Exhibit (g)(1)(a)
ANNEX TO CONTRACT
This is an amendment of and an annex to the Custody Agreement (Foreign and
Domestic Securities) ("the Custody Agreement") dated by and between UNION BANK
OF CALIFORNIA, N.A. referred to herein as "Custodian") and The Willamette Funds,
on behalf of the Willamette Funds Family referred to herein as "Principal".
Whereas the provisions of Rule 17f-5 and 17f-7 under the Investment
Company Act of 1940 ("1940 Act") have been modified to allow for delegation of
certain monitoring responsibilities previously required of the Board of Trustees
of a regulated investment company.
Whereas the Principal wishes to delegate to Custodian certain additional
monitoring responsibilities pursuant to such rules.
Now therefore, the parties hereto agree as follows:
1. Definitions. As used herein, all terms shall have the definitions set
forth in the Custody Agreement. In addition, the following terms shall have the
meanings set forth:
1.1 "Board" shall mean the Board of Trustees or the Board of Directors of
Principal.
1.2 "Emerging Market" shall mean each country listed on Schedule I
attached hereto.
1.3 "Foreign Market" shall mean each country listed on Schedule II
attached hereto.
1.4 "Monitoring System" shall mean the policies and procedures established
by Custodian to fulfill the duties delegated to it pursuant to this Annex.
1.5 The "Rule" shall refer to Rule 17f-5 and 17 f-7 of the 1940 Act, 17
CFR 17f-5, effective as of June 12, 2001.
2. Responsibilities of Custodian.
2.1 The Principal hereby delegates to Custodian the responsibilities set
forth herein.
2.2 Custodian accepts the Principal's delegation of responsibility set
forth herein and agrees in performing its responsibilities as Custodian with
respect to assets of Principal maintained in a Foreign Market or Emerging Market
to exercise reasonable care, prudence and diligence such as a reasonable person
having responsibility for the safekeeping of the Principal's assets would
exercise.
2.3 Custodian shall provide to the Board annually and at such other times
as the Board may reasonably request based on the circumstances of the
Principal's foreign custody arrangements, written reports notifying the Board of
the placement of assets of the Principal with a particular foreign Sub-Custodian
and of any material change in the arrangements (including any material changes
in any contracts governing such arrangements or any material changes in the
established practices or procedures of foreign Depositories) with respect to
assets of the Principal held by any foreign Sub-Custodian.
3. Custodian shall have the following responsibilities in addition to
those set forth in the Custody Agreement:
3.1 Before determining that assets of Principal shall be maintained with a
foreign Sub-Custodian, Custodian shall determine that assets of the Principal
held by such
Sub-Custodian shall be subject to reasonable care based on the standards
applicable to custodians in the relevant market in which such Sub-Custodian
operates.
3.2 Each Sub-Custodian relationship shall be established pursuant to
written contract providing for reasonable care of assets based on the standards
set forth in section (c)(1) of the Rule, and including the provisions set forth
in sections (c)(2)(i)(A) through (F) of the Rule or provisions which Custodian
determines provide the same or greater protection of the assets of the
Principal.
3.3 Custodian shall monitor under its Monitoring System the
appropriateness of the continued custody or maintaining of assets of the
Principal with a particular Sub-Custodian and, if the arrangement no longer
meets the requirements of the Rule and this Custody Agreement, Custodian will
take steps necessary to withdraw the foreign assets as soon as reasonably
practicable.
3.4 Custodian shall advise the Principal promptly when any change in a
contract with a Sub-Custodian or any change in established market practices or
procedures shall cause a sub-custody arrangement to no longer meet the
requirements of the Rule and of action Custodian proposes to take.
3.5 Notwithstanding the foregoing sub-sections of this section 3, except
as set forth below, Custodian shall have no responsibility for the selection of
any Depository or Depository's agent, the use of which is mandated by law or
regulation, either because securities cannot be withdrawn from a depository, or
because maintaining securities outside the securities depository is not
consistent with prevailing market practices in the relevant market; provided,
however, that Custodian shall notify Principal if Principal has directed a trade
in a market containing a Depository, so Principal and the Investment Manager
shall have an opportunity to determine the appropriateness of investing in such
market.
3.6 For purposes of this section 3, Custodian's determination of
appropriateness shall not include any evaluation of "Country Risks" associated
with investment in a particular country. Such Country Risks are the systemic
risks of holding assets in a particular country, including, but not limited to
(a) the use of Depositories, (b) the country's financial infrastructure, (c) the
country's prevailing custody and settlement practices, (d) risk of
nationalization, expropriation or other governmental actions, (e) regulation of
the banking or securities industries, (f) currency controls, restrictions,
devaluation or fluctuation, and (g) market conditions which may affect the
orderly execution of securities transactions or affect the value of the
transactions. The parties agree that the evaluation of Country Risks shall be
solely the responsibility of Principal and the Investment Manager.
3.7 For each Depository used or intended to be used by the Principal of
which Custodian is advised, Custodian shall provide Principal prior to any use
of such a depository and from time to time thereafter, so long as assets of
Principal are maintained with such Depository, with information addressing the
factors set forth in Sub-section (c) (1) of the Rule to the extent reasonably
available to the Custodian, together with Custodian's analysis of custody risks
associated with maintaining assets of Principal with such Depository to assist
the Principal and Investment Manager in determining the appropriateness of
placing assets therein. Depositories used by Custodian as of the date hereof are
set forth on Schedule III attached hereto, as the same may be amended on notice
to Principal from time to time. Custodian shall monitor the custody risks of
maintaining assets in each Depository where assets of Principal are maintained
and shall notify Principal or the Investment Manager promptly of any material
changes in these risks. The Custodian agrees to exercise reasonable care,
prudence, and diligence in performing the requirements of this section 3.7.
4. Emerging Markets.
4.1 All settlements of securities transactions in Emerging Markets shall
be transacted in accordance with the local laws, customs, procedures and
practices to which the Sub-Custodian is subject.
4.2 For Emerging Market transactions, crediting of Funds on contractual
settlement date is not available in certain countries as the Custodian may
identify in writing to Principal from time to time.
With regards to such Emerging Markets:
4.2.1 Funds deposited or delivered to the Account(s) shall be
available to the Principal or authorized Investment Manager on the same
business day on which good funds are available to the Sub-Custodian.
4.2.2 Securities deposited or delivered to the Account(s) shall be
available to the Principal or authorized Investment Manager on the same
business day on which such Securities are held in the nominee name or are
otherwise subject to the control of the Sub-Custodian.
5. Conflict. The parties agree that in case of conflict between the
Custodian Agreement and the Annex, the provisions of the Annex will govern.
6. Hold Harmless. Custodian shall not be liable for any costs, expense,
damages, liabilities or claims, including reasonable attorneys' and accountants'
fees, sustained or incurred by, or asserted against the Principal, except to the
extent the damages arise out of the failure of Custodian to exercise due care as
set forth herein. In no event shall Custodian be responsible to the Principal or
any other party for special, indirect or consequential damages, for lost profit
or for loss of business, arising in connection with this Annex or the Custody
Agreement.
In witness whereof, the Principal and Custodian have caused this Agreement
to be executed by their respective officers, thereunto duly authorized, as of
the date first above written.
THE WILLAMETTE FUNDS
By:
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Title:
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UNION BANK OF CALIFORNIA, N.A.
By:
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Title:
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SCHEDULE I
EMERGING MARKETS
Argentina
Bangladesh*
Brazil*
Chile
China
Colombia*
Czech Republic
Ecuador*
Egypt*
Estonia
Greece
Hungary
India*
Indonesia*
Xxxxxx
Xxxxxx*
Korea (Republic of)
Malaysia*
Mexico
Morocco*
Pakistan*
Peru*
Philippines*
Poland Romania*
Russia*
Slovakia*
Slovenia*
Sri Lanka
Taiwan
Thailand
Turkey
Venezuela*
* Actual Settlement Date accounting required
SCHEDULE II
FOREIGN MARKET
Australia
Austria
Belgium
Canada
Denmark
Finland
France
Germany
Hong Kong
Ireland
Italy
Japan
Netherlands
New Zealand
Norway
Portugal
Singapore
South Africa
Spain
Sweden
Switzerland
United Kingdom
SCHEDULE III
DEPOSITORIES
Compulsory Compulsory
Depository Depository
Argentina No* Korea (Republic of) No*
Australia No* Malaysia Yes
Austria No* Mexico Yes
Bangladesh No* Morocco No
Belgium Yes Netherlands Yes
Brazil Yes New Zealand No*
Canada Yes Pakistan No
Chile No Peru No*
China Yes Philippines Yes
Colombia No Poland Yes
Czech Republic Yes Portugal Yes
Denmark No* Romania Yes
Ecuador No Russia No
Egypt No Singapore Yes
Estonia No* Slovakia Yes
Finland No Slovenia Yes
France Yes South Africa No
Germany Yes Spain Yes
Greece No Sri Lanka Yes
Hong Kong No* Sweden Yes
Hungary No* Switzerland Yes
India No Taiwan Yes
Indonesia No Thailand Yes
Ireland No* Turkey Yes
Israel Yes Venezuela No
Italy Yes United Kingdom No*
Japan No*
Jordan No
NOTE: Compulsory Depositories are those mandated by law, other markets
that require depository activities based on market practices are noted with the
asterisk.
