CUSTODY AGREEMENT
AGREEMENT, dated as of December 22, 2000 between Principal Partners
SmallCap Growth Inc., a corporation organized and existing under the laws of the
State of Maryland having its principal office and place of business at 000 Xxxx
Xxxxxx, Xxx Xxxxxx, Xxxx 00000-0000 (the "Fund") and The Bank of New York, a New
York corporation authorized to do a banking business having its principal office
and place of business at Xxx Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
("Custodian").
W I T N E S S E T H:
that for and in consideration of the mutual premises hereinafter set forth the
Fund and Custodian agree as follows:
1.
DEFINITIONS
Whenever used in this Agreement, the following words shall have the
meanings set forth below:
2. "Authorized Person" shall be any person, whether or not an officer or
employee of the Fund, duly authorized by the Fund's board to execute any
Certificate or to give any Oral Instruction with respect to one or more
Accounts, such persons to be designated in a Certificate annexed hereto as
Schedule I hereto or such other Certificate as may be received by Custodian from
time to time.
3. "BNY Affiliate" shall mean any office, branch or subsidiary of The Bank of
New York Company, Inc.
4. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry system
for receiving and delivering securities, its successors and nominees.
5. "Business Day" shall mean any day on which Custodian and relevant
Depositories are open for business.
6. "Certificate" shall mean any notice, instruction, or other instrument in
writing, authorized or required by this Agreement to be given to Custodian,
which is actually received by Custodian by letter or facsimile transmission and
signed on behalf of the Fund by an Authorized Person or a person reasonably
believed by Custodian to be an Authorized Person.
7. "Composite Currency Unit" shall mean the Euro or any other composite currency
unit consisting of the aggregate of specified amounts of specified currencies,
as such unit may be constituted from time to time.
8. "Depository" shall include (a) the Book-Entry System, (b) the Depository
Trust Company, (c) any other clearing agency or securities depository registered
with the Securities and Exchange Commission identified to the Fund from time to
time, and (d) the respective successors and nominees of the foregoing.
9. "Foreign Depository" shall mean (a) Euroclear, (b) Clearstream Banking,
societe anonyme, (c) each Eligible Securities Depository as defined in Rule
17f-7 under the Investment Company Act of 1940, as amended, identified to the
Fund from time to time, and (d) the respective successors and nominees of the
foregoing.
10. "Instructions" shall mean communications transmitted by electronic or
telecommunications media, including S.W.I.F.T., computer-to-computer interface,
or dedicated transmission lines.
11. "Oral Instructions" shall mean verbal instructions received by Custodian
from an Authorized Person or from a person reasonably believed by Custodian to
be an Authorized Person.
12. "Series" shall mean the various portfolios, if any, of the Fund listed on
Schedule II hereto, and if none are listed references to Series shall be
references to the Fund.
13. "Securities" shall include, without limitation, any common stock and other
equity securities, bonds, debentures and other debt securities, notes, mortgages
or other obligations, and any instruments representing rights to receive,
purchase, or subscribe for the same, or representing any other rights or
interests therein (whether represented by a certificate or held in a Depository
or by a Subcustodian).
14. "Subcustodian" shall mean a bank (including any branch thereof) or other
financial institution (other than a Foreign Depository) located outside the U.S.
which is utilized by Custodian in connection with the purchase, sale or custody
of Securities hereunder and identified to the Fund from time to time, and their
respective successors and nominees.
15.
APPOINTMENT OF CUSTODIAN; ACCOUNTS;
REPRESENTATIONS, WARRANTIES, AND COVENANTS
16. (a) The Fund hereby appoints Custodian as custodian of all Securities and
cash at any time delivered to Custodian during the term of this Agreement, and
authorizes Custodian to hold Securities in registered form in its name or the
name of its nominees. Custodian hereby accepts such appointment and agrees to
establish and maintain one or more securities accounts and cash accounts for
each Series in which Custodian will hold Securities and cash as provided herein.
Custodian shall maintain books and records segregating the assets of each Series
from the assets of any other Series. Such accounts (each, an "Account";
collectively, the "Accounts") shall be in the name of the Fund.
17. Custodian may from time to time establish on its books and records such
sub-accounts within each Account as the Fund and Custodian may agree upon (each
a "Special Account"), and Custodian shall reflect therein such assets as the
Fund may specify in a Certificate or Instructions.
18. Custodian may from time to time establish pursuant to a written agreement
with and for the benefit of a broker, dealer, future commission merchant or
other third party identified in a Certificate or Instructions such accounts on
such terms and conditions as the Fund and Custodian shall agree, and Custodian
shall transfer to such account such Securities and money as the Fund may specify
in a Certificate or Instructions.
19. The Fund hereby represents and warrants, which representations and
warranties shall be continuing and shall be deemed to be reaffirmed upon each
delivery of a Certificate or each giving of Oral Instructions or Instructions by
the Fund, that:
20. It is duly organized and existing under the laws of the jurisdiction of its
organization, with full power to carry on its business as now conducted, to
enter into this Agreement, and to perform its obligations hereunder;
21. This Agreement has been duly authorized, executed and delivered by the Fund,
approved by a resolution of its board, constitutes a valid and legally binding
obligation of the Fund, enforceable in accordance with its terms, and there is
no statute, regulation, rule, order or judgment binding on it, and no provision
of its charter or by-laws, nor of any mortgage, indenture, credit agreement or
other contract binding on it or affecting its property, which would prohibit its
execution or performance of this Agreement;
22. It is conducting its business in substantial compliance with all applicable
laws and requirements, both state and federal, and has obtained all regulatory
licenses, approvals and consents necessary to carry on its business as now
conducted;
23. It will not use the services provided by Custodian hereunder in any manner
that is, or will result in, a violation of any law, rule or regulation
applicable to the Fund;
24. Its board or its foreign custody manager, as defined in Rule 17f-5 under the
Investment Company Act of 1940, as amended (the "`40 Act"), has determined that
use of each Subcustodian (including any Replacement Custodian) and each
Depository which Custodian or any Subcustodian is authorized to utilize in
accordance with Section 1(a) of Article III hereof, satisfies the applicable
requirements of the `40 Act and Rules 17f-4 or 17f-5 thereunder, as the case may
be;
25. The Fund or its investment adviser has determined that the custody
arrangements of each Foreign Depository provide reasonable safeguards against
the custody risks associated with maintaining assets with such Foreign
Depository within the meaning of Rule 17f-7 under the x00 Xxx.;
26. It is fully informed of the protections and risks associated with various
methods of transmitting Instructions and Oral Instructions and delivering
Certificates to Custodian, understands that there may be more secure methods of
transmitting or delivering the same than the methods selected by the Fund,
agrees that the security procedures (if any) to be utilized provide a
commercially reasonable degree of protection in light of its particular needs
and circumstances, and acknowledges and agrees that Instructions need not be
reviewed by Custodian, may conclusively be presumed by Custodian to have been
given by person(s) duly authorized, and may be acted upon as given;
27. It shall manage its borrowings, including, without limitation, any advance
or overdraft (including any day-light overdraft) in the Accounts, so that the
aggregate of its total borrowings for each Series does not exceed the amount
such Series is permitted to borrow under the `40 Act;
28. Its transmission or giving of, and Custodian acting upon and in reliance on,
Certificates, Instructions, or Oral Instructions pursuant to this Agreement
shall at all times comply with the `40 Act;
29. It shall impose and maintain restrictions on the destinations to which cash
may be disbursed by Instructions to ensure that each disbursement is for a
proper purpose; and
30. It has the right to make the pledge and grant the security interest and
security entitlement to Custodian contained in Section 1 of Article V hereof,
free of any right of redemption or prior claim of any other person or entity,
such pledge and such grants shall have a first priority subject to no setoffs,
counterclaims, or other liens or grants prior to or on a parity therewith, and
it shall take such additional steps as Custodian may require to assure such
priority.
31. The Fund hereby covenants that it shall from time to time complete and
execute and deliver to Custodian upon Custodian's request a Form FR U-1 (or
successor form) whenever the Fund borrows from Custodian any money to be used
for the purchase or carrying of margin stock as defined in Federal Reserve
Regulation U.
32.
CUSTODY AND RELATED SERVICES
33. (a) Subject to the terms hereof, the Fund hereby authorizes Custodian to
hold any Securities received by it from time to time for the Fund's account.
Custodian shall be entitled to utilize Depositories, Subcustodians, and, subject
to subsection(c) of this Section 1, Foreign Depositories, to the extent possible
in connection with its performance hereunder. Securities and cash held in a
Depository or Foreign Depository will be held subject to the rules, terms and
conditions of such entity. Securities and cash held through Subcustodians shall
be held subject to the terms and conditions of Custodian's agreements with such
Subcustodians. Subcustodians may be authorized to hold Securities in Foreign
Depositories in which such Subcustodians participate. Unless otherwise required
by local law or practice or a particular subcustodian agreement, Securities
deposited with a Subcustodian, a Depositary or a Foreign Depository will be held
in a commingled account, in the name of Custodian, holding only Securities held
by Custodian as custodian for its customers. Custodian shall identify on its
books and records the Securities and cash belonging to the Fund, whether held
directly or indirectly through Depositories, Foreign Depositories, or
Subcustodians. Custodian shall, directly or indirectly through Subcustodians,
Depositories, or Foreign Depositories, endeavor, to the extent feasible, to hold
Securities in the country or other jurisdiction in which the principal trading
market for such Securities is located, where such Securities are to be presented
for cancellation and/or payment and/or registration, or where such Securities
are acquired. Custodian at any time may cease utilizing any Subcustodian and/or
may replace a Subcustodian with a different Subcustodian (the "Replacement
Subcustodian"). In the event Custodian selects a Replacement Subcustodian,
Custodian shall not utilize such Replacement Subcustodian until after the Fund's
board or foreign custody manager has determined that utilization of such
Replacement Subcustodian satisfies the requirements of the `40 Act and Rule
17f-5 thereunder.
34. Unless Custodian has received a Certificate or Instructions to the contrary,
Custodian shall hold Securities indirectly through a Subcustodian only if (i)
the Securities are not subject to any right, charge, security interest, lien or
claim of any kind in favor of such Subcustodian or its creditors or operators,
including a receiver or trustee in bankruptcy or similar authority, except for a
claim of payment for the safe custody or administration of Securities on behalf
of the Fund by such Subcustodian, and (ii) beneficial ownership of the
Securities is freely transferable without the payment of money or value other
than for safe custody or administration.
35. With respect to each Foreign Depository, Custodian shall exercise reasonable
care, prudence, and diligence (i) to provide the Fund with an analysis of the
custody risks associated with maintaining assets with the Foreign Depository,
and (ii) to monitor such custody risks on a continuing basis and promptly notify
the Fund of any material change in such risks. The Fund acknowledges and agrees
that such analysis and monitoring shall be made on the basis of, and limited by,
information gathered from Subcustodians or through publicly available
information otherwise obtained by Custodian, and shall not include any
evaluation of Country Risks. As used herein the term "Country Risks" shall mean
with respect to any Foreign Depository: (a) the financial infrastructure of the
country in which it is organized, (b) such country's prevailing settlement
practices, (c) nationalization, expropriation or other governmental actions, (d)
such country's regulation of the banking or securities industry, (e) currency
controls, restrictions, devaluations or fluctuations, and (f) market conditions
which affect the order execution of securities transactions or affect the value
of securities.
36. Custodian shall furnish the Fund with an advice of daily transactions
(including a confirmation of each transfer of Securities) and a monthly summary
of all transfers to or from the Accounts.
37. With respect to all Securities held hereunder, Custodian shall, unless
otherwise instructed to the contrary:
38. Receive all income and other payments and advise the Fund as promptly as
practicable of any such amounts due but not paid;
39. Present for payment and receive the amount paid upon all Securities which
may mature and advise the Fund as promptly as practicable of any such amounts
due but not paid;
40. Forward to the Fund copies of all information or documents that it may
actually receive from an issuer of Securities which, in the opinion of
Custodian, are intended for the beneficial owner of Securities;
41. Execute, as custodian, any certificates of ownership, affidavits,
declarations or other certificates under any tax laws now or hereafter in effect
in connection with the collection of bond and note coupons;
42. Hold directly or through a Depository, a Foreign Depository, or a
Subcustodian all rights and similar Securities issued with respect to any
Securities credited to an Account hereunder; and
43. Endorse for collection checks, drafts or other negotiable instruments.
44. (a) Custodian shall notify the Fund of rights or discretionary actions with
respect to Securities held hereunder, and of the date or dates by when such
rights must be exercised or such action must be taken, provided that Custodian
has actually received, from the issuer or the relevant Depository (with respect
to Securities issued in the United States) or from the relevant Subcustodian,
Foreign Depository, or a nationally or internationally recognized bond or
corporate action service to which Custodian subscribes, timely notice of such
rights or discretionary corporate action or of the date or dates such rights
must be exercised or such action must be taken. Absent actual receipt of such
notice, Custodian shall have no liability for failing to so notify the Fund.
45. Whenever Securities (including, but not limited to, warrants, options,
tenders, options to tender or non-mandatory puts or calls) confer discretionary
rights on the Fund or provide for discretionary action or alternative courses of
action by the Fund, the Fund shall be responsible for making any decisions
relating thereto and for directing Custodian to act. In order for Custodian to
act, it must receive the Fund's Certificate or Instructions at Custodian's
offices, addressed as Custodian may from time to time request, not later than
noon (New York time) at least two (2) Business Days prior to the last scheduled
date to act with respect to such Securities (or such earlier date or time as
Custodian may specify to the Fund). Absent Custodian's timely receipt of such
Certificate or Instructions, Custodian shall not be liable for failure to take
any action relating to or to exercise any rights conferred by such Securities.
46. All voting rights with respect to Securities, however registered, shall be
exercised by the Fund or its designee. For Securities issued in the United
States, Custodian's only duty shall be to mail to the Fund any documents
(including proxy statements, annual reports and signed proxies) actually
received by Custodian relating to the exercise of such voting rights. With
respect to Securities issued outside of the United States, Custodian's only duty
shall be to provide the Fund with access to a provider of global proxy services
at the Fund's request. The Fund shall be responsible for all costs associated
with its use of such services.
47. Custodian shall promptly advise the Fund upon Custodian's actual receipt of
notification of the partial redemption, partial payment or other action
affecting less than all Securities of the relevant class. If Custodian, any
Subcustodian, any Depository, or any Foreign Depository holds any Securities in
which the Fund has an interest as part of a fungible mass, Custodian, such
Subcustodian, Depository, or Foreign Depository may select the Securities to
participate in such partial redemption, partial payment or other action in any
non-discriminatory manner that it customarily uses to make such selection.
48. Custodian shall not under any circumstances accept bearer interest coupons
which have been stripped from United States federal, state or local government
or agency securities unless explicitly agreed to by Custodian in writing.
49. The Fund shall be liable for all taxes, assessments, duties and other
governmental charges, including any interest or penalty with respect thereto
("Taxes"), with respect to any cash or Securities held on behalf of the Fund or
any transaction related thereto. The Fund shall indemnify Custodian and each
Subcustodian for the amount of any Tax that Custodian, any such Subcustodian or
any other withholding agent is required under applicable laws (whether by
assessment or otherwise) to pay on behalf of, or in respect of income earned by
or payments or distributions made to or for the account of the Fund (including
any payment of Tax required by reason of an earlier failure to withhold).
Custodian shall, or shall instruct the applicable Subcustodian or other
withholding agent to, withhold the amount of any Tax which is required to be
withheld under applicable law upon collection of any dividend, interest or other
distribution made with respect to any Security and any proceeds or income from
the sale, loan or other transfer of any Security. In the event that Custodian or
any Subcustodian is required under applicable law to pay any Tax on behalf of
the Fund, Custodian is hereby authorized to withdraw cash from any cash account
in the amount required to pay such Tax and to use such cash, or to remit such
cash to the appropriate Subcustodian or other withholding agent, for the timely
payment of such Tax in the manner required by applicable law. If the aggregate
amount of cash in all cash accounts is not sufficient to pay such Tax, Custodian
shall promptly notify the Fund of the additional amount of cash (in the
appropriate currency) required, and the Fund shall directly deposit such
additional amount in the appropriate cash account promptly after receipt of such
notice, for use by Custodian as specified herein. In the event that Custodian
reasonably believes that Fund is eligible, pursuant to applicable law or to the
provisions of any tax treaty, for a reduced rate of, or exemption from, any Tax
which is otherwise required to be withheld or paid on behalf of the Fund under
any applicable law, Custodian shall, or shall instruct the applicable
Subcustodian or withholding agent to, either withhold or pay such Tax at such
reduced rate or refrain from withholding or paying such Tax, as appropriate;
provided that Custodian shall have received from the Fund all documentary
evidence of residence or other qualification for such reduced rate or exemption
required to be received under such applicable law or treaty. In the event that
Custodian reasonably believes that a reduced rate of, or exemption from, any Tax
is obtainable only by means of an application for refund, Custodian and the
applicable Subcustodian shall have no responsibility for the accuracy or
validity of any forms or documentation provided by the Fund to Custodian
hereunder. The Fund hereby agrees to indemnify and hold harmless Custodian and
each Subcustodian in respect of any liability arising from any underwithholding
or underpayment of any Tax which results from the inaccuracy or invalidity of
any such forms or other documentation, and such obligation to indemnify shall be
a continuing obligation of the Fund, its successors and assigns notwithstanding
the termination of this Agreement.
50. (a) For the purpose of settling Securities and foreign exchange
transactions, the Fund shall provide Custodian with sufficient immediately
available funds for all transactions by such time and date as conditions in the
relevant market dictate. As used herein, "sufficient immediately available
funds" shall mean either (i) sufficient cash denominated in U.S. dollars to
purchase the necessary foreign currency, or (ii) sufficient applicable foreign
currency, to settle the transaction. Custodian shall provide the Fund with
immediately available funds each day which result from the actual settlement of
all sale transactions, based upon advices received by Custodian from
Subcustodians, Depositories, and Foreign Depositories. Such funds shall be in
U.S. dollars or such other currency as the Fund may specify to Custodian.
51. Any foreign exchange transaction effected by Custodian in connection with
this Agreement may be entered with Custodian or a BNY Affiliate acting as
principal or otherwise through customary banking channels. The Fund may issue a
standing Certificate or Instructions with respect to foreign exchange
transactions, but Custodian may establish rules or limitations concerning any
foreign exchange facility made available to the Fund. The Fund shall bear all
risks of investing in Securities or holding cash denominated in a foreign
currency.
52. To the extent that Custodian has agreed to provide pricing or other
information services in connection with this Agreement, Custodian is authorized
to utilize any vendor (including brokers and dealers of Securities) reasonably
believed by Custodian to be reliable to provide such information. The Fund
understands that certain pricing information with respect to complex financial
instruments (e.g., derivatives) may be based on calculated amounts rather than
actual market transactions and may not reflect actual market values, and that
the variance between such calculated amounts and actual market values may or may
not be material. Where vendors do not provide information for particular
Securities or other property, an Authorized Person may advise Custodian in a
Certificate regarding the fair market value of, or provide other information
with respect to, such Securities or property as determined by it in good faith.
Custodian shall not be liable for any loss, damage or expense incurred as a
result of errors or omissions with respect to any pricing or other information
utilized by Custodian hereunder.
53. Custodian shall promptly send to the Fund (a) any reports it receives from a
Depository on such Depository's system of internal accounting control, and (b)
such reports on its own system of internal accounting control as the Fund may
reasonably request from time to time.
54.
PURCHASE AND SALE OF SECURITIES;
CREDITS TO ACCOUNT
55. Promptly after each purchase or sale of Securities by the Fund, the Fund
shall deliver to Custodian a Certificate or Instructions, or with respect to a
purchase or sale of a Security generally required to be settled on the same day
the purchase or sale is made, Oral Instructions specifying all information
Custodian may reasonably request to settle such purchase or sale. Custodian
shall account for all purchases and sales of Securities on the actual settlement
date unless otherwise agreed by Custodian.
56. The Fund understands that when Custodian is instructed to deliver Securities
against payment, delivery of such Securities and receipt of payment therefor may
not be completed simultaneously. Notwithstanding any provision in this Agreement
to the contrary, settlements, payments and deliveries of Securities may be
effected by Custodian or any Subcustodian in accordance with the customary or
established securities trading or securities processing practices and procedures
in the jurisdiction in which the transaction occurs, including, without
limitation, delivery to a purchaser or dealer therefor (or agent) against
receipt with the expectation of receiving later payment for such Securities. The
Fund assumes full responsibility for all risks, including, without limitation,
credit risks, involved in connection with such deliveries of Securities.
57. Custodian may, as a matter of bookkeeping convenience or by separate
agreement with the Fund, credit the Account with the proceeds from the sale,
redemption or other disposition of Securities or interest, dividends or other
distributions payable on Securities prior to its actual receipt of final payment
therefor. All such credits shall be conditional until Custodian's actual receipt
of final payment and may be reversed by Custodian to the extent that final
payment is not received. Payment with respect to a transaction will not be
"final" until Custodian shall have received immediately available funds which
under applicable local law, rule and/or practice are irreversible and not
subject to any security interest, levy or other encumbrance, and which are
specifically applicable to such transaction.
58.
OVERDRAFTS OR INDEBTEDNESS
59. If Custodian should in its sole discretion advance funds on behalf of any
Series which results in an overdraft (including, without limitation, any
day-light overdraft) because the money held by Custodian in an Account for such
Series shall be insufficient to pay the total amount payable upon a purchase of
Securities specifically allocated to such Series, as set forth in a Certificate,
Instructions or Oral Instructions, or if an overdraft arises in the separate
account of a Series for some other reason, including, without limitation,
because of a reversal of a conditional credit or the purchase of any currency,
or if the Fund is for any other reason indebted to Custodian with respect to a
Series, including any indebtedness to The Bank of New York under the Fund's Cash
Management and Related Services Agreement (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 Section 2 of this Article),
such overdraft or indebtedness shall be deemed to be a loan made by Custodian to
the Fund for such Series payable on demand and shall bear interest from the date
incurred at a rate per annum ordinarily charged by Custodian to its
institutional customers, as such rate may be adjusted from time to time. In
addition, the Fund hereby agrees that Custodian shall to the maximum extent
permitted by law have a continuing lien, security interest, and security
entitlement in and to any property, including, without limitation, any
investment property or any financial asset, of such Series at any time held by
Custodian for the benefit of such Series or in which such Series may have an
interest which is then in Custodian's possession or control or in possession or
control of any third party acting in Custodian's behalf. The Fund authorizes
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 such Series' credit on Custodian's books.
60. If the Fund borrows money from any bank (including Custodian if the
borrowing is pursuant to a separate agreement) for investment or for temporary
or emergency purposes using Securities held by Custodian hereunder as collateral
for such borrowings, the Fund shall deliver to Custodian a Certificate
specifying with respect to each such borrowing: (a) the Series to which such
borrowing relates; (b) the name of the bank, (c) the amount of the borrowing,
(d) the time and date, if known, on which the loan is to be entered into, (e)
the total amount payable to the Fund on the borrowing date, (f) the 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 amount 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 the `40 Act and the Fund's prospectus. Custodian shall deliver
on the borrowing date specified in a Certificate the specified collateral
against payment by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set forth in the
Certificate. 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. Custodian shall deliver such Securities as additional collateral as
may be specified in a Certificate to collateralize further any transaction
described in this Section. The Fund shall cause all Securities released from
collateral status to be returned directly to Custodian, and Custodian shall
receive from time to time such return of collateral as may be tendered to it. In
the event that the Fund fails to specify in a Certificate the Series, 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 Custodian, Custodian
shall not be under any obligation to deliver any Securities.
61.
SALE AND REDEMPTION OF SHARES
62. Whenever the Fund shall sell any shares issued by the Fund ("Shares") it
shall deliver to Custodian a Certificate or Instructions specifying the amount
of money and/or Securities to be received by Custodian for the sale of such
Shares and specifically allocated to an Account for such Series.
63. Upon receipt of such money, Custodian shall credit such money to an Account
in the name of the Series for which such money was received.
64. Except as provided hereinafter, whenever the Fund desires Custodian to make
payment out of the money held by Custodian hereunder in connection with a
redemption of any Shares, it shall furnish to Custodian a Certificate or
Instructions specifying the total amount to be paid for such Shares. Custodian
shall make payment of such total amount to the transfer agent specified in such
Certificate or Instructions out of the money held in an Account of the
appropriate Series.
65. Notwithstanding the above provisions regarding the redemption of any Shares,
whenever any Shares are redeemed pursuant to any check redemption privilege
which may from time to time be offered by the Fund, Custodian, unless otherwise
instructed by a Certificate or Instructions, shall, upon presentment of such
check, charge the amount thereof against the money held in the Account of the
Series of the Shares being redeemed, provided, that if the Fund or its agent
timely advises Custodian that such check is not to be honored, Custodian shall
return such check unpaid.
66.
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
67. Whenever the Fund shall determine to pay a dividend or distribution on
Shares it shall furnish to Custodian Instructions or a Certificate setting forth
with respect to the Series specified therein the date of the declaration of such
dividend or distribution, the total amount payable, and the payment date.
68. Upon the payment date specified in such Instructions or Certificate,
Custodian shall pay out of the money held for the account of such Series the
total amount payable to the dividend agent of the Fund specified therein.
69.
CONCERNING CUSTODIAN
70. (a) Except as otherwise expressly provided herein, Custodian shall not be
liable for any costs, expenses, damages, liabilities or claims, including
attorneys' and accountants' fees (collectively, "Losses"), incurred by or
asserted against the Fund, except those Losses arising out of Custodian's own
negligence or willful misconduct. Custodian shall have no liability whatsoever
for the action or inaction of any Depositories, or, except to the extent such
action or inaction is a direct result of the Custodian's failure to fulfill its
duties hereunder, of any Foreign Depositories. With respect to any Losses
incurred by the Fund as a result of the acts or any failures to act by any
Subcustodian (other than a BNY Affiliate), Custodian shall take appropriate
action to recover such Losses from such Subcustodian; and Custodian's sole
responsibility and liability to the Fund shall be limited to amounts so received
from such Subcustodian (exclusive of costs and expenses incurred by Custodian).
In no event shall Custodian be liable to the Fund or any third party for
special, indirect or consequential damages, or lost profits or loss of business,
arising in connection with this Agreement, nor shall BNY or any Subcustodian be
liable: (i) for acting in accordance with any Certificate or Oral Instructions
actually received by Custodian and reasonably believed by Custodian to be given
by an Authorized Person; (ii) for acting in accordance with Instructions without
reviewing the same; (iii) for conclusively presuming that all Instructions are
given only by person(s) duly authorized; (iv) for conclusively presuming that
all disbursements of cash directed by the Fund, whether by a Certificate, an
Oral Instruction, or an Instruction, are in accordance with Section 2(i) of
Article II hereof; (v) for holding property in any particular country,
including, but not limited to, Losses resulting from nationalization,
expropriation or other governmental actions; regulation of the banking or
securities industry; exchange or currency controls or restrictions, devaluations
or fluctuations; availability of cash or Securities or market conditions which
prevent the transfer of property or execution of Securities transactions or
affect the value of property; (vi) for any Losses due to forces beyond the
control of Custodian, including without limitation strikes, work stoppages, acts
of war or terrorism, insurrection, revolution, nuclear or natural catastrophes
or acts of God, or interruptions, loss or malfunctions of utilities,
communications or computer (software and hardware) services; (vii) for the
insolvency of any Subcustodian (other than a BNY Affiliate), any Depository, or,
except to the extent such action or inaction is a direct result of the
Custodian's failure to fulfill its duties hereunder, any Foreign Depository; or
(viii) for any Losses arising from the applicability of any law or regulation
now or hereafter in effect, or from the occurrence of any event, including,
without limitation, implementation or adoption of any rules or procedures of a
Foreign Depository, which may affect, limit, prevent or impose costs or burdens
on, the transferability, convertibility, or availability of any currency or
Composite Currency Unit in any country or on the transfer of any Securities, and
in no event shall Custodian be obligated to substitute another currency for a
currency (including a currency that is a component of a Composite Currency Unit)
whose transferability, convertibility or availability has been affected,
limited, or prevented by such law, regulation or event, and to the extent that
any such law, regulation or event imposes a cost or charge upon Custodian in
relation to the transferability, convertibility, or availability of any cash
currency or Composite Currency Unit, such cost or charge shall be for the
account of the Fund, and Custodian may treat any account denominated in an
affected currency as a group of separate accounts denominated in the relevant
component currencies.
71. Custodian may enter into subcontracts, agreements and understandings with
any BNY Affiliate, whenever and on such terms and conditions as it deems
necessary or appropriate to perform its services hereunder. No such subcontract,
agreement or understanding shall discharge Custodian from its obligations
hereunder.
72. The Fund agrees to indemnify Custodian and hold Custodian harmless from and
against any and all Losses sustained or incurred by or asserted against
Custodian by reason of or as a result of any action or inaction, or arising out
of Custodian's performance hereunder, including reasonable fees and expenses of
counsel incurred by Custodian in a successful defense of claims by the Fund;
provided however, that the Fund shall not indemnify Custodian for those Losses
arising out of Custodian's own negligence or willful misconduct. This indemnity
shall be a continuing obligation of the Fund, its successors and assigns,
notwithstanding the termination of this Agreement.
73. Without limiting the generality of the foregoing, Custodian shall be under
no obligation to inquire into, and shall not be liable for:
74. Any Losses incurred by the Fund or any other person as a result of the
receipt or acceptance of fraudulent, forged or invalid Securities, or Securities
which are otherwise not freely transferable or deliverable without encumbrance
in any relevant market;
75. The validity of the issue of any Securities purchased, sold, or written by
or for the Fund, the legality of the purchase, sale or writing thereof, or the
propriety of the amount paid or received therefor;
76. The legality of the sale or redemption of any Shares, or the propriety of
the amount to be received or paid therefor;
77. The legality of the declaration or payment of any dividend or distribution
by the Fund;
78. The legality of any borrowing by the Fund;
79. The legality of any loan of portfolio Securities, nor shall Custodian be
under any duty or obligation to see to it that any cash or 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 is adequate security for the Fund
against any loss it might sustain as a result of such loan, which duty or
obligation shall be the sole responsibility of the Fund. In addition, Custodian
shall be under no duty or obligation to see that any broker, dealer or financial
institution to which portfolio Securities of the Fund are lent makes payment to
it of any dividends or interest which are payable to or for the account of the
Fund during the period of such loan or at the termination of such loan,
provided, however that Custodian shall promptly notify the Fund in the event
that such dividends or interest are not paid and received when due;
80. The sufficiency or value of any amounts of money and/or Securities held in
any Special Account in connection with transactions by the Fund; whether any
broker, dealer, futures commission merchant or clearing member makes payment to
the Fund of any variation margin payment or similar payment which the Fund may
be entitled to receive from such broker, dealer, futures commission merchant or
clearing member, or whether any payment received by Custodian from any broker,
dealer, futures commission merchant or clearing member is the amount the Fund is
entitled to receive, or to notify the Fund of Custodian's receipt or non-receipt
of any such payment; or
81. Whether any Securities at any time delivered to, or held by it or by any
Subcustodian, for the account of the Fund and specifically allocated to a Series
are such as properly may be held by the Fund or such Series under the provisions
of its then current prospectus and statement of additional information, or to
ascertain whether any transactions by the Fund, whether or not involving
Custodian, are such transactions as may properly be engaged in by the Fund.
82. Custodian may, with respect to questions of law specifically regarding an
Account, obtain the advice of counsel and shall be fully protected with respect
to anything done or omitted by it in good faith in conformity with such advice.
83. Custodian shall be under no obligation to take action to collect any amount
payable on Securities in default, or if payment is refused after due demand and
presentment.
84. Custodian shall have no duty or responsibility to inquire into, make
recommendations, supervise, or determine the suitability of any transactions
affecting any Account.
85. The Fund shall pay to Custodian the fees and charges as may be specifically
agreed upon from time to time and such other fees and charges at Custodian's
standard rates for such services as may be applicable. The Fund shall reimburse
Custodian for all costs associated with the conversion of the Fund's Securities
hereunder and the transfer of Securities and records kept in connection with
this Agreement. The Fund shall also reimburse Custodian for out-of-pocket
expenses which are a normal incident of the services provided hereunder.
86. Custodian has the right to debit any cash account for any amount payable by
the Fund in connection with any and all obligations of the Fund to Custodian. In
addition to the rights of Custodian under applicable law and other agreements,
at any time when the Fund shall not have honored any of its obligations to
Custodian, Custodian shall have the right without notice to the Fund to retain
or set-off, against such obligations of the Fund, any Securities or cash
Custodian or a BNY Affiliate may directly or indirectly hold for the account of
the Fund, and any obligations (whether matured or unmatured) that Custodian or a
BNY Affiliate may have to the Fund in any currency or Composite Currency Unit.
Any such asset of, or obligation to, the Fund may be transferred to Custodian
and any BNY Affiliate in order to effect the above rights.
87. The Fund agrees to forward to Custodian a Certificate or Instructions
confirming Oral Instructions by the close of business of the same day that such
Oral Instructions are given to Custodian. The Fund agrees that the fact that
such confirming Certificate or Instructions are not received or that a contrary
Certificate or contrary Instructions are received by Custodian shall in no way
affect the validity or enforceability of transactions authorized by such Oral
Instructions and effected by Custodian. If the Fund elects to transmit
Instructions through an on-line communications system offered by Custodian, the
Fund's use thereof shall be subject to the Terms and Conditions attached as
Appendix I hereto, and Custodian shall provide user and authorization codes,
passwords and authentication keys only to an Authorized Person or a person
reasonably believed by Custodian to be an Authorized Person.
88. The books and records pertaining to the Fund which are in possession of
Custodian shall be the property of the Fund. Such books and records shall be
prepared and maintained as required by the `40 Act and the rules thereunder. The
Fund, or its authorized representatives, shall have access to such books and
records during Custodian's normal business hours. Upon the reasonable request of
the Fund, copies of any such books and records shall be provided by Custodian to
the Fund or its authorized representative. Upon the reasonable request of the
Fund, Custodian shall provide in hard copy or on computer disc any records
included in any such delivery which are maintained by Custodian on a computer
disc, or are similarly maintained.
89. It is understood that Custodian is authorized to supply any information
regarding the Accounts which is required by any law, regulation or rule now or
hereafter in effect. The Custodian shall provide the Fund with any report
obtained by the Custodian on the system of internal accounting control of a
Depository, and with such reports on its own system of internal accounting
control as the Fund may reasonably request from time to time.
90. Custodian shall have no duties or responsibilities whatsoever except such
duties and responsibilities as are specifically set forth in this Agreement, and
no covenant or obligation shall be implied against Custodian in connection with
this Agreement.
91.
TERMINATION
92. Either of the parties hereto may terminate this Agreement by giving to the
other party a notice in writing specifying the date of such termination, which
shall be not less than ninety (90) days after the date of giving of such notice.
In the event such notice is given by the Fund, it shall be accompanied by a copy
of a resolution of the board of the 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 Custodian, the Fund shall, on or
before the termination date, deliver to Custodian a copy of a resolution of the
board of the Fund, certified by the Secretary or any Assistant Secretary,
designating a successor custodian or custodians. In the absence of such
designation by the Fund, 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 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 money then owned by the Fund and held by
it as Custodian, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled.
93. If a successor custodian is not designated by the Fund or Custodian in
accordance with the preceding Section, the Fund shall upon the date specified in
the notice of termination of this Agreement and upon the delivery by Custodian
of all Securities (other than Securities which cannot be delivered to the Fund)
and money then owned by the Fund be deemed to be its own custodian and Custodian
shall thereby be relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities which cannot be
delivered to the Fund to hold such Securities hereunder in accordance with this
Agreement.
94.
MISCELLANEOUS
95. The Fund agrees to furnish to Custodian a new Certificate of Authorized
Persons in the event of any change in the then present Authorized Persons. Until
such new Certificate is received, Custodian shall be fully protected in acting
upon Certificates or Oral Instructions of such present Authorized Persons.
96. Any notice or other instrument in writing, authorized or required by this
Agreement to be given to Custodian, shall be sufficiently given if addressed to
Custodian and received by it at its offices at 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, or at such other place as Custodian may from time to time designate
in writing.
97. Any notice or other instrument in writing, authorized or required by this
Agreement to be given to the Fund shall be sufficiently given if addressed to
the Fund and received by it at its offices at ***,or at such other place as the
Fund may from time to time designate in writing.
98. Each and every right granted to either party hereunder or under any other
document delivered hereunder or in connection herewith, or allowed it by law or
equity, shall be cumulative and may be exercised from time to time. No failure
on the part of either party to exercise, and no delay in exercising, any right
will operate as a waiver thereof, nor will any single or partial exercise by
either party of any right preclude any other or future exercise thereof or the
exercise of any other right.
99. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any exclusive jurisdiction, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected thereby. This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties, except that any
amendment to the Schedule I hereto need be signed only by the Fund and any
amendment to Appendix I hereto need be signed only by Custodian. This Agreement
shall extend to and shall be binding upon the parties hereto, and their
respective successors and assigns; provided, however, that this Agreement shall
not be assignable by either party without the written consent of the other.
100. This Agreement shall be construed in accordance with the substantive laws
of the State of New York, without regard to conflicts of laws principles
thereof. The Fund and Custodian hereby consent to the jurisdiction of a state or
federal court situated in New York City, New York in connection with any dispute
arising hereunder. The Fund hereby irrevocably waives, to the fullest extent
permitted by applicable law, any objection which it may now or hereafter have to
the laying of venue of any such proceeding brought in such a court and any claim
that such proceeding brought in such a court has been brought in an inconvenient
forum. The Fund and Custodian each hereby irrevocably waives any and all rights
to trial by jury in any legal proceeding arising out of or relating to this
Agreement.
101. 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.
IN WITNESS WHEREOF, the Fund and Custodian have caused this Agreement
to be executed by their respective officers, thereunto duly authorized, as of
the day and year first above written.
PRINCIPAL PARTNERS SMALLCAP GROWTH Fund, Inc.
By: /s/A. S. Filean
--------------------------------
Title: Senior Vice President and Secretary
Tax Identification No: 00-0000000
THE BANK OF NEW YORK
By: /s/Xxxxxx X. XxXxxx
----------------------------
Title: Vice President
Logo
Principal
Mutual
Funds
SIGNATURE LIST
The undersigned, Xxxxxx X. Xxxxxx, Senior Vice President and Secretary,
hereby certifies that each of the persons named below has been duly elected and
qualified, and as of the date hereof, is an officer of the Corporation, holding
the office set forth opposite his or her name, and signature set forth opposite
his or her name is his or her genuine signature:
Name Office Signature
---- ------ ---------
J. Xxxxx Xxxxxxxx Chairman of the Board and Directors /s/J. Xxxxx Xxxxxxxx
Xxxxx X. Xxxxxx President and Director /s/Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx Executive Vice President /s/Xxxxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx Senior Vice President and CFO /s/Xxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxx Senior Vice President and Secretary /s/A. S. Xxxxxx
Xxxxx X. Xxxxxxx Treasurer /s/ X. X. Xxxxxxx
Xxxxxxx X. Xxxxxxxx Counsel /s/Xxxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxx Vice President and Assistant /s/Xxxxxx X. Xxxxxx
Secretary
Xxxx X. Xxxxx Assistant Treasurer /s/X. X. Xxxxx
Xxxxx X. Xxxxxxxxx Controller /s/L. A. Xxxxxxxxx
Xxxx X. Xxxxxxxx Assistant Vice President and /s/Xxxx X. Xxxxxxxx
Assistant Secretary
Xxxxx X. Xxxxxx Assistant Counsel /s/Xxxxx X. Xxxxxx
By: /s/ A. S. Filean
--------------------------------------------------------
A.S. Filean, Senior Vice President
and Secretary
/s/Xxxxxxx X. Xxxxxx
Notary
Notarial Seal of Iowa Xxxxxxx X. Xxxxxx
My Commission Expires April 7, 0000
XXXXXXXX X
XXX XXXX XX XXX XXXX
ON-LINE COMMUNICATIONS SYSTEM (THE "SYSTEM")
TERMS AND CONDITIONS
1. License; Use. Upon delivery to an Authorized Person or a person reasonably
believed by Custodian to be an Authorized Person the Fund of software enabling
the Fund to obtain access to the System (the "Software"), Custodian grants to
the Fund a personal, nontransferable and nonexclusive license to use the
Software solely for the purpose of transmitting Written Instructions, receiving
reports, making inquiries or otherwise communicating with Custodian in
connection with the Account(s). The Fund shall use the Software solely for its
own internal and proper business purposes and not in the operation of a service
bureau. Except as set forth herein, no license or right of any kind is granted
to the Fund with respect to the Software. The Fund acknowledges that Custodian
and its suppliers retain and have title and exclusive proprietary rights to the
Software, including any trade secrets or other ideas, concepts, know-how,
methodologies, or information incorporated therein and the exclusive rights to
any copyrights, trademarks and patents (including registrations and applications
for registration of either), or other statutory or legal protections available
in respect thereof. The Fund further acknowledges that all or a part of the
Software may be copyrighted or trademarked (or a registration or claim made
therefor) by Custodian or its suppliers. The Fund shall not take any action with
respect to the Software inconsistent with the foregoing acknowledgments, nor
shall you attempt to decompile, reverse engineer or modify the Software. The
Fund may not copy, sell, lease or provide, directly or indirectly, any of the
Software or any portion thereof to any other person or entity without
Custodian's prior written consent. The Fund may not remove any statutory
copyright notice or other notice included in the Software or on any media
containing the Software. The Fund shall reproduce any such notice on any
reproduction of the Software and shall add any statutory copyright notice or
other notice to the Software or media upon Custodian's request.
2. Equipment. The Fund shall obtain and maintain at its own cost and expense all
equipment and services, including but not limited to communications services,
necessary for it to utilize the Software and obtain access to the System, and
Custodian shall not be responsible for the reliability or availability of any
such equipment or services.
3. Proprietary Information. The Software, any data base and any proprietary
data, processes, information and documentation made available to the Fund (other
than which are or become part of the public domain or are legally required to be
made available to the public) (collectively, the "Information"), are the
exclusive and confidential property of Custodian or its suppliers. The Fund
shall keep the Information confidential by using the same care and discretion
that the Fund uses with respect to its own confidential property and trade
secrets, but not less than reasonable care. Upon termination of the Agreement or
the Software license granted herein for any reason, the Fund shall return to
Custodian any and all copies of the Information which are in its possession or
under its control.
4. Modifications. Custodian reserves the right to modify the Software from time
to time and the Fund shall install new releases of the Software as Custodian may
direct. The Fund agrees not to modify or attempt to modify the Software without
Custodian's prior written consent. The Fund acknowledges that any modifications
to the Software, whether by the Fund or Custodian and whether with or without
Custodian's consent, shall become the property of Custodian.
5. NO REPRESENTATIONS OR WARRANTIES. CUSTODIAN AND ITS MANUFACTURERS AND
SUPPLIERS MAKE NO WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE SOFTWARE,
SERVICES OR ANY DATABASE, EXPRESS OR IMPLIED, IN FACT OR IN LAW, INCLUDING BUT
NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. THE FUND ACKNOWLEDGES THAT THE SOFTWARE, SERVICES AND ANY DATABASE ARE
PROVIDED "AS IS." IN NO EVENT SHALL CUSTODIAN OR ANY SUPPLIER BE LIABLE FOR ANY
DAMAGES, WHETHER DIRECT, INDIRECT SPECIAL, OR CONSEQUENTIAL, WHICH THE FUND MAY
INCUR IN CONNECTION WITH THE SOFTWARE, SERVICES OR ANY DATABASE, EVEN IF
CUSTODIAN OR SUCH SUPPLIER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
IN NO EVENT SHALL CUSTODIAN OR ANY SUPPLIER BE LIABLE FOR ACTS OF GOD, MACHINE
OR COMPUTER BREAKDOWN OR MALFUNCTION, INTERRUPTION OR MALFUNCTION OF
COMMUNICATION FACILITIES, LABOR DIFFICULTIES OR ANY OTHER SIMILAR OR DISSIMILAR
CAUSE BEYOND THEIR REASONABLE CONTROL.
6. Security; Reliance; Unauthorized Use. The Fund will cause all persons
utilizing the Software and System to treat all applicable user and authorization
codes, passwords and authentication keys with extreme care, and it will
establish internal control and safekeeping procedures to restrict the
availability of the same to persons duly authorized to give Instructions..
Custodian is hereby irrevocably authorized to act in accordance with and rely on
Instructions received by it through the System. The Fund acknowledges that it is
its sole responsibility to assure that only persons duly authorized use the
System and that Custodian shall not be responsible nor liable for any
unauthorized use thereof.
7. System Acknowledgments. Custodian shall acknowledge through the System its
receipt of each transmission communicated through the System, and in the absence
of such acknowledgment Custodian shall not be liable for any failure to act in
accordance with such transmission and the Fund may not claim that such
transmission was received by Custodian.
8. EXPORT RESTRICTIONS. EXPORT OF THE SOFTWARE IS PROHIBITED BY UNITED STATES
LAW. THE FUND MAY NOT UNDER ANY CIRCUMSTANCES RESELL, DIVERT, TRANSFER,
TRANSSHIP OR OTHERWISE DISPOSE OF THE SOFTWARE (IN ANY FORM) IN OR TO ANY OTHER
COUNTRY. IF CUSTODIAN DELIVERED THE SOFTWARE TO THE FUND OUTSIDE OF THE UNITED
STATES, THE SOFTWARE WAS EXPORTED FROM THE UNITED STATES IN ACCORDANCE WITH THE
EXPORTER ADMINISTRATION REGULATIONS. DIVERSION CONTRARY TO U.S. LAW IS
PROHIBITED. The Fund hereby authorizes Custodian to report its name and address
to government agencies to which Custodian is required to provide such
information by law.
9. ENCRYPTION. The Fund acknowledges and agrees that encryption may not
be available for every communication through the System, or for all data. The
Fund agrees that Custodian may deactivate any encryption features at any time,
without notice or liability to the Fund, for the purpose of maintaining,
repairing or troubleshooting the System or the Software.
