CUSTODIAN AGREEMENT
This Agreement, dated day of made by and between Trust
Funds (the Fund), a business trust operating as
an open end investment company, duly organized under the laws of the
Commonwealth of Massachusetts and The Philadelphia National Bank (PNB), a
national bank:
WITNESSETH:
WHEREAS, the Fund desires to appoint The Philadelphia National Bank as
custodian of its Securities and cash, and The Philadelphia National Bank is
willing to act in such capacity upon the terms and conditions herein set
forth; and
WHEREAS, The Philadelphia National Bank in its capacity as 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 covenants
herein contained, the parties hereto, intending to be legally bound, do
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 the meanings
herein specified unless the context otherwise requires.
CUSTODIAN: The term Custodian shall mean The Philadelphia National Bank in
its capacity as custodian under this Agreement.
PROPER INSTRUCTIONS: For purposes of this Agreement the 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 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 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.
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.
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 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
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 designed therein to act, and shall
be considered in full force and effect with the 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 Custodian as custodian of the
Securities of the Fund and cash from time to time on deposit hereunder, to be
held by the Custodian and applied as provided in this Agreement. The
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 Custodian shall have only the bare custody
thereof. The Securities held by the 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 Custodian upon purchase or otherwise shall in all cases be in due form
for transfer or already registered as above provided.
SECTION 4. The Fund will initially deposit with the Custodian the
Securities owned by the Fund at the time this Agreement becomes effective.
Thereafter the Fund will cause to be deposited with the Custodian additional
Securities as the same are purchased or otherwise acquired from time to time.
The Fund will make an initial deposit of cash to be held and applied by the
Custodian hereunder. Thereafter the Fund will cause to be deposited with the
Custodian hereunder (i) the net proceeds of Securities sold from time to time
and (ii) the applicable net assets value of Shares sold from time to time
whether representing initial issue, other stock or reinvestments of dividends
and/or distributions payable to Shareholders.
The Fund warrants that it shall keep all of its Securities, similar
investments, cash proceeds and other cash assets of the Fund in the custody
of the Custodian, except where permitted to otherwise keep, deposit, loan,
pledge or otherwise dispose of or maintain such assets in accordance with
applicable law.
SECTION 5. The Custodian will collect from time to time the dividends and
interest on the Securities held by it hereunder and will deposit the same in
the Fund's account. The Custodian is authorized to advance or pay out of said
account accrued interest on bonds purchased and dividends on securities sold
and like items. In the event that any dividends or interest payments are
received by the Fund, the Fund will endorse to the Custodian, or cause to be
endorsed, dividend and interest checks and will issue appropriate orders to
the issuers of the Securities to pay dividends and interest to the
Custodian. Subject to proper reserves for interest owing on Securities sold
and like items, the 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 Custodian is hereby authorized and directed to disburse cash
from time to time as follows:
(a) to pay the proper compensation and expenses of Custodian upon
receipt of Proper Instructions;
(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;
(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 Custodian or, in
the case of a purchase of such Securities by the 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 the 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 increases 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 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.
SECTION 7. The 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 (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 be paid
to the Custodian;
(e) for the purpose of delivery 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 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 Custodian may keep Securities of the Fund in a Securities
System provided that such Securities are represented in an account
("Account") of the Custodian in the Securities System which shall
not include any assets of the Custodian other than assets held as
a fiduciary, custodian, or otherwise for customers.
2) The records of the 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 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 Custodian
to reflect such payment and transfer for the account of the Fund.
The 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
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 Custodian
and be provided to the Fund at its request. The Custodian shall
furnish the Fund confirmation of each transfer to or from the
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 Custodian shall provide the Fund with any report obtained
by the Custodian on the Securities System's internal accounting
control and procedures for safeguarding securities deposited in
the Securities System.
5) The 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 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.
6) Anything to the contrary in this Agreement notwithstanding, the
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 Custodian or any
any of its agents or of any of its or their employees or from any
failure of the 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 Custodian with respect to any claim against the
Securities System or any other person which the 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 Custodian's compensation shall be as set forth in Schedule A
hereto attached, or as shall be set forth in amendments to such schedule
approved by the Fund and the Custodian.
SECTION 10. The 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 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 advisor, and not the responsibility of the
Custodian. Upon actual receipt by the Custodian of warrants or rights issued
in connection with the assets of the Fund, the 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 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 advisors.
In connection with its functions under this Agreement, the 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 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 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 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 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 Custodian activities and
obligations under generally accepted accounting principles. All records
maintained by the 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 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
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 Custodian shall also notify the Fund as soon as
reasonably practicable whenever income due on Securities is not collected in
due course.
The 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
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
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 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 Custodian:
(a) may rely upon the advice of counsel, who may be counsel for the
Fund or for the Custodian, and upon statements or accountants, brokers and
other persons believed by it in good faith to be experts 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 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, option 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 Custodian, its successors and assigns, of and from any and all
liability whatsoever arising out of or in connection with the Custodian's
status, acts, or omissions under this Agreement, except only for liability
arising out of the 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 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 or
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 Custodian, the Fund shall assume the entire
defense of any claim subject to the foregoing indemnity, or the joint defense
with the Custodian of such claim, as the Custodian shall request. The
indemnities and defense provisions of this SECTION 13 shall indefinitely
survive termination of this Agreement.
SECTION 14. The Custodian shall provide the Fund, at such times at 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 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 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 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 Custodian and amending and supplementing this Agreement in
the manner mutually agreed.
SECTION 16. Either the Fund or the Custodian may give one hundred twenty
(120) days written notice to the other of the termination of this Agreement,
such termination to take effect a time specified in the notice. In case such
notice of termination is given either by the Fund or by the Custodian, the
Trustees of the Fund shall, by resolution duly adopted, promptly appoint a
Successor Custodian which Successor Custodian shall be a bank, trust company,
or a bank and trust company in good standing, with legal capacity to accept
custody of the securities of a mutual fund. Upon receipt of written notice
from the Fund of the appointment of such successor and upon receipt of Proper
Instructions, the Custodian shall deliver such
Securities and cash as it may then be holding hereunder directly to and only
to the Successor Custodian. Unless or until a Successor Custodian has been
appointed as above provided, the Custodian then acting shall continue to act
as Custodian under this Agreement.
Every Successor Custodian appointed hereunder shall execute and deliver an
appropriate written acceptance of its appointment and shall thereupon become
vested with the rights, powers, obligations and custody of its predecessor
Custodian. The Custodian ceasing to act shall nevertheless, upon request of
the Fund and the Successor Custodian and upon payment of its charges and
disbursements, execute an instrument in form approved by its counsel
transferring to the Successor Custodian all the predecessor Custodian's
rights, duties, obligations and custody.
In case the 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
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 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 Custodian may, at any time or times appoint (and may at any
time remove) and 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 Custodian
may from time to time direct, provided, however, that the appointment of such
agent shall not relieve the 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 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.
Subject to security requirements of the Custodian applicable to its own
employees having access to similar records within the Custodian and such
regulations as to the conduct of such monitors as may be reasonably imposed
by the Custodian after prior consultation with an officer of the Fund the
books and records of the 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. Nothing contained in this Agreement is intended to or shall
require the Custodian in any capacity hereunder to perform any functions or
duties on any holiday or other day of special observance on which the
Custodian is closed. Functions or duties normally scheduled to be performed
on such days shall be performed on, and as of, the next business day the
Custodian is open.
SECTION 23. 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 Custodian, or by the 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 Custodian have caused this Agreement to
be signed by their respective officers as of the day and year first above
written.
TrustFunds
By:
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President
THE PHILADELPHIA NATIONAL BANK
By:
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Vice President
