Exhibit (g)(1)
CUSTODIAN AGREEMENT
(FOREIGN AND DOMESTIC SECURITIES)
This Custodian Agreement is made by and between The Willamette Funds, on
behalf of THE WILLAMETTE FUNDS FAMILY ("Principal"), and UNION BANK OF
CALIFORNIA, NATIONAL ASSOCIATION ("Custodian"). (The Willamette Funds Family
includes all series of The Willamette Funds for which Willamette Asset Managers,
Inc. serves as investment adviser.) Principal desires that Custodian hold and
administer on behalf of Principal certain Securities (as herein defined).
Custodian is willing to do so on the terms and conditions set forth in this
Agreement. Accordingly, Principal and Custodian agree as follows:
1. Definitions. Certain terms used in this Agreement are defined as
follows:
(a) "Account" means, collectively, each custodianship account
maintained by Custodian pursuant to Paragraph 3 of this Agreement.
(b) "Appointed Person" means the individual(s) designated by
Principal to initiate funds transfer instructions to Custodian in accordance
with Paragraph 14 of this Agreement.
(c) "Eligible Foreign Custodian", ("Sub-Custodian") means an entity
that is incorporated or organized under the laws of a country other than the
United States and that is a Qualified Foreign Bank or majority-owned direct or
indirect subsidiary of a U.S. Bank or bank holding company.
(d) "Eligible Foreign Securities Depository", ("Depository") means a
system for the central handling of securities as defined in 270.17-f7 that (I)
Acts as or operates as a system for the handling of securities or equivalent
book-entries; (ii) Is regulated by a foreign financial regulatory authority as
defined under section 2(a)(50) of the Act (15 U.S.C. 80a-2(50)); (iii) Holds
assets for the custodian that participates in the system on behalf of the Fund
under safekeeping conditions no less favorable that the conditions that apply to
other participants; (iv) Maintains records that identify the assets of each
participant and segregates the system's own assets for the assets of
participants; (v) Provides periodic reports to its participants with respect to
its safekeeping of assets, including notices of transfer to or from any
participants account; and (vi) is subject to periodic examinations by regulatory
authorities or independent accountants.
(e) "Investment Manager" means an investment advisor or manager
identified by Principal in a written notice to Custodian as having the authority
to direct Custodian regarding the management, acquisition, or disposition of
Securities.
(f) "Securities" means domestic or foreign securities or both within
the meaning of Section 2(a)(36) of the Investment Company Act of 1940 ("1940
Act") and regulations issued by the U.S. Securities and Exchange Commission
("SEC") under Section 17(f) of the 1940 Act, 17 C.F.R. 270.17f-5(c)(1), as
amended, which are held by Custodian in the Account, and shall include cash of
any currency or other property of Principal and all income and proceeds of sale
of such securities or other property of Principal.
2. Representations
(a) Principal represents that with respect to any Account
established by Principal to hold Securities, Principal is authorized to enter
into this Agreement and to retain Custodian on the terms and conditions and for
the purposes described herein.
(b) Custodian represents that (i) it is organized under the laws of
the United States and has its principal place of business in the United States,
(ii) it is a bank within the meaning of Section 202(a)(2) of the Investment
Advisers Act of 1940 and Section 2(a)(5) of the Investment Company Act of 1940,
as amended, and (iii) it has equity capital in excess of $1 million.
3. Establishment of Accounts. Principal hereby establishes with Custodian,
and may in the future establish, one or more Accounts in Principal's name. The
Account shall consist of Securities delivered to and receipted for by Custodian
or by any Sub-Custodian. Custodian, in its sole discretion, may reasonably
refuse to accept any property now or hereafter delivered to it for inclusion in
the Account. Principal shall be notified promptly of such refusal and any such
property shall be immediately returned to Principal.
4. Custody. Subject to the terms of this Agreement, Custodian shall be
responsible for the safekeeping and custody of the Securities. Custodian may (i)
retain possession of all or any portion of the Securities in a foreign branch or
other office of Custodian, or (ii) retain, in accordance with Paragraph 5 of
this Agreement, one or more Sub-Custodians to hold all or any portion of the
Securities. Custodian and any Sub-Custodian may, in accordance with Paragraph 5
of this Agreement, deposit definitive or book-entry Securities with one or more
Depositories.
(a) If Custodian retains possession of Securities, Custodian shall
ensure the Securities are at all times properly identified as being held for the
appropriate Account. Custodian shall segregate physically the Securities from
other securities or property held by Custodian. Custodian shall not be required
to segregate physically the Securities from other securities or property held by
Custodian for third parties as Custodian, but Custodian shall maintain adequate
records showing the true ownership of the Securities.
(b) If Custodian deposits Securities with a Sub-Custodian, Custodian
shall maintain adequate records showing the identity and location of the
Sub-Custodian, the Securities held by the Sub-Custodian, and each Account to
which such Securities belong.
(c) If Custodian or any Sub-Custodian deposits Securities with a
Depository, Custodian shall maintain, or shall cause the Sub-Custodian to
maintain, adequate records showing the identity and location of the Depository,
the Securities held by the Depository, and each Account to which such Securities
belong.
(d) If Principal directs Custodian to deliver certificates or other
physical evidence of ownership of Securities to any broker or other party, other
than a Sub-Custodian or Depository employed by Custodian for purposes of
maintaining the Account, Custodian's sole responsibility shall be to exercise
care and diligence in effecting the delivery as instructed by Principal. Upon
completion of the delivery, Custodian shall be discharged completely of any
further liability or responsibility with respect to the safekeeping and custody
of Securities so delivered.
(e) Custodian shall ensure that (i) the Securities will not be
subject to any right, charge, security interest, lien, or claim of any kind in
favor of Custodian or any Sub-Custodian or Depository except for Custodian's
expenses relating to the Securities' safe custody or administration, and (ii)
the beneficial ownership of the Securities will be freely transferable without
the payment of money or value other than for safe custody or administration.
(f) Principal or its designee, upon reasonable notice during regular
business hours, shall have reasonable access to inspect books and records
maintained by Custodian or any Sub-Custodian or Depository holding Securities
hereunder to verify the accuracy of such books and records. Custodian shall
notify Principal promptly of any applicable law or regulation in any country
where Securities are held that would restrict such access or inspection.
5. Sub-Custodians and Depositories. With Principal's advance written
approval, as provided in Paragraph 5(c) of this Agreement, Custodian may from
time to time retain one or more Sub-Custodians and Depositories to hold
Securities hereunder.
(a) Custodian shall exercise reasonable care in the selection of
Sub-Custodians and Depositories. In making its selection, Custodian shall
consider (i) the Sub-Custodian's or Depository's financial strength, general
reputation and standing in the country in which it is located, its ability to
provide efficiently the custodial services required, and the relative cost of
such services, (ii) whether the Sub-Custodian or Depository would provide a
level of safeguards for safekeeping and custody of Securities not materially
different from those prevailing in the U.S., (iii) whether the Sub-Custodian or
Depository has branch offices in the U.S. in order to facilitate jurisdiction
over and enforcement of judgments against it, and (iv) in the case of a
Depository, the number of its participants and its operating history.
(b) Custodian shall give written notice to Principal of its
intention to deposit Securities with a Sub-Custodian or (directly or through a
Sub-Custodian) with a Depository. The notice shall identify the proposed
Sub-Custodian or Depository and shall include reasonably available information
relied on by Custodian in making the selection.
(c) Within 30 days of its receipt of a notice from Custodian
pursuant to Paragraph 5(b) of this Agreement regarding Custodian's proposed
selection of one or more Sub-Custodians or Depositories, Principal shall give
written notice to Custodian of Principal's approval or disapproval of the
proposed selection. If Principal has not responded within 30 days of receipt of
Custodian's request for approval of a Sub-Custody, Principal will be deemed to
have approved such Sub-Custody. Principal hereby approves Custodian's retention
of those Sub-Custodians and Depositories, if any, which are identified in
Appendix A of this Agreement.
(d) Custodian shall evaluate and determine at least annually the
continued eligibility of each Sub-Custodian and Depository approved by Principal
to act as such hereunder. In discharging this responsibility, Custodian shall
(i) monitor continuously the day to day services and reports provided by each
Sub-Custodian or Depository, (ii) at least annually, obtain and review the
annual financial report published by such Sub-Custodian or Depository and any
reports on such Sub-Custodian or Depository prepared by a reputable independent
analyst, (iii) at least triennially, physically inspect the operations of such
Sub-Custodian or Depository and (iv) Custodian shall provide Principal with a
report of its annual review of each Sub-Custodian and Depository.
(e) If Custodian determines that any Sub-Custodian or Depository no
longer satisfies the applicable requirements described in Paragraph 1(b) (in the
case of a Depository) or Paragraph 1(e) (in the case of a Sub-Custodian) of this
Agreement or is otherwise no longer capable or qualified to perform the
functions contemplated herein, Custodian shall promptly give written notice
thereof to Principal. The notice shall, in addition, either (i) indicate
Custodian's intention to transfer Securities held by the removed Sub-Custodian
or Depository to another Sub-Custodian or Depository previously approved by
Principal, or (ii) include a notice pursuant to Paragraph 5(b) of this Agreement
of Custodian's intention to deposit Securities with a new Sub-Custodian or
Depository.
6. Registration. Subject to any specific instructions from Principal,
Custodian shall hold or cause to be held all Securities in the name of
Custodian, or any Sub-Custodian or Depository approved by Principal pursuant to
Paragraph 5 of this Agreement, or in the name of a nominee of any of them, as
Custodian shall determine to be appropriate under the circumstances.
7. Transactions. Principal or any Investment Manager from time to time may
instruct Custodian (which in turn shall be responsible for giving appropriate
instructions to any Sub-Custodian or Depository) regarding the purchase or sale
of Securities in accordance with this Paragraph 7:
(a) Custodian shall effect and account for each Securities and
currency sale on the date such transaction actually settles; provided, however,
that Principal may in its sole discretion direct Custodian, in such manner as
shall be acceptable to Custodian, to account for Securities and currency
purchases and sales on contractual settlement date, regardless of whether
settlement of such transactions actually occurs on contractual settlement date.
Principal may, from time to time, direct Custodian to change the accounting
method employed by Custodian in a written notice delivered to Custodian at least
thirty (30) days prior to the date a change in accounting method shall become
effective.
(b) Custodian shall effect purchases by charging the Account with
the amount necessary to make the purchase and effecting payment to the seller or
broker for the securities or other property purchased. Custodian shall have no
liability of any kind to any person, including Principal, except in the case of
negligent or intentional tortuous acts, or willful misconduct, if the Custodian
effects payment on behalf of Principal, and the seller or broker fails to
deliver the securities or other property purchased. Custodian shall exercise
such ordinary care and diligence as would be employed by a reasonably prudent
custodian and due diligence in examining and verifying the certificates or other
indicia of ownership of the property purchased before accepting them.
(c) Custodian shall effect sales by delivering certificates or other
indicia of ownership of the Property, and, as instructed, shall receive cash for
such sales. Custodian shall have no liability of any kind to any person,
including Principal, if Custodian exercises due diligence and delivers such
certificates or indicia of ownership and the purchaser or broker fails to effect
payment. If a purchase or sale is effected through a Depository, Custodian shall
exercise such ordinary care and diligence as would be employed by a reasonably
prudent custodian and due diligence in verifying proper consummation of the
transaction by the Depository.
(d) Principal or, where applicable, the Investment Manager, is
responsible for ensuring that Custodian receives timely instructions and/or
funds to enable Custodian to effect settlement of any purchase or sale of
Securities or Currency Transactions. If Custodian does not receive such timely
instructions or funds, Custodian shall have no liability of any kind to any
person, including Principal, for failing to effect settlement. However,
Custodian shall use reasonable efforts to effect settlement as soon as possible
after receipt of appropriate instructions. Principal shall be liable for
interest compensation and/or principal amounts to Custodian and/or its
counterparty for failure to deliver instructions or funds in a timely manner to
effect settlements of foreign exchange funds movement.
(e) At the direction of Principal or the Investment Manager, as the
case may be, Custodian shall convert currency in the Account to other currencies
through customary channels including, without limitation, Custodian or any of
its affiliates, as shall be necessary to effect any transaction directed by
Principal or the Investment Manager. Principal or the Investment Manager, as the
case may be, acknowledges that i) the foreign currency exchange department is a
part of Custodian or one of its affiliates or subsidiaries; ii) the Account is
not obligated to effect foreign currency exchange with Custodian; iii) Custodian
will receive benefits for such foreign currency transactions which are in
addition to the compensation which Custodian receives for administering the
Account; and iv) Custodian will make available the relevant data so that
Principal or the Investment Manager, as the case may be, can determine that the
foreign currency exchange transactions are as favorable to the Account as terms
generally available in arm's length transactions between unrelated parties.
(f) Custodian shall have no responsibility to manage or recommend
investments of the Account or to initiate any purchase, sale, or other
investment transaction in the absence of instructions from Principal or, where
applicable, an Investment Manager.
8. Capital Changes; Income.
(a) Custodian may, without further instructions from Principal or
any Investment Manager, exchange temporary certificates and may surrender and
exchange Securities for other securities
in connection with any reorganization, recapitalization, or similar transaction
in which the owner of the Securities is not given an option. Custodian has no
responsibility to effect any such exchange unless it has received actual notice
of the event permitting or requiring such exchange at its office designated in
Paragraph 15 of this Agreement or at the office of its designated agents.
(b) Custodian, or its designated agents, are authorized, as
Principal's agent, to surrender against payment maturing obligations and
obligations called for redemption, and to collect and receive payments of
interest and principal, dividends, warrants, and other things of value in
connection with Securities. Except as otherwise provided in Paragraph 16(d) of
this Agreement, Custodian or its designated agents shall not be obligated to
enforce collection of any item by legal process or other means.
(c) Custodian or its designated agents are authorized to sign for
Principal all declarations, affidavits, certificates, or other documents that
may be required to collect or receive payments or distributions with respect to
Securities. Custodian or its designated agents are authorized to disclose,
without further consent of Principal, Principal's identity to issuers of
Securities, or the agents of such issuers, who may request such disclosure.
9. Notices re Account Securities. Custodian shall notify Principal or,
where applicable, the Investment Manager, of any reorganization,
recapitalization, or similar transaction not covered by Paragraph 8, and any
subscription rights, proxies, and other shareholder information pertaining to
the Securities actual notice of which is received by Custodian at its office
designated in Paragraph 15 of this Agreement or at the offices of its designated
agents. Custodian's sole responsibility in this regard shall be to give such
notices to Principal or the Investment Manager, as the case may be, within a
reasonable time after Custodian receives them, and Custodian shall not otherwise
be responsible for the timeliness of such notices. Custodian has no
responsibility to respond or otherwise act with respect to any such notice
unless and until Custodian has received appropriate instructions from Principal
or the Investment Manager.
10. Taxes. Custodian shall pay or cause to be paid from the Account all
taxes and levies in the nature of taxes imposed on the Account or the Securities
thereof by any country. Custodian will use its best efforts to give the
Investment Manager advance written notice of the imposition of such taxes.
However, Custodian shall use reasonable efforts to obtain refunds of taxes
withheld on Securities or the income thereof that are available under applicable
tax laws, treaties, and regulations.
11. Cash. Principal may from time to time, direct Custodian to hold
Account cash in The HighMark Group of mutual funds or in any investment company
for which Custodian or its affiliates or subsidiaries, acts as investment
advisor, custodies the assets, or provides other services. Principal shall
designate the particular HighMark fund or such other above-mentioned fund that
Principal deems appropriate for the Account. Principal or an Investment Manager,
where applicable, acknowledges that Custodian will receive fees for such
services which will be in addition to those fees charged by Custodian as agent
for the Account.
12. Reports. Custodian shall give written reports to Principal showing (i)
each transaction involving Securities effected by or reported to Custodian, (ii)
the identity and location of Securities held by Custodian as of the date of the
report, (iii) any transfer of location of Securities not otherwise reported, and
(iv) such other information as shall be agreed upon by Principal and Custodian.
Unless otherwise agreed upon by Principal and Custodian, Custodian shall provide
the reports described in this Paragraph 12 on a monthly basis.
13. Instructions from Principal.
(a) Principal shall certify or cause to be certified to Custodian in
writing the names and specimen signatures of all persons authorized to give
instructions, notices, or other communications on behalf of Principal or any
Investment Manager. Such certification shall remain effective until Custodian
receives notice to the contrary.
(b) Principal or authorized Investment Manager, as the case may be,
may give instruction, notice, or other communication called for by this
Agreement to Custodian in writing, or by telecopy, telex, telegram, or other
form of electronic communication acceptable to Custodian. Unless otherwise
expressly provided, all Instructions shall continue in full force and effect
until canceled or superseded. Principal or Investment Manager may give and
Custodian may accept oral instructions on an exception basis; provided, however,
that Principal or Investment Manager shall promptly confirm any oral
communications in writing or by telecopy or other means permitted hereunder.
Principal will hold Custodian harmless for the failure of Principal or
Investment Manager to send confirmation in writing, the failure of such
confirmation to conform to the telephone instructions received or Custodian's
failure to produce such confirmation at any subsequent time. Custodian may
electronically record any instruction given by telephone, and any other
telephone discussions with respect to the Custody Account.
(c) All such communications shall be deemed effective upon receipt
by Custodian at its address specified in Paragraph 15 of this Agreement, as
amended from time to time. Custodian without liability may rely upon and act in
accordance with any instruction that Custodian using ordinary care believes has
been given by Principal or an Investment Manager.
(d) Custodian may at any time request instructions from Principal
and may await such instructions without incurring liability. Custodian has no
obligation to act in the absence of such requested instructions, but may,
however, without liability take such action as it deems appropriate to carry out
the purposes of this Agreement.
14. Funds Transfer Instructions.
(a) Principal authorizes Custodian to act upon instructions for the
transfer of funds from the Account to any other account(s) of Principal or to
any third party when such instructions are received from Principal or
Principal's Appointed Persons and which have been authenticated by Custodian in
accordance with the securities procedures agreed to by Principal as set forth in
Subparagraph (b) hereof.
(b) Principal agrees to the security procedure(s) offered by
Custodian to authenticate, amend, and request cancellation of funds transfer
instructions as set forth below. If a funds transfer instruction received by
Custodian purports to have been transmitted or authorized by Principal, it will
be deemed effective as Principal's instruction if Custodian followed the
security procedure(s) set forth below:
i) Authenticated Electronic Instruction. Funds transfer
instructions received by Custodian via secured electronic systems, e.g., Telex,
Swift, etc. carry the same force as if Principal or the Appointed Person gave
such instruction directly.
ii) Standing Instruction for Funds Transfers. If Principal
instructs Custodian in writing to initiate funds transfers to any account(s) of
Principal or to any designated third party beneficiary under standing
instructions, Custodian will perform no call-back for such Custodian initiated
funds transfers.
iii) Repetitive Funds Transfers. Repetitive funds transfers
may be initiated via facsimile by Principal or Appointed Person after Custodian
has performed an initial call back to a different Appointed Person to verify the
repetitive transfer information. Upon receiving each funds transfer request,
Custodian will verify that the individual whose signature appears on the funds
transfer request is an Appointed Person, and that the repetitive payment
destination matches the beneficiary data on the initial authorization.
iv) Non-Repetitive Funds Transfers. Non-repetitive funds
transfers may be initiated via facsimile by Principal or Appointed Person after
Custodian has performed a call back to a different Appointed Person and has
verified that the individual whose signature appears on the funds
transfer request is an Appointed Person. If Principal selects this security
procedure for non-repetitive funds transfers, Principal acknowledges that
Principal may assume a greater risk of unauthorized transfers than with the
other procedure offered by Custodian.
(c) Custodian will use its best efforts to execute each properly
authorized funds transfer instructions on the day of receipt if Custodian
receives the instruction and is able to authenticate it before Custodian's
cut-off time, and the day of receipt is a funds transfer business day for
Custodian and the transmission facility selected. Custodian may change its
cutoff time without prior notice to Principal.
(d) Custodian at its sole discretion may reject any funds transfer
instructions which (i) exceeds the collected and available funds on deposit in
the Account; (ii) is not authenticated to Custodian's satisfaction or which
Custodian believes may not be authorized by Principal; (iii) contains incorrect,
inconsistent, ambiguous, or missing information; (iv) involves funds which are
subject to a lien, security interest, claim, hold, dispute, or legal process
prohibiting withdrawal. Custodian shall incur no liability to Principal for any
loss occasioned by Custodian's refusal, with or without notice to Principal, to
honor any funds transfer instructions.
(e) If there are insufficient available funds in the Account to
cover Principal's obligations under this Agreement, Custodian may at is sole
discretion choose to complete funds transfers initiated by Principal, and
Principal agrees to immediately repay Custodian the amount of any overdraft
created thereby plus any overdraft charges imposed in connection therewith,
without notice or demand to Principal.
(f) If Principal's transfer instructions identifies the beneficiary,
the beneficiary's bank, or an intermediary bank by name and an account or other
identifying number, Custodian and subsequent parties to the funds transfer may
act solely on the basis of such number, even if the name and number do not
agree.
(g) Principal shall have no right to cancel or amend a funds
transfer instruction after its receipt by Custodian. However, Custodian shall
use reasonable efforts to act on a request by Principal to cancel or amend an
instruction prior to executing it, but shall have no liability if cancellation
or amendment is not effected.
(h) Except as otherwise required by the California Commercial Code,
Custodian shall not be responsible for any loss or liability arising in
connection with this Paragraph 14 from (i) any inaccuracy, act or failure to act
on the part of any person not within Custodian's reasonable control, including,
without limitation, the failure of other financial institutions to provide
accurate or timely information to Custodian or Principal; (ii) the failure of
other financial institutions to accept payment orders; (iii) Principal's
negligence or breach of this Agreement; (iv) any ambiguity or inaccuracy in any
instruction or in the information set forth in this Agreement given to Custodian
by Principal; (v) any error, failure or delay in execution of any funds transfer
instruction, or cancellation or amendment, including without limitation, any
inoperability of computer or communication facilities, or other circumstances
beyond Custodian's reasonable control. Provided that Custodian has complied with
this Paragraph 14, Principal agrees to indemnify and hold Custodian and its
directors, officers, employees, agents and attorneys harmless against any claim
of any third party arising from or in connection with this Agreement or
Custodian's performance of funds transfer services for Principal. Principal
agrees to take any and all reasonable actions to mitigate any potential or
actual Custodian loss or liability under this Paragraph 14.
15. Addresses. Until further notice from either party, all communications
called for under this Agreement shall be addressed as follows:
If to Principal:
Name: The Willamette Funds Family
Street Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇, ▇▇▇: ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier:
Telex (Answerback):
If to Custodian:
UNION BANK OF CALIFORNIA, NATIONAL ASSOCIATION
Union Bank of California Global Custody
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telex (Answerback): 215748/MBCTD UR
16. Custodian's Responsibilities and Liabilities:
(a) Custodian's duties and responsibilities shall be limited to
those expressly set forth in this Agreement, or as otherwise agreed by Custodian
in writing. In carrying out its responsibilities, Custodian shall exercise no
less than the same degree of care and diligence it usually exercises with
respect to similar property of its own.
(b) Custodian (i) shall not be required to maintain any special
insurance for the benefit of Principal, and (ii) shall not be liable or
responsible for any loss, damage, expense, failure to perform or delay caused by
accidents, strikes, fire, flood, war, riot, electrical or mechanical or
communication line or facility failures, acts of third parties (including
without limitation any messenger, telephone or delivery service), acts of God,
war, government action, civil commotion, fire, earthquake, or other casualty or
disaster or any other cause or causes which are beyond Custodian's reasonable
control. However, Custodian shall use reasonable efforts to replace Securities
lost or damaged due to such causes with securities of the same class and issue
with all rights and privileges pertaining thereto. Custodian shall be liable to
Principal for any loss which shall occur as the result of the failure of a
Sub-Custodian to exercise reasonable care with respect to the safekeeping of
assets to the same extent that Custodian would be liable to Principal if
Custodian were holding such securities and cash in its own premises. In all
cases, Custodian's liability for any act or failure to act under this Agreement
shall be limited to the resulting direct loss, if any, of Principal. Under no
circumstances shall Custodian be liable for any consequential, indirect,
punitive, or special damage which Principal may incur or suffer in connection
with this Agreement.
(c) The parties intend that Custodian shall not be considered a
fiduciary of the Account. Accordingly, Custodian shall have no power to make
decisions regarding any policy, interpretation, practice, or procedure with
respect to the Account, but shall perform the ministerial and administrative
functions described in this Agreement as provided herein and within the
framework of policies, interpretations, rules, practices, and procedures made by
Principal or an investment manager, where applicable, as the same shall be
reflected in instructions to Custodian from Principal or any Investment Manager.
(d) Custodian shall not be required to appear in or defend any legal
proceedings with respect to the Account or the Securities unless Custodian has
been indemnified to its reasonable satisfaction against loss and expense
(including reasonable attorneys' fees).
(e) With respect to legal proceedings referred to in paragraph 16(d)
of this agreement, Custodian may consult with counsel acceptable to it after
written notification to Principal concerning its duties and responsibilities
under this Agreement, and shall not be liable for any action taken or not taken
in good faith on the advice of such counsel.
17. Indemnities.
(a) Principal hereby agrees to indemnify Custodian against all
liability, claims, demands, damages, losses, and costs, including reasonable
attorneys' fees and expenses of legal proceedings, resulting from Custodian's
compliance with instructions from Principal or any Investment Manager and the
terms of this Agreement, except where Custodian has acted with negligence or
willful misconduct.
(b) Custodian's right to indemnity under Paragraph 17(a) of this
Agreement shall survive the termination of this Agreement.
18. Compensation; Expenses. Principal shall reimburse Custodian for all
reasonable out-of-pocket expenses and processing costs incurred by Custodian in
the administration of the Account including, without limitation, reasonable
counsel fees incurred by Custodian pursuant to Paragraph 16(e) of this
Agreement. Principal also shall pay Custodian reasonable compensation for its
services hereunder as specified in Appendix B. Custodian shall be entitled to
withdraw such expenses or compensation from the Account if Principal fails to
pay the same to Custodian within 45 days after Custodian has sent an appropriate
billing to Principal; provided, however, that Custodian will give Principal ten
(10) days prior written notice before withdrawing such funds.
19. Amendment; Termination. This Agreement may be amended at any time by a
written instrument signed by the parties. Either party may terminate this
Agreement and the Account upon 90 days' written notice to the other unless the
parties agree on a different time period. Upon such termination, Custodian shall
deliver or cause to be delivered the Securities, less any amounts due and owing
to Custodian under this Agreement, to a successor custodian designated by
Principal or, if a successor custodian has not accepted an appointment by the
effective date of termination of the Account, to Principal. Upon completion of
such delivery Custodian shall be discharged of any further liability or
responsibility with respect to the Securities so delivered.
20. Successors. This Agreement shall be binding upon and ensure to the
benefit of the parties hereto and their successors in interest. Without consent
of the parties, this agreement cannot be assigned to any third party.
21. Governing Law. The validity, construction, and administration of this
Agreement shall be governed by the applicable laws of the United States from
time to time in force and effect and, to the extent not preempted by such laws
of the United States, by the laws of the State of California from time to time
in force and effect. Any action or proceeding to enforce, interpret or
adjudicate the rights and responsibilities of the parties hereunder shall be
commence in the State or Federal courts located in the State of California.
22. Effective Date. This Agreement shall be effective as of the date
appearing below, and shall supersede any prior or existing agreements between
the parties pertaining to the subject matter hereof.
Date:
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The Willamette Funds
By:
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Authorized Signature
"Principal"
Union Bank of California, National Association
By:
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Title:
--------------------------
"Custodian"