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EXHIBIT (8)(a)
CUSTODIAN SERVICES AGREEMENT
This Agreement is made as of March 29, 1994, by and between SCHWAB
ANNUITY PORTFOLIOS, a Massachusetts business trust (the "Fund"), and PNC BANK,
NATIONAL ASSOCIATION ("PNC Bank"), a national banking association.
The Fund is registered as an open-end investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Fund wishes to
retain PNC Bank to provide custody services, and PNC Bank wishes to furnish such
services to each of the Fund's investment portfolios listed on Schedule A,
hereto (each a "Portfolio" and collectively the "Portfolios"), either directly
or through an affiliate or affiliates, as more fully described herein.
In consideration of the premises and mutual covenants herein contained,
the parties agree as follows:
1. Definitions.
(a) "Authorized Person". The term "Authorized Person"
shall mean any officer of the Fund and any other person, who is duly authorized
by the Fund's Governing Board, to give Oral and Written Instructions on behalf
of the Fund. Such persons are listed in the Certificate attached hereto as the
Authorized Persons Appendix.
(b) "Book-Entry System". The term "Book-Entry System"
means Federal Reserve Treasury book-entry system for United States and federal
agency securities, its successor or successors, and its nominee or nominees and
any book-entry system maintained by an
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exchange registered with the SEC under the 1934 Act.
(c) "CFTC". The term "CFTC" shall mean the Commodities
Futures Trading Commission.
(d) "Governing Board". The term "Governing Board" shall mean
the Fund's Board of Directors if the Fund is a corporation or the Fund's Board
of Trustees if the Fund is a trust, or, where duly authorized, a competent
committee thereof.
(e) "Oral Instructions". The term "Oral Instructions"
shall mean oral instructions received by PNC Bank from an Authorized Person or
from a person reasonably believed by PNC Bank to be an Authorized Person.
(f) "SEC". The term "SEC" shall mean the Securities and
Exchange Commission.
(g) "Securities and Commodities Laws". The terms the "1933
Act" shall mean the Securities Act of 1933, the "1934 Act" shall mean the
Securities Exchange Act of 1934, the "1940 Act" shall mean the Investment
Company Act of 1940, as amended, and the "CEA" shall mean the Commodities
Exchange Act, as amended.
(h) "Shares". The term "Shares" shall mean the shares of stock
of any series or class of the Fund, or, where appropriate, units of beneficial
interest in a trust where the Fund is organized as a Trust.
(i) "Property". The term "Property" shall mean:
(i) any and all securities and other investment items
which the Fund may from time to time
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deposit, or cause to be deposited, with PNC Bank or which PNC
Bank may from time to time hold for the Fund;
(ii) All income in respect of any of such securities
or other investment items;
(iii) all proceeds of the sale of any of such
securities or investment items; and
(iv) all proceeds of the sale of securities issued by
the Fund, which are received by PNC Bank from time to time,
from or on behalf of the Fund.
(j) "Written Instructions". The term "Written Instructions"
shall mean written instructions signed by two Authorized Persons and received by
PNC Bank. The instructions may be delivered by hand, mail, tested telegram,
cable, telex or facsimile sending device.
2. Appointment. The Fund hereby appoints PNC Bank to provide custodian
services to each of the Portfolios listed in Schedule A, hereto, and PNC Bank
accepts such appointment and agrees to furnish such services.
The Fund may from time to time issue separate series or classes or
classify and reclassify shares of such series or class. PFPC shall identify to
each such series or class property belonging to such series or class and in such
reports, confirmations and notices to the Fund called for under this Agreement
shall identify the series or class to which such report,
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confirmation or notice pertains.
3. Delivery of Documents. The Fund has provided or, where
applicable, will provide PNC Bank with the following:
(a) certified or authenticated copies of the resolutions of the
Fund's Governing Board, approving the appointment of PNC Bank
or its affiliates to provide services;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of the Fund's advisory agreement or agreements;
(d) a copy of the Fund's distribution agreement or agreements;
(e) a copy of the Fund's administration agreements if PNC Bank is
not providing the Fund with such services;
(f) copies of any shareholder servicing agreements made in respect
of the Fund; and
(g) certified or authenticated copies of any and all amendments or
supplements to the foregoing.
4. Compliance with Government Rules and Regulations. PNC Bank
undertakes to comply with all applicable requirements of the Securities and
Commodities Laws, and any laws, rules and regulations of governmental
authorities having jurisdiction with respect to all duties to be performed by
PNC Bank hereunder. Except as specifically set forth herein, PNC Bank assumes
no
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responsibility for such compliance by the Fund.
5. Instructions. Unless otherwise provided in this Agreement, PNC Bank
shall act only upon Oral and Written Instructions. PNC Bank shall be entitled to
rely upon any Oral and Written Instructions it receives from an Authorized
Persons (or from a person reasonably believed by PNC Bank to be an Authorized
Person) pursuant to this Agreement. PNC Bank may assume that any Oral or Written
Instructions received hereunder are not in any way inconsistent with the
provisions of organizational documents or this Agreement or of any vote,
resolution or proceeding of the Fund's Governing Board or of the Fund's
shareholders.
The Fund agrees to forward to PNC Bank Written Instructions confirming
Oral Instructions so that PNC Bank receives the Written Instructions by the
close of business on the same day that such Oral Instructions are received. The
fact that such confirming Written Instructions are not received by PNC Bank
shall in no way invalidate the transactions or enforceability of the
transactions authorized by the Oral Instructions.
The Fund further agrees that PNC Bank shall incur no liability to the
Fund in acting upon Oral or Written Instructions provided such instructions
reasonably appear to have been received from an Authorized Person.
6. Right to Receive Advice.
(a) Advice of the Fund. If PNC Bank is in doubt as to any
action it should or should not take, PNC Bank may request
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directions or advice, including Oral or Written Instructions, from the Fund.
(b) Advice of Counsel. If PNC Bank shall be in doubt as to any
questions of law pertaining to any action it should or should not take, PNC Bank
may request advice at its own cost from such counsel of its own choosing (who
may be counsel for the Fund, the Fund's advisor or PNC Bank, at the option of
PNC Bank).
(c) Conflicting Advice. In the event of a conflict between
directions, advice or Oral or Written Instructions PNC Bank receives from the
Fund, and the advice it receives from counsel, PNC Bank shall be entitled to
rely upon and follow the advice of counsel.
(d) Protection of PNC Bank. PNC Bank shall be protected in any
action it takes or does not take in reliance upon directions, advice or Oral or
Written Instructions it receives from the Fund or from counsel to the Fund and
which PNC Bank believes, in good faith, to be consistent with those directions,
advice or Oral or Written Instructions.
Nothing in this paragraph shall be construed so as to impose an
obligation upon PNC Bank (i) to seek such directions, advice or Oral or Written
Instructions, or (ii) to act in accordance with such directions, advice or Oral
or Written Instructions unless, under the terms of other provisions of this
Agreement, the same is a condition of PNC Bank's properly taking or not taking
such action.
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7. Records. The books and records pertaining to the Fund, which are in
the possession of PNC Bank, shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws, rules and regulations. The Fund, or the Fund's
Authorized Persons, shall have access to such books and records at all time
during PNC Bank's normal business hours. Upon the reasonable request of the
Fund, copies of any such books and records shall be provided by PNC Bank to the
Fund or to an Authorized Person of the Fund, at the Fund's expense.
8. Confidentiality. PNC Bank agrees to keep confidential all records of
the Fund and information relative to the Fund and its Shareholders (past,
present and potential), unless the release of such records or information is
otherwise consented to, in writing, by the Fund. The Fund agrees that such
consent shall not be unreasonably withheld. The Fund further agrees that, should
PNC Bank be required to provide such information or records to duly constituted
authorities (who may institute civil or criminal contempt proceedings for
failure to comply), PNC Bank shall not be required to seek the Fund's consent
prior to disclosing such information.
9. Cooperation with Accountants. PNC Bank shall cooperate with the
Fund's independent public accountants and shall take all reasonable action in
the performance of its obligations under this Agreement to ensure that the
necessary information is made available to such accountants for the expression
of their opinion,
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as required by the Fund.
10. Disaster Recovery. PNC Bank shall enter into and shall maintain in
effect with appropriate parties one or more agreements making reasonable
provision for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. In the event of equipment failures,
PNC Bank shall, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions but shall have no liability with respect thereto.
11. Compensation. As compensation for services rendered by PNC Bank
during the term of this Agreement, the Fund will pay to PNC Bank a fee or fees
as may be agreed to in writing by the Fund and PNC Bank from time to time.
12. Indemnification. The Fund agrees to indemnify and hold harmless PNC
Bank and its nominees from all taxes, charges, expenses, assessment, claims and
liabilities (including, without limitation, liabilities arising under the
Securities and Commodities Laws, and any state and foreign securities and blue
sky laws, and amendments thereto, and expenses, including (without limitation)
attorneys' fees and disbursements, arising directly or indirectly from any
action which PNC Bank takes or does not take (i) at the request or on the
direction of or in reliance on the advice of the Fund or (ii) upon Oral or
Written Instructions. Neither PNC Bank, nor any of its nominees, shall be
indemnified against any liability to the Fund or to its shareholders (or any
expenses incident to such liability) arising out of PNC Bank's own
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willful misfeasance, bad faith, gross negligence or reckless disregard of its
duties and obligations under this Agreement.
13. Responsibility of PNC Bank. PNC Bank shall be under no duty to take
any action on behalf of the Fund except as specifically set forth herein or as
may be specifically agreed to by PNC Bank, in writing. PNC Bank shall be
obligated to exercise reasonable care and diligence in the performance of its
duties hereunder, to act in good faith and to use its best effort, within
reasonable limits, in performing Services provided for under this Agreement. PNC
Bank shall be responsible for damages arising out of its failure to perform its
duties under this Agreement arising out of PNC Bank's negligence.
Without limiting the generality of the foregoing or of any other
provision of this Agreement, PNC Bank, in connection with its duties under this
Agreement, shall not be under any duty or obligation to inquire into and shall
not be liable for (a) the validity or invalidity or authority or lack thereof of
any Oral or Written Instruction, notice or other instrument which conforms to
the applicable requirements of this Agreement, and which PNC Bank reasonably
believes to be genuine; or (b) delays or errors or loss of data occurring by
reason of circumstances beyond PNC Bank's control, including acts of civil or
military authority, national emergencies, labor difficulties, fire, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
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14. Description of Services.
(a) Delivery of the Property. The Fund will deliver or arrange
for delivery to PNC Bank, all the property it owns, including cash received as a
result of the distribution of its shares, during the period that is set forth in
this Agreement. PNC Bank will not be responsible for such property until actual
receipt.
(b) Receipt and Disbursement of Money. PNC Bank, acting upon
Written Instructions, shall open and maintain separate account(s) in the name of
each of the Portfolios using all cash received from or for the account of such
Portfolio, subject to the terms of this Agreement. In addition, upon Written
Instructions, PNC Bank shall open separate custodial accounts for each separate
series, portfolio or class of the Fund and shall hold in such account(s) all
cash received from or for the accounts of the Fund specifically designated to
each series, portfolio or class.
PNC Bank shall make cash payments from or for the account of the Fund
only for:
(i) purchases of securities in the name of each
of the Portfolios or PNC Bank or PNC Bank's
nominee as provided in sub-paragraph j and
for which PNC Bank has received a copy of
the broker's or dealer's confirmation or
payee's invoice, as appropriate;
(ii) purchase or redemption of shares of each of
the Portfolios delivered to PNC Bank;
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(iii) payment of, subject to Written Instructions,
interest, taxes, administration, accounting,
distribution, advisory, management fees or similar
expenses which are to be borne by each of the
Portfolios;
(iv) payment to, subject to receipt of Written
Instructions, the Fund's transfer agent, as agent for
the shareholders, an amount equal to the amount of
dividends and distributions stated in the Written
Instructions to be distributed in cash by the
transfer agent to shareholders, or, in lieu of paying
the Fund's transfer agent, PNC Bank may arrange for
the direct payment of cash dividends and
distributions to shareholders in accordance with
procedures mutually agreed upon from time to time by
and among the Fund, PNC Bank and the Fund's transfer
agent.
(v) payments, upon receipt Written Instructions, in
connection with the conversion, exchange or surrender
of securities owned or subscribed to by each of the
Portfolios and held by or delivered to PNC Bank;
(vi) payments of the amounts of dividends received with
respect to securities sold short;
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(vii) payments made to a sub-custodian pursuant to
provisions in sub-paragraph c of this Agreement; and
(viii) payments, upon Written Instructions made for other
proper Fund purposes. PNC Bank is hereby authorized
to endorse and collect all checks, drafts or other
orders for the payment of money received as custodian
for the account of the Fund.
(c) Receipt of Securities.
(i) PNC Bank shall hold all securities received by it for
or for the account of each of the Portfolios in
separate accounts that physically segregate such
securities from those of any other persons, firms or
corporations. All such securities shall be held or
disposed of only upon Written Instructions of the
Fund pursuant to the terms of this Agreement. PNC
Bank shall have no power or authority to assign,
hypothecate, pledge or otherwise dispose of any such
securities or investment, except upon the express
terms of this Agreement and upon Written
Instructions, accompanied by a certified resolution
of the Fund's Governing Board, authorizing the
transaction. In no
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case may any member of the Fund's Board of
Trustees, or any officer, employee or agent
of the Fund withdraw any securities.
At PNC Bank's own expense and for its own
convenience, PNC Bank may enter into
sub-custodian agreements with other United
States banks or trust companies to perform
duties described in this sub-paragraph c.
Such bank or trust company shall have an
aggregate capital, surplus and undivided
profits, according to its last published
report, of at least one million dollars
$1,000,000), if it is a subsidiary or
affiliate of PNC Bank, or at least fifty
million dollars ($50,000,000) if such bank
or trust company is not a subsidiary or
affiliate of PNC Bank. In addition, such
bank or trust company must agree to comply
with the relevant provisions of the 1940 Act
and other applicable rules and regulations.
PNC Bank shall remain responsible for the
performance of all of its duties as
described in this Agreement and shall hold
the Fund harmless from its own acts or
omissions, under the standards of care
provided for herein, or of any sub-custodian
chosen by PNC Bank under the
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terms of this sub-paragraph c.
(d) Transactions Requiring Instructions. Upon receipt of Oral or
Written Instructions and not otherwise, PNC Bank, directly or through the use of
the Book-Entry System, shall:
(i) deliver any securities held for each of the
Portfolios against the receipt of payment
for the sale of such securities;
(ii) execute and deliver to such persons as may
be designated in such Oral or Written
Instructions, proxies, consents,
authorizations, and any other instruments
whereby the authority of the Fund as owner
of any securities may be exercised;
(iii) deliver any securities to the issuer
thereof, or its agent, when such securities
are called, redeemed, retired or otherwise
become payable; provided that, in any such
case, the cash or other consideration is to
be delivered to PNC Bank;
(iv) deliver any securities held for each of the
Portfolios against receipt of other
securities or cash issued or paid in
connection with the liquidation,
reorganization, refinancing, tender offer,
merger, consolidation or recapitalization of
any corporation, or the
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exercise of any conversion privilege;
(v) deliver any securities held for each of the
Portfolios to any protective committee,
reorganization committee or other person in
connection with the reorganization,
refinancing, merger, consolidation,
recapitalization or sale of assets of any
corporation, and receive and hold under the
terms of this Agreement such certificates of
deposit, interim receipts or other
instruments or documents as may be issued to
it to evidence such delivery;
(vi) make such transfer or exchanges of the
assets of the Fund and take such other steps
as shall be stated in said Oral or Written
Instructions to be for the purpose of
effectuating a duly authorized plan of
liquidation, reorganization, merger,
consolidation or recapitalization of such
Portfolio;
(vii) release securities belonging to a Portfolio
to any bank or trust company for the purpose
of a pledge or hypothecation to secure any
loan incurred by that Portfolio; provided,
however, that securities shall be released
only upon payment to PNC Bank of the monies
borrowed,
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except that in cases where additional
collateral is required to secure a borrowing
already made subject to proper prior
authorization, further securities may be
released for that purpose; and repay such
loan upon redelivery to it of the securities
pledged or hypothecated therefor and upon
surrender of the note or notes evidencing
the loan;
(viii) release and deliver securities owned by a
Portfolio in connection with any repurchase
agreement entered into on behalf of a
Portfolio, but only on receipt of payment
therefor; and pay out moneys of a Portfolio
in connection with such repurchase
agreements, but only upon the delivery of
the securities;
(ix) release and deliver or exchange securities
owned by a Portfolio in connection with any
conversion of such securities, pursuant to
their terms, into other securities;
(x) release and deliver securities owned by a
Portfolio for the purpose of redeeming in
kind shares of a Portfolio upon delivery
thereof to PNC Bank; and
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(xi) release and deliver or exchange securities
owned by a Portfolio for other corporate
purposes.
PNC Bank must also receive a certified
resolution describing the nature of the
corporate purpose and the name and address
of the person(s) to whom delivery shall be
made when such action is pursuant to
sub-paragraph d.(xi) above.
(e) Use of Book-Entry System. The Fund shall deliver to PNC
Bank certified resolutions of the Fund's Governing Board approving, authorizing
and instructing PNC Bank on a continuous and on-going basis, to deposit in the
Book-Entry System all securities belonging to each of the Portfolios eligible
for deposit therein and to utilize the Book-Entry System to the extent possible
in connection with settlements of purchases and sales of securities by the Fund,
and deliveries and returns of securities loaned, subject to repurchase
agreements or used as collateral in connection with borrowings. PNC Bank shall
continue to perform such duties until it receives Written or Oral Instructions
authorizing contrary actions(s).
To administer the Book-Entry System properly, the following provisions
shall apply:
(i) With respect to securities of a Portfolio
which are maintained in the Book-Entry
system, established pursuant to this
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sub-paragraph e hereof, the records of PNC
Bank shall identify by Book-Entry or
otherwise those securities belonging to a
Portfolio. PNC Bank shall furnish the Fund a
detailed statement of the Property held for
the Fund under this Agreement at least
monthly and from time to time and upon
written request.
(ii) Securities and any cash of a Portfolio
deposited in the Book-Entry System will at
all times be segregated from any assets and
cash controlled by PNC Bank in other than a
fiduciary or custodian capacity but may be
commingled with other assets held in such
capacities. PNC Bank and its sub-custodian,
if any, will pay out money only upon receipt
of securities and will deliver securities
only upon the receipt of money.
(iii) All books and records maintained by PNC Bank
which relate to the Fund's participation in
the Book-Entry System will at all times
during PNC Bank's regular business hours be
open to the inspection of the Fund's duly
authorized employees or agents, and the Fund
will be furnished with all information in
respect of the services rendered to it as it
may require.
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(iv) PNC Bank will provide the Fund with copies
of any report obtained by PNC Bank on the
system of internal accounting control of the
Book-Entry System promptly after receipt of
such a report by PNC Bank. PNC Bank will
also provide the Fund with such reports on
its own system of internal control as the
Fund may reasonably request from time to
time.
(f) Registration of Securities. All Securities held for the
Fund which are issued or issuable only in bearer form, except such securities
held in the Book-Entry System, shall be held by PNC Bank in bearer form; all
other securities held for the Fund may be registered in the name of the Fund;
PNC Bank; the Book-Entry System; a sub-custodian; or any duly appointed
nominee(s) of the Fund, PNC Bank, Book-Entry system or sub-custodian. The Fund
reserves the right to instruct PNC Bank as to the method of registration and
safekeeping of the securities of each of the Portfolios. The Fund agrees to
furnish to PNC Bank appropriate instruments to enable PNC Bank to hold or
deliver in proper form for transfer, or to register its registered nominee or in
the name of the Book-Entry System, any securities which it may hold for the
account of each of the Portfolios and which may from time to time be registered
in the name of a Portfolio. PNC Bank shall hold all such securities which are
not held in the Book-Entry System in a separate account for each of the
Portfolios in the name of each of
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the Portfolios physically segregated at all times from those of any other person
or persons.
(g) Voting and Other Action. Neither PNC Bank nor its nominee
shall vote any of the securities held pursuant to this Agreement by or for the
account of the Fund, except in accordance with Written Instructions. PNC Bank,
directly or through the use of the Book-Entry System, shall execute in blank and
promptly deliver all notice, proxies, and proxy soliciting materials to the
registered holder of such securities. If the registered holder is not the Fund
then Written or Oral Instructions must designate the person(s) who owns such
securities.
(h) Transactions Not Requiring Instructions. In the absence of
contrary Written Instructions, PNC Bank is authorized to take the following
actions:
(i) Collection of Income and Other Payments.
(A) collect and receive for the account
of each of the Portfolios, all
income, dividends, distributions,
coupons, option premiums, other
payments and similar items, included
or to be included in the Property,
and, in addition, promptly advise
the Fund of such receipt and credit
such income, as collected, to the
Fund's custodian account;
(B) endorse and deposit for collection,
in the name of the applicable
Portfolio,
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checks, drafts, or other orders for
the payment of money;
(C) receive and hold for the account of
each of the Portfolios all
securities received as a
distribution on the portfolio
securities as a result of a stock
dividend, share split-up or
reorganization, recapitalization,
readjustment or other rearrangement
or distribution of rights or similar
securities issued with respect to
any portfolio securities belonging
to a Portfolio held by PNC Bank
hereunder;
(D) present for payment and collect the
amount payable upon all securities
which may mature or be called,
redeemed, or retired, or otherwise
become payable on the date such
securities become payable; and
(E) take any action which may be
necessary and proper in connection
with the collection and receipt of
such income and other payments and
the endorsement for collection of
checks, drafts, and other negotiable
instruments.
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(ii) Miscellaneous Transactions.
(A)PNC Bank is authorized to deliver or cause to be delivered
Property against payment or other consideration or written receipt therefor in
the following cases:
(1) for examination by a broker or
dealer selling for the account of a
Portfolio in accordance with street
delivery custom;
(2) for the exchange of interim
receipts or temporary securities
for definitive securities; and
(3) for transfer of securities into the
name of a Portfolio or PNC Bank or
nominee of either, or exchange of
securities for a different number
of bonds, certificates, or other
evidence, representing the same
aggregate face amount or number of
units bearing the same interest
rate, maturity date and call
provisions, if any; provided that,
in any such case, the new
securities are to be delivered to
PNC Bank.
(B) Unless and until PNC Bank receives Oral or
Written Instructions to the contrary, PNC
Bank shall:
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(1) pay all income items held by it which call
for payment upon presentation and hold the
cash received by it upon such payment for
the account of a Portfolio;
(2) collect interest and cash dividends
received, with notice to the Fund, to the
account of a Portfolio;
(3) hold for the account of a Portfolio all
stock dividends, rights and similar
securities issued with respect to any
securities held by us; and
(4) execute as agent on behalf of the Fund all
necessary ownership certificates required by
the Internal Revenue Code or the Income Tax
Regulations of the United States Treasury
Department or under the laws of any State
now or hereafter in effect, inserting the
Fund's name on such certificate as the owner
of the securities covered thereby, to the
extent it may lawfully do so.
(i) Segregated Accounts.
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(i) PNC Bank shall upon receipt of Written or
Oral Instructions establish and maintain a
segregated accounts(s) on its records for
and on behalf of each of the Portfolios.
Such account(s) may be used to transfer cash
and securities, including securities in the
Book-Entry System:
(A) for the purposes of compliance by
the Fund with the procedures
required by a securities or option
exchange, providing such procedures
comply with the 1940 Act and any
releases of the SEC relating to the
maintenance of segregated accounts
by registered investment companies;
and
(B) Upon receipt of Written
Instructions, for other proper
corporate purposes.
(ii) PNC Bank may enter into separate custodial
agreements with various futures commission
merchants ("FCMs") that the Fund uses ("FCM
Agreement"). Pursuant to an FCM Agreement,
the Fund's margin deposits in any
transactions involving futures contracts and
options on futures contracts will be held by
PNC Bank in accounts ("FCM Account") subject
to the disposition by the FCM involved in
such
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contracts and in accordance with the
customer contract between FCM and the Fund
("FCM Contract"), SEC rules and the rules of
the applicable commodities exchange. Such
FCM Agreements shall only be entered into
upon receipt of Written Instructions from
the Fund which state that:
(A) a customer agreement between the
FCM and the Fund has been entered
into; and
(B) the Fund is in compliance with all
the rules and regulations of the
CFTC. Transfers of initial margin
shall be made into a FCM Account
only upon Written Instructions;
transfers of premium and variation
margin may be made into a FCM
Account pursuant to Oral
Instructions. Transfers of funds
from a FCM Account to the FCM for
which PNC Bank holds such an
account may only occur upon
certification by the FCM to PNC
Bank that pursuant to the FCM
Agreement and the FCM Contract, all
conditions precedent to its right
to give PNC Bank such instructions
have been satisfied.
(iii) PNC Bank shall arrange for the establishment
of XXX custodian accounts for such
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shareholders holding shares through XXX
accounts, in accordance with the Prospectus,
the Internal Revenue Code (including
regulations), and with such other procedures
as are mutually agreed upon from time to
time by and among the Fund, PNC Bank and the
Fund's transfer agent.
(j) Purchases of Securities. PNC Bank shall settle purchased
securities upon receipt of Oral or Written Instructions from the Fund or its
investment advisor(s) that specify:
(i) the name of the issuer and the title of the
securities, including CUSIP number if
applicable;
(ii) the number of shares or the principal amount
purchased and accrued interest, if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase;
(vi) the name of the person from whom or the
broker through whom the purchase was made;
and
(vii) the Portfolio to which such a purchase
applies.
PNC Bank shall upon receipt of securities
purchased by or for a Portfolio pay out of
the moneys held for the account of a
Portfolio the total amount payable to the
person from whom
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or the broker through whom the purchase was
made, provided that the same conforms to the
total amount payable as set forth in such
Oral or Written Instructions.
(k) Sales of Securities. PNC Bank shall sell securities upon
receipt of Oral Instructions from the Fund that specify:
(i) the name of the issuer and the title of the
security, including CUSIP number if
applicable;
(ii) the number of shares or principal amount
sold, and accrued interest, if any;
(iii) the date of trade, settlement and sale;
(iv) the sale price per unit;
(v) the total amount payable to the Fund upon
such sale;
(vi) the name of the broker through whom or the
person to whom the sale was made;
(vii) the location to which the security must be
delivered and delivery deadline, if any. PNC
Bank shall deliver the securities upon
receipt of the total amount payable to the
Fund upon such sale, provided that the total
amount payable is the same as was set forth
in the Oral or Written Instructions. Subject
to the foregoing, PNC Bank may accept
payment in
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such form as shall be satisfactory to it,
and may deliver securities and arrange for
payment in accordance with the customs
prevailing among dealers in securities.
(l) Reports.
(i) PNC Bank shall furnish the Fund the
following reports:
(A) such periodic and special reports
as the Fund may reasonably request;
(B) a monthly statement summarizing all
transactions and entries for the
account of each of the Portfolios,
listing the portfolio securities
belonging to each Portfolio with
the adjusted average cost of each
issue and the market value at the
end of such month, and stating the
cash account of the Portfolio
including disbursement;
(C) the reports to be furnished to the
Fund pursuant to Rule 17f-4; and
(D) such other information as may be
agreed upon from time to time
between the Fund and PNC Bank.
(ii) PNC Bank shall transmit promptly to the Fund
any proxy statement, proxy material, notice
of a call or conversion or similar
communication received by it as custodian of
the Property. PNC Bank shall be under no
other obligation to
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inform the Fund as to such actions or
events.
(m) Collections. All collections of monies or other property,
in respect, or which are to become part of the Property (but not the safekeeping
thereof upon receipt by PNC Bank) shall be at the sole risk of the Fund. If
payment is not received by PNC Bank within a reasonable time after proper
demands have been made, PNC Bank shall notify the Fund in writing, including
copies of all demand letters, any written responses, memoranda of all oral
responses and to telephonic demands thereto, and await instructions from the
Fund. PNC Bank shall not be obliged to take legal action for collection unless
and until reasonably indemnified to its satisfaction.
PNC Bank shall also notify the Fund as soon as reasonably practicable
whenever income due on securities is not collected in due course.
15. Duration and Termination. This Agreement shall continue unless
sooner terminated by the Fund or by PNC Bank for "cause" (as defined below) on
sixty (60) days prior written notice to the other party. For purposes of this
Agreement, "cause" shall mean any circumstances which materially impair the
ability of either party to this Agreement to perform all of its duties and
obligations hereunder. In the event this Agreement is terminated (pending
appointment of a successor to PNC Bank or vote of the shareholders any Portfolio
of the Fund to dissolve or to function without a custodian of its cash,
securities or other property), PNC Bank shall not deliver cash, securities or
other property of the
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applicable Portfolio to the Portfolio or the Fund. It may deliver them to a bank
or trust company of PNC Bank's, having an aggregate capital, surplus and
undivided profits, as shown by its last published report, of not less than
twenty million dollars ($20,000,000), as a custodian for such Portfolio to be
held under terms similar to those of this Agreement. PNC Bank shall not be
required to make any such delivery or payment until full payment shall have been
made to PNC Bank of all of its fees, compensation, costs and expenses. PNC Bank
shall have a security interest in and shall have a right of setoff against
Property in such Portfolio's possession as security for the payment of such
fees, compensation, costs and expenses.
16. Notices. All notices and other communications, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. Notice shall be addressed (a) if to PNC Bank at PNC
Bank's address, Airport Business Center, International Court 2, 000 Xxxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxxxx 00000, marked for the attention of the Custodian
Services Department (or its successor) (b) if to the Fund, at the address of the
Fund; or (c) if to neither of the foregoing, at such other address as shall have
been notified to the sender of any such Notice or other communication. If notice
is sent by confirming telegram, cable, telex or facsimile sending device, it
shall be deemed to have been given immediately. If notice is sent by first-class
mail, it shall be deemed to have been given five days after it has been mailed.
If notice is sent by messenger, it shall
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be deemed to have been given on the day it is delivered.
17. Amendments. This Agreement, or any term hereof, may be changed or
waived only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
18. Delegation. PNC Bank may, with the prior written consent of the
Fund, which consent may not be unreasonably withheld, assign its rights and
delegate its duties hereunder to any wholly-owned direct or indirect subsidiary
of PNC Bank, National Association or PNC Bank Corp., provided that (i) PNC Bank
gives the Fund a minimum of thirty (30) days in which to decide and to consent
by written notice; (ii) the delegate agrees with PNC Bank to comply with all
relevant provisions of the 1940 Act; and (iii) PNC Bank and such delegate
promptly provide such information as the Fund may request, and respond to such
questions as the Fund may ask, relative to the delegation, including (without
limitation) the capabilities of the delegate.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
21. Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, provided that the parties
may embody in one more separate
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documents their agreement, if any, with respect to delegated and/or Oral
Instructions.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. A copy of the Declaration of
Trust of the Fund is on file with the Secretary of the Commonwealth of
Massachusetts and notice is hereby given that the Fund by the undersigned
officer of the Fund in his/her capacity as an officer of the Fund. The
obligations of this Agreement shall only be binding upon the assets and property
of the Fund, and shall not be binding upon any Trustee, officer or shareholder
of the Fund individually.
This Agreement shall be deemed to be a contract made in California and
governed by California law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
and shall inure to the benefit of the parties hereto and their respective
successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
Title: Senior Vice President
SCHWAB ANNUITY PORTFOLIOS
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President and
Chief Operating Officer
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