EXHIBIT h(7)
FORM OF
AMENDED AND RESTATED DELEGATION AGREEMENT
AGREEMENT, dated as of February 27, 2001 by and between INVESTORS BANK &
TRUST COMPANY, a Massachusetts trust company (the "Delegate"), and FFTW Funds,
Inc., a Maryland Corporation (the "Fund").
WHEREAS, Delegate currently acts as Delegate to the Fund pursuant to a
Delegation Agreement (the "Old Agreement") between the Delegate and the Fund
dated as of July 7, 1998; and
WHEREAS, in connection with the issuance of Rule 17f-7 and amendments to
Rule 17f-5, each under the Investment Company Act of 1940, as amended (the "1940
Act") Delegate and Fund desire to amend and restate the Old Agreement in
accordance with the terms hereof; and
WHEREAS, pursuant to the provisions of Rule 17f-5 under the 1940 Act, and
subject to the terms and conditions set forth herein, the Board of Directors of
the Fund desires to continue to delegate to the Delegate certain
responsibilities concerning Foreign Assets (as defined below), and the Delegate
hereby agrees to retain such delegation, but only in accordance with the terms
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 00x-0, Xxxxxxxx shall, by
no later than July 2, 2001, 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:
FFTW FUNDS, INC.
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
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
A-1
APPENDIX A2
SECURITIES DEPOSITORIES COVERED
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:
FFTW FUNDS, INC.
By:
-------------------------------
Name:
Title:
DATE:
-----------------------------
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):
---------
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
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
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
