CUSTODY AGREEMENT
(Investment Companies - Domestic Securities)
CUSTODY AGREEMENT, dated as of September 1, 1992, between BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association
with its principal place of business at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000 (the "Bank"), and PRINCOR GOVERNMENT SECURITIES INCOME FUND,
INC.*, a Corporation organized under the laws of the State of Maryland , with
its principal place of business at The Principal Financial Group. Xxx Xxxxxx, XX
00000-0000 (the "Company").
W I T N E S S E T H :
WHEREAS, the Company desires to establish a custody account (the
"Custody Account") with the Bank to hold and maintain stocks, shares, bonds,
notes, debentures, warrants or other instruments representing rights to receive
or subscribe for the same, and other securities, or similar instruments
(collectively "Securities"), and distributions with respect to such Securities,
and other property, including, without limitation, cash, bullion and coins,
owned or held by the Company (Securities and such other property are hereinafter
collectively referred to as "Property"); and
WHEREAS, the Bank agrees to establish the Custody Account and to hold
and to maintain the Property in the Custody Account on the terms and conditions
herein set forth.
NOW, THEREFORE, in consideration of the premises and of the agreements
hereinafter set forth, the Bank and the Company hereby agree as follows:
1. APPOINTMENT AND ACCEPTANCE
The Company hereby appoints the Bank as custodian of the Property it
desires to be held within the United States by the Bank and the Bank agrees to
act as custodian upon the terms and conditions hereinafter provided.
2. DELIVERY OF CORPORATE DOCUMENTS
The Company has delivered or will deliver to the Bank prior to the
effective date hereof copies of the following resolutions, properly certified:
(a) resolutions of the Board of Directors of the Company appointing the
Bank as custodian under the provisions of this Agreement and approving the
execution and delivery of this Agreement by the Company;
(b) resolutions of the Board of Directors of the Company authorizing
the use of the securities depositories listed on Exhibit A hereto in accordance
with the provisions of Section 6 hereof;
(c) resolutions of the Board of Directors of the Company authorizing
the use of Security Pacific National Trust Company (New York) as the Bank's
agent in accordance with Section 7 hereof; and
*PRINCOR GOVERNMENT SECURITIES INCOME FUND, INC.
(d) resolutions of the Board of Directors of the Company naming the
persons authorized to give instructions to the Bank in accordance with Section 8
hereof.
3. DELIVERY AND SAFEKEEPING; REGISTRATION
(a) Delivery of Property. The Company has heretofore delivered, will
deliver or will cause to be delivered, Property to the Custody Account with the
Bank, which Property the Bank agrees to safekeep as custodian for the Company.
The Bank shall not be responsible for any Property of the Company which is not
delivered to the Bank. All Securities (other than bearer securities) delivered
to the Bank will be registered in the name of any person specified in Section
3(b) hereof or properly endorsed in a form for transfer satisfactory to the
Bank.
(b) Registration. Securities held hereunder may be registered in the
name of the Bank, or any other entity authorized to hold Property in accordance
with Section 6 or 7 hereof (hereinafter referred to as an "Authorized Entity"),
or a nominee of the Bank or any Authorized Entity, and the Company shall be
informed upon request of all such registrations. In the event that any
Securities so registered are called for partial redemption by the issuer of such
Securities, the Bank or any Authorized Entity may allot, or cause to be
allotted, the called portion to the beneficial holders of such class of Security
in any manner that the Bank or the Authorized Entity deems to be fair and
equitable. The Company agrees to hold the Bank, any Authorized Entity or any
nominee thereof harmless from any claim, liability, loss, damage or expense
(including attorneys' fees) of every nature or incurred as record holder of
Securities held in the Custody Account.
Securities in registered form will be transferred into such names or
registrations as the Company may specify in Proper Instructions (as defined in
Section 8 hereof). Notwithstanding any other provision in this Agreement to the
contrary, in the event that any Securities held hereunder are registered in a
name other than that of the Bank, an Authorized Entity or any nominee thereof,
the Bank shall be responsible solely for the safekeeping of such Securities and
shall not be responsible to collect income or to take any other action with
respect to such Securities.
4. PERFORMANCE BY THE BANK
(a) Segregation and Identification of Property. The Bank will segregate
on its books as belonging to the Company all Securities and other Property held
by the Bank or any Authorized Entity, so that at all times the Property may be
identified as belonging to the Company.
(b) Receipt of Securities. In accordance with Proper Instructions, the
Bank shall pay for Securities purchased out of monies held in the Custody
Account and receive Securities purchased for the account of the Company. The
Bank shall notify the Company promptly (and in any event no later than the next
business day) of any failure to receive Securities.
(c) Release of Securities. In accordance with Proper Instructions, the
Bank shall deliver Securities held in the Custody Account designated as sold for
the account of the Company to the person specified in the instructions relating
to such sale. The Bank shall release such Securities only upon receipt of
payment therefore in accordance with the customary and established trading and
securities processing practices, unless prior to the release of the company's
securities the bank has received permission from a person named in the
certificate to release the company's securities without payment therefore. The
Bank shall notify the Company promptly (and in any event no later than the next
business day) of any failure to deliver Securities.
(d) Settlement of Securities Transactions. On the settlement date, the
Bank shall (i) with respect to the purchase of Securities, debit the Custody
Account for the payment of Securities and credit the Custody Account with
Securities and (ii) with respect to the sale of Securities, credit the Custody
Account with the sale price of Securities and debit the Custody Account for
Securities. In the event that a transaction does not settle within a reasonable
amount of time, the Bank may reverse the transaction in the Custody Account.
(e) Options Transactions. In accordance with Proper Instructions, the
Bank shall (i) receive and retain confirmations or other documents evidencing
the purchase or writing of an option on a Security or on a securities index by
the Company, (ii) deposit or maintain Securities and/or cash in a segregated
account in accordance with Section 4(h) hereof and (iii) release Securities
and/or cash in accordance with a notice or other communication evidencing
expiration, termination or exercise of such option.
(f) Commodity Futures Transactions. In accordance with Proper
Instructions, the Bank shall (i) receive and retain confirmations or other
documents evidencing the purchase or sale of a commodity futures contract or an
option thereon by the Company, (ii) deposit and maintain Securities and/or cash
in a segregated account in accordance with Section 4(h) hereof and (iii) release
Securities and/or cash in accordance with any agreement or agreements among the
Bank, the Company and a futures commission merchant or other third party.
(g) Cash Accounts. All cash received or held by the Bank or any
Authorized Entity as interest, dividends, proceeds from transfer or other
payments for or with respect to Securities, or otherwise, shall be held in the
Custody Account or, as specified in Proper Instructions, remitted to the
Company.
(h) Segregated Account. Upon receipt of Proper Instructions, the Bank
shall establish and maintain a segregated account or accounts for and on behalf
of the Company, into which account or accounts may be transferred Securities
and/or cash, (i) for the purposes of compliance by the Company with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission ("SEC")
relating to the maintenance of segregated accounts by registered investment
companies; (ii) for the purposes of segregating Securities and/or cash in
connection with options purchased, sold or written by the Company or commodity
futures contracts or options thereon purchased or sold by the Company; or (iii)
for any other purposes.
(i) Collection. Unless otherwise instructed by the Company, the Bank
shall, with respect to all Securities held for the Company in the Custody
Account, (i) collect all income due or payable, including all dividends; whether
in cash or securities; (ii) present for payment, if necessary, and collect the
amounts payable upon all such Securities which may mature or be called,
redeemed, retired or which otherwise become payable; (iii) endorse checks,
drafts and other negotiable instruments for collection; (iv) exchange securities
in temporary form for securities in definitive form; (v) exchange securities
when the par value of such securities is changed and (vi) in general, attend to
all non-discretionary details in connection with the sale, exchange,
substitution, purchase, transfer and other dealings with Securities and other
Property pursuant to this Agreement.
The Bank shall either credit the Custody Account on the date payment is
received or shall advance to the Custody Account on such other date as may be
agreed upon between the Bank and the Company all amounts specified in clauses
(i) and (ii) above. If the Bank causes the Custody Account to be credited for
the amounts specified in clauses (i) and (ii) above and payment thereof is not
promptly received by the Bank, the Custody Account shall be debited in the
amount of such credit, and the Bank shall provide oral or written notice to the
Company that such amount cannot be collected in the ordinary course of business.
Neither the Bank nor any Authorized Entity shall have any duty or obligation to
institute legal proceedings, file a claim or proof of claim in any insolvency
proceeding or take any other action with respect to the collection of such
amount beyond its ordinary collection procedures.
Notwithstanding the foregoing, the Bank shall only be responsible to
take the action in clauses (i) and (ii) above or to take any other action
required concerning Securities if notice thereof is contained in the
publications listed on Exhibit B hereto (which list may, upon notification to
the Company, be amended by the Bank) or is provided by the issuer to the Bank.
It will be the responsibility of the Company to furnish the Bank with the
declaration, record and payment dates and amounts of any dividends or income and
any other actions required concerning each of the Securities held by the Bank
hereunder when such information is not available from the foregoing sources.
(j) Voting and Other Action. The Bank will promptly transmit to the
Company, and will instruct any Authorized Entity to transmit to the Bank, all
financial reports, stockholder communications and notices from issuers of
Securities in the Custody Account, all public information from issuers of such
Securities or, in the case of information relating to exchange or tender offers,
from offerors, and all notices, proxies and proxy soliciting materials with
respect to such Securities, to the extent sufficient copies are received by the
Bank or any Authorized Entity in time for forwarding to the Company. In the case
of Securities registered in the name of the Bank, any Authorized Entity or any
nominee thereof, proxies will be executed by the registered holder prior to
transmittal to the Company, but the manner in which Securities are to be voted
will not be indicated. Specific instructions regarding proxies will be provided
when necessary. Neither the Bank nor any Authorized Entity nor any nominee
thereof shall vote any Securities or authorize the voting of any Securities or
give any consent or take any other action with respect thereto, except as
otherwise provided herein.
The Company agrees that if it gives an instruction for the performance
of an act on the last permissible date of a period established by an exchange
offer, tender offer or proxy solicitation or other notice for the performance of
any act, the Bank will use reasonable efforts to effect the instruction, but the
Company shall hold the Bank harmless from any adverse consequences if it is
unable to do so.
(k) Corporate Action. Upon receipt of Proper Instructions, the Bank
will (i) exchange Securities in the Custody Account for other securities or cash
issued or paid in connection with any reorganization, recapitalization, merger,
consolidation, stock split or conversion and will deposit Securities in
accordance with the terms of any reorganization or protective plan and (ii) sell
any rights entitlement resulting from a rights issue.
(l) Fractional Interests. Whenever a fractional interest resulting from
a rights issue, stock dividend, stock split or for any other reason is received
with respect to Securities in the Custody Account, the Bank is authorized (but
not required) to sell such fractional interest on behalf of the Company.
(m) Payment of Bills. Upon receipt of Proper Instructions, the Bank
shall pay out of monies held in the Custody Account bills, statements and other
obligations of the Company.
(n) Ownership Certificates for Tax Purposes. The Bank shall execute
ownership and other certificates and affidavits for federal tax purposes in
connection with receipt of income or other payments with respect to Securities
held by the Bank within the United States and in connection with transfers of
such Securities. Any payment to the Company under this Agreement shall be made
net of any withholdings, taxes or governmental charges of any kind whatsoever
imposed on such payments.
(o) Authority of the Bank. The Bank and any Authorized Entity are each
authorized to accept and open on the Company's behalf all mail or communications
received by it or directed in its care. The Bank may make, execute and deliver
for, on behalf of and in the name of the Company, any declarations, affidavits
or certificates of ownership which the Bank, in its discretion, deems necessary,
appropriate or desirable to perform its obligations pursuant to this Agreement.
5. REPORTING SYSTEM; RECORDS; AND INSPECTION
(a) Reporting System. The Bank has in place a system for providing
direct access by customers to the Bank's reporting system ("Reporting System")
for Property in the Custody Account held in the United States. At the Company's
election, the Bank shall provide the Company with such instructions and
passwords as may be necessary in order for the Company to have such direct
access through the Company's terminal device. Such direct access shall be
restricted to information relating to the Custody Account. Where direct access
to the Reporting System is requested by the Company, the Company agrees to
assume full responsibility for the consequences of the use, including any misuse
or unauthorized use of the terminal device, instructions or passwords referred
to above and agrees to release, indemnify and hold harmless the Bank from and
against any and all claims, liabilities, losses, damages and expenses (including
attorneys' fees) of every nature suffered or incurred by the Bank by reason of
or in connection with such use by the Company of such terminal device, unless
such claims, liabilities, losses, damages and expenses can be shown to be the
result of negligence or willful misconduct by the Bank. Further, where the
Company elects to have direct access, the Bank shall provide the Company on each
business day a report of the preceding business day's transactions relating to
the Custody Account and of the closing or net balances of the preceding business
day.
The Bank will supply to the Company from time to time as mutually
agreed upon a written statement with respect to all of the Property in the
Custody Account. If the Company does not elect to use the Reporting System, then
the Bank will send to the Company an advice or notification of any transfers of
Property to or from the Custody Account.
(b) Records. As agreed upon between the Company and the Bank from time
to time, the Bank will prepare and maintain records with respect to the Company
required to be maintained under the Internal Revenue Code of 1986, as amended
("Code"), the Investment Company Act of 1940, as amended (the "Act"), and the
rules and regulations under the Act, with particular attention to Section 31 of
the Act and Rules 31a-1 and 31a-2 thereunder, and shall preserve said records in
the manner and for the periods prescribed in the Code, the Act and such rules
and regulations. The Bank acknowledges that all of the records it will prepare
and maintain pursuant to this Section 5(b) will be the property of the Company
and that, upon request of the Company, it shall make the records available to
the Company, along with such other information and data as are reasonably
required by the Company, for inspection, audit or copying, or shall deliver said
records to the Company.
(c) Inspection. The Bank will assist the Company's independent auditors
and, upon receipt of Proper Instructions or upon demand from any regulatory
authority having jurisdiction over the Company, assist such authority in any
examination of Property held by the Bank on its premises and of the Bank's
records regarding Property held in the Custody Account. The Bank's costs and
expenses in facilitating such examinations and providing such records,
including, but not limited to, the cost to the Bank of providing personnel in
connection with examinations, shall be borne by the Company.
The Bank shall also, subject to restrictions under applicable law, seek
to obtain from any Authorized Entity with which the Bank maintains the physical
possession of any of the Property in the Custody Account such records of the
Authorized Entity relating to the Custody Account as may be required by the
Company in connection with an internal examination of the Company's own affairs.
The Bank shall send to the Company such reports of the external
auditors of the Bank on the Bank's system of internal accounting control as the
Company may reasonably request from time to time. The Bank shall request and
upon receipt furnish to the Company reports of the external auditors of any
Authorized Entity as relate directly to the Authorized Entity's system of
internal accounting controls applicable to its duties under its agreement with
the Bank.
6. AUTHORIZED USE OF U.S. DEPOSITORIES
(a) Authorized Depositories. The Company authorizes the Bank, for any
Property held hereunder, to use the services of any United States securities
depository permitted to perform such services for registered investment
companies and their custodians pursuant to Rule 17f-4 under the Act, including,
but not limited to, the Depository Trust Company, Participants Trust Company and
the Federal Reserve Book Entry System (each an "Authorized Depository"), in
accordance with the provisions of this Section 6.
(b) Bank's Account in the Authorized Depository. The Bank may keep
Property in an Authorized Depository provided that such Property is represented
in an account of the Bank in the Authorized Depository which shall not include
any assets of the Bank, other than assets held as custodian or trustee for its
customers.
(c) Bank's Records. The records of the Bank with respect to Property
which is maintained in an Authorized Depository shall identify the
Property as belonging to the Company.
(d) Advices of Transactions. Copies of all advices from the Authorized
Depository of transfers of Property for the account of the Bank, as custodian
for the Company, shall be maintained for the Company by the Bank for a period
not less than that required by Rules 31a-1 and 31a-2 under the Act and shall be
provided to the Company at its request. Upon request, the Bank shall furnish the
Company with written confirmation of each transfer to or from the account of the
Bank, as custodian for the Company, in the form of monthly transaction sheets
reflecting the previous month's transactions in the Authorized Depository for
the account of the Bank, as custodian for the Company.
(e) Company's Approval. The Board of Directors of the Company shall
approve the use of each Authorized Depository by the Company, as required by
Rule 17f-4 under the Act, that is listed on Exhibit A hereto, and a certified
copy of such resolution shall be provided to the Bank. The Company shall notify
the Bank if the continued use of such Authorized Depository is not approved
annually by the Board of Directors of the Company, as required by Rule 17f-4
under the Act.
(f) Standard of Care. The Bank shall not be liable for any claim,
liability, loss, damage or expense incurred by the Company arising out of any
act or omission by an Authorized Depository, except such claim, liability, loss,
damage or expense arising out of the negligence or willful misconduct of the
Bank. In the event of any loss to the Company by reason of the failure of the
Bank to exercise the standard of care in the performance of its duties, the Bank
shall be liable to the Company to the extent of the Company's damages, to be
determined based on the market value of the Property which is the subject of the
loss at the date of discovery of such loss and without reference to any special
or consequential damages.
7. AUTHORIZED USE OF OTHER AGENTS
The Company authorizes the Bank at any time or times in the Bank's
discretion to appoint (and to remove) one or more agents, including Security
Pacific National Trust Company (New York), a national banking association, that
are qualified under the Act to act as a custodian, as the Bank's agent or agents
to carry out such of the provisions of this Agreement as the Bank may from time
to time direct. The appointment of such agent or agents will not relieve the
Bank of its responsibilities or liabilities hereunder.
8. PROPER INSTRUCTIONS
For purposes of this Agreement, "Proper Instructions" shall mean all
instructions upon which the Bank is authorized to rely in accordance with this
Section 8.
The persons authorized by the Company to give instructions to the Bank
shall be named in resolutions of the Board of Directors of the Company certified
to the Bank from time to time by the Company's Secretary or an Assistant
Secretary (the "Certificate"). The Company will provide the Bank with
authenticated specimen signatures of the persons so authorized. The Company will
deliver all instructions to the Bank in accordance with the operating procedures
of the Bank provided by the Bank to the Company from time to time.
The Bank is authorized to rely and act upon written, signed
instructions of those persons identified in the Certificate, as well as those
persons which the Bank reasonably believes in good faith to have been authorized
by the Company to give instructions to the Bank.
The Bank is further authorized to rely upon any instructions received
by any other means and identified as having been given or authorized by any
person named to the Bank by the Company as authorized to give instructions,
regardless of whether such instructions shall in fact have been authorized or
given by any of such persons, provided that the Bank and the Company shall have
agreed upon the means of transmission and the method of identification for such
instructions. Instructions received by any other means shall include oral
instructions, provided that any oral instructions shall be promptly confirmed in
writing. In the event oral instructions are not subsequently confirmed in
writing, the Company agrees to hold the Bank harmless and without liability for
acting upon oral instructions which it reasonably believes it has received.
If the Company elects to use the Bank's Reporting System for Property
in the Custody Account, pursuant to Section 5(a) hereof, the Bank is also
authorized to rely and act upon any instructions received by it through a
terminal device, provided that such instructions are accompanied by code words
which the Bank has furnished to the Company, or its authorized persons, by any
method mutually agreed to by the Bank and the Company, and which the Bank shall
not have then been notified by the Company or any such authorized person to
cease to recognize, regardless whether such instructions shall in fact have been
given or authorized by the Company or any such person.
9. STANDARD OF CARE
The Bank shall be responsible for the performance of only such duties
as are set forth herein. The Bank shall not be liable for any claim, liability,
loss, damage or expense incurred by the Company arising out of any act or
omission by the Bank, except for any such claim, liability, loss, damage or
expense arising out of its negligence or willful misconduct. In the event of any
loss to the Company by reason of the failure of the Bank to exercise the
standard of care in the performance of its duties, the Bank shall be liable to
the Company to the extent of the Company's damages, to be determined based on
the market value of the Property which is the subject of the loss at the date of
discovery of such loss and without reference to any special or consequential
damages.
The Company shall release, indemnify and hold harmless the Bank and its
officers, directors, employees, nominees and agents, from any claim, liability,
loss, damage or expense (including attorneys' fees) incurred by the Bank,
arising out of any act or omission by the Bank under this Agreement, except for
any claim, liability, loss, damage or expense arising out of the Bank's
negligence or willful misconduct.
The Bank shall be entitled to rely, and may act, on the advice of
counsel (who may be counsel for the Company) on all matters and shall be without
liability for any action reasonably taken or omitted pursuant to such advice.
The Bank need not maintain any insurance for the benefit of the Company.
Notwithstanding anything herein to the contrary:
(a) The Bank will be under no duty or obligation to inquire into, and shall
not be liable for:
(i) the legality of any Proper Instruction given by the
Company, the legality of any purchase or sale of any Property or the propriety
of the amount for which such Property is purchased or sold; and
(ii) the validity of the issuance of any Securities purchased
or the genuineness of any certificate evidencing Securities purchased.
(b) All collections of funds or other property paid or distributed in
respect of Securities in the Custody Account shall be made at the risk of the
Company. The Bank shall have no liability for any loss occasioned by delay in
the actual receipt of notice by the Bank or an Authorized Entity of any payment,
redemption or other transaction regarding Securities in the Custody Account in
respect of which the Bank has agreed to take action as provided herein.
(c) The Bank shall not be liable for any action taken in good faith
upon Proper Instructions or upon any certified copy of any resolution of the
Board of Directors of the Company and may rely on the genuineness of any such
documents which it may in good faith believe to be validly executed.
10. FEES AND EXPENSES
The fees payable to the Bank for the services rendered under this
Agreement and any reimbursement of expenses incurred by the Bank in connection
with the performance of such services shall be provided for in a fee schedule
attached hereto as Exhibit C. Exhibit C may be amended from time to time by the
Bank on 60 days' written notice to the Company.
If the Bank, any Authorized Entity or any nominee thereof shall incur
or be assessed any taxes, charges, expenses, assessments, claims or liabilities
in connection with the performance of its duties hereunder, or if the Bank
should, in its discretion, advance funds to the Company because the funds in the
Custody Account are insufficient to pay the total amount payable upon a purchase
of Securities or for some other reason, or if the Company is for any other
reason indebted to the Bank, such advance or indebtedness shall be deemed a loan
from the Bank to the Company. The loan shall be payable upon demand, and in any
event within 24 hours from notice by the Bank to the Company of such loan.
Interest shall be charged and calculated on the basis of 360 days and actual
days elapsed. The Bank, in its discretion, may at any time charge any such loan
together with interest due thereon, if any, against any balance of account
standing to the credit of the Company on the Bank's books.
Loans which are denominated in United States dollars will bear interest
from the date incurred at the rate of 2% per annum in excess of the Reference
Rate as the Reference Rate may change from time to time. The "Reference Rate" is
the rate of interest publicly announced from time to time by the Bank in San
Francisco, California as its Reference Rate. The Reference Rate is set by the
Bank based on various factors, including the Bank's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans. The Bank may price loans to its customers at, above, or
below the Reference Rate. Any change in the Reference Rate shall take effect at
the opening of business on the day specified in the public announcement of a
change in the Bank's Reference Rate.
The Bank shall have a continuing lien on and security interest in, and
right of offset against, any Property at any time held by it for the benefit of
the Company or in which the Company may have an interest which is then in the
possession or control of the Bank to the extent of any amount the Company may at
any time owe the Bank for the services rendered under this agreement.
The Company represents and warrants that the Bank shall have a first
and prior lien on such Property. The Company understands and agrees that the
title of any account which is created pursuant to Section 6(b) hereof or any
other section of this Agreement shall not impair or affect in any manner the
lien on and security interest in, and the right of offset against, any Property
held in the Custody Account. The Company understands and agrees that the title
of any account which is created pursuant to Section 6(b) hereof or any other
section of this Agreement shall not impair or affect in any manner the lien on
and security interest in, and the right of offset against, any Property held in
the Custody Account.
11. TERMINATION
Either party may terminate this Agreement upon 90 days' written notice
to the other, sent by registered mail, provided that any termination by the
Company shall be authorized by a resolution of its Board of Directors, a
certified copy of which shall accompany such notice of termination, and provided
further that such resolution shall specify the name of the person to whom the
Bank shall deliver the Property in the Custody Account. If notice of termination
is given by the Bank, the Company shall, within 90 days following the giving of
such notice, deliver to the Bank a certified copy of a resolution of its Board
of Directors specifying the names of the persons to whom the Bank shall deliver
the Property in the Custody Account. In either case the Bank will deliver the
Property to the person so specified, after deducting therefrom any amounts which
the Bank determines to be owed to it under Section 10 hereof. If within 90 days
following the giving of a notice of termination by the Bank, the Bank does not
receive from the Company a certified copy of a resolution of its Board of
Directors specifying the name of the person to whom the Bank shall deliver the
Property in the Custody Account, the Bank, at its election, may deliver the
Property to a bank 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 Property until a certified copy of one or more resolutions
as aforesaid is delivered to the Bank. The obligations of the parties hereto
regarding indemnities and payment of fees and expenses shall survive the
termination of this Agreement.
12. NOTICES AND MISCELLANEOUS
All notices and other communications hereunder, except for Proper
Instructions and reports relating to the Property which are transmitted through
the Bank's Reporting System for Property in the Custody Account, shall be in
writing, telex or telecopy or, if oral, shall be promptly, confirmed in writing,
and shall be hand-delivered, telexed, telecopied or mailed by prepaid first
class mail (except that notice of termination, if mailed, shall be mailed by
registered mail) to the Company, at its address set forth above, marked
"Attention: Xxxxx Xxxxxxxxx " and to the Bank, 0 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, marked "Attention: Xxxxx Xxxxxxxx", or such other address
as each party may give notice of to the other.
This Agreement may not be amended except by writing signed by the party
against whom enforcement is sought. This Agreement shall not be assignable by
either party without the written consent of the other and any attempted
assignment in contravention thereof shall be null and void. This Agreement may
be executed in several counterparts, each of which shall be an original, but all
of which shall constitute one and the same instrument. This Agreement contains
the entire agreement between the Company and the Bank relating to custody of
Property and supersedes all prior agreements on this subject. The invalidity,
illegality or unenforceability of any provisions of this Agreement shall in no
way affect the validity, legality or enforceability of any other provision; and
if any provision is held to be unenforceable as a matter of law, the other
provisions shall not be affected thereby and shall remain in full force and
effect. The captions included in this Agreement are included only for the
convenience of the parties and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect.
13. CHOICE OF LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to conflict of laws
principles thereof.
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed by its duly authorized officer.
BANK OF AMERICA NATIONAL TRUST PRINCOR GOVERNMENT SECURITIES INCOME FUND, INC.
AND SAVINGS ASSOCIATION
By: XXX XXXXXXX By: A.S. FILEAN
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Title: Senior Vice President Title: Vice President and Secretary
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Attest: Attest: XXXXXX X. XXXXXX
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Title: Title: Assistant Secretary
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EXHIBIT A
AUTHORIZED U.S. DEPOSITORIES
The Depository Trust Company
Federal Reserve Book Entry System
Participants Trust Company
EXHIBIT B
LIST OF PUBLICATIONS
Standard and Poor's Semi-Weekly Called Bond Record
Daily Financial Card Services (NY based)
Depository Transmissions
Wall St. Journal
Los Angeles Times
IDSI Interactive Data Service
EXHIBIT C
FEE SCHEDULE
Mutual Funds
Administration $ 4,000.00 per quarter
Mutual Fund Sub-Accounts $ 200.00 each/per year
Maintenance Transactions
(per month) (each)
Treasuries $ 1.00 $ 8.50
Municipal Bonds $ 1.00 $ 8.50
Commercial Paper (eligible) $ 1.00 $ 8.50
Commercial Paper (ineligible) $ 2.50 $ 20.00
Global (Euro) $ 0.05/1000 $ 25.00
Corporate Bonds $ 1.00 $ 8.50
Equities $ 1.00 $ 8.50
GNMAs (PTC) $ 1.50 $ 12.00
Mortgage Backed (physical) $ 2.50 $ 20.00
Tax Exempt (eligible) $ 1.00 $ 8.50
P&I Payments $ 8.00 per pool/per issue
On-Line $1,250.00 per quarter
Outgoing Wires $ 15.00 each
December 4, 1995
Xx. Xxxxx X. Xxxxx
Vice President
The Bank of New York
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
RE: Custody Agreements Between Bank of America and Principal Aggressive Growth
Fund, Inc., Principal Asset Allocation Fund, Inc., Princor Blue Chip Fund,
Inc., Princor Bond Fund, Inc., Principal Bond Fund, Inc., Princor Capital
Accumulation Fund, Inc., Principal Capital Accumulation Fund, Inc., Princor
Cash Management Fund, Inc., Principal Money Market Fund, Inc., Princor
Emerging Growth Fund, Inc., Principal Emerging Growth Fund, Inc., Princor
Government Securities Income Fund, Inc., Principal Government Securities
Fund, Inc., Princor Growth Fund, Inc., Principal Growth Fund, Inc., Princor
High Yield Fund, Inc., Principal High Yield Fund, Inc., Princor Balanced
Fund, Inc., Principal Balanced Fund, Inc., Princor Tax-Exempt Bond Fund,
Inc., Princor Tax-Exempt Cash Management Fund, Inc., Princor Utilities
Fund, Inc., and Principal Special Markets Fund, Inc. - (Mortgage-Backed
Securities Portfolio) (the "Funds")
Dear Xx. Xxxxx:
It is our understanding that The Bank of New York has purchased the custody
business of Bank of America's Global Securities Division and Master Employee
Benefits Trust business. You have asked that each of the funds consent to Bank
of America's assignment to The Bank of New York of the Contracts entered into
between Bank of America and each of the Funds (the "Contracts"). Upon receipt of
a Fund's consent and after the transfer of that Fund's account to The Bank of
New York's data processing systems, The Bank of New York will become successor
to Bank of America for that Account.
The Funds hereby consent to the assignment with the understanding that The Bank
of New York is obligated to perform under the Contracts to the same extent and
in the same manner as Bank of America, with the following exceptions:
1. The fee schedule for the Contracts shall be replaced with the fee schedule
attached.
2. Notwithstanding anything to the contrary in the Contracts, The Bank of New
York shall settle on an "actual settlement" basis rather than a "contractual
settlement" basis.
To indicate your agreement, please sign and return to me the enclosed copy of
this letter.
Best Regards,
XXXXX X. XXXXXXXXX
Xxxxx X. Xxxxxxxxx
Treasurer
XXXXXXXXXXX X. XXXXXX, V.P.
______________________________
(Signature of The Bank of New York
Representative)
THE BANK OF NEW YORK
Institutional Custody Fee Schedule
for Principal Mutual Life Insurance Company
and
Princor Financial Corporation
I. Securities Settled and Safekept Within the United States.
The Bank of New York's fee for custody services for each account is as
follows:
Maintenance Charges
Category Monthly Fee Per Issue
Depository Trust Company Issues $ 1.50
Federal Reserve Bank Book Entry Issues 1.50
Participants Trust Company Issues 1.50
Physical Issues 2.50
Transaction Charges
Category Per Transaction
Depository Trust Company Transactions $ 6.50
Federal Reserve Bank Book Entry Transactions 6.50
Participant Trust Company Transaction 10.00
Physical Transactions 20.00
Book Entry Paydowns 4.00
Physical Paydowns 6.00
Options 25.00
A Transaction is defined as a receipt or delivery versus payment or a free
receipt or deliver.
Reimbursable charges such as postage, shipping, transfer fees, etc., will be
billed as incurred.
II. General
Minimum: There is a monthly minimum of $4,000.00 for the
relationship
On-Line Services: $200.00 monthly access fee. Usage and connect time
will be billed to the customer.
Reconciliation Tapes: $150.00 per tape.
Wire Charges: $5.50 - incoming
$9.00 - outgoing
Dated August 30, 1995
Supersedes any previous fee schedule provided by The Bank of New York
Accepted By: XXXXXXXXXXX X. XXXXXX
_____________________
Title: VICE PRESIDENT
_____________________
Date: 12/5/95
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