Exhibit h(7)
AMENDED AND RESTATED DELEGATION AGREEMENT
AGREEMENT, dated as of March 15, 2001 by and between INVESTORS BANK &
TRUST COMPANY, a Massachusetts trust company (the "Delegate"), and TOUCHSTONE
VARIABLE SERIES TRUST, a Massachusetts Business Trust (the "Trust").
WHEREAS, Delegate currently acts as Delegate to the Trust pursuant to a
Delegation Agreement (the "Old Agreement") between the Delegate and the Trust
dated as of December 11, 1997; 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 Trust 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 Trust 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 Trust 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 Trust.
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. Trust's Representations
Trust represents that the Board has determined that it is
reasonable to rely on Delegate to perform the responsibilities described in this
Agreement. Trust further represents that the persons executing this Agreement
and any amendment or appendix hereto on its behalf are duly authorized to so
bind the Trust 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 Trust, such written contracts governing
Trust'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 Trust, 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
Trust's foreign custody arrangements, Delegate is authorized to, and shall, on
behalf of Trust, 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 Trust 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 Trust 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 Trust's investment
advisor, pursuant to authority delegated by Board) has considered, and pursuant
to its fiduciary duties to Trust and Trust'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 Trust'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 Trust 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 Trust 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 Trust'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 Trust'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 Trust 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 Trust'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
Trust'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 Trust or any third
party, and the Trust 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 Trust 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 Trust 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: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Senior Director
TOUCHSTONE VARIABLE SERIES TRUST
By: /s/ Xxxx X. XxXxxxxx
Name: Xxxx X. XxXxxxxx
Title: President
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 Trus
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
A-1
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
APPENDIX A2
Securities Depositories Covered
A-1
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:
Investors Bank & Trust Company
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Senior Director
TOUCHSTONE VARIABLE SERIES TRUST
By: /s/ Xxxx X. XxXxxxxx
Name: Xxxx X. XxXxxxxx
Title: President
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 Trust'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: Xxxxxx Xxxxxx, Senior 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
