EX-99.B(g)valcadel
RULE 17f-5 DELEGATION AGREEMENT
By its execution of this Delegation Agreement by and between XXXXXXX &
XXXX ADVISORS VALUE FUND, INC. (the Fund), a management investment
company registered with the Securities and Exchange Commission (the
Commission) under the Investment Company Act of 1940, as amended (the
1940 Act), and UMB BANK, N. A. (the Custodian), the Fund hereby directs
the Custodian to appoint Xxxxx Brothers Xxxxxxxx & Co., a New York limited
partnership with an office in Boston, Massachusetts, as the Approved
Foreign Custody Manager under the terms of the Custodian Agreement between
the Fund and the Custodian (the Delegate) to perform certain functions
with respect to the custody of the Fund's Assets (as defined in Section 14
of this Delegation Agreement) outside the United States of America.
WHEREAS, the Delegate has previously agreed to provide global custody
services to the Custodian on behalf of the Fund through a Foreign Custody
Manager Delegation Agreement dated May 13, 1998, as amended from time to
time; and
WHEREAS, the Commission amended Rule 17f-5 under the 1940 Act
concerning arrangements for the custody of the foreign assets of registered
investment companies; and
WHEREAS, this Delegation Agreement supersedes the prior Foreign
Custody Manager Delegation Agreement between the Custodian, on behalf of
the Fund, and the Delegate dated May 13, 1998;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the Fund and Custodian agree as follows.
Capitalized terms shall have the meaning indicated in Section 14 of this
Delegation Agreement unless otherwise indicated.
1. Maintenance of Fund's Assets Abroad. The Fund, acting through its
Board of Directors (the Board), or its duly authorized representative,
hereby instructs the Custodian to enter into a written agreement with the
Delegate to place and maintain the Fund's Assets outside the United States
in accordance with instructions received from the Fund's investment
adviser. (An investment adviser may include any duly authorized sub-adviser
to the Fund.) Such instruction shall represent a Proper Instruction under
the terms of the Custodian Agreement between the Fund and the Custodian
dated November 15, 2000, as amended from time to time (the Custodian
Agreement). The Fund acknowledges that: (a) the Custodian shall direct the
Delegate to perform services hereunder only with respect to the countries
where the Delegate provides custodial services to the Fund as set forth in
Schedule A to this Delegation Agreement; (b) depending on conditions in the
particular country, advance notice may be required before the Delegate,
upon the Custodian's direction, shall be able to perform its duties in or
with respect to such country (such advance notice to be reasonable in light
of the specific facts and circumstances attendant to performance of duties
in such country); and (c) nothing in this Delegation Agreement shall
require the Custodian to direct the Delegate to provide delegated or
custodial services in any country, and there may from time to time be
countries as to which the Delegate determines it will not provide
delegation services.
2. Delegation. Pursuant to the provisions of Rule 17f-5 under the 1940
Act, and on behalf of and at the direction of the Fund, the Board hereby
directs the Custodian, and the Custodian hereby agrees, to appoint the
Delegate to perform only those duties set forth in this Delegation
Agreement concerning the safekeeping of each Fund's Assets in each of the
countries as to which Custodian has reported to the Fund that the Custodian
shall have appointed the Delegate to act pursuant to Rule 17f-5. The
Custodian is hereby authorized to take such actions, and to direct the
Delegate to take such actions, on behalf of or in the name of the Fund as
are reasonably required to discharge its duties under this Delegation
Agreement, including, without limitation, to cause the Fund's Assets to be
placed with a particular Eligible Foreign Custodian in accordance herewith.
The Fund confirms that its Board or investment adviser has considered and
accepted the Sovereign Risk and prevailing Country Risk as part of its
continuing investment decision process.
3. Selection of Eligible Foreign Custodian and Contract Administration.
The Custodian shall direct the Delegate pursuant to a written agreement to
perform the following duties with respect to the selection of Eligible
Foreign Custodians and administration of certain contracts governing the
Fund's foreign custodial arrangements:
(a) Selection of Eligible Foreign Custodian. The Delegate shall place
and maintain the Fund's Assets with an Eligible Foreign Custodian; provided
that, the Delegate shall be required to determine that the Fund's Assets
will be subject to reasonable care based on the standards applicable to
custodians in the relevant market, after considering all factors relevant
to the safekeeping of such assets, including without limitation:
(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
controls and procedures for dealing with any Securities Depository,
the method of keeping custodial records, and the security and data
protection practices;
(ii) Whether the Eligible Foreign Custodian has the
requisite financial strength to provide reasonable care for the Fund's
Assets;
(iii) The Eligible Foreign Custodian's general
reputation and standing; and
(iv) Whether the Fund will have jurisdiction over and be
able to enforce judgments against the Eligible Foreign Custodian, such
as by virtue of the existence of any offices of such Eligible Foreign
Custodian in the United States or such Eligible Foreign Custodian's
appointment of an agent for service of process in the United States or
consent to jurisdiction in the United States.
The Delegate shall be required to make the foregoing determination
consistent with the standard of care set forth in Section 9 of this
Delegation Agreement.
(b) Contract Administration. The Custodian shall require that the
Delegate cause that the foreign custody arrangements with an Eligible
Foreign Custodian be governed by a written contract that the Delegate has
determined will provide reasonable care for the Fund's Assets based on the
standards applicable to custodians in the relevant market after considering
all factors relevant to the safekeeping of the Fund's Assets as specified
in Rule 17f-5(c)(1). Each such contract shall, except as set forth in the
last paragraph of this subsection (b), include provisions that provide:
(i) For indemnification or insurance arrangements (or any
combination of the foregoing) such that the Fund will be adequately
protected against the risk of loss of assets held in accordance with
such contract;
(ii) That the Fund's Assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor
of the Eligible Foreign Custodian or its creditors, except a claim of
payment for their safe custody or administration or, in the case of
cash deposits, liens or rights in favor of creditors of such Custodian
arising under bankruptcy, insolvency or similar laws;
(iii) That beneficial ownership of the Fund's Assets
will be freely transferable without the payment of money or value
other than for safe custody or administration;
(iv) That adequate records will be maintained identifying
the Fund's Assets as belonging to the Fund or as being held by a third
party for the benefit of the Fund;
(v) That the Fund's independent public accountants will be
given access to those records described in (iv) above or confirmation
of the contents of such records; and
(vi) That the Delegate will receive sufficient and timely
periodic reports with respect to the safekeeping of the Fund's Assets,
including, but not limited to, notification of any transfer to or from
the Fund's account or a third party account containing foreign assets
held for the benefit of the Fund.
The Custodian may permit in its agreement with the Delegate that such
contract may contain, in lieu of any or all of the provisions specified in
this Section 3(b), such other provisions that the Delegate determines will
provide, in their entirety, the same or a greater level of care and
protection for the Fund's Assets as the specified provisions, in their
entirety.
(c) Limitation to Delegated Selection. Notwithstanding anything in
this Delegation Agreement to the contrary, the agreement between the
Custodian and the Delegate may provide that the duties under this Section 3
shall apply only to Eligible Foreign Custodians selected by the Delegate
and shall not apply to any Eligible Foreign Custodian that the Delegate is
directed to use pursuant to Section 8 of this Delegation Agreement.
4. Monitoring. The Custodian shall enter into an agreement with the
Delegate that requires the Delegate to establish a system to monitor the
appropriateness of maintaining each Fund's Assets with each Eligible
Foreign Custodian that has been selected by the Delegate pursuant to
Section 3 of this Delegation Agreement. The Custodian shall direct the
Delegate to monitor the continuing appropriateness of placement of the
Fund's Assets in accordance with the criteria established under Section
3(a) of this Delegation Agreement and such Eligible Foreign Custodian's
actual performance in accordance with the written contract as provided in
Section 3(b) of this Delegation Agreement. The Custodian shall direct the
Delegate to monitor the continuing appropriateness of the contract
governing the Fund's arrangements in accordance with the criteria
established under Section 3(b) of this Delegation Agreement.
5. Reporting. The Custodian shall enter into an agreement with the
Delegate providing that, initially, prior to the placement of the Fund's
Assets with each Eligible Foreign Custodian, and thereafter, at least
annually and at such other times as the Board deems reasonable and
appropriate based on the circumstances of the Fund's arrangements, the
Delegate shall provide to the Board of each Fund, or to the Custodian for
prompt provision to such Board, written reports specifying placement of the
Fund's Assets with each Eligible Foreign Custodian selected by the Delegate
pursuant to Section 3 of this Delegation Agreement and shall promptly
report as to any material changes to such foreign custody arrangements.
Such reporting will include the appropriateness of maintaining the Fund's
Assets with a particular custodian under paragraph (c)(1) of Rule 17f-5 and
the performance of the contract under paragraph (c)(2) of Rule 17f-5. The
agreement may provide that the Delegate will prepare such a report with
respect to any Eligible Foreign Custodian that the Delegate has been
instructed to use pursuant to Section 8 only to the extent specifically
agreed with respect to the particular situation.
6. Withdrawal of Fund's Assets. The Custodian shall enter into an
agreement with the Delegate providing that, if the Delegate determines that
an arrangement with a specific Eligible Foreign Custodian selected by the
Delegate consistent with Section 3 of this Delegation Agreement no longer
meets the requirements of said Section, Delegate shall withdraw each Fund's
Assets from the non-complying arrangement as soon as reasonably
practicable; provided, however, that if in the reasonable judgment of the
Delegate, such withdrawal would require liquidation of any of the Fund's
Assets or would materially impair the liquidity, value or other investment
characteristics of the Fund's Assets, it shall be the duty of the Delegate
to provide information regarding the particular circumstances and to act
only in accordance with Proper Instructions of the Fund or its investment
adviser with respect to such liquidation or other withdrawal.
7. Precious Metals. The Fund shall, with respect to precious metal
deposits, instruct the Custodian to enter into a written agreement to
direct the Delegate to hold such precious metals on an allocated or on an
unallocated basis in accordance with the terms of this Delegation
Agreement. Accordingly, the Custodian shall enter into a written agreement
to direct the Delegate to be responsible for exercising reasonable care in
the administration of such accounts, and to the extent that the Fund has
appointed the Custodian to direct the Delegate to act as foreign custody
manager pursuant to the provisions of Rule 17f-5, the Custodian shall
direct the Delegate to comply with its responsibilities thereunder.
Allocated Precious Metal(s) shall mean any and all gold, silver, platinum
or palladium and any other metals maintained in any account with an
Eligible Foreign Custodian or its agents in the name of the Custodian or
its Delegate for the Fund. Unallocated Precious Metal(s) shall mean any and
all gold, silver, platinum or palladium and any other metals maintained in
any account with an Eligible Foreign Custodian or its agents in the name of
the Custodian or the Delegate for its customers generally.
(a) Unallocated Precious Metals. The Fund shall be responsible for any
and all taxes, duties, costs, charges or fees (including, without
limitation, insurance, delivery, collection and storage charges) which may
be incurred by the Fund, the Delegate or the Custodian in connection with
the holding of or transacting in Unallocated Precious Metals. The Fund
acknowledges that such deposits are nonfungible and shall be treated as a
cash deposit with the Eligible Foreign Custodian or its agents. Provided
that the Delegate has exercised reasonable care, prudence and diligence in
its own acts or omissions with respect to the administration of such
Unallocated Precious Metals and has complied with any duties that have been
established pursuant to this Delegation Agreement and provided that the
Custodian has complied with its duties under this Delegation Agreement, the
Custodian shall not be liable for the repayment of Unallocated Precious
Metals in the event such Eligible Foreign Custodian or its agent, by reason
of its bankruptcy, insolvency or otherwise, fails to make repayment.
(b) Allocated Precious Metals. With respect to Allocated Precious
Metals, the Custodian shall enter into a written agreement to direct that
the Delegate be responsible for the failure of any Eligible Foreign
Custodian or its agents to perform its obligations with respect to holding
or returning of Allocated Precious Metals. Each Fund shall be responsible
for any and all taxes, duties, costs, charges or fees (including, without
limitation, insurance, delivery, collection and storage charges) which may
be incurred by the Fund, the Delegate or the Custodian in connection with
the holding of or transacting in Allocated Precious Metals.
8. Direction as to Eligible Foreign Custodian. Notwithstanding this
Delegation Agreement, the Fund, acting through its Board, its investment
adviser or its other authorized representative, may instruct the Custodian
to direct the Delegate to place and maintain the Fund's Assets in a
particular country or with a particular Eligible Foreign Custodian,
including without limitation with respect to investment in countries as to
which the Delegate reasonably determines that it will not provide
delegation services. In the event that the Delegate determines that it will
provide delegation services in such country or with such Eligible Foreign
Custodian, the Custodian will comply with the provisions otherwise set
forth in this Delegation Agreement. In the event that the Delegate
reasonably determines that it will not provide delegation services in such
country or with such Eligible Foreign Custodian, the Custodian or Delegate
shall be entitled to rely on any such instruction as a Proper Instruction
and shall have no duties or liabilities under this Delegation Agreement
with respect to such arrangement save those that it may undertake
specifically in writing with respect to each particular instance; provided
that this Delegation Agreement and the Custodian Agreement shall not
constitute the Custodian or the Delegate as the exclusive delegate of any
of the Funds for purposes of Rule 17f-5 and, particularly where Custodian
does not agree to provide fully the services under this Delegation
Agreement and the Custodian Agreement to a Fund with respect to a
particular country, the Fund may delegate such services to another delegate
pursuant to Rule 17f-5.
9. Standard of Care. In carrying out its duties under this Delegation
Agreement, the Custodian agrees to exercise reasonable care, prudence and
diligence such as a person having responsibility for safekeeping the Fund's
Assets would exercise. In addition, the Custodian will enter into a written
agreement with the Delegate providing that, in carrying out its duties
under its agreement with the Custodian, the Delegate will exercise
reasonable care, prudence and diligence such as a person having
responsibility for safekeeping of the Fund's Assets would exercise.
10. Liability of the Custodian for Actions of Other Persons. The Custodian
shall be liable for the actions or omissions of the Delegate or any
Eligible Foreign Custodian (excluding any Securities Depository appointed
by them) to the same extent as if such actions or omissions were performed
by the Custodian itself, except as provided in Section 8 hereunder. In the
event of any loss, damage or expense suffered or incurred by the Fund
caused by or resulting from the actions or omissions of the Delegate or
Eligible Foreign Custodian for which the Custodian would otherwise be
liable, the Custodian shall promptly reimburse the Fund in the amount of
any such loss, damage or expense.
11. Representations. The Custodian hereby represents and warrants that it
is a U.S. Bank and that this Delegation Agreement has been duly authorized,
executed and delivered by the Custodian and is a legal, valid and binding
agreement of the Custodian enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy laws and any other similar laws affecting the rights and
remedies of creditors generally and by equitable principles. The Custodian
will enter into an agreement with the Delegate in which the Delegate will
represent and warrant that it is a U.S. Bank and that the agreement between
the Custodian and the Delegate has been duly authorized, executed and
delivered by the Delegate and is a legal, valid and binding agreement of
the Delegate enforceable against it in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy laws and any
other similar laws affecting the rights and remedies of creditors generally
and by equitable principles.
The Fund hereby represents and warrants that its Board has determined
that it is reasonable to rely on the Custodian to direct the Delegate to
perform the delegated responsibilities provided for herein and that this
Delegation Agreement has been duly authorized, executed and delivered by
the Fund and is a legal, valid and binding agreement of the Fund
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy laws and any other
similar laws affecting the rights and remedies of creditors generally and
by equitable principles.
12. Effectiveness; termination. This Delegation Agreement shall be
effective as of the date on which this Delegation Agreement shall have been
accepted by the Custodian, as indicated by the date set forth below the
Custodian's signature. This Delegation Agreement may be terminated at any
time, without penalty, by written notice from the terminating party to the
non-terminating party. Such termination shall be effective on the 60th day
following the date on which the non-terminating party shall receive the
foregoing notice. The foregoing to the contrary notwithstanding, this
Delegation Agreement shall be deemed to have been terminated concurrently
with the termination of the Custodian Agreement. The Custodian shall
terminate its agreement with the Delegate pursuant to this Delegation
Agreement concurrently with any termination of this Delegation Agreement.
13. Notices. Notices and other communications under this Delegation
Agreement are to be made in accordance with the arrangements designated for
such purpose under the Custodian Agreement unless otherwise indicated in a
writing referencing this Delegation Agreement and executed by both parties.
14. Definitions. Capitalized terms in this Delegation Agreement have the
following meanings:
a. Country Risk - shall mean, with respect to the acquisition,
ownership, settlement or custody of investments in a jurisdiction,
all risks relating to, or arising in consequence of, systemic and
markets factors affecting the acquisition, payment for or ownership
of investments including (a) the prevalence of crime and corruption
except for crime or corruption by the Eligible Foreign Custodian or
its employees, directors or officers, (b) the inaccuracy or
unreliability of business and financial information (unrelated to
the Custodian's duties imposed by Rule 17f-5(c) under the 1940 Act
or to the duties imposed upon it by Rule 17f-7 under the 1940 Act),
(c) the instability or volatility of banking and financial systems,
or the absence or inadequacy of an infrastructure to support such
systems, (d) custody and settlement infrastructure of the market in
which such investments are transacted and held, (e) the acts,
omissions and operation of any Securities Depository, it being
understood that this provision shall not affect any liability that
the Custodian otherwise would have under this Delegation Agreement
or with respect to foreign subcustodians and securities
depositories under the Custodian Agreement, (f) the risk of the
bankruptcy or insolvency of banking agents, counterparties to cash
and securities transactions, registrars or transfer agents, (g) the
existence of market conditions which prevent the orderly execution
or settlement of transactions or which affect the value of assets,
and (h) the laws relating to the safekeeping and recovery of the
Fund's Assets held in custody pursuant to the terms of the
Custodian Agreement; provided, however, that, in compliance with
Rule 17f-5, neither Sovereign Risk nor Country Risk shall include
the custody risk of a particular Eligible Foreign Custodian of the
Fund's Assets.
b. Eligible Foreign Custodian - shall have the meaning set forth in
Rule 17f-5(a)(1) and shall also include a bank that qualifies to
serve as a custodian of assets of investment companies under
Section 17(f) of the 1940 Act.
c. Fund's Assets - shall mean any of the Fund's investments
(including foreign currencies) for which the primary market is
outside the United States, and such cash and cash equivalents as
are reasonably necessary to effect the Fund's transactions in such
investments.
d. Proper Instructions - shall have the meaning set forth in the
Custodian Agreement.
e. Securities Depository - shall have the meaning for an "Eligible
Securities Depository" as set forth in Rule 17f-7.
f. Sovereign Risk - shall mean, in respect of any jurisdiction,
including the United States of America, where investments are
acquired or held hereunder or under the Custodian Agreement, (a)
any act of war, terrorism, riot, insurrection or civil commotion,
(b) the imposition of any investment, repatriation or exchange
control restrictions by any governmental authority, (c) the
confiscation, expropriation or nationalization of any investments
by any governmental authority, whether de facto or de jure, (d) any
devaluation or revaluation of the currency, (e) the imposition of
taxes, levies or other charges affecting investments, (f) any
change in the applicable law, or (g) any other economic or
political risk incurred or experienced that is not directly related
to the economic or financial conditions of the Eligible Foreign
Custodian, except as otherwise provided in this Delegation
Agreement or the Custodian Agreement.
g. U. S. Bank - shall have the meaning set forth in Rule 17f-5(a)(7)
under the 1940 Act.
15. Governing Law and Jurisdiction. This Delegation Agreement shall be
construed in accordance with the laws of the State of New York. The parties
hereby submit to the exclusive jurisdiction of the Federal courts sitting
in the State of New York or the Commonwealth of Massachusetts or of the
state courts of either such State or such Commonwealth.
16. Fees. The Custodian shall perform its functions under this Delegation
Agreement for the compensation determined under the Custodian Agreement.
Neither the Custodian nor the Delegate shall receive separate compensation
from the Fund for the performance of the duties and services set forth in
this Delegation Agreement.
17. Integration. This Delegation Agreement supplements and/or amends the
Custodian Agreement with respect to the selection and monitoring of
Eligible Foreign Custodians, the administration of contracts with Eligible
Foreign Custodians, the withdrawal of assets from Eligible Foreign
Custodians and the issuance of reports in connection with such duties;
provided that, in the event that there are any inconsistencies between the
Delegation Agreement and the Custodian Agreement, the provisions of the
Delegation Agreement shall govern for the purpose of compliance with Rule
17f-5. The terms of the Custodian Agreement shall apply generally as to
matters not expressly covered in this Delegation Agreement, including
dealings with the Eligible Foreign Custodians in the course of discharge of
the Custodian's obligations under the Custodian Agreement, and the
Custodian's obligation to indemnify the Fund as set forth in Section 5.06
of the Custodian Agreement, and the Fund's obligation to indemnify the
Custodian as set forth in Section 5.03 of the Custodian Agreement, the
terms of which are incorporated herein by reference. This Delegation
Agreement supersedes the Foreign Custody Manager Delegation Agreement dated
May 13, 1998, between the Delegate and UMB BANK, N. A., for and on behalf
of XXXXXXX & XXXX ADVISORS VALUE FUND, INC.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Delegation Agreement to be duly executed and effective as provided in
Section 12 hereof.
XXXXXXX & XXXX ADVISORS UMB BANK, N.A.
VALUE FUND, INC.
By: /s/Xxxxxxx X. Xxxxxxxx By: /s/Xxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx Name: Xxxxx X. Xxxxxxx
Title: Vice President Title: Senior Vice President
Dated as of: July 1, 2001 Dated as of: July 1, 2001
