FOREIGN CUSTODY MANAGER AGREEMENT
AGREEMENT made as of April 10, 2003 between each registered investment
company listed on Exhibit A hereto (each a "Fund") and The Bank of New York
("BNY").
W I T N E S S E T H:
WHEREAS, the Fund desires to appoint BNY as a Foreign Custody Manager (as
such term is hereinafter defined) on the terms and conditions contained herein;
WHEREAS, BNY desires to serve as a Foreign Custody Manager and perform the
duties set forth herein on the terms and conditions contained herein;
NOW THEREFORE, in consideration of the mutual promises hereinafter
contained in this Agreement, the Fund and BNY hereby agree as follows:
ARTICLE I.
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1. "BOARD" shall mean the board of directors or board of trustees, as the
case may be, of the Fund.
2. "ELIGIBLE FOREIGN CUSTODIAN" shall have the meaning provided in the Rule
(as hereinafter defined).
3. "MONITORING SYSTEM" shall mean a system established by BNY to fulfill
the Responsibilities specified in clauses (d) and (e) of Section 1 of Article
III of this Agreement.
4. "RESPONSIBILITIES" shall mean the responsibilities delegated to BNY
under the Rule as a Foreign Custody Manager with respect to each Specified
Country and each Eligible Foreign Custodian selected by BNY, as such
responsibilities are more fully described in Article III of this Agreement.
5. "RULE" shall mean Rule 17f-5 under the Investment Company Act of 1940,
as amended on June 12, 2000.
6. "SPECIFIED COUNTRY" shall mean each country listed on Schedule I
attached hereto and each country, other than the United States, constituting the
primary market for
a security with respect to which the Fund has given settlement instructions to
The Bank of New York as custodian (the "Custodian") under its Custody Agreement
with the Fund.
ARTICLE II.
BNY AS A FOREIGN CUSTODY MANAGER
1. The Fund on behalf of its Board hereby delegates to BNY with respect to
each Specified Country the Responsibilities.
2. BNY accepts the Board's delegation of Responsibilities with respect to
each Specified Country and agrees in performing the Responsibilities as a
Foreign Custody Manager to exercise such reasonable care, prudence and diligence
as a professional custodian person having responsibility for the safekeeping of
the assets of management investment companies registered under the Investment
Company Act would exercise.
3. BNY shall provide to the Board written reports notifying the Board of
the placement of assets of the Fund with a particular Eligible Foreign Custodian
within a Specified Country at the end of any calendar quarter in which a change
in Eligible Foreign Custodian has occurred and of any material change in the
arrangements (including the contract governing such arrangements) with respect
to assets of the Fund placed with any such Eligible Foreign Custodian as soon as
practicable after the material change.
ARTICLE III.
RESPONSIBILITIES
1. Subject to the provisions of this Agreement, BNY shall with respect to
each Specified Country select an Eligible Foreign Custodian. In connection
therewith, BNY shall: (a) determine that assets of the Fund held by such
Eligible Foreign Custodian will be subject to reasonable care, based on the
standards applicable to custodians in the relevant market in which such Eligible
Foreign Custodian operates, after considering all factors relevant to the
safekeeping of such assets, including, without limitation, those contained in
paragraph (c)(1) of the Rule; (b) determine that the Fund's foreign custody
arrangements with each Eligible Foreign Custodian are governed by a written
contract with the Custodian which will provide reasonable care for the Fund's
assets based on the standards specified in paragraph (c)(1) of the Rule; (c)
determine that each contract with an Eligible Foreign Custodian shall include
the provisions specified in paragraph (c)(2)(i)(A) through (F) of the Rule or,
alternatively, in lieu of any or all of such (c)(2)(i)(A) through (F)
provisions, such other provisions as BNY determines will provide, in their
entirety, the same or a greater level of care and protection for the assets of
the Fund as such specified provisions in their entirety; (d) monitor pursuant to
the Monitoring System the appropriateness of maintaining the assets of the Fund
with a particular Eligible Foreign Custodian pursuant to paragraph (c)(1) of the
Rule and the performance of the contract governing such arrangement; and (e)
promptly advise the
Fund whenever BNY determines under the Monitoring System that an arrangement
(including, any material change in the contract governing such arrangement)
described in preceding clause (d) no longer meets the requirements of the Rule.
2. For purposes of preceding Section 1 of this Article, BNY's determination
of appropriateness shall not include, nor be deemed to include, any evaluation
of Country Risks associated with investment in a particular country. For
purposes hereof, "Country Risks" shall mean systemic risks of holding assets in
a particular country including but not limited to (a) an Eligible Foreign
Custodian's use of any depositories that act as or operate a system or a
transnational system for the central handling of securities or any equivalent
book-entries; (b) such country's financial infrastructure; (c) such country's
prevailing custody and settlement practices; (d) nationalization, expropriation
or other governmental actions; (e) regulation of the banking or securities
industry; (f) currency controls, restrictions, devaluations or fluctuations; and
(g) market conditions which affect the orderly execution of securities
transactions or affect the value of securities.
ARTICLE IV.
REPRESENTATIONS
1. The Fund hereby represents that: (a) this Agreement has been duly
authorized, executed and delivered by the Fund, constitutes a valid and legally
binding obligation of the Fund enforceable in accordance with its terms, and no
statute, regulation, rule, order, judgment or contract binding on the Fund
prohibits the Fund's execution or performance of this Agreement; (b) this
Agreement has been approved and ratified by the Board at a meeting duly called
and at which a quorum was at all times present, and (c) the Board or the Fund's
investment advisor has considered the Country Risks associated with investment
in each Specified Country and will have considered such risks prior to any
settlement instructions being given to the Custodian with respect to any other
country.
2. BNY hereby represents that: (a) BNY is duly organized and existing under
the laws of the State of New York, with full power to carry on its businesses as
now conducted, and to enter into this Agreement and to perform its obligations
hereunder; (b) this Agreement has been duly authorized, executed and delivered
by BNY, constitutes a valid and legally binding obligation of BNY enforceable in
accordance with its terms, and no statute, regulation, rule, order, judgment or
contract binding on BNY prohibits BNY's execution or performance of this
Agreement; (c) BNY has established and will maintain the Monitoring System; and
(d) BNY is a U.S. Bank as defined in the Rule.
ARTICLE V.
CONCERNING BNY
1. BNY shall not be liable for any costs, expenses, damages, liabilities or
claims, including attorneys' and accountants' fees, sustained or incurred by, or
asserted against, the Fund except to the extent the same arises out of the
failure of BNY to exercise the
reasonable care, prudence and diligence required by Section 2 of Article II
hereof. In no event shall BNY be liable to the Fund, the Board, or any third
party for special, indirect or consequential damages, or for lost profits or
loss of business, arising in connection with this Agreement.
2. The Fund shall indemnify BNY and hold it harmless from and against its
reasonable costs, expenses, damages, liabilities or claims, including reasonable
attorneys' and accountants' fees, sustained or incurred by, or asserted against,
BNY by reason or as a result of any action or inaction, or arising out of BNY's
performance hereunder, provided that the Fund shall not indemnify BNY or hold
BNY harmless to the extent any such costs, expenses, damages, liabilities or
claims arises out of BNY's failure to exercise the reasonable care, prudence and
diligence required by Section 2 of Article II hereof.
3. For its services hereunder, the Fund agrees to pay to BNY such
compensation and out-of-pocket expenses as shall be mutually agreed.
4. BNY shall have only such duties as are expressly set forth herein. In no
event shall BNY be liable for any Country Risks associated with investments in a
particular country.
ARTICLE VI.
MISCELLANEOUS
1. This Agreement constitutes the entire agreement between the Fund and BNY
as a foreign custody manager, and no provision in the Custody Agreement between
the Fund and the Custodian shall affect the duties and obligations of BNY
hereunder, nor shall any provision in this Agreement affect the duties or
obligations of the Custodian under the Custody Agreement.
2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to BNY, shall be sufficiently given if received by it
at its offices at 000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at
such other place as BNY may from time to time designate in writing.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if received
by it at its offices at Xxx Xxxxxxxxx Xxxxxx, Xxx, Xxx Xxxx 00000-0000 or at
such other place as the Fund may from time to time designate in writing.
4. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
thereby. This Agreement may not be amended or modified in any manner except by a
written agreement executed by both parties. 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 either party without the written consent of the
other.
5. This Agreement shall be construed in accordance with the substantive
laws of the State of New York, without regard to conflicts of laws principles
thereof. The Fund and BNY hereby consent to the jurisdiction of a state or
federal court situated in New York City, New York in connection with any dispute
arising hereunder. The Fund hereby irrevocably waives, to the fullest extent
permitted by applicable law, any objection which it may now or hereafter have to
the laying of venue of any such proceeding brought in such a court and any claim
that such proceeding brought in such a court has been brought in an inconvenient
forum. The Fund and BNY each hereby irrevocably waives any and all rights to
trial by jury in any legal proceeding arising out of or relating to this
Agreement.
6. The parties hereto agree that in performing hereunder, BNY is acting
solely on behalf of the Fund and no contractual or service relationship shall be
deemed to be established hereby between BNY and any other person by reason of
this Agreement.
7. 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.
8. This Agreement shall terminate simultaneously with the termination of
the Custody Agreement between the Fund and the Custodian, and may otherwise be
terminated by either party giving to the other party a notice in writing
specifying the date of such termination, which shall be not less than thirty
(30) days after the date of such notice.
IN WITNESS WHEREOF, the Fund and BNY have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the date
first above written.
XXXXXXXX FUNDS, INC.
By: /s/ XXXXX X. XXXXXX
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Title: Executive Vice President
THE BANK OF NEW YORK
By: /s/ XXXXXX X. XXXXXX
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Title: Vice President
EXHIBIT A
XXXXXXXX FUNDS INC.
FUND NAME TAX ID NUMBER
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Xxxxxxxx Strategy Fund 00-0000000
Xxxxxxxx Capital Value Fund 00-0000000
