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EXHIBIT 23(g)(3)
DELEGATION AGREEMENT
BETWEEN
AMERICAN ODYSSEY FUNDS, INC.
AND
INVESTORS BANK & TRUST COMPANY
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DELEGATION AGREEMENT
AGREEMENT, dated as of May 28, 1998 by and between INVESTORS BANK &
TRUST COMPANY, a Massachusetts trust Company (the "Delegate"), and AMERICAN
ODYSSEY FUNDS, INC., a Maryland corporation (the "Fund").
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 Fund 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.
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 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 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 and to send notices to the other party.
c. 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.
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cannot be withdrawn from the depository; or (iii) because maintaining securities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.
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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 Compuslory
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 also include foreign branches of U.S. Banks (as the term
"U.S. Bank" 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. 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 delegated by 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 COVERED
a. Initial Jurisdictions
The authority delegated by this Agreement applies only with
respect to Assets held in the jurisdictions listed in Appendix A.
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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 that
Delegate's Authorized Representative and Board's Authorized Representative have
both executed a copy of Appendix B listing such jurisdiction, 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 delegation with respect to any
jurisdiction upon written notice to Delegate. Delegate may withdraw its
acceptance of delegated 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 is to which authority 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 Assets in the care of any Eligible
Foreign Custodian or Custodians selected by Delegate in each jurisdiction to
which this Agreement applies, except that Delegate does not accept such
authorization and direction with regard to Compulsory 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 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. Board's Conclusive Determination Regarding Country Risk
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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 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.
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;
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 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).
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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 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 Assets to move such Assets to a different
Eligible Foreign Custodian, the Fund shall bear any expense related to such
relocation of Assets.
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 and of any
material change in Fund's foreign custody arrangements. 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.
9. PROVISION OF INFORMATION REGARDING COUNTRY RISK
With respect to the jurisdictions listed in Appendix A, or added
thereto pursuant to Article 3, Delegate agrees to provide annually to Board,
such 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.
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 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
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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 hereof except for a claim
resulting from Delegate's gross negligence, willful
misfeasance or bad faith with regard to such
information;
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.
11. ARBITRATION OF DISPUTES
To the extent permitted by law, all disputes or claims arising under
this Agreement shall be resolved through arbitration. Arbitration under this
Article shall be conducted according to the Commercial Arbitration Rules of the
American Arbitration Association and shall take place in a place to be agreed
upon by the parties or, if the parties cannot agree, in the City of Boston,
Massachusetts. This Article shall be enforced and interpreted exclusively in
accordance with applicable federal law, including the Federal Arbitration Act.
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
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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: Xxxxxx X. Xxxxxx
Title: Director, Client Management
AMERICAN ODYSSEY FUNDS, INC.
By:____________________________________
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice 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 -- 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
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APPENDIX A
JURISDICTIONS COVERED
[delete those countries which are not delegated]
Argentina Lithuania
Austria Luxembourg
Australia Malaysia
Bangladesh Mauritius
Belgium Mexico
Bahrain Morocco
Botswana Namibia
Brazil Netherlands
Canada New Zealand
Chile Norway
China Oman
Colombia Pakistan
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 United Kingdom
Italy Uruguay
Japan Venezuela
Jordan Zambia
Kenya Zimbabwe
Korea
Latvia
Lebanon
X-0
00
XXXXXXXX X
ADDITIONAL JURISDICTIONS COVERED
Pursuant to Article 3 of this Agreement, Delegate and Board agree that
the following jurisdictions shall be added to Appendix A:
[insert additional countries]
Investors Bank & Trust Company
By: ___________________________________
Name:
Title:
AMERICAN ODYSSEY FUNDS, INC.
By:____________________________________
Name:
Title:
DATE: ______________________________
X-0
00
XXXXXXXX X
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):
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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
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00
XXXXXXXX X
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. 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
7. Information Regarding Securities Depositories
a) Whether use is voluntary or compulsory
b) Ownership
c) Operating History
d) Established rules, practices and procedures
e) Membership
f) Financial strength
g) Governing regulatory body
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APPENDIX F
AUTHORIZED REPRESENTATIVES
The names and addresses of each party's authorized representatives are set forth
below:
A. BOARD
American Odyssey Funds, Inc.
Xxx Xxxxx Xxxxxx
Xxxx Xxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxx, Vice President
Fax: (000) 000-0000
With a copy to:
American Odyssey Funds, Inc.
Xxx Xxxxx Xxxxxx
Xxxx Xxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxx, Senior Vice President
Fax: (000) 000-0000
B. DELEGATE
Investors Bank & Trust Company
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxx, XX 00000-0000
Attention: Xxxxxxxx X. X'Xxxxxxx, 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: Xxxx X. Xxxxx, General Counsel
Fax: (000) 000-0000
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