FOREIGN CUSTODY MANAGER DELEGATION AGREEMENT
AGREEMENT made as of this _____ day of ______ 1999 between the Dow
Xxxxx Islamic Market Index Portfolio, an open-ended New York trust registered
with the Securities and Exchange Commission (the "Commission"),under the
Investment Company Act of 1940, as amended, (the "Act"), acting through its
Board of Trustees or its duly appointed representative (the "Portfolio"), and
XXXXX BROTHERS XXXXXXXX & CO., a New York limited partnership with an office in
Boston, Massachusetts (the "Delegate").
WITNESSETH
WHEREAS the Trustees have appointed the Delegate as custodian (the
"Custodian") of the Portfolio's Assets pursuant to a Custodian Agreement dated
June 25, 1999, (the "Custodian Agreement");
WHEREAS the Portfolio may, from time to time, determine to invest
and maintain some or all Portfolio Assets outside the United States;
WHEREAS the Board of Trustees of the Portfolio (the "Board") wishes to
delegate to the Delegate certain functions with respect to the custody of
Portfolio's Assets outside the United States;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Trustees and the Delegate agree as follows. Capitalized
terms shall have the meaning indicated in Section 12 unless otherwise indicated
.
1. Maintenance of Portfolio Assets Abroad. The Portfolio, acting
through its Board or its duly authorized representative, hereby instructs
Delegate pursuant to the terms of the Custodian Agreement to place and maintain
the Portfolio's Assets within the countries listed in Schedule 1 attached hereto
(as such Schedule may be amended from time to time in accordance herewith). Such
instruction shall be deemed to include an instruction to use any Compulsory
Securities Depository in any such country and shall represent a Proper
Instruction under the terms of the Custodian Agreement. Countries may be added
to Schedule 1 by written instruction of the Investement Adviser (as defined in
the Custodian Agreement) that is accepted in writing by the Delegate as an
amendment to Schedule 1. With respect to amendments adding countries to Schedule
1, the Trustees acknowledge that - (a) the Delegate shall perform services
hereunder only with respect to the countries where it provides custodial
services to the Fund under the Custodian Agreement; (b) depending on conditions
in the particular country, advance notice may be required before the Delegate
shall be able to perform its duties hereunder in or with respect to such country
(such advance notice to be reasonable in light of the specific facts and
circumstances attendant to performance of duties in such country); and (c)
nothing in this Agreement shall require the Delegate to provide delegated or
custodial services in any country not listed in Schedule 1 until such amended
Schedule 1 has been accepted by the Delegate in accordance herewith.
2. Delegation. Pursuant to the provisions of Rule 17f-5 under the
Act as amended, the Board hereby delegates to the Delegate, and the Delegate
hereby accepts such delegation and agrees to perform, only those duties set
forth in this Agreement concerning the safekeeping of the Portfolio's Assets in
each of the countries set forth in Schedule 1 hereto as amended from time to
time. The Delegate is hereby authorized to take such actions on behalf of or in
the name of the Portfolio as are reasonably required to discharge its duties
under this Agreement, including, without limitation, to cause the Portfolio's
Assets to be placed with a particular Eligible Foreign Custodian in accordance
herewith. The Trustees confirm to the Delegate that the Trustees of the
Portfolio or its Investment Advisor or Investment Manager (as those terms are
defined in the Custodian Agreement) have considered the Sovereign Risk and
prevailing country risk as part of its continuing investment decision process,
including such factors as may be reasonably related to the systemic risk of
maintaining the Portfolio's Assets in a particular country, including, but not
limited to, financial infrastructure, prevailing custody and settlement systems
and practices (including the use of any Compulsory Securities Depository), and
the laws relating to the safekeeping and recovery of the Portfolio's Assets held
in custody pursuant to the terms of the Custodian Agreement.
3. Selection of Eligible Foreign Custodian and Contract Administration. The
Delegate shall perform the following duties with respect to the selection of
Eligible Foreign Custodians and administration of certain contracts governing
the Portfolio's foreign custodial arrangements:
(a) Selection of Eligible Foreign Custodian. The Delegate shall place and
maintain the Portfolio's Assets with an Eligible Foreign Custodian; provided
that the Delegate shall have determined that the Portfolio's Assets will be
subject to reasonable care based on the standards applicable to custodians in
the relevant market after considering all factors relevant to the safekeeping of
such assets including without limitation:
(i) The Eligible Foreign Custodian's practices, procedures, and internal
controls, including, but not limited to, the physical protections available for
certificated securities (if applicable), the controls and procedures for dealing
with any Securities Depository, the method of keeping custodial records, and the
security and data protection practices; (ii) Whether the Eligible Foreign
Custodian has the requisite financial strength to provide reasonable care for
the Portfolio's Assets; (iii) The Eligible Foreign Custodian's general
reputation and standing and, in the case of a Securities Depository, the
depository's operating history and number of participants; and (iv) Whether the
Portfolio will have jurisdiction over and be able to enforce judgments against
the Eligible Foreign Custodian, such as by virtue of the existence of any
offices of such Eligible Foreign Custodian in the United States or such Eligible
Foreign Custodian's appointment of an agent for service of process in the United
States or consent to jurisdiction in the United States.
The Delegate shall be required to make the foregoing determination to the
best of its knowledge and belief based only on information reasonably available
to it.
(b) Contract Administration. In the case of an Eligible Foreign Custodian
that is not a Securities Depository or a U.S. Bank, the Delegate shall cause
that the foreign custody arrangements shall be governed by a written contract
that the Delegate has determined will provide reasonable care for Portfolio
assets based on the standards applicable to custodians in the relevant market.
Each such contract shall, except as set forth in the last paragraph of this
subsection (b), include provisions that provide:
(i) For indemnification or insurance arrangements (or any combination of
the foregoing) such that the Portfolio will be adequately protected against the
risk of loss of assets held in accordance with such contract;
(ii) That the Portfolio's Assets will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of the Eligible Foreign
Custodian or its creditors except a claim of payment for their safe custody or
administration or, in the case of cash deposits, liens or rights in favor of
creditors of such Custodian arising under bankruptcy, insolvency or similar
laws;
(iii) That beneficial ownership of the Portfolio's Assets will be freely
transferable without the payment of money or value other than for safe custody
or administration;
(iv) That adequate records will be maintained identifying the Portfolio's
Assets as belonging to the Portfolio or as being held by a third party for the
benefit of the Portfolio;
(v) That the Portfolio's independent public accountants will be given
access to those records described in (iv) above or confirmation of the contents
of such records; and
(vi) That the Delegate will receive sufficient and timely periodic reports
with respect to the safekeeping of the Portfolio's Assets, including, but not
limited to, notification of any transfer to or from the Portfolio's account or a
third party account containing the Portfolio's Assets.
Such contract may contain, in lieu of any or all of the provisions
specified in this Section 3 (b), such other provisions that the Delegate
determines will provide, in their entirety, the same or a greater level of care
and protection for the Portfolio's Assets as the specified provisions, in their
entirety.
(c) Limitation to Delegated Selection. Notwithstanding anything in this
Agreement to the contrary, the duties under this Section 3 shall apply only to
Eligible Foreign Custodians selected by the Delegate and shall not apply to
Compulsory Securities Depositories or to any Eligible Foreign Custodian that the
Delegate is directed to use pursuant to Section 7.
4. Monitoring. The Delegate shall establish a system to monitor at
reasonable intervals (but at least annually) the appropriateness of maintaining
the Portfolio's Assets with each Eligible Foreign Custodian that has been
selected by the Delegate pursuant to Section 3 of this Agreement. The Delegate
shall monitor the continuing appropriateness of placement of the Portfolio's
Assets in accordance with the criteria established under Section 3(a) of this
Agreement.
The Delegate shall monitor the continuing appropriateness of the contract
governing the Portfolio's arrangements in accordance with the criteria
established under Section 3(b) of this Agreement.
5. Reporting. At least annually and more frequently as mutually
agreed between the parties, the Delegate shall provide to the Board written
reports specifying placement of the Portfolio's Assets with each Eligible
Foreign Custodian selected by the Delegate pursuant to Section 3 of this
Agreement and shall promptly report as to any material changes to such foreign
custody arrangements. Delegate will prepare such a report with respect to any
Eligible Foreign Custodian that the Delegate has been instructed to use pursuant
to Section 7 only to the extent specifically agreed with respect to the
particular situation.
6. Withdrawal of Portfolio's Assets. If the Delegate determines
that an arrangement with a specific Eligible Foreign Custodian selected by the
Delegate under Section 3 of this Agreement no longer meets the requirements of
said Section, Delegate shall withdraw the Portfolio's Assets from the
non-complying arrangement as soon as reasonably practicable; provided, however,
that if in the reasonable judgment of the Delegate, such withdrawal would
require liquidation of any of the Portfolio's Assets or would materially impair
the liquidity, value or other investment characteristics of the Portfolio's
Assets, it shall be the duty of the Delegate to provide information regarding
the particular circumstances and to act only in accordance with Proper
Instructions of the Portfolio or its Investment Advisor with respect to such
liquidation or other withdrawal.
7. Direction as to Eligible Foreign Custodian. Notwithstanding this
Delegation Agreement, the Portfolio, acting through its Board, its Investment
Adviser or its other authorized representative, may direct the Delegate to place
and maintain the Portfolio's Assets with a particular Eligible Foreign
Custodian. In such event, the Delegate shall be entitled to rely on any such
instruction as a Proper Instruction under the terms of the Custodian Agreement
and shall have no duties under this
Delegation Agreement with respect to such arrangement save those that it
may undertake specifically in writing with respect to each particular instance.
8. Standard of Care. In carrying out its duties under this Agreement, the
Delegate agrees to exercise reasonable care, prudence and diligence such as a
person having responsibility for safekeeping the Portfolio's Assets would
exercise.
9. Representations. The Delegate hereby represents and warrants that it is
a U.S. Bank and that this Agreement has been duly authorized, executed and
delivered by the Delegate and is a legal, valid and binding agreement of the
Delegate.
The Portfolio hereby represents and warrants that its Board of Directors
has determined that it is reasonable to rely on the Delegate to perform the
delegated responsibilities provided for herein and that this Agreement has been
duly authorized, executed and delivered by the Portfolio and is a legal, valid
and binding agreement of the Portfolio.
10. Effectiveness; termination. This Agreement shall be effective as of the
date on which this Agreement shall have been accepted by the Delegate, as
indicated by the date set forth below the Delegate's signature. This Agreement
may be terminated at any time, without penalty, by written notice from the
terminating party to the non-terminating party. Such termination shall be
effective on the 30th day following the date on which the non-terminating party
shall receive the foregoing notice. The foregoing to the contrary
notwithstanding, this Agreement shall be deemed to have been terminated
concurrently with the termination of the Custodian Agreement.
11. Notices. Notices and other communications under this Agreement are to
be made in accordance with the arrangements designated for such purpose under
the Custodian Agreement unless otherwise indicated in a writing referencing this
Agreement and executed by both parties.
12. Definitions. Capitalized terms in this agreement have the
following meanings:
a. Compulsory Securities Depository - shall mean a Securities Depository
the use of which is mandatory (i) under applicable law or regulation; (ii)
because securities cannot be withdrawn from the depository; or, (iii) because
maintaining securities outside the Securities Depository is not consistent with
prevailing custodial practices.
b. Eligible Foreign Custodian - shall have the meaning set forth in Rule
17f-5(a)(1) and shall also include a U.S. Bank.
c. Portfolio's Assets - shall mean any of the Portfolio's investments
(including foreign currencies) for which the primary market is outside the
United States, and such cash and cash equivalents as are reasonably necessary to
effect the Portfolio's transactions in such investments.
d. Proper Instructions - shall have the meaning set forth in the Custodian
Agreement.
e. Securities Depository - shall have the meaning set forth in Rule
17f-5(a)(6).
f. Sovereign Risk - shall have the meaning set forth in Section [6.3] of
the Custodian Agreement.
g. U.S. Bank - shall mean a bank which qualifies to serve as a custodian of
assets of investment companies under Section 17(f) of the Act.
13. Governing Law and Jurisdiction. This Agreement shall be construed in
accordance with the laws of the State of New York. The parties hereby submit to
the exclusive jurisdiction of the Federal courts sitting in the State of New
York or the Commonwealth of Massachusetts or of the state courts of either such
State or such Commonwealth.
14. Fees. Delegate shall perform its functions under this agreement for the
compensation determined under the Custodian Agreement.
15. Integration. This Agreement sets forth all of the Delegate's duties
with respect to the selection and monitoring of Eligible Foreign Custodians, the
administration of contracts with Eligible Foreign Custodians, the withdrawal of
assets from Eligible Foreign Custodians and the issuance of reports in
connection with such duties. The terms of the Custodian Agreement shall apply
generally as to matters not expressly covered in this Agreement, including
dealings with the Eligible Foreign Custodians in the course of discharge of the
Delegate's obligations under the Custodian Agreement.
NOW THEREFORE, the parties have caused this Agreement to be executed by its
duly authorized representatives, effective as of the date first above written.
XXXXX BROTHERS XXXXXXXX & CO.
By: _______________________________
Name: ____________________
Title: ____________________
Date: ____________________
DOW XXXXX ISLAMIC MARKET INDEX PORTFOLIO
By: _______________________________
Name: ____________________
Title: ____________________
Date: ____________________
