EXHIBIT 23 (g)(2)
[Union Bank logo omitted]
GLOBAL CUSTODY AGREEMENT
For Foreign and Domestic Securities
This Custodian Agreement ("Agreement") is made as of May 12, 2011, 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: 05/09, 2011
By: "Principal"
Authorized Signature: /s/ Xxxxxxxx X.X. Xxx
---------------------
Name: Xxxxxxxx X.X. Xxx
Title: President and CEO
Date: 5/09, 2011
Authorized Signature: /s/ Charlotte A, Xxxxx
---------------------
Name: Xxxxxxxxx X. Xxxxx
Title: Assistant Treasurer
Date: , 2011
By: Union Bank, National Association, "Custodian"
Authorized Signature: /s/ Xxxxxxxx Xxxx
-----------------
Name: Xxxxxxxx Xxxx
Title: Vice President
Date: 05/12/2011
Authorized Signature: /s/ Xxxxxxx Xxxxx
-----------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
Date: 05/19/2011
