1
EXHIBIT 8(a)
Custodian Services Agreement
----------------------------
2
EXHIBIT 8(a)
CUSTODIAN SERVICES AGREEMENT
----------------------------
This Agreement is made as of July 24, 1998 by and between
NATIONAL CITY BANK (the "Custodian") and THE PARKSTONE GROUP OF FUNDS, a
Massachusetts business trust (the "Fund").
The Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act").
The Fund wishes to retain the Custodian to provide custodian services to each of
its investment portfolios, as listed on Exhibit A attached hereto and as such
Exhibit A may be amended from time to time (the "Portfolios"), and the Custodian
wishes to furnish custodian services, either directly or though an affiliate or
affiliates, as more fully described herein.
In consideration of the promises and mutual covenants herein
contained, the parties agree as follows:
1. Definitions.
(a) "Authorized Person" shall mean any officer of the
Fund and any other person, who is duly authorized by the Fund's Board of
Trustees, to give Oral and Written Instructions on behalf of the Fund. Such
persons are listed in the Certificate attached hereto as the Authorized Persons
Appendix as such appendix may be amended in writing by the Fund's Board of
Trustees from time to time.
(b) "Book-Entry System" shall mean Federal Reserve
Treasury book-entry system for United States and federal agency securities, its
successor or successors, and its nominee or nominees and any book-entry system
maintained by an exchange registered with the SEC under the 1934 Act.
(c) "CFTC" shall mean the Commodities Futures Trading
Commission.
(d) "Oral Instructions" shall mean oral instructions
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person.
(e) "Custodian" shall mean National City Bank or a
subsidiary or affiliate of National City Bank.
(f) "SEC" shall mean the Securities and Exchange
Commission.
1
3
(g) "Securities and Commodities Laws" shall mean the
Securities Act of 1933, as amended (the "1933 Act"), the Securities Exchange Act
of 1934, as amended (the "1934 Act"), the 1940 Act, and the Commodities Exchange
Act, as amended (the "CEA").
(h) "Shares" shall mean the units of beneficial
interest of the Fund.
(i) "Property" shall mean:
(i) any and all securities and other
investment items which the Fund may
from time to time deposit, or cause
to be deposited, with the Custodian
or which the Custodian may from
time to time hold for any
Portfolio;
(ii) all income in respect of any of
such securities or other investment
items;
(iii) all proceeds of the sale of any of
such securities or investment
items; and
(iv) all proceeds of the sale of
securities issued by the Fund,
which are received by the Custodian
from time to time, from or on
behalf of the Fund.
(j) "Written Instructions" shall mean written
instructions signed by one Authorized Person and received by the Custodian. The
instructions may be delivered by hand, mail, tested telegram, cable, telex or
facsimile sending device.
2. Appointment. The Fund hereby appoints the Custodian to
provide custodian services to each of the Portfolios, and the Custodian accepts
such appointment and agrees to furnish such services.
3. Delivery of Documents. The Fund has provided or, where
applicable, will provide the Custodian with the following:
(a) certified or authenticated copies of the
resolutions of the Fund's Board of Trustees,
2
4
approving the appointment of the Custodian
or its affiliates to provide services;
(b) a copy of the Fund's most recent effective
registration statement;
(c) a copy of each Portfolio's advisory
agreement or agreements;
(d) a copy of each Portfolio's distribution
agreement or agreements;
(e) a copy of each Portfolio's transfer agency
agreement or agreements;
(f) copies of any shareholder servicing
agreements made in respect of the Fund or
any Portfolio; and
(g) certified or authenticated copies of any and
all amendments or supplements to the
foregoing.
4. Compliance with Government Rules and Regulations. The
Custodian undertakes to comply with all applicable requirements of the 1933 Act,
the 1934 Act, the 1940 Act, and the CEA, and any laws, rules and regulations of
governmental authorities having jurisdiction with respect to all duties to be
performed by the Custodian hereunder. Except as specifically set forth herein,
the Custodian assumes no responsibility for such compliance by the Fund.
5. Instructions. Unless otherwise provided in this Agreement,
the Custodian shall act only upon Oral and Written Instructions. The Custodian
shall be entitled to rely upon any Oral and Written Instructions it receives
from an Authorized Person (or from a person reasonably believed by the Custodian
to be an Authorized Person) pursuant to this Agreement. The Custodian may assume
that any Oral or Written Instructions received hereunder are not in any way
inconsistent with the provisions of organizational documents of the Fund or of
any vote, resolution or proceeding of the Fund's Board of Trustees or of the
Fund's shareholders.
The Fund agrees to forward to the Custodian Written
Instructions confirming Oral Instructions so that the Custodian receives the
Written Instructions by the close of business on the same day that such Oral
Instructions are received. The fact that such confirming Written Instructions
are not received by the Custodian shall in no way invalidate the transactions or
3
5
enforceability of the transactions authorized by the Oral Instructions.
The Fund further agrees that the Custodian shall incur no
liability to the Fund or any Portfolio in acting upon Oral or Written
Instructions provided such instructions reasonably appear to have been received
from an Authorized Person.
6. Right to Receive Advice.
(a) Advice of the Fund. If the Custodian is in doubt
as to any action it should or should not take, the Custodian may request
directions or advice, including Oral or Written Instructions, from the Fund.
(b) Advice of Counsel. If the Custodian shall be in
doubt as to any questions of law pertaining to any action it should or should
not take, the Custodian may request advice at its own cost from such counsel of
its own choosing (who may be counsel for the Fund, the Fund's adviser or the
Custodian, at the option of the Custodian).
(c) Conflicting Advice. In the event of a conflict
between directions, advice or Oral or Written Instructions the Custodian
receives from the Fund, and the advice it receives from counsel, the Custodian
shall be entitled to rely upon and follow the advice of counsel.
(d) Protection of the Custodian. The Custodian shall
be protected in any action it takes or does not take in reliance upon
directions, advice or Oral or Written Instructions it receives from the Fund or
from counsel and which the Custodian believes, in good faith, to be consistent
with those directions, advice or Oral or Written Instructions.
Nothing in this paragraph shall be construed so as to impose
an obligation upon the Custodian (i) to seek such directions, advice or Oral or
Written Instructions, or (ii) to act in accordance with such directions, advice
or Oral or Written Instructions unless, under the terms of other provisions of
this Agreement, the same is a condition of the Custodian's properly taking or
not taking such action.
7. Records. The books and records pertaining to the Fund and
the Portfolios, which are in the possession of the Custodian, shall be the
property of the Fund. Such books and records shall be prepared and maintained as
required by the 1940 Act and other applicable securities laws, rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records at all times during the
4
6
Custodian's normal business hours. Upon the reasonable request of the Fund,
copies of any such books and records shall be provided by the Custodian to the
Fund or to an authorized representative of the Fund, at the Fund's expense.
8. Confidentiality. The Custodian agrees to keep confidential
all records of the Fund and the Portfolios and information relative to the Fund,
the Portfolios and the shareholders (past, present and potential), unless the
release of such records or information is otherwise consented to, in writing, by
the Fund. The Fund further agrees that, should the Custodian be required to
provide such information or records to duly constituted authorities (who may
institute civil or criminal contempt proceedings for failure to comply), the
Custodian shall not be required to seek the Fund's consent prior to disclosing
such information; provided that the Custodian gives the Fund prior written
notice of the provision of such information and records.
9. Cooperation with Accountants. The Custodian shall cooperate
with the Fund's independent public accountants and shall take all reasonable
action in the performance of its obligations under this Agreement to ensure that
the necessary information is made available to such accountants for the
expression of their opinion, as required by the Fund.
10. Disaster Recovery. The Custodian shall enter into and
shall maintain in effect with appropriate parties one or more agreements making
reasonable provision for emergency use of electronic data processing equipment
to the extent appropriate equipment is available. In the event of equipment
failures, the Custodian shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions but shall have no liability
with respect thereto unless such failures result from the Custodian's own
willful misfeasance, bad faith, gross negligence, negligence or reckless
disregard of its duties and obligations under this Agreement.
11. Compensation. As compensation for custody services
rendered by the Custodian during the term of this Agreement, the Fund will pay
to the Custodian a fee or fees as may be agreed to in writing from time to time
by the Fund and the Custodian.
12. Indemnification. The Fund, on behalf of each of the
Portfolios, agrees to indemnify and hold harmless the Custodian and its nominees
from all taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, liabilities arising under the 1933 Act, the 1934
Act, the 1940 Act, the CEA, and any state and foreign securities and
5
7
blue sky laws, and amendments thereto), and expenses, including (without
limitation) reasonable attorneys' fees and disbursements, arising directly or
indirectly from any action which the Custodian takes or does not take (i) at the
request or on the direction of or in reliance on the advice of the Fund or (ii)
upon Oral or Written Instructions. Neither the Custodian, nor any of its
nominees, shall be indemnified against any liability to the Fund or to its
shareholders (or any expenses incident to such liability) arising out of the
Custodian's or its nominees' own willful misfeasance, bad faith, negligence or
reckless disregard of its duties and obligations under this Agreement.
In the event of any advance of cash for any purpose made by
the Custodian resulting from Oral or Written Instructions of the Fund, or in the
event that the Custodian or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in respect of the Fund or
any Portfolio in connection with the performance of this Agreement, except such
as may arise from its or its nominee's own negligent action, negligent failure
to act or willful misconduct, any Property at any time held for the account of
the relevant Portfolio or the Fund shall be security therefor.
13. Responsibility of the Custodian. The Custodian shall be
under no duty to take any action on behalf of the Fund except as specifically
set forth herein or as may be specifically agreed to by the Custodian, in
writing. The Custodian shall be obligated to exercise care and diligence in the
performance of its duties hereunder, to act in good faith and to use its best
efforts, within reasonable limits, in performing Services provided for under
this Agreement. The Custodian shall be responsible for its own or its nominees'
(including without limitation foreign sub-custodians approved by the Fund) own
willful misfeasance, bad faith, negligence or reckless disregard of its duties
and obligations under this Agreement or the Custodian's own negligent failure to
perform its duties under this Agreement. Notwithstanding the foregoing, the
Custodian shall not be responsible for losses beyond its control, provided that
the Custodian has acted in accordance with the standard of care set forth above;
and provided further that the Custodian shall only be responsible for that
portion of losses or damages suffered by the Fund or any Portfolio attributable
to the negligence of the Custodian.
Without limiting the generality of the foregoing or of any
other provision of this Agreement, the Custodian, in connection with its duties
under this Agreement, shall not be under any duty or obligation to inquire into
and shall not be liable for (a) the validity or invalidity or authority or lack
6
8
thereof of any Oral or Written Instruction, notice or other instrument which
conforms to the applicable requirements of this Agreement, and which the
Custodian reasonably believes to be genuine; or (b) delays or errors or loss of
data occurring by reason of circumstances beyond the Custodian's control,
including acts of civil or military authority, national emergencies, fire, flood
or catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply, nor shall the Custodian be under
any duty or obligation to ascertain whether any Property at any time delivered
to or held by the Custodian may properly be held by or for the Fund or any
Portfolio. Notwithstanding the foregoing, the Custodian shall use its best
efforts to mitigate the effects of the events in clause (b) above, although such
efforts shall not impute any liability thereto.
14. Description of Services.
(a) Delivery of the Property. The Fund will deliver
or arrange for delivery to the Custodian, all the property it owns, including
cash received as a result of the distribution of its Shares, during the period
that is set forth in this Agreement. The Custodian will not be responsible for
such property until actual receipt.
(b) Receipt and Disbursement of Money. The Custodian,
acting upon Written Instructions, shall open and maintain a separate account in
the name of the Fund on behalf of each Portfolio using all cash received from or
for the account of any Portfolio, subject to the terms of this Agreement.
The Custodian shall make cash payments to or from the accounts
of a Portfolio only for:
(i) purchases of securities in the name
of a Portfolio or the Custodian or
the Custodian's nominee as provided
in sub-paragraph j and for which
the Custodian has received a copy
of the broker's or dealer's
confirmation or payee's invoice, as
appropriate;
(ii) purchase or redemption of Shares of
the Fund delivered to the
Custodian;
(iii) payment of, subject to Written
Instructions, interest, dividends,
taxes, administration, accounting,
distribution, advisory, management
7
9
fees or similar expenses which are
to be borne by the Fund or any
Portfolio;
(iv) payment to, subject to receipt of
Written Instructions, the Fund's
transfer agent, as agent for the
shareholders, an amount equal to
the amount of dividends and
distributions stated in the Written
Instructions to be distributed in
cash by the transfer agent to
shareholders, or, in lieu of paying
the Fund's transfer agent, the
Custodian may arrange for the
direct payment of cash dividends
and distributions to shareholders
in accordance with procedures
mutually agreed upon from time to
time by and among the Fund, the
Custodian and the Fund's transfer
agent;
(v) payments, upon receipt of Written
Instructions, in connection with
the conversion, exchange or
surrender of securities owned or
subscribed to by a Portfolio and
held by or delivered to the
Custodian;
(vi) payments of the amounts of
dividends received with respect to
securities sold short;
(vii) payments made to a sub-custodian
pursuant to provisions in
sub-paragraph c of this Paragraph
14; and
(viii) payments, upon Written Instructions
made for other proper Fund
purposes.
The Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received as custodian
for the account of the Fund or any Portfolio.
8
10
(c) Receipt of Securities.
(i) The Custodian shall hold all
securities and non cash property
received by it for the account of a
Portfolio in a separate account
that physically segregates such
securities from those of any other
Portfolio, persons, firms or
corporations. All such securities
and property shall be held or
disposed of only upon Written
Instructions of the Fund pursuant
to the terms of this Agreement. The
Custodian shall have no power or
authority to withdraw, deliver,
assign, hypothecate, pledge or
otherwise dispose of any such
securities or investment, except
upon the express terms of this
Agreement and upon Written
Instructions, accompanied by a
certified resolution of the Fund's
Board of Trustees, authorizing the
transaction. In no case may any
member of the Fund's Board of
Trustees, or any officer, employee
or agent of the Fund withdraw any
securities.
At the Custodian's own expense and
for its own convenience, the
Custodian may enter into
sub-custodian agreements with other
United States banks or trust
companies to perform duties
described in this sub-paragraph c.
Such bank or trust company shall
have an aggregate capital, surplus
and undivided profits, according to
its last published report, of at
least one million dollars
($1,000,000), if it is a subsidiary
or affiliate of the Custodian, or
at least twenty million dollars
($20,000,000) if such bank or trust
company is not a subsidiary or
affiliate of the Custodian. In
addition, the Fund may authorize
the Custodian to employ one or more
9
11
sub-custodians for the Fund's
securities and other assets
maintained outside the United
States. Any such domestic or
foreign sub-custodian must be
qualified to act as custodian and
agree to comply with the relevant
provisions of the 1940 Act and
applicable rules and regulations.
No such arrangement will be entered
into without prior written approval
of the Fund.
The Custodian shall remain
responsible for the performance of
all of its duties as described in
this Agreement and shall be liable
to the Fund for, and shall
indemnify and hold the Fund and
each Portfolio harmless from, its
own acts or omissions and those of
any domestic or foreign
sub-custodian, under the standards
of care provided for herein.
The Fund may appoint or request the
Custodian to appoint certain
sub-custodians with respect to
(including but not limited to) the
facilitation of three party
repurchase agreements. In such an
event, the Custodian shall not be
responsible for the performance or
actions and omissions of any such
sub-custodian.
(d) Transactions Requiring Instructions. Upon receipt
of Oral or Written Instructions and not otherwise, the Custodian, directly or
through the use of the Book-Entry System, shall:
(i) deliver any securities held for a
Portfolio against the receipt of
payment for the sale of such
securities;
(ii) execute and deliver to such persons
as may be designated in such Oral
or Written Instructions, proxies,
consents, authorizations, and any
other instruments whereby the
10
12
authority of any Portfolio as owner
of any securities may be exercised;
(iii) deliver any securities to the
issuer thereof, or its agent, when
such securities are called,
redeemed, retired or otherwise
become payable; provided that, in
any such case, the cash or other
consideration is to be delivered to
the Custodian;
(iv) deliver any securities held for a
Portfolio against receipt of other
securities or cash issued or paid
in connection with the liquidation,
reorganization, refinancing, tender
offer, merger, consolidation or
recapitalization of any
corporation, or the exercise of any
conversion privilege;
(v) deliver any securities held for a
Portfolio to any protective
committee, reorganization committee
or other person in connection with
the reorganization, refinancing,
merger, consolidation,
recapitalization or sale of assets
of any corporation, and receive and
hold under the terms of this
Agreement such certificates of
deposit, interim receipts or other
instruments or documents as may be
issued to it to evidence such
delivery;
(vi) make such transfer or exchanges of
the assets of the Fund and take
such other steps as shall be stated
in said Oral or Written
Instructions to be for the purpose
of effectuating a duly authorized
plan of liquidation,
reorganization, merger,
consolidation or recapitalization
of the Fund;
(vii) release securities belonging to a
Portfolio to any bank or trust
company for the purpose of a pledge
11
13
or hypothecation to secure any loan
incurred by a Portfolio; provided,
however, that securities shall be
released only upon payment to the
Custodian of the monies borrowed,
except that in cases where
additional collateral is required
to secure a borrowing already made
subject to proper prior
authorization, further securities
may be released for that purpose;
and repay such loan upon redelivery
to it of the securities pledged or
hypothecated therefor and upon
surrender of the note or notes
evidencing the loan;
(viii) release and deliver securities
owned by a Portfolio in connection
with any repurchase agreement
entered into on behalf of the Fund,
but only on receipt of payment
therefor; and pay out moneys of
such Portfolio in connection with
such repurchase agreements, but
only upon the delivery of the
securities;
(ix) release and deliver or exchange
securities owned by a Portfolio in
connection with any conversion of
such securities, pursuant to their
terms, into other securities;
(x) release and deliver securities
owned by a Portfolio for the
purpose of redeeming in kind shares
of the Fund upon delivery thereof
to the Custodian; and
(xi) release and deliver or exchange
securities owned by a Portfolio for
other corporate purposes.
The Custodian must also receive a
certified resolution describing the
nature of the corporate purpose and
the name and address of the
person(s) to whom delivery shall be
12
14
made when such action is pursuant
to sub-paragraph d.
(e) Use of Book-Entry System. The Fund shall deliver
to the Custodian certified resolutions of the Fund's Board of Trustees
approving, authorizing and instructing the Custodian on a continuous and
on-going basis, to deposit in the Book-Entry System all securities belonging to
a Portfolio eligible for deposit therein and to utilize the Book-Entry System to
the extent possible in connection with settlements of purchases and sales of
securities by the Portfolios, and deliveries and returns of securities loaned,
subject to repurchase agreements or used as collateral in connection with
borrowings. The Custodian shall continue to perform such duties until it
receives Written or Oral Instructions authorizing contrary actions(s).
To administer the Book-Entry System properly, the following
provisions shall apply:
(i) With respect to securities of the
Fund which are maintained in the
Book-Entry system, established
pursuant to this sub-paragraph e
hereof, the records of the
Custodian shall identify by
Book-Entry or otherwise those
securities belonging to each
Portfolio. The Custodian shall
furnish the Fund a detailed
statement of the Property held for
each Portfolio under this Agreement
at least monthly and from time to
time and upon written request.
(ii) Securities and any cash of each
Portfolio deposited in the
Book-Entry System will at all times
be segregated from any assets and
cash controlled by the Custodian in
other than a fiduciary or custodian
capacity but may be commingled with
other assets held in such
capacities. The Custodian and its
sub-custodian, if any, will pay out
money only upon receipt of
securities and will deliver
securities only upon the receipt of
money.
13
15
(iii) All books and records maintained by
the Custodian which relate to the
Fund's participation in the
Book-Entry System will at all times
during the Custodian's regular
business hours be open to the
inspection of the Fund's duly
authorized employees or agents, and
the Fund will be furnished with all
information in respect of the
services rendered to it as it may
require.
(iv) The Custodian will provide the Fund
with copies of any report obtained
by the Custodian on the system of
internal accounting control of the
Book-Entry System promptly after
receipt of such a report by the
Custodian.
The Custodian will also provide the Fund with such reports on
its own system of internal control as the Fund may reasonably request from time
to time.
(f) Registration of Securities. All Securities held
for a Portfolio which are issued or issuable only in bearer form, except such
securities held in the Book-Entry System, shall be held by the Custodian in
bearer form; all other securities held for a Portfolio may be registered in the
name of the Fund on behalf of a Portfolio, the Custodian, the Book-Entry System,
a sub-custodian, or any duly appointed nominees of a Portfolio, the Custodian,
Book-Entry system or sub-custodian. The Fund reserves the right to instruct the
Custodian as to the method of registration and safekeeping of the securities of
a Portfolio. The Fund agrees to furnish to the Custodian appropriate instruments
to enable the Custodian to hold or deliver in proper form for transfer, or to
register its registered nominee or in the name of the Book-Entry System, any
securities which it may hold for the account of any Portfolio and which may from
time to time be registered in the name of the Fund on behalf of a Portfolio. The
Custodian shall hold all such securities which are not held in the Book-Entry
System in a separate account for each Portfolio in the name of the Fund on
behalf of the relevant Portfolio physically segregated at all times from those
of any other person or persons.
(g) Voting and Other Action. Neither the Custodian
nor its nominee shall vote any of the securities held pursuant to this Agreement
by or for the account of any
14
16
Portfolio, except in accordance with Written Instructions. The Custodian,
directly or through the use of the Book-Entry System, shall execute in blank and
promptly deliver all notice, proxies, and proxy soliciting materials to the
registered holder of such securities. If the registered holder is not the Fund
on behalf of a Portfolio, then Written or Oral Instructions must designate the
person who owns such securities.
(h) Transactions Not Requiring Instructions. In the
absence of contrary Written Instructions, the Custodian is authorized to take
the following actions:
(i) Collection of Income and Other
Payments.
(A) collect and receive for the
account of each Portfolio, all
income, dividends, distributions,
coupons, option premiums, other
payments and similar items,
included or to be included in the
Property, and, in addition,
promptly advise the Fund of such
receipt and credit such income,
as collected, to the Portfolio's
custodian account;
(B) endorse and deposit for
collection, in the name of each
Portfolio, checks, drafts, or
other orders for the payment of
money;
(C) receive and hold for the accounts
of each Portfolio all securities
received as a distribution on
that Portfolio's portfolio
securities as a result of a stock
dividend, share split-up or
reorganization, recapitalization,
readjustment or other
rearrangement or distribution of
rights or similar securities
issued with respect to any
portfolio securities belonging to
a Portfolio held by the Custodian
hereunder;
(D) present for payment and collect
the amount payable upon all
securities which may mature or be
called, redeemed or retired, or
otherwise become payable on the
date such securities become
payable; and
15
17
(E) take any action which may be
necessary and proper in
connection with the collection
and receipt of such income and
other payments and the
endorsement for collection of
checks, drafts, and other
negotiable instruments.
(ii) Miscellaneous Transactions.
(A) The Custodian is authorized to
deliver or cause to be delivered
Property against payment or other
consideration or written receipt
therefor, in the following cases:
(1) for examination by a broker
or dealer selling for the
account of a Portfolio in
accordance with street
delivery custom;
(2) for the exchange of interim
receipts or temporary
securities for definitive
securities; and
(3) for transfer of securities
into name of the Fund on
behalf of a Portfolio or the
Custodian or nominee of
either, or for exchange of
securities for a different
number of bonds,
certificates,or other
evidence, representing the
same aggregate face amount or
number of units bearing the
same interest rate, maturity
date and call provisions, if
any, provided that, in any
such case, the new securities
are to be delivered to the
Custodian.
(B) Unless and until the Custodian
receives Oral or Written
instructions to the contrary, the
Custodian shall:
16
18
(1) pay all income items held by
it which call for payment
upon presentation and hold
the cash received by it upon
such payment for the account
of each Portfolio;
(2) collect interest and cash
dividends received, with
notice to the Fund, to the
account of each Portfolio;
(3) hold for the account of each
Portfolio all stock
dividends, rights and similar
securities issued with
respect to any securities
held by the Custodian; and
(4) execute as agent on behalf of
the Fund all necessary
ownership certificates
required by the Internal
Revenue Code or the Income
Tax Regulations of the United
States Treasury Department or
under the laws of any State
now or hereafter in effect,
inserting the Fund's name on
behalf of any Portfolio on
such certificate as the owner
of the securities covered
thereby, to the extent it may
lawfully do so.
(i) Segregated Accounts.
(i) The Custodian shall upon receipt of
Written or Oral Instructions
establish and maintain segregated
accounts on its records for and on
behalf of each Portfolio. Such
accounts may be used to transfer
cash and securities, including
securities in the Book-Entry
System:
(A) for the purposes of compliance by
the Fund with the procedures
required by a securities or
option
17
19
exchange, providing such
procedures comply with the 1940
Act and any releases of the SEC
relating to the maintenance of
segregated accounts by registered
investment companies; and
(B) Upon receipt of Written
Instructions, for other proper
corporate purposes.
(ii) The Custodian may enter into
separate custodial agreements with
various futures commission
merchants ("FCMs") that the Fund
uses (each an "FCM Agreement"),
pursuant to which the Fund's margin
deposits in any transactions
involving futures contracts and
options on futures contracts will
be held by the Custodian in
accounts (each an "FCM Account")
subject to the disposition by the
FCM involved in such contracts in
accordance with the customer
contract between FCM and the Fund
("FCM Contract"), SEC rules
governing such segregated accounts,
CFTC rules and the rules of the
applicable commodities exchange.
Such FCM Agreements shall only be
entered into upon receipt of
Written Instructions from the Fund
which state that (i) a customer
agreement between the FCM and the
Fund has been entered into; and
(ii) the Fund is in compliance with
all the rules and regulations of
the CFTC. Transfers of initial
margin shall be made into an FCM
Account only upon Written
Instructions; transfers of premium
and variation margin may be made
into an FCM Account pursuant to
Oral Instructions. Transfers of
funds from an FCM Account to the
FCM for which the Custodian holds
such an account may only occur upon
certification by the FCM to the
Custodian that pursuant to the FCM
Agreement and the FCM Contract, all
18
20
conditions precedent to its right
to give the Custodian such
instruction have been satisfied.
(j) Purchases of Securities. The Custodian shall
settle purchased securities upon receipt of Oral or Written Instructions from
the Fund or its investment adviser(s) that specify:
(i) the name of the issuer and the
title of the securities, including
CUSIP number if applicable;
(ii) the number of shares or the
principal amount purchased and
accrued interest, if any;
(iii) the date of purchase and
settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such
purchase;
(vi) the name of the person from whom or
the broker through whom the
purchase was made. The Custodian
shall upon receipt of securities
purchased by or for a Portfolio pay
out of the moneys held for the
account of a Portfolio the total
amount payable to the person from
whom or the broker through whom the
purchase was made, provided that
the same conforms to the total
amount payable as set forth in such
Oral or Written Instructions; and
(vii) the name of the Portfolio involved.
(k) Sales of Securities. The Custodian shall settle
sold securities upon receipt of Oral or Written Instructions from the Fund that
specify:
(i) the name of the issuer and the
title of the security, including
CUSIP number if applicable;
19
21
(ii) the number of shares or principal
amount sold, and accrued interest,
if any;
(iii) the date of trade and settlement
and sale;
(iv) the sale price per unit;
(v) the total amount payable to the
Portfolio upon such sale;
(vi) the name of the broker through whom
or the person to whom the sale was
made;
(vii) the location to which the security
must be delivered and delivery
deadline, if any; and
(viii) the name of the Portfolio involved.
The Custodian shall deliver the securities upon receipt of the
total amount payable to the Portfolio upon such sale, provided that the total
amount payable is the same as was set forth in the Oral or Written Instructions.
Subject to the foregoing, the Custodian may accept payment in such form as shall
be satisfactory to it, and may deliver securities and arrange for payment in
accordance with the customs prevailing among dealers in securities.
(l) Reports.
(i) The Custodian shall furnish the
Fund the following reports:
(A) such periodic and special reports
as the Fund may reasonably
request;
(B) a monthly statement summarizing
all transactions and entries for
the account of each Portfolio,
listing the portfolio securities
belonging to each Portfolio with
the adjusted average cost of each
issue and stating the cash
account of each Portfolio
including disbursements;
(C) the reports to be furnished to
the Fund pursuant to Rule l7f-4;
and
20
22
(D) such other information as may be
agreed upon from time to time
between the Fund and the
Custodian.
(ii) The Custodian shall transmit
promptly to the Fund any proxy
statement, proxy material, notice
of a call or conversion or similar
communication received by it as
custodian of the Property. The
Custodian shall be under no other
obligation to inform the Fund as to
such actions or events.
(m) Collections. All collections of monies or other
property in respect, or which are to become part, of the Property (but not the
safekeeping thereof upon receipt by the Custodian) shall be at the sole risk of
the Fund. If payment is not received by the Custodian within a reasonable time
after proper demands have been made, the Custodian shall notify the Fund in
writing, including copies of all demand letters, any written responses,
memoranda of all oral responses and telephonic demands thereto, and await
instructions from the Fund. The Custodian shall not be obliged to take legal
action for collection unless and until reasonably indemnified to its
satisfaction. The Custodian shall also notify the Fund as soon as reasonably
practicable whenever income due on securities is not collected in due course and
shall provide the Fund with periodic status reports of such income uncollected
after a reasonable time.
15. Duration and Termination. This Agreement shall continue
until terminated by the Fund or by the Custodian on sixty (60) days' prior
written notice to the other party. In the event this Agreement is terminated
(pending appointment of a successor to the Custodian or vote of the shareholders
of the Fund to dissolve or to function without a custodian of its cash,
securities or other property), the Custodian shall not deliver cash, securities
or other property of the Portfolios to the Fund. It may deliver them to a bank
or trust company of the Custodian's choice, having an aggregate capital, surplus
and undivided profits, as shown by its last published report, of not less than
twenty million dollars ($20,000,000), as a custodian for the Fund to be held
under terms similar to those of this Agreement. The Custodian shall not be
required to make any such delivery or payment until full payment shall have been
made to the Custodian of all of its fees, compensation, costs and expenses. The
Custodian shall have a security interest in and shall have a right of setoff
against property in the Fund's
21
23
possession as security for the payment of such fees, compensation, costs and
expenses.
16. Notices. All notices and other communications, including
Written Instructions, shall be in writing or by confirming telegram, cable,
telex or facsimile sending device. Notice shall be addressed (a) if to the
Custodian, at the Custodian's address, 0000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxx
00000, marked for the attention of the Custodian Services Department (or its
successor); (b) if to the Fund, at the address of the Fund; or (c) if to neither
of the foregoing, at such other address as shall have been notified to the
sender of any such Notice or other communication. If notice is sent by
confirming telegram, cable, telex or facsimile sending device, it shall be
deemed to have been given immediately. If notice is sent by first-class mail, it
shall be deemed to have been given five days after it has been mailed. If notice
is sent by messenger, it shall be deemed to have been given on the day it is
delivered.
17. Amendments. This Agreement, or any term hereof, may be
changed or waived only by a written amendment, signed by the party against whom
enforcement of such change or waiver is sought.
18. Delegation. The Custodian may assign its rights and
delegate its duties hereunder to any wholly-owned direct or indirect subsidiary
of National City Bank, or National City Corporation, provided that (i) the
Custodian gives the Fund thirty (30) days prior written notice; (ii) the
delegate agrees with the Custodian to comply with all relevant provisions of the
1940 Act; and (iii) the Custodian and such delegate promptly provide such
information as the Fund may request, and respond to such questions as the Fund
may ask, relative to the delegation, including (without limitation) the
capabilities of the delegate.
19. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. Further Actions. Each party agrees to perform such further
acts and execute such further documents as are necessary to effectuate the
purposes hereof.
21. Miscellaneous. The Custodian acknowledges that the Fund is
a Massachusetts business trust, and that it is required by the Declaration to
limit its liability in all agreements to the assets of the Fund. Consequently,
the Custodian agrees that any claims by it against the Fund may be
22
24
satisfied only from the assets of the Fund, and no shareholders, trustees or
officers of the Fund may be held personally liable or responsible for any
obligations arising out of this Agreement. This Agreement embodies the entire
agreement and understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter hereof, provided
that the parties may embody in one more separate documents their agreement, if
any, with respect to delegated and/or Oral Instructions.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
This Agreement shall be deemed to be a contract made in Ohio
and governed by Ohio law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
and shall inure to the benefit of the parties hereto and their respective
successors.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below on the day and year
first above written.
NATIONAL CITY BANK
By:
-----------------------------------
Title:
--------------------------------
THE PARKSTONE GROUP OF FUNDS
By:
-----------------------------------
Title:
--------------------------------
23
25
Portfolios
----------
This EXHIBIT A, dated July 24, 1998, is that certain Exhibit A to a
Custodian Services Agreement dated as of July 24, 1998 between the undersigned
parties. This Exhibit A supersedes all previously dated Exhibits A.
Parkstone Small Capitalization Fund
Parkstone Mid Capitalization Fund
Parkstone Large Capitalization Fund
Parkstone International Discovery Fund
Parkstone Balanced Allocation Fund
Parkstone Aggressive Allocation Fund
Parkstone Conservative Allocation Fund
Parkstone Equity Income Fund
Parkstone Bond Fund
Parkstone Limited Maturity Bond Fund
Parkstone Intermediate Government Obligations Fund
Parkstone U.S. Government Income Fund
Parkstone Municipal Bond Fund
Parkstone Michigan Municipal Bond Fund
Parkstone Prime Obligations Fund
Parkstone U.S. Government Obligations Fund
Parkstone Treasury Fund
Parkstone Tax-Free Fund
NATIONAL CITY BANK
By:
-----------------------------------
Title:
--------------------------------
THE PARKSTONE GROUP OF FUNDS
By:
-----------------------------------
Title:
--------------------------------
24
26
AUTHORIZED PERSONS
APPENDIX
This Appendix, dated July 24, 1998, is that certain Appendix
to a Custodian Services Agreement dated as of July 24, 1998 between The
Parkstone Group of Funds and National City Bank.
Names Signatures
----- ----------
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
25
27
The Parkstone Group of Funds
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Re: Custodian Services Fees
-----------------------
Ladies and Gentlemen:
This letter constitutes our agreement with respect to
compensation to be paid to National City Bank (the "Custodian") under the terms
of a Custodian Services Agreement dated July 24, 1998 (the "Agreement") between
The Parkstone Group of Funds ("you" or the "Fund") and the Custodian. Pursuant
to Paragraph 11 of the Agreement, and in consideration of the services to be
provided to you, you will pay the Custodian the following:
22. With respect to each of the Fund's investment portfolios
listed on Exhibit A to the Agreement (the "Portfolios"), an annual custody fee
of .020% of each Portfolio's first $100 million of average daily net assets,
.010% of each Portfolio's next $650 million of average daily net assets and
.008% of the average daily net assets of each Portfolio which exceed $750
million, exclusive of out-of-pocket expenses and transaction charges. Custody
fees shall be calculated daily and paid monthly.
23. The transaction charges are a bundled fee. This bundled
fee will not exceed .25% of the amount of total The Parkstone Group of Funds
monthly asset based fee.
24. The Custodian's out-of-pocket expenses including, but not
limited to, postage, telephone, telex, interest claim fee ($50.00 per claim),
transfer and registration fees, federal express charges, Federal Reserve and
wire fees.
25. The Custodian's out-of-pocket costs in providing foreign
custody services and/or precious metal custody services.
The fee for the period from the date hereof until the end of
such year shall be pro-rated according to the proportion which such period bears
to the full annual period.
If the foregoing accurately sets forth our agreement and you
intend to be legally bound thereby, please execute a copy of this letter and
return it to us.
26
28
The Parkstone Group of Funds
-----------------
Page 2
Very truly yours,
NATIONAL CITY BANK
By:
------------------------------
Accepted:
THE PARKSTONE GROUP OF FUNDS
By:
------------------------------
27
