See All of This Company's Exhibits
EX-99.(G)(1)
6
dex99g1.txt
CUSTODIAN SERVICES AGREEMENT
EXHIBIT (G)(1)
CUSTODIAN SERVICES AGREEMENT
----------------------------
THIS AGREEMENT (the "Agreement") is made and entered into effective as of
June 20, 2001 by and among PACIFIC FUNDS, a Delaware business trust having its
principal office and place of business at 700 Newport Center Drive, Newport
Beach, California 92660 ("Trust"), and PFPC TRUST COMPANY, a Delaware limited
purpose trust company having an office and place of business at 8800 Tinicum
Boulevard, Philadelphia, PA 19153 ("PFPC" or "Custodian").
WITNESSETH:
WHEREAS, Trust initially established the funds identified on the attached
Exhibit A, as such Exhibit A may be amended from time to time by the parties to
identify such other funds with respect to which Trust and Custodian have agreed
that Custodian will serve as custodian hereunder (the "Funds"); and
WHEREAS, Trust desires to appoint PFPC as custodian of the securities and
monies for the investment portfolios of the Funds; and
WHEREAS, PFPC is willing to accept such appointment;
NOW THEREFORE, for and in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant and
agree as follows:
I. APPOINTMENT OF CUSTODIAN. Trust hereby appoints PFPC as its custodian with
-------------------------
respect to each Fund of Trust, and PFPC accepts such appointment:
Custodian will provide for the safekeeping of the Funds' securities, other
investments, monies and other property ("Assets"). Custodian agrees that
it shall hold all Assets received from each Fund in a separate account
(each such account hereinafter called the "Account") at Custodian or as
otherwise provided in this Agreement; provided, however, that Custodian
shall be the legal situs of the Accounts.
II. DELIVERY OF CORPORATE DOCUMENTS. Trust has delivered or will deliver to
--------------------------------
Custodian prior to the effective date of the Agreement, copies of the
following documents and all amendments or supplements thereto, properly
certified or authenticated:
A. Upon request by Custodian, resolutions of the Board of Trustees of
Trust (the "Board") appointing Custodian as custodian for the Funds
hereunder and approving the form of this Agreement; and
B. Resolutions of the Board designating certain persons to give
instructions on behalf of Trust to Custodian.
III. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
-----------------------------------------
A. Delivery of Assets
------------------
Trust will deliver or cause to be delivered to Custodian on the
effective date of this Agreement, or as soon thereafter as practicable,
and from time to time thereafter, all portfolio securities acquired by
it with respect to each Fund and monies then owned by it except as
permitted by the Investment Company Act of 1940, as amended, (the "1940
Act") or from time to time coming into its possession during the time
this Agreement shall continue in effect. Custodian shall have no
responsibility or liability whatsoever for or on account of securities
or monies not so delivered. All securities so delivered to Custodian
(other than bearer securities) shall be registered in the name of Trust
and the appropriate Fund, or of a nominee of Custodian, or shall be
properly endorsed and in form for transfer satisfactory to Custodian.
1
B. Delivery of Accounts
--------------------
Trust shall turn over to Custodian all of Trust's relevant accounts.
Custodian shall be entitled to rely conclusively on the completeness and
correctness of the accounts turned over to it by Trust, and Trust shall
indemnify and hold Custodian harmless of and from any and all expenses,
damages and losses whatsoever arising out of or in connection with any
such accounts or in the failure of Trust to provide any portion of such
or to provide any information needed by Custodian to knowledgeably
perform its function hereunder.
C. Delivery of Assets to Third Parties
-----------------------------------
1. Custodian will receive delivery and keep safely the assets of the
Funds delivered to it from time to time segregated in the accounts.
Custodian will not deliver, assign, pledge or hypothecate any such
assets to any person except as permitted by the provisions of this
Agreement.
2. Notwithstanding any other provision of the Agreement, Custodian is
hereby authorized to deposit or arrange for the deposit of securities
of Trust eligible for book entry deposit in Federal Reserve Banks
under book entry to the extent acceptable under applicable
regulations of the Department of the Treasury of the United States
and the Federal Reserve Bank involved.
3. Notwithstanding any other provision of this Agreement, Custodian is
authorized in its capacity as custodian for Trust to use the
facilities and services of the Depository Trust Company, or any other
system for the central handling of securities with which securities
may be deposited under the provisions of section 17(f) of the 1940
Act.
D. Registration of Securities and Bearer Form Securities
-----------------------------------------------------
1. Custodian will hold stocks and other registrable portfolio securities
of the Funds registered in the name of the Funds or in the name of
any nominee of Custodian for whose fidelity and liability Custodian
will be fully responsible. Unless otherwise instructed, Custodian
will register all such portfolio securities in the name of its
authorized nominee or the nominee of a depository that has been
registered with or approved by the Securities and Exchange
Commission. All securities, and the ownership thereof by Trust, which
are held by Custodian, its sub-custodian, nominee, correspondent,
depository or the Federal Reserve Book Entry System hereunder, will
be reflected in the records of Custodian and, where applicable, its
sub-custodian.
2. All securities issued in bearer form shall be maintained in that form
and not be subject to re-registration in definitive form; that is,
bearer form securities shall not be reregistered in the name of a
nominee of Custodian, sub-custodian, or any depository, except upon
specific instructions from Trust as to a given security. Bearer form
securities shall be retained by Custodian or sub-custodian, unless
deposited with a depository authorized by the Securities and Exchange
Commission.
3. At least quarterly, Custodian shall provide Trust an updated list of
all securities held by Custodian including securities held by a sub-
custodian, or re-deposited by Custodian (or sub-custodian) with a
depository, Federal Reserve Bank, or correspondent bank.
4. Trust will hold Custodian and its nominees harmless from any
liability as a holder of record of any Assets.
E. Release of Securities
---------------------
Upon receipt of instructions as defined herein in Section V.
"Instructions", Custodian will exchange, or cause to be exchanged,
portfolio securities held by it for the account of the applicable Fund
for other securities or cash issued or paid in connection with any
reorganization, recapitalization, merger,
2
consolidation, split-up of shares, conversion or otherwise, and will
deposit any such securities in accordance with the terms of any
reorganization or protective or similar plan. Without instructions,
Custodian is authorized to exchange securities held by it in temporary
form for securities in definitive form, to transfer securities in
connection with re-registration of the securities, to transfer Assets
for examination by a broker or dealer in accordance with street delivery
custom, and to effect an exchange of shares when the par value of the
stock is changed. Upon receiving payment therefore, with the
understanding that notwithstanding the foregoing Custodian may deliver
or cause to be delivered securities for payment in accordance with
prevailing market settlement practices and conditions, Custodian is
authorized to surrender bonds or other securities held by it at maturity
or when advised of earlier call for redemption with the understanding
that notwithstanding the foregoing Custodian may deliver or cause to be
delivered securities for payment in accordance with prevailing market
settlement practices and conditions, except that Custodian shall receive
instructions prior to surrendering any convertible security. In addition
to the foregoing, on receipt of instructions Custodian may also release
securities in the following circumstances: for purposes of effectuating
a duly authorized plan of merger, liquidation, reorganization,
consolidation or recapitalization of a Fund; in connection with any
repurchase agreement entered into with respect to a Fund (cash of such
Fund may also be released in connection with such repurchase agreement);
in connection with a broker's custody of margin collateral relating to
futures and options transactions; for the purpose of redeeming in kind
shares of a Fund; and in connection with other purposes which are set
forth in the instructions.
F. Purchases of Investments of Trust - Other Than Options and Futures
------------------------------------------------------------------
Trust will, on each business day on which a purchase of securities or
foreign exchange for a Fund shall be made by it, deliver to Custodian
instructions which shall specify with respect to each such purchase:
1. The name of the issuer and description of the security and industry
standard identification number;
2. The number of shares or the principal amount purchased, and accrued
interest, if any;
3. The trade date;
4. The settlement date;
5. The purchase price per unit and the brokerage commission, taxes and
other expenses payable in connection with the purchase;
6. The total amount payable by the Fund upon such purchase;
7. The name of the broker or dealer through whom the purchase was made
and if applicable, the corresponding broker code;
8. The name of the Fund and custody account number with respect to which
purchase was made; and
9. Settlement/Delivery instructions for U.S. domestic locations and
international local market codes.
In accordance with such instructions, Custodian will deliver or cause to
be delivered monies from the account of the applicable Fund to the
broker or other person specified in the instructions relating to such
purchase, such delivery to be made only upon receipt of securities or
other investment instruments therefor in such form as is satisfactory to
Custodian, unless prevailing market settlement practices dictate
otherwise.
G. Sales and Deliveries of Investments of Trust - Other Than Options and
---------------------------------------------------------------------
Futures
-------
Trust will, on each business day on which a sale of investment
securities or foreign exchange of a Fund has been made, deliver to
Custodian instructions specifying with respect to each such sale:
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1. The name of the issuer and description of the securities and industry
standard identification number;
2. The number of shares or principal amount sold, and the accrued
interest, if any;
3. The date on which the securities sold were purchased or other
information identifying the securities sold and to be delivered;
4. The trade date;
5. The settlement date;
6. The sale price per unit and the brokerage commission, taxes or other
information identifying the securities sold and to be delivered;
7. The total amount to be received by the Fund upon such sale;
8. The name of the broker or dealer through whom the purchase was made
and if applicable, the corresponding broker code;
9. The name of the Fund and custody account number with respect to which
the sale was made; and
10. Settlement/Delivery instructions for U.S. domestic locations and
international local market codes.
In accordance with such instructions, Custodian will deliver or cause to
be delivered the securities thus designated as sold for the account of
the applicable Fund to the broker or other person specified in the
instructions relating to such sale, such delivery to be made only upon
receipt of payment therefor in such form as is satisfactory to Custodian,
unless prevailing market settlement practices dictate otherwise.
H. Purchases or Sales (or Exercise or Closing) of Security Options, Options
------------------------------------------------------------------------
on Indices, Security Index Futures Contracts, Interest Rate Futures
-------------------------------------------------------------------
Contracts or Foreign Currency Futures Contracts or Options on Index
-------------------------------------------------------------------
Futures Contracts
-----------------
Trust will, on each business day on which a purchase or sale or exercise
or closing of the following options and/or futures shall be made by it,
deliver to Custodian instructions which shall specify with respect to
each such purchase or sale or exercise or closing the information set
forth below. With respect to purchases of such options and/or futures in
accordance with such instructions Custodian will pay for such Assets out
of monies held for the Account of the applicable Fund and receive the
portfolio Assets so purchased by or for the Account of the applicable
Fund; such payment will be made only upon receipt by Custodian of the
Assets so purchased in form for transfer satisfactory to Custodian and in
accordance with prevailing market practice.
With respect to the sale, exercise or closing of such options and/or
futures, in accordance with such instructions Custodian will delivery or
causes to be delivered the futures and/or options so designated in such
instructions to the broker or other person specified in the instructions,
such delivery to be made in such form as is satisfactory to Custodian
and in accordance with customs prevailing with respect to futures or
options, only upon receipt of payment therefor.
1. Security Options
a. The underlying security;
b. The price at which purchased or sold;
4
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening, exercising, expiring or
closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. The name of the broker or dealer through whom the purchase was
made and if applicable, the corresponding broker code;
j. The name of the Fund and custody account number with respect to
which the purchase or sale was made; and
k. Trade Date and Settlement Date.
2. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. Number of contracts;
e. Trade date and settlement date;
f. The expiration date;
g. Whether the transaction is an opening, exercising, expiring or
closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased;
j. The name of the broker or dealer through whom the sale or
purchase was made and if applicable, the corresponding broker
code, and other applicable settlement instructions; and
k. The name of the Fund and custody account number with respect to
which the purchase or sale was made.
3. Security Index Futures Contracts, Interest Rate Futures Contracts or
Foreign Currency Futures Contracts
a. The last trading date specified in the contract and, when
available, the closing level, thereof;
b. The index level, or value of the underlying security or currency
on the date the contract is entered into;
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c. The multiple;
d. Any margin requirements identifying the securities pledged as
collateral;
e. The name and address of the futures commission merchant and
applicable broker code through whom the sale or purchase was
made, and other applicable settlement instructions;
f. The name of the Fund and custody account number for which the
purchase or sale was made;
g. Trade date and settlement date;
h. Expiration of the contract;
i. Number of contracts;
j. Information regarding the position of the contract being "long"
or "short"; and
k. Whether the transaction involves an opening, exercising, expiring
or closing transaction.
4. Options on Index Futures Contracts
a. The underlying index futures contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening, exercising, expiring
or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. The market on which the option is traded;
j. The name of the Fund and custody account number for which the
option is traded;
k. Trade date and settlement date;
l. The name of the broker or dealer through whom the sale or
purchase was made and if applicable, the corresponding broker
code, and other applicable settlement instructions.
I. Securities Pledged or Loaned
----------------------------
1. Upon receipt of instructions, Custodian will release or cause to be
released securities held in custody to the pledgee designated in
such instructions by way of pledge or hypothecation to secure any
loan incurred by a Fund; provided, however, that the securities
shall be released only upon payment to Custodian of the monies
borrowed, except that in cases where additional collateral is
required to secure a borrowing already made, further securities may
be released or caused to be released for that purpose upon receipt
of instructions; Custodian will pay, but only from funds
6
available for such purpose, any such loan upon redelivery to it of
the securities pledged or hypothecated therefor and upon surrender
of the note or notes evidencing such loan.
2. Custodian will release securities held in custody to a borrower in
accordance with a securities lending agreement agreed to by Trust.
J. Routine Matters
---------------
Custodian will, in general, attend to all routine and mechanical matters
agreed to by Custodian in connection with the sale, exchange,
substitution, purchase, transfer, or other dealings with securities or
other property of the Funds except as may be otherwise provided in this
Agreement or directed from time to time by the Board. For clarity,
Custodian shall not be under any duty to take any action on behalf of
Trust except as specifically set forth herein.
K. Cash and Deposits
-----------------
All monies received by Custodian from or for the Account of a Fund shall
be credited to said Account, barring events not in control of Custodian
including strikes, lockouts or labor disputes, riots, war or equipment
or transmission failure or damages, fire, flood, earthquake or other
natural disaster, action or inaction of governmental authority or other
causes beyond its control, at 8:00 a.m., Eastern time, on the next
business day after deposit of any check into such Account, and will be
available for withdrawal by Trust in the form of Federal Funds.
Custodian may open and maintain an account in such other banks or trust
companies as may be designated by Custodian, such account, however, to
be in the name of the applicable Fund and subject only to the
Custodian's draft or order. Any cash maintained by Trust with Custodian
under this Agreement with respect to a particular Fund, wherein there is
deposited cash, interest, dividends or the proceeds of security sales,
shall be deemed to be a part of the Account for such Fund and shall be
subject to all of the other terms and provisions of the Agreement.
L. Sweep Accounts
--------------
PFPC Trust will sweep any net excess cash balances daily into an
investment vehicle or other instrument designated in writing by the Fund
(from which PFPC Trust may receive compensation), so long as the vehicle
or instrument is acceptable to PFPC Trust.
M. Income and Other Payments to Trust
----------------------------------
Dividends, interest payments and final principal redemptions with
respect to registered United States domestic securities (i.e.,
securities having an industry CUSIP number) shall be credited to the
applicable Fund on payable date. Dividends, interest payments and final
principal redemptions with respect to foreign securities shall only be
credited to the applicable Fund on payable date to the extent that the
applicable foreign sub-custodian so credits such amounts; provided
however dividends, interest payments and final principal redemptions
with respect to foreign securities held in EAFE countries will be
credited on payable date unless the market practice and conditions with
respect to such securities dictate otherwise. No amount will be credited
on payable date with respect to securities that are in default.
Custodian will actively:
1. Claim, collect and receive and deposit for the Account of each Fund
of Trust all income and other payments (including, but not limited
to, dividends, stock dividends, rights and other similar items)
which become due and payable on or after the effective date of this
Agreement with respect to the securities deposited under this
Agreement, and credit the Account of each Fund of Trust with such
income;
2. Take such other action as may be necessary or proper connection
with:
7
a. the collection, receipt and deposit of such income and other
payments, including but not limited to the presentation for
payment of:
(1) all coupons and other income items requiring presentation;
and
(2) all other securities which may mature or be called,
redeemed, retired or otherwise become payable and regarding
which Custodian has actual knowledge, or notice; and
b. the endorsement for collection, in the name of each Fund of
Trust, of all checks, drafts or other negotiable instruments.
If Custodian in its sole discretion credits an Account with respect to
(a) income, dividends, distributions, coupons, option premiums, other
payments or similar items on a contractual payment date or otherwise in
advance of Custodian's actual receipt of the amount due, (b) the
proceeds of any sale or other disposition of assets on the contractual
settlement date or otherwise in advance of Custodian's actual receipt of
the amount due or (c) provisional crediting of any amounts due, and (i)
Custodian is subsequently unable to collect full and final payment for
the amounts so credited within a reasonable time period using reasonable
efforts or (ii) pursuant to standard industry practice, law or
regulation Custodian is required to repay to a third party such amounts
so credited, or if any property has been incorrectly credited, Custodian
shall have the absolute right in its sole discretion without demand to
reverse any such credit or payment, to debit or deduct the amount of
such credit or payment from the Account, and to otherwise pursue
recovery of any such amounts so credited from Trust. Trust hereby grants
a first priority contractual possessory security interest in and a right
of set off against the assets maintained in an Account hereunder in the
amount necessary to secure the return and payment to Custodian of any
credit made by Custodian (including charges related thereto) to such
Account.
All collections of monies or other property in respect, or which are to
be come part, of the Assets maintained hereunder shall be at the sole
risk of Trust. If payment is not received by Custodian within a
reasonable time after proper demands have been made, Custodian shall
notify Trust in writing, including copies of all demand letters, any
written responses and memoranda of all oral responses and shall await
instructions from Trust. Custodian shall not be obliged to take legal
action for collection unless and until reasonably indemnified to its
satisfaction. Custodian shall also notify Trust as soon as reasonably
practicable whenever income due on securities is not collected in due
course and shall provide Trust with periodic status reports of such
income collected after a reasonable time.
N. Payment of Dividends and other Distributions
--------------------------------------------
Upon receipt of instructions, Custodian will pay to Trust's transfer
agent, as agent for the shareholders, an amount equal to the amount of
dividends and distributions stated in the instructions to be distributed
in cash by the transfer agent to shareholders, or, in lieu of paying
Trust's transfer agent, 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 Trust,
Custodian and Trust's transfer agent.
O. Proxies and Notices
-------------------
Custodian or its nominee will promptly deliver or mail or have delivered
or mailed to Trust all proxies (properly signed to the extent Custodian
is the registered owner of the security to which the proxy relates), all
notices of meetings, all proxy statements and other notices, requests or
announcements affecting or relating to securities held by Custodian for
a Fund, provided the same have first been received by Custodian in its
capacity as custodian for the Fund. Neither Custodian nor its nominee
shall vote any proxy. Neither Custodian nor its nominee shall take any
voluntary corporate action, except in accordance with instructions and
provided that such instructions are received by Custodian within such
time frames as Custodian shall required. Custodian shall carry out
mandatory corporate
8
actions in accordance with its standard operating procedures. Responses
to class actions are the responsibility of Trust.
P. Disbursements
-------------
Custodian will pay or cause to be paid bills, statements and other
obligations, or other amounts on behalf of, Trust or a Fund (including
but not limited to obligations in connection with the conversion,
exchange or surrender of securities owned by a Fund, interest charges,
dividend disbursements, taxes, management fees, custodian fees, legal
fees, auditors' fees, transfer agents' fees, brokerage commissions,
compensation to personnel, and other operating expenses of Trust or a
Fund) pursuant to instructions of Trust setting forth the name of the
person to whom payment is to be made, the amount of the payment, the
Fund to be charged, and the purpose of the payment. Notwithstanding the
foregoing, Custodian shall be entitled to deduct its fees and expenses
in accordance with the arrangement agreed in the fee letter between
Custodian and Trust.
Q. Daily Statement of Accounts.
----------------------------
Custodian will, within a reasonable time, render to Trust as of the
close of business on each day, a detailed statement of the amounts
received or paid and of securities received or delivered for the account
of each Fund of Trust during said day. Custodian will, from time to
time, render in its standard format, a detailed statement of the
securities and monies held for one or more of the Funds under this
Agreement, and Custodian will maintain such books and records as are
necessary to enable it to do so and will permit such persons as are
authorized by Trust, and if demanded, federal and state regulatory
agencies to examine the securities, accounts, books and records of
Trust. In any requested review by a regulatory authority of Trust's
accounts and records maintained by Custodian, Custodian will furnish any
information or reports regarding accounts and records of Trust which may
be requested in order to ascertain whether the operations of Trust are
being conducted in a manner consistent with applicable laws and
regulations. Upon the instructions of Trust or as demanded by federal or
state regulatory agencies, Custodian will instruct a sub-custodian to
permit such persons as are authorized by Trust and if demanded, federal
and state regulatory agencies to examine the books, records and
securities held by sub-custodian which relate to Trust.
Custodian acknowledges and understands that Trust engages in securities
lending and overnight investing (often through repurchase transactions).
In connection therewith, Custodian agrees to provide to Trust, to any
portfolio manager of Trust, to the Adviser of Trust, or to any third
party authorized by Trust, securities holdings, and sale transaction
information, on a real time basis or at such times as may be required in
order for such parties to conduct securities lending and overnight
investment programs. Custodian agrees to use reasonable efforts to
cooperate with Trust, its Adviser, its portfolio managers, and
authorized third party lending agents and overnight investment agents to
facilitate communications, and to permit and use reasonable efforts to
help facilitate on-line access and appropriate interfaces to facilitate
computer and personal access to such information as is necessary to
effect securities lending and overnight investment programs.
R. Appointment of Sub-Custodian
----------------------------
1. Notwithstanding any other provisions of this Agreement, all or any
of the monies or securities of Trust may be held in Custodian's own
custody or one or more other banks or trust companies acting as sub-
custodians as may be selected by Custodian. For clarification,
references herein to a "sub-custodian" include a foreign sub-
custodian. Any such sub-custodian must have the qualifications
required for custodian under the 1940 Act. The sub-custodian may
participate directly or indirectly in the Depository Trust Company,
any other depository, or the Treasury/Federal Reserve Book Entry
System (as such entity is defined at 17 CFR Sec. 270.17f-4(b)). The
sub-custodian may also participate directly or indirectly in any
foreign securities depository or clearing or settlement system. Use
of any depository, clearing or settlement system
9
or book-entry system will subject Trust to the rules, regulations
and practices applicable to that depository, clearing or settlement
system or book-entry system.
2. Monitoring Responsibilities. Custodian shall furnish annually to
---------------------------
Trust, upon the request of Trust, industry standard information
concerning any sub-custodian and any foreign sub-custodians utilized
to maintain Trust Assets.
S. Accounts and Records
--------------------
1. Custodian shall allow, upon not more than 48 hours' notice and
during the course of Custodian's regular business hours, any
insurance or banking authority authorized by Trust to inspect the
securities held by Custodian and all of Custodian's records
pertaining to Trust's securities held by Custodian.
2. Custodian relies upon Trust to furnish, in writing, accurate and
timely information to complete Trust's records and perform
Custodian's other duties contemplated herein.
3. Custodian shall incur no liability and Trust shall indemnify and
hold harmless Custodian from and against any liability arising from
any failure of Trust to furnish such information in a timely and
accurate manner, even if Trust subsequently provides accurate but
untimely information.
T. Accounts and Records Property of Trust
--------------------------------------
Custodian acknowledges that all of the accounts and records maintained
by Custodian pursuant to this Agreement are the property of Trust, and
will be made available to Trust for inspection or reproduction within a
reasonable period of time, upon demand. Custodian will assist Trust's
independent auditors, or upon approval of Trust, or upon demand, any
regulatory body, in any requested review of Trust's accounts and records
but shall be reimbursed for all expenses and employee time invested in
any such review outside of routine and normal periodic reviews. Upon
reasonable request for information from the Trust, Custodian will supply
necessary requested data in Custodian's possession for Trust's
completion of any necessary tax returns, questionnaires, periodic
reports to regulatory authorities and Shareholders and such other
reports and information requests as Trust and Custodian shall agree upon
from time to time.
U. Adoption of Procedures
----------------------
Custodian may conclusively assume that no procedure approved by Trust,
or directed by Trust, conflicts with or violates any requirements of its
prospectus, Declaration of Trust, Bylaws, or any rule or regulation, or
any regulatory body or governmental agency. Trust will be responsible to
notify Custodian of any changes in state statutes, regulations, rules or
policies which might necessitate changes in Custodian's
responsibilities.
V. Advances
--------
In the event that a payment necessary to settle a transaction or to
otherwise meet a payment obligation authorized by instructions or by
this Agreement would exceed the monies available for such payment,
Custodian may in its absolute discretion (but shall not be obligated to)
advance or arrange for the advancement of such excess amount, which
advance shall be considered a loan payable upon demand and shall bear
interest at the rate customarily charged by the provider of the advance
for similar transactions. Trust hereby grants a first priority
contractual possessory security interest in and a right of set off
against the assets maintained hereunder with respect to a particular
Fund in the amount necessary to secure the return and payment to
Custodian of any advance made by Custodian (including charges related
thereto) with respect to such Fund
W. Tax Reclaims.
-------------
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1. Custodian shall perform tax reclaim services with respect to taxation
levied by the revenue authorities in each country in which Trust
invests, provided such country has a tax reclaim procedure. In
connection therewith and subject to the provisions of this Section W,
Custodian shall apply for and use reasonable efforts to obtain a
reduction of withholding tax and any refund of any tax paid or tax
credits which apply in respect of income payments on the Assets for
Trust's benefit which Custodian is aware may be available to Trust.
2. The provision of tax reclaim services by Custodian is conditional
upon Custodian's receiving from Trust or, to the extent the Assets
are beneficially owned by others, from each beneficial owner, (a)
such information as is required by applicable law and (b) such other
information as Custodian may request. Trust acknowledges that, if
Custodian does not receive such information Custodian shall be unable
to provide tax reclaim services.
3. Custodian shall have no responsibility with regard to Trust's tax
position or tax status in any jurisdiction.
4. Trust confirms that Custodian is authorized to disclose any
information requested by any revenue authority or any governmental
body in relation to Trust or the securities and/or cash held for
Trust.
X. Custodian agrees to provide the following documents, containing the
information specified below, to Trust which it typically provides to its
clients.
A. Tax News Updates (contains information regarding withholding tax and
double taxation treaties and other market changes relating to tax
issues).
B. Market Information Updates (contains information regarding market
changes in countries in which clients invest; this may include issues
as diverse as a currency devaluation or a procedural change on tax
withholding in a particular country).
C. Market Profiles...(contains information regarding each market, such
as the forms and types of instruments traded, stock exchange,
securities identification system, depositories/clearing agencies,
registration, standard settlement cycles, income collection and
securities lending).
D. Market Flashes (contains information regarding regulatory changes,
tax rate changes, market conditions, general exchange and depository
information).
E. Tax Documentation Package (contains tax documentation relevant to
various jurisdictions in which clients invest).
F. Country Specific Account Opening Package (contains information
regarding documentation required for opening an account).
IV. DUTIES OF CUSTODIAN WITH RESPECT TO PROPERTY OF TRUST HELD OUTSIDE OF THE
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UNITED STATES.
--------------
A. Assets to be Held. Trust shall limit the securities and other assets
------------------
maintained in the custody of the foreign sub-custodians to those assets
referenced in Rule 17f-5 under the 1940 Act or other applicable rule or
regulation. Assets of the Trust may also be maintained in foreign
securities depositories.
B. Identification of Securities. Custodian shall identify on its books as
-----------------------------
belonging to the Funds, the foreign securities of the Funds held by each
foreign sub-custodian and each foreign securities depository. Each
agreement pursuant to which Custodian employs a sub-custodian shall, to
the extent consistent with relevant laws, rules and practices, require
that such institution establish a custody account for Custodian or Trust
or the respective Funds. In the event that such sub-custodian deposits
the Funds'
11
securities in a foreign securities depository, the sub-custodian shall,
to the extent consistent with relevant laws, rules and practices,
identify on its books as belonging to Custodian as agent for its
customers, the securities so deposited.
C. Branches of U.S. Banks. The provisions of this Section IV. shall not
-----------------------
apply where the custody of Trust assets is maintained in a foreign
branch of a banking institution which is a "bank" as defined by Section
2(a) (5) of the 1940 Act which meets the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a sub-
custodian shall be governed by Sub-Section III.R.1. of this Agreement.
D. Foreign Exchange. Custodian or sub-custodians may enter into or arrange
----------------
foreign exchange transactions in order to facilitate transactions in
Assets with respect to the Funds, and such entities and/or their
affiliates may receive compensation in connection with such foreign
exchange transactions.
E. Additional Matters with Respect to Property of the Funds Held Outside
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the United States.
-----------------
1. Shareholder Rights. With respect to the foreign securities held
------------------
pursuant to this Agreement, Custodian will use reasonable commercial
efforts to facilitate the exercise of voting and other shareholder
rights, subject always to the limitations on Custodian's
responsibilities set forth in Section III. O. above and to the laws,
regulations and practical constraints that may exist in the country
where such securities are issued or maintained. Trust acknowledges
that local conditions, including lack of regulations, onerous
procedural obligations, lack of notice and other factors may have
the effect of severely limiting the ability of Trust to exercise
shareholder rights.
2. Tax Law. Custodian shall have no responsibility or liability for
-------
any obligations now or hereafter imposed on Trust, the Funds or
Custodian as custodian of the Funds by the tax law of the United
States or of any state or political subdivision thereof. It shall be
the responsibility of Trust to notify Custodian of the obligations
imposed on Trust with respect to the Funds or Custodian as custodian
of the Funds by the tax law of countries other than those mentioned
in the above sentence, including responsibility for withholding and
other taxes, assessments or other governmental charges,
certifications and governmental reporting. The sole responsibility
of Custodian with regard to such tax law shall be to as set forth in
Section III. W.
V. INSTRUCTIONS. The term "instructions", as used herein, means written
-------------
instructions to Custodian from a designated representative of Trust or a
person reasonably believed by Custodian to be such a representative.
Certified copies of Resolutions of the Board naming one or more designated
representatives to give instructions in the name and on behalf of Trust,
may be received and accepted from time to time by Custodian as conclusive
evidence of the authority of any designated representative to act for Trust
and may be considered to be in full force and effect (and Custodian will be
fully protected in acting in reliance thereon) until receipt by Custodian
of notice to the contrary. Unless the Resolution delegating authority to
any person to give instructions specifically requires that the approval of
anyone else will first have been obtained, Custodian will be under no
obligation to inquire into the right of the person giving such instructions
to do so. Notwithstanding any of the foregoing provisions of this Section
V., no authorizations or instructions received by Custodian from Trust,
will be deemed to authorize or permit any trustee, officer, employee, or
agent of Trust to withdraw any of the securities or similar investments of
Trust upon the mere receipt of such authorization or instructions from such
trustee, officer, employee or agent.
Notwithstanding any other provision of this Agreement, Custodian, upon
receipt (and acknowledgment if required at the sole discretion of
Custodian) of the instructions will use reasonable efforts to undertake to
deliver for a Fund's account monies, (provided such monies are on hand or
available) in connection with the Fund's transactions and to wire transfer
such monies to such broker, dealer, sub-custodian, bank or other agent
specified in such instructions.
VI. STANDARDS OF CARE AND LIABILITY OF CUSTODIAN:
--------------------------------------------
12
A. Custodian shall be liable to Trust for any failure to meet any standard
of care described below and as otherwise described below.
1. Custodian's Standard of Care for Services. In connection with all
-----------------------------------------
the duties and responsibilities of Custodian under this Agreement,
Custodian shall exercise the standard of reasonable care, prudence
and diligence that a professional custodian engaged in the custody
of mutual funds and having professional expertise in financial and
securities processing transactions and custody for mutual funds
would observe. Custodian shall be liable for any loss incurred by
Trust as the result of the action or omission of a sub-custodian
only to the extent that such loss is the result of the sub-
custodian's negligence or willful misconduct (such negligence or
willful misconduct to be measured against industry standards in the
jurisdiction to which the particular transaction relates);
Custodian's liability for any loss of assets resulting from such
negligence or willful misconduct will not exceed the fair market
value of such assets, at the time of such negligence or willful
misconduct. Notwithstanding anything in this Agreement to the
contrary, Custodian shall not be liable for any action or omission
of any depository, clearing or settlement system, book-entry system,
transfer agent or registrar of uncertificated securities, or other
similar entity, and no depository, clearing or settlement system,
book-entry system, transfer agent or registrar of uncertificated
securities, or other similar entity will be considered an agent or
sub-custodian of Custodian.
2. Additional Provisions Regarding Custodian's Liability. Custodian
-----------------------------------------------------
shall have strict liability for and assume the entire responsibility
for physical loss, damage or injury to United States domestic
custodied physical/certificated Assets occasioned by robbery,
burglary, fire, theft or mysterious disappearance irrespective of
whether such loss, damage or injury occurs while such Assets are in
possession of Custodian or any domestic sub-custodian, including any
officers, directors and employees thereof (hereinafter,
"Affiliates").
In addition to the provisions of Section VI.A.1., Custodian will be
liable for any loss of any United States domestic uncertificated
Assets arising out of the negligence or willful misconduct of
Custodian or its Affiliates. In the event of such loss of such
Assets, upon Trust's demand, Custodian will promptly cause said
Assets to be replaced with Assets of like kind and quality, together
with all rights and privileges pertaining thereto, or, if acceptable
to Trust, remit cash equal to the fair market value of such Assets
as of the date when the loss was discovered, which acceptance will
not unreasonably be denied.
3. Indemnification of Custodian. Custodian shall be held to the
----------------------------
standards provided in this Section VI.A. in carrying out this
Agreement, and provided such standards are met, shall be indemnified
by, and shall be without liability to, Trust for any action taken or
omitted by Custodian in good faith without negligence or willful
misconduct.
4. Subrogation to Claims against Foreign Sub-Custodian. At Trust's
----------------------------------------------------
election, the Funds shall be entitled to be subrogated to the rights
of Custodian with respect to any claims against a foreign sub-
custodian as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Funds have not been
made whole for any such loss, damage, cost, expense, liability or
claim.
5. Custodian may request and obtain the advice and opinion of counsel
(reasonably selected by Custodian) with respect to questions or
matters of law, and it shall be without liability to Trust for any
action taken or omitted by it in good faith, in conformity with such
advice or opinion.
B. Custodian may rely upon statements of Trust's independent certified
public accountants and any representative of Trust authorized to give
instructions, and Custodian shall not be liable for any actions taken,
in good faith, upon such statements.
13
C. If Trust requires Custodian in any capacity to take, with respect to
any securities, any action which involves the payment of money by it,
or which in Custodian's opinion might make it or its nominee liable for
payment of monies or in any other way, Custodian, upon request to Trust
shall be and be kept indemnified by Trust in an amount and form
satisfactory to Custodian against any liability on account of such
action.
D. Custodian shall be protected in acting or not acting as custodian
hereunder upon any instructions, advice, opinion notice, request,
consent, certificate or other instrument or paper received from counsel
(as provided in Section VI.A.4 above) or received from a person
authorized by Trust (or from a person reasonably believed by Custodian
to be such a person). Nothing in this Agreement shall require Custodian
to seek or to follow any such instructions, advise, opinion, notice,
request, consent, certificate or other instrument or paper.
E. Without limiting the generality of the foregoing, Custodian shall be
under no duty or obligation to inquire into, and shall not be liable
for:
1. The legality of the purchase of any security by or for a Fund or
evidence of ownership required by Trust to be received by
Custodian, or the propriety of the decision to purchase or amount
paid therefore;
2. The legality of the sale of any securities by or for a Fund, or the
propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any beneficial interest of
Trust, or the sufficiency of the amount to be received therefore;
4. The legality of the repurchase or redemption of any shares of
beneficial interest of, or the propriety of the amount to be paid
therefore;
5. The legality of the declaration of any dividend of a Fund by Trust,
or the legality of the issue of any shares of beneficial interest
of a Fund of Trust in payment of any stock dividend; or
6. The general risk of investing (including without limit the risks
relating to investing or maintaining Assets in any particular
jurisdiction).
F. Notwithstanding anything in this Agreement to the contrary, neither
Custodian nor any of its affiliates or nominees will be liable for (i)
any consequential, special or indirect losses or damages (whether or
not the likelihood of such losses or damages was known by Custodian or
its affiliates or nominees) or (ii) any losses or damages beyond
Custodian's or its affiliates' or nominees' or sub-custodian's
reasonable control.
G. Custodian agrees to comply with the requirements of the 1940 Act and
the requirements of material laws, rules and regulations of
governmental authorities having jurisdiction over Custodian with
respect to the duties to be performed by Custodian herein. Custodian
assumes no responsibility for compliance by Trust or any other entity.
VII. COMPENSATION. Trust will pay to Custodian such compensation as may be
------------
agreed to in writing by the parties from time to time.
VIII. TERMINATION. The initial term of this Agreement shall be one year, and
------------
thereafter either party to this Agreement may terminate the same by notice
in writing, delivered or mailed, postage prepaid, to the other party
hereto and received not less than sixty (60) days prior to the date upon
which such termination will take effect. Subject to the foregoing and the
other terms hereof, Trust may terminate this Agreement without payment of
any penalty, forfeiture, compulsory buyout amount or performance of any
other obligation which would deter termination. Notwithstanding the
foregoing, should Custodian fail to be
14
registered with its appropriate regulatory authority as a custodian at any
time during the term of this Agreement and such failure to remain so
registered does not permit Custodian to lawfully conduct its activities,
Trust may, on written notice to Custodian, terminate this Agreement and
should either party (the "Breaching Party") be in material breach of any
provision of this Agreement which breach is not cured prior to the thirty
(30) day period after the other party (the Non-Breaching Party") has given
such the Breaching Party written notice specifying the details of the such
material breach, the Non-Breaching Party may, on written notice to the
Breaching Party, terminate this Agreement. Upon termination of this
Agreement, Trust will pay to Custodian such compensation and such
reimbursable disbursements, fees, costs and expenses paid or incurred to
such date and Trust will use its best efforts to obtain a successor
custodian. In addition, in the event Trust gives notice of termination
(unless such termination is derived from Custodian's failure to maintain
its registration or other material breach of any provision of this
Agreement) or Custodian gives notice of termination due to Trust's
material breach, all reasonable expenses associated with the conversion to
a successor custodian will be borne by Trust, provided, however, no such
expenses shall be payable in the event PFPC gives notice of termination
(unless such termination is derived from Trust's material breach of any
provision of this Agreement). Custodian will, upon termination of this
Agreement and (at Custodian's discretion) upon deduction of its accrued
and estimated fees expenses which are due and payable under the terms of
this Agreement, deliver to the successor custodian so specified or
appointed, at Custodian's office, all securities then held by Custodian
hereunder, duly endorsed and in form for transfer, all funds, records and
other properties of Trust deposited with or held by Custodian hereunder,
or will cooperate in effecting changes in book-entries at the Depository
Trust Company or in the Treasury/Federal Reserve Book Entry System
pursuant to 31 CFR Sect. 306.118. In the event Trust does not designate a
successor custodian on or before the date when such termination becomes
effective, then Custodian will deliver the securities, funds, records and
properties of Trust to a bank or trust company at the selection of
Custodian and meeting the qualifications for Custodian, if any, set forth
in the Bylaws of Trust and the 1940 Act and having not less than two
million dollars ($2,000,000) aggregate capital, surplus and undivided
profits, as shown by its last published report. Upon either such delivery
to a successor custodian, Custodian will have no further duties under this
Agreement, although any liabilities and indemnities pursuant to Section
VI. of this Agreement will survive termination of this Agreement.
Thereafter such bank or trust company will be entitled to reasonable
compensation for its services. In the event that no such successor
custodian can be found, Trust will submit to its shareholders, before
permitting delivery of the cash and securities owned by Trust to anyone
other than a successor custodian, the question of whether Trust will be
liquidated or function without a custodian. Notwithstanding the foregoing
requirement as to delivery upon termination of this Agreement, Custodian
may make any other delivery of the securities, funds, records and property
of the Funds which is permitted by the 1940 Act, Trust's Declaration of
Trust and Bylaws then in effect or apply to a court of competent
jurisdiction for the appointment of a successor custodian. Custodian shall
have a security interest in and shall have a right of setoff against
Trust's Assets as security for the payment of its fees, compensation,
costs and expenses.
IX. NOTICES. Notices, requests, instructions and other writings received by
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Trust at Pacific Funds 700 Newport Center Drive, Newport Beach, CA 92660
Attention Robin Yonis or at such other address as Trust may have
designated to Custodian in writing, will be deemed to have been properly
given to Trust hereunder; and notices, requests, instructions and other
writings received by Custodian as its offices at PFPC Trust Company, 8800
Tinicum Boulevard, Philadelphia, PA 19153 Attention: Mutual Fund Custody
Department or to such other address as it may have been designated to
Trust in writing, will be deemed to have been properly given to Custodian
hereunder.
X. CONFIDENTIALITY. Custodian, sub-custodian, or any agent thereof shall not
----------------
disclose or use any records or information obtained pursuant to this
Agreement in any manner whatsoever except as expressly authorized in the
Agreement, will keep confidential any information obtained pursuant to the
arrangements under this Agreement and will disclose such information only
if Trust has authorized such disclosure. The foregoing obligations shall
not apply to information which (a) is already known to the receiving party
at the time it is obtained; (b) is or becomes publicly known or available
through no wrongful act of the receiving party; (c) is rightfully received
from a third party who, to the best of the receiving party's knowledge, is
not under a duty of confidentiality; (d) is released by the protected
party to a third party without restriction; (e) is required to be
disclosed by the receiving party pursuant to a required of a court order,
subpoena,
15
governmental or regulatory agency or law; (f) is relevant to the defense
of any claim or cause of action asserted against the receiving party; or
(g) has been or is independently developed or obtained by the receiving
party.
XI. RESERVATION OF AUTHORITY. Notwithstanding any other provision of this
-------------------------
Agreement, it is understood and agreed that Trust shall at all times
retain the ultimate responsibility for direction and control of all
services provided pursuant to this Agreement, and retain the right to
direct, approve, or disapprove any action hereunder, which responsibility
and right shall be reasonably exercised; provided that Custodian shall not
be under any duty to take any action on behalf of Trust except as
specifically set forth herein.
XII. MISCELLANEOUS.
--------------
A. This Agreement is executed and delivered in the State of Delaware and
shall be governed by the laws of said state.
B. All the terms and provisions of this Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the respective successor
and assigns of the parties hereto.
C. No provisions of the Agreement may be amended or modified, in any
manner except by a written agreement properly authorized and executed
by both parties hereto.
D. 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 of effect.
E. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.
F. If any part, term or provision of this Agreement is by the courts held
to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not be
affected, and the rights and obligations of the parties shall be
construed and enforced as if the Agreement did not contain the
particular part, term or provision held to be illegal or invalid.
G. This Agreement may not be assigned by either party without prior
written consent of the other party, provided that (upon sixty (60) days
prior written notice to Trust) Custodian may assign this Agreement to
an affiliate of Custodian.
H. If any provision of the Agreement, either in its present form or as
amended from time to time, limits, qualifies or conflicts with the 1940
Act and the rules and regulations promulgated thereunder, such
statutes, rules and regulations shall be deemed to control and
supersede such provision without nullifying or terminating the
remainder of the provisions of this Agreement.
I. A copy of the Certificate of Trust is on file with the Secretary of the
State of Delaware. The Certificate of Trust has been executed on behalf
of Trust by a Trustee of Trust is her capacity as Trustee of Trust and
not individually. The obligations of this Custody Agreement shall be
binding upon the assets and property of Trust and shall not be binding
upon any Trustee, Officer or shareholder of Trust individually.
J. Custodian shall retain title to and ownership of any and all of its
data bases, computer programs, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade
secrets (which are disclosed to the Trust as such), and other related
legal rights and derivative works thereof, utilized by Custodian in
connection with the services provided under this Agreement by Custodian
to Trust.
K. Notwithstanding the above, Custodian agrees that Trust and/or its
employees and agents, shall be free to use and employ their general
know-how, skills, and expertise, and to use, disclose, and employ any
16
generalized ideas, concepts, know-how, methods, techniques or skills
gained or learned during the course of any services performed
hereunder, subject to their obligations with respect to confidentiality
set forth in this Agreement and also subject to PFPC's intellectual
property rights.
L. Except as expressly provided in this Agreement, Custodian hereby
disclaims all representations and warranties, express or implied, made
to Trust or any other person, including, without limitation, any
warranties regarding quality, suitability, merchantability, fitness for
a particular purpose or otherwise (irrespective of any course of
dealing, custom or usage of trade), of any services or any goods
provided incidental to services provided under this Agreement.
Custodian disclaims any warranty of title or non-infringement except as
otherwise set forth in this Agreement.
Custodian represents that it does meet all requirements of a custodian of
Section 17(f) of the 1940 Act and any Rules thereunder and agrees to
immediately notify Trust in the event that Custodian, for any reason, no
longer meets such requirements.
17
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers to be effective as of the date first above
written.
PFPC TRUST COMPANY PACIFIC FUNDS
By: /s/ Joseph Gramlich By: /s/ Diane N. Ledger
----------------------- -----------------------
Name: Joseph Gramlich Name: Diane N. Ledger
---------------------
Title: Chairman Title: Vice President & Assistant Secretary
--------------------
18
EXHIBIT 1
Funds
PF AIM Blue Chip Fund
PF AIM Aggressive Growth Fund
PF INVESCO Health Sciences Fund
PF INVESCO Technology Fund
PF Janus Strategic Value Fund
PF Janus Growth LT Fund
PF Lazard International Value Fund
PF MFS Mid-Cap Growth Fund
PF MFS Global Growth Fund
PF PIMCO Managed Bond Fund
PF Pacific Life Money Market Fund
PF Salomon Brothers Large-Cap Value Fund
19