RULE 17f-5 DELEGATION AGREEMENT
By its execution of this Delegation Agreement by and between UMB Bank, n.a.
(the Custodian), a national banking association, with its principal office in
Kansas City, Missouri, and each of the registered investment companies (on
behalf of any series thereof, if applicable) listed on the Appendix to this
Agreement, together with such additional companies as shall be made parties to
this Agreement by the execution of a revised Appendix to this Agreement (such
companies, and any series thereof, are referred to individually as a "Fund" and,
collectively, as the "Funds"), the Funds hereby direct the Custodian to appoint
Citibank, N.A., a National Banking Association under the laws of the United
States of America, as the Approved Foreign Custody Manager (the Delegate) under
the terms of the Custody Agreement between the Funds and the Custodian to
perform certain functions with respect to the custody of the Funds' Assets (as
defined in Section 13 of this Delegation Agreement) outside the United States of
America.
WHEREAS, the Delegate has agreed to provide global custody services to the
Custodian on behalf of the Funds through a Custodian Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the Funds and Custodian agree as follows.
Capitalized terms shall have the meaning indicated in Section 13 of this
Delegation Agreement unless otherwise indicated.
1. Maintenance of Funds' Assets Abroad. Each Fund, acting through its Board of
Directors or Trustees (the Board), or its duly authorized representative, hereby
instructs the Custodian to enter into a written agreement with the Delegate to
place and maintain the Fund's Assets outside the United States in accordance
with instructions received from the Fund's investment adviser. (An investment
adviser may include any duly authorized sub-adviser to the Fund.) Such
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instruction shall represent a Special Instruction under the terms of the Custody
Agreement between the Fund and the Custodian (the Custody Agreement). Each Fund
acknowledges that: (a) the Custodian shall direct the Delegate to perform
services hereunder only with respect to the countries where the Delegate
provides custodial services to the Fund as indicated on the Delegate Global
Custody Network Listing; (b) depending on conditions in the particular country,
advance notice may be required before the Delegate, upon the Custodian's
direction, shall be able to perform its duties in or with respect to such
country (such advance notice to be reasonable in light of the specific facts and
circumstances attendant to performance of duties in such country); and (c)
nothing in this Delegation Agreement shall require the Custodian to direct the
Delegate to provide delegated or custodial services in any country, and there
may from time to time be countries as to which the Delegate determines it will
not provide delegation services.
2. Delegation. Pursuant to the provisions of Rule 17f-5 under the Investment
Company Act of 0000 (xxx 0000 Xxx), and on behalf of and at the direction of the
Funds, each Fund's Board hereby directs the Custodian, and the Custodian hereby
agrees, to appoint the Delegate to perform only those duties set forth in this
Delegation Agreement concerning the safekeeping of each Funds' Assets in each of
the countries as to which Custodian has reported to the Funds that the Custodian
shall have appointed the Delegate to act pursuant to Rule 17f-5. The Custodian
is hereby authorized to take such actions, and to direct the Delegate to take
such actions, on behalf of or in the name of the Funds as are reasonably
required to discharge its duties under this Delegation Agreement, including,
without limitation, to cause the Funds' Assets to be placed with a particular
Eligible Foreign Custodian in accordance herewith. Each Fund confirms that it's
Board or investment adviser has considered and accepted the Sovereign Risk and
prevailing Country Risk as part of its continuing investment decision process.
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3. Selection of Eligible Foreign Custodian and Contract Administration. The
Custodian shall direct the Delegate pursuant to a written agreement to perform
the following duties with respect to the selection of Eligible Foreign
Custodians and administration of certain contracts governing the Funds' foreign
custodial arrangements:
(a) Selection of Eligible Foreign Custodian. The Delegate shall place and
maintain the Funds' Assets with an Eligible Foreign Custodian; provided that,
the Delegate shall be required to determine that the Funds' Assets will be
subject to reasonable care based on the standards applicable to custodians in
the relevant market, 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 controls and
procedures for dealing with any Securities Depository, the method of
keeping custodial records, and the security and data protection practices;
(ii) Whether the Eligible Foreign Custodian has the requisite
financial strength to provide reasonable care for the Funds' Assets;
(iii) The Eligible Foreign Custodian's general reputation and
standing; and
(iv) Whether the Funds 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 such Eligible Foreign Custodian in the
United States or such
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Eligible Foreign Custodian's appointment of an agent for service of process
in the United States or consent to jurisdiction in the United States.
The Delegate shall be required to make the foregoing determination consistent
with the standard of care set forth in Section 8 of this Delegation Agreement.
(b) Contract Administration. The Custodian shall require that the Delegate
cause that the foreign custody arrangements with an Eligible Foreign Custodian
be governed by a written contract that the Delegate has determined will provide
reasonable care for the Funds' Assets based on the standards applicable to
custodians in the relevant market after considering all factors relevant to the
safekeeping of the Funds' Assets as specified in Rule 17f-5(c)(1). Each such
contract shall, except as set forth in the last paragraph of this subsection
(b), include provisions that provide:
(i) For indemnification or insurance arrangements (or any
combination of the foregoing) such that the Funds will be adequately
protected against the risk of loss of assets held in accordance with such
contract;
(ii) That the Funds' Assets will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the
Eligible Foreign Custodian or its creditors, except a claim of payment for
their safe custody or administration or, in the case of cash deposits,
liens or rights in favor of creditors of such Custodian arising under
bankruptcy, insolvency or similar laws;
(iii) That beneficial ownership of each Fund's Assets will be
freely transferable without the payment of money or value other than for
safe custody or
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administration;
(iv) That adequate records will be maintained identifying each
Fund's Assets as belonging to the Fund or as being held by a third party
for the benefit of the Fund;
(v) That each Fund's independent public accountants will be given
access to those records described in (iv) above or confirmation of the
contents of such records; and
(vi) That the Delegate will receive sufficient and timely
periodic reports with respect to the safekeeping of each Fund's Assets,
including, but not limited to, notification of any transfer to or from the
Fund's account or a third party account containing foreign assets held for
the benefit of the Fund.
The Custodian may permit in its agreement with the Delegate that such
contract may contain, in lieu of any or all of the provisions specified in this
Section 3(b), such other provisions that the Delegate determines will provide,
in their entirety, the same or a greater level of care and protection for the
Funds' Assets as the specified provisions, in their entirety.
(c) Limitation to Delegated Selection. Notwithstanding anything in this
Delegation Agreement to the contrary, the agreement between the Custodian and
the Delegate may provide that the duties under this Section 3 shall apply only
to Eligible Foreign Custodians selected by the Delegate and shall not apply to
any Eligible Foreign Custodian that the Delegate is directed to use pursuant to
Section 7 of this Delegation Agreement.
4. Monitoring. The Custodian shall enter into an agreement with the Delegate
that requires
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the Delegate to establish a system to monitor the appropriateness of maintaining
each Fund's Assets with each Eligible Foreign Custodian that has been selected
by the Delegate pursuant to Section 3 of this Delegation Agreement. The
Custodian shall direct the Delegate to monitor the continuing appropriateness of
placement of each Fund's Assets in accordance with the criteria established
under Section 3(a) of this Delegation Agreement and such Eligible Foreign
Custodian's actual performance in accordance with the written contract as
provided in Section 3(b) of this Delegation Agreement. The Custodian shall
direct the Delegate to monitor the continuing appropriateness of the contract
governing each Fund's arrangements in accordance with the criteria established
under Section 3(b) of this Delegation Agreement.
5. Reporting. The Custodian shall enter into an agreement with the Delegate
providing that, initially, prior to the placement of a Fund's Assets with any
Eligible Foreign Custodian, and thereafter, at least annually and at such other
times as the Board deems reasonable and appropriate based on the circumstances
of the Fund's arrangements, the Delegate shall provide to the Board of each
Fund, or to the Custodian for prompt provision to such Board, written reports
specifying placement of the Fund's Assets with each Eligible Foreign Custodian
selected by the Delegate pursuant to Section 3 of this Delegation Agreement and
shall promptly report as to any material changes to such foreign custody
arrangements. Such reporting will include the appropriateness of maintaining the
Fund's Assets with a particular custodian under paragraph (c)(1) of Rule 17f-5
and the performance of the contract under paragraph (c)(2) of Rule 17f-5. The
agreement may provide that the Delegate will prepare such a report with respect
to any Eligible Foreign Custodian that the Delegate has been instructed to use
pursuant to Section 7 hereunder only to the extent specifically agreed with
respect to the particular situation.
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6. Withdrawal of Fund Assets. The Custodian shall enter into an agreement with
the Delegate providing that, if the Delegate determines that an arrangement with
a specific Eligible Foreign Custodian selected by the Delegate consistent with
Section 3 of this Delegation Agreement no longer meets the requirements of said
Section, the Delegate shall give the Custodian prompt notice of such
determination and upon instructions the Delegate shall withdraw each Fund's
Assets from the non-complying arrangement as soon as reasonably practicable. The
Delegate shall use good faith to notify the Custodian as to any facts known to
the Delegate, considering whether such withdrawal would require liquidation of
any of the Fund's Assets or would materially impair the liquidity, value or
other investment characteristics of the Fund's Assets. Any such instructions
from the Fund or the Fund's investment adviser to the Custodian regarding
liquidation or withdrawal shall be in the form of Special Instructions.
7. Direction as to Eligible Foreign Custodian. Notwithstanding this Delegation
Agreement, each Fund, acting through its Board, its investment adviser or its
other authorized representative, may instruct the Custodian to direct the
Delegate to place and maintain the Fund's Assets in a particular country or with
a particular Eligible Foreign Custodian, including without limitation with
respect to investment in countries as to which the Delegate reasonably
determines that it will not provide delegation services. In the event that the
Delegate determines that it will provide delegation services in such country or
with such Eligible Foreign Custodian, the Custodian will comply with the
provisions otherwise set forth in this Delegation Agreement. In the event that
the Delegate reasonably determines that it will not provide delegation services
in such country or with such Eligible Foreign Custodian, the Custodian and
Delegate shall be entitled to rely on any such instruction as a Special
Instruction and shall have no duties or liabilities under this Delegation
Agreement with respect to such arrangement save those that it
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may undertake specifically in writing with respect to each particular instance;
provided that this Delegation Agreement and the Custodian Agreement shall not
constitute the Custodian or the Delegate as the exclusive delegate of any of the
Funds for purposes of Rule 17f-5 and, particularly where Custodian does not
agree to provide fully the services under this Delegation Agreement and the
Custody Agreement to a Fund with respect to a particular country, the Fund may
delegate such services to another delegate pursuant to Rule 17f-5.
8. Standard of Care. In carrying out its duties under this Delegation Agreement,
the Custodian agrees to exercise reasonable care, prudence and diligence such as
a person having responsibility for safekeeping the Funds' Assets would exercise.
In addition, the Custodian will enter into a written agreement with the Delegate
providing that, in carrying out its duties under its agreement with the
Custodian, the Delegate will exercise reasonable care, prudence and diligence
such as a person having responsibility for safekeeping of the Funds' Assets
would exercise.
9. Liability of the Custodian for Actions of Other Persons. The Custodian shall
be liable for the actions or omissions of the Delegate or any Eligible Foreign
Custodian as set forth in the Custody Agreement between the Custodian and the
Funds, except as provided in Section 7 hereunder.
10. Representations. The Custodian hereby represents and warrants that it is a
U.S. Bank and that this Delegation Agreement has been duly authorized, executed
and delivered by the Custodian and is a legal, valid and binding agreement of
the Custodian enforceable against it in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy laws and any other
similar laws affecting the rights and remedies of creditors generally and by
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equitable principles. The Custodian will enter into an agreement with the
Delegate in which the Delegate will represent and warrant that it is a U.S. Bank
and that the agreement between the Custodian and the Delegate has been duly
authorized, executed and delivered by the Delegate and is a legal, valid and
binding agreement of the Delegate enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy
laws and any other similar laws affecting the rights and remedies of creditors
generally and by equitable principles.
Each Fund hereby represents and warrants that its Board has determined that
it is reasonable to rely on the Custodian to direct the Delegate to perform the
delegated responsibilities provided for herein and that this Delegation
Agreement has been duly authorized, executed and delivered by the Fund and is a
legal, valid and binding agreement of the Fund enforceable against it in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy laws and any other similar laws affecting the rights and
remedies of creditors generally and by equitable principles.
11. Effectiveness; termination. This Delegation Agreement shall be effective as
of , 2005. This Delegation Agreement may be terminated at any time,
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without penalty, by written notice from the terminating party to the
non-terminating party. Such termination shall be effective on the 60th day
following the date on which the non-terminating party shall receive the
foregoing notice. The foregoing to the contrary notwithstanding, this Delegation
Agreement shall be deemed to have been terminated concurrently with the
termination of the Custody Agreement. The Custodian shall terminate its
agreement with the Delegate pursuant to this Delegation Agreement concurrently
with any termination of this Delegation Agreement.
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12. Notices. Notices and other communications under this Delegation Agreement
are to be made in accordance with the arrangements designated for such purpose
under the Custody Agreement unless otherwise indicated in a writing referencing
this Delegation Agreement and executed by both parties.
13. Definitions. Capitalized terms in this Delegation Agreement have the
following meanings:
a. Country Risk - shall mean, with respect to the acquisition, ownership,
settlement or custody of investments in a jurisdiction, all risks relating
to, or arising in consequence of, systemic and markets factors affecting
the acquisition, payment for or ownership of investments including (a) the
prevalence of crime and corruption except for crime or corruption by the
Eligible Foreign Custodian or its employees, directors or officers for
which the liability of the Custodian, the Delegate or the Approved Foreign
Custody Manager is not predicated upon recovery of such damages from the
Eligible Foreign Custodian as set forth in the Global Custody Network
Listing, (b) the inaccuracy or unreliability of business and financial
information (unrelated to the Custodian's duties imposed by Rule 17f-5(c)
under the 1940 Act or to the duties imposed upon it by Rule 17f-7 under the
1940 Act), (c) the instability or volatility of banking and financial
systems, or the absence or inadequacy of an infrastructure to support such
systems, (d) custody and settlement infrastructure of the market in which
such investments are transacted and held, (e) the acts, omissions and
operation of any Securities Depository, it being understood that this
provision shall not excuse the Custodian's performance under the express
terms of this Agreement and its liability therefor, (f) the risk of the
bankruptcy or insolvency
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of banking agents, counterparties to cash and securities transactions,
registrars or transfer agents, (g) the existence of market conditions which
prevent the orderly execution or settlement of transactions or which affect
the value of assets, and (h) the laws relating to the safekeeping and
recovery of a Fund's Assets held in custody pursuant to the terms of the
Custody Agreement; provided, however, that, in compliance with Rule 17f-5,
neither Sovereign Risk nor Country Risk shall include the custody risk of a
particular Eligible Foreign Custodian of the Fund's Assets.
b. Eligible Foreign Custodian - shall have the meaning set forth in Rule
17f-5(a)(1) and shall also include a bank that qualifies to serve as a
custodian of assets of investment companies under Section 17(f) of the 1940
Act.
c. Fund's Assets - shall mean 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 the Fund's transactions in such investments.
d. Special Instructions - shall have the meaning set forth in the Custody
Agreement.
e. Securities Depository - shall have the meaning for an "Eligible
Securities Depository" as set forth in Rule 17f-7.
f. Sovereign Risk - shall mean, in respect of any jurisdiction, including
the United States of America, where investments are acquired or held
hereunder or under the Custody Agreement, (a) any act of war, terrorism,
riot, insurrection or civil commotion, (b) the imposition of any
investment, repatriation or exchange control
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restrictions by any governmental authority, (c) the confiscation,
expropriation or nationalization of any investments by any governmental
authority, whether de facto or de jure, (d) any devaluation or revaluation
of the currency, (e) the imposition of taxes, levies or other charges
affecting investments, (f) any change in the applicable law, or (g) any
other economic or political risk incurred or experienced that is not
directly related to the economic or financial conditions of the Eligible
Foreign Custodian, except as otherwise provided in this Delegation
Agreement or the Custody Agreement.
g. U. S. Bank - shall have the meaning set forth in Rule 17f-5(a)(7) under
the 1940 Act.
14. Governing Law and Jurisdiction. This Delegation Agreement shall be construed
in accordance with the laws of the State of Missouri. The parties hereby submit
to the exclusive jurisdiction of the Federal courts sitting in the State of
Missouri.
15. Fees. The Custodian shall perform its functions under this Delegation
Agreement for the compensation determined under the Custody Agreement. Neither
the Custodian nor the Delegate shall receive separate compensation from a Fund
for the performance of the duties and services set forth in this Delegation
Agreement.
16. Integration. This Delegation Agreement supplements and/or amends the Custody
Agreement with respect to the selection and monitoring of Eligible Foreign
Custodians, the administration of contracts with Eligible Foreign Custodians,
the withdrawal of assets from Eligible Foreign Custodians and the issuance of
reports in connection with such duties; provided that, in the event that there
are any inconsistencies between the Delegation Agreement and the
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Custody Agreement, the provisions of the Delegation Agreement shall govern for
the purpose of compliance with Rule 17f-5. The terms of the Custody Agreement
shall apply generally as to matters not expressly covered in this Delegation
Agreement, including dealings with the Eligible Foreign Custodians in the course
of discharge of the Custodian's obligations under the Custody Agreement, and the
Custodian's obligation to indemnify the Funds as set forth in the Custody
Agreement, and the Funds' obligation to indemnify the Custodian as set forth in
the Custody Agreement, the terms of which are incorporated herein by reference.
This Delegation Agreement supersedes the existing Delegation Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Delegation
Agreement to be duly executed.
UMB Bank, n.a.
By: By:
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Name: Xxxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President Title: Senior Vice President
Effective Date: [ ], 2005
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APPENDIX
Oberweis China Opportunities Fund
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