder for extension by DTC to DTC participants and the beneficial owners of Shares in accordance with policies and procedures of DTC for book-entry only securities;

 

(xi)       Distribute or maintain, as directed by the Trust, amounts related to purchases and redemptions of Creation Units, dividends and distributions, variation margin on derivative securities and collateral;

 

(xii)       Maintain those books and records of the Trust specified by the Trust in Schedule A attached hereto and as required by paragraph (f) below;

 

(xiii)       Prepare a monthly report of all purchases and redemptions of Shares during such month on a gross transaction basis, and identify on a daily basis the net number of Shares either redeemed or purchased on such Business Day and with respect to each Authorized Participant purchasing or redeeming Shares, the amount of Shares purchased or redeemed;

 

(xiv)       Receive from the Sponsor (as defined in the Participant Agreement) or from its agent purchase orders from Authorized Participants (as defined in the Participant Agreement) for Creation Unit Aggregations of Shares received in good form and accepted by or on behalf of the Trust by the Sponsor, transmit appropriate trade instructions to the National Securities Clearance Corporation, if applicable, and pursuant to such orders issue the appropriate number of Shares of the Trust and hold such Shares in the account of the Shareholder of the Trust;

 

(xv)       Receive from the Authorized Participants redemption requests, deliver the appropriate documentation thereof to the Sponsor with respect to redemptions for cash and for any redemptions in-kind, generate and transmit or cause to be generated and transmitted confirmation of receipt of such redemption requests to the Authorized Participants submitting the same; transmit appropriate trade instructions to the National Securities Clearance Corporation, if applicable, and redeem the appropriate number of Creation Unit Aggregations of Shares held in the account of the Shareholder;

 

 

(xvi)       Confirm the name, U.S. taxpayer identification number and principal place of business of each Authorized Participant;

 

(xvii)       Provide information or reports to the Trust or the Trust’s Chief Compliance Officer as may be reasonably requested; and

 

(xviii)       Process any request from an Authorized Participant to change its profile and static data.

 

The Bank may execute transactions directly with Authorized Participants to the extent necessary or appropriate to enable the Bank to carry out any of the duties set forth in items (i) through (xviii) above. The Trust, which may be through the Sponsor, will be responsible for confirming the receipt of assets in connection with creation activity and the withdrawal of assets in connection with redemption activity prior to the creation or redemption of Creation Units by the Bank. The Bank has no responsibility to independently verify the accuracy of such information provided to it by the Trust. Except as otherwise instructed by the Trust, the Bank shall process all transactions for the Trust in accordance with the policies and procedures mutually agreed upon between the Trust and the Bank with respect to the proper net asset value to be applied to purchases received in good order by the Bank or from an Authorized Participant before any cut-offs established by the Trust, and such other matters set forth in items (i) through (xviii) above as these policies and procedures are intended to address. The Bank shall report to the Trust any known exceptions to the foregoing.

 

(b)       The Bank may maintain and manage, as agent of the Trust, such other accounts as the Bank shall deem necessary for the performance of its duties under this Agreement, including, but not limited to, the processing of Creation Unit purchases and redemptions; and the payment of dividends and distributions. The Bank may maintain such accounts at financial institutions deemed appropriate by the Bank in accordance with applicable law.

 

(c)       In addition to the services set forth in the above sub-sections 1.2(a) and 1.2(b), the Bank shall: perform the customary services of a transfer agent and dividend disbursing agent including, but not limited to, maintaining the account of the Shareholder, maintaining the items set forth on Schedule A attached hereto, and performing such services identified in each Participant Agreement.

 

(d)       The Bank shall deliver to DTC participants as identified by DTC as Shareholders for book-entry only securities:

 

(i)       Annual and semi-annual reports of the Trust;

 

(ii)       Trust proxies, proxy statements and other proxy soliciting materials;

 

(iii)       Trust prospectus and amendments and supplements thereto, including stickers; and

 

(iv)       Other communications as the Trust may from time to time identify as required by law or as the Trust may reasonably request.

 

(e)       The Bank shall provide additional services, if any, as may be mutually agreed upon, in writing, by the parties from time to time, for which the Trust will pay such fees as may be mutually agreed upon, including the Bank’s reasonable out-of-pocket expenses. The provision of such services shall be subject to the terms and conditions of this Agreement.

 

 

(f)       The Bank shall keep records relating to the services to be performed hereunder, in the form and manner required by applicable laws, rules, and regulations (the “Rules”), all such books and records shall be the property of the Trust, will be preserved, maintained and made available in accordance with such Section and Rules, and will be surrendered promptly to the Trust on and in accordance with its request. In addition, upon notification by the Trust that it is in receipt of or otherwise subject to a court order, regulatory request or order, subpoena, or other similar action or context necessitating the preservation of certain records maintained by the Bank for the Trust, The Bank shall promptly implement reasonable measures to preserve such records in accordance with the duration or other direction specified by the Trust in accordance with the Bank’s policies and procedures and cooperate in the provision to the Trust of such records; provided, however, that if the Bank is not able to accommodate any such request, it will reasonably assist the Trust in its efforts to preserve such records, including by transmitting such records to the Trust.

 

(g)       It is understood and agreed by the parties hereto that under no circumstances will the services performed by the Bank pursuant to this Agreement include any service, function or activity that would constitute a “virtual currency business activity” for purposes of the regulations issued by the Superintendent of the New York Department of Financial Services (23 N.Y.C.R.R. Part 200).

 

(h) All such books and records shall be maintained in a form reasonably acceptable to the Trust, and shall be reasonably arranged and indexed by the Bank in a manner that permits reasonably prompt location, access and retrieval of any particular record. The Bank shall not destroy any files, records or documents created or maintained by the Bank pursuant to this Agreement except in accordance with its record retention policy or if such destruction is authorized by the Trust by means of instructions.

 

(i)       In addition to the foregoing, during the term of the Agreement authorized representatives of the Trust may conduct periodic site visits of the Bank’s facilities and inspect the Bank’s records and procedures solely as they pertain to the Bank’s services for the Trust under or pursuant to the Agreement. Such inspections shall occur during the Bank’s regular business hours and shall be subject to availability of personnel to facilitate such site visits and to the Bank’s confidentiality and security requirements.

 

(j)       Certain service level agreements are set forth in the Service Level Agreement executed as of the Effective Date.

 

2.       Fees and Expenses

 

2.1       The Bank shall receive from the Trust such compensation for the Bank’s services provided pursuant to this Agreement as may be agreed to from time to time in a written fee schedule approved by the parties. Such fees and any out-of-pocket expenses and advances identified under Section 2.2 below may be changed from time to time, subject to mutual written agreement between the Trust and the Bank. The fees are accrued daily and billed monthly and shall be due and payable within thirty (30) calendar days of receipt of the invoice. Upon the termination of this Agreement before the end of any month, the fee for the part of the month before such termination shall be prorated according to the proportion which such part bears to the full monthly period and shall be payable upon the date of termination of this Agreement.

 

2.2       In addition to the fee paid under Section 2.1 above, the Trust agrees to reimburse the Bank for reasonable out-of-pocket expenses, including but not limited to confirmation production, postage, forms, telephone, microfilm, microfiche, tabulating proxies, records storage, or advances incurred by the Bank for the items set out in the fee schedule or relating to dividend distributions and reports (whereas all expenses related to creations and redemptions of Trust securities shall be borne by the relevant Authorized Participant in such creations and redemptions). In addition, any other expenses incurred by the Bank at the request or with the consent of the Trust, will be reimbursed by the Trust.

 

 

2.3       The Trust agrees to pay all reasonable fees and reimbursable expenses within thirty (30) calendar days following the receipt of the respective billing notice accompanied by supporting documentation, as appropriate. Postage for mailing of dividends, proxies, Trust reports and other mailings to all shareholder accounts shall be advanced to the Bank by the Trust at least seven (7) days prior to the mailing date of such materials.

 

2.4       The Trust hereby represents and warrants to the Bank that (i) the terms of this Agreement, (ii) the fees and expenses associated with this Agreement, and (iii) any benefits accruing to the Bank or to the adviser to, or sponsor of, the Trust in connection with this Agreement, including, but not limited to, any fee waivers, reimbursements, or payments made, or to be made, by the Bank to such adviser or sponsor or to any affiliate of the Trust relating to this Agreement have been fully disclosed to the Trust or the Sponsor and that, if required by applicable law, the Trust or the Sponsor has approved or will approve the terms of this Agreement, and any such fees, expenses, and benefits.

 

3.       Representations and Warranties of the Bank

 

The Bank represents and warrants to the Trust that:

 

(a)

It is a banking company duly organized and existing and in good standing under the laws of the State of New York.

 

(b)

It is duly registered as a transfer agent under Section 17A(c)(2) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), it will remain so registered for the duration of this Agreement, and it will promptly notify the Trust in the event of any material change in its status as a registered transfer agent.

 

(c)

It is duly qualified to carry on its business in the State of New York.

 

(d)

It is empowered under applicable laws and by its Charter and By-Laws to act as transfer agent and dividend disbursing agent and to enter into, and perform its obligations under, this Agreement.

 

(e)

All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement.

 

(f)

It has and will continue to have access to the necessary facilities, equipment and personnel with suitable training, education, experience, and skill to perform its duties and obligations under this Agreement.

 

(g)

It is in compliance, in all material respects, with laws and regulations applicable to the Bank in its capacity as a service provider hereunder.

 

(h)

No legal or administrative proceedings have been instituted or threatened which would materially impair the Bank’s ability to perform its duties and obligations under this Agreement and the Bank will notify the Trust, except as may be prohibited by applicable law, rule or agreements between the Bank and any governmental authority, of any publicly filed legal, regulatory or administrative proceedings that have been instituted, which would materially impair the Bank’s ability to perform its duties and obligations under this Agreement; and

 

 

(i)

Its entrance into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of the Bank or any law or regulation applicable to it.

 

4.       Representations and Warranties of the Trust

 

The Trust represents and warrants to the Bank that:

 

(a)

It is duly organized and existing and in good standing under the laws of the State of Delaware.

 

(b)

It is empowered under applicable laws and by the Second Amended and Restated Trust Agreement of the Trust (the “Trust Agreement”) to enter into and perform this Agreement.

 

(c)

A registration statement under the Securities Act of 1933 (the “1933 Act”), as amended, on behalf of the Trust has become effective, will remain effective, and appropriate state securities law filings have been made and will continue to be made, with respect to all Shares of the Trust being offered for sale.

 

5.       Indemnification and Insurance

 

5.1       The Bank shall not be responsible for, and the Trust shall indemnify and hold the Bank and its directors, officers, employees and agents harmless from and against, any and all losses, damages, costs, charges, reasonable counsel fees, including those incurred by the Bank in a successful defense of any claims by the Trust, payments, expenses and liability (“Losses”) which may be sustained or incurred by or which may be asserted against the Bank in connection with or relating to this Agreement or the Bank’s actions or omissions with respect to this Agreement, or as a result of acting upon any instructions reasonably believed by the Bank to have been duly authorized by the Trust or upon reasonable reliance of information or records given or made by the Trust; except for any Losses for which the Bank has accepted liability pursuant to Article 6 of this Agreement.

 

5.2       Subject to the limitations on liability set forth in Section 6, the Bank shall indemnify and hold the Trust harmless from and against direct Losses incurred by the Trust as the direct result of the Bank’s failure to meet the Standard of Care.

 

5.3       The indemnification provisions under this Section 5 shall apply to the Bank’s actions or omissions with respect to this Agreement or the Bank’s actions or omissions in its capacity as transfer agent under a Participant Agreement.

 

5.4       In order that the indemnification provisions contained in this Article 5 shall apply, upon the assertion of a claim for which either party may be required to indemnify the other, the party seeking indemnification shall promptly notify the other party of such assertion, and shall keep the other party advised with respect to all material developments concerning such claim. The party who may be required to indemnify shall have the right to control the defense of the claim, and the party seeking indemnification shall have the option to participate in the defense of such claim, at its own cost and expense. The party seeking indemnification will cooperate reasonably, at the indemnifying party’s expense, with the indemnifying party in the defense of such claim; provided, however, that the party seeking indemnification shall not be required to take any action that would impair any claim it may have against the indemnifying party. The party seeking indemnification shall in no case confess any claim or make any compromise in any case in which the other party may be required to indemnify it except with the other party’s prior written consent. The indemnifying party shall not settle or compromise any claim or consent to the entry of any judgment with respect to which indemnification is being sought hereunder without the prior written consent of the party seeking indemnification, which consent shall not be unreasonably withheld, delayed or conditioned.

 

 

5.5       The Bank will maintain, at its own cost, at all times during the term of this Agreement, errors and omissions insurance, fidelity bonds and such other insurance as the Bank may deem appropriate, in each case in a commercially reasonable amount deemed by the Bank to be sufficient to cover its potential liabilities under this Agreement, including without limitation cyber-liability insurance coverage deemed by the Bank to be appropriate. Upon request, the Bank agrees to provide the Trust with certificates of insurance or similar documentation regarding insurance coverage.

 

6.       Standard of Care and Limitation of Liability

 

In performing its duties under this Agreement, the Bank will exercise the standard of care and diligence that a leading professional transfer agent responsible for providing transfer agency services to registered 1933 Act Bitcoin Exchange Traded Products would observe in these affairs and shall act without bad faith, negligence, willful misconduct, willful misfeasance, fraud, or reckless disregard of its duties and obligations under this Agreement (“Standard of Care”).

 

The Bank shall have no responsibility and shall not be liable for any Losses, except that the Bank shall be liable to the Trust for direct money damages caused by the Bank’s failure to meet the Standard of Care. The parties agree that any encoding or payment processing errors shall be governed by the Standard of Care, and not Section 4-209 of the Uniform Commercial Code, which is superseded by this Article. In no event shall the Bank be liable for special, indirect or consequential damages, regardless of the form of action and even if the same were foreseeable. Except as may otherwise be provided in an agreement between the parties, the Bank’s cumulative maximum liability to the Trust and all persons claiming through the Trust for any losses whatsoever (including but not limited to those arising out of or related to this Agreement in any respect) and regardless of the form of action or legal theory shall not exceed the cumulative fees received by the Bank for services provided by the Bank hereunder during the twelve (12) months immediately prior to the date of the first reported loss. For purposes of this Agreement, none of the following shall be deemed a breach of the Bank’s Standard of Care:

 

(a)       The conclusive reliance on or use by the Bank or its agents or subcontractors of information, records, documents or services which (i) are received by the Bank or its agents or subcontractors, and (ii) have been prepared, maintained or performed by the Trust or any other person or firm on behalf of the Trust, including but not limited to any previous transfer agent or registrar.

 

(b)        The conclusive reliance on, or the carrying out by the Bank or its agents or subcontractors of, any instructions or requests of the Trust or instructions or requests on behalf of the Trust.

 

(c)       The offer or sale of Shares by or for the Trust in violation of any requirement under the federal securities laws or regulations, or the securities laws or regulations of any state that such Shares be registered in such state, or any violation of any stop order or other determination or ruling by any federal agency, or by any state with respect to the offer or sale of Shares in such state.

 

 

7.        Concerning the Bank

 

7.1       Use of Agents; Key Provider Personnel

 

(a)       Subject to any agreement between the parties, the Bank may employ agents or attorneys-in-fact which are not affiliates of the Bank without the prior written consent of the Trust in its sole discretion, provided that the Bank acts in good faith and with reasonable care in the selection and retention of such agents or attorneys-in-fact, and provided that the appointment of any such agent or attorneys-in-fact shall not relieve the Bank of any of its liabilities hereunder.

 

(b)       Subject to any agreement between the parties, the Bank may enter into subcontracts, agreements and understandings, whenever and on such terms and conditions as it deems necessary or appropriate to perform its services hereunder. No such subcontract, agreement or understanding shall discharge the Bank from its obligations hereunder.

 

(c)       The Bank will make commercially reasonable efforts to not remove or replace with any other person the designated primary relationship individual and service individual assigned to the Trust as of the Effective Date, the Bank personnel identified by the Bank as the primary points of contact for each Bank function, and such other personnel as assigned from time to time in accordance with this Agreement (“Key Personnel”) without providing notice to the Trust unless such Key Personnel is being terminated or suspended or notification is not practicable under the circumstances.

 

(d)       The Trust may reasonably request the replacement of Key Personnel during the term of this Agreement, and the Bank shall comply with such requests except as prohibited by applicable law and on a commercially reasonable basis within a reasonable amount of time. The Parties may agree upon other conditions relating to Key Personnel from time to time.

 

(e)       The Bank will establish a governance structure for the provision of services to the Trust and will consult with the Trust with respect to the appointment of persons to the positions for internal face-off on day-to-day matters.

 

7.2       The Bank shall be entitled to conclusively rely upon any written or oral instruction actually received by the Bank and reasonably believed by the Bank to be duly authorized and delivered by the Trust. The Trust agrees to forward to the Bank written instructions confirming oral instructions by the close of business of the same day that such oral instructions are given to the Bank. The Trust agrees that the fact that such confirming written instructions are not received or that contrary written instructions are received by the Bank shall in no way affect the validity or enforceability of transactions authorized by such oral instructions and effected by the Bank.

 

 

7.3        The Bank shall establish and maintain a disaster recovery plan and back-up system satisfying the requirements of its regulators (the “Disaster Recovery Plan and Back-Up System”). The Bank shall not be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its control which are not a result of its negligence, including without limitation, acts of God; earthquakes; fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots; interruption, loss or malfunctions of transportation, computer (hardware or software) or communication services; labor disputes; acts of civil or military authority; governmental actions; or inability to obtain labor, material, equipment or transportation,, provided that the Bank has established and is maintaining the Disaster Recovery Plan and Back-Up System, or if not, that such delay or failure would have occurred even if the Bank had established and was maintaining the Disaster Recovery Plan and Back-Up System. Upon the occurrence of any such delay or failure the Bank shall promptly notify the Trust and use commercially reasonable best efforts to resume performance as soon as practicable under the circumstances. In the event that the Trust reasonably believes that the occurrence of any such event will substantially prevent, hinder or delay performance of the services contemplated by this Agreement for more than three (3) consecutive business days, the Trust may take commercially reasonable actions to mitigate the impact of such services not being provided, including, but not limited to, at the Trust’s expense, contracting with another service provider to provide such services during such period; provided, that the Trust shall consult with the Bank in good faith in connection with any such mitigation and the Bank shall provide the Trust reasonable assistance in good faith in connection therewith; provided, further, that the Bank shall resume providing, and the Trust shall pay for, such services when the Bank resumes providing them, unless the Trust has terminated this Agreement pursuant to the terms of Article 9.1. Notwithstanding anything set forth in this Article 7.3, (a) in no event shall the Trust be obligated to pay any fees under this Agreement to the Bank with respect to any services not actually provided during any event described in this Article 7.3, and (b) the Trust shall have no responsibility to pay the Bank for services temporarily performed by a third party service provider.

 

7.4       The Bank shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement and the Participation Agreement, and no covenant or obligation shall be implied against the Bank in connection with this Agreement, except as set forth in this Agreement and the Participation Agreement.

 

7.5       At any time the Bank may apply to an officer of the Trust, but is not obligated to do so, for written instructions with respect to any matter arising in connection with the Bank’s duties and obligations under this Agreement, and the Bank, its agents, and subcontractors shall not be liable for any action taken or omitted to be taken in good faith in accordance with such instructions. Such application by the Bank for instructions from an officer of the Trust may, at the option of the Bank, set forth in writing any action proposed to be taken or omitted to be taken by the Bank with respect to its duties or obligations under the Agreement and the date on and/or after which such action shall be taken, and the Bank shall not be liable for any action taken or omitted to be taken in accordance with a proposal included in any such application on or after the date specified therein unless, prior to taking or omitting to take any such action, the Bank has received written or oral instructions in response to such application specifying the action to be taken or omitted. In connection with the foregoing, the Bank may consult with legal counsel of its own choosing, but is not obligated to do so, and advise the Trust if any instructions provided by the Trust at the request of the Bank pursuant to this Article or otherwise would, to the Bank’s knowledge, cause the Bank to take any action or omit to take any action contrary to any law, rule, regulation or commercially reasonable practice for similarly situated service providers. The Bank may consult with counsel to the Trust or its own counsel. To the extent the Bank notifies the Trust of such advice, and the Trust, acting reasonably and in good faith, concur that reliance on such advice is reasonable as it relates to the Trust, the Bank shall be fully protected with respect to anything done or omitted by it in in good faith in accordance with the advice or opinion of such counsel.

 

7.6       The Bank, its agents and subcontractors may act upon any paper or document, reasonably believed to be genuine and to have been signed by the proper person or persons, or upon any instruction, information, data, records or documents provided to the Bank or its agents or subcontractors by or on behalf of the Trust by machine readable input, telex, CRT data entry or other similar means authorized by the Trust, and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Trust.

 

7.7       The Bank shall retain title to and ownership of any and all data bases, computer programs, screen formats, report formats, interactive design techniques, derivative works, inventions, discoveries, patentable or copyrightable matters, concepts, expertise, patents, copyrights, trade secrets, and other related legal rights utilized by the Bank in connection with the services provided by the Bank hereunder. Notwithstanding the foregoing, the parties hereto acknowledge that the Trust shall retain all ownership rights in Trust data residing on the Bank’s electronic system.

 

 

7.8       Notwithstanding any provisions of this Agreement to the contrary, the Bank shall be under no duty or obligation to inquire into, and shall not be liable for:

 

(a)       The legality of the issue, sale or transfer of any Shares, the sufficiency of the amount to be received in connection therewith, or the authority of the Trust to request such issuance, sale or transfer;

 

(b)       The legality of the purchase of any Shares, the sufficiency of the amount to be paid in connection therewith, or the authority of the Trust to request such purchase;

 

(c)       The legality of the declaration of any dividend by the Trust, or the legality of the issue of any Shares in payment of any stock dividend; or

 

(d)       The legality of any recapitalization or readjustment of the Shares.

 

7.9       The Bank shall provide the Trust, as it may reasonably request, with a SOC 1 report (or any comparable successor report thereto) by independent public accountants on the Bank’s system, relating to the services provided by the Bank under this Agreement.

 

8.       Providing of Documents by the Trust; Confidentiality and Data Security

 

8.1       The Trust shall promptly furnish to the Bank with a copy of its Trust Agreement and all amendments thereto.

 

8.2       In the event that DTC ceases to be the Shareholder, the Bank shall re-register the Shares in the name of the successor to DTC as Shareholder upon receipt by the Bank of such documentation and assurances as it may reasonably require.

 

8.3       The Bank shall have no responsibility whatsoever with respect to of any beneficial interest in any of the Shares owned by the Shareholder.

 

8.4       Prior to the issuance of any additional Shares pursuant to stock dividends, stock splits or otherwise, and prior to any reduction in the number of Shares outstanding pursuant to a reverse stock split, the Trust shall deliver to the Bank:

 

(a)       A certified copy of any required order or consent of each governmental or regulatory authority required by law as a prerequisite to the issuance or reduction of such Shares, as the case may be, and an opinion of counsel for the Trust that no other order or consent is required; and

 

(b)       With respect to any such issuance of Shares, an opinion of counsel for the Trust, in a form satisfactory to the Bank, with respect to (i) the validity of the Shares, the obtaining of all necessary governmental consents, whether such Shares are fully paid and non-assessable and the status of such Shares under the 1933 Act, as amended, and any other applicable federal law or regulations (i.e., if subject to registration, that they have been registered and that the Registration Statement has become effective or, if exempt, the specific grounds therefore), and (ii) the due and proper listing of the Shares on all applicable securities exchanges.

 

 

8.5       The Bank and the Trust agree that all books, records, confidential, non-public, or proprietary information and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement shall remain confidential, and shall not be voluntarily disclosed to any person other than its auditors, accountants, regulators, employees, agents, attorneys-in-fact or counsel, except as may be, or may become required by law, by administrative or judicial order or by rule. The foregoing confidentiality obligation shall not apply to any information to the extent: (i) it is already known to the receiving party at the time it is obtained; (ii) it is or becomes publicly known or available through no wrongful act of the receiving party: (iii) it is rightfully received from a third party who, to the receiving party’s knowledge, is not under a duty of confidentiality; (iv) it is released by the protected party to a third party without restriction; or (v) it has been or is independently developed or obtained by the receiving party without reference to the information provided by the protected party.

 

8.6       The Bank will employ reasonable safeguards designed to protect the Trust’s confidential information, which may include but are not limited to the use of encryption technologies, passwords and any other safeguards the Bank may choose to employ. To the extent that the Bank’s affiliates or other permitted agents or subcontractors have access to confidential information, the Bank shall remain responsible for such entities’ compliance with the terms of this Article 8.7. The Bank agrees to notify promptly the Trust of any breach of this Article 8.7 by the Bank or a party to which it has provided the Trust’s confidential information, and to provide the Trust with details as to the nature and extent of the breach, including, but not limited to, the type of confidential or personal information disclosed and the identity of the recipients of such information.

 

8.7       The Bank has implemented and shall maintain in effect at all times during the terms of this Agreement, business continuity and disaster recovery plans designed to minimize interruptions of service and ensure recovery of systems and applications used to provide the services under this Agreement. Such plans will cover the facilities, systems, applications and employees that are critical to the provision of services hereunder, and will be tested at least annually to validate whether the recovery strategies, requirements, and protocols are viable and sustainable. Such plans will, at a minimum, make reasonable provision for (i) periodic back-up of the computer files and data with respect to the Trust, and (ii) emergency use of electronic data processing equipment to provide service under this Agreement. Upon reasonable request, the Bank shall provide a high-level presentation summarizing such plan.

 

8.8       The Bank will establish, implement, maintain and periodically test systems, plans and procedures relating to data and cyber security, data privacy, disaster recovery and business continuity with respect to the services provided pursuant to this Agreement. The Bank will implement an information security program consistent with the Information Security Program set forth in Exhibit B for the protection of information received from the Trust in connection with this Agreement.

 

8.9        In case of any requests or demands for the inspection of the Shareholder records of the Trust, the Bank will promptly employ reasonable commercial efforts to notify the Trust and secure instructions from an authorized officer of the Trust as to such inspection. The Bank reserves the right, however, to exhibit the Shareholder records to any person whenever it is advised by its counsel that it may be held liable for the failure to exhibit the Shareholder records to such person.

 

9.       Termination of Agreement

 

9.1       The term of this Agreement shall be three years commencing upon the date hereof (the “Initial Term”) and shall automatically renew for additional one-year terms (each a “Renewal Term”) unless either party provides written notice of termination at least ninety (90) days prior to the end of the Initial Term or the then-current Renewal Term (a “Non-Renewal Notice”). In the event a Party provides a Non-Renewal Notice, this Agreement shall terminate with respect to the Trust at 11:59 PM (Eastern time) on the last day of the Initial Term or Renewal Term, as applicable. In addition, this Agreement may be terminated end of the Initial Term or Renewal Term as provided below:

 

 

(a)       Notwithstanding any other provision of this Agreement, if either party materially breaches this Agreement (a “Defaulting Party”) the other party (the “Non-Defaulting Party”) may give written notice thereof to the Defaulting Party (“Breach Notice”), and if such material breach shall not have been remedied within thirty (30) days after the Breach Notice is given, then the Non-Defaulting Party may terminate this Agreement by giving at least thirty (30) days’ written notice of termination to Defaulting Party (a “Breach Termination Notice”), in which case this Agreement shall terminate as of 11:59 PM (Eastern time) on the last day of the applicable notice period following the date the Breach Termination Notice is given by the Non-Defaulting Party, or such later date as may be specified in the Breach Termination Notice (but not later than the last day of the Initial Term or then-current Renewal Term, as appropriate). In all cases, termination by the Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting Party of any other rights it might have under this Agreement or otherwise against the Defaulting Party.

 

(b)       To the extent BNYM receives a Red, Amber, Green (“RAG”) rating of “red” for a given Key Performance Indicator (“KPI”) as specified in the Service Level Agreement for two consecutive months (or other measurement period for such Service Level, if applicable), this shall constitute a “Service Level Deep Default.” BNYM shall have a period of two (2) months (or two (2) consecutive measurement periods, if applicable) in which to cure the Service Level Deep Default (the “Cure Period”). If, during the Cure Period, BNYM receives two or more red RAG ratings for the KPI that triggered a Service Level Deep Default, the Trust may terminate the Agreement upon thirty (30) days’ written notice to BNYM.

 

(c)       Notwithstanding any other provision of this Agreement, either party hereto may terminate this Agreement immediately by sending notice thereof to the other party upon the happening of any of the following: (i) the other party commences as debtor any case or proceeding under any bankruptcy, insolvency or similar law, or there is commenced against such other party any such case or proceeding; (ii) the other party commences as debtor any case or proceeding seeking the appointment of a receiver, conservator, trustee, custodian or similar official for such party or any substantial part of its property or there is commenced against such other party any such case or proceeding; (iii) the other party makes a general assignment for the benefit of creditors; or (iv) the other party admits in any medium, written, electronic or otherwise, any public communication or in any other public manner, its inability to pay debts as they come due. Either party hereto may exercise its termination right under this Article 9.1(b) at any time after the occurrence of any of the foregoing events notwithstanding that such event may cease to be continuing prior to such exercise, and any delay in exercising this right shall not be construed as a waiver or other extinguishment of that right. Any exercise by either party of its termination right under this Article 9.1(b) shall be without any prejudice to any other remedies or rights available to such party and shall not be subject to any fee or penalty, whether monetary or equitable. Notwithstanding the provisions of Article 16 below, notice of termination under this Article 9.1(b) shall be considered given and effective when given, not when received.

 

(d) The Trust may terminate this Agreement at any time upon ninety (90) days’ prior written notice in the event that the Trust’s sponsor determines to liquidate the Trust. The Bank may terminate this Agreement at any time upon ninety (90) days’ written notice for any reason. Should the Trust exercise its right to terminate, all out-of-pocket expenses associated with the movement of records and material will be borne by the Trust.

 

(e) Notwithstanding any provision of this Section 9 to the contrary, in the event that this Agreement is terminated in its entirety the Parties agree to continue operating under the terms of this Agreement as if this Agreement remained in full force and effect for up to one (1) year (up to 180 days in the event of termination under Sections 9.1(a)-(d)) or for such shorter period of time as the Parties mutually agree is necessary for BNY Mellon to transfer the books and records pertaining to the Fund or Funds which are in BNY Mellon’s possession or control to a successor service provider (the “Transition Period”); provided, that during any such Transition Period, BNY Mellon will be entitled to compensation for BNY Mellon’s Transition Period services pursuant to Section 8 and the provisions of this Agreement relating to the duties and obligations of BNY Mellon will remain in full force and effect.

 

 

9.2       The terms of Article 2 (with respect to fees and expenses incurred prior to termination), Articles 5.1, 5.2, 5.3 and 5.4 (Indemnification), Article 6 (Standard of Care and Limitation of Liability), Article 9 (Termination), and Article 14 (New York Law to Apply) shall survive any termination of this Agreement.

 

10.       Assignment

 

10.1       This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable or delegable by the Trust without the written consent of the Bank, or by the Bank without the written consent of the Trust. For the avoidance of doubt, (i) this Article 11.1 shall not apply to the merger, reorganization or consolidation of the Trust with another entity to which the Bank provides administrative, compliance, valuation or computation services or similar services, the sale by the Trust of all, or substantially all of, its assets to another entity to which the Bank provides administrative, compliance, valuation or computation services or similar services, or the liquidation or dissolution of the Trust and the distribution of the Trust’s assets, and (ii) without limiting the provisions of the first sentence of this Article 11.1, the Bank shall have no right to prevent the merger, reorganization or consolidation of the Trust with another entity. The Bank shall notify the Trust promptly following the execution of any agreement that would result in, or would be expected to result in, a change of control of the Bank; provided that such information is publicly available information and that the Bank makes such information available to its clients generally.

 

10.2       Notwithstanding the foregoing: (i) the Bank may assign or transfer this Agreement to any affiliate of the Bank or transfer this Agreement in connection with a sale or transfer of a majority or more of its assets, equity interests or voting control, provided that (A) the Bank gives the Trust at least ninety (90) days' prior written notice (or such shorter notice as may be commercially practicable under the circumstances, as determined by the Bank in good faith) of such assignment or transfer, (B) such assignment or transfer, in any such case, does not impair the provision of services under this Agreement in any material respect, and (C) the assignee or transferee agrees to be bound by all terms of this Agreement in place of the Bank, provided further, that if the Bank assigns or transfers this Agreement pursuant to this Article 11.2 to a non-Bank affiliate without the written consent of the Trust, the Trust shall have the option, exercisable for ninety (90) days after receiving written notice of such assignment or transfer (or for such longer period as may be mutually agreed by the parties), to terminate this Agreement with respect to the Trust.

 

11.       Severability and Beneficiaries

 

11.1       In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, the legality and enforceability of the remaining provisions shall not in any way be affected thereby provided obligation of the Trust to pay is conditioned upon provision of services.

 

11.2       This Agreement is solely for the benefit of the Bank and the Trust, and none of any Participant (as defined in the Participation Agreement), any Shareholder or beneficial owner of any Shares shall be or be deemed a third party beneficiary of this Agreement.

 

 

12.       Amendment

 

This Agreement may not be amended, changed or modified in any manner except by a written agreement duly executed by the Bank and the Trust to be bound thereby.

 

13.       New York Law to Apply

 

This Agreement shall be construed in accordance with the substantive laws of the State of New York, without regard to conflicts of laws principles thereof. The Trust and the Bank hereby consent to the jurisdiction of a state or federal court situated in New York City, New York in connection with any dispute arising hereunder. The Trust hereby irrevocably waives, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of venue of any such proceeding brought in such a court and any claim that such proceeding brought in such a court has been brought in an inconvenient forum. The Trust and the Bank each hereby irrevocably waives any and all rights to trial by jury in any legal proceeding arising out of or relating to this Agreement.

 

14.       Merger of Agreement

 

This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written.

 

15.       Notices

 

All notices, requests, claims, demands, and other communications as required or permitted hereunder shall be in writing and shall be (a) addressed to the Bank or the Trust at the address or email address set forth below (or such other address as either party may designate in writing to the other party) and (b) 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 (as a signed attachment) with confirmation of email receipt.

 

If to the Bank:

 

The Bank of New York Mellon

 

240 Greenwich Street

 

New York, New York 10286

 

Attention: ETF Operations

 

with a copy to:

 

The Bank of New York Mellon

 

240 Greenwich Street

 

New York, New York 10286

 

Attention: Legal Dept. – Asset Servicing

 

 

If to the Trust:

 

WisdomTree Digital Commodity Services, LLC

 

250 West 34^th Street, 3^rd Floor

 

New York, New York 10119

 

Email: legalnotice@wisdomtree.com

 

16.       Information Sharing

 

The Bank of New York Mellon Corporation is a global financial organization that provides services to clients through its affiliates and subsidiaries in multiple jurisdictions (the “BNY Mellon Group”). The BNY Mellon Group may centralize functions including audit, accounting, risk, legal, compliance, sales, administration, product communication, relationship management, storage, compilation and analysis of customer-related data, and other functions (the “Centralized Functions”) in one or more affiliates, subsidiaries and third-party service providers. Solely in connection with the Centralized Functions, (i) the Trust consents to the disclosure of and authorizes the Bank to disclose information regarding the Trust (“Customer-Related Data”) to the BNY Mellon Group and to its third-party service providers who are subject to confidentiality obligations with respect to such information and (ii) the Bank may store the names and business contact information of the Trust’s employees and representatives on the systems or in the records of the BNY Mellon Group or its service providers. The BNY Mellon Group may aggregate Customer-Related Data with other data collected and/or calculated by the BNY Mellon Group, and notwithstanding anything in this Agreement to the contrary the BNY Mellon Group will own all such aggregated data, provided that the BNY Mellon Group shall not distribute the aggregated data in a format that identifies Customer-Related Data with a particular customer. The Trust confirms that it is authorized to consent to the foregoing.

 

17.       Counterparts

 

This Agreement may be executed by the parties hereto in any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

 

18.       Consent to Examination

 

18.1       The books and records pertaining to the Trust which are in the possession or under the control of the Bank shall be the property of the Trust. The Trust, and Authorized Persons shall have access to such books and records at all times during the Bank’s normal business hours. Upon reasonable request of the Trust, copies of any such books and records shall be provided by the Bank to the Trust, or to an Authorized Person, including in connection with any regulatory request or examination, at the Trust’s expense.

 

18.2       The Bank shall provide to the Trust, upon request, a written summary of the Bank’s AML Program, which can be accessed online anytime via the Bank’s website.

 

 

19.       Limitation of Liability

 

This Agreement has been entered into by the Trust and was executed and delivered by an officer of its Sponsor, on behalf of the Trust, which officer was acting solely in his capacity as an officer of the Sponsor and not in his individual capacity and which Sponsor was acting solely in its capacity as sponsor of the Trust and not in its individual capacity. It is expressly acknowledged and agreed that the obligations of the Trust hereunder shall not be binding upon any of the shareholders, trustees, officers, employees or agents of the Trust or the Sponsor, personally, but shall bind only the property of the Trust, as provided in the Trust Agreement.

 

[Signature page follows.]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the latest date set forth below.

 

 

	WISDOMTREE BITCOIN FUND
	By: WisdomTree Digital Commodity Services, LLC, its Sponsor
	By:	/s/Jeremy Schwartz
		Name: Jeremy Schwartz
		Title: Chief Executive Officer
		Date: November 20, 2024

 

 

 

	THE BANK OF NEW YORK MELLON
	By:	/s/Robert M. Stein Jr
		Name: Robert M. Stein Jr
		Title: Vice President
		Date: November 20, 2024

 

 

SCHEDULE A

 

Books And Records To Be Maintained By The Bank

 

Source Documents requesting Creations and Redemptions

Correspondence/AP Inquiries

Reconciliations, bank statements, copies of canceled checks, cash proofs

Daily/Monthly reconciliation of outstanding Shares between the Trust and DTC

Dividend Records

Year-end Statements and Tax Forms

 

 

EXHIBIT A

 

Form of Authorized Participant Agreement

 

 

 

 

 

 

 

EXHIBIT B

 

Information Security Program

 

Capitalized terms not defined herein shall have the meaning set forth in the Agreement.

I.       Information Security Program Overview.

 

A.       “Services” means the services provided under the Agreement.

 

B.       During the term of the Agreement, BNY Mellon will implement and maintain an information security program ("ISP") with written policies and procedures reasonably designed to protect the confidentiality and integrity of Customer’s Confidential Information provided to BNY Mellon in accordance with the Agreement and when in BNY Mellon’s possession or under BNY Mellon’s control (“Customer Data”). The ISP will include administrative, technical and physical safeguards, appropriate to the type of Customer Data concerned, reasonably designed to: (i) maintain the integrity, confidentiality and availability of Customer Data; (ii) protect against anticipated threats or hazards to the security or integrity of Customer Data; (iii) protect against unauthorized access to or use of Customer Data that could result in substantial harm or inconvenience to Customer or its clients, and (iv) provide for secure disposal of Customer Data.

 

C.       BNY Mellon’s program is dynamic and may be modified to address technological changes or changes in the threat landscape, BNY Mellon’s business activities or other factors. BNY Mellon reserves the right to modify the ISP at any time, provided that BNY Mellon shall not diminish the overall level of protection this Exhibit is intended to provide.

 

II.       Security Incident Response and Notice.

 

A.       BNY Mellon will maintain a documented incident management process designed to ensure timely detection of security events and response thereto.

 

B.       In the event of a declared Security Incident, BNY Mellon will (i) promptly notify Customer, (ii) provide updates to Customer regarding BNY Mellon’s response and (iii) use reasonable efforts to implement measures designed to prevent a reoccurrence of Security Incidents of a similar nature.

 

C.       “Security Incident” means any known loss or unauthorized access, disclosure, use, alteration or destruction of Customer Data.

 

III.       Governance. BNY Mellon shall, upon request, (i) provide a copy of its most recent SSAE-18 or equivalent external audit report to Customer, which Customer may disclose solely to its internal or external auditors that are subject to written confidentiality obligations to use reasonable care to safeguard the report and not to disclose the report to any third party or use the report for any purpose other than evaluating BNY Mellon’s security controls; (ii) engage a third party provider to perform penetration testing of BNY Mellon systems used to provide the Services and, upon request, provide Customer confirmation of such testing, and (iii) participate in Customer’s reasonable information security due diligence questionnaire process.

 

A. BNY Mellon shall also, no more than once in any 12 month period and upon request, on a mutually agreed date during business hours and subject to BNY Mellon’s facility security policies and availability of personnel:

 

(i) meet with Customer subject matter experts in a BNY Mellon clean room to review information security policies, procedures and similar related information; provided that no documentation may be copied, disclosed to any third party, or transmitted or removed from BNY Mellon premises except as mutually agreed in writing; and

 

 

(ii) permit access to a BNY Mellon data center used to process Customer Data and provide the Services by no more than three Customer representatives, including employees of a regulatory or supervisory authority of Customer that is also a regulatory or supervisory authority of BNY Mellon, for a maximum of 3 hours in order to conduct a visual inspection of the environment and its controls.

 

Notwithstanding any provision in the Agreement to the contrary, Customer shall not disclose any verbal or written information obtained during the foregoing meetings described in above subsections (i)-(ii) to any third party or use it for any purpose other than evaluating BNY Mellon’s security controls, without BNY Mellon’s prior written consent. Customer shall reimburse BNY Mellon for any costs and expenses reasonably incurred in connection with Customer’s review (including that of the regulatory or supervisory authority personnel) of BNY Mellon’s security controls and data center.

 

IV.       Network and Communications Security.

 

A.       Asset Management. BNY Mellon will maintain an inventory of its system components, hardware and software used to provide the Services, and will review and update such inventory in accordance with the ISP.

 

B.       Change Management. BNY Mellon shall require that changes to its network or software used to provide the Services are tested and applied pursuant to a documented change management process.

 

C.       Security Monitoring. BNY Mellon will monitor cyber threat intelligence feeds daily. BNY Mellon will deploy Denial of Service (DoS) and Distributed DoS solutions.

 

D.       Network Segmentation. BNY Mellon’s infrastructure utilizes a multi-tier architecture, including a DMZ, to isolate the internal infrastructure from external networks. Traffic from external sources will traverse firewalls and pass through multiple layers of malware protection prior to processing. BNY Mellon’s production environment used to provide the Services will be segregated from pre-production regions and BNY Mellon’s internal segment.

 

E.       Vulnerability Management. BNY Mellon will maintain a documented process to identify and remediate security vulnerabilities affecting its systems used to provide the Services. BNY Mellon will classify security vulnerabilities using industry recognized standards and conduct continuous monitoring and testing of its networks, hardware and software including regular penetration testing and ethical hack assessments. BNY Mellon will remediate identified security vulnerabilities in accordance with its process.

 

F.       Malicious Code. BNY Mellon will deploy industry standard malicious code protection and identification tools across its systems and software used to provide the Services.

 

G.       Communications. BNY Mellon will protect electronic communications used in the provision of Services, including instant messaging and email services, using industry standard processes and technical controls and in accordance with the ISP.

 

V.       Application Security. The ISP will require that in-house application development be governed by a documented secure software development life cycle methodology, which will include deployment rules for new applications and changes to existing applications in live production environments.

 

VI.       Logging. The ISP will require the maintenance of network and application logs as part of BNY Mellon’s security information and event management processes. Logs are retained in accordance with law applicable to BNY Mellon’s provision of the Services as well as BNY Mellon’s applicable policies. BNY Mellon uses various tools in conjunction with such logs, which may include behavioral analytics, security monitoring case management, network traffic monitoring and analysis, IP address management and full packet capture.

 

 

VII.       Data Security.

 

A.       Identity & Access Management. BNY Mellon will implement reasonable and industry recognized user access rules for users accessing Customer Data based on the need to know and the principle of least privilege, and including user ID and password requirements, session timeout and re-authentication requirements, unsuccessful login attempt limits, privileged access limits and multifactor authentication or equivalent safeguard where risk factors indicate that single factor authentication is inadequate.

 

B.       Data Segregation. The ISP will require that (i) Customer Data is stored in either physically or logically segregated databases from other BNY Mellon data and (ii) different databases are maintained for development, testing, staging and production environments used in the provision of Services.

 

C.       Encryption. BNY Mellon will (i) encrypt Customer Data in transit to an external network using transport layer security or other encryption method and (ii) protect Customer Data at rest, in each case as BNY Mellon determines to be appropriate in accordance with the ISP and law applicable to BNY Mellon’s provision of the Services.

 

D.       Remote Access. The ISP will restrict remote access to BNY Mellon systems to authorized users using multifactor authentication or equivalent safeguard, and will require such access to be logged.

 

E.       Devices. BNY Mellon will restrict the transfer of Customer Data from its network to mass storage devices. BNY Mellon will use a mobile device management system or equivalent tool when mobile computing is used to provide the Services. Applications on such authenticated devices will be housed within an encrypted container and BNY Mellon will maintain the ability to remote wipe the contents of the container.

 

F.       Data Leakage Prevention (DLP). BNY Mellon will deploy DLP tools reasonably designed to help detect and prevent unauthorized transfers of Customer Data outside BNY Mellon’s network.

 

G.       Disposal. BNY Mellon will maintain chain of custody procedures and require that any Customer Data requiring disposal be rendered inaccessible, cleaned or scrubbed from such hardware and/or media using industry recognized methods.

 

VIII.       Personnel. BNY Mellon will undertake background checks during the recruitment process of personnel involved in the provision of the Services, subject to applicable laws, and require its personnel involved in the provision of Services to undertake annual training on the aspects of the ISP applicable to the personnel’s job function.

 

IX.       Physical Security. BNY Mellon will deploy perimeter security such as barrier access controls around its facilities processing or storing Customer Data. The ISP will include (i) procedures for validating visitor identity and authorization to enter the premises, which may include identification checks, issuance of identification badges and recording of entry purpose of visit and (ii) physical security policies for personnel, such as a “clean desk” policy. In accordance with its ISP and applicable law, BNY Mellon will install closed circuit television (“CCTV”) systems and CCTV recording systems to monitor and record access to controlled areas, such as data centers and server rooms.

 

X.       Subcontracting. BNY Mellon will implement a third party governance program designed to provide oversight over unaffiliated third parties used to provide the Services (“Subcontractors”).

 

 

XI.       BCP/DR. BNY Mellon will implement business continuity and disaster recovery plans designed to minimize interruptions of service and ensure recovery of systems and applications used to provide the Services. Such plans shall cover the facilities, systems, applications and employees that are critical to the provision of the Services, and will be tested at least annually to validate that the recovery strategies, requirements and protocols are viable and sustainable.

 

 

23

 

 

v3.24.3

Cover	Nov. 20, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 20, 2024
Entity File Number	1-03480
Entity Registrant Name	WISDOMTREE BITCOIN FUND
Entity Central Index Key	0001850391
Entity Tax Identification Number	99-6119726
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	250 West 34th Street
Entity Address, Address Line Two	3rd Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10119
City Area Code	(866)
Local Phone Number	909-9473
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Shares of Beneficial Interest of WisdomTree Bitcoin Fund
Trading Symbol	BTCW
Security Exchange Name	CboeBZX
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Information, Former Legal or Registered Name	formerly WisdomTree Bitcoin Trust

---