EXHIBIT 7(a)
CUSTODY AGREEMENT
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THIS AGREEMENT, is made as of June 30, 1997, by and between STONEBRIDGE
FUNDS, INC., a corporation organized under the laws of the State of Delaware
(the "Fund"), and THE FIFTH THIRD BANK, a banking company organized under the
laws of the State of Ohio (the "Custodian").
WITNESSETH:
WHEREAS, the Fund desires that the Securities and cash of its investment
portfolio identified in Exhibit A hereto, be held and administered by the
Custodian pursuant to this Agreement; and
WHEREAS, the Fund is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Fund and the Custodian hereby agree as follows:
ARTICLE I
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DEFINITIONS
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Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1.1 "Authorized Person" means any Officer or other person duly authorized
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by resolution of the Board of Directors to give Oral Instructions and Written
Instructions on behalf of the Fund and named in Exhibit B hereto or in such
resolutions of the Board of Directors, certified by an Officer, as may be
received by the Custodian from time to time.
1.2 "Board of Directors" shall mean the Directors from time to time
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serving under the Fund's Articles of Incorporation and By-Laws, as from time to
time amended.
1.3 "Book-Entry System" shall mean a federal book-entry system as provided
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in Subpart O of Treasury Circular Xx. 000, 00 XXX 306, in Subpart B of 31 CFR
Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "Business Day" shall mean any day recognized as a settlement day by
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The New York Stock Exchange, Inc. and any other day for which the Fund computes
the net asset value of the Fund.
1.5 "NASD" shall mean The National Association of Securities Dealers, Inc.
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1.6 "Officer" shall mean the President, any Vice President, the Secretary,
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any Assistant Secretary, the Treasurer, or any Assistant Treasurer of the Fund.
1.7 "Oral Instructions" shall mean instructions orally transmitted to and
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accepted by the Custodian because such instructions are: (i) reasonably
believed by the Custodian to have been given by an Authorized Person, (ii)
recorded and kept among the records of the Custodian made in the ordinary course
of business and (iii) orally confirmed by the Custodian. The Fund shall cause
all Oral Instructions to be confirmed by Written Instructions. If such Written
Instructions confirming Oral Instructions are not received by the Custodian
prior to a transaction, it shall in no way affect the validity of
the transaction or the authorization thereof by the Fund. If Oral Instructions
vary from the Written Instructions which purport to confirm them, the Custodian
shall notify the Fund of such variance but such Oral Instructions will govern
unless the Custodian has not yet acted.
1.8 "Custody Account" shall mean any account in the name of the Fund,
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which is provided for in Section 3.2 below.
1.9 "Proper Instructions" shall mean Oral Instructions or Written
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Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.10 "Securities Depository" shall mean The Participants Fund Company or
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The Depository Fund Company and (provided that Custodian shall have received a
copy of a resolution of the Board of Directors, certified by an Officer,
specifically approving the use of such clearing agency as a depository for the
Fund) any other clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities and Exchange Act of 1934 (the
"1934 Act"), which acts as a system for the central handling of Securities where
all Securities of any particular class or series of an issuer deposited within
the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of the Securities.
1.11 "Securities" shall include, without limitation, common and preferred
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stocks, bonds, call options, put options, debentures, notes, bank certificates
of deposit, bankers' acceptances, mortgage-backed securities, other money market
instruments or other obligations, and any certificates, receipts, warrants or
other instruments or documents representing rights to receive, purchase or
subscribe for the same, or evidencing or representing any other rights or
interests therein, or any similar property or assets that the Custodian has the
facilities to clear and to service.
1.12 "Shares" shall mean the units of beneficial interest issued by the
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Fund.
1.13 "Written Instructions" shall mean (i) written communications actually
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received by the Custodian and signed by one or more persons as the Board of
Directors shall have from time to time authorized, or (ii) communications by
telex or any other such system from a person or persons reasonably believed by
the Custodian to be Authorized, or (iii) communications transmitted
electronically through the Institutional Delivery System (IDS), or any other
similar electronic instruction system acceptable to Custodian and approved by
resolutions of the Board of Directors, a copy of which, certified by an Officer,
shall have been delivered to the Custodian.
ARTICLE II
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APPOINTMENT OF CUSTODIAN
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2.1 Appointment. The Fund hereby constitutes and appoints the Custodian
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as custodian of all Securities and cash owned by or in the possession of the
Fund at any time during the period of this Agreement, provided that such
Securities or cash at all times shall be and remain the property of the Fund.
2.2 Acceptance. The Custodian hereby accepts appointment as such
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custodian and agrees to perform the duties thereof as hereinafter set forth and
in accordance with the 1940 Act as amended. Except as specifically set forth
herein, the Custodian shall have no liability and assumes no responsibly for any
non-compliance by the Fund of any laws, rules or regulations.
ARTICLE III
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CUSTODY OF CASH AND SECURITIES
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3.1 Segregation. All Securities and non-cash property held by the
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Custodian for the account of the Fund, except Securities maintained in a
Securities Depository or Book-Entry System, shall be physically segregated from
other Securities and non-cash property in the possession of the Custodian and
shall be identified as subject to this Agreement.
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3.2 Custody Account. The Custodian shall open and maintain in its trust
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department a custody account in the name of each Fund, subject only to draft or
order of the Custodian, in which the Custodian shall enter and carry all
Securities, cash and other assets of the Fund which are delivered to it.
3.3 Appointment of Agents. In its discretion, the Custodian may appoint,
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and at any time remove, any domestic bank or trust company, which has been
approved by the Board of Directors and is qualified to act as a custodian under
the 1940 Act, as sub-custodian to hold Securities and cash of the Fund and to
carry out such other provisions of this Agreement as it may determine, and may
also open and maintain one or more banking accounts with such a bank or trust
company (any such accounts to be in the name of the Custodian and subject only
to its draft or order), provided, however, that the appointment of any such
agent shall not relieve the Custodian of any of its obligations or liabilities
under this Agreement.
3.4 Delivery of Assets to Custodian. The Fund shall deliver, or cause to
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be delivered, to the Custodian all of the Fund's Securities, cash and other
assets, including (a) all payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by the Fund at any time during the period of this Agreement,
and (b) all cash received by the Fund for the issuance, at any time during such
period, of Shares. The Custodian shall not be responsible for such Securities,
cash or other assets until actually received by it.
3.5 Securities Depositories and Book-Entry Systems. The Custodian may
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deposit and/or maintain Securities of the Fund in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Fund in any Securities
Depository or Book-Entry System, the Fund shall deliver to the
Custodian a resolution of the Board of Directors, certified by an
Officer, authorizing and instructing the Custodian on an on-going
basis to deposit in such Securities Depository or Book-Entry System
all Securities eligible for deposit therein and to make use of such
Securities Depository or Book-Entry System to the extent possible and
practical 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 collateral consisting of Securities. So long as such Securities
Depository or Book-Entry System shall continue to be employed for the
deposit of Securities of the Fund, shall annually re-adopt such
resolution and deliver a copy thereof, certified by an Officer, to
the Custodian.
(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of the
Custodian in such Book-Entry System or Securities Depository which
includes only assets held by the Custodian as a fiduciary, custodian
or otherwise for customers.
(c) The records of the Custodian and the Custodian's account on the books
of the Book-Entry System and Securities Depository as the case may
be, with respect to Securities of the Fund maintained in a Book-Entry
System or Securities Depository shall, by book-entry, or otherwise
identify such Securities as belonging to the Fund.
(d) If Securities purchases by the Fund are to be held in a Book-Entry
System or Securities Depository, the Custodian shall pay for such
Securities upon (i) receipt of advice from the Book-Entry System or
Securities Depository that such Securities have been transferred to
the Depository Account, and (ii) the making of an entry on the
records of the Custodian to reflect such payment and transfer for the
account of the Fund. If Securities sold by the Fund are held in a
Book-Entry System or Securities Depository, the Custodian shall
transfer such Securities upon (i) receipt of advice from the Book-
Entry System or Securities depository that payment for such
Securities has been transferred to the Depository Account, and (ii)
the making of an entry on the records of the Custodian to reflect
such transfer and payment for the account of the Fund.
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(e) Upon request, the Custodian shall provide the Fund with copies of any
report (obtained by the Custodian from a Book-Entry System or
Securities Depository in which Securities of the Fund is kept) on the
internal accounting controls and procedures for safeguarding
Securities deposited in such Book-Entry System or Securities
Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting (i) from the use of a Book-Entry System or Securities
Depository by reason of any negligence or willful misconduct on the
part of Custodian or any sub-custodian appointed pursuant to Section
3.3 above or any of its or their employees, or (ii) from failure of
Custodian or any such sub-custodian to enforce effectively such
rights as it may have against a Book-Entry System or Securities
Depository. At its election, the Fund shall be subrogated to the
rights of the Custodian with respect to any claim against a Book-
Entry System or Securities Depository or any other person for any
loss or damage to the Fund arising from the use of such Book-Entry
System or Securities Depository, if and to the extent that the Fund
has been made whole for any such loss or damage.
3.6 Disbursement of Moneys from Custody Accounts. Upon receipt of Proper
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Instructions, the Custodian shall disburse moneys from the Fund Custody Account
but only in the following cases:
(a) For the purchase of Securities for the Fund but only upon compliance
with Section 4.1 of this Agreement and only (i) in the case of
Securities (other than options on Securities, futures contracts and
options on futures contracts), against the delivery to the Custodian
(or any sub-custodian appointed pursuant to Section 3.3 above) of
such Securities registered as provided in Section 3.9 below in proper
form for transfer, or if the purchase of such Securities is effected
through a Book-Entry System or Securities Depository, in accordance
with the conditions set forth in Section 3.5 above; (ii) in the case
of options on Securities, against delivery to the Custodian (or such
sub-custodian) of such receipts as are required by the customs
prevailing among dealers in such options; (iii) in the case of
futures contracts and options on futures contracts, against delivery
to the Custodian (or such sub-custodian) of evidence of title thereto
in favor of the Fund or any nominee referred to in Section 3.9 below;
and (iv) in the case of repurchase or reverse repurchase agreements
entered into between the Fund and a bank which is a member of the
Federal Reserve System or between the Fund and a primary dealer in
U.S. Government securities, against delivery of the purchased
Securities either in certificate form or through an entry crediting
the Custodian's account at a Book-Entry System or Securities
Depository for the account of the Fund with such Securities;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in Section
5.1 below;
(e) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account
of the Fund: interest; taxes; administration, investment management,
investment advisory, accounting, auditing, transfer agent, custodian,
trustee and legal fees; and other operating expenses of the Fund; in
all cases, whether or not such expenses are to be in whole or in part
capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement among
the Fund, the Custodian and a broker-dealer registered under the 1934
Act and a member of the NASD, relating to compliance with rules of
The Options Clearing Corporation and of any registered national
securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with
transactions by the Fund;
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(g) For transfer in accordance with the provisions of any agreement among
the Fund, the Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any contract
market (or any similar organization or organizations) regarding
account deposits in connection with transactions by the Fund;
(h) For the funding of any uncertificated time deposit or other interest-
bearing account with any banking institution (including the
Custodian), which deposit or account has a term of one year or less;
and
(i) For any other proper purposes, but only upon receipt, in addition to
Proper Instructions, of a copy of a resolution of the Board of
Directors, certified by an Officer, specifying the amount and purpose
of such payment, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such payment is to
be made.
3.7 Delivery of Securities from Fund Custody Accounts. Upon receipt of
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Proper Instructions, the Custodian shall release and deliver Securities from a
Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of the Fund but only
against receipt of payment therefor in cash, by certified or cashiers
check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of Section
3.5 above;
(c) To an Offeror's depository agent in connection with tender or other
similar offers for Securities of the Fund; provided that, in any such
case, the cash or other consideration is to be delivered to the
Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name of
the Fund, the Custodian or any sub-custodian appointed pursuant to
Section 3.3 above, or of any nominee or nominees of any of the
foregoing, or (ii) for exchange for a different number of
certificates or other evidence representing the same aggregate face
amount or number of units; provided that, in any such case, the new
Securities are to be delivered to the Custodian;
(e) To the broker selling Securities, for examination in accordance with
the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the issuer of such Securities, or pursuant to provisions for
conversion contained in such Securities, or pursuant to any deposit
agreement, including surrender or receipt of underlying Securities in
connection with the issuance or cancellation of depository receipts;
provided that, in any such case, the new Securities and cash, if any,
are to be delivered to the Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by the Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new Securities
and cash, if any, are to be delivered to the Custodian;
(i) For delivery in connection with any loans of Securities of the Fund,
but only against receipt of such collateral as the Fund shall have
specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by such Fund, but only against
receipt by the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Fund;
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(l) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian and a broker-dealer registered under the 1934
Act and a member of the NASD, relating to compliance with the rules
of The Options Clearing Corporation and of any registered national
securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with
transactions by the Fund;
(m) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any contract
market (or any similar organization or organizations) regarding
account deposits in connection with transactions by the Fund; or
(n) For any other proper corporate purposes, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the
Board of Directors, certified by an Officer, specifying the
Securities to be delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom delivery
of such Securities shall be made.
3.8 Actions Not Requiring Proper Instructions. Unless otherwise
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instructed by the Fund, the Custodian shall with respect to all Securities held
for the Fund;
(a) Subject to Section 7.4 below, collect on a timely basis all income
and other payments to which the Fund is entitled either by law or
pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on a
timely basis the amount payable upon all Securities which may mature
or be called, redeemed, or retired, or otherwise become payable;
(c) Endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(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 prepare and submit reports to the Internal Revenue Service
("IRS") and to the Fund at such time, in such manner and containing
such information as is prescribed by the IRS;
(f) Hold for the Fund, either directly or, with respect to Securities
held therein, through a Book-Entry System or Securities Depository,
all rights and similar securities issued with respect to Securities
of the Fund; and
(g) In general, and except as otherwise directed in Proper Instructions,
attend to all non-discretionary details in connection with sale,
exchange, substitution, purchase, transfer and other dealings with
Securities and assets of the Fund.
3.9 Registration and Transfer of Securities. All Securities held for the
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Fund that are issued or issuable only in bearer form shall be held by the
Custodian in that form, provided that any such Securities shall be held in a
Book-Entry System for the account of the Fund, if eligible therefor. All other
Securities held for the Fund may be registered in the name of the Fund, the
Custodian, or any sub-custodian appointed pursuant to Section 3.3 above, or in
the name of any nominee of any of them, or in the name of a Book-Entry System,
Securities Depository or any nominee of either thereof; provided, however, that
such Securities are held specifically for the account of the Fund. The Fund
shall 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
any of the nominees hereinabove referred to or in the name of a Book-Entry
System or Securities Depository, any Securities registered in the name of the
Fund.
3.10 Records. (a) The Custodian shall maintain complete and accurate
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records with respect to Securities, cash or other property held for the Fund,
including (i) journals or other records of original entry containing an itemized
daily record in detail of all receipts and deliveries of Securities and all
receipts and disbursements of cash; (ii) ledgers (or
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other records) reflecting (A) Securities in transfer, (B) Securities in physical
possession, (C) monies and Securities borrowed and monies and Securities loaned
(together with a record of the collateral therefor and substitutions of such
collateral), (D) dividends and interest received, and (E) dividends receivable
and interest accrued; and (iii) canceled checks and bank records related
thereto. The Custodian shall keep such other books and records of the Fund as
the Fund shall reasonably request, or as may be required by the 1940 Act,
including, but not limited to Section 3.1 and Rule 31a-1 and Rule 31a-2
promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i) be
maintained in a form acceptable to the Fund and in compliance with rules and
regulations of the Securities and Exchange Commission, (ii) be the property of
the Fund and at all times during the regular business hours of the Custodian be
made available upon request for inspection by duly authorized officers,
employees or agents of the Fund and employees or agents of the Securities and
Exchange Commission, and (iii) if required to be maintained by Rule 31a-1 under
the 1940 Act, be preserved for the periods prescribed in Rule 31a-2 under the
0000 Xxx.
3.11 Fund Reports by Custodian. The Custodian shall furnish the Fund with
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a daily activity statement a summary of all transfers to or from the Custody
Account on the day following such transfers. At least monthly and from time to
time, the Custodian shall furnish the Fund with a detailed statement, of the
Securities and moneys held for the Fund under this Agreement.
3.12 Other Reports by Custodian. The Custodian shall provide the Fund
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with such reports, as the Fund may reasonably request from time to time, on the
internal accounting controls and procedures for safeguarding Securities, which
are employed by the Custodian or any sub-custodian appointed pursuant to Section
3.3 above.
3.13 Proxies and Other Materials. The Custodian shall cause all proxies
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if any, relating to Securities which are not registered in the name of the Fund,
to be promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted, and shall
include all other proxy materials, if any, promptly deliver to the Fund such
proxies, all proxy soliciting materials, which should include all other proxy
materials, if any, and all notices to such Securities.
3.14 Information on Corporate Actions. Custodian will promptly notify the
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Fund of corporate actions, limited to those Securities registered in nominee
name and to those Securities held at a Depository or sub-Custodian acting as
agent for Custodian. Custodian will be responsible only if the notice of such
corporate actions is published by the Financial Daily Card Service, X.X. Xxxxx
Called Bond Service, DTC, or received by first class mail from the agent. For
market announcements not yet received and distributed by Custodian's services,
Fund will inform its custody representative with appropriate instructions.
Custodian will, upon receipt of Trust's response within the required deadline,
affect such action for receipt or payment for the Fund. For those responses
received after the deadline, Custodian will affect such action for receipt or
payment, subject to the limitations of the agent(s) affecting such actions.
Custodian will promptly notify Fund for put options only if the notice is
received by first class mail from the agent. The Fund will provide or cause to
be provided to Custodian with all relevant information contained in the
prospectus for any security which has unique put/option provisions and provide
Custodian with specific tender instructions at least ten business days prior to
the beginning date of the tender period.
ARTICLE IV
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PURCHASE AND SALE OF INVESTMENTS OF THE FUND
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4.1 Purchase of Securities. Promptly upon each purchase of Securities for
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the Fund, Written Instructions shall be delivered to the Custodian, specifying
(a) the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any) or other units purchased, (c) the date of purchase and
settlement, (d) the purchase price per unit, (e) the total amount payable upon
such purchase, and (f) the name of the person to whom such amount is payable.
The Custodian shall upon receipt of such Securities purchased by the Fund pay
out of the moneys held for the account of the Fund the total amount specified in
such Written Instructions to the person named therein. The Custodian shall not
be under any obligation to pay out moneys to cover the cost of a purchase of
Securities for the Fund, if in the relevant Custody Account there is
insufficient cash available to the Fund for which such purchase was made.
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4.2 Liability for Payment in Advance of Receipt of Securities Purchased.
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In any and every case where payment for the purchase of Securities for the Fund
is made by the Custodian in advance of receipt for the account of the Fund of
the Securities purchased but in the absence of specific Written or Oral
Instructions to so pay in advance, the Custodian shall be liable to the Fund for
such Securities to the same extent as if the Securities had been received by the
Custodian.
4.3 Sale of Securities. Promptly upon each sale of Securities by the
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Fund, Written Instructions shall be delivered to the Custodian, specifying (a)
the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (c) the date of sale and settlement (d)
the sale price per unit, (e) the total amount payable upon such sale, and (f)
the person to whom such Securities are to be delivered. Upon receipt of the
total amount payable to the Fund as specified in such Written Instructions, the
Custodian shall deliver such Securities to the person specified in such 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.
4.4 Delivery of Securities Sold. Notwithstanding Section 4.3 above or any
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other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Fund shall bear the risk that
final payment for such Securities may not be made or that such Securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and the Custodian shall have no liability for any of the
foregoing.
4.5 Payment for Securities Sold, etc. In its sole discretion and from
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time to time, the Custodian may credit the relevant Custody Account, prior to
actual receipt of final payment thereof, with (i) proceeds from the sale of
Securities which it has been instructed to deliver against payment, (ii)
proceeds from the redemption of Securities or other assets of the Fund, and
(iii) income from cash, Securities or other assets of the Fund. Any such credit
shall be conditional upon actual receipt by Custodian of final payment and may
be reversed if final payment is not actually received in full. The Custodian
may, in its sole discretion and from time to time, permit the Fund to use funds
so credited to its Custody Account in anticipation of actual receipt of final
payment. Any such funds shall be repayable immediately upon demand made by the
Custodian at any time prior to the actual receipt of all final payments in
anticipation of which funds were credited to the Custody Account.
4.6 Advances by Custodian for Settlement. The Custodian may, in its sole
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discretion and from time to time, advance funds to the Fund to facilitate the
settlement of the Fund transactions on behalf of the Fund in its Custody
Account. Any such advance shall be repayable immediately upon demand made by
Custodian.
ARTICLE V
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REDEMPTION OF TRUST SHARES
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Transfer of Fund. From such funds as may be available for the purpose in
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the relevant Custody Account, and upon receipt of Proper Instructions specifying
that the funds are required to redeem Shares of the Fund, the Custodian shall
wire each amount specified in such Proper Instructions to or through such bank
as the Fund may designate with respect to such amount in such Proper
Instructions. Upon effecting payment or distribution in accordance with proper
Instruction, the Custodian shall not be under any obligation or have any
responsibility thereafter with respect to any such paying bank.
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ARTICLE VI
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SEGREGATED ACCOUNTS
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Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of each Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the Fund,
the Custodian and a broker-dealer registered under the 1934 Act and a
member of the NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading
commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements
in connection with transactions by the Fund,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by the Fund or in connection
with financial futures contracts (or options thereon) purchased or
sold by the Fund,
(c) which constitute collateral for loans of Securities made by the Fund,
(d) for purposes of compliance by the Fund with requirements under the
1940 Act for the maintenance of segregated accounts by registered
investment companies in connection with reverse repurchase agreements
and when-issued, delayed delivery and firm commitment transactions,
and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Directors, certified by an Officer, setting forth the
purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
ARTICLE VII
-----------
CONCERNING THE CUSTODIAN
------------------------
7.1 Standard of Care. The Custodian shall be held to the exercise of
----------------
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Fund for any loss, damage, cost, expense (including
attorneys' fees and disbursements), liability or claim unless such loss,
damages, cost, expense, liability or claim arises from negligence, bad faith or
willful misconduct on its part or on the part of any sub-custodian appointed
pursuant to Section 3.3 above. The Custodian's cumulative liability within a
calendar year shall be limited with respect to the Fund or any party claiming
by, through or on behalf of the Fund for the initial and all subsequent renewal
terms of this Agreement, to the lessor amount of (a) the actual damages
sustained by the Fund, (actual damages for uninvested funds shall be the
overnight Feds fund rate), or (b) to an amount not to exceed one-half of the net
fees paid to the Custodian within the prior year. The Custodian shall be
entitled to rely on and may act upon advice of counsel on all matters, and shall
be without liability for any action reasonably taken or omitted pursuant to such
advice. The Custodian shall promptly notify the Fund of any action taken or
omitted by the Custodian pursuant to advice of counsel. The Custodian shall not
be under any obligation at any time to ascertain whether the Fund is in
compliance with the 1940 Act, the regulations thereunder, the provisions of the
Fund's charter documents or by-laws, or its investment objectives and policies
as then in effect.
7.2 Actual Collection Required. The Custodian shall not be liable for, or
--------------------------
considered to be the custodian of, any cash belonging to the Fund or any money
represented by a check, draft or other instrument for the payment of money,
until the Custodian or its agents actually receive such cash or collect on such
instrument.
7.3 No Responsibility for title, etc. So long as and to the extent that
--------------------------------
it is in the exercise of reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property or evidence of title
thereto received or delivered by it pursuant to this Agreement.
7.4 Limitation on Duty to Collect. Custodian shall not be required to
-----------------------------
enforce collection, by legal means or
9
otherwise, of any money or property due and payable with respect to Securities
held for the Fund if such Securities are in default or payment is not made after
due demand or presentation.
7.5 Reliance Upon Documents and Instructions. The Custodian shall be
----------------------------------------
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and/or any Written Instructions
actually received by it pursuant to this Agreement.
7.6 Express Duties Only. The Custodian shall have no duties or
-------------------
obligations whatsoever except such duties and obligations as are specifically
set forth in this Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
7.7 Cooperation. The Custodian shall cooperate with and supply necessary
-----------
information, by the Fund, to the entity or entities appointed by the Fund to
keep the books of account of the Fund and/or compute the value of the assets of
the Fund. The Custodian shall take all such reasonable actions as the Fund may
from time to time request to enable the Fund to obtain, from year to year,
favorable opinions from the Fund's independent accountants with respect to the
Custodian's activities hereunder in connection with (a) the preparation of the
Fund's report on Form N-1A and Form N-SAR and any other reports required by the
Securities and Exchange Commission, and (b) the fulfillment by the Fund of any
other requirements of the Securities and Exchange Commission.
ARTICLE VIII
------------
INDEMNIFICATION
---------------
8.1 Indemnification. The Fund shall indemnify and hold harmless the
---------------
Custodian and any sub-custodian appointed pursuant to Section 3.3 above, and any
nominee of the Custodian or of such sub-custodian from and against any loss,
damage, cost, expense (including attorneys' fees and disbursements), liability
(including, without limitation, liability arising under the Securities Act of
1933, the 1934 Act, the 1940 Act, and any state or foreign securities and/or
banking laws) or claim arising directly or indirectly (a) from the fact that
Securities are registered in the name of any such nominee, or (b) from any
action or inaction by the Custodian or such sub-custodian (i) at the request or
direction of or in reliance on the advice of the Fund, or (ii) upon Proper
Instructions, or (c) generally, from the performance of its obligations under
this Agreement or any sub-custody agreement with a sub-custodian appointed
pursuant to Section 3.3 above or, in the case of any such sub-custodian, from
the performance of its obligations under such custody agreement, provided that
neither the Custodian nor any such sub-custodian shall be indemnified and held
harmless from and against any such loss, damage, cost, expense, liability or
claim arising from the Custodian's or such sub-custodian's negligence, bad faith
or willful misconduct.
8.2 Indemnity to be Provided. If the Fund requests the Custodian to take
------------------------
any action with respect to Securities, which may, in the opinion of the
custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Fund shall have provided indemnity
therefor to the Custodian in an amount and form satisfactory to the Custodian.
ARTICLE IX
----------
FORCE MAJEURE
-------------
Neither the Custodian nor the Fund shall be liable for any failure or delay
in performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes, acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay shall use its best efforts to ameliorate the effects of any such
failure or delay. Notwithstanding the foregoing, the Custodian shall maintain
sufficient disaster recovery procedures to minimize interruptions.
ARTICLE X
---------
EFFECTIVE PERIOD; TERMINATION
-----------------------------
10
10.1 Effective Period. This Agreement shall become effective as of the
----------------
date first set forth above and shall continue in full force and effect until
terminated as hereinafter provided.
10.2 Termination. Either party 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 the
giving of such notice. If a successor custodian shall have been appointed by
the Board of Directors, the Custodian shall, upon receipt of a notice of
acceptance by the successor custodian, on such specified date of termination (a)
deliver directly to the successor custodian all Securities (other than
Securities held in a Book-Entry System or Securities Depository) and cash then
owned by the Fund and held by the Custodian as custodian, and (b) transfer any
Securities held in a Book-Entry System or Securities Depository to an account of
or for the benefit of the Fund at the successor custodian, provided that the
Fund shall have paid to the Custodian all fees, expenses and other amounts to
the payment or reimbursement of which it shall then be entitled. Upon such
delivery and transfer, the Custodian shall be relieved of all obligations under
this Agreement. The Fund may at any time immediately terminate this Agreement
in the event of the appointment of a conservator or receiver for the Custodian
by regulatory authorities in the State of Ohio or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.
10.3 Failure to Appoint Successor Custodian. If a successor custodian is
--------------------------------------
not designated by the Fund on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or trust company of its own selection, which is (a) a "Bank"
as defined in the 1940 Act, (b) has aggregate capital, surplus and undivided
profits as shown on its then most recent published report of not less than $25
million, and (c) is doing business in New York, New York, all Securities, cash
and other property held by Custodian under this Agreement and to transfer to an
account of or for the Fund at such bank or trust company all Securities of the
Fund held in a Book-Entry System or Securities Depository. Upon such delivery
and transfer, such bank or trust company shall be the successor custodian under
this Agreement and the Custodian shall be relieved of all obligations under this
Agreement. If, after reasonable inquiry, Custodian cannot find a successor
custodian as contemplated in this Section 10.3, then Custodian shall have the
right to deliver to the Fund all Securities and cash then owned by the Fund and
to transfer any Securities held in a Book-Entry System or Securities Depository
to an account of or for the Fund. Thereafter, the Fund shall be deemed to be
its own custodian with respect to the Fund and the Custodian shall be relieved
of all obligations under this Agreement.
ARTICLE XI
----------
COMPENSATION OF CUSTODIAN
-------------------------
The Custodian shall be entitled to compensation as agreed upon from time to
time by the Fund and the Custodian. The fees and other charges in effect on the
date hereof and applicable to the Fund are set forth in Exhibit B attached
hereto.
ARTICLE XII
-----------
LIMITATION OF LIABILITY
-----------------------
The Fund is a corporation organized under the laws of Delaware, to which
reference is hereby made a copy of which is on file at the office of the
Secretary of State of Delaware as required by law, and to any and all amendments
thereto so filed or hereafter filed. The obligations of the Fund entered into
in the name of the Fund or on behalf thereof by any of the Directors, officers,
employees or agents are made not individually, but in such capacities, and are
not binding upon any of the Directors, officers, employees, agents or
shareholders Fund personally, but bind only the assets of the Fund, and all
persons dealing with any of the Fund of the Fund must look solely to the assets
of the Fund for the enforcement of any claims against the Fund.
11
ARTICLE XIII
------------
NOTICES
-------
Unless otherwise specified herein, all demands, notices, instructions, and
other communications to be given hereunder shall be in writing and shall be sent
or delivered to The receipt at the address set forth after its name herein
below:
To the Fund:
-----------
Stonebridge Funds, Inc.
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Custodian:
----------------
The Fifth Third Bank
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attn: Area Manager - Fund Operations
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmission by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
-----------
MISCELLANEOUS
-------------
14.1 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Ohio.
14.2 References to Custodian. The Fund shall not circulate any printed
-----------------------
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information or its registration statement for the Fund
and such other printed matter as merely identifies Custodian as custodian for
the Fund. The Fund shall submit printed matter requiring approval to Custodian
in draft form, allowing sufficient time for review by Custodian and its counsel
prior to any deadline for printing.
14.3 No Waiver. No failure by either party hereto to exercise and no
---------
delay by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
14.4 Amendments. This Agreement cannot be changed orally and no amendment
----------
to this Agreement shall be effective unless evidenced by an instrument in
writing executed by the parties hereto.
14.5 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
14.6 Severability. If any provision of this Agreement shall be invalid,
------------
illegal or unenforceable in any respect
12
under any applicable law, the validity, legality and enforceability of the
remaining provisions shall not be affected or impaired thereby.
14.7 Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
14.8 Headings. The headings of sections in this Agreement are for
--------
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered in its name and on its behalf by its representatives
thereunto duly authorized, all as of the day and year first above written.
ATTEST: STONEBRIDGE FUNDS, INC.
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxx
Its: President
ATTEST: THE FIFTH THIRD BANK
/s/ Xxxxxxxxx Xxxxxxxxxx By: /s/ Xxxxxx Xxxxxx
Its: Assistant Vice-President
13
Dated: June 30, 1997
EXHIBIT A
TO THE CUSTODY AGREEMENT BETWEEN
STONEBRIDGE FUNDS, INC. AND THE FIFTH THIRD BANK
June 30, 1997
-------
Name of Fund Date
------------ ----
Stonebridge Growth Fund, Inc. June 30, 1997
STONEBRIDGE FUNDS, INC.
By: /s/ Xxxxx X. Xxxxxx
Its: President
THE FIFTH THIRD BANK
By: /s/ Xxxxxx Xxxxxx
Its: Assistant Vice President
14
Dated: June 30, 1997
EXHIBIT B
TO THE CUSTODY AGREEMENT BETWEEN
STONEBRIDGE FUNDS, INC. AND THE FIFTH THIRD BANK
June 30, 1997
-------
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Fund to Administer each Custody Account.
Name Signature
---- ---------
Xxxx X. Xxxx /s/ Xxxx X. Xxxx
Xxxxxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxxx /s/ Xxxxxxx X. Xxxxxxxxx
Xxxx X. Xxxxxxxxxxx /s/ Xxxx X Xxxxxxxxxxx
Xxxxx X. Xxxxx /s/ Xxxxx X. Xxxxx
15
SIGNATURE RESOLUTION
--------------------
RESOLVED, That all of the following officers of Stonebridge Growth Fund, Inc.
and any of them, namely the Chairman, President, Vice President, Secretary and
Treasurer, are hereby authorized as signers for the conduct of business for an
on behalf of the Fund with THE FIFTH THIRD BANK:
Xxxxxxx X. Xxxxxxx CHAIRMAN /s/ Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxx PRESIDENT /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx VICE PRESIDENT /s/ Xxxxx X. Xxxxxx
Xxxx X. Xxxxxxxxxxx VICE PRESIDENT /s/ Xxxx X Xxxxxxxxxxx
N/A VICE PRESIDENT
----------------------
N/A VICE PRESIDENT
----------------------
Xxxxx X. Xxxxxx TREASURER /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxx SECRETARY /s/ Xxxxx X. Xxxxx
In addition, the following Assistant Treasurer is authorized to sign on behalf
of the Fund for the purpose of effecting securities transactions:
_____________________ ASSISTANT TREASURER ______________________
The undersigned officers of the Fund certify that the foregoing is within the
parameters of a Resolution adopted by Directors of the Fund in a meeting held
April 10, 1997, directing and authorizing preparation of documents and to do
everything necessary to effect the Custody Agreement between STONEBRIDGE FUNDS,
INC. and THE FIFTH THIRD BANK.
STONEBRIDGE FUNDS, INC.
By: /s/ Xxxxx X. Xxxxxx
Its: President
By: /s/ Xxxxxxx X. Xxxxxxx
Its: Chairman of the Board
16
EXHIBIT C
TO THE CUSTODY AGREEMENT BETWEEN
STONEBRIDGE FUNDS, INC. AND THE FIFTH THIRD BANK
June 30, 1997
-------
MUTUAL FUND CUSTODY FEE SCHEDULE
BASIC ACCOUNT CHARGE
FUND SIZE:
Less than $50MM $
$50MM - $99MM $
$100MM - $199MM $(Fees per Attached Schedule A)
$200MM - $349MM $
Greater than $350MM $
TRANSACTION FEES
DTC/FED Eligible Trades $
DTC/FED Ineligible Trades $
Amortized Security Trades $
Repurchase Agreements (purchase and maturity) $
Third Party Repo's (purchase and maturity) $
Physical Commercial Paper Trades $
(purchase and maturity)
Book-Entry Commercial Paper Trades $
(purchase and maturity)
Options, each transaction $
Amortized Security Receipts $
A transaction is a purchase, sale, maturity, redemption, tender, exchange,
dividend reinvestment, deposit or withdrawal of a security (with the exception
of Fifth Third Certificates of Deposit, Commercial Paper & Repo's).
MISCELLANEOUS FEES
Wire Transfers & Check Disbursements $
Depository/Transfer Agent Reject $
Fifth Third Bank
Fund Accounting & Custody Service ProForma
17
Stonebridge Growth Fund
Schedule A
I. Fund Accounting Services
Annual Units Per Unit Fee Total Annual
Asset Based Fees $38,000,000 0.00003 bp $30,000
(Monthly Minimum of $1,500)
II. Custody Services
---------------------------------------------------------------------------------------
Book Entry (DTC, Fed, Fed amort, B) 195 9 1,116
---------------------------------------------------------------------------------------
Physical 0 25 0
---------------------------------------------------------------------------------------
PTC Eligible 0 25 0
---------------------------------------------------------------------------------------
Amortized P&I 0 5 0
---------------------------------------------------------------------------------------
Options (all types Equity & Index) 0 45 0
---------------------------------------------------------------------------------------
Mutual Funds 0 15 0
---------------------------------------------------------------------------------------
Foreign-Euroclear & Cedel 0 50 0
---------------------------------------------------------------------------------------
Turnaround Trade 0 50 0
---------------------------------------------------------------------------------------
Pair-off Trade 0 25 0
---------------------------------------------------------------------------------------
III. MISCELLANEOUS FEES
---------------------------------------------------------------------------------------
Voluntary Corporate Actions 0 25 0
---------------------------------------------------------------------------------------
Wire Transfer (In/Out) 22 7 154
---------------------------------------------------------------------------------------
Special Services-per hr. fee 0 75 0
---------------------------------------------------------------------------------------
Estimate Annual Fee $31,270
Estimate Monthly Fee $2,605.83
18
