As filed with the Securities and Exchange
Commission on April 17, 1998
Registration No. 2-35566
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No._______________________ / /
Post-Effective Amendment No. 43 /x /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 / /
Amendment No. 21 /x /
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Sequoia Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
767 Fifth Avenue, New York, New York 10153
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number including Area Code: (800) 686-6884
Robert D. Goldfarb
c/o Ruane, Cunniff & Co., Inc.
767 Fifth Avenue
New York, New York 10153
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
(check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/X / on May 1, 1998 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2) / / on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a previously filed post-effective amendment.
Cross Reference Sheet
(as required by Rule 404(c)
Item 1. Cover Page Cover Page
Item 2. Synopsis Not Applicable
Item 3. Condensed Selected Financial Information
Financial
Information
Item 4. General Description of the Fund
Description of
Registrant
Item 5. Management of Management of the Fund
the Fund
Item 5A. Management Management Discussion and Analysis
Discussion
and Analysis
Item 6. Capital Stock Income Dividends and Capital Gains
and other Distributions; Federal Income Tax
Securities Status; Description of Common Stock
Item 7. Purchase of How to Purchase Shares
Securities
Being Offered
Item 8. Redemption or Redemption of Shares
Repurchase
Item 9. Pending Legal Not Applicable
Proceedings
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Part B Location in Statement of
______ Additional Information (Caption)
________________________________
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Item 10. Cover Page Cover Page |
Item 11. Table of Cover Page
Contents
Item 12. General Infor- Investment Adviser and Investment
mation and Advisory Contract
History
Item 13. Investment Investment Policies
Objectives and
Policies
Item 14. Management of Management; Investment Adviser and
the Registrant Investment Advisory Contract
Item 15. Control Persons Management
and Principal
Holders of
Securities
Item 16. Investment Management; Investment Adviser and
Advisory and Investment Advisory Contract
Other Services
Item 17. Brokerage Allocation of Portfolio Brokerage
Allocation
Item 18. Capital Stock Net Asset Value; Common Stock
and Other
Securities
Item 19. Purchase, Net Asset Value
Redemption and
Pricing of
Securities
Being Offered
Item 20. Tax Status Not Applicable
Item 21. Underwriters Not Applicable
Item 22. Calculation Not Applicable
of Performance
Data
Item 23. Financial Independent Certified Public
Statements Accountant's Report;
Financial Statements
</TABLE>
PROSPECTUS
May 1, 1998
SEQUOIA FUND, INC.
767 Fifth Avenue
New York, N.Y. 10153
(800) 686-6884
Sequoia Fund, Inc. (the "Fund") is a no-load, non- diversified, open-end investment company seeking growth of capital. There can be no assurance that the Fund will accomplish its objective.
Ordinarily the Fund's portfolio will be invested primarily in common stocks and securities convertible into or exchangeable for common stocks. The Fund may invest to limited extents in foreign securities, restricted securities and special situations.
This Prospectus sets forth concisely the information a prospective investor should know before investing in the Fund. A Statement of Additional Information dated May 1, 1998 containing additional and more detailed information about the Fund (the "Statement of Additional Information"), has been filed with the Securities and Exchange Commission and is hereby incorporated by reference into this Prospectus. It is available without charge and can be obtained by writing or calling the Fund at the address and telephone number listed on this page.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS
THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
No person has been authorized to give any information or to make any representations other than those contained in this Prospectus, and information or representations not herein contained, if given or made, must not be relied upon as having been authorized by the Fund. This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.
TABLE OF CONTENTS
PAGE
Expense Information 3 Selected Financial Information 3 Management Discussion and Analysis 4 Description of the Fund 5 Management of the Fund 6 How to Purchase Shares 7 Retirement Plans 8 Stockholders' Open Accounts 9 Redemption of Shares 9 Income Dividends and Capital Gains Distributions; Federal Income Tax Status 9 Periodic Cash Withdrawal Plan 11 Portfolio Transactions 11 Description of Common Stock 12 |
SEQUOIA FUND, INC.
EXPENSE INFORMATION
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee (after expense
reimbursement) .98%
Other Expenses .02%
-----
Total Fund Operating Expenses 1.00%
-----
Example
_______
1 year 3 years 5 years 10 years
______ _______ _______ ________
You would pay the
following expenses on a
$1,000 investment,
assuming 5% annual return: $10 $32 $56 $124
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The purpose of the foregoing table is to assist the investor in understanding the various costs that an investor in the Fund will bear directly or indirectly. The "Management Fee" is shown after reimbursement to the Fund of certain expenses by the Investment Adviser. The management fee of the Fund before reimbursement of such expenses by the Investment Adviser would equal 1% of average net assets. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
SELECTED FINANCIAL INFORMATION
The following selected financial information, with respect to each of the ten years ended December 31, 1997, has been audited by McGladrey & Pullen, LLP, Independent Certified Public Accountants, whose opinion thereon appears in the Statement of Additional Information which is incorporated in this Prospectus by reference. It should be read in conjunction with the financial statements and related notes appearing therewith.
Year Ended December 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Per Share Operating
Performance (for a
share outstanding
throughout the year)
Net asset value,
beginning of year $88.44 $78.13 $55.59 $54.84 $56.66 $53.31 $41.94 $46.86 $38.81 $38.43
Income from investment
operations:
Net investment income 0.08 0.38 0.31 0.42 0.64 0.93 1.35 1.39 1.28 1.40
Net realized and
unrealized gains
(losses) on investments 38.10 16.41 22.62 1.41 5.39 3.98 14.96 (3.15) 9.48 2.60
_____ _____ _____ ____ ____ ____ _____ ______ ____ ______
Total from investment
operations 38.18 16.79 22.93 1.83 6.03 4.91 16.31 (1.76) 10.76 4.00
_____ _____ _____ ____ ____ ____ _____ ______ _____ ______
Less distributions:
Dividends from net
investment income (0.08) (0.38) (0.31) (0.42) (0.65) (0.93) (1.36) (1.38) (1.28) (1.39)
Distributions from
net realized gains (0.91) (6.10) (0.08) (0.66) (7.20) (0.63) (3.58) (1.78) (1.43) (2.23)
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Total Distributions (0.99) (6.48) (0.39) (1.08) (7.85) (1.56) (4.94) (3.16) (2.71) (3.62)
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Net asset value,
end of year $125.63 $88.44 $78.13 $55.59 $54.84 $56.66 $53.31 $41.94 $46.86 $38.81
======= ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return 43.2% 21.7% 41.4% 3.3% 10.8% 9.4% 40.0% -3.8% 28.0% 11.0%
Average Commission Rate
Paid $0.053 $0.055+ ------ ------ ------ ------ ------ ------ ------ ------
4
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Ratios/Supplemental data
Net assets, end of
year (in millions) $3,672.6 $2,581.0 $2,185.5 $1,548.3 $1,512.1 $1,389.3 $1,251.4 $870.2 $924.4 $714.2
Ratio to average
net assets:
Expenses 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%
Net investment income 0.1% 0.4% 0.5% 0.8% 1.1% 1.8% 2.8% 3.1% 2.8% 3.6%
Portfolio turnover rate 8% 23% 15% 32% 24% 28% 36% 29% 44% 39%
+ Required by regulations issued in 1995
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Management Discussion and Analysis
During 1997, the Fund gained 43.2% compared to a total
return on the Standard & Poor's 500 Index of 33.4%. The
investment philosophy of the Fund is to make concentrated
investments in a limited number of companies whose long-term
economic prospects, relative to the acquisition price of their
stocks, are deemed to be attractive. As a result of this
portfolio concentration, the performance of the Fund over time
should correlate more closely with the specific financial
performance of its limited number of portfolio companies than
with price movements in the stock market in general. At year end
1997, total equity investments comprised approximately 96% of net
assets, including a particularly heavy portfolio concentration in
selected financial services companies. The price performance of
these financial services companies in the aggregate was
principally responsible for the Fund's strong results relative to
the S&P 500 Index. However, Fund management cautions that 1997's
performance substantially exceeded management's original
expectations and, in its judgment, much of the Fund's 1997
appreciation was effectively borrowed from future years'
performance. Sequoia shareholders should also be aware that the
Fund has a significant portfolio concentration in the stock of a
single issuer, Berkshire Hathaway Inc. (over 26% of net assets at
year end 1997). As a result, short term price movements in
Berkshire's common stock -- which may be disproportionate to the
company's underlying economic progress -- will have a
particularly important effect on the periodic results of Sequoia.
Berkshire Hathaway's stock price increased 35% in 1997. The 1997
price performance of other major holdings was as follows: Federal
Home Loan Mortgage Corporation +52%; Progressive Corporation
+78%; Fifth Third Bancorp +95%; U.S. Bancorp +64%; and Johnson &
Johnson +32%. Including the Berkshire Hathaway position, these
six holdings represented almost 80% of the Fund's total equity
investments at year end 1997.</R.
SEQUOIA FUND
GRAPHIC - A line chart illustrates the performance of an assumed investment of $10,000 in Sequoia Fund and the S&P 500 index beginning on 7/15/70 as follows:
Sequoia
Date Fund S&P 500
____ _______ _______
12/31/70 $11,210 $12,060
12/31/71 12,723 13,785
12/31/72 13,194 16,390
12/31/73 10,030 13,964
12/31/74 8,457 10,278
12/31/75 13,576 14,101
12/31/76 23,393 17,429
12/31/77 28,057 16,139
12/31/78 34,771 17,172
12/31/79 38,961 20,297
12/31/80 43,894 26,853
12/31/81 53,329 25,510
12/31/82 69,920 30,970
12/31/83 89,015 37,907
12/31/84 105,481 40,219
12/31/85 134,975 52,929
12/31/86 153,027 62,773
12/31/87 164,361 65,975
12/31/88 182,516 76,729
12/31/89 233,453 101,052
12/31/90 224,586 97,919
12/31/91 314,426 127,784
12/31/92 343,863 137,496
12/31/93 380,919 151,383
12/31/94 393,633 153,351
12/31/95 556,525 211,011
12/31/96 677,506 259,543
12/31/97 970,200 346,230
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Legend in graph states that Past Performance is not Predictive of Future Performance
A box in the graph states the Annual Total Returns as of 12/31/97 as follows:
AVERAGE ANNUAL TOTAL RETURNS
Since
Inception
1 year 5 years 10 years 7/15/70
______ _______ ________ _________
SEQUOIA FUND 43.2% 23.1% 19.4% 18.1%
S&P 500 33.4% 20.3% 18.0% 13.8%
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DESCRIPTION OF THE FUND
Introduction
Sequoia Fund, Inc. (the "Fund") is a no-load, non- diversified, open-end investment company originally incorporated in Delaware on November 25, 1969. Effective May 1, 1980, the Fund reincorporated as a Maryland corporation pursuant to a statutory merger. The office of the Fund is located at 767 Fifth Avenue, New York, New York 10153.
The Fund has indefinitely discontinued the sale of its shares to new investors (see "How to Purchase Shares," page 7); accordingly, only existing stockholders of the Fund may purchase its shares.
Investment Objective
The investment objective of the Fund is growth of capital; such objective is a fundamental policy of the Fund and cannot be changed without stockholder approval. In seeking to meet this objective the Fund emphasizes the purchase of common stocks which it feels are undervalued with the hope that growth of capital will result. A guiding principle is the consideration of common stocks as units of ownership of a business and the purchase of them when the price appears low in relation to the value of the total enterprise. No weight is given to technical stock market studies nor are such techniques as borrowing, hedging or short sales used. Extensive study is made of the balance sheet and earning power factors to appraise the fundamental worth of each investment. Dividend income and interest are not prime considerations in the purchase of securities but are considered in relation to the total expected return on the investment. There can of course be no assurance that the foregoing investment objective will be met.
Fundamental Investment Policies
The Fund has adopted and is currently following the fundamental investment policies set forth below which may not be changed without the approval of the lesser of (i) 67% or more of the voting securities present at a meeting, if the holders of more than 50% of the outstanding voting securities of the Fund are present or represented by proxy, or (ii) more than 50% of the outstanding voting securities of the Fund.
(a) Concentration of Investments
While the Fund does not intend to concentrate its investments in any one industry, it has reserved the right to invest up to 25% of the value of its net assets (at the time of
purchase and after giving effect thereto) in the securities of companies principally engaged in a particular industry.
(b) Foreign Securities
Investments may be made in both domestic and foreign companies. While the Fund has no present intention to invest any significant portion of its assets in foreign securities, it reserves the right to invest not more than 15% of the value of its net assets (at the time of purchase and after giving effect thereto) in the securities of foreign issuers and obligors. As of December 31, 1997 no such securities were held by the Fund.
(c) Restricted or Not Readily Marketable Securities
The Fund may invest in securities acquired in a privately negotiated transaction from the issuer or a holder of the issuer's securities and which may not be distributed publicly without registration under the Securities Act of 1933. Such restricted securities may not thereafter ordinarily be sold by the Fund except in another private placement or under an effective registration statement filed pursuant to the Securities Act of 1933. The Fund will not invest in any restricted securities which will cause the then aggregate value of all of such restricted securities, as valued on the books of the Fund, to exceed 10% of the value of the Fund's net assets (at the time of such investment and after giving effect thereto). Restricted securities are valued in such manner as the Board of Directors in good faith deems appropriate to reflect their fair value. As of December 31, 1997 no such securities were held by the Fund.
(d) Special Situations
The Fund intends to invest in special situations from time to time. A special situation arises when, in the opinion of the Fund's management, the securities of a particular company will, within a reasonably estimable period of time, be accorded market recognition at an appreciated value solely by reason of a development particularly or uniquely applicable to that company and regardless of general business conditions or movements of the market as a whole. Developments creating special situations might include, among others, the following: liquidations, reorganizations, recapitalizations or mergers; material litigation; technological breakthroughs; and new management or management policies. Although large and well-known companies may be involved, special situations often involve much greater risk than is inherent in ordinary investment securities. The Fund will not, however, purchase securities of any company with a record of less than three years' continuous operation (including that of predecessors) if such purchase would cause the Fund's
investments in all such companies to exceed 25% of the value of the Fund's total assets.
Any such purchases will of course be subject to the restrictions applicable to the concentration of investments. See "Concentration of Investments," above.
(e) Other Investment Policies
The Fund currently follows, and proposes to continue to follow, certain other investment policies set forth below which, however, are not matters of fundamental policy and may be changed from time to time in the discretion of the management of the Fund.
Ordinarily the Fund's portfolio will be invested primarily in common stocks and securities convertible into or exchangeable for common stocks. When management believes that investments in securities other than common stocks offer opportunity for capital growth or that prevailing conditions warrant the taking of a more defensive or conservative investment position, the Fund may invest a portion or all of its assets in preferred stock, debt securities and United States Government, state, municipal and governmental agency and instrumentality obligations, or funds may be retained in cash.
(f) Investment Restrictions
The Fund has adopted the following additional restrictions as matters of fundamental investment policy, which may not be changed without a stockholder vote. The Fund may not:
1. Underwrite the securities of other issuers, except the Fund may, as indicated above (see "Restricted or Not Readily Marketable Securities," page 5), acquire restricted securities under circumstances where, if such securities are sold, the Fund might be deemed to be an underwriter for purposes of the Securities Act of 1933.
2. Purchase or sell real estate or interests in real estate, but the Fund may purchase marketable securities of companies holding real estate or interests in real estate.
3. Purchase or sell commodities or commodity contracts.
4. Make loans to other persons except by the purchase of a portion of an issue of publicly distributed bonds, debentures or other debt securities, except that the Fund may purchase privately sold bonds, debentures or other debt securities immediately convertible into equity securities
subject to the restrictions applicable to the purchase of not readily marketable securities. See "Restricted or Not Readily Marketable Securities," page 5.
5. Borrow money except for temporary or emergency purposes and then only from banks and in an aggregate amount not exceeding 5% of the value of the Fund's total assets at the time any borrowing is made, provided that the term "borrow" shall not include the short-term credits referred to in paragraph 6 below.
6. Purchase securities on margin, but it may obtain such short-term credits as may be necessary for the clearance of purchases and sales of securities.
7. Make short sales of securities.
8. Purchase or sell puts and calls on securities.
9. Participate on a joint or joint and several basis in any securities trading account.
10. Purchase the securities of any other investment company except (1) in the open market where to the best information of the Fund no commission, profit or sales charge to a sponsor or dealer (other than the customary broker's commission) results from such purchase, or (2) if such purchase is part of a merger, consolidation or acquisition of assets.
11. Invest in companies for the purpose of exercising management or control.
12. Invest more than 25% of the value of its net assets (at the time of purchase and after giving effect thereto) in the securities of any one issuer.
MANAGEMENT OF THE FUND
General
The business and affairs of the Fund are managed under the direction of the Fund's Board of Directors. The Fund retains as its investment adviser Ruane, Cunniff & Co., Inc., a Delaware corporation organized on April 14, 1969 with its principal office at 767 Fifth Avenue, New York, New York 10153 (the "Investment Adviser"). The Investment Adviser is a registered investment adviser and a registered broker-dealer and member corporation of the New York Stock Exchange, Inc. The Investment Adviser has also been and may in the future be the Fund's regular broker. William J. Ruane, Richard T. Cunniff and Robert D. Goldfarb who
are officers and directors of the Fund and the Investment Adviser, Carol L. Cunniff who is an officer of the Fund and an officer and director of the Investment Adviser, and Joseph Quinones, Jr. who is an officer of the Fund and an officer of the Investment Adviser, may be deemed "controlling persons" of the Investment Adviser. The employees of the Investment Adviser principally responsible for the Fund's investment program are Messrs. Ruane, Cunniff and Goldfarb, who have each been associated with the Investment Adviser for the previous five years.
Investment Advisory Contract
The Investment Advisory Contract (the "Contract") between the Fund and Ruane, Cunniff & Co., Inc. became effective on July 1, 1993, and was most recently approved by the Fund's Board of Directors, including the disinterested directors, on December 8, 1997, and by the stockholders of the Fund at the annual meeting of stockholders held on April 17, 1998. The previous investment advisory contract between the Corporation and the Investment Adviser dated May 1, 1974 was automatically terminated as of July 1, 1993 pursuant to the provisions of the Investment Company Act of 1940 as a result of the issuance of additional common stock of the Investment Adviser to Mr. Robert Goldfarb.
Under the Contract, the Investment Adviser furnishes advice and recommendations with respect to the Fund's portfolio of securities and investments and provides persons satisfactory to the Fund's Board of Directors to act as officers and employees of the Fund. Such officers and employees, as well as certain directors of the Fund, may be directors, officers or employees of the Investment Adviser or its affiliates. For the fiscal year ended December 31, 1997, the total expenses before the expense reimbursement, including the management fee, for the Fund constituted 1.02% of the average daily net assets of the Fund.
For the fiscal year ended December 31, 1997, the Investment Adviser received from the Fund a net management fee equal to .98% of the Fund's average daily net assets.
Distributor
The Investment Adviser also serves, without compen- sation, as the Fund's distributor and as such is authorized to solicit orders from the public to purchase shares of the Fund's common stock. The distributor acts in this capacity merely as the Fund's agent, and all subscriptions must be accepted by the Fund as principal.
Year 2000
Like other mutual funds, financial and business organizations, the Fund may be adversely affected if the computer systems used by the Fund's service providers cannot properly process and calculate date-related information from and after January 1, 2000. The Fund has been in contact with all of its service providers for whom it would be harmful to the Fund if such service providers do not address this "Year 2000" problem. Each has informed the Fund that it has either solved its "Year 2000" problem or is currently working on the problem and will keep the Fund informed of its developments in this area. However, there can be no assurance that the steps taken to address the "Year 2000" problem will be sufficient to avoid any adverse impact on the Fund.
HOW TO PURCHASE SHARES
Shares of the Fund are offered at net asset value, on a continuous basis, without any sales or other charge, by the distributor. The net asset value of each share of the Fund's Common Stock is determined once each Fund Business Day as of the close of the New York Stock Exchange, Inc. by the value of the securities and other assets owned by the Fund less its liabilities, computed in accordance with the Articles of Incorporation and By-Laws of the Fund. Fund Business Day for this purpose means weekdays (Monday through Friday) except customary national business holidays and Good Friday. The net asset value of a share is the quotient obtained by dividing the net assets of the Fund (i.e., the value of the assets of the Fund less its liabilities, including expenses payable or accrued but excluding capital stock and surplus) by the total number of shares of Common Stock outstanding.
The Fund has discontinued indefinitely the sale of its shares to new investors, including investments by IRA and Keogh plans. The Fund will continue to accept additional investments from existing stockholders, and will continue to reinvest dividends and capital gains distributions with respect to the accounts of existing stockholders who have elected those options. See "Income Dividends and Capital Gains Distributions; Federal Income Tax Status," page 9. The decision to discontinue sales to new investors reflects management's belief that unrestrained growth in the Fund's net assets might impair investment flexibility and would not be in the best interests of existing stockholders. The Fund may recommence at any time the sale of shares of the Fund to new investors if in the Board of Directors' opinion doing so would be in the best interests of the Fund and its stockholders.
Each additional investment by a stockholder must be at least $50, except that such minimum has been waived for investments by IRA and Keogh plans. Such additional subscriptions should be forwarded directly to the Fund's Transfer Agent and Dividend Disbursing Agent, DST Systems, Inc., Post Office Box 419477, Kansas City, Missouri 64141. Subscriptions are accepted for fractional shares. The Fund will not accept third-party checks (i.e., any checks which are not made payable to the order of the Fund, transfer agent or a retirement account custodian).
Stockholders may make fixed, periodic investments into the Fund by means of automatic money transfers from their bank checking accounts. To establish automatic money transfers, stockholders may contact the Fund.
Purchases of the Fund's shares may be effected through broker-dealers other than the Investment Adviser. Such broker- dealers may charge investors a service fee, none of which is received by the distributor or by the Fund.
Orders for shares received by the Fund, by the distributor or by DST Systems, Inc. prior to the close of business on the New York Stock Exchange, Inc. on each day during such periods that the Exchange is open for trading are priced at net asset value per share computed as of the close of the Exchange on that day. Orders received after the close of the New York Stock Exchange, Inc. or on a day it is not open for trading are priced at the close of such Exchange on the next succeeding day on which it is open for trading. The Fund reserves the right to reject any subscription in its sole discretion (including additional investments by existing stockholders), but in practice generally accepts subscriptions where sales are permissible under the applicable State law.
RETIREMENT PLANS
Individual Retirement Accounts
A form of individual retirement account ("IRA") is available from the Fund for investment in shares of the Fund. This form may be used for regular contributions described below as well as for qualified rollover contributions of distributions received from certain employer-sponsored pension and profit- sharing plans and from other IRAs. Under the form, all assets in the IRA are automatically invested in Fund shares, including all dividends and capital gain distributions paid on Fund shares held in the IRA. Investors Fiduciary Trust Company of Kansas City, Missouri acts as custodian of an IRA established pursuant to the form for an annual fee which is currently fixed at $12.00.
Individuals generally may make regular contributions to
a traditional IRA of up to $2,000 annually. The deductibility
for Federal income tax purposes of such contributions may be
reduced if the individual is an active participant in an
employer-sponsored retirement plan. For 1998, if an individual
is an active participant, the deduction will not be available if:
(i) the individual has adjusted gross income above $40,000, (ii)
the individual files a joint return with his or her spouse and
they have adjusted gross income above $60,000, or (iii) the
individual is married, files separately and has adjusted gross
income above $10,000. Further, in the case of a married
individual who is not an active participant but whose spouse is
an active participant, the deduction will not be available if the
couple files a joint return and has adjusted gross income above
$160,000 (or, under proposed legislation, if such individual
files separately and has adjusted gross income above $10,000).
Below these income levels, some or all of the contributions may
be deductible. In addition, an individual with a non-working
spouse may establish a separate IRA for the spouse and annually
contribute a total of up to $4,000 to the two IRAs, provided that
no more than $2,000 may be contributed to the IRA of either
spouse. As noted above, the deductibility of contributions may
be reduced if either spouse is an active participant in an
employer-sponsored retirement plan. No regular contribution may
be made to a traditional IRA for any year if by the end of such
year the IRA owner has attained the age 70-1/2.
Beginning in 1998, eligible individuals also may elect to make contributions to a Roth IRA of up to $2,000 annually. Contributions to a Roth IRA are not deductible for Federal income tax purposes. Investment earnings accumulate in a Roth IRA tax- free, and if certain criteria are met, distributions from the account will not be taxed. Contributions may not be made to a Roth IRA by an individual with adjusted gross income above $110,000, a married couple filing a joint return with adjusted gross income above $160,000, or a married individual filing separately with adjusted gross income above $15,000 ($10,000 under proposed legislation). Below these income levels, a taxpayer may make contributions to a Roth IRA, although the allowable contribution may be less than $2,000. The total amount contributed by an individual to all IRAs (both traditional and Roth) in a year may not exceed $2,000. Contributions to a Roth IRA may be made even if the IRA owner has attained the age 70- 1/2.
Keogh Plans
A self-employed individual may purchase Fund shares through a properly drafted self-employment retirement plan (often referred to as a Keogh or HR-10 plan) covering himself and his eligible employees. Generally, the annual amount which a self-
employed individual may deduct for contributions to his own account under such a plan may be up to 25% of his or her net earnings from self-employment (depending on the particular type of plan or plans involved), up to a maximum contribution of $30,000. The Fund does not have a form of Keogh plan available for adoption.
Minimums and Information
The minimum investment requirements for the purchase of Fund shares have been waived for purchases by IRAs. An investor should contact the Fund for further information concerning IRA investments. Regarding IRAs, a required disclosure statement describing relevant tax and other information will be provided with the appropriate forms and instructions, all of which should be read carefully. The investor's tax adviser should be consulted as well.
STOCKHOLDERS' OPEN ACCOUNTS
When an investor purchases shares of the Fund, a Stockholder's Open Account is automatically opened for him on the books of the Fund by DST Systems, Inc., and no certificates for shares are issued except on request. After such initial purchase of shares, any additional shares purchased by such stockholder will likewise be held in his Stockholder's Open Account.
A continuing permanent record of each Stockholder's Open Account is maintained, and whenever there is a transaction in the account, the stockholder receives a written statement of the transaction including information concerning the status of the account. These statements provide an annual record of the stockholder's investments in shares of the Fund.
Instead of carrying his shares in a Stockholder's Open Account, a stockholder may, upon written request to the Fund, receive certificates for his shares. (The cost of furnishing certificates is borne by the Fund.)
REDEMPTION OF SHARES
Subject to the limitations described below, on any stockholder's request in accordance with the procedures set forth below the Fund will redeem all or any portion of such stockholder's shares of the Fund, at a redemption price equal to the net asset value per share next computed following the receipt of his redemption request in proper form. See Statement of Additional Information, "Net Asset Value." There is no redemption charge.
A stockholder may send a written request for redemption of his shares to the Fund's Transfer Agent, DST Systems, Inc., Post Office Box 419477, Kansas City, Missouri 64141, accompanied by the outstanding certificates, if any, representing such shares together with a standard form of stock power signed by the registered owner or owners of such shares. If such shares are represented by a Stockholder's Open Account, such written request shall include a signature guaranteed by a national or state bank or by a member firm of a national stock exchange. If such shares are represented by stock certificates, the signature on the stock power must be guaranteed as above. An acknowledgment by a notary public is not acceptable.
A stockholder may make an oral redemption request of $25,000 or less, which does not require a signature guarantee unless there has been an address change within the 60 days prior to the request. All other redemption requests must have signature guarantees as set forth in the immediately preceding paragraph. Certain shareholders, such as corporations, trusts and estates, may be required to submit additional documents.
The redemption price of shares may be more or less than the investor's cost, depending upon the net asset value of the Fund's shares as next computed following receipt of the investor's redemption request in proper form.
Payment of the redemption price may be made either in cash or in portfolio securities (selected in the discretion of the Board of Directors of the Fund and taken at their value used in determining the redemption price), or partly in cash and partly in portfolio securities. Payments will be made wholly in cash unless the Board of Directors believes that paying a redemption in portfolio securities would be in the best interests of the Fund and its stockholders. If payment for shares redeemed is made wholly or partly in portfolio securities, brokerage costs will be incurred by the investor in converting the securities to cash. The Fund has filed a formal election with the Securities and Exchange Commission pursuant to which the Fund may effect a redemption in portfolio securities where the particular stockholder of record is redeeming more than $250,000 or 1% of the Fund's total net assets, whichever is less, during any 90-day period. The Fund's management believes that it would be highly likely that a redemption (or series of redemptions) in the amount of $5 million or greater will be paid in portfolio securities instead of cash.
INCOME DIVIDENDS AND CAPITAL
GAINS DISTRIBUTIONS; FEDERAL
INCOME TAX STATUS
Until the Board of Directors otherwise determines, each dividend and capital gain distribution, if any, declared by the Fund on its outstanding shares will, at the election of each stockholder, be paid in cash or in additional whole or fractional shares of Common Stock of the Fund having an aggregate net asset value as of the payment date of such dividend or distribution equal to the cash amount of such dividend or distribution. Election to receive dividends and distributions in cash or shares is made at the time shares are subscribed for. A stockholder may change such election at any time prior to the record date for a particular dividend or distribution by written request to the Fund's Dividend Disbursing Agent, DST Systems, Inc., Post Office Box 419477, Kansas City, Missouri 64141. The value of whole and fractional shares shall be computed in accordance with the provisions of "Net Asset Value" described in the Statement of Additional Information.
There is no sales or other charge in connection with the reinvestment of dividends and capital gains distributions.
The Fund is a "non-diversified" investment company, which means the Fund is not limited (subject to the Investment Restrictions, page 6) in the proportion of its assets that may be invested in the securities of a single issuer. However, for the fiscal year ended December 31, 1997 the Fund has qualified, and for each fiscal year thereafter, the Fund intends to conduct its operations so as to qualify as a "regulated investment company" for purposes of the Internal Revenue Code of 1986, as amended, which will relieve the Fund of any liability for Federal income tax on that part of its net ordinary taxable income and net realized long-term capital gain which it distributes to stockholders. Such qualification does not involve supervision of management or investment practices or policies by any government agency. To so qualify, among other requirements, the Fund will limit its investments so that, at the close of each quarter of the taxable year, (i) not more than 25 percent of the market value of the Fund's total assets will be invested in the securities of a single issuer ("the 25% test"), and (ii) with respect to 50 percent of the market value of its total assets, not more than five percent of the market value of its total assets will be invested in the securities of a single issuer and the Fund will not own more than 10 percent of the outstanding voting securities of a single issuer ("the 50% test"). The Fund's investments in U.S. Government securities are not subject to these limitations. The Fund will not lose its status as a regulated investment company if the Fund fails to meet the 25% test or the 50% test at the close of a particular quarter due to
fluctuations in the market values of its securities. Investors should consult their own counsel for a complete understanding of the requirements the Fund must meet to qualify as a regulated investment company. The following discussion relates solely to the Federal income tax treatment of dividends and distributions by the Fund and assumes the Fund qualifies as a regulated investment company. Investors should consult their own counsel for further details and for the application of state and local tax laws to his or her particular situation.
Distributions of net ordinary taxable income (including any realized short-term capital gain) by the Fund to its stockholders are taxable to the recipient stockholders as ordinary income and, to the extent determined each year, are eligible, in the case of corporate stockholders, for the 70 percent dividends-received deduction, subject to reduction of the amount eligible for deduction if the aggregate qualifying dividends received by the Fund from domestic corporations in any year are less than 100% of its gross income (excluding long-term capital gains from securities transactions). Under provisions of the current tax law, a corporation's dividends-received deduction will be disallowed, however, unless the corporation holds shares in the Fund at least 46 days during the 90-day period beginning 45 days before the date on which the corporation becomes entitled to receive the dividend. Furthermore, the dividends-received deduction will be disallowed to the extent a corporation's investment in shares of the Fund is financed with indebtedness. In view of the Fund's investment policies, dividends from domestic corporations may be a large part of the Fund's ordinary taxable income and, accordingly, a large part of such distributions by the Fund may be eligible for the dividends- received deduction; however, this is largely dependent on the Fund's investment policy for a particular year and therefore cannot be predicted with certainty. For the year ended December 31, 1997, 73% of the net ordinary taxable income distributed by the Fund was eligible for such deduction by corporate stockholders.
Pursuant to the Taxpayer Relief Act of 1997, two different tax rates apply to net capital gain--that is, the excess of net gain from capital assets held for more than one year over net loss from capital assets held for not more than one year. One rate (generally 28%) applies to net gain on capital assets held for more than one year but not more than 18 months ("mid-term gain"), and a second rate (generally 20%) applies to the balance of such net capital gain ("adjusted net capital gain"). Distributions of net capital gain will be treated in the hands of shareholders as mid-term gain to the extent designated by the Fund as deriving from net gain from assets held for more than one year but not more than 18 months, and the balance will be treated as adjusted net capital gain, irrespective of the
length of time a stockholder may have held his stock. Capital gain distributions are not eligible for the dividends-received deduction referred to above. (As of December 31, 1997 the net unrealized appreciation in the Fund's portfolio was approximately 68% of the Fund's net asset value.) Reports containing appropriate Federal income tax information (relating to the tax status of dividends and capital gain distributions by the Fund) will be furnished to each stockholder not later than 30 days following the close of each calendar year.
Any dividend or distribution received by an investor on shares of the Fund shortly after the purchase of such shares by him will have the effect of reducing the net asset value of such shares by the amount of such dividend or distribution. Furthermore, such dividend or distribution, although in effect a return of capital, is subject to applicable taxes to the extent that the investment is subject to such taxes. If a stockholder held shares for six months or less and during that period received a distribution of net capital gain, any loss realized on the sale of such shares during such six-month period would be a long-term capital loss to the extent of such distribution.
The above discussion concerning the taxation of dividends and distributions received by stockholders is applicable whether a stockholder receives such payment in cash or reinvests such amount in additional shares of the Fund. Thus, dividends and distributions which are taxable as ordinary income or long-term capital gain are so taxable whether received in cash or reinvested in additional shares of the Fund.
PERIODIC CASH WITHDRAWAL PLAN
A stockholder owning or purchasing shares of the Fund valued at $10,000 or more at the current net asset value may elect a Withdrawal Plan under which he will receive monthly or quarterly payments from a Withdrawal Plan Account in fixed amounts designated by him. A Withdrawal Plan Account will consist of shares of the Fund deposited by such stockholder. Any cash dividends and capital gains distributions on shares held in a Withdrawal Plan Account are automatically reinvested. Sufficient shares will be redeemed at net asset value to provide the cash necessary for each withdrawal payment. Redemptions for the purpose of withdrawals are made on or about the 25th day of the month at the net asset value then in effect, and checks are mailed promptly thereafter. If shares are registered in the name of a trustee or other fiduciary, payment will be made only to such fiduciary. As withdrawal payments may include a return of principal they cannot be considered a guaranteed annuity or actual yield of income to the investor. Continued withdrawals in excess of income will reduce and possibly exhaust invested principal, especially in the event of a market decline. The cost
of the Withdrawal Plan will be borne by the Investment Adviser.
Since the Withdrawal Plan may involve invasion of capital, a stockholder should consider carefully with his own financial advisers whether the Withdrawal Plan and the specified amounts to be withdrawn are appropriate in his circumstances. The Fund makes no recommendations or representations in this regard.
PORTFOLIO TRANSACTIONS
The Investment Adviser furnishes advice and recom-
mendations with respect to the Fund's portfolio decisions and,
subject to the instructions of the Board of Directors of the
Fund, determines the broker to be used in each specific
transaction. The Investment Adviser attempts to obtain from
brokers the lowest possible commission consistent with best price
and execution. In doing so, the Investment Adviser takes into
account a number of considerations including, among other
factors, the overall net economic result to the Fund (involving
both price paid or received and any commissions and other costs
paid), the efficiency with which the specific transaction is
effected, the ability to effect the transaction at all where a
large block is involved, the known practices of brokers and their
availability to execute possibly difficult transactions in the
future and the financial strength and stability of the broker.
Because of such factors, most of which are judgmental, a broker-
dealer effecting a transaction may be paid a commission higher
than that charged by another broker-dealer. Subject to these
considerations, the Investment Adviser, an affiliated
corporation, is the Fund's regular broker and is the normal
channel through which securities transactions (other than on a
principal basis) are effected. Pursuant to Section 11(a) of the
Securities Exchange Act of 1934, the Investment Adviser is
restricted as to the nature and extent of the brokerage services
it may perform for the Fund. In accordance with rules adopted by
the Securities and Exchange Commission (the "SEC") under Section
11(a), the Investment Adviser may effect, on a national
securities exchange, transactions in portfolio securities of the
Fund, that is, to cause such transactions to be transmitted,
executed, cleared and settled and to arrange for unaffiliated
brokers to execute such transactions. The Board of Directors of
the Fund, in accordance with the SEC rules, has authorized the
Fund to enter into a written contract with the Investment Adviser
pursuant to which the Investment Adviser may continue to receive
compensation for effecting, in compliance with the SEC rules,
such transactions. Certain affiliated persons of the Investment
Adviser are interested persons of the Fund.
Neither the Investment Adviser nor any affiliated person thereof either participates in commissions paid by the Fund to other brokers or dealers or receives any reciprocal business, directly or indirectly, as a result of such commissions.
DESCRIPTION OF COMMON STOCK
The authorized capital stock of the Fund consists solely of 40,000,000 shares of Common Stock having a par value of $.10 per share. Each of the Fund's shares has equal dividend, distribution, liquidation and voting rights. Holders of the Fund's shares have no conversion or preemptive rights. All shares of the Fund when duly issued will be fully paid and non- assessable. The rights of the holders of shares of Common Stock may not be modified except by vote of the holders of a majority of the outstanding shares. Shares of the Fund are transferable only with the consent of the Fund.
All stockholder inquiries may be directed to the Fund at the telephone number or address listed on the cover of this Prospectus.
SEQUOIA FUND, INC. SEQUOIA FUND, INC.
767 Fifth Avenue
New York, New York 10153
Investment Adviser
& Distributor
__________________
Ruane, Cunniff & Co., Inc.
767 Fifth Avenue
New York, New York 10153
Custodian
_________
The Bank of New York
90 Washington Street
New York, New York 10286
Transfer Agent and
Dividend Disbursing Agent
_________________________
DST Systems, Inc.
Post Office Box 419477
Kansas City, Missouri 64141
Legal Counsel
_____________
Seward & Kissel
One Battery Park Plaza
New York, New York 10004
Independent Accountants
_______________________
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017
PROSPECTUS
May 1, 1998
|
SEQUOIA FUND, INC.
767 Fifth Avenue
New York, New York 10153
(Telephone 800-686-6884)
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1998
Sequoia Fund, Inc. (the "Fund") is a no-load, non- diversified, open-end investment company seeking growth of capital. Ordinarily the Fund's portfolio will be primarily invested in common stocks and securities convertible into or exchangeable for common stocks. The Fund may invest to limited extents in foreign securities, restricted securities and special situations.
This Statement of Additional Information is not a prospectus and is only authorized for distribution when preceded or accompanied by the Fund's Prospectus dated May 1, 1998 (the "Prospectus"). This Statement of Additional Information contains additional and more detailed information than that set forth in the Prospectus and should be read in conjunction with the Prospectus, additional copies of which may be obtained without charge by writing or telephoning the Fund at the address and telephone number set forth above.
Table of Contents
Investment Policies 1 Redemption of Shares 11 Management 4 Common Stock 11 Investment Adviser and 6 Custodian, Counsel and 12 Investment Advisory Independent Accountants Contract Independent Accountant's Allocation of Portfolio 9 Report 13 Brokerage Net Asset Value 10 |
INVESTMENT POLICIES
(a) Foreign Securities
Investors should recognize that investments in foreign companies involve certain considerations which are not typically associated with investing in domestic companies. An investment may be affected by changes in currency rates and in exchange control regulations. There may be less publicly available information about a foreign company than about a domestic company. Foreign companies are not generally subject to uniform accounting, auditing and financial reporting standards comparable to those applicable to domestic companies. Foreign stock markets have substantially less volume than the New York Stock Exchange, Inc. and securities of some foreign companies may be less liquid and more volatile than securities of comparable domestic companies. There is generally less government regulation of stock exchanges, brokers and listed companies than in the United States. In addition, with respect to certain foreign countries there is a possibility of expropriation or confiscatory taxation, political or social instability or diplomatic developments which could affect investments in those countries. Individual foreign economies may differ favorably or unfavorably from the United States' economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self- sufficiency and balance of payments position. As of December 31, 1997, no foreign securities were held by the Fund.
(b) Restricted or Not Readily Marketable Securities
The purchase price and subsequent valuations of restricted securities normally reflect a discount from the price at which such securities trade when they are not restricted, since the restriction makes them less liquid. The amount of the discount from the prevailing market price is expected to vary depending upon the type of security, the character of the issuer, the party who will bear the expenses of registering the restricted securities and prevailing supply and demand conditions.
The Fund may not make loans or invest in any restricted securities or other illiquid assets which will cause the then aggregate value of all such restricted securities and other illiquid assets to exceed 10% of the value of the Fund's net assets (at the time of such investment and after giving effect thereto). As of December 31, 1997 no such securities were held by the Fund.
If pursuant to the foregoing policy the Fund were to assume substantial positions in particular securities with a limited trading market, the activities of the Fund could have an
adverse effect on the liquidity and marketability of such securities, and the Fund may not be able to dispose of its holdings in these securities at reasonable price levels. There are other investment companies and other investment media engaged in operations similar to those of the Fund, and, to the extent that these organizations trade in the same securities, the Fund may be forced to dispose of its holdings at prices lower than otherwise would be obtained.
(c) Other Investment Policies
The Fund will not seek to realize profits by antic- ipating short-term market movements and intends to purchase securities for growth of capital, in particular long-term capital appreciation. In any event, under ordinary circumstances, securities will be held for sufficient periods to qualify for long-term capital gain treatment for tax purposes. While the rate of portfolio turnover will not be a limiting factor when management deems changes appropriate, it is anticipated that given the Fund's investment objectives, its annual portfolio turnover generally should not exceed 75%. (Portfolio turnover is calculated by dividing the lesser of the Fund's purchases and sales of portfolio securities during the period in question by the monthly average of the value of the Fund's portfolio securities during that period. Excluded from consideration in the calculation are U.S. Government securities and all other securities with maturities of one year or less when purchased by the Fund.)
While the Fund is a non-diversified investment company and therefore is not subject to any statutory diversification requirements, it will be required to meet certain diversification tests each year in order to qualify as a regulated investment company under the Internal Revenue Code, as it intends to do. See "Income Dividends and Capital Gains Distributions; Federal Income Tax Status," page 9 of the Prospectus. The Fund will not acquire more than 25% of any class of the securities of any issuer. The Fund reserves the right, without stockholder action, to diversify its investments to any extent it deems advisable or to become a diversified company, but once the Fund becomes a diversified company, it could not thereafter change its status to that of a non-diversified company without the approval of its stockholders.
In connection with the qualification or registration of
the Fund's shares for sale under the State securities laws of
certain States, the Fund has agreed, in addition to the
investment restrictions set forth in the Prospectus, that it will
not (i) purchase material amounts of restricted securities,
(ii) invest more than 5% of the value of its total assets in
securities of unseasoned issuers (including their predecessors)
which have been in operation for less than three years, and
equity securities of issuers which are not readily marketable,
(iii) invest any part of its assets in interests in oil, gas or
other mineral or exploration or development programs (excluding
readily marketable securities), (iv) purchase or retain any
securities of another issuer of which those persons affiliated
with the Fund or the Investment Adviser owning, individually,
more than one-half of one percent of said issuer's outstanding
stock (or securities convertible into stock) own, in the
aggregate, more than five percent of said issuer's outstanding
stock (or securities convertible into stock), (v) invest any part
of its total assets in interests in oil, gas, or other mineral
exploration or development programs and (vi) invest in warrants
(other than warrants acquired by the Fund as a part of a unit or
attached to securities at the time of purchase), if as a result
such warrants valued at the lower of cost or market, would exceed
5% of the value of the Fund's assets as the time of purchase
provided that not more than 2% of the Fund's net assets at the
time of purchase may be invested in warrants not listed on the
New York Stock Exchange or the American Stock Exchange. The Fund
may from time to time agree to additional investment restrictions
for purposes of compliance with the securities laws of those
States where the Fund intends to sell or offer for sale its
shares. Any such additional restrictions that would have a
material bearing on the Fund's operations will be reflected in
supplements to this Statement of Additional Information or
related Prospectus.
MANAGEMENT
The directors and officers of the Fund and their principal occupations during the past five years are set forth below. Unless otherwise specified, the address of each of the following persons is 767 Fifth Avenue, New York, New York 10153.
William J. Ruane* ,72, Chairman of the Board and Director, is and has been Chairman of the Board and Director of Ruane, Cunniff & Co., Inc. (member firm of the New York Stock Exchange, Inc. and the Fund's investment adviser and distributor) for more than five years. Mr. Ruane is also a Director of The Washington Post Company.
* Such persons are "interested persons" of the Fund within the meaning of Section 2(a)(19)(A) of the Investment Company Act of 1940.
** Such persons are "interested persons" of the Fund within the meaning of Section 2(a)(19)(A) of the Investment Company Act of 1940.
Inc. for more than five years. Mr. Cunniff is also a Director of Sturm, Ruger & Company, Inc. He is the father of Carol L. Cunniff, Executive Vice President of the Fund.
Robert D. Goldfarb** , 53, President and Director, is an Executive Vice President of Ruane, Cunniff & Co., Inc. with which he has been associated for more than five years.
John M. Harding, 76, Director, is currently retired. From 1975 to 1989, Mr. Harding was Associate Professor of Business at Albers School of Business, Seattle University. His address is 2159 38th Avenue East, Seattle, Washington 98112.
Francis P. Matthews, 76, Director, is currently retired. From 1986 to 1990 Mr. Matthews was of counsel to Matthews & Cannon (law firm), Omaha, Nebraska. His address is 220 Trails End Road, Elkhorn, Nebraska 68022.
C. William Neuhauser, 72, Director, is currently retired. From January 1979 to November 1981, Mr. Neuhauser was Executive Secretary of National Maritime Council (association of U.S. flag ocean carriers, maritime unions and shipyards). His address is Sumac Lane, Gloucester, Massachusetts 01930.
Robert L. Swiggett, 76, Director, is currently retired. Mr. Swiggett was Chairman of the Board of Directors of Kollmorgen Corporation (electro-optical instruments and direct-drive motor and control devices and systems), Hartford, Connecticut from 1983 to 1990. His address is 8 Birchwood Farm Lane, P.O. Box 1070, New London, New Hampshire 03257.
Carol L. Cunniff**, 47, Executive Vice President, is an Executive Vice President and Director of Ruane, Cunniff & Co., Inc. with which she has been associated for more than five years. She is the daughter of Richard T. Cunniff, Vice Chairman and Director of the Fund.
Joseph Quinones, Jr.**, 52, Vice President, Secretary and Treasurer, is a Vice President, Secretary and Treasurer of Ruane, Cunniff & Co., Inc. Previously, Mr. Quinones had been a vice president of Weiss Peck & Greer (a money management firm), the chief financial officer of Woodward & Associates (a money management firm) and a vice president of Lazard Freres Asset Management.
On February 13, 1998, the directors and officers of the Fund collectively owned approximately .86%, or, including shares owned by their respective relatives and affiliates, approximately 2.40%, of the total number of the outstanding shares of the Fund's Common Stock. Each of the directors and officers
disclaims beneficial ownership of the shares owned by such relatives and affiliates.
The Fund does not pay any fees to, or reimburse expenses of, its Directors who are considered "interested persons" of the Fund. The aggregate compensation for the fiscal year ended December 31, 1997 paid by the Fund to each of the Directors is set forth below. Ruane, Cunniff & Co., Inc. does not provide investment advisory services to any investment companies registered under the Investment Company Act of 1940, as amended, other than the Fund.
Pension or
Retirement
Aggregate Benefits Accrued Estimated Annual
Compensation As Part of Benefits Upon Total Compensation
Name of Director from Fund Fund Expenses Retirement From Fund
________________ ____________ ________________ ________________ __________________
William J. Ruane $0 $-0- $-0- $0
Richard T. Cunniff $0 -0- -0- $0
Robert D. Goldfarb $0 -0- -0- $0
John M. Harding $34,000 -0- -0- $34,000
Francis P. Matthews $34,000 -0- -0- $34,000
C. William Neuhauser $34,000 -0- -0- $34,000
Robert L. Swiggett $34,000 -0- -0- $34,000
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INVESTMENT ADVISER AND
INVESTMENT ADVISORY CONTRACT
The terms of the Investment Advisory Contract (the "Contract") provide that it is to remain in force until December 31, 1993 and thereafter for successive twelve-month periods computed from each January 1, provided that such continuance is specifically approved annually by vote of a majority of the Fund's outstanding voting securities or by the Fund's Board of Directors; and by a majority of the Fund's Board of Directors who are not parties to the Contract or interested persons of any such party, by vote cast in person at a meeting called for the purpose of voting on such approval. Continuance
of the Contract through December 31, 1998 was so approved at a meeting of the Board of Directors on December 8, 1997 at which meeting the Board of Directors also approved the submission to stockholders of the Fund of the renewal of the Investment Advisory Contract for the period commencing January 1, 1997, pursuant to the provisions of the Investment Company Act of 1940 and the terms of the Investment Advisory Contract described above.
Under the Contract the Investment Adviser furnishes advice and recommendations with respect to the Fund's portfolio of securities and investments and provides persons satisfactory to the Fund's Board of Directors to act as officers and employees of the Fund. Such officers and employees, as well as certain directors of the Fund, may be directors, officers or employees of the Investment Adviser or its affiliates.
In addition, the Investment Adviser is responsible for
the following expenses incurred by the Fund: (i) the
compensation of any of the Fund's directors, officers and
employees who are interested persons of the Investment Adviser or
its affiliates (other than by reason of being directors, officers
or employees of the Fund), (ii) fees and expenses of registering
the Fund's shares under the appropriate federal securities laws
and of qualifying its shares under applicable State Blue Sky
laws, including expenses attendant upon renewing and increasing
such registrations and qualifications, and (iii) expenses of
printing and distributing the Fund's prospectuses and sales and
advertising materials. The Fund is responsible and has assumed
the obligation for payment of all of its other expenses including
(a) brokerage and commission expenses, (b) Federal, State or
local taxes, including issue and transfer taxes, incurred by or
levied on the Fund, (c) interest charges on borrowings,
(d) compensation of any of the Fund's directors, officers or
employees who are not interested persons of the Investment
Adviser or its affiliates (other than by reason of being
directors, officers or employees of the Fund), (e) charges and
expenses of the Fund's custodian, transfer agent and registrar,
(f) costs of proxy solicitations, (g) legal and auditing
expenses, and (h) payment of all investment advisory fees
(including the fee payable to the Investment Adviser under the
Contract).
For the services provided by the Investment Adviser under the Contract, the Investment Adviser receives from the Fund a management fee equal to 1% per annum of the Fund's average daily net asset values. Such fee is in excess of the management fees paid by most similar registered investment companies. The management fee is accrued daily in computing the net asset value of a share for the purpose of determining the offering and
redemption price per share, and is paid to the Investment Adviser at the end of each month.
However, the Investment Adviser will reimburse the Fund for the amount, if any, by which the operating expenses of the Fund in any year, including the management fee, exceed 1-1/2% of the average daily net asset values of the Fund during such year up to a maximum of $30,000,000, plus 1% of the average daily net asset values in excess of $30,000,000. Operating expenses for the purposes of the Contract do not include the expenses listed in clauses (a), (b) and (c) above. Computation of this limitation is made monthly during the Fund's fiscal year, on the basis of the average daily net asset values and operating expenses to that point during such year, and the amount of the excess, if any, over the prorated amount of the expense limitation is paid by the Investment Adviser to the Fund (or, where such amount of the excess is less than the monthly payment by the Fund to the Investment Adviser of the management fee, is deducted from such monthly payment of the management fee), after taking into account, however, any previous monthly payments under the operating expense limitation during such fiscal year. During the fiscal year ended December 31, 1997, the Fund incurred operating expenses of $31,679,100 of which the Investment Adviser reimbursed the Fund $514,000 pursuant to the expense limitation described above. During the fiscal year ended December 31, 1996, the Fund incurred operating expenses of $24,720,270 of which the Investment Adviser reimbursed the Fund $544,000 pursuant to the expense limitation described above. The amount of operating expenses incurred by the Fund during the fiscal year ended December 31, 1995 was $19,213,300 of which the Investment Adviser reimbursed the Fund $505,000.
The Contract is terminable on 60 days' written notice by vote of a majority of the Fund's outstanding shares or by vote of majority of the Fund's entire Board of Directors, or by the Investment Adviser on 60 days' written notice and automatically terminates in the event of its assignment. The Contract provides that in the absence of willful misfeasance, bad faith or gross negligence on the part of the Investment Adviser, or of reckless disregard of its obligations thereunder, the Investment Adviser is not liable for any action or failure to act in accordance with its duties thereunder.
The Investment Adviser may act as an investment adviser to other persons, firms or corporations (including investment companies), and has numerous advisory clients besides the Fund, none of which, however, is a registered investment company.
Management Fee
The following chart sets forth, for each of the last three years, (i) the management fee which was received by the Investment Adviser, (ii) the portion, if any, of such fee reimbursed to the Fund pursuant to the expense limitation described above and (iii) the net amount received by the Investment Adviser from the Fund.
Management Amount Net Amount
Year Ended Fee Reimbursed Received
__________ __________ __________ __________
December 31, 1995 $18,558,564 $505,000 $18,053,564
December 31, 1996 $24,026,121 $544,000 $23,482,121
December 31, 1997 $31,015,090 $514,000 $30,501,090
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ALLOCATION OF PORTFOLIO BROKERAGE
The Fund and the Investment Adviser generally do not direct the Fund's portfolio transactions to persons or firms because of research services provided by such person or firm. While neither the Fund nor the Investment Adviser has a present intention of doing so, the Investment Adviser may execute transactions in the Fund's portfolio securities through persons or firms which supply investment information to the Fund or the Investment Adviser, but only when consistent with the Fund's policy to seek the most favorable markets, prices and executions in its securities transactions.
The Fund may deal in some instances in securities which are not listed on a national securities exchange but are traded in the over-the-counter market or the third market. It may also execute transactions in listed securities through the third market. Where transactions are executed in the over-the-counter market or the third market, the Investment Adviser seeks to deal with primary market makers and to execute transactions on the Fund's own behalf, except in those circumstances where, in the opinion of management, better prices and executions may be available elsewhere. The Fund does not allocate brokerage business in return for sales of the Fund's shares.
The following chart sets forth figures pertaining to the Fund's brokerage during the last three years:
Brokerage
Commissions
Total Paid to
Brokerage Ruane,
Year Commissions Cunniff
Ended Paid & Co., Inc.
_____ ___________ ___________
December 31, 1995 $385,518 $187,900
December 31, 1996 $767,867 $309,715
December 31, 1997 $300,573 $180,425
_________________________________________________________
|
During the year ended December 31, 1997, the brokerage commissions paid to the Investment Adviser represented approximately 60% of the total brokerage commissions paid by the Fund during such year and were paid on account of transactions having an aggregate dollar value equal to approximately 76% of the aggregate dollar value of all portfolio transactions of the Fund during such year for which commissions were paid.
NET ASSET VALUE
The net asset value of each share of the Fund's Common Stock on which the subscription and redemption prices are based is determined once each Fund Business Day as of the close of the New York Stock Exchange, Inc. by the value of the securities and other assets owned by the Fund less its liabilities, computed in accordance with the Articles of Incorporation and By-Laws of the Fund. Fund Business Day for this purpose means any weekday exclusive of New Year's Day, Martin Luther King, Jr. Day, President's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and Good Friday. The net asset value of a share is the quotient obtained by dividing the net assets of the Fund (i.e., the value of the assets of the Fund less its liabilities, including expenses payable or accrued but excluding capital stock and surplus) by the total number of shares of Common Stock outstanding. For purposes of this computation, readily marketable portfolio securities listed on the New York Stock Exchange, Inc. are valued at the last sales price on such Exchange on the business day as of which such value is being determined. If there has been no sale on such Exchange on such day, the security is valued at the mean of the closing bid and asked prices on such day. If no bid and asked prices are quoted on such Exchange on such day, then the security is valued by such method as the Board of Directors of the Fund shall determine in good faith to reflect its fair market value. Readily marketable securities not listed on the New York Stock Exchange, Inc. but listed on other national securities exchanges are valued in like manner. Securities which are listed on the NASDAQ
National Market System shall be valued at the last sale price prior to the time of the determination of value; or if no sales are reported on that date at the mean of the current bid and asked price. Treasury Bills with remaining maturities of 60 days or less are valued at their amortized cost. Under the amortized cost method of valuation, an instrument is valued at cost and the interest payable at maturity upon the instrument is accrued as income, on a daily basis, over the remaining life of the instrument. A Treasury Bill that when purchased had a remaining maturity in excess of sixty days is valued on the basis of market quotations and estimates as described above until the sixtieth day prior to maturity, at which point it is valued at amortized cost. In that event, the "cost" of the security is deemed to be the security's stated market value on the sixty-first day prior to maturity. All other assets of the Fund, including restricted and not readily marketable securities, are valued in such manner as the Board of Directors of the Fund in good faith deems appropriate to reflect their fair value.
The net asset value for each share of Common Stock on which the subscription and redemption prices are based is determined as of the close of business on the New York Stock Exchange, Inc. next following the receipt by the Fund of the subscription or request for redemption.
REDEMPTION OF SHARES
The right of redemption may not be suspended or (other than by reason of a stockholder's delay in furnishing the required documentation following certain oral redemption requests) the date of payment upon redemption postponed for more than seven days after a stockholder's redemption request in accordance with the procedures set forth in the Prospectus, except for any period during which the New York Stock Exchange, Inc. is closed (other than customary week-end and holiday closings) or during which the Securities and Exchange Commission determines that trading thereon is restricted, or for any period during which an emergency (as determined by the Securities and Exchange Commission) exists as a result of which disposal by the Fund of securities owned by it is not reasonably practicable or as a result of which it is not reasonably practicable for the Fund fairly to determine the value of its net assets, or for such other period as the Securities and Exchange Commission may by order permit for the protection of security holders of the Fund.
COMMON STOCK
The Articles of Incorporation of the Fund give the Fund the right to purchase for cash the shares of Common Stock evidenced by any stock certificate presented for transfer at a purchase price equal to the aggregate net asset value per share
determined as of the next close of business of the New York Stock Exchange, Inc. after such certificate is presented for transfer, computed as in the case of a redemption of shares.
The Fund's shares have non-cumulative voting rights, which means that the holders of more than 50% of the shares voting for the election of directors can elect 100% of the directors if they choose to do so, and in such event the holders of the remaining less than 50% of the shares voting for such election of directors will not be able to elect any person or persons to the Board of Directors.
As of February 13, 1998, Trustees of Grinnell College (Grinnell, Iowa 50112) beneficially owned 3,859,563 shares of the Fund on such date (representing 13.14% of the outstanding Common Stock of the Fund). Bankers Trust Company as Trustee for the Walt Disney Company Employees Master Retirement Plan (280 Park Avenue, New York, New York 10022) and Fidelity Management Trust Company as Trustee for the Capital Cities/ABC, Inc. Employees Profit Sharing Plan Trust (subsidiary of the Walt Disney Company) (62 Devonshire Street, Boston, MA 02109) together beneficially owned 1,891,206 shares of the Fund (representing 6.44% of the outstanding Common Stock of the Fund). Bankers Trust Company as Trustee for FMC Corporation Master Retirement Trust (280 Park Avenue, New York, New York 10022) and Fidelity Management Trust Company as Trustee for the FMC Corporation Plans (82 Devonshire Street, Boston, Massachusetts 02109) together owned 1,756,588 shares of the Fund (representing 5.98% of the outstanding common stock of the Fund). No other person beneficially owned five percent or more of the Fund's Common Stock on such date.
CUSTODIAN, COUNSEL AND INDEPENDENT ACCOUNTANTS
The Bank of New York, 90 Washington Street, New York, New York 10286, acts as custodian for the Fund's securities portfolio and cash. Subject to the supervision of the Board of Directors, The Bank of New York may enter into sub-custodial agreements for the holding of the Fund's foreign securities.
Legal matters in connection with the issuance of the shares of Common Stock offered hereby are passed upon by Messrs. Seward & Kissel, One Battery Park Plaza, New York, New York 10004.
McGladrey & Pullen, LLP, 555 Fifth Avenue, New York, New York 10017 has been appointed independent accountants for the Fund.
SEQUOIA FUND, INC.
Statement of Investments
December 31, 1997
COMMON STOCKS (96.10%)
Value
Shares Cost (Note 1)
------ ---- --------
BANK HOLDING COMPANIES (17.35%)
4,141,575 Fifth Third Bancorp $ 92,765,943 $ 338,573,756
337,500 Mercantile Bankshares
Corporation 3,475,625 13,204,688
597,400 National Commerce Bancorp 7,406,981 21,058,350
320,000 Regions Financial Corporation 5,348,750 13,500,000
1,627,100 U. S. Bancorp 61,756,418 182,133,506
200,000 Wells Fargo & Company 48,115,010 67,887,500
-------------- --------------
218,868,727 636,357,800
-------------- --------------
CONSUMER PRODUCTS (.17%)
339,200 Sturm, Ruger & Company, Inc. 361,700 6,254,000
-------------- --------------
FINANCIAL SERVICES (26.38%)
21,034 Berkshire Hathaway Inc.
Class A* 165,788,581 967,564,000
-------------- --------------
INSURANCE (14.38%)
4,400,000 Progressive Corporation-Ohio+ 150,092,362 527,450,000
-------------- --------------
MANUFACTURING - MOTORCYCLES (3.72%)
4,981,200 Harley Davidson, Inc. 66,707,726 136,360,350
-------------- --------------
|
3,191,600 Wallace Computer
Services, Inc. + 98,833,184 124,073,450
-------------- --------------
PERSONAL CREDIT (2.13%)
613,400 Household International Inc. 23,103,672 78,246,837
-------------- --------------
PHARMACEUTICALS (4.96%)
2,760,000 Johnson & Johnson 55,292,182 181,815,000
-------------- --------------
|
SERVICES (16.24%)
14,200,000 Freddie Mac 58,732,552 595,512,500
-------------- --------------
Miscellaneous Securities
(3.17%) 123,457,621 116,347,350
-------------- --------------
TOTAL COMMON STOCKS $1,025,104,640 $3,524,610,321
-------------- --------------
|
SEQUOIA FUND, INC.
Statement of Investments
December 31, 1997
(continued)
Principal Value
Amount Cost (Note 1)
--------- ---- -------
U.S. GOVERNMENT OBLIGATIONS(3.90%)
$ 22,600,000 U.S. Treasury Bills due
1/2/98 through 2/26/98 $ 22,512,697 $ 22,512,697
50,000,000 U.S. Treasury Notes,
6% due 5/31/98 49,975,385 50,101,563
70,000,000 U.S. Treasury Notes,
5-7/8% due 8/31/99 70,131,467 70,262,500
-------------- --------------
TOTAL U.S. GOVERNMENT OBLIGATIONS 142,619,549 142,876,760
-------------- --------------
TOTAL INVESTMENTS (100%)++ $1,167,724,189 $3,667,487,081
============== ==============
|
++ The cost for federal income tax purposes is identical.
* Non-income producing.
+ Refer to Note 6.
SEQUOIA FUND, INC.
Statement of Assets and Liabilities
December 31, 1997
ASSETS:
Investments in securities, at value
(cost $1,167,724,189) (Note 1) $3,667,487,081
Cash on deposit with custodian 5,267,597
Receivable for capital stock sold 937,509
Dividends and interest receivable 2,983,239
Other assets 45,179
--------------
Total assets 3,676,720,605
==============
LIABILITIES:
Payable for capital stock repurchased 547,554
Payable for investment securities purchased 430,842
Accrued expenses 3,177,350
--------------
Total liabilities 4,155,746
-------------
Net assets applicable to 29,232,634
shares of capital stock outstanding
(Note 4) $3,672,564,859
==============
Net asset value, offering price and
redemption price per share $125.63
=======
|
See Notes to Financial Statements.
SEQUOIA FUND, INC.
Statement of Operations
Year Ended December 31, 1997
INVESTMENT INCOME:
Income:
Dividends:
Unaffiliated companies $ 21,491,718
Affiliated companies (Note 6) 2,824,460
Interest 9,215,768
--------------
Total income 33,531,946
--------------
Expenses:
Investment advisory fee (Note 2) 31,015,090
Legal and auditing fees 74,539
Stockholder servicing agent fees 234,288
Custodian fees 100,000
Directors fees and expenses (Note 5) 151,573
Other 103,610
--------------
Total expenses 31,679,100
Less expenses reimbursed by Investment
Adviser (Note 2) 514,000
--------------
Net expenses 31,165,100
--------------
Net investment income 2,366,846
--------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS:
Realized gains on investments in:
Unaffiliated companies 26,323,106
Net increase in unrealized appreciation on:
Investments 1,081,383,714
--------------
Net realized and unrealized gains
on investments 1,107,706,820
--------------
Increase in net assets from operations $1,110,073,666
==============
|
See Notes to Financial Statements.
SEQUOIA FUND, INC.
Statements of Changes in Net Assets
Year Ended December 31,
-------------------------------
1997 1996
---------------- --------------
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 2,366,846 $ 10,489,277
Net realized gains 26,323,106 181,100,219
Net increase in unrealized
appreciation 1,081,383,714 284,570,632
-------------- --------------
Net increase in net assets
from operations 1,110,073,666 476,160,128
Distributions to shareholders from:
Net investment income ( 2,474,076) (10,387,500)
Net realized gains (26,264,675) (166,897,159)
Capital share transactions
(Note 4) 10,231,447 96,600,320
-------------- --------------
Total increase 1,091,566,362 395,475,789
NET ASSETS:
Beginning of year 2,580,998,497 2,185,522,708
-------------- --------------
End of year $3,672,564,859 $2,580,998,497
============== ==============
NET ASSETS CONSIST OF:
Capital (par value and paid in
surplus) $1,172,455,159 $1,162,223,712
Undistributed net investment
income 0 107,230
Undistributed net realized
gains 346,808 288,377
Unrealized appreciation 2,499,762,892 1,418,379,178
-------------- --------------
Total Net Assets $3,672,564,859 $2,580,998,497
============== ==============
|
See Notes to Financial Statements.
SEQUOIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Sequoia Fund Inc. is registered under the Investment Company Act of 1940, as amended, as a non-diversified, open-end management company. The investment objective of the Fund is growth of capital from investments primarily in common stocks and securities convertible into or exchangeable for common stock. The following is a summary of significant accounting policies, consistently followed by the Fund in the preparation of its financial statements.
A. Valuation of investments: Investments are carried at market value or at fair value as determined by the Board of Directors. Securities traded on a national securities exchange are valued at the last reported sales price on the principal exchange on which the security is listed on the last business day of the period; securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the mean between the last reported bid and asked prices; U.S. Treasury Bills with remaining maturities of 60 days or less are valued at their amortized cost. U.S. Treasury Bills that when purchased have a remaining maturity in excess of sixty days are stated at their discounted value based upon the mean between the bid and asked discount rates until the sixtieth day prior to maturity, at which point they are valued at amortized cost.
B. Accounting for investments: Investment transactions are accounted for on the trade date and dividend income is recorded on the ex-dividend date. The net realized gain or loss on security transactions is determined for accounting and tax purposes on the specific identification basis.
C. Federal income taxes: It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its stockholders. Therefore, no federal income tax provision is required.
D. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during
the reporting period. Actual results could differ from those estimates.
E. General: Dividends and distributions are recorded by the Fund on the ex-dividend date. Interest income is accrued as earned.
NOTE 2--INVESTMENT ADVISORY CONTRACTS AND PAYMENTS TO INTERESTED PERSONS:
The Fund retains Ruane, Cunniff & Co., Inc., as its investment adviser. Ruane, Cunniff & Co., Inc. (Investment Adviser) provides the Fund with investment advice, administrative services and facilities.
Under the terms of the Advisory Agreement, the Investment Adviser receives a management fee equal to 1% per annum of the Fund's average daily net asset values. This percentage will not increase or decrease in relation to increases or decreases in the net asset value of the Fund. Under the Advisory Agreement, the Investment Adviser is obligated to reimburse the Fund for the amount, if any, by which the operating expenses of the Fund (including the management fee) in any year exceed the sum of 1-1/2% of the average daily net asset values of the Fund during such year up to a maximum of $30,000,000, plus 1% of the average daily net asset values in excess of $30,000,000. The expenses incurred by the Fund exceeded the percentage limitation during the year ended December 31, 1997 and the Investment Adviser reimbursed the Fund $514,000.
For the year ended December 31, 1997, there were no amounts accrued to interested persons, including officers and directors, other than advisory fees of $31,015,090 and brokerage commissions of $180,425 to Ruane, Cunniff & Co., Inc. Certain officers of the Fund are also officers of the Investment Adviser and the Fund's distributor. Ruane, Cunniff & Co., Inc., the Fund's distributor, received no compensation from the Fund on the sale of the Fund's capital shares during the year ended December 31, 1997.
NOTE 3--PORTFOLIO TRANSACTIONS:
The aggregate cost of purchases and the proceeds from the sales of securities, excluding U.S. government obligations, for the year ended December 31, 1997 were $178,518,006 and $120,896,361, respectively.
At December 31, 1997 the aggregate gross unrealized appreciation and depreciation of securities were $2,507,552,149 and $7,789,257, respectively.
NOTE 4--CAPITAL STOCK:
At December 31, 1997 there were 40,000,000 shares of $.10 par value capital stock authorized. Transactions in capital stock were as follows:
1997 1996
---------------------- ----------------------
Shares Amount Shares Amount
------ ------ ------ ------
Shares sold 1,872,099 $ 199,979,993 1,605,188 $ 136,443,268
Shares issued to
stockholders on
reinvestment of:
Net investment income 21,191 2,331,456 88,467 7,512,710
Net realized gain on
investments 188,981 23,446,469 1,739,720 149,633,365
--------- ------------- ---------- -------------
2,082,271 225,757,918 3,433,375 293,589,343
Shares repurchased 2,034,693 215,526,471 2,220,186 196,989,023
--------- ------------- ---------- -------------
Net Increase 47,578 $ 10,231,447 1,213,189 $ 96,600,320
========= ============= ========== =============
|
NOTE 5--DIRECTORS FEES AND EXPENSES:
Directors who are not deemed "interested persons" receive fees of $6,000 per quarter and $2,500 for each meeting attended, and are reimbursed for travel and other out-of-pocket disbursements incurred in connection with attending directors meetings. The total of such fees and expenses paid by the Fund to these directors for the year ended December 31, 1997 was $151,573.
NOTE 6--AFFILIATED COMPANIES:
Investment in portfolio companies 5% or more of whose outstanding voting securities are held by the Fund are defined in the Investment Company Act of 1940 as "affiliated companies." The total value and cost of investments in affiliates at December 31, 1997 aggregated $651,523,450 and $248,925,546, respectively. The summary of transactions for each affiliate during the period of their affiliation for the year ended December 31, 1997 is provided below:
Purchases Sales -------------------- ------------ Realized Dividend
Affiliate Shares Cost Shares Cost Gain Income
------------------- ------ ---- ------ ---- -------- --------
Progressive Corp. -
Ohio -- -- -- -- -- $1,056,000
Wallace Computer
Services, Inc. 1,599,600 $50,093,687 -- -- 1,768,460
----------
$2,824,460
==========
|
NOTE 7--SELECTED FINANCIAL INFORMATION:
Year Ended December 31,
-----------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Per Share Operating Performance
(for a share outstanding
throughout the year)
Net asset value, beginning
of year $ 88.44 $ 78.13 $ 55.59 $ 54.84 $ 56.66
--------- ---------- --------- --------- --------
Income from investment
operations:
Net investment income 0.08 0.38 0.31 0.42 0.64
Net realized and
unrealized gains on
investments 38.10 16.41 22.62 1.41 5.39
---------- ---------- --------- --------- --------
Total from investment
operations 38.18 16.79 22.93 1.83 6.03
---------- ---------- --------- --------- --------
Less distributions:
Dividends from net
investment income (0.08) (0.38) (0.31) (0.42) (0.65)
Distributions from net
realized gains (0.91) (6.10) (0.08) (0.66) (7.20)
---------- ---------- --------- --------- --------
Total distributions (0.99) (6.48) (0.39) (1.08) (7.85)
---------- ---------- --------- --------- --------
Net asset value, end of
year $ 125.63 $ 88.44 $ 78.13 $ 55.59 $ 54.84
========== ========== ========= ========= ========
Total Return 43.2% 21.7% 41.4% 3.3% 10.8%
Average commission rate
paid + $ .053 $ .055 -- -- --
Ratios/Supplemental data
Net assets, end of year
(in millions) $3,672.6 $2,581.0 $2,185.5 $1,548.3 $1,512.1
|
Ratio to average net assets:
Expenses 1.0% 1.0% 1.0% 1.0% 1.0%
Net investment income 0.1% 0.4% 0.5% 0.8% 1.1%
Portfolio turnover rate 8% 23% 15% 32% 24%
|
+ Required by regulations issued in 1995
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholders
Sequoia Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Sequoia Fund, Inc. as of December 31, 1997, and the related statements of operations for the year then ended, changes in net assets for each of the two years in the period then ended, and the selected financial information for each of the five years in the period then ended. These financial statements and the selected financial information are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and the selected financial information based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the selected financial information are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1997, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the selected financial information referred to above present fairly, in all material respects, the financial position of the Sequoia Fund, Inc. as of December 31, 1997, the results of its operations, the changes in its net assets and the selected financial information for the periods indicated, in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
New York, New York
January 15, 1998
|
SEQUOIA FUND, INC.
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Selected Financial Information
Included in the Prospectus: Selected Financial Information
Included in the Statement of Additional Information: Independent Auditor's Report; Statement of Investments at December 31, 1997; Statement of Assets and Liabilities at December 31, 1997; Statement of Operations for Year Ended December 31, 1997; Statement of Changes in Net Assets for two years ended December 31, 1997; Notes to Financial Statements
(b) Exhibits. Registrant incorporates herein by reference the exhibits, other than those filed herewith, that have previously been filed as part of Registrant's Registration Statement under the Investment Company Act of 1940. The following Exhibits are filed as part of this Post-Effective Amendment to Registrant's Registration Statement:
(1)(a) Articles of Incorporation
(1)(b) Articles of Amendment
(1)(c) Articles of Amendment
(1)(d) Articles of Amendment
(1)(e) Articles of Amendment
(2) By-Laws
(5) Advisory Agreement between the
Registrant and Ruane, Cunniff & Co., Inc.
(6) Distribution Agreement between the Fund
and Ruane, Cunniff & Stires, Inc.
(8) Custody Agreement between the
Registrant and The Bank of New York
|
(9) Services Agreement between the Registrant and DATA-SYS-TANCE, Inc.
(11) Consent of McGladrey & Pullen, LLP
(27) Financial Data Schedule
Other Exhibits: Powers of Attorney of Messrs. Harding, Matthews, Neuhauser and Swiggett
Item 25. Persons Controlled by or Under Common
Control with Registrant.
No such persons.
Item 26. Number of Holders of Securities.
The following information is furnished as of
February 13, 1998.
(2)
(1) Number of
Title of Class Record Holders
______________ ______________
Common Stock, par
value $.10 per share 10,712
Item 27. Indemnification.
|
The Registrant incorporates herein by reference the response to "Item 19. Indemnification of Directors and Officers" of Registrant's Form N-8B-1 Registration Statement under the Investment Company Act of 1940 (File No. 811-1976) and its response to Item 27 of Post-Effective Amendment No. 30 to this Registration Statement.
Item 28. Business and Other Connections
of Investment Adviser.
Ruane, Cunniff & Co., Inc., the Registrant's investment adviser and the distributor of the Registrant's shares, is a registered broker-dealer and member corporation of the New York Stock Exchange, Inc. Its investment advisory clients besides the Registrant include pension and profit-sharing trusts, corporations and individuals.
Item 29. Principal Underwriters.
(a) No such investment company.
(b) The following are the directors and officers of Ruane, Cunniff & Co., Inc. The principal business address of each of these persons is 767 Fifth Avenue, New York, New York 10153.
(1) (2) (3)
Positions and
Positions and Offices Offices with
Name with Underwriters Registrant
____ _____________________ _____________
William J. Ruane Chairman of the Chairman of the
Board of Directors Board of Directors
and Director and Director
Richard T. Cunniff President and Vice Chairman and
Director Director
Robert D. Goldfarb Executive President
Vice President and Director
and Director
Carol L. Cunniff Executive Executive Vice
Vice President President
and Director
Joseph Quinones, Jr. Vice President, Vice President,
Secretary and Secretary and
Treasurer Treasurer
(c) Not applicable.
|
Item 30. Location of Accounts and Records.
Accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940, as amended, and the rules promulgated thereunder are maintained in the physical possession of (i) the Registrant, (ii) The Bank of New York, 90 Washington Street, New York, New York 10286, the Registrant's custodian, or (iii) DST Systems, Inc., 21 West 10th Street, Kansas City, Missouri 64105, the Registrant's transfer agent and dividend disbursing agent.
Item 31. Management Services.
No such management-related service contracts.
Item 32. Undertakings.
Not applicable.
69900020.AV6
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, and State of New York, on the 16th day of April, 1998.
SEQUOIA FUND, INC.
By /s/ Robert D. Goldfarb
______________________
President
|
Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registrant's Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
Signature Capacity Date
_________ ________ ______
(1) Principal Executive
Officer
/s/ Robert D. Goldfarb President and 4/16/98
________________________ Director
Robert D. Goldfarb
(2) Principal Financial and
Accounting Officer
/s/ Joseph Quinones, Jr. Treasurer 4/16/98
________________________
Joseph Quinones, Jr.
(3) All of the Directors
/s/ William J. Ruane 4/16/98
________________________
William J. Ruane
/s/ Richard T. Cunniff 4/16/98
________________________
Richard T. Cunniff
|
/s/ Robert D. Goldfarb 4/16/98 ________________________ Robert D. Goldfarb |
John M. Harding
Francis P. Matthews
C. William Neuhauser
Robert L. Swiggett
By /s/ Robert D. Goldfarb 4/16/98
______________________
Robert D. Goldfarb
Attorney-in-Fact
|
69900020.AV6
INDEX TO EXHIBITS
(1)(a) Articles of Incorporation (1)(b) Articles of Amendment (1)(c) Articles of Amendment (1)(d) Articles of Amendment (1)(e) Articles of Amendment (2) By-Laws (5) Advisory Agreement (6) Distribution Agreement (8) Custody Agreement (9) Services Agreement (11) Consent of McGladrey & Pullen, LLP (27) Financial Data Schedule |
Other Exhibits: Powers of Attorney of Messrs. Harding, Matthews, Neuhauser and Swiggett
69900020.AV6
Exhibit (1) (a)
ARTICLES OF INCORPORATION
of
SEQUOIA FUND, INC.
FIRST: (1) The name of the incorporator is Barry
Fink.
(2) The incorporator's post office address is
|
63 Wall Street, New York, New York 10005.
(3) The incorporator is over eighteen years of age.
(4) The incorporator is forming the corporation named in these Articles of Incorporation under the general laws of the State of Maryland.
SECOND: The name of the corporation (hereinafter called the "Corporation") is Sequoia Fund, Inc.
THIRD: The purposes for which the Corporation is formed are:
(a) to constitute and carry on the business of an investment company and engage in the business of holding, investing, reinvesting or otherwise placing the funds of the Corporation in securities (as defined herein); to acquire securities through purchase, exchange, subscription, or otherwise, and to dispose of and to exercise all rights, powers and privileges with reference to such business or incident to ownership, use and enjoyment of such funds or of securities, including, but without limitation, the right, power and privilege to own, vote, hold, purchase, sell, negotiate, assign, exchange, transfer, or otherwise deal with, dispose of, use, exercise or enjoy any right, title, interest, power or privilege under or with reference to any securities owned or held, including the payment of any assessments, subscriptions and other sums of money the Corporation may deem to be expedient for the protection of its interest as owner or holder of such securities and the right to transfer and convey any of such securities to one or more persons, firms, associations, corporations, trusts or other entities subject to voting trusts or other agreements placing in such persons voting or other powers in respect of such securities; to invest or utilize the proceeds, interest,
dividends or other returns from any of its investments or activities in such manner as is consistent with the business, purposes or objects of the Corporation; and to do any and all acts and things which the Corporation may deem to be expedient for the preservation, protection, improvement and enhancement of the value of such securities. As used in these Articles of Incorporation, the term "securities" shall include, without limiting the generality thereof, stocks, shares, bonds, debentures, notes, mortgages and other evidences of indebtedness or obligations, and any certificates, receipts, warrants or other instruments evidencing or representing rights to receive, purchase or subscribe for the same, or evidencing or representing any other rights or interests therein or in any property or assets created or issued by any persons, firms, associations, corporations, trusts, syndicates, combinations, organizations, governments or subdivisions thereof (including instrumentalities and agencies of any such government or subdivision), and other entities whether domestic or foreign;
(b) to conduct research and investigations in respect of securities, organizations, businesses and general business conditions, in the United States of America and elsewhere, to secure information pertinent to the investment and employment of the assets and funds of the Corporation, to procure any or all of the foregoing to be done by others as independent contractors, and to pay compensation therefor;
(c) to conduct business in the State of Maryland and in other states or territories of the United States of America and in foreign countries, and to have one or more offices with in or without the State of Maryland;
(d) to purchase or otherwise acquire, hold, dispose of, resell, transfer, reissue or cancel (all without the vote or consent of the stockholders of the Corporation) shares of its capital stock and other of its securities in any manner and to the extent now or hereafter permitted by the laws of the State of Maryland and by these Articles of Incorporation, provided that shares of its capital stock owned by the Corporation shall not be voted upon directly or indirectly;
(e) to carry out all or any part of the foregoing purposes or objects as principal or agent, or in conjunction with any other person, firm, association, corporation or other entity, or as a partner or member of a partnership, syndicate or joint venture or otherwise, and in any part of the world to the same extent and as fully as natural persons might or could do;
(f) to have and exercise all of the powers and privileges conferred by the laws of the State of Maryland upon corporations formed under the laws of such State; and
(g) to do any and all such further acts and things and to exercise any and all such further powers and privileges as may be necessary, incidental, relative, conducive, appropriate or desirable for the attainment or advancement of the foregoing purposes and objects.
The foregoing objects and purposes shall be construed also as powers, but the foregoing enumeration of specific objects, purposes and powers shall not be held to limit or restrict in any manner the powers of the Corporation, but shall be in furtherance of, and in addition to, and not in limitation of, the general powers now or hereafter conferred on the Corporation by the laws of the State of Maryland. Only the business for which a corporation may be formed under the laws of the State of Maryland may be conducted by the Corporation.
Except where otherwise expressly specified herein, the objects, purposes and powers specified in any of the foregoing provisions shall not in any wise be limited or restricted by reference to, or inference from, the terms of any other provision of these Articles of Incorporation, but the objects, purposes and powers, specified in each of the provisions of this Article THIRD shall be regarded as independent objects, purposes and powers.
FOURTH: The post office address of the principal office of the Corporation within the State of Maryland is First Maryland Building, Floor 10A, Suite 1006, Baltimore, Maryland 21201, in care of The Corporation Trust, Incorporated.
The resident agent of the Corporation in the State of Maryland is The Corporation Trust, Incorporated, First Maryland Building, Floor 10A, Suite 1006, 25 South Charles Street, Baltimore, Maryland 21201.
FIFTH: The total number of shares of capital stock which the Corporation shall have authority to issue is ten million (10,000,000), all of which shall be of one class and shall be Common Stock of the par value of ten cents ($.10) per share, having an aggregate par value of One Million Dollars ($1,000,000). Such shares and the holders thereof shall be subject to the following provisions:
(a) No transfer or registration of transfer of such shares may be effected without the consent of the Corporation thereto.
(b) In addition to and without limitation of the provisions of the foregoing paragraph (a) of this Article, to the extent permitted by law, the Corporation in its sole and absolute discretion, acting by its Board of Directors or any officer or officers designated by the Board of Directors, upon presentation
for transfer of any certificate evidencing Common Stock of the Corporation, may purchase for the Corporation, without prior notice, the share or shares of Common Stock represented by such certificate by paying therefor a sum in cash equal to the net asset value of such share or shares computed in accordance with Article NINTH hereof.
(c) Each holder of Common Stock of the Corporation, upon request to the Corporation accompanied by surrender of the appropriate stock certificate or certificates in proper form for transfer, shall be entitled to require the Corporation to redeem, to the extent that the Corporation may lawfully effect such redemption under the laws of the State of Maryland, all or any part of the shares of Common Stock standing in the name of such holder on the books of the Corporation, at a price per share equal to the net asset value per share computed in accordance with Article NINTH hereof.
(d) Payment of the net asset value Of Common Stock of the Corporation surrendered to it for redemption shall be made by the Corporation in cash within seven business days of such surrender out of the funds legally available therefor, provided that the Corporation may suspend the right of the holders of Common Stock of the Corporation to redeem such shares of Common Stock and may postpone the right of such holders to receive payment for any shares surrendered (i) for any period during which the New York Stock Exchange is closed other than customary week-end and holiday closings or during which trading on the New York Stock Exchange is restricted, as determined by the rules and regulations of the Securities and Exchange Commission or any successor thereto; (ii) for any period during which an emergency, as determined by the rules and regulations of the Securities and Exchange Commission or any successor thereto, exists as a result of which disposal by the Corporation of securities owned by it is not reasonably practicable or as a result of which it is not reasonably practicable for the Corporation fairly to determine the value of its net assets; or (iii) for such other periods as the Securities and Exchange Commission or any successor thereto may by order permit for the protection of security holders of the Corporation.
(e) The right of any holder of Common Stock of the Corporation purchased or redeemed by the Corporation as provided in paragraphs (b) and (c) of this Article FIFTH to receive dividends thereon and all other rights of such holder with respect to such shares shall terminate at the time as of which the purchase or redemption price of such shares is determined, except the right of such holder to receive (i) the purchase or redemption price of such shares from the Corporation or its designated agent in cash, and (ii) any dividend or other distribution to which such bolder has previously become entitled
as the record holder of such shares on the record date for such dividend or other distribution.
(f) In the absence of any specification as to the purpose for which such shares of Common Stock of the Corporation are redeemed or purchased by it, all shares so redeemed or purchased shall be deemed to be retired in the sense contemplated by the laws of the State of Maryland and the number of authorized shares of Common Stock of the Corporation shall not be reduced by the number of any shares redeemed or purchased by it.
(g) No holder of any shares of Common Stock of the Corporation shall be entitled as of right to subscribe for purchase, or otherwise acquire any such shares which the Corporation shall issue or propose to issue; and any and all of the shares of Common Stock of the Corporation, whether now or hereafter authorized, may be issued, or may be reissued or transferred if the same have been reacquired and have treasury status, by the Board of Directors to such persons, firms, corporations and associations, and for such lawful consideration, and an such terms, as the Board of Directors in its discretion may determine, without first offering same, or any thereof, to any said holder.
SIXTH: The number of directors of the Corporation, until such number shall be increased or decreased pursuant to the By-Laws of the Corporation, shall be five. The number of directors shall never be less than the number prescribed by the General Corporation Law of the State of Maryland. The names of the persons who shall act as directors of the Corporation until the first annual meeting or until their successors are duly chosen and qualify are as follows:
William J. Ruane
Richard T. Cunniff
Francis P. Matthews
C. William Neuhauser
Robert L. Swiggett
SEVENTH: The following provisions are inserted for the management of business and for the conduct of the affairs of the Corporation and for creating, defining, and regulating the powers of the Corporation, its directors and stockholders and are in furtherance of and not in limitation of powers conferred upon the Corporation by statute:
(a) The Board of Directors shall have the management and control of the property, business and affairs of the Corporation, and is hereby vested with all the powers possessed by the Corporation itself so far as is not inconsistent with law or these Articles of Incorporation. In furtherance and without
limitation of the foregoing provisions, it is expressly declared that, subject to these Articles of Incorporation, the Board of Directors shall have power:
(1) to make, alter or repeal, or to adopt new, by-laws of the Corporation, except as otherwise provided in a by-law adopted by the stockholders;
(2) to issue and sell, from time to time, shares of Common Stock of the Corporation in such amounts and on such terms and conditions, and for such amount and kind of consideration (cash or otherwise) as said Board shall determine, provided that the consideration per share to be received by the Corporation shall be not less than the net asset value per share of Common Stock outstanding at such time computed in accordance with Article NINTH hereof;
(3) from time to time to set apart out of any assets of the Corporation otherwise available for dividends a reserve or reserves as working capital or for any other proper purpose or purposes, and to reduce, abolish or add to any such reserve or reserves from time to time as said Board may deem to be in the interests of the Corporation; and to determine in its discretion what part of the assets of the Corporation available for dividends in excess of such reserve or reserves shall be declared in dividends and paid to the stockholders of the Corporation; and
(4) from time to time to determine to what extent and at what times and places and under what conditions and regulations the accounts, books and records of the Corporation, or any of them, shall be open to the inspection of the stockholders; and no stockholder shall have any right to inspect any account or book or document of the Corporation except as conferred by the laws of the state of Maryland, unless and until authorized so to do by resolution of the Board or of the stockholders of the Corporation.
(b) Subject to the provisions of the laws of the State of Maryland, the books, records and accounts of the Corporation may be kept outside of the State of Maryland at such place or places as may be designated by the Board of Directors or in the by-laws.
(c) Elections of directors need not be by written ballot unless the by-laws so provide.
(d) Except to the extent prohibited by the
Investment Company Act of 1940, as from time to time in
effect, or rules, regulations or orders thereunder of the
Securities and Exchange Commission or any successor thereto,
no contract or other transaction between the Corporation and
any other corporation, partnership, individual or other
entity and no act of the Corporation shall in any way be
affected or invalidated by the fact that any of the
directors of the Corporation are directors, principals,
partners or officers of such other entity, or are
pecuniarily or otherwise interested in such contract,
transaction or act; provided that (i) the existence of such
relationship or such interest shall be disclosed to the
entire Board of Directors and the contract, transaction or
act shall be authorized, approved or ratified by a majority
of disinterested directors even if the number of
disinterested directors constitutes less than a quorum or
(ii) the contract, transaction or act shall be authorized,
ratified or approved in any other manner permitted by the
Maryland General Corporation Law.
(e) Specifically and without limitation of the foregoing paragraph (d) but subject to the exception therein prescribed, the Corporation may enter into a management or advisory contract and other contracts, including brokerage, distribution or principal underwriting and custodian contracts, and may otherwise do business (including brokerage business), with the firm of Ruane, Cunniff & Co., Inc., and any subsidiary or affiliate of such firm or the stockholders, directors, officers and employees thereof, notwithstanding that the Board of Directors of the Corporation may be composed in part of directors, officers or employees of said firm and/or its subsidiaries or affiliates and that officers of the Corporation may have been, be or become directors, officers, or employees of said firm and/or its subsidiaries or affiliates, and in the absence of fraud the Corporation and such firm and/or its subsidiaries or affiliates, may deal freely with one and other, and neither such management or advisory contract or brokerage, distribution or principal underwriting or custodian contract nor any other contract or transaction between the Corporation and such firm and/or its subsidiaries or affiliates shall be invalidated or in any wise affected thereby, nor shall any director or officer of the Corporation be liable to the Corporation or to any stockholder or creditor thereof or to any other person for any loss incurred by it or him under or by reason of any such contract or transaction; provided that nothing herein
shall protect any director or officer of the Corporation against any liability to the Corporation or to its security holders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office; and provided always that such contract or transaction shall have been on terms that were not unfair to the Corporation at the time at which it was entered into.
EIGHTH: To the maximum extent permitted by the Maryland General Corporation Law as from time to time amended, the Corporation shall indemnify its currently acting and its former directors and officers and those persons who, at the request of the Corporation, serve or have served another corporation, partnership, joint venture, trust or other enterprise in one or more of such capacities.
NINTH: For the purposes of the computation of net asset value as referred to in these Articles of Incorporation, the following rules shall apply:
(a) The net asset value of each share of Common Stock of the Corporation for the purpose of the issue or sale of such Common Stock at its net asset value shall be determined as of the close of business of the New York Stock Exchange on the date on which the subscription for such Common Stock is accepted, provided such subscription is accepted prior to such close of business; if such subscription is accepted after such close of business or if such date of acceptance is a day on which the New York Stock Exchange is not open for unrestricted trading, the net asset value shall be determined as of the close of business of said Exchange on the first business day thereafter on which subscriptions for Common Stock are accepted by the Corporation and on which said Exchange is open for unrestricted trading.
(b) The net asset value of each share of Common Stock of the Corporation purchased by the Corporation or surrendered to the Corporation for redemption pursuant to paragraph (b) or (c), respectively, of Article FIFTH hereof shall be determined as of the close of business of the New York Stock Exchange on the date on which such Common Stock is so purchased or surrendered, provided such share is received by the Corporation prior to such close of business; if such share is received by the Corporation after such close of business or on a day on which the New York Stock Exchange is not open for unrestricted trading, the net asset value shall be determined as of the close of business of said Exchange on the first business day on which said
Exchange is open for unrestricted trading next succeeding such date of receipt.
(c) The net asset value of each share of Common Stock of the Corporation as of the close of business of the New York Stock Exchange on any day shall be the quotient obtained by dividing the value as at such close, of the net assets of the Corporation (i.e., the value of the assets of the Corporation less its liabilities exclusive of capital stock and surplus) by the total number of shares of Common Stock outstanding at such close, all determined and computed as provided in the Corporation's by-laws.
TENTH: The Corporation may issue, sell, redeem, repurchase, and otherwise deal in and with shares of its capital stock in fractional denominations to the same extent as its whole shares, and shares in fractional denominations shall be shares of capital stock having proportionately to the respective fractions represented thereby all the rights of whole shares, including, without limitation, the right to vote, the right to receive dividends and distributions, and the right to participate upon liquidation of the Corporation; provided that the issue of shares in fractional denominations shall be limited to such transactions and be made upon such terms as may be fixed by the Board of Directors or in the by-laws.
ELEVENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of incorporation or in any amendment hereto, in the manner now or hereafter prescribed by the laws of the State of Maryland, and all rights conferred upon stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned, being the incorporator of the Corporation, has adopted and signed these Articles of Incorporation for the purpose of forming the corporation described herein pursuant to the General Corporation Law of the State of Maryland and does hereby acknowledge that said adoption and signing are his act.
/s/ Barry Fink
Barry Fink
Dated: March 17, 1980
|
69900020.AW0
Exhibit (1)(b)
SEQUOIA FUND, INC.
ARTICLES OF AMENDMENT
SEQUOIA FUND INC. a Maryland corporation
(hereinafter called the "Corporation"), having its principal
office within the State of Maryland at First Maryland
Building, Floor 10A, Suite 1006, Baltimore, Maryland 21201
in care of The Corporation Trust, Incorporated.
FIRST: The charter of the Corporation is hereby
amended by (A) adding a second sentence to paragraph (c) of
Article FIFTH, such that said paragraph (c), as so amended,
shall read in its entirety as follows:
"(c) Each holder of Common Stock of the Corporation, upon request to the Corporation accompanied by surrender of the appropriate stock certificate or certificates in proper, form for transfer, shall be entitled to require the Corporation to redeem, to the extent that the Corporation may lawfully effect such redemption under the laws of the State of Maryland, all or any part of the shares of Common Stock standing in the name of such holder on the books of the Corporation, at a price per share equal to the net asset value per share computed in accordance with Article NINTH hereof. Payment of the aggregate such price may be made in cash or, at the option of the Corporation wholly or partly in such portfolio securities of the Corporation as the Corporation shall select."
and (B) striking out the words "in cash" from paragraph (d)
of Article FIFTH, such that said paragraph (d), as so
amended, shall read in its entirety as follows:
"(d) Payment of the not asset value of
Common Stock of the Corporation surrendered to
it for redemption shall be made by the
Corporation within seven business days of such
surrender out of the funds legally available
therefor, provided that the Corporation may
suspend the right of the holders of Common
Stock of the Corporation to redeem such shares
of Common Stock and may postpone the right of
such holders to receive payment for any shares
surrendered (i) for any period during which
the New York Stock Exchange is closed other
than customary week-end and holiday closings
or during which trading on the New York Stock
Exchange is restricted, as determined by the
rules and regulations of the Securities and
Exchange Commission or any successor thereto;
(ii) for any period during which an emergency,
as determined by the rules and regulations of
the Securities and Exchange Commission or any
successor thereto, exists as a result of which
disposal by the Corporation of securities
owned by it is not reasonably practicable or
as a result of which it is not reasonably
practicable for the Corporation fairly to
determine the value of its net assets; or
(iii) for such other periods as the Securities
and Exchange Commission or any successor
thereto may by order permit for the protection
of the security holders of the Corporation."
and (C) striking out the words "in cash" from paragraph (e)
of Article FIFTH, such that said paragraph (e), as so
amended, shall read in its entirety as follows:
"(e) The right of any holder of Common Stock of the Corporation purchased or redeemed by the Corporation as provided in paragraphs
(b) and (c) of this Article FIFTH to receive dividends thereon and all other rights of such holder with respect to such shares shall terminate at the time as of which the purchase or redemption price of such shares is determined, except the right of such holder to receive (i) the purchase or redemption price of such shares from the Corporation or its designated agent, and (ii) any dividends or other distribution to which such holder has previously become entitled as the record holder of such shares on the record date for such dividend or other distribution."
SECOND: The Board of Directors of the
Corporation, by its unanimous written consent dated
October 13, 1980, duly adopted a resolution setting forth
the foregoing amendments to the charter, declaring that the
said amendments to the charter, were advisable and directing
that they be submitted for action thereon at a Special
Meeting of the Stockholders of the Corporation to be held on
December 10, 1980.
THIRD: Notice setting forth the said amendments
to the charter and stating that a purpose of the meeting of
the stockholders would be to take action thereon was given
as required by law to all stockholders of the Corporation
entitled to vote thereon. The amendment of the charter of
the Corporation as hereinabove set forth was approved by the
stockholders of the Corporation at said meeting held on
December 10, 1980 by the affirmative vote to two-thirds of
all the votes entitled to be cast thereon.
FOURTH: The amendment of the charter of the
Corporation as hereinabove set forth has been duly advised
by the Board of Directors and approved by the stockholders
of the Corporation.
IN WITNESS WHEREOF, SEQUOIA FUND, INC. has caused
these presents to be signed in its name and on its behalf by
its President and to be attested by its Secretary on
December 16, 1980.
SEQUOIA FUND, INC.
/s/ Richard T. Cunniff
By______________________
Richard T. Cunniff
President
ATTEST
/s/ Robert R. Paczkowski
Secretary
|
69900020.AX1
Exhibit (1)(c)
SEQUOIA FUND, INC.
ARTICLES OF AMENDMENT
SEQUOIA FUND, INC., a Maryland corporation (hereinafter
called the "Corporation"), having its principal office within the
State of Maryland at First Maryland Building, Floor 10A, Suite
1006, Baltimore, Maryland 21201 in care of The Corporation Trust,
Incorporated, hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby
amended by adding a new paragraph (f) to Article SEVENTH, which
new paragraph (f) shall read in its entirety as follows:
"(f) Notwithstanding any provision of the General Corporation Law of the State of Maryland requiring a greater proportion than a majority of the votes entitled to be cast in order to take or authorize any action, any such action may be taken or authorized upon the concurrence of a majority of the aggregate number of votes entitled to be cast thereon subject to any applicable requirements of the Investment Company Act of 1940, as from time to time in effect, or rules or orders of the Securities and Exchange Commission or any successor thereto."
SECOND: The Board of Directors of the Corporation, at
a meeting on March 30, 1981, adopted a resolution by unanimous
vote setting forth the foregoing amendment to the charter,
declaring that the said amendment to the charter was advisable
and directing that it be submitted for action thereon at the
annual meeting of the stockholders of the Corporation to be held
an April 28, 1981.
THIRD: Notice setting forth the said amendment to the
charter and stating that a purpose of the meeting of the
stockholders would be to take action thereon was given as
required by law to all stockholders of the Corporation entitled
to vote thereon. The amendment of the charter of the Corporation
as hereinabove set forth was approved by the stockholders of the
Corporation at said meeting held on April 28, 1981 by the
affirmative vote of two-thirds of all the votes entitled to be
cast thereon.
FOURTH: The amendment of the charter of the
Corporation as hereinabove set forth has been duly advised by the
Board of Directors and approved by the stockholders of the
Corporation.
IN WITNESS WHEREOF, SEQUOIA FUND, INC. has caused these
presents to be signed in its name and on its behalf by its
President and to be attested by its Secretary on May 8, 1981.
SEQUOIA FUND, INC.
By: /s/ Richard T. Cunniff
Richard T. Cunniff
President
ATTEST:
/s/ Robert R. Paczkowski
Robert R. Paczkowski
Secretary
|
69900020.AW1
Exhibit 1(d)
SEQUOIA FUND, INC.
Articles of Amendment
SEQUOIA FUND, INC., a Maryland corporation (hereinafter
called the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: The first sentence of Article FIFTH of the
Articles of Incorporation of the Corporation is hereby amended to
read in its entirety as follows:
"The total number of shares of capital stock which the Corporation shall have authority to issue is twenty million (20,000,000), all of which shall be of one class and shall be Common Stock of the par value of ten cents ($.10) per share, having an aggregate par value of Two Million Dollars ($2,000,000)."
The total number of shares of capital stock of the
Corporation heretofore authorized was ten million (10,000,000)
shares of Common Stock par value ten cents ($.10) per share and
having an aggregate par value of one million Dollars
($1,000,000). The total number of shares of authorized stock as
increased by this Amendment is twenty million (20,000,000) shares
of Common Stock, par value ten cents ($.10) per share and having
an aggregate par value of Two Million Dollars ($2,000,000).
SECOND: The Board of Directors of the Corporation, at
a meeting on March 18, 1983, unanimously adopted a resolution in
which was set forth the foregoing amendment to the Articles of
Incorporation of the Corporation, declaring that the said
amendment to the Articles of Incorporation was advisable and
directing that it be submitted for action thereon at the annual
meeting of the stockholders of the Corporation to be held on
April 20, 1983.
THIRD: Notice setting forth the said amendment of the
Articles of Incorporation of the Corporation and stating that a
purpose of the meeting of the stockholders would be to take
action thereon was given as required by law to all stockholders
of the Corporation entitled to vote thereon. The amendment of
the Articles of Incorporation of the Corporation as hereinabove
set forth was approved by the stockholders of the Corporation at
said meeting held on April 20, 1983 by the affirmative vote of a
majority of all the votes entitled to be cast thereon pursuant to
the provisions of paragraph (f) of Article SEVENTH of the
Articles of Incorporation of the Corporation authorizing, subject
to certain conditions not here relevant, action to be taken upon
the concurrence of the holders of a majority of the Corporation's
outstanding shares notwithstanding any provision of the General
Corporation Law of the State of Maryland requiring a greater
proportion of votes.
FOURTH: The amendment of the Articles of Incorporation
of the Corporation as hereinabove set forth has been duly advised
by the Board of Directors and approved by the stockholders of the
Corporation.
IN WITNESS WHEREOF, SEQUOIA FUND, INC. has caused these
presents to be signed in its name and on its behalf by its
President and to be attested by its Secretary on April 21, 1983.
SEQUOIA FUND, INC.
By /s/ Richard T. Cunniff
Richard T. Cunniff,
President
Attest:
/s/ Robert R. Paczkowski
Robert H. Paczkowski,
Secretary
|
ACKNOWLEDGMENT
THE UNDERSIGNED, President of SEQUOIA FUND, INC., who
executed on behalf of said corporation the foregoing Articles of
Amendment, of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said corporation, the
foregoing Articles of Amendment to be the corporate act of said
corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set
forth therein with respect to the approval thereof are true in
all material respects, under the penalties for perjury.
/s/ Richard T. Cunniff Richard T. Cunniff |
69900020.AW2
Exhibit 1(e)
SEQUOIA FUND, INC.
Articles of Amendment
SEQUOIA FUND, INC., a Maryland corporation (hereinafter
called the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: The first sentence of Article FIFTH of the
Articles of Incorporation of the Corporation is hereby amended to
read in its entirety as follows:
"The total number of shares of capital stock which the Corporation shall have authority to issue is forty million (40,000,000), all of which shall be of one class and shall be Common Stock of the par value of ten cents ($.10) per share, having an aggregate par value of Four Million Dollars ($4,000,000)."
The total number of shares of capital stock of the
Corporation heretofore authorized was twenty million (20,000,000)
shares of Common Stock par value ten cents ($.10) per share and
having an aggregate par value of Two Million Dollars
($2,000,000). The total number of shares of authorized stock as
increased by this Amendment is forty million (40,000,000) shares
of Common Stock, par value ten cents ($.10) per share and having
an aggregate par value of Four Million Dollars ($4,000,000).
SECOND: The Board of Directors of the Corporation, at a
meeting on March 9, 1987, unanimously adopted a resolution in
which was set forth the foregoing amendment to the Articles of
Incorporation of the Corporation, declaring that the said
amendment to the Articles of Incorporation was advisable and
directing that it be submitted for action thereon at the annual
meeting of the stockholders of the Corporation to be held on
April 23, 1987.
THIRD: Notice setting forth the said amendment of the
Articles of Incorporation of the Corporation and stating that a
purpose of the meeting of the stockholders would be to take
action thereon was given as required by law to all stockholders
of the Corporation entitled to vote thereon. The amendment of
the Articles of incorporation of the Corporation as hereinabove
set forth was approved by the stockholders of the Corporation at
said meeting held on April 23, 1987 by the affirmative vote of a
majority of all the votes entitled to be cast thereon pursuant to
the provisions of paragraph (f) of Article SEVENTH of the
Articles of Incorporation of the Corporation authorizing, subject
to certain conditions not here relevant, action to be taken upon
the concurrence of the holders of a majority of the Corporation's
outstanding shares notwithstanding any provision of the General
Corporation Law of the State of Maryland requiring a greater
proportion of votes.
FOURTH: The amendment of the Articles of Incorporation
of the Corporation as hereinabove set forth has been duly advised
by the Board of Directors and approved by the stockholders of the
corporation.
IN WITNESS WHEREOF, SEQUOIA FUND, INC. has caused these
presents to be signed in its name and on its behalf by its
President and to be attested by its Secretary on April 24, 1987.
SEQUOIA FUND, INC.
/s/ Richard T. Cunniff
Richard T. Cunniff,
President
Attest:
/s/ Robert R. Paczkowski
Robert H. Packowski,
Secretary
|
ACKNOWLEDGMENT
THE UNDERSIGNED, President of SEQUOIA FUND, INC., who
executed on behalf of said corporation the foregoing Articles of
Amendment, of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said corporation, the
foregoing Articles of Amendment to be the corporate act of said
corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set
forth therein with respect to the approval thereof are true in
all material respects, under the penalties for perjury.
/s/ Richard T. Cunniff Richard T. Cuniff |
69900020.AW3
EXHIBIT (2)
BY-LAWS
OF
SEQUOIA FUND, INC.
ARTICLE I
Offices
Section 1. Principal Office in Maryland. The principal
office shall be in the City of Baltimore, State of Maryland.
Section 2. Other Offices. The Corporation may have
offices also at such other places within and without the State of
Maryland as the Board of Directors may from time to time
determine or as the business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meeting. Meetings of stockholders
shall be held at such place, either within the State of Maryland
or at such other place within the United States, as shall be
fixed from time to time by the Board of Directors.
Section 2. Annual Meetings. Annual meetings of
stockholders shall be held on a date fixed from time to time by
the Board of Directors within 120 days after the close of each
fiscal year of the Corporation, for the election of directors and
the transaction of any other business within the powers of the
Corporation.
Section 3. Notice of Annual Meeting. Written or
printed notice of the annual meeting, stating the place, date and
hour thereof, shall be given to each stockholder entitled to vote
thereat not less than ten or more than ninety days before the
date of the meeting
Section 4. Special Meetings. Special meetings of
stockholders may be called by the chairman of the Board of
Directors or the president and shall be called by the secretary
upon the written request of holders of shares entitled to cast
not less than twenty-five per cent of all the votes entitled to
be cast at such meeting. Such request shall state the purpose or
purposes of such meeting and the matters proposed to be acted on
thereat. In the case of such request for a special meeting, upon
payment by such stockholders to the Corporation of the estimated
reasonable cost of preparing and mailing a notice of such
meeting, the secretary shall give the notice of such meeting.
The secretary shall not be required to call a special meeting to
consider any matter which is substantially the same as a matter
acted upon at any special meeting of stockholders held within the
preceding twelve months unless requested to do so by holders of
shares entitled to cast not less than a majority of all votes
entitled to be cast at such meeting.
Section 5. Notice of Special Meeting. Written or
printed notice of a special meeting of stockholders, stating the
place, date, hour and purpose thereof, shall be given by the
secretary to each stockholder entitled to vote thereat not less
than ten nor more than ninety days before the date fixed for the
meeting.
Section 6. Business of Special Meetings. Business
transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice thereof.
Section 7. Quorum. The holders of a majority of the
stock issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of
business.
Section 8. Voting. When a quorum is present at any
meeting, the affirmative vote of a majority of the votes cast
shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the Investment
Company Act of 1940, as from time to time in effect, or other
statutes or rules or orders of the Securities and Exchange
Commission or any successor thereto or of the Articles of
Incorporation a different vote is required, in which case such
express provision shall govern and control the decision of such
question.
Section 9. Proxies. Each stockholder shall at every
meeting of stockholders be entitled to one vote in person or by
proxy for each share of the Common Stock having voting power held
by such stockholder, but no proxy shall be voted after three
years from its date, unless otherwise provided in the proxy.
Section 10. Record Date. In order that the Corporation
may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, to
express consent to corporate action in writing without a meeting,
or to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may
fix, in advance, a record date which shall be not more than
ninety days and, in the case of a meeting of stockholders, not
less than ten days prior to the date on which the particular
action requiring such determination of stockholders is to be
taken. In lieu of fixing a record date, the Board of Directors
may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, twenty days. If
the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of or to vote at a
meeting of stockholders, such books shall be closed for at least
ten days immediately preceding such meeting. If no record date
is fixed and the stock transfer books are not closed for the
determination of stockholders: (1) The record date for the
determination of stockholders entitled to notice of, or to vote
at, a meeting of stockholders shall be at the close of business
on the day on which notice of the meeting of stockholders is
mailed or the day thirty days before the meeting, whichever is
the closer date to the meeting and (2) The record date for the
determination of stockholders entitled to receive payment of a
dividend or an allotment of any rights shall be at the close of
business on the day on which the resolution of the Board of
Directors, declaring the dividend or allotment of rights, is
adopted, provided that the payment or allotment date shall not be
more than sixty days after the date of the adoption of such
resolution.
Section 11. Inspectors of Election. The directors, in
advance of any meeting, may, but need not, appoint one or more
inspectors to act at the meeting or any adjournment thereof. If
an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an
inspector fails to appear or act, the vacancy may be filled by
appointment made by the directors in advance of the meeting or at
the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his duties, shall take
and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best
of his ability. The inspectors, if any, shall determine the
number of shares outstanding and the voting power of each, the
shares represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate
all votes, ballots or consent determine the result, and do such
acts as are proper to conduct the election or vote with fairness
to all stockholders. On request of the person presiding at the
meeting or any stockholder, the inspector or inspectors, if any,
shall make a report in writing of any challenge, question or
matter determined by him or them and execute a certificate of any
fact found by him or them.
Section 12. Informal Action by Stockholders. Except to
the extent prohibited by the Investment Company Act of 1940, as
from time to time in effect, or rules or orders of the Securities
and Exchange Commission or any successor thereto, any action
required or permitted to be taken at any meeting of stockholders
may be taken without a meeting if a consent in writing, setting
forth such action, is signed by all the stockholders entitled to
vote on the subject matter thereof and any other stockholders
entitled to notice of a meeting of stockholders (but not to vote
thereat) have waived in writing any rights which they may have to
dissent from such action, and such consent and waiver are filed
with the records of the Corporation.
ARTICLE III
Board of Directors
Section 1. Number of Directors. The number of
directors which shall constitute the entire Board of Directors
shall be seven (9/12/80). By amendment of this By-Law the number
may be increased or decreased from time to time by the vote of a
majority of the entire Board of Directors within the limits
permitted by law but at no time may be more than twenty, but the
tenure of office of a director in office at the time of any
decrease in the number of directors shall not be affected as a
result thereof. The directors shall be elected to hold office at
the annual meeting of stockholders, except as provided in
Section 2 of this Article, and each director shall hold office
until the next annual meeting of stockholders or until his
successor is elected and qualified. Any director may resign at
any time upon written notice to the Corporation. Any director
may be removed, either with or without cause, at any meeting of
stockholders duly called and at which a quorum is present by the
affirmative vote of the majority of the votes entitled to be cast
thereon, and the vacancy in the Board of Directors caused by such
removal may be filled by the stockholders at the time of such
removal. Directors need not be stockholders.
Section 2. Vacancies and Newly-created Directorships.
Any vacancy occurring in the Board of Directors for any cause
other than by reason of an increase in the number of directors
may be filled by a majority of the remaining members of the Board
of Directors although such majority is less than a quorum. Any
vacancy occurring by reason of an increase in the number of
directors may be filled by a majority of the directors then in
office, though less than a quorum. A director elected by the
Board of Directors to fill a vacancy shall be elected to hold
office until the next annual meeting of stockholders or until his
successor is elected and qualifies.
Section 3. Powers. The business and affairs of the
Corporation shall be managed by the Board of Directors which
shall exercise all such powers of the Corporation and do all such
lawful acts and things as are not by statute or by the Articles
of Incorporation or by these By-Laws conferred upon or reserved
to the stockholders.
Section 4. Annual Meeting. The first meeting of each
newly elected Board of Directors shall be held immediately
following the adjournment of the annual meeting of stockholders
and at the place thereof. No notice of such meeting to the
directors shall be necessary in order legally to constitute the
meeting, provided a quorum shall be present. In the event such
meeting is not so held, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors.
Section 5. Other Meetings. The Board of Directors of
the Corporation or any committee thereof may hold meetings, both
regular and special, either within or without the State of
Maryland. Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall from time
to time be determined by the Board of Directors. Special
meetings of the Board of Directors may be called by the chairman
of the Board of Directors or the president and shall be called by
the secretary on the written request of two or more directors.
Notice of special meetings of the Board of Directors shall be
given by the secretary to each director at least three days
before the meeting if by mail or at least 24 hours before the
meeting if given in person or by telephone or by telegraph. The
notice need not specify the business to be transacted.
Section 6. Quorum and Voting. At meetings of the Board
of Directors, two of the directors in office at the time, but in
no event less than one-third of the entire Board of Directors,
shall constitute a quorum for the transaction of business. The
action of a majority of the directors present at a meeting at
which a quorum is present shall be the action of the Board of
Directors. If a quorum shall not be present at any meeting of
the Board of Directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 7. Committees. The Board of Directors may, by
resolution passed by a majority of the entire Board of Directors,
appoint from among its members an executive committee and other
committees of the Board of Directors, each committee to be
composed of two or more of the directors of the Corporation. The
Board of Directors may, to the extent provided in the resolution,
delegate to such committees, in the intervals between meetings of
the Board of Directors, any or all of the powers of the Board of
Directors in the management of the business and affairs of the
Corporation, except the power to declare dividends, to issue
stock or to recommend to stockholders any action requiring
stockholders' approval. Such committee or committees shall have
the name or names as may be determined from time to time by
resolution adopted by the Board of Directors. Unless the Board
of Directors designates one or more directors as alternate
members of any committee, who may replace an absent or
disqualified member at any meeting of the committee, the members
of any such committee present at any meeting and not disqualified
from voting may, whether or not they constitute a quorum,
unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any absent or disqualified
member of such committee. At meetings of any such committee, a
majority of the members or alternate members of such committee
shall constitute a quorum for the transaction of business and the
act of a majority of the members or alternate members present at
any meeting at which a quorum is present shall be the act of the
committee.
Section 8. Minutes of Committee Meetings. The
committees shall keep regular minutes of their proceedings.
Section 9. Informal Action by Board of Directors and
Committees. Any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee thereof may
be taken without a meeting if a written consent thereto is signed
by all members of the Board of Directors or of such committee, as
the case may be, and such written consent is filed with the
minutes of proceedings of the Board of Directors or committee.
Section 10. Meetings by Conference Telephone. The
members of the Board of Directors or any committee thereof may
participate in a meeting of the Board of Directors or committee
by means of a conference telephone or similar communications
equipment by means of which all persons participating in the
meeting can hear each other at the same time and such
participation shall constitute presence in person at such
meeting.
Section 11. Fees and Expenses. The directors may be
paid their expenses of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director.
No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be
allowed like reimbursement and compensation for attending
committee meetings.
ARTICLE IV
Notices
Section 1. General. Notices to directors and
stock-holders mailed to them at their post office addresses
appearing on the books of the Corporation shall be deemed to be
given at the time when deposited in the United States mail.
Section 2. Waiver of Notice. Whenever any notice is
required to be given under the provisions of the statutes, of the
Articles of Incorporation or of these By-Laws, a waiver thereof
in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be
deemed equivalent of notice. Attendance of a person at a meeting
shall constitute a waiver of notice of such meeting except when
the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or
convened.
ARTICLE V
Officers
Section 1. General. The officers of the Corporation
shall be chosen by the Board of Directors at its first meeting
after each annual meeting of stockholders and shall be a chairman
of the Board of Directors, a president, a secretary and a
treasurer. The chairman of the Board of Directors shall be
chosen from among the directors of the Corporation. The Board of
Directors may choose also such vice presidents and additional
officers or assistant officers as it may deem advisable. Any
number of offices, except the offices of president and vice
president, may be held by the same person. No officer shall
execute, acknowledge or verify any instrument in more than one
capacity if such instrument is required by law to be executed,
acknowledged or verified by two or more officers.
Section 2. Other Officers and Agents. The Board of
Directors may appoint such other officers and agents as it
desires who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
Section 3. Tenure of Officers. The officers of the
Corporation shall hold office at the pleasure of the Board of
Directors. Each officer shall hold his office until his
successor is elected and qualifies or until his earlier
resignation or removal. Any officer may resign at any time upon
written notice to the Corporation. Any officer elected or
appointed by the Board of Directors may be removed at any time by
the Board of Directors when, in its judgment, the best interests
of the Corporation will be served thereby. Any vacancy occurring
in any office of the Corporation by death, resignation, removal
or otherwise shall be filled by the Board of Directors.
Section 4. Chairman of the Board of Directors. The
chairman of the Board of Directors shall be the chief executive
officer of the Corporation, shall preside at all meetings of the
stockholders and the Board of Directors, shall have general and
active management of the business of the Corporation, shall have
such other powers and perform such other duties as are usually
incident to the chief executive officer of a corporation, shall
have such other powers and perform such other duties as may be
assigned to him by the Board of Directors from time to time, and
shall see that all orders and resolutions of the Board of
Directors are carried into effect. He shall execute on behalf of
the Corporation, and may affix the seal of the Corporation to all
instruments requiring such execution, except where such
instruments are required or permitted by law to be otherwise
signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board of Directors to
some other officer or agent of the Corporation.
Section 5. President. In the absence or inability to
act of the chairman of the Board of Directors, the president
shall perform all of the duties and may exercise all of the
powers of the chairman of the Board of Directors. He also shall
have such other powers and shall perform such other duties as may
be assigned to him by the Board of Directors or the chairman of
the Board of Directors from time to time.
Section 6. Vice Presidents. The vice presidents shall
act under the direction of the president and in the absence or
disability of the president shall perform the duties and exercise
the powers of the president. They shall perform such other
duties and have such other powers as the president or the Board
of Directors may from time to time prescribe. The Board of
Directors may designate one or more executive vice presidents or
may otherwise specify the order of seniority of the vice
presidents and, in that event, the duties and powers of the
president shall descend to the vice presidents in the specified
order of seniority.
Section 7. Secretary. The secretary shall act under
the direction of the chairman of the Board of Directors. Subject
to the direction of the president he shall attend all meetings of
the Board of Directors and all meetings of stockholders and
record the proceedings in a book to be kept for that purpose and
shall perform like duties for the committees designated by the
Board of Directors when required. He shall give, or cause to be
given, notice of all meetings of stockholders and special
meetings of the Board of Directors, and shall perform such other
duties as may be prescribed by the president or the Board of
Directors. He shall keep in safe custody the seal of the
Corporation and shall affix the seal or cause it to be affixed to
any instrument requiring it.
Section 8. Assistant Secretaries. The assistant
secretaries in the order of their seniority, unless otherwise
determined by the president or the Board of Directors, shall, in
the absence or disability of the secretary, perform the duties
and exercise the powers of the secretary. They shall perform
such other duties and have such other powers as the president or
the Board of Directors may from time to time prescribe.
Section 9. Treasurer. The treasurer shall act under
the direction of the chairman of the Board of Directors. Subject
to the direction of the chairman of the Board of Directors he
shall have the custody of the corporate funds and securities and
shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to
the credit of the Corporation in such depositories as may be
designated by the Board of Directors. He shall disburse the
funds of the Corporation as may be ordered by the president or
the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of
Directors, at its regular meetings, or when the Board of
Directors so requires, an account of all his transactions as
treasurer and of the financial condition of the Corporation.
Section 10. Assistant Treasurers. The assistant
treasurers in the order of their seniority, unless otherwise
determined by the president or the Board of Directors, shall, in
the absence or disability of the treasurer, perform the duties
and exercise the powers of the treasurer. They shall perform
such other duties and have such other powers as the president or
the Board of Directors may from time to time prescribe.
ARTICLE VI
Capital Stock
Section 1. General. Every holder of Common Stock of
the Corporation who has made full payment of the consideration
for such stock shall be entitled upon request to have a
certificate, signed by, or in the name of the Corporation by, the
chairman of the Board of Directors, the president or a vice
president and countersigned by the treasurer or an assistant
treasurer or the secretary or an assistant secretary of the
Corporation, certifying the number of whole shares of Common
Stock owned by him in the Corporation.
Section 2. Fractional Share Interests or Scrip. The
Corporation may, but shall not be obliged to, issue fractions of
a share of Common Stock, arrange for the disposition of
fractional interests by those entitled thereto, pay in cash the
fair value of fractions of a share of Common Stock as of the time
when those entitled to receive such fractions are determined, or
issue scrip or other evidence of ownership which shall entitle
the holder to receive a certificate for a full share of Common
Stock upon the surrender of such scrip or other evidence of
ownership aggregating a full share. Fractional shares of Common
Stock shall have proportionately to the respective fractions
represented thereby all the rights of whole shares, including the
right to vote, the right to receive dividends and distributions
and the right to participate upon liquidation of the Corporation,
excluding however the right to receive a stock certificate
representing such fractional shares. The Board of Directors may
cause such scrip or evidence of ownership to be issued subject to
the condition that it shall become void if not exchanged for
certificates representing full shares of Common Stock before a
specified date or subject to the condition that the shares of
Common Stock for which such scrip or evidence of ownership is
exchangeable may be sold by the Corporation and the proceeds
thereof distributed to the holders of such script or evidence of
ownership, or subject to any other reasonable conditions which
the Board of Directors shall deem advisable, including provision
for forfeiture of such proceeds to the Corporation if not claimed
within a period of not less than three years after the date of
the original issuance of scrip certificates.
Section 3. Signatures on Certificates. Any of or all
the signatures on a certificate may be a facsimile. In case any
officer who has signed or whose facsimile signature has been
placed upon a certificate shall cease to be such officer before
such certificate is issued, it may be issued with the same effect
as if he were such officer at the date of issue. The seal of the
Corporation or a facsimile thereof may, but need not, be affixed
to certificates of stock.
Section 4. Lost, Stolen or Destroyed Certificates. The
Board of Directors may direct a new certificate or certificates
to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of any affidavit of that
fact by the person claiming the certificate or certificates to be
lost, stolen or destroyed. When authorizing such issue of a new
certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate
or certificates, or his legal representative, to give the
Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation with
respect to the certificate or certificates alleged to have been
lost, stolen or destroyed.
Section 5. Transfer of Shares. Upon request by the
registered owner of shares, and if a certificate has been issued
to represent such shares upon surrender to the Corporation or a
transfer agent of the Corporation of a certificate for shares of
Common Stock duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, subject to the
Corporation's rights to purchase such shares, it shall be the
duty of the Corporation, if it is satisfied that all provisions
of the Articles of Incorporation, of the By-Laws and of the law
regarding the transfer of shares have been duly complied with, to
record the transaction upon thereto upon request for such
certificate, and cancel the old certificate, if any.
Section 6. Registered Owners. The Corporation shall be
entitled to recognize the person registered on its books as the
owner of shares to be the exclusive owner for all purposes
including redemption, voting and dividends, and the Corporation
shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Maryland.
Section 7. Right of Corporation to Purchase Shares.
(a) The Board of Directors in its sole and absolute discretion
upon presentation for transfer of any certificate evidencing
Common Stock of the Corporation, may purchase for the
Corporation, without prior notice, the share or shares of Common
Stock represented by such certificate by paying therefor a sum in
cash equal to the net asset value of such share or shares,
computed in accordance with the Articles of Incorporation and
these By-laws, as of the close of business of the New York Stock
Exchange on the day the certificate for such share or shares is
received for transfer, provided such share is received by the
Corporation prior to such close of business; if such share is
received by the Corporation after such close of business or on a
day on which the New York Stock Exchange is not open for
unrestricted trading, the net asset value shall be determined as
of the close of business of said Exchange on the first business
day on which said Exchange is open for unrestricted trading next
succeeding such day of receipt; provided, however, that written
advice to the transferor and proposed transferee of such share or
shares of such purchase must be given within seven days following
the date of the receipt of the certificate representing such
share or shares and payment of the purchase price shall be made
as soon as is reasonably practicable thereafter.
(b) The Board of Directors may authorize one or more
officers of the Corporation to exercise its right to purchase any
Common Stock of the Corporation in specific cases or generally.
ARTICLE VII
Net Asset Value
For the purposes of the computation of not asset value,
as referred to in the Articles of Incorporation or these By-Laws,
the following rules shall apply:
(a) The net asset value of each share of Common Stock
of the Corporation for the purpose of the issue or sale of such
Common Stock at its net asset value shall be determined as of the
close of business of the New York Stock Exchange on the date on
which the subscription for such Common Stock is accepted provided
such subscription is accepted prior to such close of business; if
such subscription is accepted after such close of business or if
such date of acceptance is a day on which the New York Stock
Exchange is not open for unrestricted trading, the net asset
value shall be determined as of the close of business of said
Exchange on the first business day thereafter on which
subscriptions for Common Stock are accepted by the Corporation
and on which said Exchange is open for unrestricted trading.
(b) The net asset value of each share of Common Stock
of the Corporation surrendered to the Corporation for redemption
pursuant to the Articles of Incorporation or these By-Laws shall
be determined as of the close of business of the New York Stock
Exchange on the date on which such Common Stock is so
surrendered, provided such share is received by the Corporation
prior to such close of business; if such share is received by the
Corporation after such close of business or on a day on which the
New York Stock Exchange is not open for unrestricted trading, the
net asset value shall be determined as of the close of business
of said Exchange on the first business day on which said Exchange
is open for unrestricted trading next succeeding such date of
receipt.
(c) The net asset value of each share of Common Stock
of the Corporation as of the close of business of the New York
Stock Exchange on any day shall be the quotient obtained by
dividing the value, as at such close, of the net assets of the
Corporation (i.e., the value of the assets of the Corporation
less its liabilities exclusive of capital stock and surplus) by
the total number of shares of Common Stock outstanding at such
close, all determined and computed as follows:
(1) The assets of the Corporation shall be deemed to include (A) all cash on hand, on deposit, or on call, (B) all bills and notes and accounts receivable, (C) all shares of stock and subscription rights and other securities owned or contracted for by the Corporation, other than shares of its own Common Stock, (D) all stock and cash dividends and cash distributions to be received by the Corporation and not yet received by it but declared to stockholders of record on or before the time at which the net asset value is being determined, (E) all interest accrued on any interest bearing securities owned by the Corporation and (F) all other property of every kind and nature including prepaid expenses; the value of such assets to be determined as follows:
(a) Securities listed or admitted to trading an a national securities exchange shall be valued at their last sale price prior to the time of the determination of value; or if no sales are reported on that date at the mean of the current bid and asked price. Securities listed or admitted to trading on more than one national securities exchange shall be valued at the last sale price or at the mean of the last quoted bid and asked price, whichever is appropriate, on the exchange which in the opinion of the Board of Directors represents the principal market for such securities. Unlisted securities shall be valued at the mean of the current bid and asked price as obtained from at least two dealers regularly making a market in such securities, provided that when a bid and asked price can be obtained from only one such dealer such securities shall be valued at the mean of the bid and asked price obtained from such dealer. Securities and other assets for which market quotations are not readily available shall be valued at their fair value, as determined by or under the authority of the Board of Directors.
(2) The liabilities of the Corporation shall include (A) all bills and notes and accounts payable, (B) all administrative expenses payable and/or accrued (including management and advisory fees payable and/or accrued, including in the case of any contingent feature thereof, an estimate based on the facts existing at the time), (C) all contractual obligations for the payment of money or property, including the amount of any unpaid dividend declared upon the Corporation's Common Stock and payable to stockholders of record on or before the time at which net asset value is being determined, (D) all reserves, if any, authorized or approved by the Board of Directors for taxes, including reserves for taxes at current rates based on any unrealized appreciation in the value of the assets of the Corporation and (E) all other liabilities of the Corporation of whatsoever kind and nature except liabilities represented by outstanding capital stock and surplus of the Corporation.
(3) For the purposes hereof
(A) Common Stock subscribed for shall not be deemed to be outstanding until immediately after the time as of which its net asset value is determined as provided in the Articles of Incorporation next following the acceptance of the subscription therefor and the subscription price thereof shall not be deemed to be an asset of the Corporation until such time, but immediately thereafter such capital stock shall be deemed to be outstanding and until paid the subscription price thereof shall be deemed to be an asset of the Corporation.
(B) Common Stock surrendered for redemption by the Corporation pursuant to the provisions of the Articles of Incorporation or purchased by the Corporation pursuant to the provisions of the Articles of Incorporation or these By-Laws shall be deemed to be outstanding to and including the time as of which its net asset value is determined as provided in the Articles of Incorporation but not thereafter, and thereupon and until paid
the redemption or purchase price thereof shall be deemed to be a liability of the Corporation.
(C) Changes in the holdings of the Corporation's portfolio securities shall be accounted for on a trade date basis.
(D) Expenses, including management and advisory fees, shall be included to date of calculation.
In addition to the foregoing, the Board of Directors is empowered
subject to applicable legal requirements, in its absolute
discretion, to establish other methods for determining the net
asset value of each share of Common Stock of the Corporation and
to determine other times within which not asset value shall be in
effect for purposes of computing the price at which stock shall
be issued, redeemed or repurchased.
ARTICLE VIII
Miscellaneous
Section 1. Reserves. There may be set aside out of any
funds of the Corporation available for dividends such sum or sums
as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet
contingencies, or for repairing or maintaining any property of
the Corporation, or for the purchase of additional property, or
for such other purpose as the Board of Directors shall think
conducive to the interest of the Corporation, and the Board of
Directors may modify or abolish any such reserve.
Section 2. Dividends. Dividends upon the Common Stock
of the Corporation may, subject to the provisions of the Articles
of Incorporation and of the provisions of applicable law, be
declared by the Board of Directors at any time. Dividends may be
paid in cash, in property or in shares of the Corporation's
Common Stock, subject to the provisions of the statute and of the
Articles of Incorporation and of applicable law.
Section 3. Capital Gains Distributions. The amount and
number of capital gains distributions paid to the stockholders
during each fiscal year shall be determined by the Board of
Directors. Each such payment shall be accompanied by a statement
as to the source of such payment, to the extent required by law.
Section 4. Checks. All checks or demands for money and
notes of the Corporation shall be signed by such officer or
officers or such other person or persons as the Board of
Directors may from time to time designate.
Section 5. Fiscal Year. The fiscal year of the
Corporation shall be fixed by resolution of the Board of
Directors.
Section 6. Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its
organization and the words "Corporate Seal, Maryland". The seal
may be used by causing it or a facsimile thereof to be impressed
or affixed or in another manner reproduced.
Section 7. Filing of By-Laws. A certified copy of the
By-Laws, including all amendments, shall be kept at the principal
office of the Corporation in the State of Maryland.
Section 8. Annual Report. The books of account of the
Corporation shall be examined by an independent firm of public
accountants at the close of each annual fiscal period of the
Corporation and at such other times, if any, as may be directed
by the Board of Directors of the Corporation. Within 120 days of
the close of each annual fiscal period a report based upon such
examination at the close of that fiscal period shall be mailed to
each stockholder of the Corporation of record at the close of
such annual fiscal period, unless the Board of Directors shall
set another record date, at his address as the same appears on
the books of the Corporation. Each such report shall contain
such information as is required to be set forth therein by the
Investment Company Act of 1940 and the rules and regulations
promulgated by the Securities and Exchange Commission thereunder.
Such report shall also be submitted at the annual meeting of the
stockholders and filed within twenty days thereafter at the
principal office of the Corporation in the State of Maryland.
Section 9. Stock Ledger. The Corporation shall
maintain at its principal office outside of the State of Maryland
an original or duplicate stock ledger containing the names and
addresses of all stockholders and the number of shares of stock
held by each stockholder. Such stock ledger may be in written
form or in any other form capable of being converted into written
form within a reasonable time for visual inspection.
Section 10. Ratification of Accountants by
Stockholders. At every annual meeting of the stockholders of the
Corporation there shall be submitted for ratification or
rejection the name of the firm of independent public accountants
which has been selected for the current fiscal year in which such
annual meeting is held by a majority of those members of the
Board of Directors who are not investment advisers of, or
interested persons (as defined in the Investment Company Act of
1940) of an investment adviser of, or officers or employees of,
the Corporation.
Section 11. Custodian. All securities and similar
investments owned by the Corporation shall be held by a custodian
which shall be either a trust company or a national bank of good
standing, having a capital surplus and undivided profit
aggregating not less than two million dollars ($2,000,000), or a
member firm of the New York Stock Exchange. The terms of custody
of such securities and cash shall include such provisions
required to be contained therein by the Investment Company Act of
1940 and the rules and regulations promulgated thereunder by the
Securities and Exchange Commission.
Upon the resignation or inability to serve of any such
custodian the Corporation shall (a) use its best efforts to
obtain a successor custodian, (b) require the cash and securities
of the Corporation held by the custodian to be delivered directly
to the successor custodian, and (c) in the event that no
successor custodian can be found, submit to the stockholders of
the Corporation, before permitting delivery of such cash and
securities to anyone other than a successor custodian, the
question whether the Corporation shall be dissolved or shall
function without a custodian; provided, however, that nothing
herein contained shall prevent the termination of any agreement
between the Corporation and any such custodian by the affirmative
vote of the holders of a majority of all the capital stock of the
Corporation at the time outstanding and entitled to vote. Upon
its resignation or inability to serve and pending action by the
Corporation as set forth in this section, the custodian may
deliver any assets of the Corporation held by it to a qualified
bank or trust company in the City of New York, or to a member
firm of the New York Stock Exchange selected by it, such assets
to be held subject to the terms of custody which governed such
retiring custodian
Section 12. Investment Adviser. The Corporation may
enter into a management or advisory, underwriting, distribution
or administration contract with any person, firm, partnership,
association or corporation but such contract or contracts shall
continue in effect only so long as such continuance is
specifically approved annually by a majority of the Board of
Directors or by vote of the holders of a majority of the voting
securities of the Corporation, and in either case by vote of a
majority of the directors who are not parties to such contract or
interested persons (as defined in the Investment Company Act) of
any such party cast in person at a meeting called for the purpose
of voting on such approval.
ARTICLE IX
Amendments
The Board of Directors shall have the power, by a
majority vote of the entire Board of Directors at any meeting
thereof, to make, alter and repeal by-laws of the Corporation.
69900020.AW4
EXHIBIT 5
SEQUOIA FUND, INC.
July 1, 1993
Ruane, Cunniff & Co., Inc.
Dear Sirs:
We herewith confirm our agreement with you as follows:
1. We are engaged in the business of investing and reinvesting our capital in securities of the type and in accordance with the limitations specified in our Certificate of Incorporation, By-Laws, Registration Statement filed with the Securities and Exchange Commission under the Investment Company Act, and any representations made in our Prospectus, all in such manner and to such extent as may from time to time be authorized by our Board of Directors. We enclose copies of the documents listed above and will from time to time furnish you with amendments thereof. We will also keep you currently advised as to the make-up of our portfolio of securities.
2. (a) We hereby employ you to advise us in respect of investing and reinvesting our capital as above specified, and, without limiting the generality of the foregoing, to provide management and other services specified below.
(b) You on your own motion will advise us whenever in your opinion conditions are such as to make it desirable that a specified security or group of securities be eliminated from the portfolio or added to it. You will also keep us in touch with important developments affecting our portfolio and on your own initiative will furnish us from time to time with such information as you may believe appropriate for this purpose, whether concerning the individual companies whose securities are included in our portfolio, or the industries in which they engage, or the economy generally. Similar information is to be furnished us with reference to securities which you may believe desirable for inclusion in our portfolio. You will also furnish us with such statistical information with respect to the securities which may hold or contemplate purchasing as you may believe appropriate or as we reasonably may request. In advising us, you will bear in mind the limitations imposed by our Certificate of Incorporation and statement of policy included in our Registration Statement under the Investment Company Act and
the limitations in the Internal Revenue Code in respect of regulated investment companies.
(c) It is understood that you will from time to time employ or associate with you such persons as you believe to be particularly fitted to assist you in the execution of this agreement, the compensation of such persons to be paid by you. No obligation may be incurred on our behalf in any such respect. During the continuance of this agreement you will provide persons satisfactory to our Board of Directors to serve as officers and employees of our corporation, if elected or appointed as the case may be. These shall be a chairman of the board, a president, a secretary, a treasurer, and such additional officers and employees as may reasonably be necessary for the conduct of our business. You or your affiliates (other than us) shall pay the entire salaries and wages of all of our officers, directors, and employees who are interested persons of you or your affiliates (other than by reason of being our directors, officers or employees), and the salaries of such persons shall not be deemed to be expenses incurred by us for purposes of paragraph 3 hereof.
3. It is further agreed that you shall be responsible
for the following expenses incurred by us during each year or
portion thereof that this agreement is in effect between us:
(i) the compensation of any of our directors, officers and
employees who are interested persons of you or your affiliates
(other than by reason of being our directors, officers or
employees), (ii) fees and expenses of registering our shares
under the appropriate Federal securities laws and of qualifying
our shares under applicable State Blue Sky laws, including
expenses attendant upon renewing and increasing such
registrations and qualifications, and (iii) expenses of printing
and distributing our prospectus and sales and advertising
materials. We shall be responsible and hereby assume the
obligation for payment of all our other expenses, including
(a) brokerage and commission expenses, (b) Federal, State or
local taxes, including issue and transfer taxes, incurred by or
levied on us, (c) interest charges on borrowings,
(d) compensation of any of our directors, officers or employees
who are not interested persons of you or your affiliates (other
than by reason of being our directors, officers or employees),
(e) charges and expenses of our custodian, transfer agent and
registrar, (f) costs of proxy solicitations, (g) legal and
auditing expenses and (h) payment of all investment and advisory
fees (including the fees payable to you hereunder). However, you
shall reimburse us for the excess, if any, in any year of our
operating expenses over 1 1/2% of our average daily net asset
values up to a maximum of $30,000,000, plus 1% of our average
daily net asset values in excess of $30,000,000. Such operating
expenses will not include expenses listed in clauses (a), (b) and
(c). Computations under this expense limitation shall be made
monthly during our fiscal year, on the basis of the average daily net asset values and operating expenses thus far during such year, and the amount of the excess, if any, over the prorated amount of the expense limitation shall be paid by you to us (or, where such amount of the excess is less than the monthly payment by us to you of the management fee set forth below, shall be deducted from such monthly payment of the management fee), after taking into account, however, any previous monthly payments under the operating expense limitation during such fiscal year. This operating expense limitation will be prorated for the portion of the fiscal year from July 1, 1993 through December 31, 1993.
4. We shall expect of you, and you will give us the benefit of, your best judgment and efforts in rendering these services to us, and we agree as an inducement to your undertaking these services that you shall not be liable hereunder for any mistake of judgment or in any event whatsoever, except for lack of good faith, provided that nothing herein shall be deemed to protect, or purport to protect, you against any liability to us or to our security holders to which you would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of your duties hereunder or by reason of your reckless disregard of your obligations and duties hereunder.
5. In consideration of the foregoing we will pay you, for each year or portion of a year during which this agreement is effective between us, a management fee of 1% per annum of our average daily net asset values. The management fee will be accrued daily and paid to you at the end of each month of our fiscal year.
6. This agreement shall become effective on July 1, 1993, and shall continue in force until December 31, 1993 and thereafter for successive twelve-month periods (computed from each January 1) provided that such continuance is specifically approved annually by vote of a majority of our outstanding voting securities (as defined in the Investment Company Act) or by our Board of Directors; and by a majority of our directors who are not parties to this agreement or interested persons, as defined in the Investment Company Act, of any such party (other than as directors of our corporation) cast in person at a meeting called for the purpose of voting on such approval. This agreement may be terminated at any time, without the payment of any penalty, by vote of a majority of our outstanding voting securities (as so defined), or by a vote of a majority of our entire Board of Directors on sixty days' written notice to you, or by you on sixty days' written notice to us.
7. This agreement may not be transferred, assigned, sold or in any manner hypothecated or pledged by you and this
agreement shall terminate automatically in the event of its assignment. The terms "transfer", "assignment" and "sale" as used in this paragraph shall have the meanings ascribed thereto by governing law and any interpretation thereof contained in rules or regulations promulgated by the Securities and Exchange Commission thereunder.
8. Except to the extent necessary to perform your obligations hereunder, nothing herein shall be deemed to limit or restrict your right, or the right of any of your officers, directors or employees who may also be a director, officer or employee of ours, or persons otherwise affiliated with us (within the meaning of the Investment Company Act of 1940) to engage in any other business or to devote time and attention to the management or other aspects of any other business, whether of a similar or dissimilar nature, or to render services of any kind to any other corporation, firm, individual or association. It is understood that you and your affiliates may render similar investment advisory services to clients other than us for compensation which may be more or less than the compensation charged to us for such services.
9. It is understood that, whether or not we follow the investment advice and recommendations given by you to us thereunder, the provisions contained herein concerning your compensation hereunder shall be binding on you and us.
If the foregoing is in accordance with your understanding, will you kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
SEQUOIA FUND, INC.
By /s/ William J. Ruane ______________________ Chairman of the Board |
Accepted:
Ruane, Cunniff & Co., Inc.
By /s/ Richard T. Cunniff
_______________________
President
|
69900020.AY3
Sequoia Fund, Inc. 1 New York Plaza New York, N.Y. 10004
July 15, 1970
Ruane, Cunniff & Stires, Inc.
1 New York Plaza
New York, New York 10004
Dear Sirs:
This is to confirm that, in consideration of the agreements on your part herein contained and on the terms and conditions set forth herein, we have agreed that you shall be, for the period of this agreement, the exclusive distributor, as our agent, for the unsold portion of such number of shares of our Common Stock (par value $.10 per share) as may from time to time be effectively registered under the Securities Act of 1933, as amended (hereinafter referred to as the "Act").
1. We hereby agree to offer through you as our agent, and to solicit through you as our agent, offers to subscribe to, the unsold balance of shares of our Common Stock as shall then be effectively registered under the Act, and you are appointed our agent for such purpose. All subscriptions for our shares obtained by you shall be directed to us for acceptance and shall not be binding on us until accepted by us. You shall have no authority to make binding subscriptions on our behalf. We reserve the right to sell our shares directly to investors, whether or not such sales shall have been solicited by us. The right given to you under this agreement shall not apply to shares issued in connection with (a) the merger or consolidation of any other investment company with us, (b) our acquisition by purchase or otherwise of all or substantially all of the assets or stock of any other investment company, or (c) the reinvestment in our shares by our stockholders of dividends or other distributions or any other offering of shares to our stockholders.
2. You will use your best efforts to obtain subscriptions to our shares upon the terms and conditions
contained herein and in the then current Prospectus, including the offering price. You will send to us promptly all subscriptions placed with you. We shall advise you of the net asset value per share as of the close of business of the New York Stock Exchange on the last day of each month and at such other times as it shall have been determined by us. We shall furnish you from time to time, for use in connection with the offering of our shares, such other information with respect to us and our shares as you may reasonably request. We shall supply you with such copies of our current Prospectus in effect from time to time as you may request. You are not authorized to give any information or to make any representations, other than those contained in the Registration Statement or Prospectus, as then in effect, filed under the Act covering our shares or which we may authorize in writing. You may use employees and agents at your cost and expense to assist you in carrying out your obligations hereunder but no such employee or agent shall be deemed to be our agent or have any rights under this agreement.
3. We reserve the right to suspend the offering of our shares at any time, in the absolute discretion of our Board of Directors, and upon notice of such suspension you shall cease to offer our shares hereunder.
4. Both of us will cooperate with each other in taking such action as may be necessary to qualify our shares for sale under the securities laws of such states as we may designate, provided, that you shall not be required to register as a broker-dealer or file a consent to service of process in any such state. Pursuant to our Investment Advisory Contract, RCS Management Company, Inc., our investment adviser, shall pay all expenses of the qualification of our shares and our qualification under such laws and all expenses of registration of our shares under the Act. You shall pay all expenses relating to your broker-dealer qualification.
5. We represent to you that our Registration Statement and Prospectus (as in effect from time to time) under the Act have been or will be, as the case may be, carefully prepared in conformity with the requirements of the Act and the rules and regulations of the Securities and Exchange Commission thereunder. We represent and warrant to you that our Registration Statement and Prospectus contain or will contain all statements required to be stated therein in accordance with the Act and the rules and regulations of
said Commission, and that all statements of fact contained or to be contained therein are or will be true and correct at the time indicated or the effective date as the case may be; that neither our Registration Statement nor our Prospectus, when it shall become effective or be authorized for use, will include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading to a purchaser of our shares. We will from time to time file such amendment or amendments to our Registration Statement and Prospectus as, in the light of future developments, shall, in the opinion of our counsel, be necessary in order to have our Registration Statement and Prospectus at all times contain all material facts required to be stated therein or necessary to make any statements therein not misleading to a purchaser of our shares, but, if we shall not file such amendment or amendments within fifteen days after receipt by us of a written request from you to do so, you may, at your option, terminate this agreement immediately. We shall not file any amendment to our Registration Statement or Prospectus without giving you reasonable notice thereof in advance; provided, however, that nothing in this agreement contained shall in any way limit our right to file at any time such amendments to our Registration Statement and/or Prospectus, of whatever character, as we may deem advisable, such right being in all respects absolute and unconditional. We represent and warrant to you that any amendment to our Registration Statement or Prospectus hereafter filed by us will, when it becomes effective, contain all statements required to be stated therein in accordance with the Act and the rules and regulations of said Commission, that all statements of fact contained therein will, when the same shall become effective, be true and correct and that no such amendment, when it becomes effective, will include an untrue statement of a material fact or will omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading to a purchaser of our shares.
6. We agree to indemnify, defend and hold you,
and any person who controls you within the meaning of
Section 15 of the Act, free and harmless from and against
any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such
claims, demands or liabilities and any counsel fees incurred
in connection therewith) which you or any such controlling
person may incur, under the Act, or under common law or
otherwise, arising out of or based upon any alleged untrue statement of a material fact contained in our Registration Statement or Prospectus in effect from time to time under the Act or arising out of or based upon any alleged omission to state a material fact required to be stated in either thereof or necessary to make the statements in either thereof not misleading; provided, however, that in no event shall anything herein contained be so construed as to protect you against any liability to us or our security holders to which you would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence, in the performance of your duties, or by reason of your reckless disregard of your obligations and duties under this agreement. Our agreement to indemnify you and any such controlling person as aforesaid is expressly conditioned upon our being notified of any action brought against you or any such controlling person, such notification to be given by letter or by telegram addressed to us at our principal office in New York, N.Y., and sent to us by the person against whom such action is brought, within ten days after the summons or other first legal process shall have been served. The failure so to notify us of any such action shall not relieve us from any liability which we may have to the person against whom such action is brought by reason of any such alleged untrue statement or omission otherwise than on account of our indemnity agreement contained in this paragraph 6. We will be entitled to assume the defense of any suit brought to enforce any such claim, demand or liability, but, in such case, such defense shall be conducted by counsel of good standing chosen by us and approved by you. In the event we do elect to assume the defense of any such suit and retain counsel of good standing approved by you, the defendant or defendants in such suit shall bear the fees and expenses of any additional counsel retained by any of them; but in case we do not elect to assume the defense of any such suit, or in case you do not approve of counsel chosen by us, we will reimburse you or the controlling person or persons named as defendant or defendants in such suit, for the fees and expenses of any counsel retained by you or them. Our indemnification agreement contained in this paragraph numbered 6 and our representations and warranties in this agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of you or any controlling person and shall survive the sale of any of our shares made pursuant to subscriptions obtained by you. This agreement of indemnity will inure exclusively to your benefit, to the benefit of your successors and assigns, and
to the benefit of any controlling persons and their successors and assigns. We agree promptly to notify you of the commencement of any litigation or proceedings against us in connection with the issue and sale of any of our common stock.
7. You agree to indemnify, defend and hold us, our several officers and directors, and any person who controls us within the meaning of Section 15 of the Act, free and harmless from and against any and all claims, demands, liabilities and expenses (including the cost of investigating or defending such claims, demands or liabilities and any counsel fees incurred in connection therewith) which we, our officers or directors, or any such controlling person may incur under the Act or under common law or otherwise, but only to the extent that such liability or expense incurred by us, our officers or directors or such controlling person resulting from such claims or demands shall arise out of or be based upon any alleged untrue statement of a material fact contained in information furnished in writing by you to us for use in our Registration Statement or Prospectus in effect from time to time under the Act, or shall arise out of or be based upon any alleged omission to state a material fact in connection with such information required to be stated in the Registration Statement or Prospectus or necessary to make such information not misleading. Your agreement to indemnify us, our officers and directors, and any such controlling person as aforesaid is expressly conditioned upon your being notified of any action brought against us, our officers or directors or any such controlling person, such notification to be given by letter or telegram addressed to you at your principal office in New York, New York, and sent to you by the person against whom such action is brought, within ten days after the summons or other first legal process shall have be served. You shall have a right to control the defense of such action, with counsel of your own choosing, satisfactory to us, if such action is based solely upon such alleged misstatement or omission on your part, and in any other event you or such controlling person shall each have the right to participate in the defense or preparation of the defense of any such action. The failure so to notify you of any such action shall not relieve you from any liability which you may have to us, our officers or directors, or to such controlling person by reason of any such untrue statement of omission on your part otherwise than on account of your indemnity agreement contained in this paragraph 7.
8. We agree to advise you immediately:
(a) of any request by the Securities and Exchange Commission for amendments to our Registration Statement or Prospectus or for additional information.
(b) in the event of the issuance by the Securities and Exchange Commission of any stop order suspending the effectiveness of our Registration Statement or Prospectus or the initiation of any proceedings for that purpose,
(c) of the happening of any material event which makes untrue any statement made in our Registration Statement or Prospectus or which requires the making of a change in either thereof in order to make the statements therein not misleading, and
(d) of all action of the Securities and Exchange Commission with respect to any amendments to our Registration Statement or Prospectus which may from time to time be filed with the Securities and Exchange Commission under the Act.
9. This agreement shall become effective on the date on which our pending Registration Statement on Form S-5 relating to shares of our common stock becomes effective and shall remain in effect until May 31, 1971, and thereafter automatically for successive twelve-month periods (computed from each June 1), provided that such continuance is specifically approved at least annually by our Board of Directors [including a majority of our directors who are not parties to this agreement or affiliated persons, as defined in the Investment Company Act, of any such party (other than as directors of our corporation)], or by vote of a majority of our outstanding voting, securities (as defined in the Investment Company Act). This agreement may be terminated at any time, without the payment of any penalty, by vote of a majority of outstanding voting securities (as so defined), or by a vote of a majority of our entire Board of Directors, on sixty days' written notice to you, or by you on sixty days' written notice to us.
10. This agreement may not be transferred, assigned, sold or in any manner hypothecated or pledged by
you and this agreement shall terminate automatically in the event of any such transfer, assignment, sale, hypothecation or pledge. The terms "transfer, "assignment" and "sale" as used in this paragraph shall have the meanings ascribed thereto by governing law and any interpretation thereof contained in rules or regulations promulgated by the Securities and Exchange Commission thereunder.
11. Except to the extent necessary to perform your obligations hereunder, nothing herein shall be deemed to limit or restrict your right, or the right of any of your officers, directors or employees who may also be a director, officer or employee of ours, or persons otherwise affiliated with us (within the meaning of the Investment Company Act), to engage in any other business or to devote time and attention to the management or other aspects of any other business, whether of a similar or dissimilar nature, or to render services of any kind to any other corporation, firm, individual or association.
If the foregoing is in accordance with your understanding, will you kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
SEQUOIA FUND, INC.
/s/ William J. Ruane
By_______________________
ACCEPTED:
July 15, 1970
|
RUANE, CUNNIFF & STIRES, INC.
/s/ Richard T. Cunniff
By_____________________________
|
69900020.AX9
CUSTODY AGREEMENT
Agreement made as of this 10th day of June, 1996, between Sequoia Fund, Inc., a corporation organized and existing under the laws of the State of Maryland having its principal office and place of business at 767 Fifth Avenue, New York, NY 10153 (hereinafter called the "Fund"), and THE BANK OF NEW YORK, a New York corporation authorized to do a banking business, having its principal office and place of business at 48 Wall Street, New York, New York 10286 (hereinafter called the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set forth, the Fund and the Custodian 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. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry system for United States and federal agency securities, its successor or successors and its nominee or nominees.
2. "Call Option" shall mean an exchange traded option with respect to Securities other than Stock Index Options, Futures Contracts, and Futures Contract Options entitling the holder, upon timely exercise and payment of the exercise price, as specified therein, to purchase from the writer thereof the specified underlying Securities.
3. "Certificate" shall mean 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 Fund by any two Officers, and the term Certificate shall also include instructions by the Fund to the Custodian communicated by a Terminal Link.
4. "Clearing Member" shall mean a registered broker- dealer which is a clearing member under the rules of O.C.C. and a member of a national securities exchange any broker-dealer reasonably believed by the Custodian to be such a clearing member.
5. "Collateral Account" shall mean a segregated account so denominated which is specifically allocated to a Series and pledged to the Custodian as security for, and in consideration of, the Custodian's issuance of (a) any Put Option guarantee letter or similar document described in paragraph 8 of Article V herein, or (b) any receipt described in Article V or VIII herein.
6. "Covered Call Option" shall mean an exchange traded option entitling the holder, upon timely exercise and payment of the exercise price, as specified therein, to purchase from the writer thereof the specified underlying Securities (excluding Futures Contracts) which are owned by the writer thereof and subject to appropriate restrictions.
7. "Depository" shall mean The Depository Trust Company ("DTC"), a clearing agency registered with the Securities and Exchange Commission, its successor or successors and its nominee or nominees. The term "Depository" shall further mean and include any other person authorized to act as a depository under the Investment Company Act of 1940, its successor or successors and its nominee or nominees, specifically identified in a certified copy of a resolution of the Fund's Board of Directors specifically approving deposits therein by the Custodian.
8. "Financial Futures Contract" shall mean the firm commitment to buy or sell fixed income securities including, without limitation, U.S. Treasury Bills, U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank certificates of deposit, and Eurodollar certificates of deposit, during a specified month at an agreed upon price.
9. "Futures Contract" shall mean a Financial Futures Contract and/or Stock Index Futures Contracts.
10. "Futures Contract Option" shall mean an option with respect to a Futures Contract.
11. "Margin Account" shall mean a segregated account in the name of a broker, dealer, futures commission merchant, or a Clearing Member, or in the name of the Fund for the benefit of a broker, dealer, futures commission merchant, or Clearing Member, or otherwise, in accordance with an agreement between the Fund, the Custodian and a broker, dealer, futures commission merchant or a Clearing Member (a "Margin Account Agreement"), separate and distinct from the custody account, in which certain Securities and/or money of the Fund shall be deposited and withdrawn from time to time in connection with such transactions as the Fund may from time to time determine. Securities held in the Book-Entry System or the Depository shall be deemed to have been deposited in, or withdrawn from, a Margin Account upon the Custodian's effecting an appropriate entry in its books and records.
12. "Money Market Security" shall be deemed to include, without limitation, certain Reverse Repurchase Agreements, debt obligations issued or guaranteed as to interest and principal by the government of the United States or agencies or instrumentalities thereof, any tax, bond or revenue anticipation note issued by any state or municipal government or public authority, commercial paper, certificates of deposit and bankers' acceptances, repurchase agreements with respect to the same and bank time deposits, where the purchase and sale of such securities normally requires settlement in federal funds on the same day as such purchase or sale.
13. "O.C.C." shall mean the Options Clearing Corporation, a clearing agency registered under Section 17A of the Securities Exchange Act of 1934, its successor or successors, and its nominee or nominees.
14. "Officers" shall be deemed to include the President, any Vice President, the Secretary, the Treasurer, the Controller, any Assistant Secretary, any Assistant Treasurer, and any other person or persons, whether or not any such other person is an officer of the Fund, duly authorized by the Board of Directors of the Fund to execute any Certificate, instruction, notice or other instrument on behalf of the Fund and listed in the Certificate annexed hereto as Appendix A or such other Certificate as may be received by the Custodian from time to time.
15. "Option" shall mean a Call Option, Covered Call Option, Stock Index option and/or a Put Option.
16. "Oral Instructions" shall mean verbal instructions actually received by the Custodian from an officer or from a person reasonably believed by the Custodian to be an Officer.
17. "Put Option" shall mean an exchange traded option with respect to Securities other than Stock Index Options, Futures Contracts, and Futures Contract Options entitling the holder, upon timely exercise and tender of the specified underlying Securities, to sell such Securities to the writer thereof for the exercise price.
18. "Reverse Repurchase Agreement" shall mean an agreement pursuant to which the Fund sells Securities and agrees to repurchase such Securities at a described or specified date and price.
19. "Security" shall be deemed to include, without limitation, Money Market Securities, Call Options, Put Options, Stock Index Options, Stock Index Futures Contracts, Stock Index Futures Contract Options, Financial Futures Contracts, Financial
Contract Options, Reverse Repurchase Agreements, common stocks and other securities having characteristics similar to common stocks, preferred stocks, debt obligations issued by state or municipal governments and by public authorities, (including, without limitation, general obligation bonds, revenue bonds, industrial bonds and industrial development bonds), bonds, debentures, notes, mortgages or other obligations, and any certificates, receipts, warrants or other instruments representing rights to receive, purchase, sell or subscribe for the same, or evidencing or representing any other rights or interest therein, or any property or assets.
20. "Senior Security Account" shall mean an account maintained and specifically allocated to a Series under the terms of this Agreement as a segregated account, by recordation or otherwise, within the custody account in which certain Securities and/or other assets of the Fund specifically allocated to such Series shall be deposited and withdrawn from time to time in accordance with Certificates received by the Custodian in connection with such transactions as the Fund may from time to time determine.
21. "Series" shall mean the various portfolios, if any, of the Fund as described from time to time in the current and effective prospectus for the Fund and listed on Appendix B hereto as amended from time to time.
22. "Shares" shall mean the shares of capital stock of the Fund, each of which is, in the case of a Fund having Series, allocated to a particular Series.
23. "Stock Index Futures Contract" shall mean a bilateral agreement pursuant to which the parties agree to take or make delivery of an amount of cash equal to a specified dollar amount times the difference between the value of a particular stock index at the close of the last business day of the contract and the price at which the futures contract is originally struck.
24. "Stock Index Option" shall mean an exchange traded option entitling the holder, upon timely exercise, to receive an amount of cash determined by reference to the difference between the exercise price and the value of the index on the date of exercise.
25. "Terminal Link" shall mean an electronic data transmission link between the Fund and the Custodian requiring in connection with each use of the Terminal Link by or on behalf of the Fund use of an authorization code provided by the Custodian and at least two access codes established by the Fund.
ARTICLE II.
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as custodian of the Securities and moneys at any time owned by the Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III.
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this Article and in Article VIII, the Fund will deliver or cause to be delivered to the Custodian all Securities and all moneys owned by it, at any time during the period of this Agreement, and shall specify with respect to such Securities and money the Series to which the same are specifically allocated. The Custodian shall segregate, keep and maintain the assets of the Series separate and apart. The Custodian will not be responsible for any Securities and moneys not actually received by it. The Custodian will be entitled to reverse any credits made on the Fund's behalf where such credits have been previously made and moneys are not finally collected. The Fund shall deliver to the Custodian a certified resolution of the Board of Directors of the Fund, substantially in the form of Exhibit A hereto, approving, authorizing and instructing the Custodian on a continuous and on- going basis to deposit in the Book-Entry System all Securities eligible for deposit therein, regardless of the Series to which the same are specifically allocated and to utilize the Book-Entry System to the extent possible in connection with its performance hereunder, including, without limitation, in connection with settlements of purchases and sales of Securities, loans of Securities and deliveries and returns of Securities collateral. Prior to a deposit of Securities specifically allocated to a Series in the Depository, the Fund shall deliver to the Custodian a certified resolution of the Board of Directors of the Fund, substantially in the form of Exhibit B hereto, approving, authorizing and instructing the Custodian on a continuous and ongoing basis until instructed to the contrary by a Certificate actually received by the Custodian to deposit in the Depository all Securities specifically allocated to such Series eligible for deposit therein, and to utilize the Depository to the extent possible with respect to such Securities in connection with its performance hereunder, including, without limitation, in connection with settlements of purchases and sales of Securities, loans of Securities, and deliveries and returns of Securities
collateral. Securities and moneys deposited in either the Book- Entry System or the Depository will be represented in accounts which include only assets held by the Custodian for customers, including, but not limited to, accounts in which the Custodian acts in a fiduciary or representative capacity and will be specifically allocated on the Custodian's books to the separate account for the applicable Series. Prior to the Custodian's accepting, utilizing and acting with respect to Clearing Member confirmations for Options and transactions in options for a Series as provided in this Agreement, the Custodian shall have received a certified resolution of the Fund's Board of Directors, substantially in the form of Exhibit C hereto, approving, authorizing and instructing the Custodian on a continuous and on- going basis, until instructed to the contrary by a Certificate actually received by the Custodian, to accept, utilize and act in accordance with such confirmations as provided in this Agreement with respect to such Series.
2. The Custodian shall establish and maintain separate accounts, in the name of each Series, and shall credit to the separate account for each Series all moneys received by it for the account of the Fund with respect to such Series. Money credited to a separate account for a Series shall be disbursed by the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates setting forth the name and address of the person to whom the payment is to be made, the Series account from which payment is to be made and the purpose for which payment is to be made; or
(c) In payment of the fees and in reimbursement of the expenses and liabilities of the Custodian attributable to such Series.
3. Promptly after the close of business on each day, the Custodian shall furnish the Fund with confirmations and a summary, on a per Series basis, of all transfers to or from the account of the Fund for a Series, either hereunder or with any co-custodian or sub-custodian appointed in accordance with this Agreement during said day. Where Securities are transferred to the account of the Fund for a Series, the Custodian shall also by book-entry or otherwise identify as belonging to such Series a quantity of Securities 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 the Book-Entry System or the Depository. At least monthly and from time to time, the Custodian shall furnish the Fund with a detailed statement, on a per Series basis, of the Securities and moneys held by the Custodian for the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and in Article VIII, all Securities held by the Custodian hereunder, which are issued or issuable only in bearer form, except such Securities as are held in the Book-Entry System, shall be held by the Custodian in that form; all other Securities held hereunder may be registered in the name of the Fund, in the name of any duly appointed registered nominee of the Custodian as the Custodian may from time to time determine, or in the name of the Book-Entry System or the Depository or their successor or successors, or their nominee or nominees. The 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 the Book-Entry System or the Depository any Securities which it may hold hereunder and which may from time to time be registered in the name of the Fund. The Custodian shall hold all such Securities specifically allocated to a Series which are not held in the Book-Entry System or in the Depository in a separate account in the name of such Series physically segregated at all times from those of any other person or persons.
5. Except as otherwise provided in this Agreement and unless otherwise instructed to the contrary by a Certificate, the Custodian by itself, or through the use of the Book-Entry System or the Depository with respect to Securities held hereunder and therein deposited, shall with respect to all Securities held for the Fund hereunder in accordance with preceding paragraph 4:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon such Securities which are called, but only if either (i) the Custodian receives a written notice of such call, or (ii) notice of such call appears in one or more of the publications listed in Appendix C annexed hereto, which may be amended at any time by the Custodian without the prior notification or consent or the Fund;
(c) Present for payment and collect the amount payable upon all Securities which mature;
(d) Surrender Securities in temporary form for definitive Securities;
(e) Execute, as custodian, any necessary declarations or certificates of ownership under the Federal Income Tax Laws or the laws or regulations of any other taxing authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry System or the Depository with respect to Securities therein deposited, for
the account of a Series, all rights and similar securities issued with respect to any Securities held by the Custodian for such Series hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian, directly or through the use of the Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons as may be designated in such Certificate proxies, consents, authorizations, and any other instruments whereby the authority of the Fund as owner of any Securities held by the Custodian hereunder for the Series specified in such Certificate may be exercised;
(b) Deliver any Securities held by the Custodian hereunder for the Series specified in such Certificate 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 and receive and hold hereunder specifically allocated to such Series any cash or other Securities received in exchange;
(c) Deliver any Securities held by the Custodian hereunder for the Series specified in such Certificate to any protective committee, reorganization committee or other person in connection with the reorganization, refinancing, merger, consolidation, recapitalization or sale of assets of any corporation, and receive and hold hereunder specifically allocated to such Series such certificates of deposit, interim receipts or other instruments or documents as may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the Series specified in such Certificate, and take such other steps as shall be stated in such Certificate to be for the purpose of effectuating any duly authorized plan of liquidation, reorganization, merger, consolidation or recapitalization of the Fund; and
(e) Present for payment and collect the amount payable upon Securities not described in preceding paragraph 5(b) of this Article which may be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained herein, the Custodian shall not be required to obtain possession of any instrument or certificate representing any Futures Contract, any Option, or any Futures Contract Option until after it shall have determined, or shall have received a Certificate from the Fund stating, that any such instruments or certificates are available. The Fund shall deliver to the Custodian such a
Certificate no later than the business day preceding the availability of any such instrument or certificate. Prior to such availability, the Custodian shall comply with Section 17(f) of the Investment Company Act of 1940, as amended, in connection with the purchase, sale, settlement, closing out or writing of Futures Contracts, Options, or Futures Contract Options by making payments or deliveries specified in Certificates received by the Custodian in connection with any such purchase, sale, writing, settlement or closing out upon its receipt from a broker, dealer, or futures commission merchant of a statement or confirmation reasonably believed by the Custodian to be in the form customarily used by brokers, dealers, or future commission merchants with respect to such Futures Contracts, Options, or Futures Contract Options, as the case may be, confirming that such Security is held by such broker, dealer or futures commission merchant, in book-entry form or otherwise, in the name of the Custodian (or any nominee of the Custodian) as custodian for the Fund, provided, however, that notwithstanding the foregoing, payments to or deliveries from the Margin Account, and payments with respect to Securities to which a Margin Account relates, shall be made in accordance with the terms and conditions of the Margin Account Agreement. Whenever any such instruments or certificates are available, the Custodian shall, notwithstanding any provision in this Agreement to the contrary, make payment for any Futures Contract, Option, or Futures Contract Option for which such instruments or such certificates are available only against the delivery to the Custodian of such instrument or such certificate, and deliver any Futures Contract, Option or Futures Contract Option for which such instruments or such certificates are available only against receipt by the Custodian of payment therefor. Any such instrument or certificate delivered to the Custodian shall be held by the Custodian hereunder in accordance with, and subject to, the provisions of this Agreement.
ARTICLE IV.
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the Fund, other than a purchase of an Option, a Futures Contract, or a Futures Contract Option, the Fund shall deliver to the Custodian (i) with respect to each purchase of Securities which are not Money Market Securities, a Certificate, and (ii) with respect to each purchase of Money Market Securities, a Certificate or Oral Instructions, specifying with respect to each such purchase: (a) the Series to which such Securities are to be specifically allocated; (b) the name of the issuer and the title of the Securities; (c) the number of shares or the principal
amount purchased and accrued interest, if any; (d) the date of purchase and settlement; (e) the purchase price per unit; (f) the total amount payable upon such purchase; (g) the name of the person from whom or the broker through whom the purchase was made, and the name of the clearing broker, if any; and (h) the name of the broker to whom payment is to be made. The Custodian shall, upon receipt of Securities purchased by or for the Fund, pay to the broker specified in the Certificate out of the moneys held for the account of such Series the total amount payable upon such purchase, provided that the same conforms to the total amount payable as set forth in such Certificate or Oral Instructions.
2. Promptly after each sale of Securities by the Fund, other than a sale of any Option, Futures Contract, Futures Contract Option, or any Reverse Repurchase Agreement, the Fund shall deliver to the Custodian (i) with respect to each sale of Securities which are not Money Market Securities, a Certificate, and (ii) with respect to each sale of Money Market Securities, a Certificate or Oral Instructions, specifying with respect to each such sale: (a) the Series to which such Securities were specifically allocated; (b) the name of the issuer and the title of the Security; (c) the number of shares or principal amount sold, and accrued interest, if any; (d) the date of sale; (e) the sale price per unit; (f) the total amount payable to the Fund upon such sale; (g) the name of the broker through whom or the person to whom the sale was made, and the name of the clearing broker, if any; and (h) the name of the broker to whom the Securities are to be delivered. The Custodian shall deliver the Securities specifically allocated to such Series to the broker specified in the Certificate against payment of the total amount payable to the Fund upon such sale, provided that the same conforms to the total amount payable as set forth in such Certificate or Oral Instructions.
ARTICLE V.
OPTIONS
1. Promptly after the purchase of any Option by the Fund, the Fund shall deliver to the Custodian a Certificate specifying with respect to each Option purchased: (a) the Series to which such Option is specifically allocated; (b) the type of Option (put or call); (c) the name of the issuer and the title and number of shares subject to such Option or, in the case of a Stock Index Option, the stock index to which such Option relates and the number of Stock Index Options purchased; (d) the expiration date; (e) the exercise price; (f) the dates of purchase and settlement; (g) the total amount payable by the Fund in connection with such purchase; (h) the name of the Clearing Member through whom such option was purchased; and (i) the name
of the broker to whom payment is to be made. The Custodian shall pay, upon receipt of a Clearing Member's statement confirming the purchase of such Option held by such Clearing Member for the account of the Custodian (or any duly appointed and registered nominee of the Custodian) as custodian for the Fund, out of moneys held for the account of the Series to which such Option is to be specifically allocated, the total amount payable upon such purchase to the Clearing Member through whom the purchase was made, provided that the same conforms to the total amount pay- able as set forth in such Certificate.
2. Promptly after the sale of any Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate specifying with respect to each such sale: (a) the Series to which such option was specifically allocated; (b) the type of option (put or call); (c) the name of the issuer and the title and number of shares subject to such Option or, in the case of a Stock Index Option, the stock index to which such Option relates and the number of Stock Index Options sold; (d) the date of sale; (e) the sale price; (f) the date of settlement; (g) the total amount payable to the Fund upon such sale; and (h) the name of the Clearing Member through whom the sale was made. The Custodian shall consent to the delivery of the Option sold by the Clearing Member which previously supplied the confirmation described in preceding paragraph 1 of this Article with respect to such Option against payment to the Custodian of the total amount payable to the Fund, provided that the same conforms to the total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call
Option purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall deliver to the Custodian a Certificate specifying with
respect to such Call Option: (a) the Series to which such Call
Option was specifically allocated; (b) the name of the issuer and
the title and number of shares subject to the Call Option;
(c) the expiration date; (d) the date of exercise and settlement;
(e) the exercise price per share; (f) the total amount to be paid
by the Fund upon such exercise; and (g) the name of the Clearing
Member through whom such Call Option was exercised. The
Custodian shall, upon receipt of the Securities underlying the
Call Option which was exercised, pay out of the moneys held for
the account of the Series to which such Call Option was
specifically allocated the total amount payable to the Clearing
Member through whom the Call option was exercised, provided that
the same conforms to the total amount payable as set forth in
such Certificate.
4. Promptly after the exercise by the Fund of any Put Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate specifying with
respect to such Put Option: (a) the Series to which such Put Option was specifically allocated; (b) the name of the issuer and the title and number of shares subject to the Put Option; (c) the expiration date; (d) the date of exercise and settlement; (e) the exercise price per share; (f) the total amount to be paid to the Fund upon such exercise; and (g) the name of the Clearing Member through whom such Put Option was exercised. The Custodian shall, upon receipt of the amount payable upon the exercise of the Put Option, deliver or direct the Depository to deliver the Securities specifically allocated to such Series, provided the same conforms to the amount payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Stock
Index Option purchased by the Fund pursuant to paragraph 1
hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) the
Series to which such Stock Index Option was specifically
allocated; (b) the type of Stock Index Option (put or call);
(c) the number of Options being exercised; (d) the stock index to
which such Option relates, (e) the expiration date; (f) the
exercise price; (g) the total amount to be received by the Fund
in connection with such exercise; and (h) the Clearing Member
from whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Covered Call Option: (a) the
Series for which such Covered Call Option was written; (b) the
name of the issuer and the title and number of shares for which
the Covered Call Option was written and which underlie the same;
(c) the expiration date; (d) the exercise price; (e) the premium
to be received by the Fund; (f) the date such Covered Call Option
was written; and (g) the name of the Clearing Member through whom
the premium is to be received. The Custodian shall deliver or
cause to be delivered, in exchange for receipt of the premium
specified in the Certificate with respect to such Covered Call
Option, such receipts as are required in accordance with the
customs prevailing among Clearing Members dealing in Covered Call
Options and shall impose, or direct the Depository to impose,
upon the underlying Securities specified in the Certificate
specifically allocated to such Series such restrictions as may be
required by such receipts. Notwithstanding the foregoing, the
Custodian has the right, upon prior written notification to the
Fund, at any time to refuse to issue any receipts for Securities
in the possession of the Custodian and not deposited with the
Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and described in the preceding paragraph of this Article is exercised, the Fund shall promptly deliver to the Custodian a
Certificate instructing the Custodian to deliver, or to direct the Depository to deliver, the Securities subject to such Covered Call Option and specifying: (a) the Series for which such Covered Call Option was written; (b) the name of the issuer and the title and number of shares subject to the Covered Call Option; (c) the Clearing Member to whom the underlying Securities are to be delivered; and (d) the total amount payable to the Fund upon such delivery. Upon the return and/or cancellation of any receipts delivered pursuant to paragraph 6 of this Article, the Custodian shall deliver, or direct the Depository to deliver, the underlying Securities as specified in the Certificate against payment of the amount to be received as set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect to such Put Option: (a) the Series for which such
Put Option was written; (b) the name of the issuer and the title
and number of shares for which the Put Option is written and
which underlie the same; (c) the expiration date; (d) the
exercise price; (e) the premium to be received by the Fund;
(f) the date such Put Option is written; (g) the name of the
Clearing Member through whom the premium is to be received and to
whom a Put Option guarantee letter is to be delivered; (h) the
amount of cash, and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the
Senior Security Account for such Series; and (i) the amount of
cash and/or the amount and kind of Securities specifically
allocated to such Series to be deposited into the Collateral
Account for such Series. The Custodian shall, after making the
deposits into the Collateral Account specified in the
Certificate, issue a Put Option guarantee letter substantially in
the form utilized by the Custodian on the date hereof, and
deliver the same to the Clearing Member specified in the
Certificate against receipt of the premium specified in said
Certificate. Notwithstanding the foregoing, the Custodian shall
be under no obligation to issue any Put Option guarantee letter
or similar document if it is unable to make any of the
representations contained therein.
9. Whenever a Put Option written by the Fund and
described in the preceding paragraph is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying:
(a) the Series to which such Put Option was written; (b) the name
of the issuer and title and number of shares subject to the Put
Option; (c) the Clearing Member from whom the underlying
Securities are to be received; (d) the total amount payable by
the Fund upon such delivery; (e) the amount of cash and/or the
amount and kind of Securities specifically allocated to such
Series to be withdrawn from the Collateral Account for such
Series and (f) the amount of cash and/or the amount and kind of
Securities, specifically allocated to such Series, if any, to be withdrawn from the Senior Security Account. Upon the return and/or cancellation of any Put Option guarantee letter or similar document issued by the Custodian in connection with such Put Option, the Custodian shall pay out of the moneys held for the account of the Series to which such Put Option was specifically allocated the total amount payable to the Clearing Member specified in the Certificate as set forth in such Certificate against delivery of such Securities, and shall make the withdrawals specified in such Certificate.
10. Whenever the Fund writes a Stock Index Option, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) the
Series for which such Stock Index Option was written; (b) whether
such Stock Index Option is a put or a call; (c) the number of
options written; (d) the stock index to which such Option
relates; (e) the expiration date; (f) the exercise price; g) the
Clearing Member through whom such Option was written; (h) the
premium to be received by the Fund; (i) the amount of cash and/or
the amount and kind of Securities, if any, specifically allocated
to such Series to be deposited in the Senior Security Account for
such Series; (j) the amount of cash and/or the amount and kind of
Securities, if any, specifically allocated to such Series to be
deposited in the Collateral Account for such Series; and (k) the
amount of cash and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in a Margin
Account, and the name in which such account is to be or has been
established. The Custodian shall, upon receipt of the premium
specified in the Certificate, make the deposits, if any, into the
Senior Security Account specified in the Certificate, and either
(1) deliver such receipts, if any, which the Custodian has
specifically agreed to issue, which are in accordance with the
customs prevailing among Clearing Members in Stock Index Options
and make the deposits into the Collateral Account specified in
the Certificate, or (2) make the deposits into the Margin Account
specified in the Certificate.
11. Whenever a Stock Index Option written by the Fund
and described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Stock Index Option:
(a) the Series for which such Stock Index Option was written;
(b) such information as may be necessary to identify the Stock
Index Option being exercised; (c) the Clearing Member through
whom such Stock Index Option is being exercised; (d) the total
amount payable upon such exercise, and whether such amount is to
be paid by or to the Fund; (e) the amount of cash and/or amount
and kind of Securities, if any, to be withdrawn from the Margin
Account; and (f) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Senior Security
Account for such Series; and the amount of cash and/or the amount and kind of Securities, if any, to be withdrawn from the Collateral Account for such Series. Upon the return and/or cancellation of the receipt, if any, delivered pursuant to the preceding paragraph of this Article) the Custodian shall pay out of the moneys held for the account of the Series to which such Stock Index Option was specifically allocated to the Clearing Member specified in the Certificate the total amount payable, if any, as specified therein.
12. Whenever the Fund purchases any Option identical to
a previously written Option described in paragraphs, 6, 8 or 10
of this Article in a transaction expressly designated as a
"Closing Purchase Transaction" in order to liquidate its position
as a writer of an Option, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to the Option
being purchased: (a.) that the transaction is a Closing Purchase
Transaction; (b) the Series for which the Option was written;
(c) the name of the issuer and the title and number of shares
subject to the Option, or, in the case of a Stock Index Option,
the stock index to which such Option relates and the number of
Options held; (d) the exercise price; (e) the premium to be paid
by the Fund; (f) the expiration date; (g) the type of Option (put
or call); (h) the date of such purchase; (i) the name of the
Clearing Member to whom the premium is to be paid; and (j) the
amount of cash and/or the amount and kind of Securities, if any,
to be withdrawn from the Collateral Account, a specified Margin
Account, or the Senior Security Account for such Series. Upon
the Custodian's payment of the premium and the return and/or
cancellation of any receipt issued pursuant to paragraphs 6, 8 or
10 of this Article with respect to the Option being liquidated
through the Closing Purchase Transaction, the Custodian shall
remove, or direct the Depository to remove, the previously
imposed restrictions on the Securities underlying the Call
Option.
13. Upon the expiration, exercise or consummation of a Closing Purchase Transaction with respect to any Option purchased or written by the Fund and described in this Article, the Custodian shall delete such Option from the statements delivered to the Fund pursuant to paragraph 3 Article III herein, and upon the return and/or cancellation of any receipts issued by the Custodian, shall make such withdrawals from the Collateral Account, and the Margin Account and/or the Senior Security Account as may be specified in a Certificate received in connection with such expiration, exercise, or consummation.
ARTICLE VI.
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract,
the Fund shall deliver to the Custodian a Certificate specifying
with respect to such Futures Contract, (or with respect to any
number of identical Futures Contract(s)): (a) the Series for
which the Futures Contract is being entered; (b) the category of
Futures Contract (the name of the underlying stock index or
financial instrument); (c) the number of identical Futures
Contracts entered into; (d) the delivery or settlement date of
the Futures Contract(s); (e) the date the Futures Contract(s) was
(were) entered into and the maturity date; (f) whether the Fund
is buying (going long) or selling (going short) on such Futures
Contract(s); (g) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security
Account for such Series; (h) the name of the broker, dealer, or
futures commission merchant through whom the Futures Contract was
entered into; and (i) the amount of fee or commission, if any, to
be paid and the name of the broker, dealer, or futures commission
merchant to whom such amount is to be paid. The Custodian shall
make the deposits, if any, to the Margin Account in accordance
with the terms and conditions of the Margin Account Agreement.
The Custodian shall make payment out of the moneys specifically
allocated to such Series of the fee or commission, if any,
specified in the Certificate and deposit in the Senior Security
Account for such Series the amount of cash and/or the amount and
kind of Securities specified in said Certificate.
2. (a) Any variation margin payment or similar payment required to be made by the Fund to a broker, dealer, or futures commission merchant with respect to an outstanding Futures Contract, shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment from a broker, dealer, or futures commission merchant to the Fund with respect to an outstanding Futures Contract, shall be received and dealt with by the Custodian in accordance with the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is retained by the Fund until delivery or settlement is made on such Futures Contract, the Fund shall deliver to the Custodian a Certificate specifying: (a) the Futures Contract and the Series to which the same relates; (b) with respect to a Stock Index Futures Contract, the total cash settlement amount to be paid or received, and with respect to a Financial Futures Contract, the Securities and/or amount of cash to be delivered or received; (c) the broker, dealer, or futures commission merchant
to or from whom payment or delivery is to be made or received; and (d) the amount of cash and/or Securities to be withdrawn from the Senior Security Account for such Series. The Custodian shall make the payment or delivery specified in the Certificate, and delete such Futures Contract from the statements delivered to the Fund pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to offset a Futures Contract held by the Custodian hereunder, the Fund shall deliver to the Custodian a Certificate specifying: (a) the items of information required in a Certificate described in paragraph 1 of this Article, and (b) the Futures Contract being offset. The Custodian shall make payment out of the money specifically allocated to such Series of the fee or commission, if any, specified in the Certificate and delete the Futures Contract being offset from the statements delivered to the Fund pursuant to paragraph 3 of Article III herein, and make such withdrawals from the Senior Security Account for such Series as may be specified in such Certificate. The withdrawals, if any, to be made from the Margin Account shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement.
ARTICLE VII.
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract Option by the Fund, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Futures Contract Option: (a) the Series to which such option is specifically allocated; (b) the type of Futures Contract option (put or call); (c) the type of Futures Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Contract Option purchased; (d) the expiration date; (e) the exercise price; (f) the dates of purchase and settlement; (g) the amount of premium to be paid by the Fund upon such purchase; (h) the name of the broker or futures commission merchant through whom such option was purchased; and (i) the name of the broker, or futures commission merchant, to whom payment is to be made. The Custodian shall pay out of the moneys specifically allocated to such Series, the total amount to be paid upon such purchase to the broker or futures commissions merchant through whom the purchase was made, provided that the same conforms to the amount set forth in such Certificate.
2. Promptly after the sale of any Futures Contract Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to each such sale: (a) Series to which
such Futures Contract Option was specifically allocated; (b) the type of Future Contract Option (put or call); (c) the type of Futures Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Contract Option; d) the date of sale; (e) the sale price; (f) the date of settlement; (g) the total amount payable to the Fund upon such sale; and (h) the name of the broker of futures commission merchant through whom the sale was made. The Custodian shall consent to the cancellation of the Futures Contract Option being closed against payment to the Custodian of the total amount payable to the Fund, provided the same conforms to the total amount payable as set forth in such Certificate.
3. Whenever a Futures Contract option purchased by the
Fund pursuant to paragraph 1 is exercised by the Fund, the Fund
shall promptly deliver to the Custodian a Certificate specifying:
(a) the Series to which such Futures Contract Option was
specifically allocated; (b) the particular Futures Contract
Option (put or call) being exercised; (c) the type of Futures
Contract underlying the Futures Contract Option; (d) the date of
exercise; (e) the name of the broker or futures commission
merchant through whom the Futures Contract Option is exercised;
(f) the net total amount, if any, payable by the Fund; (g) the
amount, if any, to be received by the Fund; and (h) the amount of
cash and/or the amount and kind of Securities to be deposited in
the Senior Security Account for such Series. The Custodian shall
make, out of the moneys and Securities specifically allocated to
such Series, the payments, if any, and the deposits, if any, into
the Senior Security Account as specified in the Certificate. The
deposits, if any, to be made to the Margin Account shall be made
by the Custodian in accordance with the terms and conditions of
the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Futures Contract Option: (a) the
Series for which such Futures Contract Option was written;
(b) the type of Futures Contract Option (put or call); (c) the
type of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures
Contract Option; (d) the expiration date; (e) the exercise price;
(f) the premium to be received by the Fund; (g) the name of the
broker or futures commission merchant through whom the premium is
to be received; and (h) the amount of cash and/or the amount and
kind of Securities, if any, to be deposited in the Senior
Security Account for such Series. The Custodian shall, upon
receipt of the premium specified in the Certificate, make out of
the moneys and Securities specifically allocated to such Series
the deposits into the Senior Security Account, if any, as
specified in the Certificate. The deposits, if any, to be made
to the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
5. Whenever a Futures Contract Option written by the
Fund which is a call is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series
to which such Futures Contract Option was specifically allocated;
(b) the particular Futures Contract Option exercised; (c) the
type of Futures Contract underlying the Futures Contract Option;
(d) the name of the broker or futures commission merchant through
whom such Futures Contract Option was exercised; (e) the net
total amount, if any, payable to the Fund upon such exercise;
(f) the net total amount, if any, payable by the Fund upon such
exercise; and (g) the amount of cash and/or the amount and kind
of Securities to be deposited in the Senior Security Account for
such Series. The Custodian shall, upon its receipt of the net
total amount payable to the Fund, if any, specified in such
Certificate make the payments, if any, and the deposits, if any,
into the Senior Security Account as specified in the Certificate.
The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is written
by the Fund and which is a put is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying:
(a) the Series to which such option was specifically allocated;
(b) the particular Futures Contract Option exercised; (c) the
type of Futures Contract underlying such Futures Contract Option;
(d) the name of the broker or futures commission merchant through
whom such Futures Contract Option is exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the
net total amount, if any, payable by the Fund upon such exercise;
and (g) the amount and kind of Securities and/or cash to be
withdrawn from or deposited in, the Senior Security Account for
such Series, if any. The Custodian shall, upon its receipt of
the net total amount payable to the Fund, if any, specified in
the Certificate, make out of the moneys and Securities
specifically allocated to such Series, the payments, if any, and
the deposits, if any, into the Senior Security Account as
specified in the Certificate. The deposits to and/or withdrawals
from the Margin Account, if any, shall be made by the Custodian
in accordance with the terms and conditions of the Margin Account
Agreement.
7. Whenever the Fund purchases any Futures Contract option identical to a previously written Futures Contract Option described in this Article in order to liquidate its position as a writer of such Futures Contract Option, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to the Futures Contract Option being purchased: (a) the Series to
which such option is specifically allocated; (b) that the transaction is a closing transaction; (c) the type of Future Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Option Contract; (d) the exercise price; (e) the premium to be paid by the Fund; (f) the expiration date; (g) the name of the broker or futures commission merchant to whom the premium is to be paid; and (h) the amount of cash and/or the amount and kind of Securities, if any, to be withdrawn from the Senior Security Account for such Series. The Custodian shall effect the withdrawals from the Senior Security Account specified in the Certificate. The withdrawals, if any, to be made from the Margin Account shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement.
8. Upon the expiration, exercise, or consummation of a closing transaction with respect to, any Futures Contract Option written or purchased by the Fund and described in this Article, the Custodian shall (a) delete such Futures Contract Option from the statements delivered to the Fund pursuant to paragraph 3 of Article III herein and, (b) make such withdrawals from and/or in the case of an exercise such deposits into the Senior Security Account as may be specified in a Certificate. The deposits to and/or withdrawals from the Margin Account, if any, shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of a Futures Contract Option described in this Article shall be subject to Article VI hereof.
ARTICLE VIII.
SHORT SALES
1. Promptly after any short sales by any Series of the Fund, the Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the Series for which such short sale was made; (b) the name of the issuer and the title of the Security; (c) the number of shares or principal amount sold, and accrued interest or dividends, if any; (d) the dates of the sale and settlement; (e) the sale price per unit; (f) the total amount credited to the Fund upon such sale, if any, (g) the amount of cash and/or the amount and kind of Securities, if any, which are to be deposited in a Margin Account and the name in which such Margin Account has been or is to be established; (h) the amount of cash and/or the amount and kind of Securities, if any, to be deposited in a Senior Security Account, and (i) the name of the broker through whom such short sale was made. The Custodian shall upon its receipt of a statement from such broker confirming such sale and that the total amount credited to the Fund upon
such sale, if any, as specified in the Certificate is held by such broker for the account of the Custodian (or any nominee of the Custodian) as custodian of the Fund, issue a receipt or make the deposits into the Margin Account and the Senior Security Account specified in the Certificate.
2. In connection with the closing-out of any short
sale, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such closing out:
(a) the Series for which such transaction is being made; (b) the
name of the issuer and the title of the Security; (c) the number
of shares or the principal amount, and accrued interest or
dividends, if any, required to effect such closing-out to be
delivered to the broker; (d) the dates of closing-out and
settlement; (e) the purchase price per unit; (f) the net total
amount payable to the Fund upon such closing-out; (g) the net
total amount payable to the broker upon such closing-out; (h) the
amount of cash and the amount and kind of Securities to be
withdrawn, if any, from the Margin Account; (i) the amount of
cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Senior Security Account; and (j) the name of
the broker through whom the Fund is effecting such closing-out.
The Custodian shall, upon receipt of the net total amount payable
to the Fund upon such closing-out, and the return and/or
cancellation of the receipts, if any, issued by the Custodian
with respect to the short sale being closed-out, pay out of the
moneys held for the account of the Fund to the broker the net
total amount payable to the broker, and make the withdrawals from
the Margin Account and the Senior Security Account, as the same
are specified in the Certificate.
ARTICLE IX.
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repurchase
Agreement with respect to Securities and money held by the
Custodian hereunder, the Fund shall deliver to the Custodian a
Certificate, or in the event such Reverse Repurchase Agreement is
a Money Market Security, a Certificate or Oral Instructions
specifying: (a) the Series for which the Reverse Repurchase
Agreement is entered; (b) the total amount payable to the Fund in
connection with such Reverse Repurchase Agreement and
specifically allocated to such Series; (c) the broker or dealer
through or with whom the Reverse Repurchase Agreement is entered;
(d) the amount and kind of Securities to be delivered by the Fund
to such broker or dealer; (e) the date of such Reverse Repurchase
Agreement; and (f) the amount of cash and/or the amount and kind
of Securities, if any, specifically allocated to such Series to
be deposited in a Senior Security Account for such Series in
connection with such Reverse Repurchase Agreement. The Custodian
shall, upon receipt of the total amount payable to the Fund specified in the Certificate, Oral Instructions, or Written Instructions make the delivery to the broker or dealer, and the deposits, if any, to the Senior Security Account, specified in such Certificate or Oral Instructions.
2. Upon the termination of a Reverse Repurchase
Agreement described in preceding paragraph 1 of this Article, the
Fund shall promptly deliver a Certificate or, in the event such
Reverse Repurchase Agreement is a Money Market Security, a
Certificate or Oral Instructions to the Custodian specifying:
(a) the Reverse Repurchase Agreement being terminated and the
Series for which same was entered; (b) the total amount payable
by the Fund in connection with such termination; (c) the amount
and kind of Securities to be received by the Fund and
specifically allocated to such Series in connection with such
termination; (d) the date of termination; (e) the name of the
broker or dealer with or through whom the Reverse Repurchase
Agreement is to be terminated; and (f) the amount of cash and/or
the amount and kind of Securities to be withdrawn from the Senior
Securities Account for such Series. The Custodian shall, upon
receipt of the amount and kind of Securities to be received by
the Fund specified in the Certificate or Oral Instructions, make
the payment to the broker or dealer, and the withdrawals, if any,
from the Senior Security Account, specified in such Certificate
or Oral Instructions.
ARTICLE X.
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically allocated to a Series held by the Custodian hereunder, the Fund shall deliver or cause to be delivered to the Custodian a Certificate specifying with respect to each such loan: (a) the Series to which the loaned Securities are specifically allocated; (b) the name of the issuer and the title of the Securities, (c) the number of shares or the principal amount loaned, (d) the date of loan and delivery, (e) the total amount to be delivered to the Custodian against the loan of the Securities, including the amount of cash collateral and the premium, if any, separately identified, and (f) the name of the broker, dealer, or financial institution to which the loan was made. The Custodian shall deliver the Securities thus designated to the broker, dealer or financial institution to which the loan was made upon receipt of the total amount designated as to be delivered against the loan of Securities. The Custodian may accept payment in connection with a delivery otherwise than through the Book-Entry System or Depository only in the form of a certified or bank cashier's check payable to the order of the Fund or the Custodian drawn on New York Clearing House funds and
may deliver Securities in accordance with the customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of
Securities by the Fund, the Fund shall deliver or cause to be
delivered to the Custodian a Certificate specifying with respect
to each such loan termination and return of Securities: (a) the
Series to which the loaned Securities are specifically allocated;
(b) the name of the issuer and the title of the Securities to be
returned, (c) the number of shares or the principal amount to be
returned, (d) the date of termination, (e) the total amount to be
delivered by the Custodian (including the cash collateral for
such Securities minus any offsetting credits as described in said
Certificate), and (f) the name of the broker, dealer, or the
financial institution from which the Securities will be returned.
The Custodian shall receive all Securities returned from the
broker, dealer, or financial institution to which receipt thereof
shall pay, out of the moneys held for the account of the Fund,
the total amount payable upon such return of Securities as set
forth in the Certificate.
ARTICLE XI.
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or withdrawals from, a Senior Security Account as specified in a Certificate received by the Custodian. Such Certificate shall specify the Series for which such deposit or withdrawal is to be made and the amount of cash and/or the amount and kind of Securities specifically allocated to such Series to be deposited in, or withdrawn from, such Senior Security Account for such Series. In the event that the Fund fails to specify in a Certificate the Series, the name of the issuer, the title and the number of shares or the principal amount of any particular Securities to be deposited by the Custodian into, or withdrawn from, a Senior Securities Account, the Custodian shall be under no obligation to make any such deposit or withdrawal and shall so notify the Fund.
2. The Custodian shall make deliveries or payments from a Margin Account to the broker, dealer, futures commission merchant or Clearing Member in whose name, or for whose benefit, the account was established as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions with respect to Securities deposited in any Margin Account shall be dealt with in accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security interest in and to any property at any time held by the Custodian in any Collateral Account described herein. In accordance with applicable law the Custodian may enforce its lien and realize on any such property whenever the Custodian has made payment or delivery pursuant to any Put Option guarantee letter or similar document or any receipt issued hereunder by the Custodian. In the event the Custodian should realize on any such property net proceeds which are less than the Custodian's obligations under any Put Option guarantee letter or similar document or any receipt, such deficiency shall be a debt owed the Custodian by the Fund within the scope of Article XIV herein.
5. On each business day the Custodian shall furnish the
Fund with a statement with respect to each Margin Account in
which money or Securities are held specifying as of the close of
business on the previous business day: (a) the name of the Margin
Account; (b) the amount and kind of Securities held therein; and
(c) the amount of money held therein. The Custodian shall make
available upon request to any broker, dealer, or futures
commission merchant specified in the name of a Margin Account a
copy of the statement furnished the Fund with respect to such
Margin Account.
6. Promptly after the close of business on each business day in which cash and/or Securities are maintained in a Collateral Account for any Series, the Custodian shall furnish the Fund with a statement with respect to such Collateral Account specifying the amount of cash and/or the amount and kind of Securities held therein. No later than the close of business next succeeding the delivery to the Fund of such statement, the Fund shall furnish to the Custodian a Certificate or Written Instructions specifying the then market value of the Securities described in such statement. In the event such then market value is indicated to be less than the Custodian's obligation with respect to any outstanding Put Option guarantee letter or similar document, the Fund shall promptly specify in a Certificate the additional cash and/or Securities to be deposited in such Collateral Account to eliminate such deficiency.
ARTICLE XII.
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution of the Board of Directors of the Fund, certified by the Secretary or any Assistant Secretary, either (i) setting forth with respect to the Series specified therein the date of the declaration of a dividend or distribution, the date of payment thereof, the record date as of which shareholders entitled to payment shall be determined, the amount payable per
Share of such Series to the shareholders of record as of that date and the total amount payable to the Dividend Agent and any sub-dividend agent or co-dividend agent of the Fund on the payment date, or (ii) authorizing with respect to the Series specified therein the declaration of dividends and distributions on a daily basis and authorizing the Custodian to rely on Oral Instructions or a Certificate setting forth the date of the declaration of such dividend or distribution, the date of payment thereof, the record date as of which shareholders entitled to payment shall be determined, the amount payable per Share of such Series to the shareholders of record as of that date and the total amount payable to the Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution, Oral Instructions or Certificate, as the case may be, the Custodian shall pay out of the moneys held for the account of each Series the total amount payable to the Dividend Agent and any sub-dividend agent or co-dividend agent of the Fund with respect to such Series.
ARTICLE XIII.
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver to the Custodian a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade date, and price; and
(b) The amount of money to be received by the Custodian for the sale of such Shares and specifically allocated to the separate account in the name of such Series.
2. Upon receipt of such money from the Transfer Agent, the Custodian shall credit such money to the separate account in the name of the Series for which such money was received.
3. Upon issuance of any Shares of any Series described in the foregoing provisions of this Article, the Custodian shall pay, out of the money held for the account of such Series, all original issue or other taxes required to be paid by the Fund in connection with such issuance upon the receipt of a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund desires the Custodian to make payment out of the money held by the Custodian hereunder in connection with a redemption of any Shares, it shall furnish to the Custodian a Certificate
specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice setting forth the Series and number of Shares received by the Transfer Agent for redemption and that such Shares are in good form for redemption, the Custodian shall make payment to the Transfer Agent out of the moneys held in the separate account in the name of the Series the total amount specified in the Certificate issued pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption of any Shares, whenever any Shares are redeemed pursuant to any check redemption privilege which may from time to time be offered by the Fund, the Custodian, unless otherwise instructed by a Certificate, shall, upon receipt of an advice from the Fund or its agent setting forth that the redemption is in good form for redemption in accordance with the check redemption procedure, honor the check presented as part of such check redemption privilege out of the moneys held in the separate account or the Series of the Shares being redeemed.
ARTICLE XIV.
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian, should in its sole discretion advance funds on behalf of any Series which results in an overdraft because the moneys held by the Custodian in the separate account for such Series shall be insufficient to pay the total amount payable upon a purchase of Securities specifically allocated to such Series, as set forth in a Certificate or Oral Instructions, or which results in an overdraft in the separate account of such Series for some other reason, or if the Fund is for any other reason indebted to the Custodian with respect to a Series, including any indebtedness to The Bank of New York under the Fund's Cash Management and Related Services Agreement, (except a borrowing for investment or for temporary or emergency purposes using Securities as collateral pursuant to a separate agreement and subject to the provisions of paragraph 2 of this Article), such overdraft or indebtedness shall be deemed to be a loan made by the Custodian to the Fund for such Series payable on demand and shall bear interest from the date incurred at a rate per annum (based on a 360-day year for the actual number of days involved) equal to 1/2% over Custodian's prime commercial lending rate in effect from time to time, such rate to be adjusted on the effective date of any change in such prime commercial lending
rate but in no event to be less than 6% per annum. In addition, the Fund hereby agrees that the Custodian shall have a continuing lien and security interest in and to any property specifically allocated to such Series at any time held by it for the benefit of such Series or in which the Fund may have an interest which is then in the Custodian's possession or control or in possession or control of any third party acting in the Custodian's behalf. The Fund authorizes the Custodian, in its sole discretion, at any time to charge any such overdraft or indebtedness together with interest due thereon against any balance of account standing to such Series' credit on the Custodian's books. In addition, the Fund hereby covenants that on each Business Day on which either it intends to enter a Reverse Repurchase Agreement and/or otherwise borrow from a third party, or which next succeeds a Business Day on which at the close of business the Fund had outstanding a Reverse Repurchase Agreement or such a borrowing, it shall prior to 9 a.m., New York City time, advise the Custodian, in writing, of each such borrowing, shall specify the Series to which the same relates, and shall not incur any indebtedness not so specified other than from the Custodian.
2. The Fund will cause to be delivered to the Custodian
by any bank (including, if the borrowing is pursuant to a
separate agreement, the Custodian) from which it borrows money
for investment or for temporary or emergency purposes using
Securities held by the Custodian hereunder as collateral for such
borrowings, a notice or undertaking in the form currently
employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing:
(a) the Series to which such borrowing relates; (b) the name of
the bank, (c) the amount and terms of the borrowing, which may be
set forth by incorporating by reference an attached promissory
note, duly endorsed by the Fund, or other loan agreement, (d) the
time and date, if known, on which the loan is to be entered into,
(e) the date on which the loan becomes due and payable, (f) the
total amount payable to the Fund on the borrowing date, (g) the
market value of Securities to be delivered as collateral for such
loan, including the name of the issuer, the title and the number
of shares or the principal amount of any particular Securities,
and (h) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and
that such loan is in conformance with the Investment Company Act
of 1940 and the Fund's prospectus. The Custodian shall deliver
on the borrowing date specified in a Certificate the specified
collateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan
payable, provided that the same conforms to the total amount
payable as set forth in the Certificate. The Custodian may, at
the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights therein given the lending bank by virtue of any promissory note or loan agreement. The Custodian shall deliver such Securities as additional collateral as may be specified in a Certificate to collateralize further any transaction described in this paragraph. The Fund shall cause all Securities released from collateral status to be returned directly to the Custodian, and the Custodian shall receive from time to time such return of collateral as may be tendered to it. In the event that the Fund fails to specify in a Certificate the Series, the name of the issuer, the title and number of shares or the principal amount of any particular Securities to be delivered as collateral by the Custodian, the Custodian shall not be under any obligation to deliver any Securities.
ARTICLE XV.
TERMINAL LINK
1. At no time and under no circumstances shall the Fund be obligated to have or utilize the Terminal Link, and the provisions of this Article shall apply if, but only if, the Fund in its sole and absolute discretion elects to utilize the Terminal Link to transmit Certificates to the Custodian.
2. The Terminal Link shall be utilized by the Fund only for the purpose of the Fund providing Certificates to the Custodian with respect to transactions involving Securities or for the transfer of money to be applied to the payment of dividends, distributions or redemptions of Fund Shares, and shall be utilized by the Custodian only for the purpose of providing notices to the Fund. Such use shall commence only after the Fund shall have delivered to the Custodian a Certificate substantially in the form of Exhibit D and shall have established access codes. Each use of the Terminal Link by the Fund shall constitute a representation and warranty that the Terminal Link is being used only for the purposes permitted hereby, that at least two Officers have each utilized an access code, that such safekeeping procedures have been established by the Fund, and that such use does not contravene the Investment Company Act of 1940, as amended, or the rules or regulations thereunder.
3. The Fund shall obtain and maintain at its own cost and expense all equipment and services, including, but not limited to communications services, necessary for it to utilize the Terminal Link, and the Custodian shall not be responsible for the reliability or availability of any such equipment or services.
4. The Fund acknowledges that any data bases made available as part of, or through the Terminal Link and any
proprietary data, software, processes, information and documentation (other than any such which are or become part of the public domain or are legally required to be made available to the public) (collectively, the "Information"), are the exclusive and confidential property of the Custodian. The Fund shall, and shall cause others to which it discloses the Information, to keep the Information confidential by using the same care and discretion it uses with respect to its own confidential property and trade secrets, and shall neither make nor permit any disclosure without the express prior written consent of the Custodian.
5. Upon termination of this Agreement for any reason, the Fund shall return to the Custodian any and all copies of the Information which are in the Fund's possession or under its control, or which the Fund distributed to third parties. The provisions of this Article shall not affect the copyright status of any of the Information which may be copyrighted and shall apply to all Information whether or not copyrighted.
6. The Custodian reserves the right to modify the Terminal Link from time to time without notice to the Fund except that the Custodian shall give the Fund notice not less than 75 days in advance of any modification which would materially adversely affect the Fund's operation, and the Fund agrees that the Fund shall not modify or attempt to modify the Terminal Link without the Custodian's prior written consent. The Fund acknowledges that any software or procedures provided the Fund as part of the Terminal Link are the property of the Custodian and, accordingly, the Fund agrees that any modifications to the Terminal Link, whether by the Fund, or by the Custodian and whether with or without the Custodian's consent, shall become the property of the Custodian.
7. Neither the Custodian nor any manufacturers and suppliers it utilizes or the Fund utilizes in connection with the Terminal Link make any warranties or representations, express or implied, in fact or in law, including but not limited to warranties of merchantability and fitness for a particular purpose.
8. The Fund will Use its Officers and employees to treat the authorization codes and the access codes applicable to Terminal Link with extreme care, and irrevocably authorizes the Custodian to act in accordance with and rely on Certificates received by it through the Terminal Link. The Fund acknowledges that it is its responsibility to assure that only its officers use the Terminal Link on its behalf, and that a Custodian shall not be responsible nor liable for use of the Terminal Link on the Fund's behalf by persons other than such persons or Officers, or
by only a single Officer, nor for any alteration, omission, or failure to promptly forward.
9(a). Except as otherwise specifically provided in
Section 9(b) of this Article, the Custodian shall have no
liability for any losses, damages, injuries, claims, costs or
expenses arising out of or in connection with any failure,
malfunction or other problem relating to the Terminal Link except
for money damages suffered as the direct result of the
negligence of the Custodian in an amount not exceeding for any
incident $25,000 provided, however, that the Custodian shall have
no liability under this Section 9 if the Fund fails to comply
with the provisions, of Section 11.
9(b). The Custodian's liability for its negligence in
executing or failing to execute in accordance with a Certificate
received through Terminal Link shall be only with respect to a
transfer of Funds which is not made in accordance with such
Certificate after such Certificate shall have been duly
acknowledged by the Custodian, and shall be contingent upon the
Fund complying with the provisions of Section 12 of this Article,
and shall be limited to (i) restoration of the principal amount
mistransferred, if and to the extent that the Custodian would be
required to make such restoration under applicable law, and
(ii) the lesser of (A) a Fund's actual pecuniary loss incurred by
reason of its loss of use of the mistransferred funds or the
funds which were not transferred, as the case may be, or
(B) compensation for the loss of the use of the mistransferred
funds or the funds which were not transferred, as the case may
be, at a rate per annum equal to the average federal funds rate
as computed from the Federal Reserve Bank of New York's daily
determination of the effective rate for federal funds, for the
period during which a Fund has lost use of such funds. In no
event shall the Custodian have any liability for failing to
execute in accordance with a Certificate a transfer of funds
where the Certificate is received by the Custodian through
Terminal Link other than through the applicable transfer module
for the particular instructions contained in such Certificate.
10. Without limiting the generality of the foregoing,
in no event shall the Custodian or any manufacturer or supplier
of its computer equipment, software or services relating to the
Terminal Link be responsible for any special, indirect,
incidental or consequential damages which the Fund may incur or
experience by reason of its use of the Terminal Link even if the
Custodian or any manufacturer or supplier has been advised of the
possibility of such damages, nor with respect to the use of the
Terminal Link shall the Custodian or any such manufacturer or
supplier be liable for acts of God, or with respect to the
following to the extent beyond such person's reasonable control:
machine or computer breakdown or malfunction, interruption or
malfunction of communication facilities, labor difficulties or any other similar or dissimilar cause.
11. The Fund shall notify the Custodian of any errors, omissions or interruptions in, or delay or unavailability of, the Terminal Link as promptly as practicable, and in any event within 24 hours after the earliest of (i) discovery thereof, (ii) the Business Day on Which discovery should have occurred through the exercise of reasonable care and (iii) in the case of any error, the date of actual receipt of the earliest notice which reflects such error, it being agreed that discovery and receipt of notice may only occur on a business day. The Custodian shall promptly advise the Fund whenever the Custodian learns of any errors, omissions or interruption in, or delay or unavailability of, the Terminal Link.
12. The Custodian shall verify to the Fund, by use of the Terminal Link, receipt of each Certificate the Custodian receives through the Terminal Link, and in the absence of such verification the Custodian shall not be liable for any failure to act in accordance with such Certificate and the Fund may not claim that such Certificate was received by the Custodian. Such verification, which may occur after the Custodian has acted upon such Certificate, shall be accomplished on the same day on which such Certificate is received.
ARTICLE XVI.
DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY
OF ANY SERIES HELD OUTSIDE OF THE UNITED STATES
1. The Custodian is authorized and instructed to employ, as sub-custodian for each Series' Foreign Securities (as such term is defined in paragraph (c)(1) of Rule 17f-5 under the Investment Company Act of 1940, as amended) and other assets, the foreign banking institutions and foreign securities depositories and clearing agencies designated on Schedule I hereto ("Foreign Sub-Custodians") to carry out their respective responsibilities in accordance with the terms of the sub-custodian agreement between each such Foreign Sub-Custodian and the Custodian, copies of which have been previously delivered to the Fund and receipt of which is hereby acknowledged (each such agreement, a "Foreign Sub-Custodian Agreement"). Upon receipt of a Certificate, together with a certified resolution substantially in the form attached as Exhibit E of the Fund's Board of Directors, the Fund may designate any additional foreign sub-custodian with which the Custodian has an agreement for such entity to act as the Custodian's agent, as its sub-custodian and any such additional foreign sub-custodian shall be deemed added to Schedule I. Upon receipt of a Certificate from the Fund, the Custodian shall cease the employment of any one or more Foreign Sub-Custodians for
maintaining custody of the Fund's assets and such Foreign Sub- Custodian shall be deemed deleted from Schedule I.
2. Each Foreign Sub-Custodian Agreement shall be substantially in the form previously delivered to the Fund and will not be amended in a way that materially adversely affects the Fund without the Fund's prior written consent.
3. The Custodian shall identify on its books as belonging to each Series of the Fund the Foreign Securities of such Series held by each Foreign Sub-Custodian. At the election of the Fund, it shall be entitled to be subrogated to the rights of the Custodian with respect to any claims by the Fund or any Series against a Foreign Sub-Custodian as a consequence of any loss, damage, cost, expense, liability or claim sustained or incurred by the Fund or any Series if and to the extent that the Fund or such Series has not been made whole for any such loss, damage, cost, expense, liability or claim.
4. Upon request of the Fund, the Custodian will, consistent with the terms of the applicable Foreign Sub-Custodian Agreement, use reasonable efforts to arrange for the independent accountants of the Fund to be afforded access to the books and records of any Foreign Sub-Custodian insofar as such books and records relate to the performance of such Foreign Sub-Custodian under its agreement with the Custodian on behalf of the Fund.
5. The Custodian will supply to the Fund from time to time, as mutually agreed upon, statements in respect of the securities and other assets of each Series held Sub-Custodians, including but not limited to, an identification of entities having possession of each Series' Foreign Securities and other assets, and advices or notifications of any transfers of Foreign Securities to or from each custodial account maintained by a Foreign Sub-Custodian for the Custodian on behalf of the Series.
6. The Custodian shall furnish annually to the Fund, as mutually agreed upon, information concerning the Foreign SubCustodians employed by the Custodian. Such information shall be similar in kind and scope to that furnished to the Fund in connection with the Fund's initial approval of such Foreign SubCustodians and, in any event, shall include information pertaining to (i) the Foreign Custodians' financial strength, general reputation and standing in the countries in which they are located and their ability to provide the custodial services required, and (ii) whether the Foreign Sub-Custodians would provide a level of safeguards for safekeeping and custody of securities not materially different form those prevailing in the United States. The Custodian shall monitor the general operating performance of each Foreign Sub-Custodian. The Custodian agrees that it will use reasonable care in monitoring compliance by each
Foreign Sub-Custodian with the terms of the relevant Foreign Sub- Custodian Agreement and that if it learns of any breach of such Foreign Sub-Custodian Agreement believed by the Custodian to have a material adverse effect on the Fund or any Series it will promptly notify the Fund of such breach. The Custodian also agrees to use reasonable and diligent efforts to enforce its rights under the relevant Foreign Sub-Custodian Agreement.
7. The Custodian shall transmit promptly to the Fund all notices, reports or other written information received pertaining to the Fund's Foreign Securities, including without limitation, notices of corporate action, proxies and proxy solicitation materials.
8. Notwithstanding any provision of this Agreement to the contrary, settlement and payment for securities received for the account of any Series and delivery of securities maintained for the account of such Series may be effected in accordance with the customary or established securities trading or securities processing practices and procedures in the jurisdiction or market in which the transaction occurs, including, without limitation, delivery of securities to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) against a receipt with the expectation of receiving later payment for such securities from such purchaser or dealer.
9. Notwithstanding any other provision in this Agreement to the contrary, with respect to any losses or damages arising out of or relating to any actions or omissions of any Foreign Sub-Custodian the sole responsibility and liability of the Custodian shall be to take appropriate action at the Fund's expense to recover such loss or damage from the Foreign Sub- Custodian. It is expressly understood and agreed that the Custodian's sole responsibility and liability shall be limited to amounts so recovered from the Foreign Sub-Custodian.
ARTICLE XVII.
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, or as provided in Article XVI neither the Custodian nor its nominee shall be liable for any loss or damage, including counsel fees, resulting from its action or omission to act or otherwise, either hereunder or under any Margin Account Agreement, except for any such loss or damage arising out of its own negligence or willful misconduct. In no event shall the Custodian be liable to the Fund or any third party for special, indirect or consequential damages or lost profits or loss of business, arising under or in connection with this Agreement, even if previously informed of the possibility of such damages and regardless of the form of action.
The Custodian may, with respect to questions of law arising hereunder or under any Margin Account Agreement, apply for and obtain the advice and opinion of counsel to the Fund or of its own counsel, at the expense of the Fund, and shall be fully protected with respect to anything done or omitted by it in good faith in conformity with such advice or opinion. The Custodian shall be liable to the Fund for any loss or damage resulting from the use of the Book-Entry System or any Depository arising by reason of any negligence or willful misconduct on the part of the Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing, the Custodian shall be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased, sold, or written by or for the Fund, the legality of the purchase, sale or writing thereof, or the propriety of the amount paid or received therefor;
(b) The legality of the sale or redemption of any Shares, or the propriety of the amount to be received or paid therefor;
(c) The legality of the declaration or payment of any dividend by the Fund;
(d) The legality of any borrowing by the Fund using Securities as collateral;
(e) The legality of any loan of portfolio Securities, nor shall the Custodian be under any duty or obligation to see to it that any cash collateral delivered to it by a broker, dealer, or financial institution or held by it at any time as a result of such loan of portfolio Securities of the Fund is adequate collateral for the Fund against any loss it might sustain as a result of such loan. The Custodian specifically, but not by way of limitation, shall not be under any duty or obligation periodically to check or notify the Fund that the amount of such cash collateral held by it for the Fund is sufficient collateral for the Fund, but such duty or obligation shall be the sole responsibility of the Fund. In addition, the Custodian shall be under no duty or obligation to see that any broker, dealer or financial institution to which portfolio Securities of the Fund are lent pursuant to Article X of this Agreement makes payment to it of any dividends or interest which are payable to or for the account of the Fund during the Period of such loan or at the termination of such loan, provided, however, that the Custodian shall promptly notify the Fund in the event that such dividends or interest are not paid and received when due; or
(f) The sufficiency or value of any amounts of money and/or Securities held in any Margin Account, Senior Security Account or Collateral Account in connection with transactions by the Fund. In addition, the Custodian shall be under no duty or obligation to see that any broker, dealer, futures commission merchant or Clearing Member makes payment to the Fund of any variation margin payment or similar payment which the Fund may be entitled to receive from such broker, dealer, futures commission merchant or Clearing Member, to see that any payment received by the Custodian from any broker, dealer, futures commission merchant or Clearing Member is the amount the Fund is entitled to receive, or to notify the Fund of the Custodian's receipt or non- receipt of any such payment.
3. 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 the Fund until the Custodian actually receives and collects such money directly or by the final crediting of the account representing the Fund's interest at the Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and shall not be liable for ascertaining or acting upon any calls, conversions, exchange offers, tenders, interest rate changes or similar matters relating to Securities held in the Depository, unless the Custodian shall have actually received timely notice from the Depository. In no event shall the Custodian have any responsibility or liability for the failure of the Depository to collect, or for the late collection or late crediting by the Depository of any amount payable upon Securities deposited in the Depository which may mature or be redeemed, retired, called or otherwise become payable. However, upon receipt of a Certificate from the Fund of an overdue amount on Securities held in the Depository the Custodian shall make a claim against the Depository on behalf of the Fund, except that the Custodian shall not be under any obligation to appear in, prosecute or defend any action suit or proceeding in respect to any Securities held by the Depository which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense and liability be furnished as often as may be required.
5. The Custodian shall not be under any duty or obligation to take action to effect collection of any amount due to the Fund from the Transfer Agent of the Fund nor to take any action to effect payment or distribution by the Transfer Agent of the Fund of any amount paid by the Custodian to the Transfer Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation 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 (i) it shall be directed to take such action by a Certificate and (ii) it shall be assured to its satisfaction of reimbursement of its costs and expenses in connection with any such action.
7. The Custodian may in addition to the employment of Foreign Sub-Custodians pursuant to Article XVI appoint one or more banking institutions as Depository or Depositories, as Sub- Custodian or Sub-Custodians, or as Co-Custodian or Co-Custodians including, but not limited to, banking institutions located in foreign countries, of Securities and moneys at any time owned by the Fund, upon such terms and conditions as may be approved in a Certificate or contained in an agreement executed by the Custodian, the Fund and the appointed institution.
8. The Custodian shall not be under any duty or obligation (a) to ascertain whether any Securities at any time delivered to, or held by it or by any Foreign Sub-Custodian, for the account of the Fund and specifically allocated to a Series are such as properly may be held by the Fund or such Series under the provisions of its then current prospectus, or (b) to ascertain whether any transactions by the Fund, whether or not involving the Custodian, are such transactions as may properly be engaged in by the Fund.
9. The Custodian shall be entitled to receive and the Fund agrees to pay to the Custodian all out-of-pocket expenses and such compensation as may be agreed upon from time to time between the Custodian and the Fund. The Custodian may charge such compensation and any expenses with respect to a Series incurred by the Custodian in the performance of its duties pursuant to such agreement against any money specifically allocated to such Series. Unless and until the Fund instructs the Custodian by a Certificate to apportion any loss, damage, liability or expense among the Series in a specified manner, the Custodian shall also be entitled to charge against any money held by it for the account of a Series such Series' pro rata share (based on such Series net asset value at the time of the charge to the aggregate net asset value of all Series at that time) of the amount of any loss, damage, liability or expense, including counsel fees, for which it shall be entitled to reimbursement under the provisions of this Agreement. The expenses for which the Custodian shall be entitled to reimbursement hereunder shall include, but are not limited to, the expenses of sub-custodians and foreign branches of the Custodian incurred in settling outside of New York City transactions involving the purchase and sale of Securities of the Fund.
10. The Custodian shall be entitled to rely upon any Certificate, notice or other instrument in writing received by the Custodian and reasonably believed by the Custodian to be a Certificate. The Custodian shall be entitled to rely upon any Oral Instructions actually received by the Custodian hereinabove provided for. The Fund agrees to forward to the Custodian a Certificate or facsimile thereof confirming such Oral Instructions in such manner so that such Certificate or facsimile thereof is received by the Custodian, whether by hand delivery, telecopier or other similar device, or otherwise, by the close of business of the same day that such Oral Instructions are given to the Custodian. The Fund agrees that the fact that such confirming instructions are not received, or that contrary instructions are received, by the Custodian shall in no way affect the validity of the transactions or enforceability of the transactions hereby authorized by the Fund. The Fund agrees that the Custodian shall incur no liability to the Fund in acting upon Oral Instructions given to the Custodian hereunder concerning such transactions provided such instructions reasonably appear to have been received from an officer.
11. The Custodian shall be entitled to rely upon any instrument, instruction or notice received by the Custodian and reasonably believed by the Custodian to be given in accordance with the terms and conditions of any Margin Account Agreement. Without limiting the generality of the foregoing, the Custodian shall be under no duty to inquire into, and shall not be liable for, the accuracy of any statements or representations contained in any such instrument or other notice including, without limitation, any specification of any amount to be paid to a broker, dealer, futures commission merchant or Clearing Member.
12. The books and records pertaining to the Fund which are in the possession of the Custodian shall be the property of the Fund. Such books and records shall be prepared and maintained as required by the Investment Company Act of 1940, as amended, and other applicable securities laws and rules and regulations. The Fund, or the Fund's authorized representatives, shall have access to such books and records during the Custodian's normal business hours. Upon the reasonable request of the Fund, copies of any such books and records shall be provided by the Custodian to the Fund or the Fund's authorized representative, and the Fund shall reimburse the Custodian its expenses of providing such copies. Upon reasonable request of the Fund, the Custodian shall provide in hard copy or on micro- film, whichever the Custodian elects, any records included in any such delivery which are maintained by the Custodian on a computer disc, or are similarly maintained, and the Fund shall reimburse the Custodian for its expenses of providing such hard copy or micro-film.
13. The Custodian shall provide the Fund with any report obtained by the Custodian on the system of internal accounting control of the Book-Entry System, the Depository or O.C.C., and with such reports on its own systems of internal accounting control as the Fund may reasonably request from time to time.
14. The Fund agrees to indemnify the Custodian against and save the Custodian harmless from all liability, claims, losses and demands whatsoever, including attorney's fees, howsoever arising or incurred because of or in connection with this Agreement, including the Custodian's payment or non-payment of checks pursuant to paragraph 6 of Article XIII as part of any check redemption privilege program of the Fund, except for any such liability, claim, loss and demand arising out of the Custodian's own negligence or willful misconduct.
15. Subject to the foregoing provisions of this Agreement, including, without limitation, those contained in Article XVI the Custodian may deliver and receive Securities, and receipts with respect to such Securities, and arrange for payments to be made and received by the Custodian in accordance with the customs prevailing from time to time among brokers or dealers in such Securities. When the Custodian is instructed to deliver Securities against payment, delivery of such Securities and receipt of payment therefor may not be completed simultaneously. The Fund assumes all responsibility and liability for all credit risks involved in connection with the Custodian's delivery of Securities pursuant to instructions of the Fund, which responsibility and liability shall continue until final payment in full has been received by the Custodian.
16. The Custodian shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement, and no covenant or obligation shall be implied in this Agreement against the Custodian.
ARTICLE XVIII.
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving to the other party a notice in writing specifying the date of such termination, which shall be not less than ninety (90) days after the date of giving of such notice. In the event such notice is given by the Fund, it shall be accompanied by a copy of a resolution of the Board of Directors of the Fund, certified by the Secretary or any Assistant Secretary, electing to terminate this Agreement and designating a successor custodian or custodians, each of which shall be a bank
or trust company having not less than $2,000,000 aggregate capital, surplus and undivided profits. In the event such notice is given by the Custodian, the Fund shall, on or before the termination date, deliver to the Custodian a copy of a resolution of the Board of Directors of the Fund, certified by the Secretary or any Assistant Secretary, designating a successor custodian or custodians. In the absence of such designation by the Fund, the Custodian may designate a successor custodian which shall be a bank or trust company having not less than $2,000,000 aggregate capital, surplus and undivided profits. Upon the date set forth in such notice this Agreement shall terminate, and the Custodian shall upon receipt of a notice of acceptance by the successor custodian on that date deliver directly to the successor custodian all Securities and moneys then owned by the Fund and held by it as Custodian, after deducting all fees, expenses and other amounts for the payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the Custodian in accordance with the preceding paragraph, the Fund shall upon the date specified in the notice of termination of this Agreement and upon the delivery by the Custodian of all Securities (other than Securities held in the Book-Entry System which cannot be delivered to the Fund) and moneys then owned by the Fund be deemed to be its own custodian and the Custodian shall thereby be relieved of all duties and responsibilities pursuant to this Agreement, other than the duty with respect to Securities held in the "Book Entry System which cannot be delivered to the Fund to hold such Securities hereunder in accordance with this Agreement.
ARTICLE XIX.
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of the present Officers of the Fund under its corporate seal, setting forth the names and the signatures of the present officers of the Fund. The Fund agrees to furnish to the Custodian a new Certificate in similar form in the event any such present Officer ceases to be an officer of the Fund, or in the event that other or additional Officers are elected or appointed. Until such new Certificate shall be received, the Custodian shall be fully protected in acting under the provisions of this Agreement upon the signatures of the officers as set forth in the last delivered Certificate.
2. Any notice or other instrument in writing, authorized or required by this Agreement to be given to the Custodian, shall be sufficiently given if addressed to the Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10286, or at such other place as the Custodian 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 addressed to the Fund and mailed or delivered to it at its office at the address for the Fund first above written, or at such other place as the Fund may from time to time designate in writing.
4. This Agreement may not be amended or modified in any manner except by a written agreement executed by both parties with the same formality as this Agreement and approved by a resolution of the Board of Directors of the Fund.
5. 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 Fund without the written consent of the Custodian, or by the Custodian without the written consent of the Fund, authorized or approved by a resolution of the Fund's Board of Directors.
6. This Agreement shall be construed in accordance with the laws of the State of New York without giving effect to conflict of laws principles thereof. Each party hereby consents to the jurisdiction of a state or federal court situated in New York City, New York in connection with any dispute arising hereunder and hereby waives its right to trial by jury.
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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective corporate Officers, thereunto duly authorized and their respective corporate seals to be hereunto affixed, as of the day and year first above written.
Sequoia Fund, Inc.
/s/ Joseph Quinones, Jr.
[SEAL] By:_______________________
Attest:
/s/
______________________
|
THE BANK OF NEW YORK
/s/ Stephen E. Grunston
[SEAL] By:______________________
Name:
Title:
Attest:
/s/
________________________
|
APPENDIX A
I Richard T. Cunniff, and I, Joseph Quinones, Jr., of Sequoia Fund, Inc., a Maryland corporation (the "Fund") do hereby certify that:
The following individuals serve in the following positions with the Fund and each has been duly elected or appointed by the Board of Directors of the Fund to each such position and qualified therefor in conformity with the Fund's Articles of Incorporation and By-Laws, and the signatures set forth opposite their respective names are their true and correct signatures:
Name Position Signature William J. Ruane Chairman of the Board /s/ William J. Ruane ________________ ______________________ _____________________ Richard T. Cunniff President /s/ Richard T. Cunniff __________________ _________________ ______________________ Robert D. Goldfarb Vice President /s/ Robert D. Goldfarb __________________ _________________ ______________________ Carol L. Cunniff Vice President /s/ Carol L. Cunniff ________________ _________________ ______________________ Joseph Quinones, Jr. Vice President /s/ Joseph Quinones, Jr. ___________________ _______________ ______________________ |
APPENDIX B
SERIES
APPENDIX C
I, Mayra Adomino, a Vice President with THE BANK OF NEW YORK do hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
EXHIBIT A
CERTIFICATION
The undersigned, Joseph Quinones, Jr., hereby certifies that he or she is the duly elected and acting Vice President of Sequoia Fund, Inc., a Maryland corporation (the "Fund"), and further certifies that the following resolution was adopted by the Board of Directors of the Fund at a meeting duly held on June 10, 1996, at which a quorum was at all times present and that such resolution has not been modified or rescinded and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a Custody Agreement between The Bank of New York and the Fund dated as of June 10, 1996, (the "Custody Agreement") is authorized and instructed on a continuous and ongoing basis to deposit in the Book-Entry System, as defined in the Custody Agreement, all securities eligible for deposit therein, regardless of the Series to which the same are specifically allocated, and to utilize the Book-Entry System to the extent possible in connection with its performance thereunder, including, without limitation, in connection with settlements of purchases and sales of securities, loans of securities, and deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of Sequoia Fund, Inc. as of the day of 10th day of June,
1996.
/s/ Joseph Quinones, Jr.
_______________________
[SEAL]
|
EXHIBIT B
CERTIFICATION
The undersigned, Joseph Quinones, Jr. hereby certifies that he or she is the duly elected and acting Vice President of Sequoia Fund, Inc., a Maryland corporation (the "Fund"), and further certifies that the following resolution was adopted by the Board of Directors of the Fund at a meeting duly held on June 10, 1996, at which a quorum was at all times present and that such resolution has not been modified or rescinded and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a Custody Agreement between The Bank of New York and the Fund dated as of June 10, 1996, (the "Custody Agreement") is authorized and instructed on a continuous and ongoing basis until such time as it receives a Certificate, as defined in the Custody Agreement, to the contrary to deposit in the Depository, as defined in the Custody Agreement, all securities eligible for deposit therein, regardless of the Series to which the same are specifically allocated, and to utilize the Depository to the extent possible in connection with its performance thereunder, including, without limitation, in connection with settlements of purchases and sales of securities, loans, of securities, and deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of Sequoia Fund, Inc. as of the day of 10th day of June, 1996.
/s/ Joseph Quinones, Jr.
________________________
[SEAL]
|
EXHIBIT C
CERTIFICATION
The undersigned, Joseph Quinones, Jr., hereby certifies that he or she is the duly elected and acting Vice President of Sequoia Fund, Inc. a Maryland corporation (the "Fund"), and further certifies that the following resolution was adopted by the Board of Directors of the Fund at a meeting duly held on June 10, 1996, at which a quorum was at all times present and that such resolution has not been modified or rescinded and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a Custody Agreement between The Bank of New York and the Fund dated as of June 10, 1996, (the "Custody Agreement") is authorized and instructed on a continuous and ongoing basis until such time as it receives a Certificate, as defined in the Custody Agreement, to the contrary, to accept, utilize and act with respect to Clearing Member confirmations for Options and transaction in Options, regardless of the Series to which the same are specifically allocated, as such terms are defined in the Custody Agreement, as provided in the Custody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of Sequoia Fund, Inc. as of the 10th day of June, 1996.
/s/ Joseph Quinones, Jr.
___________________________
[SEAL]
|
EXHIBIT D
The undersigned, Joseph Quinones, Jr., hereby certifies that he or she is the duly elected and acting Vice President of Sequoia Fund, Inc., a Maryland corporation (the "Fund"), and further certifies that the following resolutions were adopted by the Board of Directors of the Fund at a meeting duly held on June 10, 1996, at which a quorum was at all times present and that such resolutions have not been modified or rescinded and are in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to the Custody Agreement between The Bank of New York and the Fund dated as of June 10, 1996 (the "Custody Agreement") is authorized and instructed on a continuous and ongoing basis to act in accordance with, and to rely on Certificates (as defined in the Custody Agreement) given by the Fund to the Custodian by a Terminal Link (as defined in the Custody Agreement).
RESOLVED, that the Fund shall establish access codes and grant use of such access codes only to officers of the Fund as defined in the Custody Agreement, shall establish internal safekeeping procedures to safeguard and protect the confidentiality and availability of such access codes, shall limit its use of the Terminal Link to those purposes permitted by the Custody Agreement, shall require at least two such Officers to utilize their respective access codes in connection with each such Certificate, and shall use the Terminal Link only in a manner that does not contravene the Investment Company Act of 1940, as amended, or the rules and regulations thereunder.
RESOLVED, that Officers of the Fund shall, following the establishment of such access codes and such internal safe keeping procedures, advise the Custodian that the same have been established by delivering a Certificate, as defined in the Custody Agreement, and the Custodian shall be entitled to rely upon such advice.
IN WITNESS WHEREOF, I hereunto set my hand and the seal of Sequoia Fund, Inc., as of the 10th day of June, 1996.
/s/ Joseph Quinones Jr.
_____________________
[SEAL]
|
EXHIBIT E
The undersigned, Joseph Quinones, Jr., hereby certifies that he or she is the duly elected and acting Vice President of Sequoia Fund, Inc, a Maryland corporation (the "Fund"), and further certifies that the following resolutions were adopted by the Board of Directors of the Fund at a meeting duly held on June 10, 1996, at which a quorum was at all times present and that such resolutions have not been modified or rescinded and are in full force and effect as of the date hereof.
RESOLVED, that the maintenance of the Fund's assets in each country listed in Schedule I hereto be, and hereby is, approved by the Board of Directors as consistent with the best interests of the Fund and its shareholders; and further
RESOLVED, that the maintenance of the Fund's assets with the foreign branches of The Bank of New York (the "Bank") listed in Schedule I located in the countries specified therein, and with the foreign sub-custodians and depositories listed in Schedule I located in the countries specified therein be, and hereby is, approved by the Board of Directors as consistent with the best interest of the Fund and its shareholders; and further
RESOLVED, that the Sub-Custodian Agreements presented to this meeting between the Bank and each of the foreign sub- custodians and depositories listed in Schedule I providing for the maintenance of the Fund's assets with the applicable entity, be and hereby are, approved by the Board of Directors as consistent with the best interests of the Fund and its shareholders; and further
RESOLVED, that the appropriate officers of the Fund are hereby authorized to place assets of the Fund with the aforementioned foreign branches and foreign sub-custodians and depositories as hereinabove provided; and further
RESOLVED, that the appropriate officers of the Fund, or any of them, are authorized to do any and all other acts, in the name of the Fund and on its behalf, as they, or any of them, may determine to be necessary or desirable and proper in connection with or in furtherance of the foregoing resolutions.
IN WITNESS WHEREOF, I hereunto set my hand and the seal of Sequoia fund, Inc., as of the 10th day of June, 1996.
/s/ Joseph Quinones, Jr.
________________________
[SEAL]
|
SCHEDULE I
GLOBAL CUSTODY AGENT BANKS
COUNTRY AGENT RELATIONSHIP
Argentina The Bank of Boston Correspondent
Florida 99
1005 Buenos Aires
Argentina
Australia ANZ Banking Group Limited Correspondent
530 Collins Street (Level 25)
Melbourne, Victoria 3001
Australia
Austria GiroCredit Bank AG Correspondent
Schubertring 5
A-1011 Vienna
Austria
Bangladesh Standard Chartered Bank Correspondent
18-20 Motijheel Commercial Area
P.O. Box 536
Dhaka 1000
Bangladesh
Belgium Banque Bruxelles Lambert Correspondent
Administration Centrale
Cours Saint Michel 60
B-1040 Brussels
Belgium
Botswana *Standard Bank of Correspondent
South Affica Limited
46 Marshall Street
Johannesburg 2001
South Africa
Brazil The Bank Of Boston Correspondent
Rua Libero Badaro 501
01009 Sao Paulo
Brazil
|
Canada Royal Trust/ Correspondent
Global Securities Service
200 Bay Street
South Tower, 4th Floor
Toronto, Ontario M5J2J5
Canada
Royal Bank cf Canada Correspondent
200 Bay Street
Toronto, Ontario M5J2J5
Canada
Chile The Bank of Boston Correspondent
Moneda 799 - Casilla 1946
Santiago
Chile
China Standard Chartered Bank Correspondent
8/F Edinburgh Tower
The Landmark,
15 Queens Road Central
Hong Kong
Colombia Cititrust, Colombia Correspondent
Avenida, Jimenez N8-89
Bogota, Colombia
Colombia
Czech Republic Ceskoslovenska Obchodni Banka Correspondent
Na Prikope 14
11520 Prague
Czech Republic
Denmark Den Danske Bank Correspondent
2-12 Holmens Kanal
DK-1092 Copenhagen
Denmark
Euromarket Cedel, S.A. Correspondent
67, Blvd. Grande Duchesse Charlotte
L-1010 Luxembourg
Finland Union Bank of Finland Correspondent
Aleksanterinkatu 30
Helsinki
Finland
|
France Banque Paribas Correspondent
BP 141, 3 rue d'Antin
75078 Paris Cedex 02
France
CCF Correspondent
Avenue Robert Schuman
51100 Reims
Paris, France
Germany Dresdner Bank AG Correspondent
Jurgen-Ponto.-Platz 1
Postfach 11 06 61
6000 Frankfurt 11
Germany
Ghana *Standard Bank of Correspondent
South Africa Limited
46 Marshall Street
Johannesburg 2001
South Africa
Greece Alpha Credit Bank Correspondent
40 Stadiou Street
GR10252 Athiens
Greece
Hong Kong HongKong & Shanghai Correspondent
Banking Corp.
Securities Department BLI
1 Queens Road Central
Hong Kong
Hungary Citibank Hungary Correspondent
Custody Operations
Budapest V.
Deak Ferenc utca 5.1.154
Hungary
India HongKong & Shanghai Correspondent
Banking Corporation
52/60 Mahatma Gandhi Road
Bombay 400 001
India
|
State Bank of India Correspondent Main Branch (Securities Division)
Bombay Samachar Marg,
Bombay 400023
India
Indonesia HongKong & Shanghai Correspondent
Banking Corporation
World Trade Centre - 4th Fl.
JL. Jend. Sudirman Kav 29-31
P.O. Box 2307
Jakarta 10023
Indonesia
Ireland Allied Irish Bank Correspondent
Custodial Services
P.O. Box 518
I.F.S.C.
Dublin 1
Ireland
Israel Israel Discount Bank Limited Correspondent
27-31 Yehuda Halevi Street
65-546 Tel Aviv
Israel
Italy Banca, Commerciale Italiana Correspondent
Area Regolanento
Piazza Della Scala
20121 Milano
Italy
Japan Yasuda Trust & Banking Co. Correspondent
2-1 Yaesu, 1-Chome
Chuo-ku, Tokyo 103
Japan
Jordan British Bank of the Middle East Correspondent
Jebel Hussein
Khalid Bin Al Walid
11110 Amman
Jordan
Kenya * Standard Bank of Correspondent
South Africa Limited
46 Marshall Street
Johannesburg 2001
South Africa
|
Korea Bank of Seoul Correspondent
Investment Trust Division
10-1, Namdaemoon-Ro
20-GA Jung-Gu
Seoul
Korea
Luxembourg Cedel, S.A. Correspondent
67, Blvd. Grande Duchesse Charlotte
L-1010 Luxembourg
Malaysia HongKong Bank Malaysia Berhad Correspondent
Securities Department
2, Leboh Ampang
50100 Kuala Lumpur
Malaysia
Mexico Banco Nacional de Mexico Correspondent
Avenida Juarez 104
Piso 11
Mexico 06040, DF
Mexico
Morocco Banque Commerciale du Maroc Correspondent
21 Boulevard Moulay Youssef
Casablanca, 20000
Morocco
Namibia *Standard Bank of Correspondent
South Africa Limited
46 Marshall Street
Johannesburg 2001
South Africa
Netherlands Mees, Pierson N.V. Correspondent
Rokin 55
1012 KK
Amsterdam, Netherlands
New Zealand ANZ Banking Group Limited Correspondent
UDC Tower
113-119, The Terrace
Wellington
New Zealand
|
Nigeria *Standard Bank of Correspondent
South Africa Limited
46 Marshall Street
Johannesburg 2001
South Africa
Norway Den norske Bank Correspondent
Head Office
P.O. Box 1171 Sentrum
0107 Oslo 1
Pakistan Standard Chaltered Bank Correspondent
Box 4896
Ismail Ibrahim Chundrigar Road
Karachi 2
Pakistan
Peru Citibank, N.A. Correspondent
Ave Camino Real 456 - Piso 5
Lima 27 Peru
Peru
Philippines HongKong & Shanghai Correspondent
Banking Corp.
HongKong Bank Centre
San Miguel Avenue
Ortigas Centre
Pasig, Metro Manila
Philippines
Poland Bank Handlowy w Warszawie S.A. Corespondent
Custody Department
Capital Markets Center - V Branch
ul. Kasprzaka 18/20
01-211 Warzawa
Poland
Portugal Banco Comercial Portugues Correspondent
Avenida Jose Malhoa
Lote 1686, 7th Floor
1000 Libson
Portugal
Singapore United Overseas Bank Correspondent
80 Raffles Place
17th Floor
Singapore 0104
|
South Africa Standard Bank of Correspondent
South Affica Limited
46 Marshall Street
Johannesburg 2001
South Africa
Spain Banco Bilbao Vizcaya Correspondent
Invex Department
Clara Del Rey, 26-3rd Floor
28002 Madrid
Spain
SriLanka Standard Chartered Bank Correspondent
P.O. Box 27
17 Janadhipatli Mawatha
Colombo 1
SriLanka
Swaziland Standard Bank of Correspondent
South Affica Limited
46 Marshall Street
Johannesburg 2001
South Affica
Sweden Skandinaviska Enskilda Banken Correspondent
Trust Department
Jakobsgatan 6
Stockholm S-106 40
Sweden
Switzerland Union Bank of Switzerland Correspondent
Bahnofstrasse 45
8021 Zurich
Switzerland
Taiwan HongKong & Shanghai Correspondent
Banking Corp.
333 Section 1
Keelung Road
Taipei 10548
Taiwan
Thailand Siam Commercial Bank Correspondent
1060 Phetchburi Road
Building 2, 4th floor
Bangkok 10400
Thailand
|
Turkey Citibank, N.A. Correspondent
Abdi Ipekci Cad. 65
80200 Macka
Istanbul
Turkey
United Kingdom The Bank of New York Branch
46 Berkeley Street
London, WIX6AA
England
Uruguay Banco De Boston Correspondent
P.O. Box 90
Zabala 1463
11000 Monterideo
Uruguay
Venezuela Citibank N.A. Correspondent
Camelitas a Altagraeia
Edificio Citibank
Caracas 1010-A
Venezuela
Zambia *Standard Bank of Correspondent
South Affica Limited
46 Marshall Street
Johannesburg 2001
South Africa
Zimbabwe *Standard Bank of Correspondent
South Africa Limited
46 Marshall Street
Johannesburg 2001
South Africa
|
* 17f5 Documentation not yet complete
DOMESTIC CUSTODY FEE SCHEDULE
FOR
SEQUOIA FUND, INC.
Flat Fee Arrangement
$100,000 per annum
Out-of-Pocket Expenses
None
Billing Cycle
The fees are to be billed to the Fund on a monthly cycle.
Fee includes services described in Schedule I.
This fee schedule will be in effect for two (2) years from the date of acceptance at which time the Fund's activity will be reviewed and new fees assessed if applicable.
Sequoia Fund, Inc. The Bank of New York Accepted by: Acknowledged by: /s/ Joseph Quinones, Jr. /s/ Stephen E. Grunston Name: Joseph Quinones, Jr. Stephen E. Grunston Title: Vice President Vice President Date: 6/10/96 6/12/96 |
Schedule I
DOMESTIC CUSTODY SERVICES
- Safekeeping of Assets
- Income Collection
- Reporting
- Corporate Action & Proxy
- Securities Transaction Processing
- Fed Funds Transfers
- Check Processing
69900020.AY0
SERVICE AGREEMENT
AGREEMENT made as of the 11th day of June, 1973, by and
between SEQUOIA FUND, INC., a Delaware corporation, having its
principal office and place of business at One New York Plaza, New
York, New York 10004, (the "Fund"), and DATA-SYS-TANCE, INC., a
Delaware corporation, having its principal office and place of
business at Kansas City, Missouri, ("DST").
WHEREAS, the Fund desires to appoint DST as Transfer
Agent and Dividend Disbursing Agent, and DST desires to accept
such appointment;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
Section 1. Terms of Appointment.
1.01 Subject to the conditions set forth in this
Agreement, the Fund hereby employs and appoints DST as Transfer
Agent and Dividend Disbursing Agent effective July 1, 1973,
1.02 DST hereby accepts such employment and appointment
and agrees that on and after the effective date of its
appointment it will act as the Fund's Transfer Agent and Dividend
Disbursing Agent. DST agrees that it will also act as agent in
connection with any periodic investment plan, periodic withdrawal
program or other accumulation, open-account or similar plans for
the Fund's shareholders.
1.03 DST agrees to provide the necessary facilities,
equipment and personnel to perform its duties and obligations
hereunder in accordance with industry practice.
1.04 The Fund agrees to use its best efforts to deliver
to DST in Kansas City, Missouri, on or before July 1, 1973, all
of its existing shareholder and account records or such thereof
as DST deems necessary to perform its duties hereunder and upon
the correctness of which DST is entitled to rely in its said
performance as required by this Agreement.
1.05 DST agrees that it will perform all of the usual
and ordinary services as Transfer Agent and Dividend Disbursing
Agent and as agent for the various shareholder accounts including
but not limited to: Issuing, transferring and cancelling stock
certificates, maintaining all shareholder accounts, preparing
annual shareholder meeting lists, mailing proxies, receiving and
tabulating proxies, mailing shareholder reports and prospectuses,
withholding taxes on non-resident alien accounts, disbursing
income dividends and capital gains distributions, preparing and
filing U.S. Treasury Department Form 1099 for all shareholders,
preparing and mailing confirmation forms to shareholders for all
purchases and liquidations of Fund shares and other confirmable
transactions in shareholders accounts, recording reinvestment of
dividends and distributions in Fund shares, causing liquidation
of shares and causing disbursements to be made to withdrawal plan
holders.
Section 2. Fees and Expenses.
2.01 DST agrees to perform all of the services
necessary to convert the shareholder records of the Fund from the
Fund's present system to DST's system in Kansas City, Missouri.
For such services, the Fund agrees to reimburse DST for out-of-
pocket expenses incurred with the approval of the Fund.
2.02 For the services to be rendered by DST pursuant to
paragraph 1.05, the Fund agrees to pay DST an annual maintenance
fee for each shareholder account. The annual maintenance fee
shall be $6.50 per shareholder account subject to a $10,000
annual minimum charge, one-twelfth of which is payable an the
first day of each month. Each monthly payment shall be
calculated by multiplying one-twelfth of the annual maintenance
fee by the highest number of open shareholder accounts existing
at any time during the previous month or one-twelfth of the
annual minimum charge, whichever is greater.
2.03 The Fund agrees to promptly reimburse DST for all
reasonable out-of-pocket expenses or advances incurred by DST in
connection with the performance of services under this Agreement
including, but not limited to, expenditures for counsel fees,
postage, envelopes, checks, continuous forms, reports and
statements, telephone, telegraph, stationery, supplies, costs of
outside mailing firms, record storage costs and media for storage
of records (e.g. microfilm, computer tapes). In addition, any
other expense incurred by DST at the request or with the consent
of the Fund will be promptly reimbursed by the Fund.
Section 3. Representations and Warranties of DST.
DST represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing
and in good standing under the laws of the State of Delaware;
3.02 It is duly qualified to carry on its business in
the State of Missouri;
3.03 It is empowered under applicable laws and by its
charter By-laws to enter into and perform the services
contemplated in this Agreement;
3.04 All requisite corporate proceedings have been
taken to authorize it to enter into and perform this Agreement;
and
3.05 It has and will continue to have and maintain the
necessary facilities, equipment and personnel to perform its
duties and obligations under this Agreement.
Section 4. Representations and Warranties of the Fund.
The Fund represents and warrants to DST that;
4.01 It is a corporation duly organized and existing
and in good standing under the laws of the State of Delaware;
4.02 It is an open-end non-diversified management
investment company registered under the Investment Company Act of
1940;
4.03 A registration statement under the Securities Act
of 1933 is currently effective with respect to all shares of the
Fund being offered for sale;
4.04 The Fund is empowered under the applicable laws
and regulations and by its charter and By-laws to enter into and
perform this Agreement; and all requisite corporate proceedings
have been taken to authorize it to enter into and perform this
Agreement.
Section 5. Indemnification.
5.01 DST shall not be responsible and the Fund shall
indemnify and hold DST harmless from and against any and all
losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributable to:
(a) All actions of DST required to be taken by
DST pursuant to this Agreement provided that DST has
acted in good faith and with due diligence.
(b) The reliance on, or use by DST of information
furnished or of records and documents received by DST
which have been prepared and/or maintained by the Fund,
or any other person or firm on behalf of the Fund.
(c) Defaults by dealers with respect to payment
for share orders previously entered.
(d) The reliance on, or the carrying out of, any
instructions or requests of the Fund.
(e) The offer or sale of the Fund's shares in
violation of any requirement under the securities laws
or regulations of any state that such shares be
registered in such state or in violation of any stop
order or other determination or ruling by any state with
respect to the offer or sale of such shares in such
state (unless such violation results from DST's failure
to comply with written instructions of the Fund or of
any officer or the Fund that no offers or sales be made
in or to residents of such state).
5.02 DST shall indemnify and bold the Fund harmless
from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of
DST's failure to comply with the terms of this Agreement or which
arise out of DST's gross negligence or willful misconduct.
5.03 At any time DST may apply to any officer of the
Fund for instructions, and may consult with legal counsel for the
Fund or its own legal counsel, at the expense of the Fund, with
respect to any matter arising in connection with the services to
be performed by DST under this Agreement and DST shall not be
liable and shall be indemnified by the Fund for any action taken
or omitted by it in good faith in reliance upon such instructions
or upon the opinion of such counsel. DST shall be protected and
indemnified in acting upon any paper or document believed by it
to be genuine and to have been signed by the proper person or
persons and shall not be held to have notice of any change of
authority of any person, until receipt of written notice thereof
from the Fund. DST shall also be protected and indemnified in
recognizing stock certificates which DST reasonably believes to
bear the proper manual or facsimile signatures of the officers of
the Fund, and the proper counter-signature of any former transfer
agent or registrar, or of a co-transfer agent or co-registrar.
Section 6. Covenants of DST and the Fund.
6.01 The Fund shall promptly furnish to DST the
following:
(a) A certified copy of the resolution of the
Board of Directors of the Fund authorizing the
appointment of DST and the execution and delivery of
this Agreement.
(b) Certified copy of the Articles of
Incorporation and By-laws of the Fund and all amendments
thereto.
(c) Specimens of all forms of outstanding stock
certificates in the form approved by the Fund's Board of
Directors with a certificate of the Secretary of the
Fund as to such approval.
6.02 DST hereby agrees to establish and maintain
facilities and procedures reasonably acceptable to the Fund for
safekeeping of stock certificates, check forms, and facsimile
signature imprinting devices, if any; and for the preparation or
use, and for keeping account of such certificates, forms and
devices.
6.03 To the extent required by Section 31 of the
Investment Company Act of 1940 and Rules thereunder, DST agrees
that all records maintained by DST relating to the services to be
performed by DST under this Agreement are the property of the
Fund and will be preserved and will be surrendered promptly to
the Fund on request.
6.04 DST and the Fund agree that all books, records,
information and data pertaining to the business of the other
party which are exchanged or received pursuant to the negotiation
of and the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other
person.
Section 7. Termination of Agreement.
7.01 This Agreement may be terminated by either party
by three months written notice to the other.
Section 8. Assignment.
8.01 Neither this Agreement nor any rights or
obligations hereunder may be assigned by DST without the written
consent of the Fund.
8.02 This Agreement shall inure to the benefit of and
be binding upon the parties and their respective successors and
assigns.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their names and on their behalf under
their corporate seals by and through their duly authorized
officers, as of the day and year first above written.
SEQUOIA FUND, INC.
By /s/ Richard T. Cunniff
___________________________
Richard Cunniff
President
|
ATTEST
/s/
_____________________________
Secretary
|
DATA-SYS-TANCE, INC.
By /s/ Thomas A. McDonnell
___________________________
President
ATTEST:
/s/
_____________________________
Secretary
|
69900020.AX8
DST SYSTEMS, INC.
TRANSFER AGENCY FEE SCHEDULE
SEQUOIA, INC.
*Mainframe Programming:
Dedicated Resource:
Mainframe Programmer - $115,000 per
year
Client Services Technical Support -
$70,500 per year
IWSI(TM)/AWD(R)1 Programming -
$140,000 per year
On-Request:
Mainframe Programmer - $80 per hour
Client Services Technical Support -
$60 per hour
IWS/AWD Programming - $105 per hour
Average Cost System:
$5,215 per year of history converted
$.27 per account per year
*Business Analysis:
Senior Staff Support - $55 per h(w
Staff Support - $35 per hour
Clerical Support - $25 per hour
*Audio Response(TM) System - see Exhibit A Escheatment Costs - as incurred Acquisition/Conversion Costs - Out of pocket expenses including but not limited to travel and accommodations, programming, training, equipment installation, etc.
1. AWD(R) is a registered trademark of DST Systems, Inc.
NOTES TO THE ABOVE FEE SCHEDULE.
A. The above schedule does not include reimbursable expenses that are incurred on the Fund's behalf. Examples of reimbursable expenses include but are not limited to forms, postage, mailing services, telephone line/long distance charges, remote client hardware, disaster recovery, proxy processing, magnetic tapes, printing, microfilm/microfiche, ACH bank charges, NSCC charges, etc. Reimbursable expenses are billed separately from service fees on a monthly basis.
B. Any fees or reimbursable expenses not paid within 30 days of the date of the original invoice will be charged a late payment fee of 1% per month until payment is received.
C. The above fees, except for phone calls and those indicated by an "*", are guaranteed for a one year period, and are subject to an annual increase in an amount not less than the annual percentage change in the Consumer Price Index (CPI) of the Kansas City Metropolitan Area. All changes to the fee schedule will be communicated in writing at least 60 days prior to their effective date. Those items which have been marked by an "*" are established by other entities and therefore are subject to change with a 60 day notice and cannot be guaranteed for a one year period.
Fees Accepted By:
/s/ Morton B. Comer /s/ Joseph Quinones, Jr.
DST Systems, Inc.
Sequoia Fund, Inc.
|
9/22/97 9/9/97
Date Date
69900020.AX8
11
|
Exhibit 11
MCGLADREY & PULLEN, LLP
Certified Public Accountants and Consultants
We hereby consent to the use of our report dated January 15, 1998 on the financial statements of Sequoia Fund, Inc. referred to therein in Post-Effective Amendment No. 43 to the Registration Statement on Form N-1A, File No. 2-35566, as filed with the Securities and Exchange Commission.
We also consent to the reference to our firm in the Prospectus under the caption "Selected Financial Information" and in the Statement of Additional Information under the caption "Custodian, Counsel and Independent Accountants."
/S/ McGladrey & Pullen, LLP
_______________________________
McGladrey & Pullen, LLP
New York, New York
April 15, 1998
|
69900020.AX6
| ARTICLE 6 |
| The schedule contains financial information extracted from the financial statements and supporting schedules as of the end of the most current period and is qualified in its entirety by reference to such financial statements. |
| CIK: 0000089043 |
| NAME: SEQUOIA FUND INC |
| MULTIPLIER: 1 |
| PERIOD TYPE | YEAR |
| FISCAL YEAR END | DEC 31 1997 |
| PERIOD START | JAN 01 1997 |
| PERIOD END | DEC 31 1997 |
| INVESTMENTS AT COST | 1,167,724,189 |
| INVESTMENTS AT VALUE | 3,667,487,081 |
| RECEIVABLES | 3,920,748 |
| ASSETS OTHER | 45,179 |
| OTHER ITEMS ASSETS | 5,267,597 |
| TOTAL ASSETS | 3,676,720,605 |
| PAYABLE FOR SECURITIES | 0 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 4,155,746 |
| TOTAL LIABILITIES | 4,155,746 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 1,172,455,159 |
| SHARES COMMON STOCK | 29,232,634 |
| SHARES COMMON PRIOR | 29,185,056 |
| ACCUMULATED NII CURRENT | 0 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 346,808 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 2,499,762,892 |
| NET ASSETS | 3,672,564,859 |
| DIVIDEND INCOME | 24,316,178 |
| INTEREST INCOME | 9,215,768 |
| OTHER INCOME | 0 |
| EXPENSES NET | (31,165,100) |
| NET INVESTMENT INCOME | 2,366,846 |
| REALIZED GAINS CURRENT | 26,323,106 |
| APPREC INCREASE CURRENT | 1,081,383,714 |
| NET CHANGE FROM OPS | 1,110,073,666 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | (2,474,076) |
| DISTRIBUTIONS OF GAINS | (26,264,675) |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 1,872,099 |
| NUMBER OF SHARES REDEEMED | (2,034,693) |
| SHARES REINVESTED | 210,172 |
| NET CHANGE IN ASSETS | 1,091,566,362 |
| ACCUMULATED NII PRIOR | 107,230 |
| ACCUMULATED GAINS PRIOR | 288,377 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 31,015,090 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 31,679,100 |
| AVERAGE NET ASSETS | 3,101,508,958 |
| PER SHARE NAV BEGIN | 88.44 |
| PER SHARE NII | 0.08 |
| PER SHARE GAIN APPREC | 38.10 |
| PER SHARE DIVIDEND | (0.08) |
| PER SHARE DISTRIBUTIONS | (0.91) |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 125.63 |
| EXPENSE RATIO | 1.0 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below hereby revokes all prior powers granted by the undersigned to the extent inconsistent herewith and constitutes and appoints Robert D. Goldfarb, to act as attorney-in-fact and agent, with power of substitution and resubstitution, for the undersigned in any and all capacities, solely for the purpose of signing the Registration Statement, and any amendments thereto, on Form N-1A of Sequoia Fund, Inc. and filing the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in- fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
/s/ John M. Harding
___________________________
John M. Harding
Dated: April 16, 1998
|
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below hereby revokes all prior powers granted by the undersigned to the extent inconsistent herewith and constitutes and appoints Robert D. Goldfarb, to act as attorney-in-fact and agent, with power of substitution and resubstitution, for the undersigned in any and all capacities, solely for the purpose of signing the Registration Statement, and any amendments thereto, on Form N-1A of Sequoia Fund, Inc. and filing the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
/s/ Francis P. Matthews
___________________________
Francis P. Matthews
Dated: April 16, 1998
|
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below hereby revokes all prior powers granted by the undersigned to the extent inconsistent herewith and constitutes and appoints Robert D. Goldfarb, to act as attorney-in-fact and agent, with power of substitution and resubstitution, for the undersigned in any and all capacities, solely for the purpose of signing the Registration Statement, and any amendments thereto, on Form N-1A of Sequoia Fund, Inc. and filing the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
/s/ C. William Neuhauser
___________________________
C. William Neuhauser
Dated: April 16, 1998
|
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below hereby revokes all prior powers granted by the undersigned to the extent inconsistent herewith and constitutes and appoints Robert D. Goldfarb, to act as attorney-in-fact and agent, with power of substitution and resubstitution, for the undersigned in any and all capacities, solely for the purpose of signing the Registration Statement, and any amendments thereto, on Form N-1A of Sequoia Fund, Inc. and filing the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
/s/ Robert L. Swiggett
___________________________
Robert L. Swiggett
Dated: April 16, 1998
|
69900020.AY1