SECONDARY CUSTODIAN AGREEMENT
This Agreement, dated 25th day of October, 1984 made by and between TrustFunds
Liquid Asset Trust (the "Fund"), a business trust operating as an open end
investment company, duly organized under the laws of The Commonwealth of
Massachusetts and First Interstate Bank of Oregon ("First Interstate");
WITNESSETH:
WHEREAS, the Fund desires to appoint First Interstate as custodian of a part of
its Securities and Cash at times when the Fund's primary custodian is not open
for business, and First Interstate is willing to act in such capacity upon the
terms and conditions herein set forth; and
WHEREAS; First Interstate in its capacity as Secondary Custodian hereunder will
also collect and apply the dividends and interest on said Securities in the
manner and to the extent herein set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual convenants
herein contained, the parties hereto, intending to be legally bound, to hereby
agree as follows:
SECTION 1. The terms as defined in this Section wherever used in this
Agreement, or in any amendment or supplement hereto, shall have meanings herein
specified unless the context otherwise requires.
CUSTODIAN: The term Custodian shall mean The Philadelphia National Bank in its
capacity as custodian under an agreement with the Trust dated September 1, 1981,
or any successor thereto.
PROPER INSTRUCTIONS: For purposes of this Agreement the Secondary Custodian
shall be deemed to have received Proper Instructions upon receipt of written,
telephone or telegraphic instructions from a person or persons reasonably
believed by the Secondary Custodian to be a person or persons authorized from
time to time by the trustees of the Fund or by the Board of Directors of an
investment adviser for the Fund to give the particular class of instructions.
Telephone or telegraphic instructions shall be confirmed in writing by such
person or persons as said Trustees or said Board of Directors shall have from
time to time authorized to give the particular class of instructions in
question. The Secondary Custodian may act upon
telephone or telegraphic instructions without awaiting receipt of written
confirmation, and shall not be liable for Fund's or such investment adviser's
failure to confirm such instructions in writing.
SECONDARY CUSTODIAN: The term Secondary Custodian shall mean First Interstate
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Bank of Oregon in its capacity as Secondary Custodian under this Agreement.
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SECURITIES: The term Securities shall mean bonds, debentures, notes,
certificates of deposit, evidences of indebtedness, and other securities and
investments from time to time owned by the Fund.
SERVICE DATE: The day or days when services of the Secondary Custodian are
required.
SHAREHOLDERS: The term Shareholders shall mean the registered owners from time
to time of the Shares of the Fund in accordance with the registry records
maintained by the Fund or agents on its behalf.
SHARES: The term Shares of the Fund shall mean the shares of beneficial
interest of the Fund.
SECTION 2. The Fund shall from time to time file with the Secondary Custodian a
certified copy of each resolution of its Board of Trustees authorizing the
person or persons to give Proper Instructions (as defined in SECTION 1) and
specifying the class of instructions that may be given by each person to the
Secondary Custodian under this Agreement, together with certified signatures of
such persons authorized to sign, which shall constitute conclusive evidence of
the authority of the officers and signatories designated therein to act, and
shall be considered in full force and effect with the Secondary Custodian fully
protected in acting in reliance thereon until it receives written notice to the
contrary; provided, however, that if the certifying officer is authorized to
give Proper Instructions, the certification shall be also signed by a second
officer of the Fund.
SECTION 3. The Fund hereby appoints the Secondary Custodian as Secondary
Custodian of the Securities of the Fund and cash from time to time on deposit
hereunder, to be held by the Secondary Custodian and applied as provided in this
Agreement. The Secondary Custodian hereby accepts such appointment subject to
the terms and conditions hereinafter provided. Such Securities and cash shall,
however, be segregated from the assets of others and shall be and remain the
sole property of the Fund and the Secondary Custodian shall have only the bare
custody thereof.
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The Securities held by the Secondary Custodian shall, unless payable to bearer,
be registered in the name of the Custodian or in the name of its nominee.
Securities, excepting bearer securities, delivered from time to time to
the Secondary Custodian upon purchase or otherwise shall in all cases be in due
form for transfer or already registered as above provided.
SECTION 4: The Secondary Custodian shall be required to act in said capacity on
certain days when the Custodian is not open for transaction of business as
determined by the Fund. The Secondary Custodian shall maintain open accounts for
each portfolio of the Fund to be activated upon receipt of Proper Instructions.
The Fund will provide telephonic notice to the Secondary Custodian not less than
5 business days prior to the Service Day.
The Fund will make a deposit of cash one business day prior to the Service Day
to be held and applied by the Secondary Custodian hereunder. Thereafter the
Fund will cause to be deposited with the Secondary Custodian hereunder (i) the
net proceeds of Securities sold on the service day and (ii) the applicable net
asset value of Shares sold on the service day whether representing initial
issue, other stock or reinvestments of dividends and/or distributions payable to
Shareholders.
The Fund will withdraw such cash as is on deposit on the business day following
the Service Day.
SECTION 5. The Secondary Custodian will collect from time to time the dividends
and interest on the Securities held by it hereunder and will forward all
proceeds to the Custodian within one business day of receipt of same. The
Secondary Custodian is authorized to advance or pay out of said account accrued
interest on bonds purchased and dividends on securities sold and like items.
Subject to proper reserves for interest owing on Securities sold and like items,
the Secondary Custodian will disburse the money from time to time on deposit in
the account to or upon the order of the Fund as it may from time to time direct
in accordance with this Agreement.
SECTION 6. The Secondary Custodian is hereby authorized and directed to
disburse cash from time to time as follows:
(a) to pay the proper compensation and expenses of Secondary Custodian
upon receipt of Proper Instruction;
(b) to transfer to the Transfer Agent or other dividend disbursing agent
to pay dividends and/or distributions which may be authorized by the Fund upon
receipt of Proper Instructions;
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(c) to pay, or provide the Fund with money to pay, if any, taxes upon
receipt of Proper Instructions;
(d) for the purpose of completing the purchase of Securities purchased by
the Fund, upon receipt of (i) Proper Instructions specifying the Securities and
stating the purchase price, and the name of the broker, investment banker or
other party to or upon whose order the purchase price is to be paid; and (ii)
upon receipt of such Securities by the Secondary Custodian or, in the case of a
purchase effected through a Securities System, in accordance with Section 8
hereof;
(e) for the purpose of redeeming or purchasing Shares upon receipt of
Proper Instructions stating applicable redemption amounts payable, to the
Transfer Agent or other appropriate party;
(f) for the purpose of paying over to the Transfer agent or dividend
disbursing agent such amounts as may be stated in Proper Instructions,
representing proceeds of the sale of warrants, rights, stock dividends, profit
and increase in values of the Securities, as the Fund may determine to include
in dividends and/or distributions on the Shares;
(g) for the purpose of paying in whole or in part any loan of the Fund
upon receipt of Proper Instructions directing payment and stating the
Securities, if any, to be received against payment;
(h) to pay interest, investment advisory or supervisory fees,
administration, dividend and transfer agency fees and costs, compensation of
personnel, or operating expenses (including, without limitation thereto, fees
for legal purposes). Before making any such payment or disbursement, however,
the Secondary Custodian shall receive (and may conclusively rely upon) Proper
Instructions requesting such payment or disbursement and stating that it is for
one or more of the purposes hereinabove enumerated, provided that if the
disbursement is for any other purposes, the instructions shall be in writing and
shall state that the disbursement was authorized by resolution of the Board of
Trustees of the Fund (a copy of which resolution shall be attached) and is for a
proper purpose.
(i) for the purpose of transfer to the Custodian, upon receipt of Proper
Instructions.
SECTION 7. The Secondary Custodian is hereby authorized and directed to deliver
Securities from time to time as follows:
(a) for the purpose of completing sales of Securities sold by the Fund,
upon receipt of (i) the net proceeds of sale and
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(ii) Proper Instructions specifying the Securities sold and stating the amount
to be received and the broker, investment banker or other party to or upon whose
order the Securities are to be delivered;
(b) for the purpose of exchanging Securities for other Securities and/or
cash upon timely receipt of (i) Proper Instructions stating Securities to be
delivered and the Securities and/or cash to be received in exchange and the
manner in which the exchange is to be made, and (ii) against receipt of the
other Securities and/or cash as specified in the Proper Instructions;
(c) for the purpose of exchanging or converting Securities pursuant to
their terms or pursuant to any plan of conversion, consolidation,
recapitalization, reorganization, readjustment or otherwise, upon timely receipt
of (i) Proper Instructions authorizing such exchange or conversion and stating
the manner in which such exchange or conversion is to be made, and (ii) against
receipt of the Securities, certificates of deposit, interim receipts, and/or
cash to be received as specified in the Proper Instructions;
(d) for the purpose of presenting Securities for payment which have matured
or have been called for redemption upon receipt of appropriate Proper
Instructions and provided that the cash or other consideration is to paid to the
Secondary Custodian;
(e) for the purpose of delivering of Securities upon redemption of Shares
in kind, upon receipt of appropriate Proper Instructions; or
(f) for the purpose of depositing with the lender Securities to be held as
collateral of a loan to the Fund upon receipt of Proper Instructions directing
delivery to the lender and upon receipt of the proceeds of the loan.
SECTION 8. The Secondary Custodian may deposit and/or maintain Securities owned
by the Fund in a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934, which acts
as a securities depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain Federal agencies, collectively referred
to herein as "Securities System" in accordance with applicable Federal Reserve
Board and Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
1) The Secondary Custodian may keep Securities of the Fund in a Securities
System provided that such Securities
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are represented in an account ("Account") of the Secondary Custodian in
the Securities System which shall not include any assets of the
Secondary Custodian other than assets held as a fiduciary, custodian,
or otherwise for customers.
2) The records of the Secondary Custodian with respect to Securities of
the Fund which are maintained in a Securities System shall identify by
book-entry those Securities belonging to the Fund.
3) The Secondary Custodian shall pay for Securities purchased for the
account of the Fund upon (i) receipt of advice from the Securities
System that such Securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Secondary Custodian
to reflect such payment and transfer for the account of the Fund. The
Secondary Custodian shall transfer Securities sold for the account of
the Fund upon (i) receipt of advice from the Securities System that
payment for such Securities has been transferred to the Account, and
(ii) the making of an entry on the records of the Secondary Custodian
to reflect such transfer and payment for the account of the Fund.
Copies of all advices from the Securities System of transfers of
Securities for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Secondary Custodian and be provided to
the Fund at its request. The Secondary Custodian shall furnish the Fund
confirmation of each transfer to or from the account of the Fund in the
form of a written advice or notice and shall furnish to the Fund copies
of daily transaction sheets reflecting each day's transaction for the
account of the Fund on the next business day.
4) The Secondary Custodian shall provide the Fund with any report obtained
by the Secondary Custodian on the Securities System's internal
accounting control and procedures for safeguarding securities deposited
in the Securities System.
5) The Secondary Custodian shall have received an initial certificate of
the Secretary or an Assistant Secretary that the Trustees of the Fund
have approved the initial use of a particular Securities System and the
Secondary Custodian shall receive an annual certificate of the
Secretary or an Assistant Secretary that the Trustees have reviewed the
use by the Fund of such Securities System, as required in each case by
Rule 17f-4 under the Investment Company Act of 1940, as amended.
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6) Anything to the contrary in this Agreement notwithstanding, the
Secondary Custodian shall be liable to the Fund for any loss or damage
to the fund resulting from use of the Securities System by reason of
any negligence, misfeasance or misconduct of the Secondary Custodian
or any of its agents or of any of its or their employees or from any
failure of the Secondary Custodian or any such agent to enforce
effectively such rights as it may have against the Securities System;
at the election of the Fund, it shall be entitled to be subrogated to
the rights of the Secondary Custodian with respect to any claim
against the Securities System or any other person which the Secondary
Custodian may have as a consequence of any such loss or damage if and
to the extent that the Fund has not been made whole for any such loss
or damage.
SECTION 9. The Secondary Custodian's compensation shall be as negotiated
between the Secondary Custodian and the Fund.
SECTION 10. The Secondary Custodian shall forward to the Fund proxies, proxy
statements, annual reports, conversion notices, call notices, or other notices
or written materials sent to the registered owners of securities and actually
received by the Secondary Custodian (hereafter referred to as "notices and
materials"), excluding only certificates representing securities and dividend
and interest payments. Responsibility for taking action thereon is the sole
responsibility of the Fund and its investment adviser, and not the
responsibility of the Secondary Custodian. Upon actual receipt by the Secondary
Custodian of warrants or rights issued in connection with the assets of the
Fund, the Secondary Custodian shall enter on its ledgers appropriate notations
indicating such receipt and shall forward notice thereof to the Fund, but shall
have no obligation whatsoever to take any action of any kind with respect to
such warrants or rights except upon receipt of Proper Instructions authorizing
the exercise or sale of such warrants or rights.
SECTION 11. The Secondary Custodian assumes only the usual duties or
obligations normally performed by custodians of mutual funds. It specifically
assumes no responsibility for the management, investment or reinvestment of the
Securities from time to time owned by the Fund whether or not on deposit
hereunder, it being understood that the responsibility for the proper and timely
management, investment and reinvestment of said Securities shall be that of the
Fund and its investment advisers.
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In connection with its functions under this Agreement, the Secondary Custodian
shall:
(a) obtain a "due xxxx" for dividends, interest or other distributions of
the issuer, due the purchaser in connection with Securities delivered to the
Secondary Custodian;
(b) render to the Fund a daily report of all monies received or paid on
behalf of the Fund and such listings of Securities held by the Secondary
Custodian for the account of the Fund as may from time to time be requested by
the Fund.
(c) execute ownership and other certificates and affidavits for all
Federal and State tax purposes in connection with the collection of bond and
note coupons;
(d) present for payment on the date of payment all coupons and other
periodic income items requiring presentation;
(e) monitor and record the collection of funds in accounts maintained by
the Secondary Custodian, in the name of the Fund on the same day as received;
(f) in accordance with the manager's directions as to allocation of the
securities to separate portfolios designated by the Fund, the Secondary
Custodian shall maintain records showing the respective securities comprising
each such portfolio.
(g) create, maintain and retain all records relating to its activities and
obligations under this Agreement in such manner as will meet the obligations of
the Fund with respect to said Secondary Custodian activities and obligations
under generally accepted accounting principles. All records maintained by the
Secondary Custodian in connection with the performance of its duties under this
Agreement will remain the property of the Fund and in the event of termination
of this Agreement will be relinquished to the Fund.
If the Secondary Custodian does not receive payment for items due under
subsection (a), (d), or (e) within a reasonable time after it has made proper
demands for the same, it shall so notify the Fund in writing, including copies
of all demand letters, any written responses thereto, and memoranda of all oral
responses thereto and to telephonic demands, and await Proper Instructions; the
Secondary Custodian shall not be obliged to take legal action for collection
except by its consent and unless and until reasonably indemnified to its
satisfaction. The Secondary Custodian shall also notify the Fund as soon as
reasonably practicable whenever income due on Securities is not collected in due
course.
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The Secondary Custodian shall not be liable for any taxes, assessments, or
governmental charges, which may be levied or assessed upon the Securities held
by it hereunder, or upon the income therefrom or otherwise whatsoever. The
Secondary Custodian may pay any such tax, assessment or charge and reimburse
itself out of the monies of the fund or out of the Securities held hereunder.
SECTION 12. No liability of any kind shall be attached to or incurred by the
Secondary Custodian by reason of its custody of the funds, assets, or shares
held by it from time to time under this Agreement, or otherwise by reason of its
position as secondary custodian hereunder except only for its own negligence,
bad faith, or willful misconduct in the performance of its duties as
specifically set forth in the Agreement. Without limiting the generality of the
foregoing sentence, the Secondary Custodian:
(a) may rely upon the advice of counsel, who may be counsel for the Fund
or for the Secondary Custodian, and upon statements of accountants, brokers and
other persons believed by it in good faith to be expert in the matters upon
which they are consulted; and for any action taken or suffered in good faith
based upon such advice or statements the Secondary Custodian shall not be liable
to anyone;
(b) shall not be liable for anything done or suffered to be done in good
faith in accordance with any request or advice of, or based upon information
furnished by, the Fund or its authorized officers or agents;
(c) is authorized to accept a certificate of the Secretary or Assistant
Secretary of the Fund, or Proper Instructions, to the effect that a resolution
in the form submitted has been duly adopted by its Board of Trustees or by the
Shareholders, as conclusive evidence that such resolution has been duly adopted
and is in full force and effect;
(d) may rely and shall be protected in acting upon any signature, written
(including telegraph or other mechanical) instructions, request, letter of
transmittal, certificate, opinion of counsel, statement, instrument, report,
notice, consent, order, or other paper or document reasonably believed by it to
be genuine and to have been signed, forwarded or presented by the purchaser,
Fund or other proper party or parties.
SECTION 13. The Fund, its successors and assigns hereby indemnify and hold
harmless the Secondary Custodian, its successors and assigns, of and from any
and all liability whatsoever arising out of or in connection with the Secondary
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Custodian's status, acts, or omissions under this Agreement except only for
liability arising out of the Secondary Custodian's own negligence, bad faith, or
willful misconduct in the performance of its duties specifically set forth in
this Agreement. Without limiting the generality of the foregoing, the Fund, its
successors and assigns do hereby fully indemnify and hold harmless the Secondary
Custodian, its successors and assigns, from any and all loss, liability, claims,
demand, actions, suits and expenses of any nature as the same may arise from the
failure of the Fund to comply with any law, rule, regulation or order of the
United States, any State of any other jurisdiction, governmental authority,
body, or board relating to the sale, registration, qualification of shares of
any beneficial interest in the Fund, or from the failure of the Fund to perform
any duty or obligation under this Agreement.
Upon written request of the Secondary Custodian, the Fund shall assume the
entire defense of any claim subject to the foregoing indemnity, or the joint
defense with the Secondary Custodian of such claim, as the Secondary Custodian
shall request. The indemnities and defense provisions of this SECTION 13 shall
indefinitely survive termination of this Agreement.
SECTION 14. The Secondary Custodian shall provide the Fund, at such times as the
Fund may reasonably require, with accountants' reports on the accounting system,
internal accounting control and procedures for safeguarding securities,
including securities deposited and/or maintained in a Securities System,
relating to the services provided by the Secondary Custodian under this
Agreement; such reports, which shall be of sufficient scope and in sufficient
detail to provide reasonable assurance that any material inadequacies would be
disclosed, shall state in detail material inadequacies disclosed by such
examination, and, if there are no such inadequacies, shall so state.
Notwithstanding the foregoing the Secondary Custodian shall not be required by
the provisions of this Section 14 to have such a report, which is not required
for other purposes, prepared by independent public accountants, unless the Fund
agrees to reimburse the Secondary Custodian for the reasonable charges of such
independent public accountants for preparing such report.
SECTION 15. This Agreement may be amended from time to time without notice to or
approval of the Shareholders by a supplemental agreement executed by the Fund
and the Secondary Custodian and amending and supplementing this Agreement in the
manner mutually agreed.
SECTION 16. Either the Fund or the Secondary Custodian may give one hundred
twenty (120) days written notice to the other of the
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termination of this Agreement, such termination to take effect at the time
specified in the notice.
In case the Secondary Custodian shall consolidate with or merge into any other
corporation, the corporation remaining after or resulting from such
consolidation or merger shall ipso facto, without the execution of filing of any
papers or other documents, succeed to and be substituted for the Secondary
Custodian with like effect as though originally named as such.
SECTION 17. This Agreement shall take effect when assets of the Fund are first
delivered to the Secondary Custodian.
SECTION 18. This Agreement may be executed in two or more counterparts, each of
which when so executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
SECTION 19. The Secondary Custodian may, at any time or times appoint (and may
at any time remove) any other bank or trust company which is itself qualified
under the Investment Company Act of 1940, as amended, to act as a custodian, as
its agent to carry out such of the provisions of this Agreement as the Secondary
Custodian may from time to time direct, provided, however, that the appointment
of such agent shall not relieve the Secondary Custodian of any of its
responsibilities under this Agreement.
SECTION 20. 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
this instrument is executed on behalf of the Trustees of the Fund as Trustees
and not individually and that the obligations of this instrument are not binding
upon any of the Trustees, officers or shareholders of the Fund individually but
binding only upon the assets and property of the Fund.
SECTION 21. The Secondary Custodian shall create and maintain all records
relating to its activities and obligations under this Agreement in such manner
as will meet the obligations of the Fund under the Investment Company Act of
1940, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, applicable Federal and State tax laws and any other law or
administrative rules or procedures which may be applicable to the Fund.
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Subject to security requirements of the Secondary Custodian applicable to its
own employees having access to similar records within the Secondary Custodian
and such regulations as to the conduct of such monitors as may be reasonably
imposed by the Secondary Custodian after prior consultation with an officer of
the Fund the books and records of the Secondary Custodian pertaining to its
actions under this Agreement shall be open to inspection and audit at any
reasonable times by officers of, attorneys for, and auditors employed by, the
Fund.
SECTION 22. This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund without the written
consent of the Secondary Custodian, or by the Secondary Custodian without the
written consent of the Fund, authorized or approved by a resolution of its Board
of Trustees.
IN WITNESS WHEREOF, the Fund and the Secondary Custodian have caused this
Agreement to be signed by their respective officers as of the day and year first
above written.
TrustFunds Liquid Asset Trust
By: /s/ Signature Appears Here
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President
FIRST INTERSTATE BANK OF OREGON
By: /s/ Signature Appears Here
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