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EXHIBIT 99.B8.2
DELEGATION AGREEMENT
AGREEMENT, dated as of October 29, 1997 by and between Investors Bank
& Trust Company, a Massachusetts Trust Company (the "Delegate"), and Xxxxxxx
Xxxxx Mutual Funds, Inc., a Maryland corporation (the "Company").
WHEREAS, the Company has entered into a Custodian Agreement dated
February 26, 1996 between the Company and Delegate whereby Delegate is appointed
as custodian of the assets of the Company;
WHEREAS, pursuant to the provisions of Rule 17f-5(b) under the
Investment Company Act of 1940, and subject to the terms and conditions set
forth herein, the Board of Directors of the Company desires to delegate to the
Delegate, and the Delegate hereby agrees to accept and assume, certain
responsibilities described herein concerning Assets held outside of the United
States on behalf of the portfolios listed in Appendix H, as amended from time to
time (each a "Fund");
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. Assets
Assets means any of a Fund's investments (including foreign
currencies) for which the primary market is outside the United States, and such
cash and cash equivalents as are reasonably necessary to effect a Fund's
transactions in such investments.
b. 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, to send notices to the other party, to add or delete
jurisdictions pursuant to Article 4, and to otherwise bind the respective
parties with respect to the subject matter of this Agreement.
c. Board
Board means the Board of Directors of the Company.
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d. Compulsory Securities Depository
Compulsory Securities Depository means a Securities Depository
the use of which is mandatory (i) by 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cannot be withdrawn from the depository; or (iii) because maintaining securities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.
e. Country Risk
Country Risk means all factors reasonably related to the
systemic risk of holding 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 Assets held in
custody.
f. Eligible Foreign Custodian
Eligible Foreign Custodian has the meaning set forth in Rule
17f-5(a)(1) and shall include foreign branches of U.S. Banks (as the term "U.S.
Banks" is defined in Rule 17f-5).
g. Foreign Custody Manager
Foreign Custody Manager has the meaning set forth in Rule
17f-5(a)(2).
h. Monitor
Monitor means to re-assess or re-evaluate, at reasonable
intervals, a decision or determination previously made.
i. Securities Depository
Securities Depository has the meaning set forth in Rule
17f-5(a)(6).
2. Representations
a. Delegate's Representations
Delegate represents that it is a trust company chartered under
the laws of the Commonwealth of Massachusetts.
b. Fund's Representations
Fund represents that the Board has determined to rely upon
Delegate to perform the responsibilities delegated by this Agreement.
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3. Jurisdictions Covered
a. Initial Jurisdictions
The authority delegated by this Agreement applies only with
respect to Assets of a Fund held in the jurisdictions listed in Appendix A.
b. Added Jurisdictions
Jurisdictions may be added to Appendix A by written agreement
in the form of Appendix B. Delegate's responsibility and authority with respect
to any jurisdiction so added will commence at the later of (i) the time when
Delegate's Authorized Representative and Board's Authorized Representative have
both executed a copy of Appendix B listing such jurisdiction, or (ii) the time
when Delegate's Authorized Representative receives a copy of such fully executed
Appendix B.
c. Withdrawn Jurisdictions
Board may withdraw its delegation with respect to any
jurisdiction upon written notice to Delegate. Delegate may withdraw its
acceptance of designated authority with respect to any jurisdiction upon written
notice to Board. Ten days (or such longer period as to which the parties agree)
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 or jurisdictions as to which authority is withdrawn. With regard to
Assets then custodied in any jurisdiction for which the delegation is withdrawn,
Delegate shall act in accordance with any instructions of Board or the Company's
Authorized Representative regarding the disposition of such Assets, and Delegate
shall not be liable for the safekeeping of such assets upon the expiration of
the time period described herein.
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 Assets in the care of any Eligible
Foreign Custodian or Custodians selected by Delegate in each jurisdiction to
which this Agreement applies.
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.
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5. Monitoring of Eligible Foreign Custodians and Contracts
In each case in which Delegate has exercised the authority delegated
under this Agreement to place 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 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. Guidelines and Procedures for the Exercise of Delegated Authority
a. Country Risk
In exercising its delegated authority under this Agreement,
Delegate may assume, for all purposes, that it is not responsible for such
Country Risk as is incurred by placing and maintaining Assets in the
jurisdictions to which this Agreement applies. 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 Assets with an Eligible Foreign Custodian, Delegate shall determine that
Assets will be subject to reasonable care, based on the standards applicable to
custodians in the market in which the Assets will be held, 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 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
Assets;
iii. The Eligible Foreign Custodian's general reputation
and standing and, in the case of a Securities
Depository, the Securities Depository's operating
history and number of participants;
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;
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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
vi. In the case of an Eligible Foreign Custodian that is
a Securities Depository, any additional factors and
criteria set forth in Appendix D to this Agreement.
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 (or,
in the case of a Securities Depository, such contract, the rules or established
practices or procedures of the depository, or any combination of the foregoing)
provide reasonable care for Assets based on the standards applicable to Eligible
Foreign Custodian 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
In exercising the authority delegated under this Agreement to
establish a system to Monitor the appropriateness of maintaining Assets with an
Eligible Foreign Custodian or the appropriateness of a written contract
governing Fund's foreign custody arrangements, Delegate shall consider all
factors Delegate deems relevant, including, without limitation those factors and
criteria set forth in Appendix E 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 Assets to move such Assets to a different Eligible
Foreign Custodian, the Fund shall bear any expense related to such relocation of
Assets. In the event that Delegate shall have determined that no Eligible
Foreign Custodian in a given country would afford reasonable care, Delegate
shall promptly so advise the Board and shall then act in accordance with the
instructions of Board or the Company's Authorized Representative(s) with respect
to the disposition of the affected Assets. Ten days after so advising the Board,
Delegate shall not be liable for safekeeping of the affected Assets while
awaiting the receipt or execution of such instructions.
7. Standard of Care
In exercising the authority delegated under this Agreement, Delegate
agrees to exercise reasonable care, prudence and diligence such as a person
having responsibility for the safekeeping of assets of an investment company
registered under the Investment Company Act of 1940 would exercise.
8. Reporting Requirements
Delegate agrees to provide written reports notifying Board of the
placement of Assets with a particular Eligible Foreign Custodian or Permissible
Foreign Custodian and of any material change in Fund's foreign custody
arrangements. Such reports shall be provided to Board quarterly for
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consideration at the next regularly scheduled meeting of the Board or more
frequently if deemed necessary or advisable by the Delegate or if reasonably
requested by the Board. Delegate shall provide to the Company's Authorized
Representative(s) reports with reasonable promptness upon the occurrence of any
material change in the arrangement with any Eligible Foreign Custodian.
9. Provision of Information Regarding Country Risk
With respect to the jurisdictions listed in Appendix A or added thereto
pursuant to Article 4, Delegate agrees to provide annually to Board, such
information relating to Country Risk, if available, as is specified in Appendix
F to this Agreement.
10. 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 done or omitted to be done in accordance with this Agreement
in good faith, 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 9 hereto except as results
from Delegate's own gross negligence; or
iii. Any act of God, earthquakes, fires, floods, storms or
other disturbances of nature, epidemics, strikes,
riots, nationalization, expropriation, currency
restrictions, act 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 except
as results from Delegate's own gross negligence.
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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 any special, consequential or punitive damages of any kind
whatsoever in connection with this Agreement or any activities hereunder.
11. 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 60 days after receipt
by the non-terminating party of such notice.
12. Authorized Representatives and Notices
The respective Authorized Representatives of Company and Delegate, and
the addresses to which notices and other documents under this Agreement are to
be sent to each, are as set forth in Appendix G. 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.
13. Governing Law
This Agreement shall be constructed in accordance with the laws of the
Commonwealth of Massachusetts without regard to principals of choice of law. In
the event that there is a conflict between this Agreement and the Custodian
Agreement between the parties, the terms of this Agreement shall control.
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IN WITNESS WHEREOF, Authorized Representatives of Board and of Delegate
have fixed their signatures as of the date first written above.
INVESTORS BANK & TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxxxx 10/29/97
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Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
XXXXXXX XXXXX MUTUAL FUNDS, INC.
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: President
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List of Appendices
A -- Jurisdictions Covered
B -- Additional Jurisdictions Covered
C -- Additional Factors and Criteria To Be Applied in the
Selection of Eligible Foreign Custodians That Are Banking
Institutions or Trust Companies
D -- Additional Factors and Criteria To Be Applied in the Selection
of Eligible Foreign Custodians That Are Securities Depositories
E -- Factors and Criteria To Be Applied in Establishing Systems for
the Monitoring of Foreign Custody Arrangements and Contracts
F -- Information Regarding Investment Risk
G -- Authorized Representatives
H -- Covered Portfolios
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APPENDIX A
JURISDICTIONS COVERED
For the International Growth Fund and Value Discovery Fund:
Argentina Greece Philippines
Australia Hong Kong Poland
Austria Hungary Portugal
Bangladesh India Russia
Belgium Indonesia Singapore
Botswana Ireland Slovenia
Brazil Israel Slovak Republic
Canada Italy South Africa
Chile Japan South Korea
China Luxembourg Spain
Colombia Malaysia Sri Lanka
Czech Republic Mauritius Sweden
Denmark Mexico Switzerland
Ecuador Morocco Taiwan
Egypt Netherlands Thailand
Finland New Zealand Turkey
France Norway United Kingdom
Germany Pakistan Venezuela
Ghana Peru Zambia
Zimbabwe
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00
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ADDITIONAL JURISDICTIONS COVERED
Pursuant to Article 4 of this Agreement, Delegate and Board agree that
the following jurisdiction(s) shall be added to Appendix A:
Bahrain Lithuania
Croatia Namibia
Cyprus Oman
Estonia Panama
Iceland Papua New Guinea
Jordan Romania
Kenya Swaziland
Latvia Uruguay
Lebanon
INVESTORS BANK & TRUST COMPANY
By:
------------------------------------
Name:
Title:
XXXXXXX XXXXX MUTUAL FUNDS, INC.
By:
------------------------------------
Name:
Title:
DATE:
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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):
X-0
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ADDITIONAL FACTORS AND CRITERIA TO BE
APPLIED IN THE SELECTION OF ELIGIBLE FOREIGN
CUSTODIANS THAT ARE SECURITIES DEPOSITORIES
In addition to the factors set forth in Rule 17f-5(c)(1), in selecting
Eligible Foreign Custodians that are Securities Depositories, Delegate shall
consider the following factors, if such information is available (check all that
apply):
1. Whether use is voluntary or compulsory
2. Ownership
3. Operating History
4. Established rules, practices and procedures
5. Membership
6. Financial strength
7. Governing regulatory body
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APPENDIX E
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 (check all that
apply):
1. Operating performance
2. Established practices and procedures
3. Relationship with market regulators
4. Contingency planning
X-0
00
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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, and entities used therein, the following:
1. Copy of Subcustodian Agreement
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. Summary of Central Depository Information
6. 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
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APPENDIX G
AUTHORIZED REPRESENTATIVES
Notices under this Agreement shall be sent to, and shall be executed on
behalf of the respective parties by, any one of the following --
1. Board
a. Xxxxx X. ("Rocky") Xxxxxx, Jr. (name)
President, Xxxxxxx Xxxxx Mutual Funds, Inc. (title)
000 Xxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 (address)
b. Xxxxxxx X. Xxxxxxxxx (name)
Senior Vice President, Xxxxxxx Xxxxx Mutual Funds, Inc. (title)
000 Xxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 (address)
c. W. Xxxxxx Xxxxx (name)
Senior Vice President, Xxxxxxx Xxxxx Mutual Funds, Inc. (title)
000 Xxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 (address)
d. Xxxx Xxxxxxx (name)
Senior Vice President, Xxxxxxx Xxxxx Mutual Funds, Inc. (title)
000 Xxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 (address)
2. Delegate
a. Xxxxxx Xxxxxxxxx (name)
Director, Investors Bank & Trust Company (title)
000 Xxxxxxxxx Xxxxxx, P.O. Box 9130 (address)
Boston, Massachusetts 02117-9130
b. Xxxxxxxx X'Xxxxxxx (name)
Director, Investors Bank & Trust Company (title)
000 Xxxxxxxxx Xxxxxx, X.X. Xxx 0000 (xxxxxxx)
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
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WITH A COPY OF ALL NOTICES TO:
Xxxx X. Xxxxx (name)
General Counsel, Investors Bank & Trust Company (title)
000 Xxxxxxxxx Xxxxxx, X.X. Xxx 0000 (xxxxxxx)
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
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APPENDIX H
COVERED PORTFOLIOS
International Growth Fund
Value Discovery Fund
Emerging Markets Growth Fund
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