Exhibit 99 - g
[FORM OF]CUSTODIAN AGREEMENT
AGREEMENT dated as of December 20, 2000 between BANKERS TRUST COMPANY
(the "Custodian") and FLAG INVESTORS SERIES FUNDS, INC. (the "Customer").
WHEREAS, the Customer may be organized with one or more series of
shares, each of which shall represent an interest in a separate portfolio of
Securities and Cash (each as hereinafter defined) (all such existing and
additional series now or hereafter listed on Exhibit A being hereafter referred
to individually as a "Portfolio" and collectively, as the "Portfolios"); and
WHEREAS, the Customer desires to appoint the Custodian as custodian on
behalf of the Portfolios under the terms and conditions set forth in this
Agreement, and the Custodian has agreed to so act as custodian.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Employment of Custodian. The Customer hereby employs the Custodian
as custodian of all assets of each Portfolio which are delivered to and accepted
by the Custodian or any Subcustodian (as that term is defined in Section 4) (the
"Property") pursuant to the terms and conditions set forth herein. For purposes
of this Agreement, "delivery" of Property shall include the acquisition of a
security entitlement (as that term is defined in the New York Uniform Commercial
Code ("UCC")) with respect thereto. Without limitation, such Property shall
include stocks and other equity interests of every type, evidences of
indebtedness, other instruments representing same or rights or obligations to
receive, purchase, deliver or sell same and other non-cash investment property
of a Portfolio which is acceptable for deposit ("Securities") and cash from any
source and in any currency ("Cash"), provided that the Custodian shall have the
right, in its sole discretion, to refuse to accept as Property any property of a
Portfolio that the Custodian considers not to be appropriate or in proper form
for deposit for any reason. The Custodian shall not be responsible for any
property of a Portfolio held or received by the Customer or others and not
delivered to the Custodian or any Subcustodian.
2. Maintenance of Securities and Cash at Custodian and Subcustodian
Locations. Pursuant to Instructions, the Customer shall direct the Custodian to
(a) settle Securities transactions and maintain cash 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 payment or where such
Securities are acquired and (b) maintain cash and cash equivalents in such
countries in amounts reasonably necessary to effect the Customer's transactions
in such Securities. Instructions to settle Securities transactions in any
country shall be deemed to authorize the holding of such Securities and Cash in
that country.
3. Custody Account. The Custodian agrees to establish and maintain one
or more custody accounts on its books each in the name of a Portfolio (each, an
"Account") for any and all Property from time to time received and accepted by
the Custodian or any Subcustodian for the account of such Portfolio. Upon
delivery by the Customer to the Custodian of any Property belonging to a
Portfolio, the Customer shall, by Instructions (as hereinafter defined in
Section 15), specifically indicate to which Portfolio such Property belongs or
if such Property belongs to more than one Portfolio shall allocate such Property
to the appropriate Portfolio, and the Custodian shall allocate such Property to
the Accounts in accordance with the Instructions. The Customer on behalf of each
Portfolio, acknowledges its responsibility as a principal for all of its
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obligations to the Custodian arising under or in connection with this Agreement,
warrants its authority to deposit in the appropriate Account any Property
received therefor by the Custodian or a Subcustodian and to give, and authorize
others to give, instructions relative thereto. The Custodian may deliver
securities of the same class in place of those deposited in the Account.
The Custodian shall hold, keep safe and protect as custodian for each
Account, on behalf of the Customer, all Property in such Account and, to the
extent such Property constitutes financial assets for purposes of the New York
UCC, shall maintain those financial assets in such Account as security
entitlements in favor of the Portfolio in whose name the Account is maintained.
All transactions, including, but not limited to, foreign exchange transactions,
involving the Property shall be executed or settled solely in accordance with
Instructions (which shall specifically reference the Account for which such
transaction is being settled), except that until the Custodian receives
Instructions to the contrary, the Custodian will:
(a) collect all interest and dividends and all other income and
payments, whether paid in cash or in kind, on the Property, as
the same become payable and credit the same to the appropriate
Account;
(b) present for payment all Securities held in an Account which
are called, redeemed or retired or otherwise become payable
and all coupons and other income items which call for payment
upon presentation to the extent that the Custodian or
Subcustodian is actually aware of such opportunities and hold
the cash received in such Account pursuant to this Agreement;
(c) (i) exchange Securities where the exchange is purely
ministerial (including, without limitation, the exchange of
temporary securities for those in definitive form and the
exchange of warrants, or other documents of entitlement to
securities, for the Securities themselves) and (ii) when
notification of a tender or exchange offer (other than
ministerial exchanges described in (i) above) is received for
an Account, endeavor to receive Instructions, provided that if
such Instructions are not received in time for the Custodian
to take timely action, no action shall be taken with respect
thereto;
(d) whenever notification of a rights entitlement or a fractional
interest resulting from a rights issue, stock dividend or
stock split is received for an Account and such rights
entitlement or fractional interest bears an expiration date,
if after endeavoring to obtain Instructions such Instructions
are not received in time for the Custodian to take timely
action or if actual notice of such actions was received too
late to seek Instructions, sell in the discretion of the
Custodian (which sale the Customer hereby authorizes the
Custodian to make) such rights entitlement or fractional
interest and credit the Account with the net proceeds of such
sale;
(e) execute in the Customer's name for an Account, whenever the
Custodian deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of
income from the Property in such Account;
(f) pay for each Account, any and all taxes and levies in the
nature of taxes imposed on interest, dividends or other
similar income on the Property in such Account by any
governmental authority. In the event there is insufficient
Cash available in such Account to pay such taxes and levies,
the Custodian shall notify the Customer of the amount of the
shortfall and the Customer, at its option, may deposit
additional Cash in such Account or take steps to have
sufficient Cash available. The Customer agrees, when and if
requested by the Custodian and
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required in connection with the payment of any such taxes to
cooperate with the Custodian in furnishing information,
executing documents or otherwise; and
(g) appoint brokers and agents for any of the ministerial
transactions involving the Securities described in (a) - (f),
including, without limitation, affiliates of the Custodian or
any Subcustodian.
4. Subcustodians and Securities Systems. The Customer authorizes and
instructs the Custodian to maintain the Property in each Account directly in one
of its U.S. branches or indirectly through custody accounts which have been
established by the Custodian with the following other securities intermediaries:
(a) another U.S. bank or trust company or branch thereof located in the U.S.
which is itself qualified under the Investment Company Act of 1940, as amended
("1940 Act"), to act as custodian (individually, a "U.S. Subcustodian"), or a
U.S. securities depository or clearing agency or system in which the Custodian
or a U.S. Subcustodian participates (individually, a "U.S. Securities System")
or (b) one of its non-U.S. branches or majority-owned non-U.S. subsidiaries, a
non-U.S. branch or majority-owned subsidiary of a U.S. bank or a non-U.S. bank
or trust company, acting as custodian (individually, a "non-U.S. Subcustodian";
U.S. Subcustodians and non-U.S. Subcustodians, collectively, "Subcustodians"),
or a non-U.S. depository or clearing agency or system in which the Custodian or
any Subcustodian participates (individually, a "non-U.S. Securities System";
U.S. Securities System and non-U.S. Securities System, collectively, Securities
System"), provided that in each case in which a U.S. Subcustodian or U.S.
Securities System is employed, each such Subcustodian or Securities System shall
have been approved by Instructions; provided further that in each case in which
a non-U.S. Subcustodian or non-U.S. Securities System is employed, (a) such
Subcustodian or Securities System either is (i) a "qualified U.S. bank" as
defined by Rule 17f-5 under the 1940 Act ("Rule 17f-5") or (ii) an "eligible
foreign custodian" within the meaning of Rule 17f-5 or such Subcustodian or
Securities System is the subject of an order granted by the U.S. Securities and
Exchange Commission ("SEC") exempting such agent or the subcustody arrangements
thereto from all or part of the provisions of Rule 17f-5 and (b) the agreement
between the Custodian and such non-U.S. Subcustodian has been approved by
Instructions; it being understood that the Custodian shall have no liability or
responsibility for determining whether the approval of any Subcustodian or
Securities System has been proper under the 1940 Act or any rule or regulation
thereunder.
Upon receipt of Instructions, the Custodian agrees to cease the
employment of any Subcustodian or Securities System with respect to the
Customer, and if desirable and practicable, appoint a replacement subcustodian
or securities system in accordance with the provisions of this Section. In
addition, the Custodian may, at any time in its discretion, upon written
notification to the Customer, terminate the employment of any Subcustodian or
Securities System.
Upon request of the Customer, the Custodian shall deliver to the
Customer annually a certificate stating: (a) the identity of each non-U.S.
Subcustodian and non-U.S. Securities System then acting on behalf of the
Custodian and the name and address of the governmental agency or other
regulatory authority that supervises or regulates such non-U.S Subcustodian and
non-U.S. Securities System; (b) the countries in which each non-U.S.
Subcustodian or non-U.S. Securities System is located; and (c) so long as Rule
17f-5 requires the Customer's Board of Directors to directly approve its foreign
custody arrangements, such other information relating to such non-U.S.
Subcustodians and non-U.S. Securities Systems as may reasonably be requested by
the Customer to ensure compliance with Rule 17f-5. So long as Rule 17f-5
requires the Customer's Board of Directors to directly approve its foreign
custody arrangements, the Custodian also shall furnish annually to the Customer
information concerning such non-U.S. Subcustodians and non-U.S. Securities
Systems similar in kind and scope as that furnished to the Customer in
connection with the initial approval of this Agreement. Custodian agrees to
promptly notify the Customer if, in the normal course of its
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custodial activities, the Custodian has reason to believe that any non-U.S.
Subcustodian or non-U.S. Securities System has ceased to be a qualified U.S.
bank or an eligible foreign custodian each within the meaning of Rule 17f-5 or
has ceased to be subject to an exemptive order from the SEC.
5. Use of Subcustodian. With respect to Property in an Account which is
maintained by the Custodian through a Subcustodian employed pursuant to Section
4:
(a) The Custodian will identify on its books as belonging to the
Customer on behalf of a Portfolio, any Property maintained
through such Subcustodian.
(b) Any Property in the Account held by a Subcustodian will be
subject only to the instructions of the Custodian or its
agents.
(c) Property deposited with a Subcustodian will be maintained in an
account holding only assets for customers of the Custodian.
(d) Any agreement the Custodian shall enter into with a non-U.S.
Subcustodian with respect to maintaining Property shall require
that (i) the Account will be adequately indemnified or its
losses adequately insured; (ii) the Securities so maintained are
not subject to any right, charge, security interest, lien or
claim of any kind in favor of such Subcustodian or its creditors
except a claim for payment in accordance with such agreement for
their safe custody or administration and expenses related
thereto, (iii) beneficial ownership of such Securities be freely
transferable without the payment of money or value other than
for safe custody or administration and expenses related thereto,
(iv) adequate records will be maintained identifying the
Property maintained pursuant to such Agreement as belonging to
the Custodian, on behalf of its customers and (v) to the extent
permitted by applicable law, officers of or auditors employed
by, or other representatives of or designated by, the Custodian,
including the independent public accountants of or designated
by, the Customer be given access to the books and records of
such Subcustodian relating to its actions under its agreement
pertaining to any Property maintained by it thereunder or
confirmation of or pertinent information contained in such books
and records be furnished to such persons designated by the
Custodian.
6. Use of Securities System. With respect to Property in the Account(s)
which is maintained by the Custodian or any Subcustodian through a Securities
System employed pursuant to Section 4:
(a) The Custodian shall, and the Subcustodian will be required by
its agreement with the Custodian to, identify on its books
such Property as being maintained for the account of the
Custodian or Subcustodian for its customers.
(b) Any Property maintained through a Securities System for the
account of the Custodian or a Subcustodian will be subject
only to the instructions of the Custodian or such
Subcustodian, as the case may be.
(c) Property deposited with a Securities System will be maintained
in an account holding only assets for customers of the
Custodian or Subcustodian, as the case may be, unless
precluded by applicable law, rule, regulation or local market
practice.
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(d) The Custodian shall provide the Customer with any report
obtained by the Custodian on the Securities System's
accounting system, internal accounting control and procedures
for safeguarding securities deposited in the Securities
System.
7. Agents. The Custodian may at any time or times in its sole
discretion appoint (or remove) any other U.S. bank or trust company which is
itself qualified under the 1940 Act to act as custodian, as its agent to carry
out such of the provisions of this Agreement as the Custodian may from time to
time direct; provided, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities hereunder.
8. Records, Ownership of Property, Statements, Opinions of Independent
Certified Public Accountants.
(a) The ownership of the Property whether Securities, Cash and/or other
property, and whether maintained directly by the Custodian or indirectly through
a Subcustodian or a Securities System as authorized herein, shall be clearly
recorded on the Custodian's books as belonging to the appropriate Account and
not for the Custodian's own interest. The Custodian shall keep accurate and
detailed accounts of all investments, receipts, disbursements and other
transactions for each Account. All accounts, books and records of the Custodian
relating thereto shall be open to inspection and audit at all reasonable times
during normal business hours by any person designated by the Customer. All such
accounts shall be maintained and preserved in the form reasonably requested by
the Customer. The Custodian will supply to the Customer from time to time, as
mutually agreed upon, a statement in respect to any Property in an Account
maintained by the Custodian or by a Subcustodian. In the absence of the filing
in writing with the Custodian by the Customer of exceptions or objections to any
such statement within sixty (60) days of the mailing thereof, the Customer shall
be deemed to have approved such statement and in such case or upon written
approval of the Customer of any such statement, such statement shall be presumed
to be for all purposes correct with respect to all information set forth
therein.
(b) The Custodian shall take all reasonable action as the Customer may
request to obtain from year to year favorable opinions from the Customer's
independent certified public accountants with respect to the Custodian's
activities hereunder in connection with the preparation of the Customer's Form
N-1A and the Customer's Form N-SAR or other periodic reports to the SEC and with
respect to any other requirements of the SEC.
(c) At the request of the Customer, the Custodian shall deliver to the
Customer a written report prepared by the Custodian's independent certified
public accountants with respect to the services provided by the Custodian under
this Agreement, including, without limitation, the Custodian's accounting
system, internal accounting control and procedures for safeguarding Cash and
Securities, including Cash and Securities deposited and/or maintained in a
securities system or with a Subcustodian. Such report shall be of sufficient
scope and in sufficient detail as may reasonably be required by the Customer and
as may reasonably be obtained by the Custodian.
(d) The Customer may elect to participate in any of the electronic
on-line service and communications systems offered by the Custodian which can
provide the Customer, on a daily basis, with the ability to view on-line or to
print on hard copy various reports of Account activity and of Securities and/or
Cash being held in any Account. To the extent that such service shall include
market values of Securities in an Account, the Customer hereby acknowledges that
the Custodian now obtains and may in the future obtain information on such
values from outside sources that the Custodian considers to be reliable and the
Customer agrees that the Custodian (i) does not verify or represent or warrant
either the reliability of such service nor
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the accuracy or completeness of any such information furnished or obtained by or
through such service and (ii) shall be without liability in selecting and
utilizing such service or furnishing any information derived therefrom.
9. Holding of Securities, Nominees, etc. Securities in an Account which
are maintained by the Custodian or any Subcustodian may be held directly by such
entity in the name of the Customer or in bearer form or maintained on behalf of
a Portfolio, in the Custodian's or Subcustodian's name or in the name of the
Custodian's or Subcustodian's nominee. Securities that are maintained through a
Subcustodian or which are eligible for deposit in a Securities System as
provided above may be maintained with the Subcustodian or the Securities System
in an account for the Custodian's or Subcustodian's customers, unless prohibited
by law, rule, or regulation. The Custodian or Subcustodian, as the case may be,
may combine certificates representing Securities held in an Account with
certificates of the same issue held by it as fiduciary or as a custodian. In the
event that any Securities in the name of the Custodian or its nominee or held by
a Subcustodian and registered in the name of such Subcustodian or its nominee
are called for partial redemption by the issuer of such Security, the Custodian
may, subject to the rules or regulations pertaining to allocation of any
Securities System in which such Securities have been deposited, allot, or cause
to be allotted, the called portion of the respective beneficial holders of such
class of security in any manner the Custodian deems to be fair and equitable.
Securities maintained with a Securities System shall be maintained subject to
the rules of that Securities System governing the rights and obligations among
the Securities System and its participants.
10. Proxies, etc. With respect to any proxies, notices, reports or
other communications relative to any of the Securities in any Account, the
Custodian shall perform such services and only such services relative thereto as
are (i) set forth in Section 3 of this Agreement, (ii) described in Exhibit B
attached hereto (as such service therein described may be in effect from time to
time) (the "Proxy Service") and (iii) as may otherwise be agreed upon between
the Custodian and the Customer. The liability and responsibility of the
Custodian in connection with the Proxy Service referred to in (ii) of the
immediately preceding sentence and in connection with any additional services
which the Custodian and the Customer may agree upon as provided in (iii) of the
immediately preceding sentence shall be as set forth in the description of the
Proxy Service and as may be agreed upon by the Custodian and the Customer in
connection with the furnishing of any such additional service and shall not be
affected by any other term of this Agreement. Neither the Custodian nor its
nominees or agents shall vote upon or in respect of any of the Securities in an
Account, execute any form of proxy to vote thereon, or give any consent or take
any action (except as provided in Section 3) with respect thereto except upon
the receipt of Instructions relative thereto.
11. Segregated Account. To assist the Customer in complying with the
requirements of the 1940 Act and the rules and regulations thereunder, the
Custodian shall, upon receipt of Instructions, establish and maintain a
segregated account or accounts on its books for and on behalf of a Portfolio.
12. Settlement Procedures. Securities will be transferred, exchanged or
delivered by the Custodian or a Subcustodian upon receipt by the Custodian of
Instructions which include all information required by the Custodian. Settlement
and payment for Securities received for an Account and delivery of Securities
out of such Account may be effected in accordance with the customary or
established securities trading or securities processing practices and procedures
in the jurisdiction or market in which the transaction occurs, including,
without limitation, delivering Securities to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such Securities from such
purchaser or dealer, as such practices and procedures may be modified or
supplemented in accordance with the standard operating procedures of the
Custodian in effect from time to time for that jurisdiction or market. The
Custodian shall not be liable for any loss which results from
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effecting transactions in accordance with the customary or established
securities trading or securities processing practices and procedures in the
applicable jurisdiction or market.
Notwithstanding that the Custodian may settle purchases and sales
against, or credit income to, an Account, on a contractual basis, as outlined in
the Investment Manager User Guide provided to the Customer by the Custodian, the
Custodian may, at its sole option, reverse such credits or debits to the
appropriate Account in the event that the transaction does not settle, or the
income is not received in a timely manner, and the Customer agrees to hold the
Custodian harmless from any losses which may result therefrom.
13. Conditional Credits.
(a) Notwithstanding any other provision of this Agreement, the
Custodian shall not be required to comply with any Instructions to settle the
purchase of any securities for the Account, unless there are sufficient
immediately available funds in the relevant currency in the Account, provided
that, if, after all expenses, debits and withdrawals of Cash in the relevant
currency ("Debits") applicable to the Account have been made and if after all
Conditional Credits, as defined below, applicable to the Account have been made
final entries as set forth in (c) below, the amount of immediately available
funds of the relevant currency in such Account is at least equal to the
aggregate purchase price of all securities for which the Custodian has received
Instructions to settle on that date ("Settlement Date"), the Custodian, upon
settlement, shall credit the Securities to the Account by making a final entry
on its books and records.
(b) Notwithstanding the foregoing, if after all Debits applicable to
the Account have been made, there remains outstanding any Conditional Credit (as
defined below) applicable to the Account or the amount of immediately available
funds in a given currency in such Account are less than the aggregate purchase
price in such currency of all securities for which the Custodian has received
Instructions to settle on the Settlement Date, the Custodian, upon settlement,
may credit the securities to the Account by making a conditional entry on its
books and records ("Conditional Credit"), pending receipt of sufficient
immediately available funds in the relevant currency in the Account.
(c) If, within a reasonable time from the posting of a Conditional
Credit and after all Debits applicable to the Account have been made,
immediately available funds in the relevant currency at least equal to the
aggregate purchase price in such currency of all securities subject to a
Conditional Credit on a Settlement Date are deposited into the Account, the
Custodian shall make the Conditional Credit a final entry on its books and
records. In such case, the Customer shall be liable to the Custodian only for
late charges at a rate which the Custodian customarily charges for similar
extensions of credit.
(d) ) If (i) within a reasonable time from the posting of a Conditional
Credit, immediately available funds at least equal to the resultant Debit on a
Settlement Date are not on deposit in the Account, or (ii) any Proceeding shall
occur, the Custodian may sell such of the Securities subject to the Conditional
Credit as it selects in its sole discretion and shall apply the net proceeds of
such sale to cover such Debit, including related late charges, and any remaining
proceeds shall be credited to the Account. If such proceeds are insufficient to
satisfy such debt in full, the Customer shall continue to be liable to the
Custodian for any shortfall. The Custodian shall make the Conditional Credit a
final entry on its books as to the Securities not required to be sold to satisfy
such Debit. Pending payment in full by the Customer of the purchase price for
Securities subject to a Conditional Credit, and the Custodian's making a
Conditional Credit a final entry on its books and unless consented to by the
Custodian, the Customer shall have no right to give further Instructions in
respect of Securities subject to a Conditional Credit. The Custodian shall have
the sole discretion to determine which Securities shall be deemed to have been
paid for by the Customer out of funds available in the Account. Any such
Conditional Credit may be reversed (and any corresponding Debit shall
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be canceled) by the Custodian unless and until the Custodian makes a final entry
on its books crediting such Securities to the Account. The term "Proceeding"
shall mean any insolvency, bankruptcy, receivership, reorganization or similar
proceeding relating to the Customer, whether voluntary or involuntary.
(e) The Customer agrees that it will not use the Account to facilitate
the purchase of securities without sufficient funds in the Account (which funds
shall not include the expected proceeds of the sale of the purchased
securities).
14. Permitted Transactions. The Customer agrees that it will cause
transactions to be made pursuant to this Agreement only upon Instructions in
accordance Section 15 and only for the purposes listed below.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions.
(b) When Securities are called, redeemed or retired, or otherwise
become payable.
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment.
(d) Upon conversion of Securities pursuant to their terms into other
securities.
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities.
(f) For the payment of interest, taxes, management or supervisory fees,
distributions or operating expenses.
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts borrowed or in order
to satisfy requirements for additional or substitute collateral.
(h) In connection with any loans, but only against receipt of
collateral as specified in Instructions which shall reflect any restrictions
applicable to the Customer.
(i) For the purpose of redeeming shares of the capital stock of the
Customer against delivery of the shares to be redeemed to the Custodian, a
Subcustodian or the Customer's transfer agent.
(j) For the purpose of redeeming in kind shares of the Customer against
delivery of the shares to be redeemed to the Custodian, a Subcustodian or the
Customer's transfer agent.
(k) For delivery in accordance with the provisions of any agreement
among the Customer, on behalf of a Portfolio, the Portfolio's investment adviser
and a broker-dealer registered under the Securities Exchange Act of 1934 and a
member of the National Association of Securities Dealers, Inc., relating to
compliance with the rules of The Options Clearing Corporation, the Commodities
Futures Trading Commission 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 Customer.
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only upon
payment to the Custodian of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option, or at
expiration, the Custodian will receive the Securities previously deposited from
broker. The Custodian will
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act strictly in accordance with Instructions in the delivery of Securities to be
held in escrow and will have no responsibility or liability for any such
Securities which are not returned promptly when due other than to make proper
request for such return.
(m) For spot or forward foreign exchange transactions to facilitate
security trading or receipt of income from Securities related transactions.
(n) Upon the termination of this Agreement as set forth in Section 21.
(o) For other proper purposes.
The Customer agrees that the Custodian shall have no obligation to
verify the purpose for which a transaction is being effected.
15. Instructions. The term "Instructions" means instructions from the
Customer in respect of any of the Custodian's duties hereunder which have been
received by the Custodian at its address set forth in Section 22 below (i) in
writing (including, without limitation, facsimile transmission) or by tested
telex signed or given by such one or more person or persons as the Customer
shall have from time to time authorized in writing to give the particular class
of Instructions in question and whose name and (if applicable) signature and
office address have been filed with the Custodian, or (ii) which have been
transmitted electronically through an electronic on-line service and
communications system offered by the Custodian or other electronic instruction
system acceptable to the Custodian, or (iii) a telephonic or oral communication
by one or more persons as the Customer shall have from time to time authorized
to give the particular class of Instructions in question and whose name has been
filed with the Custodian; or (iv) upon receipt of such other form of
instructions as the Customer may from time to time authorize in writing and
which the Custodian has agreed in writing to accept. Instructions in the form of
oral communications shall be confirmed by the Customer by tested telex or
writing in the manner set forth in clause (i) above, but the lack of such
confirmation shall in no way affect any action taken by the Custodian in
reliance upon such oral instructions prior to the Custodian's receipt of such
confirmation. Instructions may relate to specific transactions or to types or
classes of transactions, and may be in the form of standing instructions.
The Custodian shall have the right to assume in the absence of notice
to the contrary from the Customer that any person whose name is on file with the
Custodian pursuant to this Section has been authorized by the Customer to give
the Instructions in question and that such authorization has not been revoked.
The Custodian may act upon and conclusively rely on, without any liability to
the Customer or any other person or entity for any losses resulting therefrom,
any Instructions reasonably believed by it to be furnished by the proper person
or persons as provided above.
16. Standard of Care. The Custodian shall be responsible for the
performance of only such duties as are set forth herein or contained in
Instructions given to the Custodian which are not contrary to the provisions of
this Agreement. The Custodian will use reasonable care with respect to the
safekeeping of Property in each Account and, except as otherwise expressly
provided herein, in carrying out its obligations under this Agreement. So long
as and to the extent that it has exercised reasonable care, the Custodian shall
not be responsible for the title, validity or genuineness of any Property or
other property or evidence of title thereto received by it or delivered by it
pursuant to this Agreement and shall be held harmless in acting upon, and may
conclusively rely on, without liability for any loss resulting therefrom, any
notice, request, consent, certificate or other instrument reasonably believed by
it to be genuine and to be signed or furnished by the proper party or parties,
including, without limitation, Instructions, and shall be indemnified by the
Customer for any losses, damages, costs and expenses (including, without
limitation, the fees and expenses of counsel)
-9-
incurred by the Custodian and arising out of action taken or omitted with
reasonable care by the Custodian hereunder or under any Instructions. The
Custodian shall be liable to the Customer for any act or omission to act of any
Subcustodian to the same extent as if the Custodian committed such act itself.
With respect to a Securities System, the Custodian shall only be responsible or
liable for losses arising from employment of such Securities System caused by
the Custodian's own failure to exercise reasonable care. In the event of any
loss to the Customer by reason of the failure of the Custodian or a Subcustodian
to utilize reasonable care, the Custodian shall be liable to the Customer to the
extent of the Customer's actual damages at the time such loss was discovered
without reference to any special conditions or circumstances. In no event shall
the Custodian be liable for any consequential or special damages. The Custodian
shall be entitled to rely, and may act, on advice of counsel (who may be counsel
for the Customer) on all matters and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
In the event the Customer subscribes to an electronic on-line service
and communications system offered by the Custodian, the Customer shall be fully
responsible for the security of the Customer's connecting terminal, access
thereto and the proper and authorized use thereof and the initiation and
application of continuing effective safeguards with respect thereto and agree to
defend and indemnify the Custodian and hold the Custodian harmless from and
against any and all losses, damages, costs and expenses (including the fees and
expenses of counsel) incurred by the Custodian as a result of any improper or
unauthorized use of such terminal by the Customer or by any others.
All collections of funds or other property paid or distributed in
respect of Securities in an Account, including funds involved in third-party
foreign exchange transactions, shall be made at the risk of the Customer.
Subject to the exercise of reasonable care, the Custodian shall have no
liability for any loss occasioned by delay in the actual receipt of notice by
the Custodian or by a Subcustodian of any payment, redemption or other
transaction regarding Securities in each Account in respect of which the
Custodian has agreed to take action as provided in Section 3 hereof. The
Custodian shall not be liable for any loss resulting from, or caused by, or
resulting from acts of governmental authorities (whether de jure or de facto),
including, without limitation, nationalization, expropriation, and the
imposition of currency restrictions; devaluations of or fluctuations in the
value of currencies; changes in laws and regulations applicable to the banking
or securities industry; market conditions that prevent the orderly execution of
securities transactions or affect the value of Property; acts of war, terrorism,
insurrection or revolution; strikes or work stoppages; the inability of a local
clearing and settlement system to settle transactions for reasons beyond the
control of the Custodian; hurricane, cyclone, earthquake, volcanic eruption,
nuclear fusion, fission or radioactivity, or other acts of God.
The Custodian shall have no liability in respect of any loss, damage or
expense suffered by the Customer, insofar as such loss, damage or expense arises
from the performance of the Custodian's duties hereunder by reason of the
Custodian's reliance upon records that were maintained for the Customer by
entities other than the Custodian prior to the Custodian's employment under this
Agreement.
The provisions of this Section shall survive termination of this
Agreement.
17. Investment Limitations and Legal or Contractual Restrictions or
Regulations. The Custodian shall not be liable to the Customer and the Customer
agrees to indemnify the Custodian and its nominees, for any loss, damage or
expense suffered or incurred by the Custodian or its nominees arising out of any
violation of any investment restriction or other restriction or limitation
applicable to the Customer or
-10-
any Portfolio pursuant to any contract or any law or regulation. The provisions
of this Section shall survive termination of this Agreement.
18. Fees and Expenses. The Customer agrees to pay to the Custodian such
compensation for its services pursuant to this Agreement as may be mutually
agreed upon in writing from time to time and the Custodian's reasonable
out-of-pocket or incidental expenses in connection with the performance of this
Agreement, including (but without limitation) legal fees as described herein
and/or deemed necessary in the judgment of the Custodian to keep safe or protect
the Property in the Account. The initial fee schedule is attached hereto as
Exhibit C. Such fees will not be abated by, nor shall the Custodian be required
to account for, any profits or commissions received by the Custodian in
connection with its provision of custody services under this Agreement. The
Customer hereby agrees to hold the Custodian harmless from any liability or loss
resulting from any taxes or other governmental charges, and any expense related
thereto, which may be imposed, or assessed with respect to any Property in an
Account and also agrees to hold the Custodian, its Subcustodians, and their
respective nominees harmless from any liability as a record holder of Property
in such Account. The Custodian is authorized to charge the applicable Account
for such items and the Custodian shall have a lien on the Property in the
applicable Account for any amount payable to the Custodian under this Agreement,
including but not limited to amounts payable pursuant to the last paragraph of
Section 12 and pursuant to indemnities granted by the Customer under this
Agreement. The provisions of this Section shall survive the termination of this
Agreement.
19. Tax Reclaims. With respect to withholding taxes deducted and which
may be deducted from any income received from any Property in an Account, the
Custodian shall perform such services with respect thereto as are described in
Exhibit D attached hereto and shall in connection therewith be subject to the
standard of care set forth in such Exhibit D. Such standard of care shall not be
affected by any other term of this Agreement.
20. Amendment, Modifications, etc. No provision of this Agreement may
be amended, modified or waived except in a writing signed by the parties hereto.
No waiver of any provision hereto shall be deemed a continuing waiver unless it
is so designated. No failure or delay on the part of either party in exercising
any power or right under this Agreement operates as a waiver, nor does any
single or partial exercise of any power or right preclude any other or further
exercise thereof or the exercise of any other power or right.
21. Termination. (a) Termination of Entire Agreement. This Agreement
may be terminated by the Customer or the Custodian by ninety (90) days' written
notice to the other; provided that notice by the Customer shall specify the
names of the persons to whom the Custodian shall deliver the Securities in each
Account and to whom the Cash in such Account shall be paid. If notice of
termination is given by the Custodian, the Customer shall, within ninety (90)
days following the giving of such notice, deliver to the Custodian a written
notice specifying the names of the persons to whom the Custodian shall deliver
the Securities in each Account and to whom the Cash in such Account shall be
paid. In either case, the Custodian will deliver such Securities and Cash to the
persons so specified, after deducting therefrom any amounts which the Custodian
determines to be owed to it under Sections 12, 18, and 24. In addition, the
Custodian may in its discretion withhold from such delivery such Cash and
Securities as may be necessary to settle transactions pending at the time of
such delivery. The Customer grants to the Custodian a lien and right of setoff
against the Account and all Property held therein from time to time in the full
amount of the foregoing obligations. If within ninety (90) days following the
giving of a notice of termination by the Custodian, the Custodian does not
receive from the Customer a written notice specifying the names of the persons
to whom the Custodian shall deliver the Securities in each Account and to whom
the Cash in such Account shall be paid, the Custodian, at its election, may
deliver such Securities and pay such Cash to a bank
-11-
or trust company doing business in the State of New York to be held and disposed
of pursuant to the provisions of this Agreement, or may continue to hold such
Securities and Cash until a written notice as aforesaid is delivered to the
Custodian, provided that the Custodian's obligations shall be limited to
safekeeping.
(b) Termination as to One or More Portfolios. This Agreement may be
terminated by the Customer or the Custodian as to one or more Portfolios (but
less than all of the Portfolios) by delivery of an amended Exhibit A deleting
such Portfolios, in which case termination as to such deleted Portfolios shall
take effect ninety (90) days after the date of such delivery, or such earlier
time as mutually agreed. The execution and delivery of an amended Exhibit A
which deletes one or more Portfolios shall constitute a termination of this
Agreement only with respect to such deleted Portfolio(s), shall be governed by
the preceding provisions of Section 20 as to the identification of a successor
custodian and the delivery of Cash and Securities of the Portfolio(s) so deleted
to such successor custodian, and shall not affect the obligations of the
Custodian and the Customer hereunder with respect to the other Portfolios set
forth in Exhibit A, as amended from time to time.
22. Notices. Except as otherwise provided in this Agreement, all
requests, demands or other communications between the parties or notices in
connection herewith (a) shall be in writing, hand delivered or sent by
registered mail, telex or facsimile addressed to such other address as shall
have been furnished by the receiving party pursuant to the provisions hereof and
(b) shall be deemed effective when received, or, in the case of a telex, when
sent to the proper number and acknowledged by a proper answerback.
23. Several Obligations of the Portfolios. With respect to any
obligations of the Customer on behalf of each Portfolio and each of its related
Accounts arising out of this Agreement, the Custodian shall look for payment or
satisfaction of any obligation solely to the assets and property of the
Portfolio and such Accounts to which such obligation relates as though the
Customer had separately contracted with the Custodian by separate written
instrument with respect to each Portfolio and its related Accounts.
24. Security for Payment. To secure payment of all obligations due
hereunder, the Customer hereby grants to Custodian a continuing security
interest in and right of setoff against each Account and all Property held
therein from time to time in the full amount of such obligations; provided that,
if there is more than one Account and the obligations secured pursuant to this
Section can be allocated to a specific Account or the Portfolio related to such
Account, such security interest and right of setoff will be limited to Property
held for that Account only and its related Portfolio. Should the Customer fail
to pay promptly any amounts owed hereunder, Custodian shall be entitled to use
available Cash in the Account or applicable Account, as the case may be, and to
dispose of Securities in the Account or such applicable Account as is necessary.
In any such case and without limiting the foregoing, Custodian shall be entitled
to take such other action(s) or exercise such other options, powers and rights
as Custodian now or hereafter has as a secured creditor under the New York
Uniform Commercial Code or any other applicable law.
25. Representations and Warranties.
(a) The Customer hereby represents and warrants to the Custodian that:
(i) the employment of the Custodian and the allocation of
fees, expenses and other charges to any Account as herein provided, is not
prohibited by law or any governing documents or contracts to which the Customer
is subject;
-12-
(ii) the terms of this Agreement do not violate any obligation
by which the Customer is bound, whether arising by contract, operation of law or
otherwise;
(iii) this Agreement has been duly authorized by appropriate
action and when executed and delivered will be binding upon the Customer and
each Portfolio in accordance with its terms; and
(iv) the Customer will deliver to the Custodian such evidence
of such authorization as the Custodian may reasonably require, whether by way of
a certified resolution or otherwise.
(b) The Custodian hereby represents and warrants to the Customer that:
(i) the terms of this Agreement do not violate any obligation
by which the Custodian is bound, whether arising by contract, operation of law
or otherwise;
(ii) this Agreement has been duly authorized by appropriate
action and when executed and delivered will be binding upon the Custodian in
accordance with its terms;
(iii) the Custodian will deliver to the Customer such evidence
of such authorization as the Customer may reasonably require, whether by way of
a certified resolution or otherwise; and
(iv) Custodian is qualified as a custodian under Section 26(a)
of the 1940 Act and warrants that it will remain so qualified or upon ceasing to
be so qualified shall promptly notify the Customer in writing.
26. Governing Law and Successors and Assigns. This Agreement shall be
governed by the law of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Custodian.
27. Publicity. Customer shall furnish to Custodian at its office
referred to in Section 22 above, prior to any distribution thereof, copies of
any material prepared for distribution to any persons who are not parties hereto
that refer in any way to the Custodian. Customer shall not distribute or permit
the distribution of such materials if Custodian reasonably objects in writing
within ten (10) business days of receipt thereof (or such other time as may be
mutually agreed) after receipt thereof. The provisions of this Section shall
survive the termination of this Agreement.
28. Submission to Jurisdiction. Any suit, action or proceeding arising
out of this Agreement may be instituted in any State or Federal court sitting in
the City of Xxx Xxxx, Xxxxx xx Xxx Xxxx, Xxxxxx Xxxxxx of America, and the
Customer irrevocably submits to the non-exclusive jurisdiction of any such court
in any such suit, action or proceeding and waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any such suit, action or proceeding brought in such a court and any
claim that such suit, action or proceeding was brought in an inconvenient forum.
29. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered by
each of the parties hereto.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
-13-
30. Confidentiality. The parties hereto agree that each shall treat
confidentially the terms and conditions of this Agreement and all information
provided by each party to the other regarding its business and operations. All
confidential information provided by a party hereto shall be used by any other
party hereto solely for the purpose of rendering services pursuant to this
Agreement and, except as may be required in carrying out this Agreement, shall
not be disclosed to any third party without the prior consent of such providing
party. The foregoing shall not be applicable to any information that is publicly
available when provided or thereafter becomes publicly available other than
through a breach of this Agreement, or that is required or requested to be
disclosed by any bank or other regulatory examiner of the Custodian, Customer,
or any Subcustodian, any auditor of the parties hereto, by judicial or
administrative process or otherwise by applicable law or regulation.
31. Severability. If any provision of this Agreement is determined to
be invalid or unenforceable, such determination shall not affect the validity or
enforceability of any other provision of this Agreement.
32. Headings. The headings of the paragraphs hereof are included for
convenience of reference only and do not form a part of this Agreement.
Dated as of: FLAG INVESTORS SERIES FUNDS, INC.
By:
-------------------------------------
Name: Xxx X. Xxxxxx
Title: Secretary
BANKERS TRUST COMPANY
By:
--------------------------------------
Name:
------------------------------------
Title:
----------------------------------
-14-
EXHIBIT A
To Custodian Agreement dated as of December 20, 2000 between Bankers
Trust Company and Flag Investors Series Funds, Inc.
LIST OF PORTFOLIOS
The following is a list of Portfolios referred to in the first WHEREAS
clause of the above-referred to Custodian Agreement. Terms used herein as
defined terms unless otherwise defined shall have the meanings ascribed to them
in the above-referred to Custodian Agreement.
Growth Opportunity Fund
Dated as of: FLAG INVESTORS SERIES FUNDS, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
BANKERS TRUST COMPANY
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
-15-
EXHIBIT B
To Custodian Agreement dated as of December 20, 2000 between Bankers
Trust Company and Flag Investors Series Funds, Inc.
PROXY SERVICE
The following is a description of the Proxy Service referred to in
Section 9 of the above referred to Custodian Agreement. Terms used herein as
defined terms shall have the meanings ascribed to them therein unless otherwise
defined below.
The Custodian provides a service, described below, for the transmission
of corporate communications in connection with shareholder meetings relating to
Securities held in Argentina, Australia, Austria, Canada, Cedel, Finland,
France, Germany, Greece, Hong Kong, Indonesia, Ireland, Italy, Japan, Korea,
Malaysia, Mexico, Netherlands New Zealand, Pakistan, Singapore, South Africa,
Spain, Sri Lanka, Sweden, Switzerland (only bearer shares), United Kingdom,
United States and Venezuela. For the United States and Canada, the term
"corporate communications" means the proxy statements or meeting agenda, proxy
cards, annual reports and any other meeting materials received by the Custodian.
For countries other than the United States and Canada, the term "corporate
communications" means the meeting agenda only and does not include any meeting
circulars, proxy statements or any other corporate communications furnished by
the issuer in connection with such meeting. Non-meeting related corporate
communications are not included in the transmission service to be provided by
the Custodian except upon request as provided below.
The Custodian's process for transmitting and translating meeting
agendas will be as follows:
1) If the meeting agenda is not provided by the issuer in the
English language, and if the language of such agenda is in the
official language of the country in which the related security
is held, the Custodian will as soon as practicable after
receipt of the original meeting agenda by a Subcustodian
provide an English translation prepared by that Subcustodian.
2) If an English translation of the meeting agenda is furnished,
the local language agenda will not be furnished unless
requested.
Translations will be free translations and neither the Custodian nor
any Subcustodian will be liable or held responsible for the accuracy thereof or
any direct or indirect consequences arising therefrom, including without
limitation arising out of any action taken or omitted to be taken based thereon.
If requested, the Custodian will, on a reasonable efforts basis,
endeavor to obtain any additional corporate communication such as annual or
interim reports, proxy statements, meeting circulars or local language agendas,
and provide them in the form obtained.
Timing in the voting process is important and, in that regard, upon
receipt by the Custodian of notice from a Subcustodian, the Custodian will
provide a notice to the Customer indicating the deadline for receipt of its
instructions to enable the voting process to take place effectively and
efficiently. As voting procedures will vary from market to market, attention to
any required procedures will be very important. Upon timely receipt of voting
instructions, the Custodian will promptly forward such instructions to the
applicable
-16-
Subcustodian. If voting instructions are not timely received, the Custodian
shall have no liability or obligation to take any action.
For Securities held in markets other than those set forth above, the
Custodian will not furnish the material described above or seek voting
instructions. However, if requested to exercise voting rights at a specific
meeting, the Custodian will endeavor to do so on a reasonable efforts basis
without any assurance that such rights will be so exercised at such meeting.
If the Custodian or any Subcustodian incurs extraordinary expenses in
exercising voting rights related to any Securities pursuant to appropriate
instructions or directions (e.g., by way of illustration only and not by way of
limitation, physical presence is required at a meeting and/or travel expenses
are incurred), such expenses will be reimbursed out of the Account unless other
arrangements have been made for such reimbursement.
It is the intent of the Custodian to expand the Proxy Service to
include jurisdictions which are not currently included as set forth above. The
Custodian will notify the Customer as to the inclusion of additional countries
or the deletion of existing countries after their inclusion or deletion and this
Exhibit B will be deemed to be automatically amended to include or delete such
countries as the case may be. Such notification may be by Global Custody Flash
Notice.
Notwithstanding anything in this Exhibit B to the contrary, the Custodian may
utilize third-party non-affiliated agents to perform any of the services
described herein.
-17-
EXHIBIT C
To Custodian Agreement dated as of December 20, 2000 between Bankers
Trust Company and Flag Investors Series Funds, Inc.
BANKERS TRUST CUSTODY FEE SCHEDULE
I. Account Maintenance Fees
DOMESTIC CUSTODY ACCOUNTS $1,200 PER ACCOUNT (HUB) PER YEAR
$600 PER ACCOUNT (SPOKE/3RD PARTY)
PER YEAR
Global Custody Accounts $6,000 per account (Hub) per year
-----------------------------------------------------------------------
$2,400 PER ACCOUNT (SPOKE/3RD PARTY)
PER YEAR
II. Domestic Custody Fees
SAFEKEEPING CHARGES
================================================ ======================
Country Assets Under Custody Annual
Asset Fee
------------------------------------------------ ----------------------
United States $0 - $2 Billion 1 Basis Point
------------------------------------------------ ----------------------
$2 - $3 Billion 0.75 Basis Points
------------------------------------------------ ----------------------
$3 - $10 Billion 0.50 Basis Points
------------------------------------------------ ----------------------
$10 Billion + 0.25 Basis Points
================================================ ======================
*To be calculated using the blended complex-wide assets under
custody formula currently employed by the BT Funds
TRANSACTION CHARGES
------------------------------------------ ----------------------------
Transaction Type Cost per Transaction
------------------------------------------ ----------------------------
DTC ID $4
------------------------------------------ ----------------------------
DTC Automated $6
------------------------------------------ ----------------------------
DTC Manual $8
------------------------------------------ ----------------------------
Federal Book Entry $10
------------------------------------------ ----------------------------
PTC $10
------------------------------------------ ----------------------------
Physicals $25
------------------------------------------ ----------------------------
Euro CD's $20
------------------------------------------ ----------------------------
Maturities (Depository) $10
------------------------------------------ ----------------------------
Maturities (Physical) $20
------------------------------------------ ----------------------------
P&I Payments (Book Entry) $5
------------------------------------------ ----------------------------
P&I Payments (Physical) $10
------------------------------------------ ----------------------------
Fed Wires (From Custody Account) $15
------------------------------------------ ----------------------------
Cash Tfrs Between Custody Accounts Free of Charge
------------------------------------------ ----------------------------
SHE (Shares Held Elsewhere) Trades $25
------------------------------------------ ----------------------------
-18-
III. Global Custody Fees
SAFEKEEPING & TRANSACTION CHARGES BY MARKET
========================== ======================= ====================
Country Annual Receive and Deliver
Asset Fee Transactions
-------------------------- ----------------------- --------------------
Argentina 35 Basis Points $100
-------------------------- ----------------------- --------------------
Australia 3 Basis Points $50
-------------------------- ----------------------- --------------------
Austria 5 Basis Points $75
-------------------------- ----------------------- --------------------
Bangladesh 40 Basis Points $150
-------------------------- ----------------------- --------------------
Belgium 4 Basis Points $60
-------------------------- ----------------------- --------------------
Botswana 50 Basis Points $150
-------------------------- ----------------------- --------------------
Brazil 25 Basis Points $70
-------------------------- ----------------------- --------------------
Canada 1.5 Basis Points $20
-------------------------- ----------------------- --------------------
Cedel/Euroclear 2.5 Basis Points $20
-------------------------- ----------------------- --------------------
Chile 30 Basis Points $80
-------------------------- ----------------------- --------------------
China 30 Basis Points $75
-------------------------- ----------------------- --------------------
Colombia 35 Basis Points $100
-------------------------- ----------------------- --------------------
Czech Republic 20 Basis Points $70
-------------------------- ----------------------- --------------------
Denmark 4 Basis Points $50
-------------------------- ----------------------- --------------------
Ecuador 45 Basis Points $100
-------------------------- ----------------------- --------------------
Egypt 45 Basis Points $80
-------------------------- ----------------------- --------------------
Finland 10 Basis Points $75
-------------------------- ----------------------- --------------------
France 4 Basis Points $50
-------------------------- ----------------------- --------------------
Germany 2 Basis Points $30
-------------------------- ----------------------- --------------------
Ghana 50 Basis Points $150
-------------------------- ----------------------- --------------------
Greece 35 Basis Points $120
-------------------------- ----------------------- --------------------
Hong Kong 5 Basis Points $30
-------------------------- ----------------------- --------------------
Hungary 45 Basis Points $150
-------------------------- ----------------------- --------------------
India (Physical) 60 Basis Points $200
-------------------------- ----------------------- --------------------
India (Dematerialized) 25 Basis Points $140
-------------------------- ----------------------- --------------------
Indonesia 8 Basis Points $35
-------------------------- ----------------------- --------------------
Ireland 5 Basis Points $50
-------------------------- ----------------------- --------------------
Israel 40 Basis Points $50
-------------------------- ----------------------- --------------------
Italy 3 Basis Points $50
-------------------------- ----------------------- --------------------
Japan 2.5 Basis Points $35
-------------------------- ----------------------- --------------------
Jordan 30 Basis Points $100
-------------------------- ----------------------- --------------------
Kenya 50 Basis Points $150
-------------------------- ----------------------- --------------------
Malaysia 7 Basis Points $50
-------------------------- ----------------------- --------------------
Mauritius 50 Basis Points $140
-------------------------- ----------------------- --------------------
Mexico 5 Basis Points $30
-------------------------- ----------------------- --------------------
Morocco 30 Basis Points $130
-------------------------- ----------------------- --------------------
Netherlands 4 Basis Points $45
-------------------------- ----------------------- --------------------
New Zealand 4 Basis Points $50
-------------------------- ----------------------- --------------------
Norway 5 Basis Points $50
-------------------------- ----------------------- --------------------
Pakistan 30 Basis Points $150
-------------------------- ----------------------- --------------------
Xxxx 00 Basis Points $100
-------------------------- ----------------------- --------------------
Philippines 8 Basis Points $30
-------------------------- ----------------------- --------------------
Poland 45 Basis Points $100
========================== ======================= ====================
-19-
========================== ======================= ====================
Portugal 4 Basis Points $75
-------------------------- ----------------------- --------------------
Russia 50 Basis Points $300
-------------------------- ----------------------- --------------------
Singapore 7 Basis Points $50
-------------------------- ----------------------- --------------------
Slovakia 25 Basis Points $100
-------------------------- ----------------------- --------------------
South Africa 3 Basis Points $30
-------------------------- ----------------------- --------------------
South Korea 15 Basis Points $50
-------------------------- ----------------------- --------------------
Spain 6 Basis Points $50
-------------------------- ----------------------- --------------------
Sri Lanka 12 Basis Points $60
-------------------------- ----------------------- --------------------
Sweden 4 Basis Points $50
-------------------------- ----------------------- --------------------
Switzerland 2 Basis Points $60
-------------------------- ----------------------- --------------------
Taiwan 15 Basis Points $100
-------------------------- ----------------------- --------------------
Thailand 7 Basis Points $100
-------------------------- ----------------------- --------------------
Xxxxxxx 00 Xxxxx Xxxxxx $50
-------------------------- ----------------------- --------------------
Turkey 15 Basis Points $50
-------------------------- ----------------------- --------------------
United Kingdom 1.5 Basis Points $15
-------------------------- ----------------------- --------------------
United States 1 Basis Point $15
-------------------------- ----------------------- --------------------
Venezuela 35 Basis Points $100
-------------------------- ----------------------- --------------------
Zambia 50 Basis Points $150
-------------------------- ----------------------- --------------------
Zimbabwe 50 Basis Points $150
========================== ======================= ====================
IV. RELATED CUSTODY ACCOUNT CHARGES
Credit Interest Rate: Fed Funds - 0.25%
Overdraft Rate: Fed Funds + 1.00%
**Overdrafts over a quarter-end will
incur a charge of Fed Funds + 2.50%
NOTES
-Market Values will be provided by the Fund Accountant at
month-end to determine monthly assets for billing purposes.
-A surcharge of $10 per trade will be added for the processing of
any facsimile transactions.
-The standard Global Custody Service includes: asset safekeeping, trade
settlement, income collection, corporate action processing including proxy
voting and tax reclaims where applicable.
-Contractual settlement of trades and posting of income will not be offered in
Russia due to the uncertainty of transaction settlement efficiencies in the
market. Contractual posting of income is not offered in India, Bangladesh,
Pakistan or Turkey due to local market practice. From time to time, Bankers
Trust contractual posting policy may be amended based on market conditions,
regulatory constraints, etc.
-All income receipts and tax reclaim refunds are credited to
client accounts net of agent's collection fees (where applicable).
-20-
-Third party FX transactions are charged $25 per non-U.S.
wire. No fee is levied for FX transactions executed with
Bankers Trust.
-The above fee schedule includes the cost of time spent on the
installation of the bank's proprietary software (Globeview ,
etc.), and one day of training on the system. The fee schedule
does not include the cost of any hardware, or the daily
communication charges which will be incurred by using these
systems. These costs are borne by the client.
-Out-of-pocket expenses are borne by the client. Out-of-pocket
expenses include but are not necessarily limited to: stamp
charges, duties, application and/or registration fees incurred
outside of the United States, the cost of building and/or setting
up an interface with your (i) investment managers, or (ii) other
vendors, as well as postage and legal fees. These charges are
passed on at cost.
-Fees are billed monthly in arrears.
-This fee schedule shall be valid for one year commencing on the
effective date.
-All fees are payable in full immediately upon receipt of an
invoice. Fees outstanding over 60 days will be assessed a late
payment charge.
This Exhibit C shall be amended upon delivery by the Custodian of a new Exhibit
C to the Customer and acceptance thereof by the Customer and shall be effective
as of the date of acceptance by the Customer or a date agreed upon between the
Custodian and the Customer.
Dated as of: FLAG INVESTORS SERIES FUNDS, INC.
By:
-------------------------------------
Name: Xxx X. Xxxxxx
Title: Secretary
BANKERS TRUST COMPANY
By:
-------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
-21-
EXHIBIT D
To Custodian Agreement dated as of December 20, 2000 between Bankers
Trust Company and Flag Investors Series Funds, Inc.
TAX RECLAIMS
Pursuant to Section 18 of the above referred to Custodian Agreement, the
Custodian shall perform the following services with respect to withholding taxes
imposed or which may be imposed on income from Property in the Account in
certain countries. Terms used herein as defined terms shall unless otherwise
defined have the meanings ascribed to them in the above referred to Custodian
Agreement.
When withholding tax has been deducted with respect to income from any
Property in an Account, the Custodian will actively pursue on a reasonable
efforts basis the reclaim process, provided that the Custodian shall not be
required to institute any legal or administrative proceeding against any
Subcustodian or other person. The Custodian will provide fully detailed
advices/vouchers to support reclaims submitted to the local authorities by the
Custodian or its designee. In all cases of withholding, the Custodian will
provide full details to the Customer. When the Custodian becomes aware of an
opportunity to obtain exemption, the Custodian will notify and advise the
Customer of the required documentation, if any, to obtain such exemption.
Provided that the Custodian can file the exemption on behalf of the Customer,
the Custodian will do so upon receipt of the completed appropriate
documentation. The Custodian will notify the Customer when such exemption has
been obtained.
In connection with providing the foregoing services, the Custodian
shall be entitled to apply categorical treatment of the Customer according to
the Customer's nationality, the particulars of its organization and other
relevant details that shall be supplied by the Customer. It shall be the duty of
the Customer to inform the Custodian of any change in the organization, domicile
or other relevant fact concerning tax treatment of the Customer and further to
inform the Custodian if the Customer is or becomes the beneficiary of any
special ruling or treatment not applicable to the general nationality and
category or entity of which the Customer is a party under general laws and
treaty provisions. The Custodian may rely on any such information provided by
the Customer.
In connection with providing the foregoing services, the Custodian may
also rely on professional tax services published by a major international
accounting firm and/or advice received from a Subcustodian in the jurisdictions
in question. In addition, the Custodian may seek the advice of counsel or other
professional tax advisers in such jurisdictions. The Custodian is entitled to
rely, and may act, on information set forth in such services and on advice
received from a Subcustodian, counsel or other professional tax advisers and
shall be without liability to the Customer for any action reasonably taken or
omitted pursuant to information contained in such services or such advice.
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EXHIBIT E
CASH MANAGEMENT ADDENDUM (this "Addendum") to the CUSTODIAN AGREEMENT
(the "Agreement") between BANKERS TRUST COMPANY (the "Custodian") and FLAG
INVESTORS SERIES FUNDS, INC. (the "Customer").
WHEREAS, the Custodian will provide cash management services to the
Customer, and the Custodian and the Customer desire to confirm their
understanding with respect to such services;
NOW, THEREFORE, the Custodian and the Customer agree as follows:
1. Until the Custodian receives Instructions to the contrary, the
Custodian will (a) hold with Subcustodians, in deposit accounts maintained for
the benefit of the Custodian's clients, all Cash received for the Account, (b)
credit such interest, if any, on Cash in the Account as the Custodian shall from
time to time determine and (c) receive compensation out of any amounts paid by
Subcustodians in respect of Cash in the Account.
2. The Custodian may (on an overnight or other short-term basis) move
certain, or all, currencies of Cash in the Account from any Subcustodian and
place it, as deposits or otherwise, with one or more other Subcustodians
(including branches and affiliates of the Custodian). The Custodian will notify
the Customer of any placement procedures it implements and will move Cash in
accordance with such procedures until it notifies the Customer otherwise or
receives Instructions to the contrary. The Custodian may credit interest and
receive compensation as described in 1 above with respect to any Cash moved. If
any Cash is held in an investment fund managed by Bankers Trust, it will notify
the fund (as opposed to the Customer) as provided herein with respect to such
Cash.
3. The Customer acknowledges that it has received and reviewed the
current policies of the Custodian regarding cash management services, which are
attached to this Addendum.
4. To the extent any of the Property or Cash in the Account is subject
to the Employee Retirement Income Security Act of 1974, the Customer (a)
represents and warrants that it, at all times during the duration of the
Agreement, will be a qualified professional asset manager as defined in the
prohibited transaction exemption 84-14 and that the provisions of the exemption
apply to the Agreement (and transactions thereunder) and (b) agrees to maintain
such records as are necessary to comply with the exemption or to enable
interested persons to determine that the conditions of the exemption are met.
5. Capitalized terms used but not defined in this Addendum are used
with the respective meanings assigned to them in the Agreement.
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IN WITNESS WHEREOF, this Addendum has been executed as of the date of
the Agreement. BANKERS TRUST COMPANY
By:
-------------------------------------
FLAG INVESTORS SERIES FUNDS, INC.
By:
-------------------------------------
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Global Custody Cash Management Program
In the Global Custody cash management program, currencies on which
Bankers Trust pays interest are divided into two categories: (1) currencies on
which we pay interest based on a market benchmark rate for overnight deposits,
and (2) currencies on which we pay interest based on a rate paid by the London
branch of Deutsche Bank AG or the local subcustodian.
Currencies on which we pay interest based on a market benchmark rate
for overnight deposits (which we call "Benchmark Rate Currencies"):
o For each of these currencies, the interest rate we pay is
based on a specific market benchmark (such as Effective Fed
Funds) and is calculated by taking an average of the benchmark
rate and subtracting a spread. (See Schedule A)
o Currently, the only Benchmark Rate Currency is the U.S.
Dollar. Over time we will be considering additional currencies
to include in this category.
o Operationally, most balances in U.S. Dollars are swept
overnight into deposits at the Nassau branch of Bankers Trust
Company. Where you have selected a short-term investment fund,
your U.S. Dollar balances in the U.S. will be swept overnight
in accordance with your instructions.
Currencies on which we pay interest based on a rate paid by the London
branch of Deutsche Bank AG or the local subcustodian (which we call "Base Rate
Currencies"):
o For each of these currencies, the interest rate we pay is
based on the rate paid by the London branch of Deutsche Bank
AG or the local subcustodian on overnight deposits in the
currency. In either case, interest is calculated by using the
overnight rate (which will be the actual overnight, a weekly
average, monthly average rate, depending on the month and
currency) and subtracting a spread. (See Schedule A)
o Currencies that are part of the sweep program will earn
interest based on the base rate, which will be the higher of
the rate offered by the London branch of Deutsche Bank AG or
the local subcustodian.
o Currencies that are not part of the sweep program will
generally earn interest based on the rate paid by the local
subcustodian. We may at times be able to sweep certain
currency balances into deposits of Deutsche Bank AG's London
branch in order to be able to earn a higher rate for you. On
those days, any such currency will be treated as part of the
sweep program, and you will earn interest on all of your
balances in that currency at the higher rate for that day.
o Currently, there are 30 Base Rate Currencies, 10 of which are
included in our sweep program to the London branch of Deutsche
Bank AG.
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o Operationally, most balances in Base Rate Currencies that are
part of our sweep program are swept overnight into deposits at
the London branch of Deutsche Bank AG, while balances in Base
Rate Currencies that are not part of our sweep program remain
with the local subcustodian.
For each currency on which we pay interest:
o We will notify you periodically in writing of changes in
spreads and updates to the cash management program. These
program updates also will be available through Global Custody
Flash Notices.
o For markets where we maintain one or more omnibus cash
accounts, you earn interest at the calculated rate on your
entire contractual balance without any action on your part and
without any minimum balance requirements. This is the case
regardless of whether we are able to invest your balances at
or near the applicable benchmark or base rate and regardless
of whether your contractual balance may exceed your actual
balance.
o For markets where we maintain one or more omnibus cash
accounts, the minimum rate paid is 0.50%, except for the
Japanese Yen (for which the minimum rate of 0.05% has been
suspended for the time being due to market conditions) and the
Singapore Dollar (for which the minimum rate is 0.25%). Please
note that this is also subject to change as appropriate for
any currency. Notwithstanding the foregoing, in no event will
interest be negative.
o For the currencies of "client specific markets," those markets
where for regulatory or other reasons we do not maintain
omnibus accounts for client cash, on which we pay credit
interest (which at this time are the Hungarian Forint, Israeli
Shekel, Polish Zloty, Korean Won and Taiwanese Dollar), we
will no longer be taking a spread for providing interest on
cash balances. The credit interest you earn on overnight
balances will be based on actual balances, as opposed to
contractual balances, and the minimum credit interest rate
will no longer be applied.
o You will have continuous access through Globe*View, BTWorld,
or Globe*Link or other agreed electronic on-line system to the
interest rate earned during the previous "rate averaging
period". Because we may use weekly or monthly average rates to
calculate the interest you earn, we do not know the actual
interest rate until the weekly or monthly period is completed.
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o Our program generally requires that overnight balances in each
currency remain with (or are swept to) a subcustodian we
designate for that currency. Nevertheless, we pay our stated
rate of interest on any balances that, because of transactions
in your account, are held overnight with an alternate
subcustodian if we receive interest on that currency from that
subcustodian. If the alternate subcustodian does not pay
interest, however, these balances are excluded from our
program.
o For swept currencies, from time to time we may not be able to
sweep the full amount of your balances to the London branch of
Deutsche Bank AG because of operational constraints or because
your balance on a contractual basis temporarily exceeds your
actual balance. You will, however, always receive credit for
interest based on your entire contractual balance. To the
extent you would have earned a lower rate on balances not
swept, we will make up the difference. To the extent that
actual balances are higher than contractually posted balances
due to purchase fails or otherwise, we will retain the
interest earned as compensation.
o The effective rate we pay on overnight balances will generally
differ from the effective rate we receive (whether from the
London branch of Deutsche Bank AG or the local subcustodian).
Any difference between the effective rate we receive and the
effective rate we pay (which may be positive or negative, but
is generally positive) is kept by us and covers our fee for
running the cash management program and the related costs we
absorb.
Obviously, there will be currencies on which we will not pay interest
because of local regulations, insufficient scale, or other reasons. However, we
hope to identify additional currencies where we can begin paying interest and we
will announce those to you as soon as practical.
Currently most cash balances in our overnight sweep program are swept
into deposits at the London branch of Deutsche Bank AG. We reserve the right to
utilize other branches or affiliates for the overnight sweep program. In the
event of such change, we will notify you in writing, which may be through Global
Custody Flash Notice.
As you know, overdrafts are not permitted in the normal course of
business in any currency. Should they occur in any currency, your account will
be charged a fee to settle transactions in advance of receipt of funds. If the
overdraft is not promptly cured (and in any event upon the expiration of 30
days) after the investment manager has been notified of the outstanding
overdraft, the account's home currency will be used to cure the overdraft and
the associated foreign exchange will be done by Bankers Trust at market rates.
(Other currencies may be utilized to the extent the home currency is
insufficient.) Investment managers that have not cured overdrafts within such
period will be deemed to have directed such foreign exchange transaction.
Accounts subject to ERISA will be deemed to have engaged in the transaction
under the authority of the class exemptions available to qualified professional
asset managers and in-house investment managers. To the extent that the
overdraft is less than the U.S. dollar equivalent of $50,000, Bankers Trust's
foreign exchange desk will bundle the transaction with other small amounts for
other clients.
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Schedule A
Cash Management Program - Global Custody
Overnight Uninvested Cash Balances
(* - Denotes currencies in sweep program)
Currencies Rates
---------- -----
Argentine Peso Base Rate less 100
Australian Dollar* Base Rate less 130
British Pound Sterling* Base Rate less 165
Canadian Dollar* Base Rate less 150
Czech Koruna Base Rate less 75
Danish Krone* Base Rate less 100
EMU Euro* Base Rate less 150
Greek Drachma Base Rate less 75
Hong Kong Dollar* Base Rate less 225
Hungarian Forint Base Rate less 0
Indonesian Rupiah Base Rate less 100
Israeli Shekel Base Rate less 0
Japanese Yen Base Rate less 75
Jordanian Dinar Base Rate less 150
Korean Won Base Rate less 0
Malaysian Ringgit1 Base Rate less 150
Mexican Peso Base Rate less 150
Moroccan Dirham Base Rate less 150
New Taiwan Dollar Base Rate less 0
New Zealand Dollar Base Rate less 100
Norwegian Krone* Base Rate less 150
Philippine Peso Base Rate less 100
Polish Zloty Base Rate less 0
Singapore Dollar Base Rate less 000
Xxxxxx Koruna Base Rate less 100
South African Rand* Base Rate less 200
Swedish Krona* Base Rate less 200
Swiss Franc* Base Rate less 100
Thai Baht Base Rate less 150
Turkish Lira Base Rate less 75
U.S. Dollar* Effective Fed Funds less 100(2)
We reserve the right, in our sole discretion, to adjust the base rates and
benchmark rates used and the spreads charged at any time and for any reason. We
will notify you periodically in writing of changes in spreads and updates to the
cash management program. These program updates also will be available through
Global Custody Flash Notices.
(1) As a result of the rules introduced by local Malaysia regulators, we have
suspended paying interest on Ringgit balances. Should the situation change,
we will notify you via Flash Notice.
(2) Not applicable if U.S. Dollars are swept to a short-term investment fund.
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