Exhibit (j)(2)
DELEGATION AGREEMENT
--------------------
AGREEMENT, dated as of ___________ __, 2005 by and between INVESTORS
BANK & TRUST COMPANY, a Massachusetts trust company (the "Delegate"), and The
Xxxxxxxx Multi-Strategy Trust, a statutory trust (the "Fund").
WHEREAS, pursuant to the provisions of Rule 17f-5 under the
Investment Company Act of 1940, as amended (the "1940 Act"), and subject to
the terms and conditions set forth herein, the Board of Directors of the Fund
desires to delegate to the Delegate certain responsibilities concerning
Foreign Assets (as defined below), and the Delegate hereby agrees to retain
such delegation, as described herein; and
WHEREAS, pursuant to the provisions of Rule 17f-7 under the 1940 Act,
and subject to the terms and conditions set forth herein, the Board of
Directors of the Fund desires to retain the Delegate to provide certain
services concerning Foreign Assets, and the Delegate hereby agrees to provide
such services, as described herein;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Definitions
Capitalized terms in this Agreement have the following meanings:
a. Authorized Representative
Authorized Representative means any one of the persons who are
empowered, on behalf of the parties to this Agreement, to receive notices from
the other party and to send notices to the other party.
b. Board
Board means the Board of Directors (or the body authorized to
exercise authority similar to that of the board of directors of a corporation)
of Fund.
c. Country Risk
Country Risk means all factors reasonably related to the systemic
risk of holding Foreign Assets in a particular country including, but not
limited to, such country's financial infrastructure (including any Securities
Depositories operating in such country); prevailing custody and settlement
practices; and laws applicable to the safekeeping and recovery of Foreign
Assets held in custody.
d. Eligible Foreign Custodian
Eligible Foreign Custodian has the meaning set forth in Rule
17f-5(a)(1) and it is understood that such term includes foreign branches of
U.S. Banks (as the term "U.S. Bank" is defined in Rule 17f-5(a)(7)).
e. Foreign Assets
Foreign Assets has the meaning set forth in Rule 17f-5(a)(2).
f. Foreign Custody Manager
Foreign Custody Manager has the meaning set forth in Rule
17f-5(a)(3).
g. Securities Depository
Securities Depository has the meaning set forth in Rule 17f-4(a).
h. Monitor
Monitor means to re-assess or re-evaluate, at reasonable intervals, a
decision, determination or analysis previously made.
2. Representations
a. Delegate's Representations
Delegate represents that it is a trust company chartered under
the laws of the Commonwealth of Massachusetts. Delegate further represents
that the persons executing this Agreement and any amendment or appendix hereto
on its behalf are duly authorized to so bind the Delegate with respect to the
subject matter of this Agreement.
b. Fund's Representations
Fund represents that the Board has determined that it is
reasonable to rely on Delegate to perform the responsibilities described in
this Agreement. Fund further represents that the persons executing this
Agreement and any amendment or appendix hereto on its behalf are duly
authorized to so bind the Fund with respect to the subject matter of this
Agreement.
3. Jurisdictions and Depositories Covered
a. Initial Jurisdictions and Depositories
The authority delegated by this Agreement in connection with Rule
17f-5 applies only with respect to Foreign Assets held in the jurisdictions
listed in Appendix A1. Delegate's responsibilities under this Agreement in
connection with Rule 17f-7 apply only with respect to the Securities
Depositories listed in Appendix A2. Upon the creation of a new Securities
Depository in any of the jurisdictions listed in Appendix A1 at the time of
such creation, such Securities Depository will automatically be deemed to be
listed in Appendix A2 and will be covered by the terms of this Agreement.
b. Added Jurisdictions and Depositories
Jurisdictions and related Securities Depositories may be added to
Appendix A1 and Appendix A2, respectively, by written agreement in the form of
Appendix B. Delegate's responsibility and authority with respect to any
jurisdiction or Securities Depository, respectively, so added will commence at
the later of (i) the time that Delegate's Authorized Representative and
Board's Authorized Representative have both executed a copy of Appendix B
listing such jurisdiction and/or Securities Depository, or (ii) the time that
Delegate's Authorized Representative receives a copy of such fully executed
Appendix B.
c. Withdrawn Jurisdictions
Board may withdraw its (i) delegation to Delegate with respect to
any jurisdiction or (ii) retention of Delegate with respect to any Securities
Depository, upon written notice to Delegate. Delegate may withdraw its (i)
acceptance of delegation with respect to any jurisdiction or (ii) retention
with respect to any Securities Depository, upon written notice to Board. Ten
days (or such longer period as to which the parties agree in such event) after
receipt of any such notice by the Authorized Representative of the party other
than the party giving notice, Delegate shall have no further responsibility or
authority under this Agreement with respect to the jurisdiction(s) or
Securities Depository as to which delegation is withdrawn.
4. Delegation of Authority to Act as Foreign Custody Manager
a. Selection of Eligible Foreign Custodians
Subject to the provisions of this Agreement and the requirements
of Rule 17f-5 (and any other applicable law), Delegate is authorized and
directed to place and maintain Foreign Assets in the care of any Eligible
Foreign Custodian(s) selected by Delegate in each jurisdiction to which this
Agreement applies, except that Delegate does not accept such authorization and
direction with regard to Securities Depositories.
b. Contracts with Eligible Foreign Custodians
Subject to the provisions of this Agreement and the requirements
of Rule 17f-5 (and any other applicable law), Delegate is authorized to enter
into, on behalf of Fund, such written contracts governing Fund's foreign
custody arrangements with such Eligible Foreign Custodians as Delegate deems
appropriate.
5. Monitoring of Eligible Foreign Custodians and Contracts
In each case in which Delegate has exercised the authority
delegated under this Agreement to place Foreign Assets with an Eligible
Foreign Custodian, Delegate is authorized to, and shall, on behalf of Fund,
establish a system to monitor the appropriateness of maintaining Foreign
Assets with such Eligible Foreign Custodian. In each case in which Delegate
has exercised the authority delegated under this Agreement to enter into a
written contract governing Fund's foreign custody arrangements, Delegate is
authorized to, and shall, on behalf of Fund, establish a system to Monitor the
appropriateness of such contract.
6. Securities Depositories
a. In accordance with the requirements of Rule 17f-7, Delegate shall,
upon execution of this Agreement, provide the Fund or its investment adviser
with an analysis of the custody risks associated with maintaining assets with
each Securities Depository listed on Appendix A2 hereto.
b. In accordance with the requirements of Rule 17f-7, Delegate shall
monitor the custody risks associated with maintaining assets with each
Securities Depository listed on Appendix A2 hereto on a continuing basis, and
shall promptly notify the Fund or its investment adviser of any material
change in such risks.
7. Guidelines and Procedures for the Exercise of Delegated Authority
a. Board's Conclusive Determination Regarding Country Risk
In exercising its delegated authority under this Agreement,
Delegate may assume, for all purposes, that Board (or Fund's investment
advisor, pursuant to authority delegated by Board) has considered, and
pursuant to its fiduciary duties to Fund and Fund's shareholders, determined
to accept, such Country Risk as is incurred by placing and maintaining Foreign
Assets in the jurisdictions to which this Agreement applies. In exercising its
delegated authority under this Agreement, Delegate may also assume that Board
(or Fund's investment advisor, pursuant to authority delegated by Board) has,
and will continue to, Monitor such Country Risk to the extent Board deems
necessary or appropriate.
Except as specifically described herein, nothing in this
Agreement shall require Delegate to make any selection or to engage in any
Monitoring on behalf of Fund that would entail consideration of Country Risk.
b. Selection of Eligible Foreign Custodians
In exercising the authority delegated under this Agreement to
place Foreign Assets with an Eligible Foreign Custodian, Delegate shall
determine that Foreign Assets will be subject to reasonable care, based on the
standards applicable to custodians in the market in which the Foreign Assets
will be held, after considering all factors relevant to the safekeeping of
such Foreign 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 method of keeping custodial records,
and the security and data protection practices;
ii. Whether the Eligible Foreign Custodian has the financial
strength to provide reasonable care for Foreign Assets;
iii. The Eligible Foreign Custodian's general reputation and
standing;
iv. Whether Fund will have jurisdiction over and be able to
enforce judgments against the Eligible Foreign Custodian,
such as by virtue of
the existence of any offices of the Eligible Foreign
Custodian in the United States or the Eligible Foreign
Custodian's consent to service of process in the United
States;
v. In the case of an Eligible Foreign Custodian that is a
banking institution or trust company, any additional factors
and criteria set forth in Appendix C to this Agreement; and
c. Evaluation of Written Contracts
In exercising the authority delegated under this Agreement to
enter into written contracts governing Fund's foreign custody arrangements
with an Eligible Foreign Custodian, Delegate shall determine that such
contracts provide reasonable care for Foreign Assets based on the standards
applicable to Eligible Foreign Custodians in the relevant market. In making
this determination, Delegate shall ensure that the terms of such contracts
comply with the provisions of Rule 17f-5(c)(2).
d. Monitoring of Eligible Foreign Custodians
In exercising the authority delegated under this Agreement to
establish a system to monitor the appropriateness of maintaining Foreign
Assets with an Eligible Foreign Custodian or the appropriateness of a written
contract governing Fund's foreign custody arrangements, Delegate shall
consider any factors and criteria set forth in Appendix D to this Agreement.
If, as a result of its Monitoring of Eligible Foreign Custodian relationships
hereunder or otherwise, the Delegate determines in its sole discretion that it
is in the best interest of the safekeeping of the Foreign Assets to move such
Foreign Assets to a different Eligible Foreign Custodian, the Fund shall bear
any expense related to such relocation of Foreign Assets.
8. Standard of Care
a. In exercising the authority delegated under this Agreement with
regard to its duties under Rule 00x-0, Xxxxxxxx agrees to exercise reasonable
care, prudence and diligence such as a person having responsibility for the
safekeeping of Foreign Assets of an investment company registered under the
1940 Act would exercise.
b. In carrying out its responsibilities under this Agreement with
regard to Rule 00x-0, Xxxxxxxx agrees to exercise reasonable care, prudence
and diligence.
9. Reporting Requirements
Delegate agrees to provide written reports notifying Board of the
placement of Foreign Assets with a particular Eligible Foreign Custodian and
of any material change in Fund's arrangements with such Eligible Foreign
Custodians. Such reports shall be provided to Board quarterly for
consideration at the next regularly scheduled meeting of the Board or earlier
if deemed necessary or advisable by the Delegate in its sole discretion.
10. Provision of Information Regarding Country Risk
With respect to the jurisdictions listed in Appendix A1, or added
thereto pursuant to Article 3, Delegate agrees to provide the Board and the
Fund's investment adviser with access to Eyes to the WorldTM, a service
available through the Delegate's Web Site at xxx.xxxxx.xxx, containing
information relating to Country Risk, if available, as is specified in
Appendix E to this Agreement. Such information relating to Country Risk shall
be updated from time to time as the Delegate deems necessary.
11. Limitation of Liability.
a. Notwithstanding anything in this Agreement to the contrary, in no
event shall the Delegate or any of its officers, directors, employees or
agents (collectively, the "Indemnified Parties") be liable to the Fund or any
third party, and the Fund shall indemnify and hold the Delegate and the
Indemnified Parties harmless from and against any and all loss, damage,
liability, actions, suits, claims, costs and expenses, including legal fees,
(a "Claim") arising as a result of any act or omission of the Delegate or any
Indemnified Party under this Agreement, except for any Claim resulting solely
from the negligence, willful misfeasance or bad faith of the Delegate or any
Indemnified Party. Without limiting the foregoing, neither the Delegate nor
the Indemnified Parties shall be liable for, and the Delegate and the
Indemnified Parties shall be indemnified against, any Claim arising as a
result of:
i. Any act or omission by the Delegate or any Indemnified
Party in reasonable good faith reliance upon the terms of
this Agreement, any resolution of the Board, telegram,
telecopy, notice, request, certificate or other instrument
reasonably believed by the Delegate to be genuine;
ii. Any information which the Delegate provides or does not
provide under Section 10 hereof;
iii. Any acts of God, earthquakes, fires, floods, storms or
other disturbances of nature, epidemics, strikes, riots,
nationalization, expropriation, currency restrictions, acts
of war, civil war or terrorism, insurrection, nuclear
fusion, fission or radiation, the interruption, loss or
malfunction of utilities, transportation or computers
(hardware or software) and computer facilities, the
unavailability of energy sources and other similar
happenings or events.
b. Notwithstanding anything to the contrary in this Agreement, in no
event shall the Delegate or the Indemnified Parties be liable to the Fund or
any third party for lost profits or lost revenues or any special,
consequential, punitive or incidental damages of any kind whatsoever in
connection with this Agreement or any activities hereunder.
12. Effectiveness and Termination of Agreement
This Agreement shall be effective as of the later of the date of
execution on behalf of Board or Delegate and shall remain in effect until
terminated as provided herein. This Agreement may be terminated at any time,
without penalty, by written notice from the
terminating party to the non-terminating party. Termination will become
effective 30 days after receipt by the non-terminating party of such notice.
13. Authorized Representatives and Notices
The respective Authorized Representatives of Fund and Board, and
the addresses to which notices and other documents under this Agreement are to
be sent to each, are as set forth in Appendix F. Any Authorized Representative
of a party may add or delete persons from that party's list of Authorized
Representatives by written notice to an Authorized Representative of the other
party.
14. Governing Law
This Agreement shall be constructed in accordance with the laws
of the Commonwealth of Massachusetts without regard to principles of choice of
law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives as of the date first
written above.
INVESTORS BANK & TRUST COMPANY
By:___________________________________
Name:
Title:
The Xxxxxxxx Multi-Strategy Trust
By:____________________________________
Name:
Title:
List of Appendices
------------------
A1 -- Jurisdictions Covered
A2 -- Securities Depositories Covered
B -- Additional Jurisdictions/Securities Depositories Covered
C -- Additional Factors and Criteria To Be Applied in the Selection of
Eligible Foreign Custodians That Are Banking Institutions or Trust Companies
D -- Factors and Criteria To Be Applied in Establishing Systems For the
Monitoring of Foreign Custody Arrangements and Contracts
E -- Information Regarding Country Risk
F -- Authorized Representatives
APPENDIX A1
-----------
Jurisdictions Covered
---------------------
[delete those countries which are not delegated]
Argentina Kenya
Austria Korea
Australia Latvia
Bahrain Lebanon
Bangladesh Lithuania
Belgium Luxembourg
Bermuda Malaysia
Bolivia Mauritius
Botswana Mexico
Brazil Morocco
Bulgaria Namibia
Canada Netherlands
Chile New Zealand
China Norway
Clearstream (Cedel) Oman
Colombia Pakistan
Costa Rica Panama
Croatia Papau New Guinea
Cyprus Peru
Czech Republic Philippines
Denmark Poland
Ecuador Portugal
Egypt Romania
Estonia Russia
Euroclear Singapore
Finland Slovak Republic
France Slovenia
Germany South Africa
Ghana Spain
Greece Sri Lanka
Hong Kong Swaziland
Hungary Sweden
Iceland Switzerland
India Taiwan
Indonesia Thailand
Ireland Turkey
Israel Ukraine
Italy United Kingdom
Ivory Coast Uruguay
Japan Venezuela
Jordan Zambia
Kazakhstan Zimbabwe
A1-1
APPENDIX A2
-----------
Securities Depositories Covered
-------------------------------
------------------------------------------------------- -----------------------------------------------------
Argentina CDV Philippines PCD
XXXX XxXX
------------------------------------------------------- -----------------------------------------------------
Australia Austraclear Ltd. Poland CRBS
CHESS NDS
RITS
------------------------------------------------------- -----------------------------------------------------
Austria OeKB AG Portugal Central de Valores
Mobiliarios
------------------------------------------------------- -----------------------------------------------------
Bahrain None Romania NBR
SNCDD
Stock Exchange
Registry, Clearing &
Settlement
------------------------------------------------------- -----------------------------------------------------
Bangladesh None Russia DCC
NDC
VTB
------------------------------------------------------- -----------------------------------------------------
Belgium BKB Singapore CDP
CIK MAS
------------------------------------------------------- -----------------------------------------------------
Bermuda None Slovak Republic NBS
SCP
------------------------------------------------------- -----------------------------------------------------
Botswana None Slovenia KDD
------------------------------------------------------- -----------------------------------------------------
Brazil CBLC South Africa STRATE
CETIP The Central Depository
SELIC (Pty) Ltd.
------------------------------------------------------- -----------------------------------------------------
Bulgaria The Bulgarian National Spain Banco de Espana
Bank SCLV
The Central Depository
------------------------------------------------------- -----------------------------------------------------
Canada Bank of Canada Sri Lanka CDS
CDS
------------------------------------------------------- -----------------------------------------------------
Chile DCV Sweden VPC AB
------------------------------------------------------- -----------------------------------------------------
China SSCC Switzerland SIS SegaIntersettle AG
SSCCRC
------------------------------------------------------- -----------------------------------------------------
Clearstream Taiwan TSCD
------------------------------------------------------- -----------------------------------------------------
Colombia DCV Thailand TSD
DECEVAL
------------------------------------------------------- -----------------------------------------------------
Costa Rica CEVAL Turkey CBT
Takasbank
------------------------------------------------------- -----------------------------------------------------
Croatia CNB Ukraine Depository of the
Ministry of Finance National Bank of
SDA Ukraine
MFS Depository
------------------------------------------------------- -----------------------------------------------------
Czech Republic SCP Uruguay None
TKD
------------------------------------------------------- -----------------------------------------------------
Denmark VP United Kingdom CMO
CREST
------------------------------------------------------- -----------------------------------------------------
Ecuador DECEVALE, S.A. Venezuela BCV
CVV
------------------------------------------------------- -----------------------------------------------------
Egypt Misr for Clearing, Zambia Bank of Zambia
Settlement & Dep. XxXX CSD
------------------------------------------------------- -----------------------------------------------------
Estonia ECDSL Zimbabwe None
------------------------------------------------------- -----------------------------------------------------
Euroclear
------------------------------------------------------- -----------------------------------------------------
Finland APK
------------------------------------------------------- -----------------------------------------------------
France Sicovam SA
------------------------------------------------------- -----------------------------------------------------
Germany Clearstream
------------------------------------------------------- -----------------------------------------------------
Ghana None
------------------------------------------------------- -----------------------------------------------------
Greece Bank of Greece
CSD
------------------------------------------------------- -----------------------------------------------------
Hong Kong CCASS
CMU
------------------------------------------------------- -----------------------------------------------------
Hungary Keler Ltd.
------------------------------------------------------- -----------------------------------------------------
India CDSL
NSDL
------------------------------------------------------- -----------------------------------------------------
Indonesia Bank Indonesia
PT.KSEI
------------------------------------------------------- -----------------------------------------------------
Ireland CREST
Gilt Settlement Office
------------------------------------------------------- -----------------------------------------------------
Israel TASE Clearing
House Ltd.
------------------------------------------------------- -----------------------------------------------------
Italy Banca d-Italia
Monte Titoli
------------------------------------------------------- -----------------------------------------------------
Ivory Coast* Depositaire Central/
Banque de Reglement
------------------------------------------------------- -----------------------------------------------------
Japan Bank of Japan
JASDEC
------------------------------------------------------- -----------------------------------------------------
Jordan SDC
------------------------------------------------------- -----------------------------------------------------
Kazakhstan Kazakhstan Central
Securities Depository
------------------------------------------------------- -----------------------------------------------------
Kenya Central Bank of Kenya
Central Depository
------------------------------------------------------- -----------------------------------------------------
Korea KSD
------------------------------------------------------- -----------------------------------------------------
Latvia Bank of Latvia
LCD
------------------------------------------------------- -----------------------------------------------------
Lebanon Banque de Liban
MIDCLEAR
------------------------------------------------------- -----------------------------------------------------
Lithuania CSDL
------------------------------------------------------- -----------------------------------------------------
Luxembourg Clearstream
------------------------------------------------------- -----------------------------------------------------
Malaysia BNM (SSTS)
MCD
------------------------------------------------------- -----------------------------------------------------
Mauritius CDS
------------------------------------------------------- -----------------------------------------------------
Mexico S.D. Indeval
------------------------------------------------------- -----------------------------------------------------
Morocco Maroclear S.A.
------------------------------------------------------- -----------------------------------------------------
Netherlands NECIGEF
------------------------------------------------------- -----------------------------------------------------
New Zealand New Zealand Central
Securities Depository
------------------------------------------------------- -----------------------------------------------------
Norway VPS
------------------------------------------------------- -----------------------------------------------------
Oman MDSRC
------------------------------------------------------- -----------------------------------------------------
Pakistan Central Depository Co.
of Pakistan Limited
State Bank of Pakistan
------------------------------------------------------- -----------------------------------------------------
Peru CAVALI
------------------------------------------------------- -----------------------------------------------------
* Benin, Burkina-Faso, Guinea Bissau, Mali, Nigeria, Senegal, and Togo are available through the Ivory Coast
APPENDIX B
----------
Additional Jurisdictions Covered
--------------------------------
Pursuant to Article 3 of this Agreement, Delegate and Board agree
that the following jurisdictions shall be added to Appendix A1:
[insert additional countries/depositories]
INVESTORS BANK & TRUST COMPANY
By:___________________________________
Name:
Title:
The Xxxxxxxx Multi-Strategy Trust
By:____________________________________
Name:
Title:
DATE:__________________________________
B-1
APPENDIX C
----------
Additional Factors and Criteria To Be Applied
in the Selection of Eligible Foreign Custodians
That Are Banking Institutions or Trust Companies
------------------------------------------------
In addition to the factors set forth in Rule 17f-5(c)(1), in
selecting Eligible Foreign Custodians that are banking institutions or trust
companies, Delegate shall consider the following factors, if such information
is available (check all that apply):
_________ None
_________ Other (list below):
C-1
APPENDIX D
----------
Factors and Criteria To Be Applied
in the Establishing Systems For the Monitoring of
Foreign Custody Arrangements and Contracts
------------------------------------------
In establishing systems for the Monitoring of foreign custody
arrangements and contracts with Eligible Foreign Custodians, Delegate shall
consider the following factors, if such information is available:
1. Operating performance
2. Established practices and procedures
3. Relationship with market regulators
4. Contingency planning
D-1
APPENDIX E
----------
Information Regarding Country Risk
----------------------------------
To aid the Board in its determinations regarding Country Risk,
Delegate will furnish Board annually with respect to the jurisdictions
specified in Article 3, the following information:
1. Copy of Addenda or Side Letters to Subcustodian Agreements
2. Legal Opinion, if available, with regard to:
a) Access to books and records by the Fund's accountants
b) Ability to recover assets in the event of bankruptcy of a
custodian
c) Ability to recover assets in the event of a loss
d) Likelihood of expropriation or nationalization, if available
e) Ability to repatriate or convert cash or cash equivalents
3. Audit Report
4. Copy of Balance Sheet from Annual Report
5. Country Profile Matrix containing market practice for:
a) Delivery versus payment
b) Settlement method
c) Currency restrictions
d) Buy-in practice
e) Foreign ownership limits
f) Unique market arrangements
E-1
APPENDIX F
----------
Authorized Representatives
--------------------------
The names and addresses of each party's authorized representatives are set
forth below:
A. Board
With a copy to:
B. Delegate
Investors Bank & Trust Company
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 0000 Xxxxxx, XX 00000-0000
Attention: _______________, Director, Client Management
Fax: (000) 000-0000
With a copy to:
Investors Bank & Trust Company
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 0000 Xxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxx, Assistant General Counsel
Fax: (000) 000-0000
F-1
