CUSTODIAN AGREEMENT
(FOREIGN AND DOMESTIC SECURITIES)
This Custodian Agreement is made by and between S.I.S. Mercator Fund, Inc.
("Principal") and THE BANK OF CALIFORNIA, NATIONAL ASSOCIATION ("Custodian").
Principal desires that Custodian hold and administer on behalf of Principal
certain Securities (as herein defined) and cash. 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. It is understood that
the Custodian will maintain separate accounts for each Portfolio of the
Principal described in the prospectus of Principal and as of the date
hereof, there are two such Portfolios described in the prospectus.
(b)"Eligible Foreign Securities Depository", ("Depository") shall mean a
securities depository or clearing agency incorporated or organized under
the laws of a country other than the United States which operates (i) the
central system for handling securities or equivalent book-entries in that
country, or (ii) a transnational system for the central handling of
securities or equivalent book-entries.
(c)"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.
(d)"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 all income and proceeds of sale of such securities or
other property of Principal.
(e)"Eligible Foreign Custodian", ("Sub-Custodian") shall mean (i) a banking
institution or trust company incorporated or organized under the laws of a
country other than the United States that is regulated as such by that
country's government or an agency thereof and that has shareholders' equity
in excess of $200 million in U.S. currency (or a foreign currency equivalent
thereof), (ii) a majority owned direct or indirect subsidiary of a
qualified U.S. bank or bank holding company that is incorporated or organized
under the laws of a country other than the United States and that has
shareholders' equity in excess of $100 million in U.S. currency (or a
foreign currency equivalent thereof, (iii) a banking institution or trust
company incorporated or organized under the laws of a country other than
the United States or a majority owned direct or indirect subsidiary of a
qualified U.S. bank as defined in Rule 17f-5 or bank holding company that is
incorporated or organized under the laws of a country other than the
United States which has such other qualifications as shall be specified
in Instructions and approvedby the Bank; or (iv)any other entity that shall
have been so qualified by exemptive order, rule or other appropriate action
of the SEC. Custodian shall evaluate and determine at least annually the
continued eligibility of each Sub-Custodian as described in Paragraph 5(d)
of this Agreement.
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 $2 million.
3.Establishment of Accounts. Principal hereby establishes with Custodian,
and may in the future establish, one or more Accounts in Principal's name.
Each Account shall consist of Securities or cash 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 an 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 cash and Securities.
Custodian may (i) retain possession of all or any portion of the cash and/or
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 cash and/or 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 due 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 authorized representatives 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 branches in the U.S. in
order to facilitate jurisdiction over and enforcement of judgements 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 and currencies 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 tortious acts, willful misconduct, or
disregard of the provisions of the Agreement 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 care
and diligence as would be employed by a 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 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 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 fir interest compensation at market rate 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 foriegn exchange
movement. Custodian shall make effect settlements of foreign securities under
the prevailing practices of the market of settlement.
(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 1) the foreign currency exchange
department is a part of the Custodian or one of its affiliates or
subsidiaries, 2) the Account is not obligated to effect foreign currency
exchange with custodian, 3) the Custodian will recieve benefits for such
foreign currency transactions which are in addition to the compensation
which the Custodian recieves for administering the Account, and 4) the
Custodian will make available the relevent 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.
0.Xxxxxxx Changes; Income.
(a) Custodian shall, 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 14 of this Agreement or at the office of its
designated agents.
(b) Custodian, or its designated agents, shall, 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 15(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 14 of this Agreement or
at the offices of its designated agents. Custodian's sole responsibility
in this regard shall be to give 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 untill 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.
00.Xxxx. The 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 confirmations in
writing, the failure of such confirmation to conform to the telephone
instructions received or the Custodian's failure to produce such confirmation
at any subsequent time. The Custodian may electronically record any
instruction given by telephone, or 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 14 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 due 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 reasonably
appropriate to carry out the purposes of this Agreement.
14.Addresses. Until further notice from either party, all communications
called for under this Agreement shall be addressed as follows:
If to Principal:
Name:
S.I.S. Mercator Fund, Inc.
Street Address: 0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxx, Xxxxx, Xxx: Xxxxx, XX 00000
Attn: Xx. Xxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Telex (Answerback):
If to Custodian:
THE BANK OF CALIFORNIA, NATIONAL ASSOCIATION
Mitsubishi Global Custody
Attn: Xx. Xxxxx X. Xxxxxx, Vice President
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Telex (Answerback): 215748/MBCTD UR
15.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 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 of or damage to Securities resulting from any causes beyond
Custodian's reasonable control including, without limitations, acts of God,
war, government action, civil commotion, fire, earthquake, or other casualty
or disaster. 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. The
Custodian shall be liable to the 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 the
Custodian would be liable to the principal if the Custodian were holding such
securities and cash in their own premises. The Custodian shall be liable to
the Principal only to the extent of the Principal's direct damages, to be
determined based on the market value of the property which is subject to
loss and without reference to any special conditions or circumstances.
(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 to 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 15(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.
16.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 or in disregard of the terms of this
Agreement.
(b)Custodian's right to indemnity under Paragraph 16(a) of this Agreement
shall survive the termination of this Agreement, but is subject to the
following terms. Custodian will promptly notify Principal of the assertion
of any indemnifiable claim hereunder and will not settle any such claim
without the express written consent of Principal. Principal shall be
entitled to defend any such claim with counsel of its choice. Custodian
may join in the defense assumed by Principal, at its own expense,
with counsel of its choise.
17.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 15(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.
18.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 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 resposibility
with respect to the Securities so delivered.
19.Successors. This Agreement shall be binding upon and inure 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.
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.
21.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:
By:
Authorized Signature
"Principal"
The Bank of California, National Association
By:
Title:
By:
Title:
"Custodian"
