CUSTODY AGREEMENT
between
STAGECOACH FUNDS, INC.
and
INVESTORS BANK & TRUST COMPANY
TABLE OF CONTENTS
1. Bank Appointed Custodian..................................... 1
2. Definitions.................................................. 1
2.1 Authorized Person..................................... 1
2.2 Board 1
2.3 Security 1
2.4 Portfolio Security.................................... 1
2.5 Officer's Certificate................................. 2
2.6 Book-Entry System..................................... 2
2.7 Depository............................................ 2
2.8 Proper Instructions................................... 2
2.9 Foreign Securities.................................... 2
3. Separate Accounts............................................ 2
4. Certification as to Authorized Persons....................... 3
5. Custody of Cash.............................................. 3
5.1 Purchase of Securities................................ 3
5.2 Redemptions........................................... 3
5.3 Distributions and Expenses of the Fund................ 4
5.4 Payment in Respect of Securities...................... 4
5.5 Repayment of Loans.................................... 4
5.6 Repayment of Cash..................................... 4
5.7 Foreign Exchange Transactions......................... 4
5.8 Other Authorized Payments............................. 4
5.9 Termination........................................... 4
6. Securities................................................... 5
6.1 Segregation and Registration.......................... 5
6.2 Voting and Proxies.................................... 5
6.3 Corporate Action...................................... 5
6.4 Book-Entry System..................................... 6
6.5 Use of a Depository................................... 7
6.6 Use of Book-Entry System for Commercial Paper......... 9
6.7 Use of Immobilization Programs........................ 9
6.8 Eurodollar CDs........................................ 10
6.9 Options and Futures Transactions...................... 10
6.10 Segregated Account.................................... 11
6.11 Interest Bearing Call or Time Deposits................ 12
6.12 Transfer of Securities................................ 12
7. Redemptions.................................................. 14
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8. Merger, Dissolution, etc. of the Company or the Fund......... 14
9. Actions of the Bank Without Prior Authorization.............. 15
10. Collections and Defaults..................................... 15
11. Maintenance of Records and Accounting Services............... 16
12. [Reserved]
13. Concerning the Bank.......................................... 16
13.1 Bank Warranty......................................... 16
13.2 Standard of Care and Performance of Duties............ 16
13.3 Agents and Sub-custodians with Respect to Property
of the Fund Held in the United States................. 18
13.4 Duties of the Bank with Respect to Property
Held Outside of the United States..................... 18
13.5 Insurance............................................. 20
13.6 Compensation and Reimbursement of Expenses............ 20
13.7 Advances by Bank...................................... 21
14. Termination.................................................. 21
15. Confidentiality.............................................. 22
16. Notices...................................................... 23
17. Amendments................................................... 23
18. Parties...................................................... 23
19. Governing Law................................................ 24
20. Counterparts................................................. 24
21. Limitations of Liability..................................... 24
22. Single Agreement............................................. 24
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CUSTODY AGREEMENT
AGREEMENT made as of this 22nd day of September, 1997, between
STAGECOACH FUNDS, INC., a Maryland corporation (the "Company"), and INVESTORS
BANK & TRUST COMPANY (the "Bank" or, "IBT").
The Company, an open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), on behalf of the
International Equity Fund (the "Fund"), desires to place and maintain all of the
Fund's portfolio securities and other assets including cash in the custody of
the Bank, and the Bank has indicated its willingness to so act, subject to the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Company hereby appoints the Bank as
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custodian of the Fund's portfolio securities and cash delivered to the Bank as
hereinafter described, and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth.
2. Definitions. Whenever used herein, the terms listed below will have
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the following meanings:
2.1 Authorized Person. Authorized Person will mean any of the persons
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duly authorized to give Proper Instructions or otherwise act on behalf of the
Company and the Fund by appropriate resolution of the Board of Directors of the
Company, and set forth in a certificate as required by Section 4 hereof.
2.2 Board. Board will mean the Company's Board of Directors.
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2.3 Security. The term security as used herein will have the same
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meaning as when such term is used in the Securities Act of 1933, as amended (the
"1933 Act"), including, without limitation, any note, stock, treasury stock,
bond, debenture, evidence of indebtedness, certificate of interest or
participation in any profit sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share, investment
contract, voting-trust certificate, certificate of deposit for a security,
fractional undivided interest in oil, gas, or other mineral rights, any put,
call, straddle, option, or privilege on any security, certificate of deposit, or
group or index of securities (including any interest therein or based on the
value thereof), or any put, call, straddle, option, or privilege entered into on
a national securities exchange relating to a foreign currency, or, in general,
any interest or instrument commonly known as a "security", or any certificate of
interest or participation in, temporary or interim certificate for, receipt for,
guarantee of, or warrant or right to subscribe to, or option contract to
purchase or sell any of the foregoing, and futures, forward contracts and
options thereon.
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2.4 Portfolio Security. Portfolio Security will mean any security
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owned by the Fund.
2.5 Officer's Certificate. Officer's Certificate will mean, unless
---------------------
otherwise indicated, any request, direction, instruction, or certification in
writing signed by an Authorized Person of the Company.
2.6 Book-Entry System. Book-Entry System shall mean the Federal
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Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor(s) and its nominee(s) and any other book entry system approved by the
Board.
2.7 Depository. Depository shall mean The Depository Trust Company
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("DTC") and any other clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange Act of 1934, as
amended ("Exchange Act"), and its successor(s) and its nominee(s). The term
"Depository" shall further mean and include any other person authorized to act
as a depository under the 1940 Act, its successor(s) and its nominee(s),
specifically identified in a certified copy of a resolution of the Board.
2.8 Proper Instructions. Proper Instructions shall mean (i)
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instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized Person,
such instructions to be given in such form and manner as the Bank and the
Company shall agree upon from time to time, and (ii) instructions (which may be
continuing instructions) regarding other matters signed or initialed by an
Authorized Person. Oral instructions will be considered Proper Instructions if
the Bank reasonably believes them to have been given by an Authorized Person.
The Company shall cause all oral instructions to be promptly confirmed in
writing or by facsimile. The Bank shall act upon and comply with any subsequent
Proper Instruction which modifies a prior instruction, and the sole obligation
of the Bank with respect to any follow-up or confirmatory instruction shall be
to make reasonable efforts to detect any discrepancy between the original
instruction and such confirmation and to report such discrepancy to the Company.
The Company shall be responsible, at the expense of the Fund, for taking any
action, including any reprocessing, necessary to correct any such discrepancy or
error, and, to the extent such action requires the Bank to act, the Company
shall give the Bank specific Proper Instructions as to the action required.
Upon receipt by the Bank of an Officer's Certificate as to the authorization by
the Board accompanied by a detailed description of procedures approved by the
Company, Proper Instructions may include communication effected directly between
electromechanical or electronic devices provided that the Company and the Bank
are satisfied that such procedures afford adequate safeguards for the Fund's
assets.
2.9 Foreign Securities. The term Foreign Securities as used herein
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will have the same meaning as when such term is used in Rule 17f-5 under the
1940 Act.
3. Separate Accounts. The Bank will segregate the assets of the Fund into
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a separate account for the Fund containing the assets of the Fund (and all
investment earnings thereon). Unless the context otherwise requires, any
reference in this Agreement to any actions to be taken
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by the Company shall be deemed to refer to the Company acting on behalf of the
Fund, any reference in this Agreement to any assets of the Company, including,
without limitation, any Portfolio Securities and other assets including cash and
any earnings thereon, shall be deemed to refer only to assets of the Fund, any
duty or obligation of the Bank hereunder to the Company shall be deemed to refer
to duties and obligations with respect to the Fund, and any obligation or
liability of the Company hereunder shall be binding only with respect to the
Fund and shall be discharged only out of the assets of the Fund.
4. Certification as to Authorized Persons. The Secretary or an Assistant
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Secretary of the Company will at all times maintain on file with the Bank his or
her certification to the Bank, in such form as may be acceptable to the Bank, of
(i) the names and signatures of the Authorized Persons and (ii) the names of the
Board, it being understood that upon the occurrence of any change in the
information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or an
Assistant Secretary of the Company, will sign a new or amended certification
setting forth the change of the new, additional or omitted names or signatures.
The Bank will be entitled to rely and act upon any Officer's Certificate given
to it by the Company that has been signed by Authorized Persons named in the
most recent certification received by the Bank.
5. Custody of Cash. As custodian, the Bank will open and maintain a
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separate account or accounts in the name of the Fund or in the name of the Bank
as custodian of the Fund, and will deposit to the account of the Fund all of the
cash of the Fund, except for cash held by a sub-custodian appointed pursuant to
subsections 13.3 or 13.4 hereof, including borrowed funds, delivered to the
Bank, subject only to draft or order by the Bank acting pursuant to the terms of
this Agreement. Upon receipt by the Bank of Proper Instructions (which may be
continuing instructions) or in the case of payments for redemptions and
repurchases of outstanding interests of the Fund, notification from the Fund's
transfer agent as provided in Section 7, requesting such payment, designating
the payee or the account or accounts to which the Bank will release funds for
deposit, and stating that it is for a purpose permitted under the terms of this
Section 5, specifying the applicable subsection, the Bank will make payments of
cash held for the accounts of the Fund, insofar as funds are available for that
purpose, only as permitted in subsections 5.1-5.9 below.
5.1 Purchase of Securities. Upon the purchase of securities for the
----------------------
Fund, against contemporaneous receipt of such securities by the Bank, or against
delivery of such securities to the Bank, in accordance with generally accepted
settlement practices or customs in the jurisdiction or market in which the
transaction occurs, such securities to be registered in the name of the Fund or
in the name of, or properly endorsed and in form for transfer to, the Bank, or a
nominee of the Bank, or receipt for the account of the Bank pursuant to the
provisions of Section 6 below, each such payment to be made at the purchase
price shown on a broker's confirmation (or transaction report in the case of
Book Entry Paper) of purchase of the securities that is received by the Bank
before such payment is made and that has been confirmed in the Proper
Instructions also received by the Bank before such payment is made.
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5.2 Redemptions. In such amount as may be necessary for the
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repurchase or redemption of interests of the Fund offered for repurchase or
redemption in accordance with Section 7 of this Agreement.
5.3 Distributions and Expenses of the Fund. For the payment on the
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account of the Fund of dividends or other distributions to shareholders as may
from time to time be declared by the Board, interest, taxes, investment advisory
or administration fees, and, as and to the extent provided on Schedule A hereto,
any fees of the Bank for its services hereunder and any reimbursement of the
expenses and liabilities of the Bank related to such services with respect to
the Fund of the Company as provided pursuant to subsection 13.6 hereunder and on
Schedule A hereto.
5.4 Payment in Respect of Securities. For payments in connection with
--------------------------------
the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Fund held by or to be delivered to the Bank.
5.5 Repayment of Loans. To repay loans of money made to the Fund,
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but, in the case of final payment, only upon redelivery to the Bank of any
Portfolio Securities pledged or hypothecated therefor and upon surrender of
documents evidencing the loan.
5.6 Repayment of Cash. To repay the cash delivered to the Fund for
-----------------
the purpose of collateralizing the obligation to return to the Fund certificates
borrowed from the Fund representing Portfolio Securities, but only upon
redelivery to the Bank of such borrowed certificates.
5.7 Foreign Exchange Transactions. For payments in connection with
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foreign exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery ("Foreign Exchange Agreements") that may be entered
into by the Bank on behalf of the Fund upon the receipt of Proper Instructions,
such Proper Instructions to specify the currency broker or banking institution
(which may be the Bank, or any other sub-custodian or agent hereunder, acting as
principal) with which the contract or option is made, and the Bank shall have no
duty with respect to the selection of such currency brokers or banking
institutions with which the Fund deals or for their failure to comply with the
terms of any contract or option.
5.8 Other Authorized Payments. For other authorized transactions of
-------------------------
the Fund, or other obligations of the Fund incurred for proper purposes with
respect to the Fund; provided that before making any such payment, the Bank also
will receive Proper Instructions or a certified copy of a resolution of the
Board signed by an Authorized Person (other than the Person certifying such
resolution) and certified by its Secretary or Assistant Secretary, naming the
person or persons to whom such payment is to be made, and either describing the
transaction for which payment is to be made and declaring it to be an authorized
transaction of the Fund, or specifying the amount of the obligation for which
payment is to be made, setting forth the purpose for which such obligation was
incurred and declaring such purpose to be a proper corporate purpose.
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5.9 Termination. Upon the termination of this Agreement as
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hereinafter set forth pursuant to Section 8 and Section 14 of this Agreement.
6. Securities.
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6.1 Segregation and Registration. Except as otherwise provided
----------------------------
herein, and except for Portfolio Securities to be delivered to any sub-custodian
appointed pursuant to subsections 13.2 or 13.3 hereof, the Bank as custodian,
will receive and hold pursuant to the provisions hereof, in a separate account
or accounts and physically segregated at all times from those of other persons,
any and all Portfolio Securities which may now or hereafter be delivered to it
by or for the account of the Fund. All such Portfolio Securities will be held
or disposed of by the Bank for, and subject at all times to, the instructions of
the Company pursuant to the terms of this Agreement. Subject to the specific
provisions herein relating to Portfolio Securities that are not physically held
by the Bank, the Bank will register all Portfolio Securities (unless otherwise
directed by Proper Instructions or an Officer's Certificate), in the name of a
registered nominee of the Bank as defined in the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, and will execute and
deliver all such certificates in connection therewith as may be required by such
laws or regulations or under the laws of any state. The Bank will use its best
efforts to the end that the specific Portfolio Securities held by it hereunder
will be at all times identifiable.
The Company, on behalf of the Fund, will from time to time furnish to
the Bank appropriate instruments to enable it to hold or deliver in proper form
for transfer, or to register in the name of its registered nominee, any
Portfolio Securities which may from time to time be registered in the name of
the Fund.
6.2 Voting and Proxies. Neither the Bank nor any nominee of the Bank
------------------
will vote any of the Portfolio Securities held hereunder, except in accordance
with Proper Instructions or an Officers' Certificate. The Bank will execute and
deliver, or will cause to be executed and delivered, to the Company or its
designated agent all notices, proxies and proxy soliciting materials with
respect to such Portfolio Securities, but without indicating the manner in which
such proxies are to be voted, such proxy to be executed by the registered holder
of such Portfolio Securities (if registered otherwise than in the name of the
Fund), in accordance with the Proper Instructions or an Officer's Certificate.
6.3 Corporate Action. If at any time the Bank is notified that an
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issuer of a Portfolio Security has taken or intends to take a corporate action
(a "Corporate Action") that affects the rights, privileges, powers, preferences,
qualifications or ownership of the Portfolio Security, including, without
limitation, liquidation, consolidation, merger, recapitalization,
reorganization, reclassification, subdivision, combination, stock split or stock
dividend, which Corporate Action requires an affirmative response or action on
the part of the holder of such Portfolio Security (a "Response"), the Bank shall
notify the Company's designee, Xxxxx Fargo Bank, N.A. ("Xxxxx Fargo Bank"),
promptly of the Corporate Action, the Response required in connection with the
Corporate Action, and the Bank's deadline for receipt from the Company's
designee, Xxxxx Fargo Bank, of Proper Instructions regarding the Response (the
"Response
5
Deadline"). Except as provided in subsection 6.3(c) below, the date specified as
the Response Deadline shall not be more than 24 hours prior to the Response
expiration day set by the depository processing such Corporate Action. The Bank
shall forward to the Company's designee, Xxxxx Fargo Bank, via facsimile and/or
overnight courier all notices, information statements or other materials
relating to the Corporate Action within twenty-four (24) hours of receipt of
such materials by the Bank.
(a) The Bank shall act upon a required Response only after
receipt by the Bank of Proper Instructions from the Company's designee, Xxxxx
Fargo Bank, no later than 4:00 p.m. (Pacific time) on the date specified as the
Response Deadline and only if the Bank (or its agent or sub-custodian hereunder)
has actual possession of all Portfolio Securities (but only if such Portfolio
Securities are necessary for the consummation of the Corporate Action
("Necessary Portfolio Securities")), consents and other materials no later than
4:00 p.m. (Pacific time) on the date specified as the Response Deadline.
Portfolio Securities in the possession of a broker or other borrower pursuant to
the Bank's securities lending program shall be deemed to be in the possession of
the Bank for the purposes of this subsection 6.3.
(b) The Bank shall have no duty to act upon a required Response
if Proper Instructions relating to such Response and all Necessary Portfolio
Securities, consents and other materials are not received by and in the
possession of the Bank no later than 4:00 p.m. (Pacific time) on the date
specified as the Response Deadline. Notwithstanding, the Bank may, in its sole
discretion, use its best efforts to act upon a Response for which Proper
Instructions and/or Necessary Portfolio Securities, consents or other materials
are received by the Bank after 4:00 p.m. (Pacific time) on the date specified as
the Response Deadline, it being acknowledged and agreed by the parties that any
undertaking by the Bank to use its best efforts in such circumstances shall in
no way create any duty upon the Bank to complete such Response prior to its
expiration.
(c) In the event that the Company's designee, Xxxxx Fargo Bank,
notifies the Bank of a Corporate Action requiring a Response and the Bank has
received no other notice of such Corporate Action, the Response Deadline shall
be 48 hours prior to the Response expiration time set by the depository
processing such Corporate Action.
(d) Subsection 13.4(g) of this Agreement shall govern any
Corporate Action involving Foreign Portfolio Securities held by a Selected
Foreign Sub-custodian.
6.4 Book-Entry System. Provided (i) the Bank has received a
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certified copy of a resolution of the Board specifically approving deposits of
the Fund assets in the Book-Entry System, and (ii) for any subsequent changes to
such arrangements following such approval, the Board has reviewed and approved
the arrangement and has not delivered an Officers Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the Book-Entry
System provided that such Portfolio Securities are represented in an account
("Account") of the Bank (or
6
its agent) in such System that shall not include any assets of the Bank (or such
agent) other than assets held as a fiduciary, custodian, or otherwise for
customers:
(b) The records of the Bank (and any such agent) with respect to
the Fund's participation in the Book-Entry System through the Bank (or any such
agent) will identify by book entry Portfolio Securities that are included with
other securities deposited in the Account and shall at all times during the
regular business hours of the Bank (or such agent) be open for inspection by
duly authorized officers, employees or agents of the Company. Where securities
are transferred to the Fund's account, the Bank shall also, by book entry or
otherwise, identify as belonging to the Fund a quantity of Portfolio Securities
in a fungible bulk of securities (i) registered in the name of the Bank or its
nominee, or (ii) shown on the Bank's account on the books of the Federal Reserve
Bank;
(c) The Bank (or its agent) shall pay for securities purchased
for the account of the Fund or shall pay cash collateral against the return of
Portfolio Securities loaned by the Fund upon (i) receipt of advice from the
Book-Entry System that such Securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Bank (or its agent) to reflect
such payment and transfer for the account of the Fund. The Bank (or its agent)
shall transfer Portfolio Securities sold or loaned for the account of the Fund
upon:
(i) receipt of advice from the Book-Entry System that
payment for securities sold or payment of the initial cash collateral against
the delivery of Portfolio Securities loaned by the Fund has been transferred to
the Account: and
(ii) the making of an entry on the records of the Bank (or
its agent) to reflect such transfer and payment for the account of the Fund.
Copies of all advices from the Book-Entry System of transfers of Portfolio
Securities for the account of the Fund shall identify the Fund, be maintained
for the Fund by the Bank and shall be provided to the Fund at its request. The
Bank shall send the Fund a confirmation, in accordance with Rule 17f-4 under the
1940 Act, of any transfers to or from the account of the Fund;
(d) The Bank will promptly provide the Company with any report
obtained by the Bank or its agent on the Book-Entry System's accounting system,
internal accounting control and procedures for safeguarding securities deposited
in the Book-Entry System;
(e) The Bank shall be liable to the Company and the Fund for any
loss or damage to the Fund resulting from use of the Book-Entry System by reason
of any negligent actions or inactions of the Bank or any of its agents or of any
of its or their employees, or from any failure by the Bank or any such agent to
use its best efforts to enforce such rights as it may have against the Book-
Entry System; at the election of the Fund, it shall be entitled to be subrogated
for the Bank in any claim against the Book-Entry System or any other person that
the Bank or its agent may have as a consequence of any such loss or damage if
and to the extent that the Fund has not been made whole for any loss or damage;
6.5 Use of a Depository. Provided (i) the Bank has received a
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certified copy of a resolution of the Board specifically approving deposits in
DTC or other such Depository and (ii)
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for any subsequent changes to such arrangements following such approval, the
Board has reviewed and approved the arrangement and has not delivered an
Officer's Certificate to the Bank indicating that the Board has withdrawn its
approval:
(a) The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio Securities including
stock dividends, rights and other items of like nature, and to receive and remit
to the Bank on behalf of the Fund all income and other payments thereon and to
take all steps necessary and proper in connection with the collection thereof;
(b) Registration of Portfolio Securities may be made in the name
of any nominee or nominees used by such Depository;
(c) Payment for securities purchased and sold may be made through the
clearing medium employed by such Depository for transactions of participants
acting through it. Upon any purchase of Portfolio Securities, payment will be
made only upon delivery of the securities to or for the account of the Fund and
the Fund shall pay cash collateral against the return of Portfolio Securities
loaned by the Fund only upon delivery of the Securities to or for the account of
the Fund; and upon any sale of Portfolio Securities, delivery of the Securities
will be made only against payment thereof or, in the event Portfolio Securities
are loaned, delivery of Securities will be made only against receipt of the
initial cash collateral to or for the account of the Fund; and
(d) The Bank shall be liable to the Fund for any loss or damage to
the Fund resulting from use of a Depository by reason of any negligent actions
or inactions of the Bank or its employees or from any failure by the Bank to use
its best efforts to enforce such rights as it may have against a Depository. In
this connection, the Bank shall use its best efforts to ensure that:
(i) the Depository obtains replacement of any certificated
Portfolio Security deposited with it in the event such Security is lost,
destroyed, wrongfully taken or otherwise not available to be returned to the
Bank upon its request;
(ii) any proxy materials received by a Depository with respect
to Portfolio Securities deposited with such Depository are forwarded immediately
to the Bank for voting in accordance with subsection 6.2 above;
(iii) such Depository immediately forwards to the Bank
confirmation of any purchase or sale of Portfolio Securities and of the
appropriate book entry made by such Depository to the Fund's account;
(iv) such Depository prepares and delivers to the Bank such
records with respect to the performance of the Bank's obligations and duties
hereunder as may be necessary for the Fund to comply with the recordkeeping
requirements of Section 31(a) of the 1940 Act and Rule 31(a) thereunder; and
8
(v) such Depository delivers to the Bank and the Company all
internal accounting control reports, whether or not audited by an independent
public accountant, as well as such other reports as the Company may reasonably
request in order to verify the Portfolio Securities held by such Depository.
6.6 Use of Book-Entry System for Commercial Paper. Provided (i) the
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Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each year
following such approval the Board has received and approved the arrangements,
upon receipt of Proper Instructions and upon receipt of confirmation from an
Issuer (as defined below) that the Fund has purchased such Issuer's Book-Entry
Paper, the Bank shall issue and hold in book-entry form, on behalf of the Fund,
commercial paper issued by issuers with whom the Bank has entered into a book-
entry agreement (the "Issuers"). In maintaining its procedures for Book-Entry
Paper, the Bank agrees that:
(a) The Bank will maintain all Book-Entry Paper held by the Fund
in an account of the Bank that includes only assets held by it for customers;
(b) The records of the Bank with respect to the Fund's purchase
of Book-Entry Paper through the Bank will identify, by book-entry, commercial
paper belonging to the Fund that is included in the Book-Entry Paper system and
shall at all times during the regular business hours of the Bank be open for
inspection by duly authorized officers, employees or agents of the Company;
(c) The Bank shall pay for Book-Entry Paper purchased for the
account of the Fund upon contemporaneous (i) receipt of advice from the Issuer
that such sale of Book-Entry Paper has been effected, and (ii) the making of an
entry on the records of the Bank to reflect such payment and transfer for the
account of the Fund;
(d) The Bank shall cancel such Book-Entry Paper obligation upon
the maturity thereof upon contemporaneous (i) receipt of advice that payment for
such Book-Entry Paper has been transferred to the Fund, and (ii) the making of
an entry on the records of the Bank to reflect such payment for the account of
the Fund;
(e) The Bank shall transmit to the Company a transaction journal
confirming each transaction in Book-Entry Paper for the account of the Fund on
the next business day following the transaction: and
(f) The Bank will send to the Company such reports on its system
of internal accounting control with respect to Book-Entry Paper as the Company
may reasonably request from time to time.
6.7 Use of Immobilization Programs. Provided (i) the Bank has
------------------------------
received a certified copy of a resolution of the Board specifically approving
the maintenance of Portfolio Securities in an immobilization program operated by
a bank which meets the requirements of Section 26(a)(1) of the 1940 Act, and
(ii) for each year following such approval the Board has
9
reviewed and approved the arrangement and has not delivered an Officer's
Certificate to the Bank indicating that the Board has withdrawn its approval,
the Bank shall enter into such immobilization program with such bank acting as a
sub-custodian hereunder.
6.8 Eurodollar CDs. Any Portfolio Securities that are Eurodollar CDs
--------------
may be physically held by the European branch of the U.S. banking institution
that is the issuer of such Eurodollar CD (a "European Branch"), provided that
such Portfolio Securities are identified on the books of the Bank as belonging
to the Fund and that the books of the Bank identify the European Branch holding
such Portfolio Securities. Notwithstanding any other provision of this
Agreement to the contrary, except as stated in the first sentence of this
subsection 6.8, the Bank shall be under no other duty with respect to such
Eurodollar CDs belonging to the Fund, and the Bank shall have no liability to
the Fund or its interestholders with respect to the actions, inactions, whether
negligent or otherwise of such European Branch in connection with such
Eurodollar CDs, except for any loss or damage to the Fund resulting from the
Bank's own negligent actions or inactions or lack of reasonable care in the
performance of its duties hereunder.
6.9 Options and Futures Transactions.
--------------------------------
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter.
(i) The Bank shall take action as to put options ("puts")
and call options ("calls") purchased or sold (written) by the Fund regarding
escrow or other arrangements in accordance with the provisions of any agreement
entered into upon receipt of Proper Instructions between the Bank, any broker-
dealer registered under the Exchange Act and a member of the National
Association of Securities Dealers, Inc. (the "NASD"), and, if necessary, the
Company, on behalf of the Fund, relating to the compliance with the rules of the
Options Clearing Corporation and of any registered national securities exchange,
or of any similar organization or organizations.
(ii) Unless another agreement requires it to do so, the Bank
shall be under no duty or obligation to see that the Fund has deposited or is
maintaining adequate margin, if required, with any broker in connection with any
option, nor shall the Bank be under duty or obligation to present such option to
the broker for exercise unless it receives Proper Instructions from the Company.
The Bank shall have no responsibility for the legality of any put or call
purchased or sold on behalf of the Fund, the propriety of any such purchase or
sale, or the adequacy of any collateral delivered to a broker in connection with
an option or deposited to or withdrawn from a Segregated Account (as defined in
subsection 6.10 below). The Bank specifically, but not by way of limitation,
shall not be under any duty or obligation to: (1) periodically check or notify
the Fund that the amount of such collateral held by a broker or held in a
Segregated Account is sufficient to protect such broker or the Fund against any
loss; (2) effect the return of any collateral delivered to a broker; or (3)
advise the Fund that any option it holds, has or is about to expire. Such duties
or obligations shall be the sole responsibility of a Company.
10
(b) Puts, Calls and Futures Traded on Commodities Exchanges
(i) The Bank shall take action, upon receipt of Proper
Instructions, as to puts, calls and futures contracts ("futures") purchased or
sold by the Fund in accordance with the provisions of any agreement among the
Company, on behalf of the Fund, the Bank and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract Market, or
any similar organization(s), regarding account deposits in connection with
transactions by the Fund.
(ii) The responsibilities and liabilities of the Bank as
to futures, puts and calls traded on commodities exchanges, any Futures
Commission Merchant account and the Segregated Account shall be limited as set
forth in subparagraph (a)(ii) of this subsection 6.9 as if such subparagraph
referred to Futures Commission Merchants rather than brokers, and futures and
puts and calls thereon instead of options.
6.10 Segregated Account. The Bank shall upon receipt of Proper
------------------
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of the Fund, into which Account or Accounts may be transferred upon
receipt of Proper Instructions, cash and/or Portfolio Securities.
(a) Cash and/or Portfolio Securities may be transferred into a
Segregated Account in the following circumstances, upon receipt of Proper
Instructions:
(i) in accordance with the provisions of any agreement
among the Company, on behalf of the Fund, the Bank and a broker-dealer
registered under the Exchange Act and a member of the NASD or any Futures
Commission Merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Options Clearing Corporation and of any
registered national securities exchange or the Commodity Futures Trading
Commission or any registered Contract Market, or of any similar organizations
regarding escrow or other arrangements in connection with transactions by the
Fund;
(ii) for the purpose of segregating cash or Securities in
connection with options purchased or written by the Fund or commodity futures
purchased or written by the Fund;
(iii) for the deposit of liquid assets, including, but not
limited to cash, U.S. Government obligations or other high-grade debt
obligations, having a market value (marked-to-market on a daily basis) at all
times equal to not less than the aggregate purchase price due on the settlement
dates of all the Fund's then outstanding forward commitment or "when-issued
agreements" relating to the purchase of Portfolio Securities and all the Fund's
then outstanding commitments under any reverse repurchase agreements entered
into with broker-dealer firms;
(iv) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases
11
of the Securities and Exchange Commission or no-action positions taken by the
staff of the Securities and Exchange Commission relating to the maintenance of
Segregated Accounts by registered investment companies; or
(v) for other proper corporate purposes, but only, in the
case of this clause (v), upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board, or of the Executive Committee,
signed by an officer of the Company and certified by the Secretary or an
Assistant Secretary, setting forth the purpose(s) of such Segregated Account and
declaring such purpose(s) to be a proper corporate purpose(s).
(b) assets may be withdrawn from the Segregated Account pursuant
to Proper Instructions only:
(i) with respect to assets deposited in accordance with
the provisions of any agreements referenced in (a)(i) or (a)(ii) above, in
accordance with the provisions of such agreements;
(ii) with respect to assets deposited pursuant to (a)(iii)
or (a)(iv) above, for sale or delivery to meet the Fund's obligations under
outstanding forward-commitment, delayed-settlement or when-issued agreements for
the purchase of Portfolio Securities and under reverse repurchase agreements, or
for release back into the Fund's Portfolio Securities account upon receipt of
Proper Instructions specifying that the value of the assets in the Segregated
Account or Accounts exceeds the amount required to ensure compliance with the
procedures described in (a)(iv), above;
(iii) for exchange for other liquid assets of equal or
greater value deposited in the Segregated Account;
(iv) to the extent that the Fund's outstanding forward-
commitment or when-issued agreements for the purchase of portfolio securities or
any reverse repurchase agreements are sold to other parties or the Fund's
obligations thereunder are met from assets of the Fund other than those in the
Segregated Account;
(v) for delivery upon settlement of a forward-commitment,
delayed-settlement or when-issued agreement for the sale of Portfolio
Securities; or
(vi) with respect to assets deposited pursuant to (a)(v)
above, in accordance with the purposes of such account as set forth in Proper
Instructions.
6.11 Interest Bearing Call or Time Deposits. The Bank shall, upon
--------------------------------------
receipt of Proper Instructions relating to the purchase by the Fund of interest-
bearing fixed-term and call deposits, transfer cash, by wire or otherwise, in
such amounts and to such bank(s) as shall be indicated in such Proper
Instructions. The Bank shall include in its records with respect to the assets
of the Fund appropriate notation as to the amount of each such deposit, the
banking institution with which such deposit is made (the "Deposit Bank"), and
shall retain such forms of advice or receipt evidencing the deposit, if any, as
may be forwarded to the Bank by the Deposit
12
Bank. Such deposits shall be deemed Portfolio Securities of the Fund and the
responsibility of the Bank therefore shall be the same as and no greater than
the Bank's responsibility in respect of other Portfolio Securities of the Fund.
6.12 Transfer of Securities. The Bank will transfer, exchange,
----------------------
deliver or release Portfolio Securities held by it hereunder, insofar as such
Securities are available for such purpose, provided that before making any
transfer, exchange, delivery or release under this Section, the Bank will
receive Proper Instructions requesting such transfer, exchange or delivery
stating that it is for a purpose permitted under the terms of this subsection
6.12, specifying the applicable subsection, or describing the purpose of the
transaction with sufficient particularity to permit the Bank to ascertain the
applicable subsection, only:
(a) upon sales of Portfolio Securities for the account of the
Fund, against contemporaneous receipt by the Bank of payment therefor in full,
or against payment to the Bank in accordance with generally accepted settlement
practices and customs in the jurisdiction or market in which the transaction
occurs, each such payment to be in the amount of the sale price shown in a
broker's confirmation of sale of the Portfolio Securities received by the Bank
before such payment is made, as confirmed in the Proper Instructions received by
the Bank before such payment is made;
(b) in exchange for, or upon conversion into, other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of subscription,
purchase or sale or other similar rights represented by such Portfolio
Securities, or for the purpose of tendering shares in the event of a tender
offer therefor, provided however that in the event of an offer of exchange,
tender offer, or other exercise of rights requiring the physical tender or
delivery of Portfolio Securities, the Bank shall have no liability for failure
to so tender in a timely manner unless such Proper Instructions are received by
the Bank at least two business days prior to the date required for tender, and
unless the Bank (or its agent or sub-custodian hereunder) has actual possession
of such Portfolio Security at least two business days prior to the date of
tender
(c) upon conversion of Portfolio Securities pursuant to their
terms into other securities;
(d) for the purpose of redeeming in kind interests of the Fund
upon authorization from the Fund;
(e) in the case of option contracts owned by the Fund, for
presentation to the endorsing broker;
(f) when such Portfolio Securities are called, redeemed or
retired or otherwise become payable;
(g) for the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to the Fund by
any bank, including the Bank;
13
provided, however, that such Securities will be released only upon payment to
the Bank for the account of the Fund of the moneys borrowed, except that in
cases where additional collateral is required to secure a borrowing already
made, and such fact is made to appear in the Proper Instructions, further
Portfolio Securities may be released for that purpose without any such payment.
In the event that any such pledged Portfolio Securities are held by the Bank,
they will be so held for the account of the lender, and after notice to the Fund
from the lender in accordance with the normal procedures of the lender, that an
event of deficiency or default on the loan has occurred, the Bank may deliver
such pledged Portfolio Securities to or for the account of the lender,
(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the Proper Instructions received
by the Bank before such payment is made;
(i) for the purpose of delivering Portfolio Securities lent by
the Fund to a bank or broker dealer, but only against receipt in accordance with
street delivery custom except as otherwise provided herein, of adequate
collateral as agreed upon from time to time by the Fund and the Bank, and upon
receipt of payment in connection with any repurchase agreement relating to such
Securities entered into by the Fund;
(j) for other authorized transactions of the Fund or for other
proper corporate purposes; provided that before making such transfer, the Bank
will also receive a certified copy of resolutions of the Board, signed by an
authorized officer of the Company (other than the officer certifying such
resolution) and certified by its Secretary or an Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Fund or such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such Securities
shall be made; and
(k) upon termination of this Agreement as hereinafter set forth
pursuant to Section 8 and Section 14 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (e), (f), (g), (h) and (i) securities or cash receivable in exchange
therefor shall be delivered to the Bank.
7. Redemptions. In the case of payment of assets of the Fund held by the
-----------
Bank in connection with redemptions and repurchases by the Fund of outstanding
interests, the Bank will rely on notification by the Company's transfer agent of
receipt of a request for redemption before such payment is made. Payment shall
be made in accordance with the Declaration of Trust (the "Declaration") of the
Company, from assets available for said purpose.
8. Merger, Dissolution, etc. of the Company or the Fund. In the case of
----------------------------------------------------
the following transactions, not in the ordinary course of business, namely, the
merger of the Fund into or the consolidation of the Company with another
investment company, the sale by the Company of all, or substantially all, of the
assets of one or more Funds to another investment company, or the liquidation or
dissolution of the Fund and distribution of its assets, the Bank will deliver
the
14
Portfolio Securities held by it under this Agreement and disburse cash only
upon the order of the Company, on behalf of the Fund, accompanied by a certified
copy of a resolution of the Board authorizing any of the foregoing transactions.
Upon completion of such delivery and disbursement and the payment of the fees,
disbursements and expenses of the Bank, this Agreement will terminate with
respect to the Fund or Company, as applicable.
9. Actions of the Bank Without Prior Authorization. Notwithstanding
-----------------------------------------------
anything herein to the contrary, unless and until the Bank receives an Officer's
Certificate to the contrary, it will without prior authorization or instruction
of the Company or the transfer agent:
(a) endorse for collection and collect on behalf of and in the
name of the Fund all checks, drafts, or other negotiable or transferable
instruments or other orders for the payment of money received by it for the
account of the Fund and hold for the account of the Fund all income, dividends,
interest and other payments or distributions of cash with respect to the
Portfolio Securities held thereunder;
(b) present for payment all coupons and other income items held
by it for the account of the Fund that call for payment upon presentation and
hold the cash received by it upon such payment for the account of the Fund;
(c) receive and hold for the account of the Fund all securities
received as a distribution on Portfolio Securities as a result of a stock
dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder.
(d) execute as agent on behalf of the Fund all necessary
ownership and other certificates and affidavits required by the Internal Revenue
Code or the regulations of the Treasury Department issued thereunder, or by the
laws of any state, now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent it
may lawfully do so and as may be required to obtain payment in respect thereof.
The Bank will execute and deliver such certificates in connection with Portfolio
Securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any State;
(e) present for payment all Portfolio Securities that are
called, redeemed, retired or otherwise become payable, and hold cash received by
it upon payment for the account of the Fund; and
(f) exchange interim receipts or temporary securities for
definitive securities.
10. Collections and Defaults. The Bank will use all reasonable efforts to
------------------------
collect any funds that may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Company, on behalf of the Fund, notice actually received by the
Bank of any call for redemption, offer of exchange, right of subscription,
reorganization or other proceedings affecting such Portfolio Securities. If
Portfolio
15
Securities upon which such income is payable are in default or payment is
refused after due demand or presentation, the Bank will notify the Company, on
behalf of the Fund, in writing of any default or refusal to pay within two
business days from the day on which it receives knowledge of such default or
refusal. In addition, the Bank will send the Company a written report once each
month showing any income on any Portfolio Security held by Bank on behalf of the
Fund that is more than ten days overdue on the date of such report.
11. Maintenance of Records and Accounting Services. The Bank will
----------------------------------------------
maintain records with respect to transactions for which the Bank is responsible
pursuant to the terms and conditions of this Agreement, and in compliance with
the applicable rules and regulations under the 1940 Act and will furnish the
Company daily with a statement of condition of the Fund. The Bank will furnish
to the Company at the end of every month, and at the close of each quarter of
the Company's fiscal year, a list of the Portfolio Securities and the aggregate
amount of cash held by Bank on behalf of the Fund. The books and records of the
Bank pertaining to its actions under this Agreement and reports by the Bank or
its independent accountants concerning its accounting system, procedures for
safeguarding securities and internal accounting controls will be open to
inspection and audit at reasonable times by officers of or auditors employed by
the Company and will be preserved by the Bank in the manner and in accordance
with the applicable rules and regulations under the 1940 Act.
12. [Reserved]
13. Concerning the Bank.
-------------------
13.1 Bank Warranty. The Bank warrants that it has and will maintain
-------------
at least the minimum qualifications required by Section 17(f)(1) of the 1940 Act
to act as custodian of the Portfolio Securities and other assets including cash
of the Fund.
13.2 Standard of Care and Performance of Duties.
------------------------------------------
(a) The Bank agrees to use reasonable care with regard to its
obligations under this Agreement and the safekeeping of property of the Fund.
In performing its duties hereunder and any other duties listed on the Schedules
hereto, the Bank will be entitled to receive and act upon the advice of
independent counsel of its own selection, which may be counsel for the Company,
and the Bank will be without liability for any action taken or thing done, or
omitted to be done, so long as the Bank's actions or inactions are without
negligence and in accordance with this Agreement in good faith in conformity
with such advice. The Bank shall be liable to, and shall indemnify and hold
harmless the Company from and against any loss which shall occur as the result
of the failure of the Bank or a sub-custodian (other than a foreign securities
depository or clearing agency and except as provided in subsections 6.8, 13.2
and 13.3(i) hereof) to exercise reasonable care with respect to their respective
obligations under this Agreement and the safekeeping of such property. Subject
to the foregoing, the Bank will not be responsible for any act, omission,
default or for the solvency of any foreign securities depository or clearing
agency utilized in connection with the provision of services under this
Agreement.
16
(b) In the performance of its duties hereunder, the Bank will be
protected and not be liable, and will be indemnified and held harmless for any
action taken or omitted to be taken by it with reasonable care and in good faith
reliance upon the terms of this Agreement, any Officer's Certificate, Proper
Instructions, resolution of the Board, facsimile, telegram, notice, request,
certificate or other instrument reasonably believed by the Bank to be genuine
and for any other loss to the Fund except in the case of its negligent actions
or inactions or lack of good faith or reasonable care in the performance of its
obligations or duties hereunder.
(c) The Bank will be under no duty or obligation to inquire into
and will not be liable for:
(i) the validity of the issue of any Portfolio Securities
purchased by or for the Fund, the legality of the purchases thereof or the
propriety of the price incurred therefor;
(ii) the legality of any sale of any Portfolio Securities
by or for the Fund or the propriety of the amount for which the same are sold;
(iii) the legality of an issue or sale of any interests of
the Fund or the sufficiency of the amount to be received therefor;
(iv) the legality of the repurchase of any interests of
the Fund or the propriety of the amount to be paid therefor;
(v) the legality of the declaration of any dividend by
the Fund or the legality of the distribution of any Portfolio Securities as
payment in kind of such dividend; and
(vi) any property or moneys of the Fund unless and until
received by it, and any such property or moneys delivered or paid by it pursuant
to the terms hereof.
(d) Moreover, the Bank will not be under any duty or obligation
to ascertain whether any Portfolio Securities at any time delivered to or held
by it for the account of the Fund are such as may properly be held by the Fund
under the provisions of its Company Articles, By-Laws, any federal or state
statutes or any rule or regulation of any governmental agency.
(e) Notwithstanding anything in this Agreement to the contrary,
in no event shall the Bank be liable hereunder or to any third party:
(i) for any losses or damages of any kind resulting from
acts of God, earthquakes, fires, floods, storms or other disturbances of nature,
epidemics, strikes, riots, nationalization, expropriation, currency
restrictions, acts of war, civil war or terrorism, insurrection, nuclear fusion,
fission or radiation, the interruption, loss or malfunction of utilities,
transportation, or computers (hardware or software) and computer facilities, the
unavailability of energy sources and other similar happenings or events, except
as results from the Bank's own negligence, provided that the Bank shall make all
reasonable efforts, whenever necessary, to use data processing back-up
facilities provided by Electronic Data Systems, Inc.; or
17
(ii) for special, punitive or consequential damages
arising from the provision of services hereunder, even if the Bank has been
advised of the possibility of such damages.
(f) The Bank need not maintain any insurance for the exclusive
benefit of the Company, but hereby warrants that as of the date of this
Agreement it is maintaining a bankers Blanket Bond and hereby agrees to notify
the Company in the event that such bond is canceled or otherwise lapses.
13.3 Agents and Sub-custodians with Respect to Property of the Fund
--------------------------------------------------------------
Held in the United States. The Bank may employ agents in the performance of its
-------------------------
duties hereunder and shall be responsible for the acts and omissions of such
agents as if performed by the Bank hereunder. Without limiting the foregoing,
certain duties of the Bank hereunder may be performed by one or more affiliates
of the Bank.
Upon receipt of Proper Instructions, the Bank may employ sub-custodians,
provided that any such sub-custodian meets at least the minimum qualifications
required by Section 17(f)(1) of the 1940 Act to act as a custodian of the Fund's
assets with respect to property of the Fund held in the United States. The Bank
shall have no liability to the Company or any other person by reason of any act
or omission of any sub-custodian and the Company shall indemnify the Bank and
hold it harmless from and against any and all actions, suits and claims, arising
directly or indirectly out of the performance of any sub-custodian. Upon
request of the Bank, the Company shall assume the entire defense of any action,
suit, or claim subject to the foregoing indemnity. All fees and expenses of any
sub-custodian shall be paid by the Bank.
13.4 Duties of the Bank with Respect to Property of the Fund Held
------------------------------------------------------------
Outside of the United States.
----------------------------
(a) Appointment of Foreign Sub-custodians. The Company hereby
-------------------------------------
authorizes and instructs the Bank to employ as sub-custodians for the Company's
Portfolio Securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated by
the Board or by the Bank as Foreign Custody Manager, or any other Foreign
Custody Manager approved by the Board (each, a "Selected Foreign Sub-
custodian"). Upon receipt of Proper Instructions, together with a certified
resolution of the Company's Board of Directors or such Foreign Custody Manager,
the Bank and the Company may agree to designate additional foreign banking
institutions and foreign securities depositories to act as Selected Foreign Sub-
custodians hereunder. Upon receipt of Proper Instructions, the Company or such
Foreign Custody Manager may instruct the Bank to cease the employment of any one
or more such Selected Foreign Sub-custodians for maintaining custody of the
Fund's assets, and the Bank shall so cease to employ such sub-custodian as soon
as alternate custodial arrangements have been implemented.
(b) Foreign Securities Depositories. Except as may otherwise
-------------------------------
be agreed upon in writing by the Bank and the Company, assets of the Fund shall
be maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as Selected Foreign Sub-
custodians pursuant to the terms hereof. Where
18
possible, such arrangements shall include entry into agreements containing the
provisions set forth in subparagraph (d) hereof.
(c) Segregation of Securities. The Bank shall identify on its
-------------------------
books as belonging to the Fund the Foreign Securities held by each Selected
Foreign Sub-custodian. Each agreement pursuant to which the Bank employs a
foreign banking institution shall require that such institution establish a
custody account for the Bank and hold in that account, Foreign Securities and
other assets of the Fund, and, in the event that such institution deposits
Foreign Securities in a foreign securities depository, that it shall identify on
its books as belonging to the Bank the securities so deposited.
(d) Agreements with Foreign Banking Institutions. Each of the
--------------------------------------------
agreements pursuant to which a foreign banking institution holds assets of the
Company's Funds (each, a "Foreign Sub-custodian Agreement") shall be
substantially in conformity with the provisions of Rule 17f-5.
(e) Access of Independent Auditors of the Company. Upon request
---------------------------------------------
of the Company, the Bank will use its best efforts to arrange for the Company's
independent auditors to be afforded access to the books and records of any
foreign banking institution employed as a Selected Foreign Sub-custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its Foreign Sub-custodian Agreement.
(f) Reports by the Bank. The Bank will supply to the Company
-------------------
from time to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Fund held by Selected Foreign Sub-custodians,
including but not limited to an identification of entities having possession of
the Foreign Portfolio Securities and other assets of the Fund.
(g) Transactions in Foreign Custody Accounts. Transactions with
----------------------------------------
respect to the assets of the Fund held by a Selected Foreign Sub-custodian shall
be effected pursuant to Proper Instructions from the Company to the Bank and
shall be effected in accordance with the applicable Foreign Sub-custodian
Agreement. If at any time any Foreign Portfolio Securities shall be registered
in the name of the nominee of the Selected Foreign Sub-custodian, the Company
agrees to hold any such nominee harmless from any liability by reason of the
registration of such securities in the name of such nominee.
Notwithstanding any provision of this Agreement to the contrary, settlement
and payment for Foreign Securities received for the account of the Fund and
delivery of Foreign Securities maintained for the account of the Fund may be
effected in accordance with the customary established securities trading or
securities processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor (or an agent for
such purchaser or dealer) against a receipt with the expectation of receiving
later payment for such securities from such purchaser or dealer.
In connection with any action to be taken with respect to the Foreign
Securities held hereunder, including, without limitation, the exercise of any
voting rights, subscription rights,
19
redemption rights, exchange rights, conversion rights or tender rights, or any
other action in connection with any other right, interest or privilege with
respect to such Securities (collectively, the "Rights"), the Bank shall promptly
transmit to the Company or its investment adviser such information in connection
therewith as is made available to the Bank by the Foreign Sub-custodian, and the
Bank shall promptly forward to the applicable Foreign Sub-custodian any
instructions, forms or certifications with respect to such Rights, and any
instructions relating to the actions to be taken in connection therewith, as the
Bank shall receive pursuant to Proper Instructions. The Bank agrees to use its
best efforts to obtain and forward to the Company or its designated agent, Xxxxx
Fargo Bank, information regarding Rights with respect to Foreign Securities held
hereunder. Notwithstanding the foregoing, the Bank shall have no further duty or
obligation with respect to such Rights, including, without limitation, the
determination of whether the Fund is entitled to participate in such Rights
under applicable U.S. and foreign laws, or the determination of whether any
action proposed to be taken with respect to such Rights by the Fund or by the
applicable Foreign Sub-custodian will comply with all applicable terms and
conditions of any such Rights or any applicable laws or regulations, or market
practices within the market in which such action is to be taken or omitted.
(h) Liability of Selected Foreign Sub-custodians. Each Foreign
--------------------------------------------
Sub-custodian Agreement with a foreign banking institution shall require the
institution to exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Bank and Company from and against certain
losses, damages, costs, expenses, liabilities or claims arising out of or in
connection with the institution's performance of such obligations, all as set
forth in the applicable Foreign Sub-custodian Agreement.
(i) Liability of Bank. The Bank shall have no more or less
-----------------
responsibility or liability on account of the acts or omissions of any Selected
Foreign Sub-custodian employed hereunder than any such Selected Foreign Sub-
custodian has to the Bank and, without limiting the foregoing, the Bank shall
not be liable for any loss, damage, cost, expense, liability or claim resulting
from nationalization, expropriation, currency restrictions, or acts of war or
terrorism, political risk (including, but not limited to, exchange control
restrictions, confiscation, insurrection, civil strife or armed hostilities)
other losses due to Acts of God, nuclear incident or any loss where the Selected
Foreign Sub-custodian has otherwise exercised reasonable care.
(j) Monitoring Responsibilities. The Bank shall furnish annually
---------------------------
to the Company or any other Foreign Custody Manager, information concerning the
Selected Foreign Sub-custodians employed hereunder for use by the Company's
Board or such Foreign Custody Manager in evaluating such Selected Foreign Sub-
custodians to ensure compliance with the requirements of Rule 17f-5 of the 1940
Act.
(k) Tax Law. The Bank shall have no liability for any
-------
obligations now or hereafter imposed on the Trust, or its Funds, or the Bank as
custodian of the Trust by the tax laws of any jurisdiction. The sole
responsibility of the Bank with regard to such taxes shall be to use reasonable
efforts to assist the Company with respect to the withholding and payment by the
Company of such taxes and with respect to any claim for exemption or refund
under the tax law of jurisdictions for which the Company is entitled to such
exemptions or refunds.
20
13.5 Insurance. The Bank shall use the same care with respect to the
---------
safekeeping of Portfolio Securities and cash of the Company's Funds held by it
as it uses in respect of its own similar property but need not maintain any
special insurance for the benefit of the Company.
13.6. Compensation and Reimbursement of Expenses. For providing
------------------------------------------
custodial services under this Agreement, the Bank shall be entitled to
compensation and reimbursement of expenses at such rates and on such terms as
are set forth on Schedule A. Notwithstanding Schedule A, the Bank shall not be
entitled to any compensation or reimbursement of expenses relating to fund
accounting services pursuant to this Agreement. Any such compensation or
reimbursement shall be payable pursuant to a separate Sub-Fund Accounting
Agreement, as may be in effect from time to time.
13.7 Advances by Bank. The Bank may, in its sole discretion, advance
----------------
funds on behalf of the Fund to make any payment permitted by this Agreement upon
receipt of any proper authorization required by this Agreement for such
payments. Should such a payment or payments, with advanced funds, result in an
overdraft (due to insufficiencies of the Fund's account with the Bank, or for
any other reason) this Agreement deems any such overdraft or related
indebtedness, a loan made by the Bank to the Fund payable on demand and bearing
interest at the current rate charged by the Bank for such loans unless the Fund
shall provide the Bank with agreed upon compensating balances. The Company
agrees that the Bank shall have a continuing lien and security interest to the
extent of any overdraft or indebtedness, in and to any property at any time held
by it for the Fund's benefit or in which the Fund has an interest and which is
then in the Bank's possession or control (or in the possession or control of any
third party acting on the Bank's behalf). The Company authorizes the Bank, in
its sole discretion, at any time to charge any overdraft or indebtedness,
together with interest due thereon against any balance of account standing to
the credit of the Fund on the Bank's books.
14. Termination.
-----------
(a) This Agreement shall be effective for an initial term of two
(2) years commencing upon the date hereof (the "Initial Term") unless earlier
terminated as provided in subsection (b) below. Thereafter, the Agreement may be
terminated at any time, without penalty upon sixty (60) days' written notice
delivered by either party to the other by means of registered mail, and upon the
expiration of such sixty (60) days, this Agreement will terminate; provided,
however, that the effective date of such termination may be postponed to a date
not more than ninety (90) days from the date of delivery of such notice (i) by
the Bank in order to prepare for the transfer by the Bank of all of the assets
of the Fund held hereunder, or (ii) by the Company in order to give it an
opportunity to make suitable arrangements for a successor custodian. At any time
after the termination of this Agreement, the Bank agrees to make available to
the Company, at its request, the records maintained by the Bank relating to the
performance of its duties as custodian and to preserve such records for the
periods prescribed in Rule 31a-2 under the 1940 Act.
(b) Notwithstanding subsection (a) above, either party hereto
may terminate this Agreement at any time prior to the expiration of the Initial
Term in the event that the other
21
party violates any material provision of this Agreement, provided that the
violating party does not cure such violation within sixty (60) days of receipt
of written notice from the non-violating party of such violation.
(c) Notwithstanding subsection (a) above, the Company may
terminate this Agreement at any time prior to the expiration of the Initial Term
in the event that (i) the Board of Directors determines that the performance of
the Bank does not meet the reasonable satisfaction (considered in light of
industry standards) of the Board of Directors, provided that the Bank does not
cure such unsatisfactory performance within sixty (60) days of receipt of
written notice specifying such unsatisfactory performance; or (ii) if the Bank
becomes the subject of any state or federal bankruptcy proceeding that is not
dismissed within sixty (60) days of the initiation of such proceeding.
(d) In addition, notwithstanding anything herein to the
contrary, the Company may terminate this Agreement on sixty (60) days' notice at
any time prior to the expiration of the Initial Term, provided that, with
respect to any termination not covered by Subsections (b) and (c), it shall pay
to the Bank, as liquidated damages, all fees that would be due for the remainder
of the Initial Term, calculated as if asset levels remained constant from the
date notice of termination is given through the end of the Initial Term.
(e) In the event of the termination of this Agreement, the Bank
will immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duly endorsed and all records
maintained under Section 11 to the successor custodian when appointed by the
Company. The obligation of the Bank to deliver and transfer over the assets of
the Company's Funds held by the Bank directly to such successor custodian will
commence as soon as such successor is appointed and will continue until
completed as aforesaid. If the Company does not select a successor custodian
within sixty (60) days from the date of delivery of notice of termination the
Bank may, subject to the provisions of subsection 14(c), deliver the Portfolio
Securities and cash of the Company's Fund held by the Bank to a bank or trust
company of its own selection that meets the requirements of Section 17(f)(1) of
the 1940 Act and has a reported capital, surplus and undivided profits
aggregating not less than $2,000,000, to be held as the property of the
Company's Funds under terms similar to those on which they were held by the
Bank, whereupon such bank or trust company so selected by the Bank will become
the successor custodian of such assets of the Company's Funds with the same
effect as though selected by the Board.
(f) Prior to the expiration of sixty (60) days after notice of
termination has been given, the Company may furnish the Bank with an order of
the Company advising that a successor custodian cannot be found willing and able
to act upon reasonable and customary terms and that there has been submitted to
the Fund's interestholders the question of whether the Fund will be liquidated
or will function without a custodian for the assets of the Fund. In that event
the Bank will deliver the Portfolio Securities and cash of the Company's Funds,
subject as aforesaid, in accordance with one of such alternatives that may be
approved by the requisite vote of shareholders, upon receipt by the Bank of a
copy of the minutes of the meeting of shareholders
22
at which action was taken, certified by the Company's Secretary and an opinion
of counsel to the Company in form and content satisfactory to the Bank.
15. Confidentiality. Both parties hereto agree than any non-public
---------------
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person without the consent of the other party,
except as may be required by applicable law or at the request of a governmental
agency. The parties further agree that a breach of this provision would
irreparably damage the other party and accordingly agree that each of them is
entitled, in addition to all other remedies at law or in equity and without bond
or other security, to an injunction or injunctions to prevent breaches of this
provision.
16. Notices. Any notice or other instrument in writing authorized or
-------
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and delivered, via registered U.S.
Mail or facsimile with written confirmation via registered U.S. Mail, to it at
its office at the address set forth below; namely:
(a) In the case of notices sent to the Company or the Fund to:
Stagecoach Funds, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Xx.
With copies to:
C. Xxxxx Xxxxxxx
Xxxxx Fargo Bank, N.A.
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Xxxxx X. Xxxxxxx
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X., #0000
Xxxxxxxxxx, XX 00000
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxx
With a copy to: Xxxx X. Xxxxx, Esq. at the same address;
23
or at such other place as such party may from time to time designate in
writing.
17. Amendments. This Agreement, excluding Schedule A, may not be altered
----------
or amended, except by an instrument in writing, executed by both parties, and in
the case of the Company, any such material alteration or amendment will be
authorized and approved by its Board. Schedule A to this Agreement may be
amended from time to time with respect to the global custody fee schedule
therein as authorized by an appropriately executed amendment by both parties,
and in the case of the Company, any such amendment is ratified and approved by
its Board at its next regular meeting after such amendment is duly executed.
18. Parties. This Agreement will be binding upon and shall inure to the
-------
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Company
without the written consent of the Bank or by the Bank without the written
consent of the Company, authorized and approved by its Board; and provided
further that termination proceedings pursuant to Section 14 hereof will not be
deemed to be an assignment within the meaning of this provision.
19. Governing Law. This Agreement and all performance hereunder will be
-------------
governed by the laws of the Commonwealth of Massachusetts.
20. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
21. Limitation of Liability. The Company and the Bank agree that the
-----------------------
Company's obligations under this Agreement shall not be binding upon any
Director, interestholder, officer, employee or agent of the Company
individually, or upon the assets and property of any other series of the
Company, but are binding only upon the assets and property of the Fund.
22. Single Agreement. This Agreement (including any exhibits, appendices
----------------
and schedules hereto) constitutes the entire agreement between the Bank and the
Company as to the subject matter hereof and supersedes any and all agreements,
representations and warranties, written or oral, regarding such subject matter
made prior to the time at which this Agreement has been executed and delivered
between the Bank and the Company.
24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the day
and year first written above.
STAGECOACH FUNDS, INC.
By /s/ Xxxxxxx X.Xxxxx
------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Chief Operating Officer
INVESTORS BANK & TRUST COMPANY
By /s/ Xxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
Approved: April 29, 1997
Approved as amended: November 19, 1998
25
Schedule A
----------
FEE SCHEDULE
Annual Fee
----------
For All Assets -- Domestic Custody 0.01%
Transaction Costs**
-------------------
. DTC/Fed Book Entry $ 9
. Physical Securities 35
. Options and Futures 18
. GNMA Securities 30
. Principal Paydown 5
. Foreign Exchange 18***
. Outgoing Wires 7
. Incoming Wires 5
** This fee schedule assumes that trade information will be electronically
sent to IBT in the ISITC format.
*** There are no transaction costs for foreign exchange contracts executed by
IBT.
Foreign Subcustodian Fees
-------------------------
. Incremental basis point and transaction fees will be charged for all
foreign assets for which IBT is custodian. The asset based fees and
transaction fees vary by country, based upon the global custody fee
schedule below. Local duties, script fees, registration, exchange fees, and
other market charges are included in out-of-pocket reimbursements.
MISCELLANEOUS
A. Out-of-Pocket Reimbursements
----------------------------
. These charges consist of:
- Printing, Delivery & Postage - Extraordinary Travel Expenses
- Legal Expenses - Pricing
- International Verification - InvestView
- Telecommunications - Third Party Review ($250/year)
- Customized Systems - Support Equipment
Development/Reporting
- Forms and Supplies
A-1
B. Payment
-------
. The above fees will be paid by the Company five business days after
the invoice is mailed.
C. Systems
-------
. The details of any systems work will be determined after a thorough
business analysis. Systems work will be billed on a time and material
basis. This includes modifications to standard extracts or changes
needed to except trade information in a non-ISITC format.
D. Domestic Balance Credit
-----------------------
. The Company, on behalf of the Fund, may make use of balance credit
against fees (excluding out-of-pocket charges) for Fund balances
arising out of the custody relationship. The credit is based on
collected balances reduced by balances required to support the
activity charges of the accounts. The monthly earnings allowance is
equal to 75% of the 90-day T-xxxx rate.
E. Securities Lending, Foreign Exchange and Cash Management
--------------------------------------------------------
. For securities lending, revenue is split with the Fund and IBT on a
60% Fund/40% IBT basis.
GLOBAL CUSTODY FEE SCHEDULE
---------------------------
Annual Basis
Country Point Charge Trade Charge
------- ------------ ------------
Argentina* 22.00 $ 75.00
Australia 5.00 $ 60.00
Austria 7.00 $ 60.00
Bangladesh 41.00 $150.00
Bermuda 20.00 $100.00
Belgium 7.00 $ 60.00
Bharain 41.00 $140.00
Botswana 50.00 $175.00
Brazil** 29.00 $ 80.00
Bulgaria 30.00 $ 75.00
Canada 5.00 $ 30.00
Chile*** 45.00 $100.00
A-2
Annual Basis
Country Point Charge Trade Charge
------- ------------ ------------
China 20.00 $ 75.00
Colombia** 45.00 $140.00
Cyprus 50.00 $150.00
Czech Republic 20.00 $ 75.00
Denmark 5.00 $ 60.00
Ecuador 45.00 $100.00
Egypt 41.00 $100.00
Euroclear-Eurobonds 5.00 $ 20.00
Euroclear-Non-Eurobond Issues 5.00 $ 60.00
Finland 7.00 $ 70.00
France 5.00 $ 60.00
France Debt 5.00 $ 60.00
Germany 5.00 $ 30.00
Ghana 50.00 $200.00
Greece 45.00 $130.00
Hong Kong 10.00 $ 65.00
Hungary 50.00 $200.00
India**** 50.00 00XX
Xxxxxxxxx 13.00 $ 65.00
Ireland 7.00 $ 60.00
Israel 50.00 $150.00
Italy Debt 5.00 $ 50.00
Italy Equity 5.00 $ 50.00
Japan 5.00 $ 30.00
Jordan 41.00 $120.00
Kazakhstan 45.00 $150.00
Kenya 50.00 $200.00
Korea 13.00 $ 65.00
Lebanon 41.00 $140.00
Lithuania 20.00 $ 75.00
Lithuania T-Bills 25.00 $ 75.00
Luxembourg 7.00 $ 60.00
Malaysia 10.00 $ 70.00
Mauritius 41.00 $140.00
Mexico 10.00 $ 40.00
Morocco 40.00 $150.00
Namibia 50.00 $200.00
Netherlands 5.00 $ 40.00
New Zealand 5.00 $ 60.00
Norway 7.00 $ 90.00
Oman 41.00 $140.00
Pakistan 41.00 $140.00
A-3
Annual Basis
Country Point Charge Trade Charge
------- ------------ ------------
Peru 50.00 $150.00
Philippines 13.00 $ 65.00
Poland - Equities 50.00 $150.00
Poland T Bills 29.00 $110.00
Portugal 20.00 $125.00
Russia - Equities 41.00 $250.00
Russia - MinFins 35.00 $140.00
Singapore 10.00 $ 65.00
Slovakia 20.00 $ 75.00
Slovenia 41.00 $120.00
South Africa 7.00 $ 40.00
Spain Equity & Corp. Debt 7.00 $ 60.00
Spain - Gov't. Debt 5.00 $ 60.00
Sri Lanka 13.00 $ 65.00
Swaziland 50.00 $200.00
Sweden 5.00 $ 40.00
Sweden Debt 5.00 $ 40.00
Switzerland 5.00 $ 60.00
Taiwan 13.00 $ 65.00
Thailand 10.00 $ 65.00
Turkey 41.00 $140.00
United Kingdom 5.00 $ 50.00
Uruguay 50.00 $150.00
Venezuela** 45.00 $140.00
Zambia 50.00 $200.00
Zimbabwe 50.00 $175.00
* Bonds billed at residual value.
** Local administration fees included in custody fee.
*** Twenty (20) basis points local administration charge applied to
trades.
**** Trades xxxx at 50 basis points.
Out-of-pocket charges are passed through as actuals in all markets.
A-4
IN WITNESS WHEREOF, the parties hereto have caused this Schedule A to
be amended by their respective officers thereunto duly authorized as of the day
and year written below.
STAGECOACH FUNDS, INC.
By /s/ Xxxxxxx X. Xxxxx, Xx.
---------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Chief Operating Officer
INVESTORS BANK & TRUST COMPANY
By /s/ Xxxxxx X. Xxxxxxx
------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
Accepted by the
parties as amended on: November 19, 1998 -
Global Custody Fee Schedule
revised to include Xxxxxxx,
Xxxxxxxx, Xxxxxxxxxx,
Xxxxxxxxx and Slovenia.
A-5
