EXHIBIT (g)(2)
FOREIGN CUSTODY MANAGER AGREEMENT
AGREEMENT made as of November 5, 1999, between TD Waterhouse Trust (the
"Trust") and The Bank of New York ("BNY").
W I T N E S S E T H:
WHEREAS, the Trust desires to appoint BNY as a Foreign Custody Manager
on the terms and conditions contained herein;
WHEREAS, BNY desires to serve as a Foreign Custody Manager and perform
the duties set forth herein on the terms and condition contained herein;
NOW THEREFORE, in consideration of the mutual promises hereinafter
contained in this Agreement, the Trust and BNY hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1. "Board" shall mean the board of directors or board of trustees, as
the case may be, of the Trust.
2. "Eligible Foreign Custodian" shall have the meaning provided in the
Rule.
3. "Monitoring System" shall mean a system established by BNY to
fulfill the Responsibilities specified in clauses 1(d) and 1(e) of Article III
of this Agreement.
4. "Qualified Foreign Bank" shall have the meaning provided in the
Rule.
5. "Responsibilities" shall mean the responsibilities delegated to BNY
as a Foreign Custody Manager with respect to each Specified Country and each
Eligible Foreign Custodian selected by BNY, as such responsibilities are more
fully described in Article III of this Agreement.
6. "Rule" shall mean Rule 17f-5 under the Investment Company Act of
1940, as amended, as such Rule became effective on June 16, 1997, and as may
hereafter be amended from time to time.
7. "Securities Depository" shall mean any securities depository or
clearing agency within the meaning of Section (a)(1)(ii) or (a)(1)(iii) of the
Rule.
8. "Specified Country" shall mean each country listed on Schedule I
attached hereto and each country, other than the United States, constituting the
primary market for a security with respect to which the Trust has given
settlement instructions to The Bank of New York as custodian (the "Custodian")
under its Custody Agreement with the Trust.
ARTICLE II
BNY AS A FOREIGN CUSTODY MANAGER
1. The Trust on behalf of its Board hereby delegates to BNY with
respect to each Specified Country the Responsibilities.
2. BNY accepts the Board's delegation of Responsibilities with respect
to each Specified Country and agrees in performing the Responsibilities as a
Foreign Custody Manager to exercise reasonable care, prudence and diligence such
as a person having responsibility for the safekeeping of the Trust's assets
would exercise.
3. BNY shall provide to the Board at such times as the Board deems
reasonable and appropriate based on the circumstances of the Trust's foreign
custody arrangements, but not less frequently than quarterly, written reports
notifying the Board of the placement of assets of the Trust with a particular
Eligible Foreign Custodian within a Specified Country and of any material change
in the arrangements (including, in the case of Qualified Foreign Banks, any
material change in any contract governing such arrangements and in the case of
Securities Depositories, any material change in the established practices or
procedures of such Securities Depositories) with respect to assets of the Trust
with any such Eligible Foreign Custodian.
ARTICLE III
RESPONSIBILITIES
1. Subject to the provisions of this Agreement, BNY shall with respect
to each Specified Country select an Eligible Foreign Custodian. In connection
therewith, BNY shall: (a) determine that assets of the Trust held by such
Eligible Foreign Custodian will be subject to reasonable care, based on the
standards applicable to custodians in the relevant market in which such Eligible
Foreign Custodian operates, after considering all factors relevant to the
safekeeping of such assets, including, without limitation, those contained in
Section (c)(1) of the Rule; (b) determine that the Trust's foreign custody
arrangements with each Qualified Foreign Bank are governed by a written contract
with the Custodian (or, in the case of a Securities Depository, by such a
contract, by the rules or established practices or procedures of the Securities
Depository, or by any combination of the foregoing) which will provide
reasonable care for the Trust's assets based on the standards specified in
paragraph (c)(1) of the Rule; (c) determine that each contract with a Qualified
Foreign Bank shall include the provisions specified in paragraph (c)(2)(i)(A)
through (F) of the Rule or, alternatively, in lieu of any or all of such
(c)(2)(i)(A) through (F) provisions, such other provisions as BNY determines
will provide, in their entirety, the same or a greater level of care and
protection for the assets of the Trust as such specified provisions; (d) monitor
pursuant to the Monitoring System the appropriateness of maintaining the assets
of the Trust with a particular Eligible Foreign Custodian pursuant to paragraph
(c)(1) of the Rule and in the case of a Qualified Foreign Bank, any material
change in the contract governing such arrangement and in the case of a
Securities Depository, any material change in the established practices or
procedures of such Securities Depository; and (e) advise the Trust promptly
whenever an arrangement (including, in the case of a Qualified Foreign Bank, any
material change in the contract governing such arrangement and in the case of a
Securities Depository, any material change in the established practices or
procedures of such Securities Depository) described in preceding clause (d) no
longer meets the requirements of the Rule. Anything in this Agreement to the
contrary notwithstanding, BNY shall in no event be deemed to have selected any
Securities Depository the use of which is mandatory by law or regulation or
because securities cannot be withdrawn from such Securities Depository, or
because maintaining securities outside the Securities Depository is not
consistent with prevailing custodial practices in the relevant market (each, a
"Compulsory Depository"); it being understood however, that for each Compulsory
Depository utilized or intended to be utilized by the Trust, BNY shall provide
the Trust from time to time with information addressing the factors set forth in
Section (c)(1) of the Rule and BNY's opinions with respect thereto so that the
Trust may determine the appropriateness of placing Trust assets therein. BNY
shall also provide to the Trust or its designee such other information relating
to the Specified Countries as may reasonably be requested by the Trust to assist
in the Trust's evaluation of Country Risk, including without limitation,
information relating to each Specified Country's custody and settlement
practices.
2. (a) For purposes of Clauses (a) and (b) of preceding Section 1 of
this Article, with respect to Securities Depositories, it is understood that
such determination shall be made on the basis of, and limited by, publicly
available information with respect to each such Securities Depository.
(b) For purposes of clause (d) of preceding Section 1 of this Article,
BNY's determination of appropriateness shall not include, nor be deemed to
include, any evaluation of Country Risks associated with investment in a
particular country. For purposes hereof, "Country Risks" shall mean systemic
risks of holding assets in a particular country including, but not limited to,
(a) the use of Compulsory Depositories, (b) such country's financial
infrastructure, (c) such country's prevailing custody and settlement practices,
(d) nationalization, expropriation or other governmental actions, (e) regulation
of the banking or securities industry, (f) currency controls, restrictions,
devaluations or fluctuations, and (g) market conditions which affect the orderly
execution of securities transactions or affect the value of securities.
ARTICLE IV
REPRESENTATIONS
1. The Trust hereby represents that: (a) this Agreement has been duly
authorized, executed and delivered by the Trust, constitutes a valid and legally
binding obligation of the Trust enforceable in accordance with its terms, and no
statute, regulation, rule, order, judgment or contract binding on the Trust
prohibits the Trust's execution or performance of this Agreement; (b) this
Agreement has been approved and ratified by the Board at a meeting duly called
and at which a quorum was at all times present; and (c) the Board or its
investment advisor has considered the Country Risks associated with investment
in each Specified Country and will have considered such risks prior to any
settlement instructions being given to the Custodian with respect to any other
Specified Country.
2. BNY hereby represents that: (a) BNY is duly organized and existing
under the laws of the State of New York, with full power to carry on its
businesses as now conducted, and to enter into this Agreement and to perform its
obligations hereunder; (b) this Agreement has been duly authorized, executed and
delivered by BNY, constitutes a valid and legally binding obligation of BNY
enforceable in accordance with its terms, and no statute, regulation, rule,
order, judgment or contract binding on BNY prohibits BNY's execution or
performance of this Agreement; and (c) BNY has established the Monitoring
System.
ARTICLE V
CONCERNING BNY
1. BNY shall not be liable for any costs, expenses, damages,
liabilities or claims, including attorneys' and accountants' fees, sustained or
incurred by, or asserted against, the Trust except to the extent the same arises
out of the failure of BNY to exercise the care, prudence and diligence required
by Section 2 of Article II hereof. In no event shall BNY be liable to the Trust,
the Board, or any third party for special, indirect or consequential damages, or
for lost profits or loss of business, arising in connection with this Agreement.
2. The Trust shall indemnify BNY and hold it harmless from and against
any and all costs, expenses, damages, liabilities or claims, including
reasonable attorneys' and accountants' fees, sustained or incurred by, or
asserted against, BNY by reason or as a result of any action or inaction, or
arising out of BNY's performance hereunder, provided that the Trust shall not
indemnify BNY to the extent any such costs, expenses, damages, liabilities or
claims arises out of BNY's failure to exercise the reasonable care, prudence and
diligence required by Section 2 of Article II hereof, including without
limitation, in the event of BNY's negligence or willful misconduct.
3. For its services hereunder, the Trust agrees to pay to BNY such
compensation and out-of-pocket expenses as shall be mutually agreed.
4. BNY shall have only such duties as are expressly set forth herein.
In no event shall BNY be liable for any Country Risks associated with
investments in a particular country.
ARTICLE VI
MISCELLANEOUS
1. This Agreement constitutes the entire agreement between the Trust
and BNY, and no provision in the Custody Agreement between the Trust and the
Custodian shall affect the duties and obligations of BNY hereunder, nor shall
any provision in this Agreement affect the duties or obligations of the
Custodian under the Custody Agreement.
2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to BNY, shall be sufficiently given if received by it
at its offices at 00 Xxxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other place as BNY may from time to time designate in writing.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Trust shall be sufficiently given if received
by it at its offices at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such
other place as the Trust may from time to time designate in writing.
4. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
thereby. This Agreement may not be amended or modified in any manner except by a
written agreement executed by both parties. This Agreement shall extend to and
shall be binding upon the parties hereto, and their respective successors and
assigns; provided however, that this Agreement shall not be assignable by either
party without the written consent of the other.
5. This Agreement shall be construed in accordance with the substantive
laws of the State of New York, without regard to conflicts of laws principles
thereof. The Trust and BNY hereby consent to the exclusive jurisdiction of a
state or federal court situated in New York City, New York in connection with
any dispute arising hereunder. The Trust and BNY each hereby irrevocably waives
any and all rights to trial by jury in any legal proceeding arising out of or
relating to this Agreement.
6. The parties hereto agree that in performing hereunder, BNY is acting
solely on behalf of the Trust and no contractual or service relationship shall
be deemed to be established hereby between BNY and any other person.
7. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
8. This Agreement shall terminate simultaneously with the termination
of the Custody Agreement between the Trust and the Custodian, and may otherwise
be terminated by either party giving to the other party a notice in writing
specifying the date of such termination, which shall be not less than thirty
(30) days after the date of such notice.
IN WITNESS WHEREOF, the Trust and BNY have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the date
first above written.
TD WATERHOUSE TRUST
By: /s/ Xxxxxx X. Rio
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Title: President
THE BANK OF NEW YORK
By: /s/ Xxxxx X. Xxxxxxx
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Title: Senior Vice President
SCHEDULE 1
Specified Countries
