CUSTODY AGREEMENT
LIFE & ANNUITY TRUST
This Agreement is made as of this 15th day of November, 1993 (the
"Agreement"), by and between LIFE & ANNUITY TRUST (the "Trust"), on behalf of
the Funds listed on Appendix A hereto, as such Appendix may be revised from time
to time (each a "Fund" and, collectively, the "Funds"), and XXXXX FARGO BANK,
N.A. (the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set forth, the
Trust and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meaning:
1. "Authorized Person" shall be deemed to include the treasurer, the
controller or any other person, whether or not any such person is an Officer or
employee of the Trust, duly authorized by the Board of Trustees ("Trustees") to
give Oral Instructions and Written Instructions on behalf of a Fund and listed
in the Certificate attached hereto as Appendix C or such other Certificate as
may be received from time to time by the Custodian.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury book-
entry system for United States and federal agency securities, its successor(s)
and its nominee(s).
3. "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian and signed on behalf of a
Fund by any two Officers of the Trust.
4. "Clearing Member" shall mean a registered broker-dealer that is a
member of a national securities exchange qualified to act as a custodian for an
investment company, or any broker-dealer reasonably believed by the Custodian to
be such a clearing member.
5. "Depository" shall mean The Depository Trust Trust ("DTC"),
Participants Trust Trust ("PTC"), and any other clearing agency registered with
the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934, its successor(s) and its nominee(s), provided the
Custodian has received a certified copy of a resolution of the Board of Trustees
specifically approving deposits in DTC, PTC or such other clearing agency. The
term "Depository" shall further mean and include any person authorized to act as
a depository pursuant to Section 17, Rule 17f-4 or Rule 17f-5 thereunder, under
the Investment Trust Act of 1940, its successor(s) and its nominee(s),
specifically identified in a certified copy of a resolution of the Board of
Trustees approving deposits therein by the Custodian.
6. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, or Clearing Member, or in the name of the Trust or a Fund for
the benefit of a broker, dealer, or Clearing Member, or otherwise, in accordance
with an agreement between the Trust on behalf of a Fund, the Custodian and a
broker, dealer, or Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or moneys of
a Fund shall be deposited and withdrawn from time to time in connection with
such transactions as a Fund may from time to time determine. Securities held in
the Book-Entry System or the Depository shall be deemed to have been deposited
in, or withdrawn from, a Margin Account upon the Custodian's effecting an
appropriate entry on its books and records.
7. "Money Market Securities" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to principal and interest
by the government of the United States or agencies or instrumentalities thereof,
commercial paper, certificates of deposit and bankers' acceptances, repurchase
and reverse repurchase agreements with respect to the same and bank time
deposits, where the purchase and sale of such securities normally requires
settlement in federal funds on the same date as such purchase or sale.
8. "Officers" shall be deemed to include the President, Vice President,
the Secretary, the Treasurer, the Controller, any Assistant Secretary, any
Assistant Treasurer or any other person or persons duly authorized by the
Trustees of the Trust to execute any Certificate, instruction, notice or other
instrument on behalf of a Fund and listed in the Certificate attached hereto as
Appendix B or such other Certificate as may be received by the Custodian from
time to time.
9. "Oral Instructions" shall mean verbal instructions actually received
by the Custodian from an Authorized Person or from a person reasonably believed
by the Custodian to be an Authorized Person.
10. "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which a Fund sells Securities and agrees to repurchase such Securities at a
described or specified date and price.
11. "Security" or "Securities" shall be deemed to include, without
limitation, Money Market Securities, Reverse Repurchase Agreements, common stock
and other instruments or rights having characteristics similar to common stocks,
preferred stocks, debt obligations issued by state or municipal governments and
by public authorities (including, without limitation, general obligations
bonds), bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights to
receive, purchase, sell or subscribe for the same, or evidencing or representing
any other rights or interest therein, or any property or assets.
12. "Segregated Security Account" shall mean an account maintained under
the terms of this Agreement as a segregated account, by recordation or
otherwise, within the custody account in which certain Securities and/or other
assets of a Fund shall be deposited and withdrawn from time to time in
accordance with Certificates received by the Custodian in connection with such
transactions as a Fund may from time to time determine.
13. "Shares" shall mean the shares of common stock of a Fund, each of
which, in the case of a Fund having Series, is allocated to a particular Series.
2
14. "Written Instructions" shall mean written communications actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person by telex or any other such
system whereby the receiver of such communications is able to verify by codes or
otherwise with a reasonable degree of certainty the authenticity of the sender
of such communication.
ARTICLE II
APPOINTMENT OF A CUSTODIAN
1. The Trust on behalf of a Fund hereby constitutes and appoints the
Custodian as custodian of all the Securities and moneys at any time owned by a
Fund during the term of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and agrees
to perform all the duties thereof as set forth in this Agreement.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in Article V, a Fund will deliver or
cause to be delivered to the Custodian all Securities and all moneys owned by
it, including cash received for the issuance of its Shares, at any time during
the term of this Agreement. The Custodian will not be responsible for such
Securities and such moneys until actually received by it. The Custodian will be
entitled to reverse any credits made on a Fund's behalf where such credits have
been previously made and moneys are not finally collected. A Fund shall deliver
to the Custodian a certified resolution of the Trustees of the Trust authorizing
and instructing the Custodian on a continuous and ongoing basis to deposit in
the Book-Entry System all Securities eligible for deposit therein and to utilize
the Book-Entry System to the extent possible in connection with its performance
hereunder, including, without limitation, in connection with settlements of
purchases and sales of Securities, loans of Securities, and deliveries and
returns of Securities collateral. Prior to a deposit of Securities of a Fund in
the Depository, a Fund shall deliver to the Custodian a certified resolution of
the Trustees of the Trust approving, authorizing and instructing the Custodian
on a continuous and ongoing basis until instructed to the contrary by a
Certificate actually received by the Custodian to deposit in the Depository all
Securities eligible for deposit therein and to utilize the Depository to the
extent possible in connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales of Securities,
loans of Securities, and deliveries and returns of Securities collateral.
Securities and moneys of a Fund deposited in either the Book-Entry System or the
Depository will be represented in accounts which include only assets held by the
Custodian for customers, including, but not limited to, accounts in which the
Custodian acts in a fiduciary or representative capacity.
2. The Custodian shall credit to a separate account in the name of a
Fund all moneys received by it for the account of a Fund, and shall disburse the
same only:
(a) In payment for Securities purchased, as provided in Article IV
hereof;
(b) In payment of dividends or distributions, as provided in Article
VIII hereof;
(c) In payment of original issue or other taxes, as provided in Article
IX hereof;
3
(d) In payment for Shares redeemed by it, as provided in Article IX
hereof;
(e) Pursuant to Certificate(s) setting forth the name(s) and address(es)
of the person(s) to whom the payment is to be made, and the purpose for which
payment is to be made; or
(f) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian, as provided in Article XII hereof.
3. Promptly after the close of business on each day, the Custodian shall
furnish a Fund with confirmations and a summary of all transfers to or from the
account of a Fund during said day. Where Securities are transferred to the
account of a Fund, the Custodian shall also by book-entry or otherwise identify
as belonging to a Fund a quantity of Securities in a fungible bulk of Securities
registered in the name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of the Book-Entry System or the Depository.
The Custodian shall furnish a Fund at least monthly with a detailed statement of
the Securities and moneys held for a Fund under this Agreement.
4. Except as otherwise provided in Article V, all Securities held for a
Fund which are issued or issuable only in bearer form, except such Securities as
are held in the Book-Entry System, shall be held by the Custodian in that form;
all other Securities held for a Fund may be registered in the name of a Fund, in
the name of any duly appointed registered nominee of the Custodian as the
Custodian may from time to time determine, or in the name of the Book-Entry
System or the Depository or their successor(s) or their nominee(s). The Trust
agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to register in the
name of its registered nominee or in the name of the Book-Entry System or the
Depository, any Securities which it may hold for the account of a Fund and which
may from time to time be registered in the name of a Fund. The Custodian shall
hold all such Securities which are not held in the Book-Entry System or in the
Depository in a separate account in the name of a Fund physically segregated at
all times from those of any other person or persons.
5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or through
the use of the Book-Entry System or the Depository with respect to the
Securities therein deposited, shall, with respect to all Securities held for a
Fund in accordance with this Agreement:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon such
Securities which are called, but only if either (i) the Custodian receives a
written notice of such call, or (ii) notice of such call appears in one or more
of the publications listed in Appendix D annexed hereto, which may be amended at
any time by the Custodian upon five business days' prior notification to a Fund;
(c) Present for payment and collect the amount payable upon all
Securities which mature;
(d) Surrender Securities in temporary form for definitive Securities;
(e) Execute, as Custodian, any necessary declarations or certificates of
ownership under the federal income tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect; and
4
(f) Hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of a Fund all
rights and similar securities issued with respect to any Securities held by the
Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons as may be designated in such
Certificate proxies, consents, authorizations, and any other instruments whereby
the authority of a Fund as owner of any Securities may be exercised;
(b) Deliver any Securities held for a Fund in exchange for other
Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any Securities held for a Fund to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this Agreement such
certificates of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
(d) Make such transfer or exchanges of the assets of a Fund and take
such other steps as shall be stated in said order to be for the purpose of
effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of a Fund; and
(e) Present for payment and collect the amount payable upon Securities
not described in preceding paragraph 5(b) of this Article which may be called as
specified in the Certificate.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
1. Promptly after each purchase or sale (as applicable) of Securities by
a Fund, other than a purchase or sale of any Reverse Repurchase Agreement, a
Fund shall deliver to the Custodian (i) with respect to each purchase or sale of
Securities which are not Money Market Securities, a Certificate; and (ii) with
respect to each purchase or sale of Money Market Securities, a Certificate, Oral
Instructions or Written Instructions, specifying with respect to each such
purchase or sale: (a) the name of the issuer and the title of the Securities;
(b) the number of shares or the principal amount purchased or sold and accrued
interest, if any; (c) the date of purchase or sale and settlement date; (d) the
purchase or sale price per unit; (e) the total amount payable upon such purchase
or sale; (f) the name of the person from whom or the broker through whom the
purchase or sale was made, and the name of the clearing broker, if any; (g) in
the case of a purchase, the name of the broker to which payment is to be made;
and (h) in the case of a sale, the name of the broker to whom the Securities are
to be delivered. In the case of a purchase, the Custodian shall, upon receipt
of Securities purchased by or for a Fund, pay out of the moneys held for the
account of a Fund the total amount payable to the person from whom, or the
broker through whom, the purchase was made, provided that the same conforms to
the total amount payable as set forth in such Certificate, Oral Instructions or
Written Instructions. In the case of a sale, the Custodian shall deliver the
Securities upon receipt of the total amount payable to a Fund upon such sale,
provided that the same
5
conforms to the total amount payable as set forth in such Certificate, Oral
Instructions or Written Instructions. Subject to the foregoing, the Custodian
may accept payment in such form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs prevailing
among dealers in securities.
ARTICLE V
SHORT SALES
1. Promptly after any short sale, a Fund shall deliver to the Custodian
a Certificate specifying: (a) the name of the issuer and the title of the
Security; (b) the number of shares or principal amount sold, and accrued
interest or dividends, if any; (c) the dates of the sale and settlement; (d) the
sale price per unit; (e) the total amount credited to a Fund upon such sale, if
any (f) the amount of cash and/or the amount and kind of Securities, if any,
which are to be deposited in a Margin Account and the name in which such Margin
Account has been or is to be established; (g) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in a Segregated Security
Account; and (h) the name of the broker through which such short sale was made.
The Custodian shall upon its receipt of a statement from such broker confirming
such sale and that the total amount credited to a Fund upon such sale, if any,
as specified in the Certificate is held by such broker for the account of the
Custodian (or any nominee of the Custodian) as custodian of a Fund, issue a
receipt or make the deposits into the Margin Account and the Segregated Security
Account specified in the Certificate.
2. In connection with the closing-out of any short sale, a Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to each
such closing-out: (a) the name of the issuer and the title of the Security; (b)
the number of shares or the principal amount, and accrued interest or dividends,
if any, required to effect such closing-out to be delivered to the broker; (c)
the dates of the closing-out and settlement; (d) the purchase price per unit;
(e) the net total amount payable to a Fund upon such closing-out; (f) the net
total amount payable to the broker upon such closing-out; (g) the amount of cash
and the amount and kind of Securities, if any, to be withdrawn, from the Margin
Account; (h) the amount of cash and/or the amount and kind of Securities, if
any, to be withdrawn from the Segregated Security Account; and (i) the name of
the broker through which a Fund is effecting such closing-out. The Custodian
shall, upon receipt of the net total amount payable to a Fund upon such closing-
out and the return and/or cancellation of the receipts, if any, issued by the
Custodian with respect to the short sale being closed-out, pay out the moneys
held for the account of a Fund to the broker the net total amount payable to the
broker, and make the withdrawals from the Margin Account and the Segregated
Security Account, as the same are specified in the Certificate.
ARTICLE VI
REVERSE REPURCHASE AGREEMENTS
1. Promptly after a Fund enters into a Reverse Repurchase Agreement with
respect to Securities and money held by the Custodian hereunder, a Fund shall
deliver to the Custodian a Certificate, or in the event such Reverse Repurchase
Agreement is a Money Market Security, a Certificate, Oral Instructions or
Written Instructions specifying: (a) the total amount payable to a Fund in
connection with such Reverse Repurchase Agreement; (b) the broker or dealer
through or with which the Reverse Repurchase Agreement is entered; (c) the
amount and kind of Securities to be delivered by a Fund to such broker or
dealer; (d) the date of such Reverse Repurchase Agreement; and (e) the amount of
cash and/or the amount and kind of Securities, if any, to be deposited in a
Segregated Security
6
Account in connection with such Reverse Repurchase Agreement. The Custodian
shall, upon receipt of the total amount payable to a Fund specified in the
Certificate, Oral Instructions or Written Instructions make the delivery to the
broker or dealer, and the deposits, if any, to the Segregated Security Account,
specified in such Certificate, Oral Instructions or Written Instructions.
2. Upon the termination of a Reverse Repurchase Agreement described in
paragraph 1 of this Article VI, a Fund shall promptly deliver a Certificate or,
in the event such Reverse Repurchase Agreement is a Money Market Security, a
Certificate, Oral Instructions or Written Instructions to the Custodian
specifying: (a) the Reverse Repurchase Agreement being terminated; (b) the
total amount payable by a Fund in connection with such termination; (c) the
amount and kind of Securities to be received by a Fund in connection with such
termination; (d) the date of termination; (e) the name of the broker or dealer
with or through which the Reverse Repurchase Agreement is to be terminated; and
(f) the amount of cash and/or the amount and kind of Securities to be withdrawn
from the Segregated Security Account. The Custodian shall, upon receipt of the
amount and kind of Securities to be received by a Fund specified in the
Certificate, Oral Instructions or Written Instructions, make the payment to the
broker or dealer, and the withdrawals, if any, from the Segregated Security
Account, specified in such Certificate, Oral Instructions or Written
Instructions.
ARTICLE VII
MARGIN ACCOUNTS, SEGREGATED SECURITY
ACCOUNTS AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Segregated Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the amount of cash
and/or the amount and kind of Securities to be deposited in, or withdrawn from,
the Segregated Security Account. In the event that a Fund fails to specify in a
Certificate the name of the issuer, the title and the number of shares or the
principal amount of any particular Securities to be deposited by the Custodian
into, or withdrawn from, a Segregated Securities Account, the Custodian shall be
under no obligation to make any such deposit or withdrawal and shall so notify a
Fund.
2. The Custodian shall make deliveries or payments from a Margin Account
to the broker, dealer or Clearing Member in whose name, or for whose benefit,
the account was established as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security interest in
and to any property at any time held by the Custodian in any Collateral Account
described herein.
5. On each business day, the Custodian shall furnish a Fund with a
statement with respect to a Fund's Margin Account in which money or Securities
are held specifying as of the close of business on the previous business day:
(a) the name of the Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custodian shall make
available upon request to any broker or dealer specified in the name of a Margin
Account a copy of the statement furnished a Fund with respect to such Margin
Account.
7
6. Promptly after the close of business on each business day in which
cash and/or Securities are maintained in a Collateral Account, the Custodian
shall furnish a Fund with a statement with respect to a Fund's Collateral
Account specifying the amount of cash and/or the amount and kind of Securities
held therein. No later than the close of business next succeeding the delivery
to a Fund of such statement, a Fund shall furnish the Custodian with a
Certificate or Written Instructions specifying the then market value of the
Securities described in such statement.
ARTICLE VIII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. A Fund shall furnish the Custodian with a copy of the resolution of
the Trustees, certified by the Secretary or any Assistant Secretary, either (i)
setting forth the date of the declaration of a dividend or distribution, the
date of payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the shareholders of
record as of that date and the total amount payable to the Dividend Agent of a
Fund on the payment date, or (ii) authorizing the declaration of dividends and
distributions on a daily basis or some other periodic basis and authorizing the
Custodian to rely on Oral Instructions, Written Instructions or a Certificate
setting forth the date of the declaration of such dividend or distribution, the
date of payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the shareholders of
record as of that date and the total amount payable to the Dividend Agent on the
payment date.
2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions or Certificate, the Custodian shall pay out
the moneys held for the account of a Fund the total amount payable to the
Dividend Agent of a Fund.
ARTICLE IX
SALE AND REDEMPTION OF SHARES
1. Whenever a Fund shall sell any of its Shares, it shall deliver to the
Custodian a Certificate duly specifying the number of Shares sold, trade date,
price and the amount of money to be received by the Custodian for the sale of
such Shares.
2. Upon receipt of such money from the Transfer Agent or a co-transfer
agent, the Custodian shall credit such money to the account of a Fund.
3. Upon issuance of any of a Fund's Shares in accordance with the
foregoing provisions of this Article IX, the Custodian shall pay, out of the
money held for the account of a Fund, all original issue or other taxes required
to be paid by a Fund in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever a Fund shall redeem any of
its Shares, it shall furnish the Custodian with a Certificate specifying the
number of Shares redeemed and the amount to be paid for the Shares redeemed.
5. Upon receipt from the Transfer Agent or co-transfer agent of an
advice setting forth the number of Shares received by the Transfer Agent or co-
transfer agent for redemption, and that such
8
Shares are valid and in good form for redemption, the Custodian shall make
payment to the Transfer Agent or co-transfer agent, as the case may be, out of
the moneys held for the account of a Fund of the total amount specified in the
Certificate issued pursuant to paragraph 4 of this Article IX.
6. Notwithstanding the above provisions regarding the redemption of any
of a Fund's Shares, whenever its Shares are redeemed pursuant to any check
redemption privilege which may from time to time be offered by a Fund, the
Custodian, unless otherwise instructed by a Certificate, shall, upon receipt of
an advice from a Fund or its agent setting forth that the redemption is in good
form for redemption in accordance with the check redemption procedure, honor the
check presented as part of such check redemption privilege out of the money held
in the account of a Fund for such purposes.
ARTICLE X
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on
behalf of a Fund which results in an overdraft because the moneys held by the
Custodian for the account of a Fund shall be insufficient to pay the total
amount payable upon a purchase of Securities as set forth in a Certificate or
Oral Instructions issued pursuant to Article IV, or which results in an
overdraft for some other reason, or if a Fund is, for any other reason, indebted
to the Custodian (except a borrowing for investment or for temporary or
emergency purposes using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this Article X), such
overdraft or indebtedness shall be deemed to be a loan made by the Custodian to
a Fund payable on demand and shall bear interest from the date incurred at a
rate per annum (based on a 360-day year for the actual number of days involved)
equal to 1/2% over the Custodian's prime commercial lending rate in effect from
time to time, such rate to be adjusted on the effective date of any change in
such prime commercial lending rate but in no event to be less than 6% per annum.
Any such overdraft or indebtedness shall be reduced by an amount equal to the
total of all amounts due a Fund which have not been collected by the Custodian
on behalf of a Fund when due because of the failure of the Custodian to make
timely demand or presentment for payment. In addition, the Trust on behalf of a
Fund hereby agrees that the Custodian shall have a continuing lien and security
interest in and to any property at any time held by it for the benefit of a Fund
or in which a Fund may have an interest which is then in the Custodian's
possession or control or in possession or control of any third party acting on
the Custodian's behalf. The Trust authorizes the Custodian, in its sole
discretion, at any time to charge any such overdraft or indebtedness together
with interest due thereon against any balance of account standing to a Fund's
credit on the Custodian's books.
2. A Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities as collateral for such borrowings, a notice or
undertaking in the form currently employed by any such bank setting forth the
amount which such bank will loan to a Fund against delivery of a stated amount
of collateral. A Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such borrowing: (a) the name of the bank; (b)
the amount and terms of the borrowing, which may be set forth by incorporating
by reference an attached promissory note, duly endorsed by a Fund, or other loan
agreement; (c) the time and date, if known, on which the loan is to be entered
into; (d) the date on which the loan becomes due and payable; (e) the total
amount payable to a Fund on the borrowing date; (f) the market value of
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal of any
particular Securities; and (g) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in conformance with
9
the Investment Trust Act of 1940 and a Fund's prospectus. The Custodian shall
deliver on the borrowing date specified in a Certificate the specified
collateral and the executed promissory note, if any, against delivery by the
lending bank of the total amount of the loan payable, provided that the same
conforms to the total amounts payable as set forth in the Certificate. The
Custodian may, at the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights therein given the
lending bank by virtue of any promissory note or loan agreement. The Custodian
shall deliver such Securities as additional collateral as may be specified in a
Certificate to collateralize further any transaction described in this
paragraph. A Fund shall cause all Securities released from collateral status to
be returned directly to the Custodian, and the Custodian shall receive from time
to time such return of collateral as may be tendered to it. In the event that a
Fund fails to specify in a Certificate the name of the issuer, the title and
number of shares or the principal amount of any particular Securities to be
delivered as collateral by the Custodian, the Custodian shall not be under any
obligation to deliver any Securities.
ARTICLE XI
LOANS OF PORTFOLIO SECURITIES OF THE FUND
1. If a Fund is permitted by the terms of the Trust's Articles of
Incorporation and as disclosed in a Fund's most recent and currently effective
prospectus to lend its portfolio Securities, within twenty-four (24) hours after
each loan of portfolio Securities a Fund shall deliver or cause to be delivered
to the Custodian a Certificate specifying with respect to each such loan; (a)
the name of the issuer and the title of the Securities; (b) the number of shares
or the principal amount loaned; (c) the date of loan and delivery; (d) the total
amount to be delivered to the Custodian against the loan of the Securities,
including the amount of cash collateral and the premium, if any, separately
identified; and (e) the name of the broker, dealer or financial institution to
which the loan was made. The Custodian shall deliver the Securities thus
designated to the broker, dealer or financial institution to which the loan was
made upon receipt of the total amount designated as to be delivered against the
loan of Securities. The Custodian may accept payment in connection with a
delivery otherwise than through the Book-Entry System or Depository only in the
form of a certified or bank cashier's check payable to the order of a Fund or
the Custodian drawn on New York Clearing House funds and may deliver Securities
in accordance with the customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of Securities by a Fund,
it shall deliver or cause to be delivered to the Custodian a Certificate
specifying with respect to each such loan termination and return of Securities:
(a) the name of the issuer and the title of the Securities to be returned; (b)
the number of shares or the principal amount to be returned; (c) the date of
termination; (d) the total amount to be delivered by the Custodian (including
the cash collateral for such Securities minus any offsetting credits as
described in said Certificate); and (e) the name of the broker, dealer or
financial institution from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt thereof shall
pay, out of the moneys held for the account of a Fund, the total amount payable
upon such return of Securities as set forth in the Certificate.
10
ARTICLE XII
THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its nominee
shall be liable for any loss or damage, including attorney's fees, resulting
from its action or omission to act or otherwise, either hereunder or under any
Margin Account Agreement, except for any such loss or damage arising out of its
own negligence or willful misconduct. The Custodian may, with respect to
questions of law arising hereunder or under any Margin Account Agreement, apply
for and obtain the advice and opinion of counsel to a Fund or of its own
counsel, at the expense of a Fund, and shall be fully protected with respect to
anything done or omitted by it in good faith in conformity with such advice or
opinion. The Custodian shall be liable to a Fund for any loss or damage
resulting from the use of the Book-Entry System or any Depository arising by
reason of any negligence, misfeasance or willful misconduct on the part of the
Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing, the Custodian shall
be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased, sold or
written by or for a Fund, the legality of the purchase, sale or writing thereof,
or the propriety of the amount paid or received thereof;
(b) The legality of the issue or sale of any of a Fund's Shares, or the
sufficiency of the amount to be received therefor;
(c) The legality of the redemption of any of a Fund's Shares, or the
propriety of the amount to be paid therefor;
(d) The legality of the declaration or payment of any dividend by a
Fund;
(e) The legality of any borrowing by a Fund using Securities as
collateral;
(f) The legality of any loan of portfolio Securities pursuant to Article
XI of this Agreement, nor shall the Custodian be under any duty or obligation to
see to it that any cash collateral delivered to it by a broker, dealer or
financial institution or held by it at any time as a result of such loan of
portfolio Securities of a Fund is adequate collateral for a Fund against any
loss it might sustain as a result of such loan. The Custodian specifically, but
not by way of limitation, shall not be under any duty or obligation periodically
to check or notify a Fund that the amount of such cash collateral held by it for
a Fund is sufficient collateral for a Fund, but such duty or obligation shall be
the sole responsibility of a Fund. In addition, the Custodian shall be under no
duty or obligation to see that any broker, dealer or financial institution to
which portfolio Securities of a Fund are lent pursuant to Article XI of this
Agreement makes payment to it of any dividends or interest which are payable to
or for the account of a Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custodian shall promptly
notify a Fund in the event that such dividends or interest are not paid and
received when due; or
(g) The sufficiency or value of any amounts of money and/or Securities
held in any Margin Account, Segregated Security Account or Collateral Account in
connection with transactions by a Fund. In addition, the Custodian shall be
under no duty or obligation to see that any broker, dealer, or Clearing
11
Member makes payment to a Fund of any variation margin payment or similar
payment which a Fund may be entitled to receive from such broker, dealer, or
Clearing Member, to see that any payment received by the Custodian from any
broker, dealer, or Clearing Member is the amount a Fund is entitled to receive,
or to notify a Fund of the Custodian's receipt or non-receipt of any such
payment; provided however that the Custodian, upon a Fund's written request,
shall as Custodian, demand from any broker, dealer, or Clearing Member
identified by a Fund the payment of any variation margin payment or similar
payment that a Fund asserts it is entitled to receive pursuant to the terms of a
Margin Account Agreement or otherwise from such broker, dealer, or Clearing
Member.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft or other
instrument for the payment of money, received by it on behalf of a Fund until
the Custodian actually receives and collects such money directly or by the final
crediting of the account representing a Fund's interest at the Book-Entry System
or the Depository.
4. The Custodian shall have no responsibility and shall not be liable
for ascertaining or acting upon any calls, conversions, exchanges, offers,
tenders, interest rate changes or similar matters relating to Securities held in
the Depository unless the Custodian shall have actually received timely notice
from the Depository. In no event shall the Custodian have any responsibility or
liability for the failure of the Depository to collect, or for the late
collection or late crediting by the Depository of any amount payable upon
Securities deposited in the Depository which may mature or be redeemed, retired,
called or otherwise become payable. However, upon receipt of a Certificate from
a Fund of an overdue amount on Securities held in the Depository, the Custodian
shall make a claim against the Depository on behalf of a Fund, except that the
Custodian shall not be under any obligation to appear in, prosecute or defend
any action, suit or proceeding in respect to any Securities held by the
Depository which in its opinion may involve it in expense or liability, unless
indemnity satisfactory to it against all expense and liability be furnished as
often as may be required.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to a Fund from the Transfer Agent
of a Fund nor to take any action to effect payment or distribution by the
Transfer Agent of a Fund of any amount paid by the Custodian to the Transfer
Agent of a Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action.
7. The Custodian may appoint one or more banking institutions as
Depository or Depositories or as sub-custodian(s), including, but not limited
to, banking institutions located in foreign countries, of Securities and moneys
at any time owned by a Fund, upon terms and conditions approved in a
Certificate, which shall, if requested by the Custodian, be accompanied by an
approving resolution of the Trust's Board of Trustees adopted in accordance with
Rule 17f-5 under the Investment Trust Act of 1940, as amended.
8. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account of
a Fund are such as properly may be held by a Fund under the provisions of its
Declaration of Trust.
12
9. The Custodian shall be entitled to receive and each Fund agrees to
pay to the Custodian all out-of-pocket expenses and fees as set forth in
Appendix E attached hereto. The Custodian may charge such fees and any expenses
incurred by the Custodian in the performance of its duties against any money
held by it for the account of a Fund. The Custodian shall also be entitled to
charge against any money held by it for the account of a Fund the amount of any
loss, damage, liability or expense, including attorney's fees, for which it
shall be entitled to reimbursement under the provisions of this Agreement. The
expense which the Custodian may charge against the account of a Fund include,
but are not limited to, the expenses of Sub-Custodians of the Custodian incurred
in settling outside of New York City transactions involving the purchase and
sale of Securities of a Fund.
10. The Custodian shall be entitled to rely upon any Certificate, notice
or other instrument in writing received by the Custodian and reasonably believed
by the Custodian to be a Certificate. The Custodian shall be entitled to rely
upon any Oral Instructions and any Written Instructions actually received by the
Custodian pursuant to Article IV or VII hereof. A Fund agrees to forward to the
Custodian a Certificate or facsimile thereof, confirming such Oral Instructions
or Written Instructions in such manner so that such Certificate or facsimile
thereof is received by the Custodian, whether by hand delivery, telex or
otherwise, by the close of business of the same day that such Oral Instructions
or Written Instructions are given to the Custodian. A Fund agrees that the fact
that such confirming instructions are not received by the Custodian shall in no
way affect the validity of the transactions hereby authorized by a Fund. A Fund
agrees that the Custodian shall incur no liability to a Fund in acting upon Oral
Instructions given to the Custodian hereunder concerning such transactions,
provided such instructions reasonably appear to have been received from an
Authorized Person.
11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, or Clearing Member.
12. The books and records pertaining to a Fund which are in the
possession of the Custodian shall be the property of a Fund. Such books and
records shall be prepared and maintained as required by the Investment Trust Act
of 1940, as amended, and other applicable securities laws, rules and
regulations. A Fund, or a Fund's authorized representative(s), shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of a Fund, copies of any such books and records
shall be provided by the Custodian to a Fund or a Fund's authorized
representative(s) at a Fund's expense.
13. The Custodian shall provide the Trust with any report obtained by
the Custodian on the system of internal accounting control of the Book-Entry
System or the Depository and with such reports on its own systems of internal
accounting control as the Trust may reasonably request from time to time.
14. A Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of or in
connection with the Custodian's payment or non-payment of checks pursuant to
paragraph 6 of Article IX as part of any check redemption privilege program of a
Fund, except for any such liability, claim, loss and demand arising out of the
Custodian's own negligence or willful misconduct.
13
15. Subject to the foregoing provisions of this Agreement, the Custodian
may deliver and receive Securities, and receipts with respect to such
Securities, and arrange for payments to be made and received by the Custodian in
accordance with the customs prevailing from time to time among brokers or
dealers in such Securities.
16. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement or Appendix F attached hereto, and no covenant or obligation shall be
implied in this Agreement against the Custodian.
ARTICLE XIII
TERMINATION
1. This Agreement shall continue until October 1994, and thereafter
shall continue automatically for successive annual periods ending on October of
each year, provided such continuance is specifically approved at least annually
by (i) the Trust's Trustees or (ii) vote of a majority (as defined in the
Investment Trust Act of 1940) of a Fund's outstanding voting securities,
provided that in either event its continuance also is approved by a majority of
the Trust's Trustees who are not "interested persons" (as defined in said Act)
of any party to this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This Agreement is terminable without
penalty, on sixty (60) days' notice, by the Trust's Trustees or, by vote of
holders of a majority of a Fund's Shares or, upon not less than ninety (90)
days' notice, by the Custodian. In the event such notice is given by a Fund, it
shall be accompanied by a copy of a resolution of the Trustees of the Trust on
behalf of a Fund, certified by the Secretary or any Assistant Secretary,
electing to terminate this Agreement and designating a successor custodian or
custodians, each of which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits. In the event such
notice is given by the Custodian, a Fund shall, on or before the termination
date, deliver to the Custodian a copy of a resolution of the Trustees, certified
by the Secretary or any Assistant Secretary, designating a successor custodian
or custodians. In the absence of such designation by a Fund, the Custodian may
designate a successor custodian which shall be a bank or trust company having
not less than $2,000,000 aggregate capital, surplus and undivided profits. Upon
the date set forth in such notice, this Agreement shall terminate and the
Custodian shall, upon receipt of a notice of acceptance by the successor
custodian, on that date deliver directly to the successor custodian all
Securities and moneys then owned by a Fund and held by it as Custodian, after
deducting all fees, expenses, and other amounts for the payment of reimbursement
of which shall then be entitled.
2. If a successor custodian is not designated by the Trust on behalf of
a Fund or the Custodian in accordance with the preceding paragraph, a Fund
shall, upon the date specified in the notice of termination of this Agreement
and upon the delivery by the Custodian of all Securities (other than Securities
held in the Book-Entry System which cannot be delivered to a Fund) and moneys
then owned by a Fund, be deemed to be its own custodian, and the Custodian shall
thereby be relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities held in the Book-Entry
System, in any Depository or by a Clearing Member which cannot be delivered to a
Fund, to hold such Securities hereunder in accordance with this Agreement.
14
ARTICLE XIV
MISCELLANEOUS
1. Annexed hereto as Appendix B is a Certificate signed by two of the
present Officers of the Trust under its seal, setting forth the names and the
signatures of the present Authorized Persons. The Trust agrees to furnish to
the Custodian a new Certificate in similar form in the event that any such
present Authorized Person ceases to be an Authorized Person or in the event that
other or additional Authorized Persons are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or signatures of
the present Authorized Persons as set forth in the last delivered Certificate.
2. Annexed hereto as Appendix C is a Certificate signed by two of the
present Officers of the Trust under its seal, setting forth the names and the
signatures of the present Officers of the Trust. A Fund agrees to furnish to
the Custodian a new Certificate in similar form in the event any such present
Officer ceases to be an Officer of the Trust, or in the event that other or
additional Officers are elected or appointed. Until such new Certificate shall
be received, the Custodian shall be fully be protected in acting under the
provisions of this Agreement upon the signatures of the Officers as set forth in
the last delivered Certificate.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be deemed sufficiently given
if addressed to the Custodian and mailed or delivered to it at its offices at
000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000, or at such other place
as the Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or required by
this Agreement to be given by or on behalf of a Fund, shall be deemed
sufficiently given if addressed to a Fund and mailed or delivered to it at its
office at 000 Xxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx, 00000, or at such other
place as a Fund may from time to time designate in writing.
5. This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties to this Agreement and approved by a
resolution of the Trustees of the Trust.
6. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successor(s) and assign(s); provided, however, that
this Agreement shall not be assignable by the Trust without the written consent
of the Custodian, or by the Custodian without the written consent of the Trust,
authorized or approved by a resolution of its Trustees.
7. This Agreement shall be construed in accordance with the laws of the
State of California.
8. This Agreement may be executed in any number of counterparts, each
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
9. This Agreement has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of the Trust.
The obligations of this agreement shall only be binding upon the assets and
property of the relevant Fund, as provided for in the Trust's Agreement and
Declaration of Trust, and shall not be binding upon any trustee, officer of
shareholder of the Trust or Fund individually.
15
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 above written.
LIFE & ANNUITY TRUST XXXXX FARGO BANK, N.A.
By: /s/ Xxxxxxx X. Xxxxx, Xx. By: /s/ Xxxxxxx Xxxxxxxxx
-------------------------- ----------------------
Name: Xxxxxxx X. Xxxxx, Xx. Name: Xxxxxxx Xxxxxxxxx
---------------------- ------------------
Title: Chief Operating Officer Title: Vice President
------------------------ ---------------
By: /s/ Xxxxx X. Xxxxxxx, Xx.
--------------------------
Name: Xxxxx X. Xxxxxxx, Xx.
----------------------
Title: Vice President
---------------
16
APPENDIX A
----------
Equity Value Fund
Growth Fund
Money Market Fund
Strategic Growth Fund
Approved as amended: February 2, 1995, Paragraph 5 of Article I
Approved as amended: January 29, 1998, to add the Equity Value and Strategic
Growth Funds
-A-
APPENDIX B
----------
OFFICERS
Pursuant to Article I, Paragraph 8, the term "Officers" does not
include any persons other than the President, Vice President, Secretary,
Treasurer, Controller, Assistant Secretary and Assistant Treasurer.
-B-
APPENDIX C
----------
AUTHORIZED PERSONS
Pursuant to Article I, Xxxxxxxxx 0, Xxxxxxxxx 1, of the Custody
Agreement, the following persons have been authorized by the Board of Trustees
to give Oral Instructions and Written Instructions on behalf of a Fund.
Signature: _______________________________
Name: ____________________________________
Signature: _______________________________
Name: ____________________________________
-C-
APPENDIX D
----------
DESIGNATED PUBLICATIONS LIST FOR CALLED INSTRUMENTS
The following publications are designated publications for the purposes
of Article III, Para. 5(b):
A. The Bond Buyer
B. The Depository Trust Trust Notices
C. Financial Daily Card Services
D. The New York Times
E. Standard & Poor's Called Bond Record
F. The Wall Street Journal
-D-
APPENDIX E
----------
CUSTODY FEES
Net Asset Charge 0.0167% (1.67 bps) annually
Transaction Charges:
Depository Eligible $10.00 ea.
Physical Delivery $20.00 ea.
Principal & Interest Paydown $10.00 ea.
Sweeps $-0-
PORTFOLIO ACCOUNTING
Monthly Base Fee $2,000.00
Net Asset Charge:
First $50,000,000 Net Assets 0.070% (7 bps) annually
Next $50,000,000 Net Assets 0.045% (4.5 bps) annually
Net Assets Over $100,000,000 0.020% (2.0 bps) annually
-E-
APPENDIX F
----------
COMPANY AND FUND ACCOUNTING SERVICES:
SCHEDULE OF SERVICES
A. Maintain Fund general ledger and journal.
B. Prepare and record disbursements for direct Fund expenses.
C. Prepare daily money transfers.
D. Reconcile all Fund bank and custodian accounts.
E. Assist Fund independent auditors as appropriate.
F. Prepare daily projection of available cash balances.
G. Record trading activity for purposes of determining net asset values and
daily dividend.
H. Prepare daily portfolio evaluation report to value portfolio Securities and
determine daily accrued income.
I. Determine the daily net asset value per share.
J. Determine the daily dividend per share.
K. Prepare monthly, quarterly, semi-annual and annual financial statements.
L. Provide financial information for reports to the Securities and Exchange
Commission in compliance with the provisions of the Investment Trust Act of
1940 and the Securities Act of 1933, the Internal Revenue Service and any
other regulatory or governmental agencies as required.
M. Provide financial, yield, net asset value, etc., information to National
Association of Securities Dealers, Inc., and other survey and statistical
agencies as instructed from time to time by a Fund.
-F-
