Exhibit 99.(g)
2/03/12/01
MUTUAL FUND CUSTODY AND
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SERVICES AGREEMENT
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TABLE OF CONTENTS
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SECTION PAGE
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DEFINITIONS..................................................................1
ARTICLE I - CUSTODY..........................................................4
1. Appointment of Custodian..............................................4
2. Custody of Cash and Securities........................................4
3. Settlement of Fund Transactions ......................................8
4. Lending of Securities.................................................9
5. Persons Having Access to Assets of the Fund...........................9
6. Standard of Care; Scope of Custodial Responsibilities................10
7. Appointment of Subcustodians ........................................11
8. Overdraft Facility and Security for Payment .........................12
9. Tax Obligations .....................................................12
ARTICLE II - FOREIGN CUSTODY MANAGER SERVICES...............................13
1. Delegation...........................................................13
2. Changes to Appendix C ...............................................13
3. Reports to Board ....................................................13
4. Monitoring System ...................................................13
5. Standard of Care.....................................................13
6. Use of Securities Depositories ......................................14
ARTICLE III - Information Services..........................................14
1. Risk Analysis........................................................14
2. Monitoring of Securities Depositories................................14
3. Use of Agents .......................................................14
4. Exercise of Reasonable Care..........................................15
5. Liabilities and Warranties...........................................15
ARTICLE IV - GENERAL PROVISIONS.............................................15
1. Compensation.........................................................15
2. Insolvency of Foreign Custodians.....................................15
3. Liability for Depositories...........................................16
4. Damages..............................................................16
5. Indemnification; Liability of the Fund...............................16
6. Force Majeure .......................................................16
7. Termination..........................................................16
8. Inspection of Books and Records .....................................17
9. Miscellaneous.........................................................17
APPENDIX A.....Authorized Persons...........................................21
APPENDIX B.....Fund Officers................................................21
APPENDIX C.....Selected Countries...........................................22
APPENDIX D.....Information Services Agreement...............................23
MUTUAL FUND CUSTODY AND
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SERVICES AGREEMENT
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This AGREEMENT is effective as of _______________________, 200__, and is between
Xxxxxx Xxxxxx Fund Inc., (the "Company") on behalf of its Xxxxxx Xxxxxx Global
Value Fund and Xxxxxx Xxxxxx American Value Fund (individually a `Fund" and
collectively the "Funds", a corporation organized under the laws of the State of
Maryland having its principal office and place of business at 000 Xxxx Xxxxxx,
XX, XX 00000, and BOSTON SAFE DEPOSIT AND TRUST COMPANY, (the "Custodian") a
Massachusetts trust company with its principal place of business at Xxx Xxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
W I T N E S S E T H:
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WHEREAS, the Company and the Custodian desire to restate the terms of their
existing custody agreement to reflect the changes to Rules 17f-5 and the
requirements of new Rule 17f-7, and to set forth their agreement with respect to
the custody of the Funds' Securities and cash and the processing of Securities
transactions;
WHEREAS, the Board desires to delegate certain of its responsibilities for
performing the services set forth in paragraphs (c)(1), (c)(2) and (c)(3) of
Rule 17f-5 to the Custodian as a Foreign Custody Manager; and
WHEREAS, the Custodian agrees to accept such delegation with respect to
Assets, including those held by Foreign Custodians in the Selected Countries as
set forth in jurisdictions listed on Appendix C as set forth in Article II;
WHEREAS, the Custodian agrees to perform the function of a Primary
Custodian under Rule 17f-7;
NOW THEREFORE, the Company and the Custodian agree as follows:
DEFINITIONS
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The following words and phrases, unless the context requires otherwise, shall
have the following meanings:
1. "ACT": the Investment Company Act of 1940 and the Rules and
Regulations thereunder, all as amended from time to time. References
to a Rule herein are references to a Rule under the Act unless
otherwise specified.
2. "AGREEMENT": this agreement and any amendments.
3. "ASSETS": any of the Funds' investments, including foreign currencies
and investments for which the primary market is outside the United
States, and such cash and cash equivalents as are reasonably necessary
to effect the Funds' transactions in such investments.
4. "AUTHORIZED PERSON": the Chairman of the Company Board, its President,
and any Vice President, Secretary, Treasurer or any other person,
whether or not any such person is an officer or employee of the
Company, duly authorized by the Board to add or delete jurisdictions
pursuant to Article II and to give Instructions on behalf of the
Company which is listed in the Certificate annexed hereto as Appendix
A or such other Certificate as may be received by the Custodian from
time to time.
5. "BOARD": the Board of Directors (or the body authorized to exercise
authority similar to that of the board of directors of a corporation)
of the Company.
6. "BOOK-ENTRY SYSTEM": the Federal Reserve/Treasury book-entry system
for United States and federal agency Securities, its successor or
successors and its nominee or nominees.
7. "BUSINESS DAY": any day on which the Funds, the Custodian, the
Book-Entry System and appropriate clearing corporation(s) are open for
business.
8. "CERTIFICATE": any notice, instruction or other instrument in writing,
authorized or required by this Agreement to be given to the Custodian,
which is actually received by the Custodian and signed on behalf of
the Company by an Authorized Person or Persons designated by the Board
to issue a Certificate.
9. "COUNTRY RISK": means all factors reasonably related to the systemic
risk of holding assets in a particular country including, but not
limited to, such country's financial infrastructure (including any
Securities Depositories operating in such country), prevailing custody
and settlement practices and laws applicable to the safekeeping and
recovery of Assets held in custody.
10. "ELIGIBLE SECURITIES DEPOSITORY": the meaning of the term set forth in
Rule 17f-7(b)(1) of the Act.
11. "FOREIGN CUSTODIAN": (a) 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 the country's government
or an agency of the country's government; (b) a majority-owned direct
or indirect subsidiary of a U.S. Bank or bank-holding company; or (c)
any entity other than a Securities Depository with respect to which
exemptive or no-action relief has been granted by the Securities and
Exchange Commission authorizing it to act as a Custodian for
registered investment companies. For the avoidance of doubt, the term
"Foreign Custodian" shall not include Euroclear, Clearstream, Bank One
or any other transnational system for the central handling (including
on a book-entry basis) of securities transactions regardless of
whether or not such entities or their service providers are acting in
a custodial capacity with respect to Assets, Securities or other
property of the Company.
12. "FOREIGN CUSTODY MANAGER" the meaning set forth in Rule 17f-5(a)(3).
13. "INSTRUCTIONS": directions and instructions to the Custodian from an
Authorized Person in writing by facsimile or electronic transmission
subject to the Custodian's practices or any other method specifically
agreed upon, provided that the Custodian may, in its discretion,
accept oral directions and instructions from an individual it
reasonably believes to be an Authorized Person and may require
confirmation in writing, provided further that with respect to cash
disbursements for the payment of expenses, directions from two
Authorized Persons shall be required.
14. "PRIMARY CUSTODIAN": the meaning set forth in Rule 17f-7(b)(2) of the
Act.
15. "PROSPECTUS": the Fund' current prospectus and statement of additional
information relating to the registration of the Funds' Shares under
the Securities Act of 1933, as amended. .
16. "RISK ANALYSIS": the analysis required under Rule 17f-7(a) (1)(i)(A).
17. "RULES 17F-4, 17F-5 AND 17F-7": such Rules as promulgated under
Section 17(f) of the Act, as such rules (and any successor rules or
regulations) may be amended from time to time.
18. "SECURITY" or "SECURITIES": bonds, debentures, notes, stocks, shares,
evidences of indebtedness, and other securities, commodities,
interests and investments from time to time owned by the Funds.
19. "SECURITIES DEPOSITORY": a system for the central handling of
securities as defined in Rule 17f-4.
20. "SELECTED COUNTRIES": the jurisdictions listed on Appendix C as such
may be amended from time to time in accordance with Article II.
21. "SHARES": shares of the Funds, however designated.
ARTICLE I
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CUSTODY PROVISIONS
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1. APPOINTMENT OF CUSTODIAN. The Board appoints the Custodian, and the
Custodian accepts appointment as custodian of all the Securities and monies at
the time owned by or in the possession of the Funds during the period of
this Agreement.
2. CUSTODY OF CASH AND SECURITIES.
(a) Receipt and Holding of Assets. The Funds will deliver or cause to be
delivered to the Custodian all Securities and monies owned by each at
any time during the period of this Custody Agreement. The Custodian
will not be responsible for such Securities and monies until actually
received. The Board specifically authorizes the Custodian to hold
Securities, Assets or other property of the Fund with any domestic
subcustodian or Securities Depository or with any Foreign Custodian or
Eligible Securities Depository in any Selected Country as provided in
Article II. Securities and monies of the Funds deposited in a
Securities Depository or Eligible Securities Depository will be
reflected in an account or accounts which include only assets held by
the Custodian or a Foreign Custodian for its customers.
(b) Disbursements of Cash and Delivery of Securities. The Custodian shall
disburse cash or deliver out Securities only for the purposes listed
below. Instructions must specify or evidence the purpose for which any
transaction is to be made and the Company shall be solely responsible
to assure that Instructions are in accord with any limitations or
restrictions applicable to the Funds.
(1) In payment for Securities purchased for a Fund;
(2) In payment of dividends or distributions with respect to Shares;
(3) In payment for Shares which have been redeemed by a Fund;
(4) In payment of taxes;
(5) When Securities are called, redeemed, retired, or otherwise
become payable;
(6) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger,
consolidation, reorganization, recapitalization or readjustment;
(7) Upon conversion of Securities pursuant to their terms into other
securities;
(8) Upon exercise of subscription, purchase or other similar rights .
(9) For the payment of interest, management or supervisory fees,
distributions or operating expenses;
(10) In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to a Fund;
(11) In connection with any borrowings by a Fund or short sales of
securities requiring a pledge of Securities, but only against
receipt of amounts borrowed;
(12) In connection with any loans, but only against receipt of
adequate collateral as specified in Instructions which shall
reflect any restrictions applicable to a Fund.
(13) For the purpose of redeeming Shares of the capital stock of a
Fund and the delivery to, or the crediting to the account of, the
Custodian or the Company's transfer agent, such Shares to be
purchased or redeemed;
(14) For the purpose of redeeming in kind Shares of a Fund against
delivery to the Bank, its Subcustodian or the Company's
transfer agent of such Shares to be so redeemed;
(15) For delivery in accordance with the provisions of any agreement
among a Fund, the Custodian and a broker-dealer registered under
the Securities Exchange Act of 1934 (the "Exchange Act") and a
member of the National Association of Securities Dealers, Inc.
("NASD"), relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by a Fund. The Custodian will act only in accordance
with Instructions in the delivery of Securities to be held in
escrow and will have no responsibility or liability for any such
Securities which are not returned promptly when due other than to
make proper requests for such return;
(16) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related
transactions;
(17) Upon the termination of this Agreement; and
(18) For other proper purposes as may be specified in Instructions
issued by an officer of the Company which shall include a
statement of the purpose for which the delivery or payment is to
be made, the amount of the payment or specific Securities to be
delivered, the name of the person or persons to whom delivery or
payment is to be made, and a Certificate stating that the purpose
is a proper purpose under the instruments governing the Company
(c) Actions Which May be Taken Without Instructions. Unless an Instruction
to the contrary is received, the Custodian shall:
(1) Collect all income due or payable, provided that the Custodian
shall not be responsible for any failure not attributable to
itself to receive payment of (or late payment of) distributions
or other payments with respect to Securities or other property
held in the account;
(2) Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed, retired or
otherwise become payable. Notwithstanding the foregoing, the
Custodian shall have no responsibility to the Company for
monitoring or ascertaining any call, redemption or retirement
dates with respect to put bonds or similar instruments that are
owned by Fund and held by the Custodian or its nominees where
such dates are not published in sources routinely used by the
Custodian. Nor shall the Custodian have any responsibility or
liability to the Company for any loss by a Fund for any missed
payments or other defaults resulting therefrom with respect to
put bonds or similar instruments unless the Custodian received
timely notification from the Fund specifying the time, place and
manner for the presentment of any such put bond owned by the Fund
and held by the Custodian or its nominee. The Custodian shall not
be responsible and assumes no liability for the accuracy or
completeness of any notification the Custodian may furnish to a
Fund with respect to put bonds or similar instruments;
(3) Surrender Securities in temporary form for definitive Securities;
(4) Hold directly, or through a Securities Depository with respect to
Securities therein deposited, for the account of a Fund all
rights and similar Securities issued with respect to any
Securities held by the Custodian hereunder for a Fund;
(5) Submit or cause to be submitted to the a Fund or its investment
adviser as designated by a Fund information actually received by
the Custodian regarding ownership rights pertaining to property
held for a Fund;
(6) Deliver or cause to be delivered any Securities held for a Fund
in exchange for other Securities or cash issued or paid in
connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege;
(7) Deliver or cause to be delivered any Securities held for a Fund
to any protective committee, reorganization committee or other
person in connection with the reorganization, refinancing,
merger, consolidation or recapitalization or sale of assets of
any corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or other
instruments or documents as may be issued to it to evidence such
delivery;
(8) Make or cause to be made such transfers or exchanges of the
assets specifically allocated to a Fund and take such other steps
as shall be stated in Instructions to be for the purpose of
effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of a
Fund;
(9) Deliver Securities upon the receipt of payment in connection with
any repurchase agreement related to such Securities entered into
by a Fund;
(10) Deliver Securities owned by a Fund to the issuer thereof or its
agent when such Securities are called, redeemed, retired or
otherwise become payable; provided, however, that in any such
case the cash or other consideration is to be delivered to the
Custodian. Notwithstanding the foregoing, the Custodian shall
have no responsibility to the Funds for monitoring or
ascertaining any call, redemption or retirement dates with
respect to the put bonds or similar instruments that are owned by
a Fund and held by the Custodian or its nominee where such dates
are not published in sources routinely used by the Custodian. Nor
shall the Custodian have any responsibility or liability to the
Company for any loss by a Fund for any missed payment or other
default resulting therefrom with respect to put bonds or similar
instruments unless the Custodian received timely notification
from the Fund specifying the time, place and manner for the
presentment of any such put bond owned by the Fund and held by
the Custodian or its nominee. The Custodian shall not be
responsible and assumes no liability to the Company for the
accuracy or completeness of any notification the Custodian may
furnish to the Funds with respect to put bonds or similar
investments;
(11) Endorse and collect all checks, drafts or other orders for the
payment of money received by the Custodian for the account of the
Funds
(12) Execute any and all documents, agreements or other instruments as
may be necessary or desirable for the accomplishment of the
purposes of this Agreement.
(d) Confirmation and Statements. Promptly after the close of business on
each day, the Custodian shall furnish the Company with confirmations
and a summary of all transfers to or from the account of the Funds
during the day. Where securities purchased by a Fund are in a fungible
bulk of securities registered in the name of the Custodian (or its
nominee) or shown on the Custodian's account on the books of a
Securities Depository, the Custodian shall by book-entry or otherwise
identify the quantity of those securities belonging to the Fund. At
least monthly, the Custodian shall furnish the Funds with a detailed
statement of the Securities and monies held for the Funds under this
Custody Agreement.
(e) Registration of Securities. The Custodian is authorized to hold all
Securities, Assets, or other property of the Funds in nominee name, in
bearer form or in book-entry form. The Custodian may register any
Securities, Assets or other property of a Fund in the name of the
Fund, in the name of the Custodian, any domestic subcustodian, or
Foreign Custodian, in the name of any duly appointed registered
nominee of such entity, or in the name of a Securities Depository or
its successor or successors, or its nominee or nominees. Each Fund
agrees to furnish to the Custodian appropriate instruments to enable
the Custodian to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee or in the name of a
Securities Depository, any Securities which it may hold for the
account of a Fund and which may from time to time be registered in the
name of a Fund.
(f) Segregated Accounts. Upon receipt of Instructions, the Custodian will,
from time to time establish segregated accounts on behalf of the Funds
to hold and deal with specified assets as shall be directed.
3. SETTLEMENT OF FUND TRANSACTIONS.
(a) Customary Practices. Settlement of transactions may be effected in
accordance with trading and processing practices customary in the
jurisdiction or market where the transaction occurs. The Company
acknowledges that this may, in certain circumstances, require the
delivery of cash or Securities (or other property) without the
concurrent receipt of Securities (or other property) or cash. In such
circumstances, the Custodian shall have no responsibility for
nonreceipt of payments (or late payment) or nondelivery of Securities
or other property (or late delivery) by the counterparty unless it has
breached its standard of care under this Agreement.
(b) Contractual Income. Unless the parties agree to the contrary, the
Custodian shall credit the Funds, in accordance with the Custodian's
standard operating procedure, with income and maturity proceeds on
securities on contractual payment date net of any taxes or upon actual
receipt. To the extent the Custodian credits income on contractual
payment date, the Custodian may reverse such accounting entries with
back value to the contractual payment date if the Custodian reasonably
believes that such amount will not be received.
(c) Contractual Settlement. Unless the parties agree to the contrary, the
Custodian will attend to the settlement of securities transactions in
accordance with the Custodian's standard operating procedure, on the
basis of either contractual settlement date accounting or actual
settlement date accounting. To the extent the Custodian settles
certain securities transactions on the basis of contractual settlement
date accounting, the Custodian may reverse with back value to the
contractual settlement date any entry relating to such contractual
settlement if the Custodian reasonably believes that such amount will
not be received.
4. LENDING OF SECURITIES. The Custodian may lend the assets of the Funds in
accordance with the terms and conditions of a separate securities lending
agreement.
5. PERSONS HAVING ACCESS TO ASSETS OF THE FUND.
(a) The Custodian shall not permit any trustee or agent of the Company, or
any officer, director, employee or agent of the Funds' investment
adviser, of any sub-investment adviser of the Funds, or of the Funds'
administrator, to have physical access to the Assets held by the
Custodian or be authorized or permitted to withdraw any Assets nor
shall the Custodian deliver any Assets to any such person.
The Custodian shall not permit any officer, director, employee or
agent of the Custodian who holds any similar position with the Funds'
investment adviser, with any sub-investment adviser of the Funds or
with the Funds' administrator to have access to the Assets.
(b) Nothing in this Section 5 shall prohibit any duly authorized officer,
employee or agent of the Company, or a duly authorized officer,
director, employee or agent of the investment adviser, of any
sub-investment adviser of the Funds'or of the Funds' administrator,
from giving Instructions to the Custodian or executing a Certificate
so long as it does not result in delivery of or access to Assets of
the Fund prohibited by paragraph (a) of this Section 5.
6. STANDARD OF CARE; SCOPE OF CUSTODIAL RESPONSIBILITIES.
(a) Standard of Care. Custodian shall be required to exercise reasonable
care with respect to its duties under this Agreement unless otherwise
provided.
(1) Notwithstanding any other provision of this Custody Agreement,
the Custodian shall not be liable for any loss or damage,
including counsel fees, resulting from its action or omission to
act or otherwise, except for any such loss or damage arising out
of the negligence or willful misconduct of the Custodian.
(2) The Custodian may, with respect to questions of law, apply for
and obtain the advice and opinion of counsel to the Company or of
its own counsel, at the expense of the Company, and shall be
fully protected with respect to anything done or omitted by it in
good faith in conformity with such advice or opinion.
(b) Scope of Duties. Without limiting the generality of the foregoing, the
Custodian shall be under no duty or obligation to inquire into, and
shall not be liable for:
(1) The acts or omissions of any other agent appointed pursuant to
Instructions of a Fund or its investment adviser including, but
not limited to, any broker-dealer or other entity to hold any
Securities or other property of the Fund as collateral or
otherwise pursuant to any investment strategy.
(2) The validity of the issue of any Securities purchased by a Fund,
the legality of the purchase thereof, or the propriety of the
amount paid therefor;
(3) The legality of the sale of any Securities by a Fund or the
propriety of the amount for which the same are sold;
(4) The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
(5) The legality of the redemption of any Shares, or the propriety of
the amount to be paid therefor;
(6) The legality of the declaration or payment of any distribution of
a Fund;
(7) The legality of any borrowing for temporary administrative or
emergency purposes.
(c) No Liability Until Receipt. The Custodian shall not be liable for, or
considered to be the Custodian of, any money, whether or not
represented by any check, draft, or other instrument for the payment
of money, received by it on behalf of a Fund until the Custodian
actually receives and collects such money.
(d) Amounts Due from Transfer Agent. The Custodian shall not be required
to effect collection of any amount due to a Fund from the Fund's
transfer agent nor be required to cause payment or distribution by
such transfer agent of any amount paid by the Custodian to the
transfer agent.
(e) Collection Where Payment Refused. The Custodian shall not be required
to take action to effect collection of any amount, if the Securities
upon which such amount is payable are in default, or if payment is
refused after due demand or presentation, unless and until it shall be
directed to take such action and it shall be assured to its
satisfaction of reimbursement of its related costs and expenses.
(f) No Duty to Ascertain Authority. The Custodian shall not be under any
duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for a Fund are such as may properly be held
by the Fund under the provisions of its governing instruments or
Prospectus.
(g) Reliance on Instructions. The Custodian shall be entitled to rely upon
any Instruction, notice or other instrument in writing received by the
Custodian and reasonably believed by the Custodian to be genuine and
to be signed by an Authorized Person (or Authorized Persons, if
required) of the Company. Where the Custodian is issued Instructions
orally, the Company acknowledges that if written confirmation is
requested, the validity of the transactions or enforceability of the
transactions authorized by the Company shall not be affected if such
confirmation is not received or is contrary to oral Instructions
given. The Custodian shall be under no duty to question any direction
of an Authorized Person to review any property held in the account, to
make any suggestions with respect to the investment of the assets in
the account, or to evaluate or question the performance of any
Authorized Person. The Custodian shall not be responsible or liable
for any diminution of value of any securities or other property held
by the Custodian.
7. APPOINTMENT OF SUBCUSTODIANS. The Custodian is hereby authorized to appoint
one or more domestic subcustodians (which may be an affiliate of the Custodian)
qualified under the Act to hold Securities and monies at any time owned by the
Funds; provided however that the appointment of any such sub-custodian shall not
relieve the Custodian of its responsibilities or liabilities hereunder. The
Custodian is also hereby authorized when acting pursuant to Instructions to: 1)
place assets with any Foreign Custodians located in a jurisdiction which is not
a Selected Country; and 2) place assets with a broker or other agent as
subcustodian in connection with futures, options, short selling or other
transactions which in the case of transactions subject to Rule 17f-6 would be
done in compliance with Rule 17f-6. When acting pursuant to such Instructions,
the Custodian shall not be liable for the acts or omissions of any subcustodian
so appointed.
8. OVERDRAFT FACILITY AND SECURITY FOR PAYMENT. In the event that the Custodian
receives Instructions to make payments or transfers of monies on behalf of a
Fund for which there would be, at the close of business on the date of such
payment or transfer, insufficient monies held by the Custodian on behalf of the
Fund, the Custodian may, in its sole discretion, provide an overdraft (an
"Overdraft") to the Fund in an amount sufficient to allow the completion of such
payment or transfer. Any Overdraft provided hereunder: (a) shall be payable on
the next Business Day, unless otherwise agreed by the Fund and the Custodian;
and (b) shall accrue interest from the date of the Overdraft to the date of
payment in full by the Fund at a rate agreed upon from time to time, by the
Custodian and the Fund or, in the absence of specific agreement, by such rate as
charged to other customers of Custodian under procedures uniformly applied. The
Custodian and the Company acknowledge that the purpose of such Overdraft is to
temporarily finance the purchase of Securities for prompt delivery in accordance
with the terms hereof, to meet unanticipated or unusual redemptions, to allow
the settlement of foreign exchange contracts or to meet other unanticipated Fund
expenses. The Custodian shall promptly notify the Funds (an "Overdraft Notice")
of any Overdraft. To secure payment of any Overdraft, each Fund hereby grants to
the Custodian a continuing security interest in and right of setoff against the
Securities and cash in the Fund's account from time to time in the full amount
of such Overdraft. Should the a Fund fail to pay promptly any amounts owed
hereunder, the Custodian shall be entitled to use available cash in the Fund's
account and to liquidate Securities in the account as necessary to meet the
Fund's obligations under the Overdraft. In any such case, and without limiting
the foregoing, the Custodian shall be entitled to take such other actions(s) or
exercise such other options, powers and rights as the Custodian now or hereafter
has as a secured creditor under the Massachusetts Uniform Commercial Code or any
other applicable law.
9. TAX OBLIGATIONS. For purposes of this Agreement, "Tax Obligations" shall mean
taxes, withholding, certification and reporting requirements, claims for
exemptions or refund, interest, penalties, additions to tax and other related
expenses. To the extent that the Custodian has received relevant and necessary
information with respect to a Fund, the Custodian shall perform the following
services with respect to Tax Obligations:
a. the Custodian shall file claims for exemptions or refunds with respect
to withheld foreign (non-U.S.) taxes in instances in which such claims are
appropriate;
b. the Custodian shall withhold appropriate amounts, as required by U.S.
tax laws, with respect to amounts received on behalf of nonresident aliens; and
c. the Custodian shall provide to the Fund or the Authorized Person such
information received by the Custodian which could, in the Custodian's reasonable
belief, assist the Fund or the Authorized Person in the submission of any
reports or returns with respect to Tax Obligations. The Fund shall inform the
Custodian in writing as to which party or parties shall receive information from
the Custodian.
The Custodian shall provide such other services with respect to Tax Obligations,
including preparation and filing of tax returns and reports and payment of
amounts due (to the extent funded), as requested by the Fund and agreed to by
the Custodian in writing. The Custodian shall have no independent obligation to
determine the existence of any information with respect to, or the extent of,
any Tax Obligations now or hereafter imposed on the Fund by any taxing
authority. Except as specifically provided herein or agreed to in writing by the
Custodian, the Custodian shall have no obligations or liability with respect to
Tax Obligations, including, without limitation, any obligation to file or submit
returns or reports with any taxing authorities.
ARTICLE II
----------
FOREIGN CUSTODY MANAGER SERVICES
--------------------------------
1. DELEGATION. PURSUANT TO RULE 17F-5(B) the Board delegates to the Custodian,
and the Custodian hereby agrees to accept responsibility as the Company's
Foreign Custody Manager for selecting, contracting with and monitoring Foreign
Custodians in those Selected Countries set forth in Appendix C in accordance
with Rule 17f-5(c).
2. CHANGES TO APPENDIX C. Appendix C may be amended by from time to time to add
or delete jurisdictions by written agreement signed by an Authorized Person of
the Company and the Custodian, but the Custodian reserves the right to delete
jurisdictions upon reasonable notice to the Company.
3. REPORTS TO BOARD. The Custodian shall provide written reports notifying the
Board of the placement of Assets with a particular Foreign Custodian and of any
material change in a Fund's foreign custody arrangements. Such reports shall be
provided to the Board quarterly, except as otherwise agreed to by the Custodian
and the Company.
4. MONITORING SYSTEM. In each case in which the Custodian as Foreign Custody
Manager has exercised delegated authority to place Assets with a Foreign
Custodian, the Custodian shall establish a system, to re-assess or
re-evaluate such Foreign Custodians, at least annually in accordance with
Rule 17f-5(c)(3) and to notify the Company immediately if any such Foreign
Custodian is determined by the Custodian to no longer satisfy the
requirements of Rule 17f-5 (c).
5. STANDARD OF CARE. In exercising the delegated authority under this Article II
of the Agreement, the Custodian agrees to exercise reasonable care, prudence and
diligence such as a person having responsibility for the safekeeping of the
Assets would exercise in like circumstances. Contracts with Foreign Custodians
shall be in writing and shall provide for reasonable care for Assets based on
the standards applicable to Foreign Custodians in the Selected Country and shall
comply with the other requirements of Rule 17f-5(c)(2). In making this
determination, the Custodian shall consider all pertinent factors including
those set forth in Rule 17f-5(c)(1). The Custodian shall be liable for the acts
or omissions for a Foreign Custodian to the same extent as set forth herein with
respect to domestic subcustodians, provided, however, that except as may arise
from the negligence or willful misconduct of the Custodian or a domestic
custodian shall be without liability in respect of Country Risk.
6. USE OF SECURITIES DEPOSITORIES. In exercising its delegated authority, the
Custodian may assume, unless instructed in writing to the contrary by an
Authorized Person, that the Board or the Funds' investment adviser has
determined, pursuant to Rule 17f-7, to place and maintain foreign assets with
any Securities Depository as to which the Custodian has provided the Company
with a Risk Analysis.
ARTICLE III
-----------
Information Services
--------------------
1. RISK ANALYSIS. The Custodian will provide the Company with a Risk Analysis
with respect to Securities Depositories operating in the countries listed in
Appendix C. If the Custodian is unable to provide a Risk Analysis with respect
to a particular Securities Depository, it will promptly notify the Fund Company.
Each Risk Analysis shall indicate whether the particular Securities Depository
has been determined by the Custodian, in exercise of its standard of care, to be
an Eligible Securities Depository. If a new Securities Depository commences
operation in one of the Appendix C countries, the Custodian will provide the
Company with a Risk Analysis within a reasonably practicable time after such
Securities Depository becomes operational. If a new country is added to Appendix
C, the Custodian will provide the Company with a Risk Analysis with respect to
each Securities Depository in that country within a reasonably practicable time
after the addition of the country to Appendix C.
2. MONITORING. The Custodian will monitor the custody risks associated with
maintaining assets with each Securities Depository for which it has provided the
Company with a Risk Analysis as required under Rule 17f-7. The Custodian will
promptly notify the Company or Funds investment adviser of any material change
in these risks with respect to any Eligible Securities Depository.
3. USE OF AGENTS. The Custodian may employ agents, including, but not limited to
Foreign Custodians, to perform its responsibilities under Sections 1 and 2
above.
4. EXERCISE OF REASONABLE CARE. The Custodian will exercise reasonable care,
prudence, and diligence in performing its responsibilities under this Article
III. With respect to the Risk Analyses provided or monitoring performed by an
agent, the Custodian will exercise reasonable care in the selection of such
agent, and shall be entitled to rely upon information provided by agents so
selected in the performance of its duties and responsibilities under this
Article III unless the Custodian knows or should have know such information to
be incorrect, incomplete or misleading.
5. LIABILITIES AND WARRANTIES. While the Custodian will take reasonable
precautions to ensure that information provided is accurate, the Custodian shall
have no liability with respect to information provided to it by third parties
unless the Custodian knows or should have known such information to be
incorrect, incomplete or misleading. Due to the nature and source of
information, and the necessity of relying on various information sources, most
of which are external to the Custodian, the Custodian shall have no liability
for direct or indirect use of such information
ARTICLE IV
----------
GENERAL PROVISIONS
------------------
1. COMPENSATION.
(a) The Company will compensate the Custodian for its services rendered
under this Agreement in accordance with the fees set forth in a
separate Fee Schedule which schedule may be modified by the Custodian
upon not less than ninety days prior written notice to the Company.
(b) The Custodian will xxxx the Company as soon as practicable after the
end of each calendar month. The Company will promptly pay to the
Custodian the amount of such billing.
(c) If not paid directly or timely by the Company, the Custodian may
charge against assets held on behalf of a Fund compensation and any
expenses incurred by the Custodian in the performance of its duties
for such Fund pursuant to this Agreement. The Custodian shall also be
entitled to charge against assets of a Fund the amount of any loss,
damage, liability or expense incurred with respect to such Fund,
including counsel fees, for which it shall be entitled to
reimbursement under the provisions of this Agreement. The expenses
which the Custodian may charge include, but are not limited to, the
expenses of domestic subcustodians and Foreign Custodians incurred in
settling transactions.
2. INSOLVENCY OF FOREIGN CUSTODIANS. The Custodian shall be responsible for
losses or damages suffered by a Fund arising as a result of the insolvency of a
Foreign Custodian only to the extent that the Custodian failed to comply with
the standard of care set forth in Article II with respect to the selection and
monitoring of such Foreign Custodian.
3. LIABILITY FOR DEPOSITORIES. The Custodian shall not be responsible for any
losses resulting from the deposit or maintenance of Securities, Assets or other
property of a Fund with a Securities Depository.
4. DAMAGES. Under no circumstances shall the Custodian be liable for any
indirect, consequential or special damages with respect to its role as Foreign
Custody Manager, Custodian or information vendor.
5. INDEMNIFICATION; LIABILITY OF THE COMPANY.
(a) The Company shall indemnify and hold the Custodian harmless from all
liability and expense, including reasonable counsel fees and expenses,
arising out of the performance of the Custodian's obligations under
this Agreement except as a result of the Custodian's negligence or
willful misconduct.
(b) The Company and the Custodian agree that the obligations of the
Company under this Agreement shall not be binding upon any of the
Directors, Trustees, shareholders, nominees, officers, employees or
agents, whether past, present or future, of the Company, individually,
but are binding only upon the assets and property of the Funds.
6. FORCE MAJEURE. Notwithstanding anything in this Agreement to the contrary,
the Custodian shall not be liable for any losses resulting from or caused by
events or circumstances beyond its reasonable control, including, but not
limited to, losses resulting from nationalization, strikes, expropriation,
devaluation, revaluation, confiscation, seizure, cancellation, destruction or
similar action by any governmental authority, de facto or de jure; or enactment,
promulgation, imposition or enforcement by any such governmental authority of
currency restrictions, exchange controls, taxes, levies or other charges
affecting the Funds' property; or the breakdown, failure or malfunction of any
utilities or public telecommunications systems; or any order or regulation of
any banking or securities industry including changes in market rules and market
conditions affecting the execution or settlement of transactions; or acts of
war, terrorism, insurrection or revolution; or any other similar event.
7. TERMINATION.
(a) Either party may terminate this Agreement by giving the other party at
least sixty (60) days notice in writing, specifying the date of such
termination.
(b) In the event notice of termination is given by the Custodian, the
Company shall, on or before the termination date, deliver to the
Custodian a Certificate evidencing the vote of the Board designating a
successor custodian. In the absence of such designation, the Custodian
may designate a successor custodian, which shall be a person qualified
to so act under the Act or the Company. If the Company fails to
designate a successor custodian, the Company shall, upon the date
specified in the notice of termination, and upon the delivery by the
Custodian of all Securities and monies then owned by the Funds, be
deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities under this Agreement other
than the duty with respect to Securities held in the Book-Entry System
or any Securities Depository which cannot be delivered to the Company.
(c) Upon termination of the Agreement, the Custodian shall, upon receipt
of a notice of acceptance by the successor custodian, deliver to the
successor all Securities and monies then held by the Custodian on
behalf of the Funds, after deducting all fees, expenses and other
amounts owed to the Custodian
(d) In the event of a dispute following the termination of this Agreement,
all relevant provisions shall be deemed to continue to apply to the
obligations and liabilities of the parties.
8. INSPECTION OF BOOKS AND RECORDS. The books and records of the Custodian shall
be open to inspection and audit at reasonable times by officers and auditors
employed by the Company at its own expense and with prior written notice to the
Custodian, and by the appropriate employees of the Securities and Exchange
Commission.
9. MISCELLANEOUS.
(a) Appendix A is a Certificate signed by the Secretary of the Fund
setting forth the names and the signatures of Authorized Persons. The
Company shall furnish a new Certificate when the list of Authorized
Persons is changed in any way. Until a new certification is received,
the Custodian shall be fully protected in acting upon Instructions
from Authorized Persons as set forth in the last delivered
Certificate.
(b) Any required written notice or other instrument shall be sufficiently
given if addressed to the Custodian or the Company as the case may be
and delivered to it at its offices at:
The Custodian:
Boston Safe Deposit and Trust Company
000 Xxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: ____________________________
The Company
The Tweedy, Xxxxxx Fund, Inc.
c/o Tweedy, Xxxxxx Co. LLc
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: General Counsel________________
or at such other place as the parties may from time to time
designate to the other in writing.
(c) The Custodian shall provide the Company at such time as the Company
may reasonably request with reports by independent public accountants
and procedures for safe guarding Assets in sufficient scope and detail
to provide reasonable assurance that any material inadequacies would
be disclosed.
(d) This Agreement may not be amended or modified except by a written
agreement executed by both parties.
(e) This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Company
without the written consent of the Custodian, or by the Custodian
without the written consent of the Company authorized or approved by a
vote of the Board, provided, however, that the Custodian may assign
the Agreement or any function thereof to any corporation or entity
which directly or indirectly is controlled by, or is under common
control with, the Custodian and any other attempted assignment without
written consent shall be null and void.
(f) Nothing in this Agreement shall give or be construed to give or confer
upon any third party any rights hereunder.
(g) The Custodian represents that it is a U.S. Bank within the meaning of
paragraph (a)(7) of Rule 17f-5.
(h) The Company acknowledges and agrees that, except as expressly set
forth in this Agreement, the Company is solely responsible to assure
that the maintenance of the Funds' Securities and cash hereunder
complies with applicable laws and regulations, including without
limitation the Act and applicable interpretations thereof or
exemptions therefrom. The Company represents that it has determined
that it is reasonable to rely on the Custodian to perform the
responsibilities delegated pursuant to this Agreement.
(i) This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.
(j) The captions of the 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.
(k) Each party represents to the other that it has all necessary power and
authority, and has obtained any consent or approval necessary to
permit it, to enter into and perform this Agreement and that this
Agreement does not violate, give rise to a default or right of
termination under or otherwise conflict with any applicable law,
regulation, ruling, decree or other governmental authorization or any
contract to which it is a party or by which any of its assets is
bound.
(l) This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
(m) SEC Rule 14b-2 requires banks which hold securities for the account of
customers to respond to requests by issuers of securities for the
names, address and holdings of beneficial owners of securities of that
issuer held by the bank unless the beneficial owner has expressly
objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Company to indicate whether it
authorizes the Custodian to provide a Fund's name, address, and share
position to requesting companies whose securities the Fund owns. If a
fund tells the Custodian "no", the Custodian will not provide this
information to requesting companies.
If a Fund tells the Custodian "yes" or does not check either "yes" or
"no" below, the Custodian is required by the rule to treat the Fund as
consenting to disclosure of this information for all securities owned
by the Fund or any funds or accounts established by the Fund. For the
Funds protection, the Rule prohibits the requesting company from using
a Funds' name and address for any purpose other than corporate
communications. Please indicate below whether the Company consents or
objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Funds' name,
address, and share positions.
NO [X] The Custodian is not authorized to release the Funds' name,
address, and share positions.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective representatives duly authorized as of the day and year first
above written.
TWEEDY, XXXXXX FUND, INC.
By:
------------------------
Name:
Title:
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
------------------------
Name:
Title:
APPENDIX A
----------
LIST OF AUTHORIZED PERSONS
--------------------------
I, X. X. Xxxxxxxxxxx, the Secretary of Tweedy, Xxxxxx Fund,
Inc._____________________, a corporation organized under the laws of the
State of Maryland (the " Company"), on behalf of its Tweedy, Xxxxxx Global
Value Fund and Tweedy, Xxxxxx American Value Fund (the "Funds do hereby
certify that:
The following individuals have been duly authorized as Authorized Persons
to give Instructions on behalf of the Company Funds and the specimen signatures
set forth opposite their respective names are their true and correct signatures:
Name Signature
---------------------
---------------------
---------------------
---------------------
---------------------
---------------------
---------------------
---------------------
By:
-----------------------------
Secretary
Dated:
APPENDIX C
----------
SELECTED COUNTRIES
------------------
[List]
Russia
Estonia
Trinidad-Tobago
Costa Rica
Romania
"*Note, Custodian will not act as a Foreign Custody Manager with respect to
assets held in this country. Holding assets and use of Mellon's usual
subcustodian in this country is subject to Instructions by the Company and its
execution of a separate letter-agreement pertaining to custody and market
risks."
APPENDIX D
----------
ANCILLARY INFORMATION SERVICES AGREEMENT
----------------------------------------
Until the Custodian provides a Risk Analysis pursuant to Article III of
the Agreement with respect to a Securities Depositories operating in such
country a particular country as set forth on Appendix C, the following sets
forth our agreement with respect to the delivery of certain information to the
Board or its agents as requested by the Board from time to time. These terms
shall control over the provisions of Article III of this Agreement but shall
cease to apply as to any country for which Custodian provides a Risk Analysis
for one or more Securities Depositories operating therein. Otherwise, unless
continued as provided below, these provisions shall expire on July 2, 2001.
After expiration, the information set forth in Sections 2, A and B below
may be provided as agreed upon from time to time in writing between the Company
and the Custodian subject to Section 3 hereof.
1. PROVISION OF INFORMATION. In accordance with the provisions of this
Information Services Agreement, the Custodian agrees to provide to the Board, or
at the direction of the Board, the Funds' investment advisers, the information
set forth in Section 2, below, with respect to Foreign Custodians and Securities
Depositories which hold Securities, Assets, or other property of the Fund and
the systems and environment for securities processing in the jurisdiction in
which such Foreign Custodians or Securities Depositories are located. The
Custodian shall provide only that portion of such information as is reasonably
available to it.
2. INFORMATION TO BE PROVIDED.
A. COUNTRY INFORMATION
o Settlement Environment
o Depository
o Settlement Period
o Trading
o Security Registration
o Currency
o Foreign Investment Restrictions
o Entitlements
o Proxy Voting
o Foreign Taxation
B. SUBCUSTODIAN INFORMATION
o Financial Information
o Regulator
o External Auditor
o How Securities are Held
o Operational Capabilities
o Insurance Coverage
C. DEPOSITORY INFORMATION (IF APPLICABLE TO THE COUNTRY)
o Name
o Information relative to Determining Compulsory or Voluntary Status of
the Facility
o Type of Entity
o Ownership Structure
o Operating History
o Eligible Instruments
o Security Form
o Financial Data
o Regulator
o External Auditor
D. INFORMATION ON THE FOLLOWING LEGAL QUESTIONS
o Would the applicable foreign law restrict the access afforded the
independent public accountants of the Fund to books and records kept by
a Foreign Custodian?
o Would the applicable foreign law restrict the ability of the Fund to
recover its assets in the event of bankruptcy of the Foreign Custodian?
o Would the applicable foreign law restrict the ability of the Fund to
recover assets that are lost while under the control of the Foreign
Custodian?
o What are the foreseeable difficulties in converting the Fund's cash
into U.S. dollars?
3. LIABILITY AND WARRANTIES. While the Custodian will take reasonable
precautions to ensure that information provided is accurate the Custodian shall
have no liability with respect to information provided to it by third parties
unless the Custodian knows or should have known such information to be
incorrect, incomplete or misleading. Due to the nature and source of
information, and the necessity of relying on various information sources, most
of which are external to the Custodian, the Custodian shall have no liability
for direct or indirect use of such information. The Custodian makes no other
warranty or representation, either express or implied, as to the merchantability
or fitness for any particular purpose of the information provided under this
Appendix D
Acknowledged:
----------------------------------- -----------------------------
Fund Custodian
