[Union Bank LOGO omitted] EXHIBIT 23(g)(2)
GLOBAL CUSTODY AGREEMENT
For Foreign and Domestic Securities
This Custodian Agreement ("Agreement") is made as of____________________, by and
between First Pacific Mutual Fund, Inc. for the First Pacific Low Volatility
Fund series ("Principal") and Union Bank, N.A. ("Custodian").
WHEREAS, the Custodian is a bank meeting the qualifications required by Section
17(f)(1) of the Act to act as custodian of the portfolio securities and other
assets of investment companies; and
WHEREAS, Principal wishes to retain the Custodian to act as custodian of its
portfolio securities and other assets, and the Custodian has indicated its
willingness to so act;
NOW, THEREFORE, in consideration of the promises and mutual covenants herein
contained, and intending to be legally bound hereby, the parties hereto agree as
follows:
1. DEFINITIONS. Certain terms used in this Agreement are defined as follows:
1.1 "Account" means, collectively, each account maintained by Custodian on
behalf of Principal pursuant to Paragraph 4 of this Agreement.
1.2 "Act" means the Investment Company Act of 1940, as amended, and the rules
and regulations adopted by the U.S. Securities and Exchange Commission ("SEC")
thereunder, including 270.17f-4, 270.17f-5 and 270.17f-7, all as may be
amended from time to time.
1.3 "Board" means the Board of Trustees or the Board of Directors of Principal.
1.4 "Depository" means both any "securities depository" within the meaning of
270.17f-4 of the Act and any Eligible Securities Depository
1.5 "Eligible Foreign 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, as defined in 270.17f-5(a)(5) of the Act.
1.6 "Eligible Securities Depository", ("Depository", or collectively
"Depositories") means a system for the central handling of securities as defined
in 270.17f-7(b)(1) of the Act.
1.7 "Emerging Market" means each market so identified in Appendix A attached
hereto.
1.8 "Foreign Account" means an Account in which Foreign Currencies or Securities
are held by the Custodian for the benefit of clients whether in comingled
accounts or accounts designated for each beneficiary owner as is required under
the regulatory jurisdiction where the Foreign Account is established.
1.9 "Foreign Assets" has the meaning provided in 270.17f-5(a)(2) of the Act.
1.10 "Foreign Currency" ("Currencies") means any currency or any composite
currency unit issued by a government or entity other than the United States
Department of Treasury.
1.11 "Foreign Market" means each market so identified in Appendix A attached
hereto.
1.12 "Global Sub-Agent Network" ("Sub-Agent Network" or "Sub-Agents") means the
countries and markets where Eligible Foreign Sub-Custodians and Eligible Foreign
Depositories are maintained by Custodian.
1.13 "Governing Documents" means, with respect to each of the portfolios, (i)
the declaration of trust or other constituting document of the Principal of
which the portfolio is a series or portfolio, (ii) the currently effective
prospectus under the Securities Act, (ii) the most recent statement of
additional information, and (iii) a certified copy of the Board approving the
engagement of the Custodian to act as custodian of the Securities.
1.14 "Investment Manager" or "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.
1.15 "Monitoring System" means the policies and procedures established by
Custodian to fulfill its duties to monitor the custody risks associated with
maintaining Securities with a Sub-Custodian or Depository on a continuing basis,
pursuant to this Agreement.
1.16 "Securities" means securities as defined in 2(a)(36) of the Act together
with cash or any currency or other property of Principal and all income and
proceeds of sale of such securities or other property of Principal that are held
by Custodian in the Account.
1.17 "Securities Act" means the Securities Act of 1933, as amended.
1.18 "Sub-Custodian" means an entity, including an Eligible Foreign Custodian,
that Custodian retains to hold Securities.
2. APPOINTMENT
2.1 Principal hereby appoints the Custodian as the custodian of the Securities
of each of its Portfolios.
2.2 Principal has provided the Custodian with a copy of its Governing Documents,
and will provide the Custodian with a copy of amendments, supplements and
modifications thereof from time to time.
2.3 The Custodian hereby accepts appointment as custodian of the Securities of
Principal and agrees to perform the duties of such custodian in accordance with
the provisions of this Agreement.
3. REPRESENTATIONS AND ACKNOWLEDGEMENTS
3.1 Power to Enter Agreement. Principal represents that, with respect to the
Account, Principal is authorized to enter into this Agreement and to retain
Custodian on the terms and conditions and for the purposes described herein.
3.2 Foreign Custody Manager. The custodian agrees to serve as Principal's
"Foreign Custody Manager" as defined in Rule 270.17f-5(a)(3) of the Act, in
respect of Principal's Foreign Assets held from time to time by the Custodian
with any Sub-Custodian that is an Eligible Foreign Custodian or with any
Eligible Securities Depository.
3.3 Custodian's Sub-Agent Network. Principal hereby acknowledges receiving
appropriate notice of Custodian's selection the of the use of those Eligible
Foreign Custodians and Eligible Securities Depositories that are identified in
Appendix A of this Agreement.
4. ESTABLISHMENT OF ACCOUNT.
Custodian shall open and maintain a separate Account or Accounts in the name of
Principal and shall hold in such Account or Accounts, subject to the provisions
hereof, all Securities received by it from or for the Account of the Principal.
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. Custodian shall be under no duty to take any action
hereunder on behalf of the Principal except as specifically set forth herein or
as may be specifically agreed to by Custodian and the Principal in a written
amendment hereto.
5. CUSTODY AND REGISTRATION.
Custodian may (i) maintain possession of all or any portion of the Securities,
including possession in a foreign branch or other office of Custodian; or (ii)
retain, in accordance with this Paragraph 5 and Paragraph 6 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 this Paragraph 5 and
Paragraph 6 of this Agreement, deposit definitive or book-entry Securities with
one or more Depositories.
5.1 Identification 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 owned
by Custodian. Custodian shall not be required to segregate physically
Securities held from other securities or property held by Custodian for third
parties as custodian or other representative capacity, but Custodian shall
maintain adequate records showing the true ownership of the Securities.
5.2 Use of Depositories and Sub-Custodians. Custodian may, in its discretion,
deposit any Securities which, under applicable law, are eligible to be so
deposited in a Depository or Sub-Custodian account. Securities and Foreign
Currencies held by a Sub-Custodian or Depository will be held subject to the
rules, terms and conditions of such securities markets or securities
depositories. If Custodian deposits Securities with a Sub-Custodian or
Depository, Custodian shall maintain adequate records showing the identity and
location of the Sub-Custodian or Depository, the Securities held by the Sub-
Custodian or Depository and each account to which such Securities belong. With
respect to Securities that are held for Custodian or any Sub-Custodian at a
Depository, as defined in of 270.17f-4 of the Act, Custodian shall
satisfy or cause the Sub-Custodian to satisfy the requirements of 270.17f-4 of
the Act.
5.3 Use of Nominees. Custodian shall have the right to hold or cause to be
held all Securities in the name of the Custodian, or for any Sub-Custodian or
Depository, or in the name of a nominee of any of them as Custodian shall
determine to be appropriate under the circumstances.
5.4 Foreign Currency Deposits. The Custodian may in accordance with customary
practices hold any currency in which any cash is denominated on deposit , and
effect transaction relating thereto, through an account with an affiliate of
Union Bank, or Sub-Custodian or Depository in the country where such currency is
the lawful currency or in other countries where such currency may be lawfully
held on deposit.
5.5 Transferability and Convertibility of Currency. Custodian shall have no
liability for any loss or damage arising from the applicability of any law or
regulation now or hereafter in effect, or from the occurrence of any event,
which may affect the transferability, convertibility, or availability of any
currency in the countries where such Foreign Accounts are maintained and in no
event shall Custodian be obligated to substitute another currency for a currency
whose transferability, convertibility, or availability has been affected by
such law, regulation or event . To the extent that any such law, regulation or
event imposes a cost or charge upon Custodian in relation to the
transferability, convertibility, or availability of any such currency,
such cost or charge shall be for the Account.
5.6 Delivery of Securities. if Principal or Investment Manager directs
Custodian to deliver assets, 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 or Manager. 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.
5.7 Transferability of Securities. Except as otherwise provided under this
Agreement or as the parties may otherwise agree, 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 any
person claiming through any of them except for Custodian's expenses relating to
the Securities' safe custody or administration or other services made available
under contractual agreements to Account by Custodian, and in the case of cash
deposits at an Eligible Foreign Custodian, liens or rights in favor of the
creditors of the Eligible Foreign Custodian arising under bankruptcy,
insolvency, or similar laws, 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.
5.8 Access to Account Records. Principal or its designee, shall have access,
upon reasonable prior notice to Custodian, during regular business hours to the
books and records relating to the Accounts, or shall be given confirmation of
the contents of the books and records, maintained by Custodian or any Sub-
Custodian 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 confirmation.
6. SELECTION AND MONITORING OF GLOBAL SUB-AGENT NETWORK.
Upon written notice to Principal, as provided in Subparagraph 6.4 of this
Agreement, Custodian may from time to time select one or more Eligible Foreign
Custodians and, subject to the provisions of Subparagraph 6.7, one or more
Eligible Securities Depositories, to hold Securities hereunder.
6.1 Governing Sub-Agent Agreement. Any relationship Custodian establishes with
an Eligible Foreign Custodian with respect to Securities shall be governed by a
written contract providing for the reasonable care of Securities based on the
standards specified in section 270.17(f)-5(c)(1) of the Act, and including
the provisions set forth in sections 270.17(f)-5(c)(2)(i)(A) through (F) of the
Act, or provisions which Custodian determines provide the same or greater
protection of Principal's Securities.
6.2 Sub-Agent Network Selection.
6.2.1 Foreign Sub-Custodian. In selecting an Eligible Foreign Custodian,
Custodian shall exercise reasonable care, prudence and diligence and shall
consider whether the Securities will be subject to reasonable care, based on the
standards applicable to custodians in the relevant market, including (i) the
Eligible Foreign Custodian's practices, procedures, and internal controls,
including, but not limited to, the physical protections available for
certificated securities (if applicable), the method of keeping custodial
records, and the security and data protection practices; (ii) the Eligible
Foreign Custodian'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; and, (iii) whether
the Eligible Foreign Custodian has branch offices in the United States, or
consents to service of process in the United States, in order to facilitate
jurisdiction over and enforcement of judgments against it.
6.2.2 Securities Depository. In selecting an Eligible Securities Depository,
Custodian shall exercise reasonable care, prudence, and diligence in evaluating
the custody risks associated with maintaining Securities with the Eligible
Securities Depository under Custodian's custody arrangements with any
relevant Eligible Foreign Custodian and the Eligible Securities Depository.
6.3 Notices to Principal. Custodian shall give 30 days' written notice to
Principal of its intention to deposit Securities with an Eligible Foreign
Custodian or, directly or through an Eligible Foreign Sub-Custodian,
with an Eligible Securities Depository. The notice shall identify the proposed
Eligible Foreign Custodian or Eligible Securities Depository and shall include
reasonably available information relied on by Custodian in making the selection.
6.4 Monitoring of Sub-Agent Network. Custodian shall monitor under its
Monitoring System the appropriateness of the continued custody or maintenance of
Principal's Securities with each Eligible Foreign Custodian or Eligible
Securities Depository.
6.4.1 Custodian shall evaluate and determine at least annually the continued
eligibility of each Eligible Foreign Custodian and Eligible Securities
Depository approved by Principal to act as such hereunder. In discharging this
responsibility, Custodian shall (i) monitor on a continuing basis the day to day
services and reports provided by each Eligible Foreign Custodian or Eligible
Securities Depository; (ii) at least annually, obtain and review the annual
financial report published by each Eligible Foreign Custodian, and to the extent
such reports are publicly available, each Eligible Securities Depository, and
other reports on each Eligible Foreign Custodian or Eligible Securities
Depository which Custodian may obtain from a reputable independent analyst; and,
(iii) periodically as deemed appropriate, physically inspect the operations of
each Eligible Foreign Custodian or Eligible Securities Depository.
6.4.2 Custodian shall provide to the Board annually and at such other times as
the Board may reasonably request based on the circumstances of the Principal's
foreign custody arrangements, written reports notifying the Board of the
placement of Securities of the Principal with a particular foreign Eligible
Foreign Custodian within a Foreign Market or an Emerging Market and of any
material change in the arrangements (including any material changes in any
contracts governing such arrangements or any material changes in the established
practices or procedures of Depositories) with respect to Securities of
the Principal held by the Eligible Foreign Custodian.
6.4.3 If Custodian determines that (i) any Eligible Foreign Custodian or
Eligible Securities Depository no longer satisfies the applicable requirements
described in Subparagraph 1.4 of this Agreement (in the case of an Eligible
Foreign Custodian) or Subparagraph 1.5 of this Agreement (in the case of an
Eligible Securities Depository); or, (ii) any Eligible Foreign Custodian or
Eligible Securities Depository is otherwise no longer capable or qualified to
perform the functions contemplated herein; or, (iii) any change in a contract
with a Eligible Foreign Custodian or any change in established Eligible
Securities Depository or market practices or procedures shall cause a custody
arrangement to no longer meet the requirements of the Act, Custodian shall
promptly give written notice thereof to Principal. The notice shall, in
addition, either indicate Custodian's intention to transfer Securities held by
the removed Eligible Foreign Custodian or Eligible Securities Depository to
another Eligible Foreign Custodian or Eligible Securities Depository
previously identified to Principal, or include a notice pursuant to Subparagraph
6.4 of this Agreement of Custodian's intention to deposit Securities with a new
Eligible Foreign Custodian or Eligible Securities Depository, in either instance
such transfer of Securities to be effected as soon as reasonably practical.
6.5 Compulsory Depositories. Notwithstanding the foregoing sub-sections of
this Paragraph 6, Custodian shall have no responsibility for the selection or
monitoring of any Eligible Securities Depository or Eligible Securities
Depository's agent ("Compulsory Depository") (i) the use of which is mandated by
law or regulation; (ii) because securities cannot be withdrawn from the
depository; or (iii) because maintaining securities outside the securities
depository is not consistent with prevailing market practices in the relevant
market; provided however, that Custodian shall notify Principal if Principal has
directed a trade in a market containing a Compulsory Depository, so Principal
and Advisor shall have an opportunity to determine the appropriateness of
investing in such market.
6.6 Assessment of Custody Risk. Principal and Custodian agree that, for
purposes of this Paragraph 6, Custodian's determination of appropriateness shall
only include custody risk, and shall not include any evaluation of "country
risk" or systemic risk associated with the investment or holding of assets in a
particular country or market, including, but not limited to (i) the use of
Compulsory Depositories, (ii) the country's or market's financial
infrastructure, (iii) the country's or market's prevailing custody and
settlement practices, (iv) risk of nationalization, expropriation or other
governmental actions, (v) regulation of the banking or securities industries,
(vi) currency controls, restrictions, devaluation or fluctuation, and
(vii) country or market conditions which may affect the orderly execution of
securities transactions or affect the value of the transactions. Principal and
Custodian further agree that the evaluation of any such country and systemic
risks shall be solely the responsibility of Principal and the Investment
Manager.
7. TRANSACTIONS
7.1 Instructions and Immediately Available Funds. Principal, or where
applicable, the Investment Manager, is responsible for ensuring that Custodian
receives timely instructions and sufficient immediately available funds for all
transactions by such time and date as conditions in the relevant market
dictates. As used herein, "sufficient immediately available funds" shall mean
either (a) sufficient cash denominated in the currency of Principal's home
jurisdiction to purchase the necessary foreign currency, or (b) sufficient
applicable foreign currency, to settle the transaction. If Custodian does not
receive such timely instructions and/or immediately available 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.
7.2.1 Customary or Established Settlement Practices. Principal and Manager
acknowledge settlement of and payment for Securities received for and delivered
from the Account may be made in accordance with the customary or established
securities trading and securities processing practices in the market in which
the transaction occurs. Principal understands that when Custodian is instructed
to deliver Foreign Securities or Foreign Currencies against payment, delivery of
such Foreign Securities and Foreign Currencies and receipt of payment therefore
may not be completed simultaneously. Principal assumes full responsibility for
all credit risks involved in connection with Custodian's delivery of Foreign
Securities or Foreign Currencies pursuant to instructions of Principal or
Manager.
7.2.2 Additions to and Withdrawals from Account. Custodian shall make all
additions and withdrawals of Securities to and from this Account only upon
receipt of and pursuant to written instructions from Principal or Manager.
7.3 Purchase or Sales. Principal or Manager from time to time may instruct
Custodian regarding the purchase or sale of Securities in accordance with this
paragraph 7.3.
7.3.1 Purchases. Custodian shall settle purchases by charging the Account with
the amount necessary to make the purchase and effecting payment to the seller or
broker for the Securities. Custodian shall have no liability of any kind to any
person, including Principal, if Custodian effects payment on behalf of the
Account, and the settler or broker specified by Manager fails to deliver the
Securities purchased. Custodian shall exercise such ordinary care and diligence
as would be employed by a reasonably prudent custodian in examining and
verifying the certificates or other indicia of ownership of the Securities
purchased before accepting them, except with respect to assets described in
Paragraph 7.4.
7.3.2 Sales. Custodian shall settle sales by delivering certificates or other
indicia of ownership of the Securities, 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.
7.4 Depository Settlement. If a purchase or sale is settled through a Sub-
Custodian or Depository, Custodian shall exercise such ordinary care and
diligence as would be employed by a reasonably prudent custodian in verifying
proper consummation of the transaction by the Sub-Custodian or Depository.
7.5 Income and Principal. Custodian or its designated Sub-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. Absent written instructions
from Principal or Manager, funds will remain in the currency of
collection upon receipt of payment.
7.6 Foreign Currency Transactions. 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.
7.7 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 Foreign
Securities thereof by any country. Custodian will use reasonable efforts to
give the Principal or Manager, as the case may be, advance notice of the
imposition of such taxes. The Custodian shall have no responsibility or
liability for any obligations now or hereafter imposed on the Principal or the
Custodian as custodian of the Principal by the tax law of the United States
or of any state or political subdivision thereof or any foreign jurisdiction.
The sole responsibilities of the Custodian with regard to such tax law shall be
to use reasonable efforts to effect the withholding of local taxes and related
charges with regard to market entitlement/payment in accordance with local law
and subject to local market practice or custom and to assist the Principal with
respect to any claim for exemption or refund under the tax law of countries for
which such Principal as provided such information. Except as specifically
provided in this Agreement or otherwise agreed to in writing by the Custodian,
the Custodian shall have no independent obligation to determine the tax
obligations now or hereafter imposed on the Principal by any taxing authority or
to obtain or provide information relating thereto, and shall have no obligation
or liability with respect to such tax obligations.
7.8 Foreign Tax Reclamation. Custodian shall use reasonable efforts to obtain
refunds of taxes withheld on Foreign Securities or the income thereof that are
available under applicable tax laws, treaties and regulations subject to
Principal's provision of all documentation and certifications as required by
U.S. and foreign tax authorities to establish the eligibility of Principal for
tax reclamation under applicable law or treaty. Principal hereby agrees to
indemnify and hold harmless Custodian and its agents in respect to any liability
arising from any under withholding or underpayment of any Tax which results from
the inaccuracy or invalidity of any such forms or other documentation, and such
obligation to indemnify shall be a continuing obligation of Principal, its
successor and assignees, notwithstanding the termination of this agreement. The
Custodian is authorized to disclose any information required by any such tax or
other governmental authority in relation to processing any claim for exemption
from or reduction or refund of any taxes relating to the Principal's
transactions and holdings.
7.9 Collection Obligations. Custodian shall diligently collect income and
principal of Securities which the Custodian has received actual notice in
accordance with normal industry practices. However, Custodian shall be under no
obligation or duty to take any action to effect collection of any amount if the
Securities upon which such amount is payable is in default, or if payment is
refused after due demand. Custodian shall notify Principal and Manager promptly
of such default or refusal to pay. Custodian shall have no duty to file or
pursue any bankruptcy or class action claims with respect to Account, unless
indemnified by Principal in manner and amount satisfactory to Custodian.
7.10 Capital Changes. Custodian may, without further instruction from Principal
or 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 notice of the event permitting or requiring such
exchange at its processing center in San Francisco or at the office
of Custodian's designated agents.
7.11 Fractional Interest. Custodian shall receive and retain all stock
distributed by a corporation as a dividend, stock split, or otherwise; however,
in connection therewith, if a fractional share is received, Custodian shall sell
such fractional shares when such market facility is available.
8. CREDITS TO ACCOUNT
8.1 Payment. Custodian may as a matter of bookkeeping convenience or by
separate agreement with the Principal, credit the account with the proceeds from
the sale, redemption or other disposition of Securities or interest or dividends
or other distributions payable on Securities prior to its actual receipt of
final payment; therefore, all such credits shall be conditional until the
Custodian's actual receipt of final payment and may be reversed by Custodian to
the extent that final payment is not received. Payment with respect to a
transaction will not be final until Custodian receives immediately available
funds under which applicable local law; rule and/or practice are irreversible
and not subject to any security interest, levy or other encumbrance, and which
are specifically applicable to such transaction. Principal acknowledges
and agrees that any currency risk associated with such credits will be born by
Principal.
8.2. Emerging Market Settlement Dates. Notwithstanding the foregoing Paragraph
8.1, Principal understands and agrees that settlement of Securities transactions
is available only on settlement date basis in certain Emerging Markets, which
are identified in Appendix A, as amended from time to time by written notice to
Principal.
8.2.1 Cash Deposits. For Emerging Markets with restricted settlement
conditions, cash of any currency deposited or delivered to the Account shall be
available for use by Principal or Investment Manager only on the business day on
which actual receipt of final payment and funds of good value are available to
Sub-Custodian in the Account.
8.2.2 Securities. For Emerging Markets with restricted settlement conditions,
Securities deposited or delivered to the Account shall be available for use by
Principal or Investment Manager only on the business day on which such
Securities are held in the nominee name or are otherwise subject to the
control of, and in a form for good delivery by, the Sub-Custodian.
9. OVERDRAFT AND INDEBTEDNESS
9.1 Advance Funds. If Custodian advances funds to or for the benefit of
Account in connection with the settlement of securities or currency transactions
or other activity in the Account including overdrafts or other indebtedness
incurred in connection with the settlement of securities transactions, maturity
or income payments or funds transfers, Principal agrees to reimburse Custodian
on demand the amount of the advance or overdraft and all related fees as
established in Custodian's published fee schedule. Principal will bear the risk
from any currency valuation differences associated with Principal's
reimbursement obligations to Custodian.
9.2 Repayment. To the extent permissible by applicable law, in order to secure
repayment of Account's obligations to Custodian hereunder, Principal hereby
pledges and grants to Custodian a continuing lien and security interest in, and
right of set-off against, all of Principal's right, title and interest in and to
(a) all Accounts in Principal's name and the Securities now or hereafter held in
such Accounts (including proceeds thereof); (b) each Account in respect of which
or for whose benefit the advance or overdraft relates and the Securities now or
hereafter held in such Accounts, including proceeds thereof. In this regard,
Custodian shall be entitled to all the rights and remedies of a pledgee and
secured creditor under applicable laws, rules or regulations as then in effect.
Principal authorizes the Custodian, in the Custodian's sole discretion, at any
time to charge any overdraft or indebtedness, together with interest due
thereon, against any balance of account standing to the credit of the Principal
on the Custodian's books. In addition, the Custodian shall be entitled to
utilize available cash and to dispose of such Principal's Securities to the
extent necessary to obtain reimbursement.
10. CORPORATE ACTIONS, PROXIES AND LITERATURE
10.1 Corporate Actions. Custodian shall notify Manager of the receipt of
notices of redemptions, conversions, exchanges, calls, puts, subscription
rights, and scrip certificates ("Corporate Action(s)"). Custodian need not
monitor financial publications for notices of Corporate Actions and shall not be
obligated to take any action unless actual notice has been received by Custodian
at its processing center in San Francisco, California, or at the offices of the
Sub-Agent where the security is held in Custodian's Foreign Account.
Custodian's sole responsibility in this regard shall be to give such notices to
Principal or Investment Manager, as the case may be, within a reasonable time
after Custodian receives them. Custodian has no responsibility to respond or
otherwise act with respect to any such notice unless and until Custodian has
received timely and appropriate instructions from Principal or Manager.
Principal or Manager is responsible to ensure all required documentation and
funds are available to Custodian and its agents as required under the terms of
the offer or by legal jurisdiction in order for Custodian and its agent
to take action on behalf of Account.
10.2 Proxies. Custodian shall forward all proxies and accompanying material
actually received by Custodian that are issued by any company whose securities
are held in the Account to Manager or Principal, as directed. . Principal and
Manager acknowledge that proxy services are limited in foreign markets and
Custodian's sole responsibility with respect to such proxy materials will be to
forward the proxy and accompanying material received by Custodian to Principal
or Manager. Custodian shall have no duty to translate or retain any material
received unless required to do so by law.
10.3 Corporate Literature. Custodian shall have no duty to forward or to
retain any other corporate material received by Custodian for the Account unless
required to do so by law. Custodian shall have no duty to translate or retain
any material received from its Global Sub-Agent Network unless required to do
so by law.
10.4 Disclosure to Issuers of Securities. Unless Principal directs Custodian
in writing to the contrary, Principal agrees that Custodian or its Sub-Agents
may disclose the name and address of the party with the authority to vote the
proxies of the Securities held in this Account as well as the number of shares
held, to any issuer of said Securities or its agents upon the written request of
such issuer or agent in conformity with the provisions of the applicable law.
Principal acknowledges that Custodian or its Sub-Agents may be required under
jurisdictional law to disclose to issuers beneficial owner information
regardless of Principal's instructions otherwise.
11. INSTRUCTIONS
11.1 Written. All instructions from Principal or Manager with respect to the
Accounts must be from an authorized person and, except those instructions
described in Paragraph 7, shall be in writing, and shall continue in force until
changed by subsequent instructions. For purposes of this Paragraph 11, an
authorized person means any of the persons duly authorized by the Board to give
instructions on behalf of the Principal as set forth in a certificate along with
any limitations on such Persons' scope of authority, such certificate to be
executed by the Secretary or Assistant Secretary of the Principal, as the same
may be revised from time to time. Pending receipt of written authority,
Custodian may in its absolute discretion at any time accept oral, faxed, wired
and electronically transmitted instructions from Principal or Manager provided
Custodian believes in good faith that the instructions are genuine. If oral
instructions are received, Principal or Manager, as the case may be, shall
promptly confirm such instructions in writing or by facsimile or other means
permitted hereunder. Principal will hold Custodian harmless for the failure of
Principal or 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.
11.2 Reliance on Instructions. Except as otherwise provided herein, all
instructions shall be in writing, and shall continue in force until changed by
subsequent instructions. Pending receipt of written authority, Custodian may in
its absolute discretion at any time accept oral, wired or electronically
transmitted instructions from Principal or Manager provided Custodian believes
in good faith that the instructions are genuine. Further, Custodian may assume
that any written or oral instructions received hereunder are consistent with the
provisions of organizational documents of the Principal or of any vote,
resolution or proceeding of the Principal's board of directors of the
Principal's shareholders, unless and until Custodian receives written
instructions to the contrary.
12. RIGHT TO RECEIVE ADVICE
12.1 Advice of the Principal. If Custodian is in doubt as to any action it
should or should not take under this Agreement, Custodian may request directions
or advice, including oral instructions or written instructions, from the
Principal.
12.2 Advice of Counsel. If Custodian shall be in doubt as to any question of
law pertaining to any action it should or should not take, Custodian may request
advice from counsel of its own choosing (who may be counsel for the Principal,
the Investment Manager or Custodian, at the option of Custodian). Principal
shall pay the reasonable cost of any counsel retained by Custodian with prior
notice to Principal.
12.3 Conflicting Advice. In the event of a conflict between directions or
advice or oral instructions or written instructions Custodian receives from the
Principal, and the advice it receives from counsel, Custodian shall be entitled
to rely upon and follow the advice of counsel.
12.4 Protection of Custodian. Custodian shall be indemnified by Principal and
without liability for any action Custodian takes or does not take in reliance
upon directions or advice or oral instructions or written instructions Custodian
receives from or on behalf of the Principal, or from counsel and which Custodian
believes, in good faith, to be consistent with those directions or advice or
oral instructions or written instructions. Nothing in this paragraph shall be
construed so as to impose an obligation upon Custodian (i) to seek such
directions or advice or oral instructions or written instructions, or (ii) to
act in accordance with such directions or advice or oral instructions or written
instructions.
13. ACCOUNTING AND REPORTING
13.1 Cost and Nominal Value. Principal agrees to furnish Custodian with the
income tax cost basis and dates of acquisition of all Securities held in the
Account to be carried on its records. If Principal does not furnish such
information, Custodian shall carry the Securities at any such nominal value it
determines, such value to be for bookkeeping purposes only. All statements and
reporting of any matters requiring this information will use this nominal value.
Custodian shall have no duty to verify the accuracy of the cost basis and dates
of acquisition furnished by Principal. Securities purchased in the Account
shall be carried at cost.
13.2 Valuations. To the extent that Custodian has agreed to provide pricing or
other information services, Custodian is authorized to utilize any vendor
(including brokers and dealers of Securities and pricing services embedded in
Custodian's securities processing or accounting systems) reasonably believed by
Custodian to be reliable to provide such information. Principal understands
that certain pricing information with respect to complex financial instruments
including, without limitation, derivatives, may be based on calculated amounts
rather than actual market transactions and may not reflect actual market values,
and that the variance between such calculated amounts and actual market values
may or may not be material. Where pricing vendors used by Custodian do not
provide information for Securities, Principal or authorized party may advise
Custodian regarding the fair market value of, or provide other information with
respect to, such held Securities. If Principal or Manager does not provide such
information, Custodian shall use the cost or nominal value for such Securities,
solely for administrative convenience. Custodian shall not be liable for any
loss, damage or expense incurred as a result of errors or omissions with respect
to any pricing or other information utilized by Custodian hereunder and shall
have no responsibility or duty to ascertain or authenticate the value of pricing
applied to any such Security.
13.3 Activity Reports. Custodian shall provide access to Principal and Manager
and other persons authorized by Principal to access advices of securities
transactions and other information regarding the Account by means of Custodian's
Online Trust & Custody Service.
13.4 Statements. Custodian shall provide Principal and Manager Account
statements and other reports periodically by means of the Custodian's Online
Trust and Custody Service or as otherwise as agreed to by Principal and
Custodian showing all income and principal transactions and cash positions, and
a list of securities. Principal may approve or disapprove any such statement
within thirty (30) days of its receipt, and, if no written objections are
received within the thirty (30) day period, such statement of Account shall
be deemed approved.
14. USE OF OTHER BANK SERVICES
14.1 HighMark Mutual Funds
Principal or Manager may direct Custodian to invest available funds in the
HighMark(r) Funds mutual funds advised by an affiliate of Custodian and for
which Custodian may also act as custodian and provide other services for the
purpose of cash management. Principal or Manager shall designate the particular
HighMark Fund that Principal or Manager deems appropriate for the Account.
Principal hereby acknowledges that Custodian will receive fees for such services
in addition to those fees charged by Custodian as agent for the Principal's
custody Account.
14.2 Other Fund Investments. Principal or Manager may invest in third party
mutual funds, for which the Custodian or its affiliates may provide shareholder,
recordkeeping or other services. Principal hereby acknowledges that Custodian
or its affiliates may receive fees for such services in addition to those fees
charged by Custodian under this Agreement.
14.3 Foreign Exchange. The Custodian makes available to Principal or Manager
its foreign exchange services to convert currencies in conjunctions with
transactions in Principal's Account. Principal or Manager, as the case may be
acknowledges that (a) the foreign currency exchange department is a part
of Custodian or one of its affiliates or subsidiaries; (b) the Account is not
obligated to effect foreign currency exchange with Custodian; (c) Custodian will
receive benefits for such foreign currency transactions which are in addition to
the compensation which Custodian receives for administering the Account; and (d)
Custodian will make available the relevant data so that Principal or Manager, as
the case may be, can determine that the foreign currency exchange transaction
are as favorable to the Account as terms generally available in arm's length
transaction between unrelated parties. Principal and Manager acknowledge that
foreign currency transactions will be performed in accordance with Union Bank's
Foreign Exchange Agreement in the form of Exhibit I hereto and incorporated
herein by reference and Principal hereby agrees and acknowledges of the terms
and conditions thereof. If Principal or Manager elects to give standing
instructions to Custodian to execute foreign currency exchange transactions on
their behalf, or in the event a foreign currency exchange transaction is
initiated in the absence of the specific Foreign Exchange Agreement, such
transaction will be performed at the Bank's prevailing rate. Principal
acknowledges that a Foreign Exchange transaction in which Custodian's foreign
exchange services is the counterparty to Principal are subject to Paragraph 9 of
this Agreement.
14.4 Interest Bearing Deposits. Principal or Manager may direct that assets of
the Account be invested in deposits with Union Bank as a sweep vehicle or other
deposit held in the Custodian's street name for the benefit of it's clients.
Such deposits are covered by FDIC insurance up to the designated value in effect
for each beneficial owner.
14.5 Brokerage Services. Principal or Manager may direct Custodian to utilize
for this Account other services or facilities provided by Custodian, its
subsidiaries or affiliates. Such services may include, but are not be limited
to (i) the purchase or sale of securities as principal, or (ii) the placing of
orders for the purchase, sale, exchange, investment or reinvestment of
securities through any affiliated brokerage service, or (iii) the placing of
orders for the purchase or sale of units of any investment company that
Custodian, UnionBanCal Corporation, or their subsidiaries or affiliates, manage,
advise act as custodian or provide other services.
14.6 Credit Facilities. The Custodian may in accordance with its commercial
lending practices enter into a credit facility with the Principal for use with
the operation of the Account. Such credit facility will be agreed to under
separate agreement and subject to the terms and conditions, therein. Principal
acknowledges that any such credit facility is subject to the lien provisions of
Paragraph 9.2 of this Agreement.
15. CUSTODIAN'S RESPONSIBILITIES AND LIABILITIES:
15.1 Standard of Care. In performing the responsibilities delegated to it
under this Agreement, the Custodian agrees to exercise reasonable care, prudence
and diligence and shall not be liable for any damages arising out of the
Custodian's performance of or failure to perform its duties under this
Agreement except to the extent that damages arise directly out of the
Custodian's willful misfeasance, bad faith, gross negligence or otherwise from a
material breach of the Custodian's standard of care under this Agreement.
15.2 Investment Authority. The parties intend that Custodian shall not be
considered a fiduciary of the Account.
15.3 Insurance and Force Majeure. Without limiting the generality of Paragraph
14.1 or of any other provision of this Agreement the Custodian shall not be
liable so long as and to the extent that it exercises reasonable care, for any
defect in the title, validity or genuineness of any Security or in the evidence
of title thereto received by it or delivered by it pursuant to this Agreement.
In addition, 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 not
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.
15.4 Legal Proceedings
15.4.1 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).
15.4.2 With respect to legal proceedings 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.
15.4.3 To the extent permissible by law or regulation and upon Principal's
request, the Principal shall be subrogated to the rights of the Custodian with
respect to any claim for any loss, damage or claim suffered by Principal, in
each case to the extent that the Custodian fails to pursue any such claim or
Principal is not made whole in respect of such loss, damage or claim.
16. INDEMNITIES AND LIMITATION OF LIABILITY.
16.1 In addition to the indemnification provisions contained in this Agreement,
Principal agrees to indemnify, defend and hold harmless Custodian and its
affiliates providing services under this Agreement, including their respective
officers, directors, agents and employees from all taxes, charges, expenses,
assessments, claims and liabilities including, without limitation, reasonable
attorneys' fees and disbursements and liabilities ("Claims") arising directly or
indirectly from any action or omission to act which Custodian takes in
connection with the provision of services to Principal. Neither Custodian, nor
any of its affiliates, shall be indemnified against any liability (or any
expenses incident to such liability) caused by Custodian's or its affiliates'
own willful misfeasance, bad faith, gross negligence or reckless disregard in
the performance of Custodian's or its affiliates' activities under this
Agreement. The provisions of this Paragraph 15 shall survive termination of this
Agreement.
16.2 In all cases, Custodian's liability under this Agreement shall be limited
to the resulting direct loss, if any, incurred by Principal. Under no
circumstances shall Custodian be liable for any incidental, consequential,
indirect, punitive, or special damage which Principal may incur or suffer in
connection with this Agreement.
17. COMPENSATION AND OTHER CHARGES
17.11 Compensation. Principal shall pay Custodian compensation for its
services hereunder as specified in Appendix B. Fees shall accrue and be taken
in arrears as specified on the active fee schedule and charged to the Account
unless Principal has requested that it be billed directly. However, any fees
not paid within 60 days of billing will be charged to the Account.
17.2 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 Subparagraph 14.4 of this Agreement.
18. AMENDMENT AND TERMINATION.
18.1 Amendment. This Agreement may be amended at any time by a written
instrument signed by the parties or by Custodian immediately if required by
applicable law or upon thirty (30) days written notice to Principal.
18.2 Termination. Custodian may terminate this Agreement immediately if
Custodian, in its sole discretion, determines that (i) Principal failed to
strictly comply with any provision of this Agreement; (ii) any representation,
warranty or covenant of the other party in this Agreement is false or
misleading. Any such termination shall not constitute a waiver of any other
rights that the Custodian may have under this Agreement.
In addition, either party may terminate this Agreement and the Account upon 90
days' written notice. 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. In the event that Securities or other
properties remain in the possession of the Custodian after the date of
termination hereof owing to failure of Principal to provide proper instructions,
the Custodian shall be entitled to fair compensation for its services during
such period as the Custodian retains possession of such securities, funds and
other properties and the provisions of this Agreement relating to the duties and
obligations of the Custodian shall remain in full force and effect. In the event
that no proper instructions designating a successor custodian or alternative
arrangements shall have been delivered to the Custodian on or before the date
when such termination shall become effective, then the Custodian shall have the
right to deliver to a bank or trust company, which is a "bank" as defined in the
Act of its own selection, having an aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not less than $25,000,000,
all Securities held by the Custodian on behalf of Principal and all instruments
held by the Custodian relative thereto held by it under this Agreement on behalf
of Principal, and to transfer to an account of such successor custodian all of
the Securities held in an Account. Thereafter, such bank or trust company shall
be the successor of the Custodian under this Agreement. All expenses associated
with the transfer of custody hereunder upon termination hereof shall be borne by
the Principal (except as may be specifically agreed in writing by the parties in
relation to special arrangements).
19. SUCCESSORS.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their successors in interest. This Agreement may not be assigned by
either party, nor may the duties of either party hereunder be delegated, without
the prior written consent of the other party.
20. 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
commenced in the State or Federal courts located in the State of California.
21. ADDRESSES. Until further notice from either party, all communications
called for under this Agreement shall be in writing and addressed as follows:
If to Principal:
Name: First Pacific Mutual Fund, Inc.
Street Address: 0000 Xxxxxxxx Xxxxx, Xxxxx #0-000
Xxxx, Xxxxx, Xxx: Xxxxxxxx, XX 00000
Attn: Xxxxxxxx X.X. Xxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Custodian:
Union Bank, N.A.
Institutional Custody Services
000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxx Xxxx Xxx, Senior Vice President
Facsimile: (000) 000-0000
Email: xxxx.xxx@xxxxxxxxx.xxx
This agreement and any amendment, notice or other document required to be signed
and in writing under this Agreement may be delivered via fax, email with an
imaged or scanned attachment (such as a .PDF), or similar electronic
transmission, unless otherwise specified herein. Signatures delivered via fax,
email, or similar electronic transmission shall be effective as original
signatures in binding the parties and shall be effective upon receipt.
22. CONFIDENTIALITY.
All non-public information and advice furnished by either party to the other
shall be treated as confidential and will not be disclosed to third parties
unless required by law, except that Union Bank may disclose (a) the identity of
Client as a client or client reference of Union Bank; (b) any information to any
government regulator of Union Bank or the Affiliated Entities.
23. 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.
24. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument. This Agreement and all exhibits, appendices, attachments and
amendments hereto may be reproduced by any reasonable means. The parties hereto
each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
25. MISCELLANEOUS.
Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof. This Agreement
embodies the entire agreement and understanding between the parties and
supersedes all prior agreements and understandings relating to the subject
matter hereof. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
Date:
By: "Principal"
Authorized Signature: ___________________________________
Name: ___________________________________________________
Title: __________________________________________________
Date: ___________________________________________________
Authorized Signature: ___________________________________
Name: ___________________________________________________
Title: __________________________________________________
Date: __________________________________________________
By: Union Bank, National Association, "Custodian"
Authorized Signature: ___________________________________
Name: ___________________________________________________
Title: __________________________________________________
Date: ___________________________________________________
Authorized Signature: ___________________________________
Name: ___________________________________________________
Title: __________________________________________________
Date: ___________________________________________________
[Union Bank LOGO Omitted]
SCHEDULE OF FEES
Mutual Funds
Effective September 28, 2010
INSTITUTIONAL New account set-up
CUSTODY SERVICES Free receipt of assets transferring into Union Bank
Asset safekeeping
Trade settlements
Income collections
Capital changes and proxy processing
All wire transfers and disbursements
Cash control of shareholder transactions
Daily reconcilement with fund accountant
NSCC clearing available
Daily cash sweep
Account statement - Holdings and Transactions
Dedicated relationship manager assigned to your account
Account access to Online Trust & Custody
ANNUAL 1.5 basis point per annum*
ADMINISTRATION FEE
ITEMIZED FEES Transaction Fee
Depository Eligible/Ineligible $10/$20
Disbursements - Wires/Checks $10
Out-of-Pocket Expenses As incurred
Class Action Fee Service 6% of recovered fees
All other fees are included in the Annual Administration
Fee
MINIMUM ANNUAL Initial Account $5,000
AGGREGATE FEE Per additional Sub-account $1,000
DISCLOSURES Market value used for fee calculations on fee invoices
may differ slightly from market values on client
statements due to posting of accruals, late pricing of
securities, and/or other timing issues.
A transaction is defined as any activity affecting
assets including purchases, sales, tender offers, stock
dividends, free deliveries, maturities, exchanges,
redemptions, etc. Fees for foreign securities, foreign
exchange transactions, international wires, and non-
standard services are quoted separately. Union Bank
retains the right to charge special fees for
extraordinary services not covered in this fee schedule.
You may be assessed an overdraft charge for any negative
balance in your account, provided such advance or
overdraft is not related to Bank errors or omissions.
The current rate will be provided at time of account
opening and may be subject to change upon notification.
Please see your account Agreement for additional
information.
Fees are invoiced monthly unless otherwise agreed. This
fee schedule is subject to change upon thirty (30) days
written notice.
*Includes cash sweep
ACKNOWLEDGMENT ________________________________________________________
Client Name
__________________________________ _______________
Authorized Client Representative Date
__________________________________ _______________
Union Bank Representative Date
