CUSTODIAN AGREEMENT
This Agreement, dated 1st day of September 1981 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 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 designated 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 asset 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
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 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 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 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 or 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 period
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 demand 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 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 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 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, it 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 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 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 at the 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 Liquid Asset Trust
By: /s/ Signature Appears Here
---------------------------------
President
THE PHILADELPHIA NATIONAL BANK
By: /s/ Signature Appears Here
---------------------------------
Vice President
Schedule A
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The custodian fees will be taken against the portfolios in aggregate. These fees
shall consist of two parts: a net asset value fee and a variable transaction
fee.
Fixed Fee
---------
The net asset value fee will be charged monthly based on the average book value
of the aggregate portfolios during the month. There will be a minimum charge of
$50,000 per year, plus wire charges.
-------
Net Asset Value % Fee
--------------- -----
On the first $1,000,000,000 .00013
Above $1,000,000,000 To be agreed on by the parties
Transactional Fee
-----------------
A transaction is defined as a purchase, a sale or a maturity.
. $12.00 - per transaction for Commercial Paper, Certificate of Deposit
Bankers Acceptances, Governmental Nat'l Mortgage Association (GNMA),
Euro Dollar Deposits, Nassau Time Deposits and repurchase agreements of
those investments.
. $10.00 - per transaction on all direct obligation of the U.S. Government
agencies of the U.S. Government (except GNMA) and repurchase agreements
these instruments - plus $2.00 per underlying asset.
These fees will be in effect for a period of not less than two years from the
date of the original document.
