FOREIGN CUSTODY MANAGER AGREEMENT
AGREEMENT made as of February 17, 2000, between The Victory Portfolios
(the "Trust"), on behalf of its series portfolios listed in Exhibit A to this
Agreement (each, a "Series") and The Bank of New York ("BNY").
WITNESSETH:
WHEREAS, the Trust desires to appoint BNY as its Foreign Custody Manager
on the terms and conditions contained herein;
WHEREAS, BNY desires to perform the duties set forth herein on the
terms and conditions 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 trustees 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
hereunder 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.
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 the Schedule
attached hereto and each country, other than the United States, constituting the
primary market for a security with respect to which Key Trust Company of Ohio,
National Association ("Key Trust") has given settlement instructions to The Bank
of New York as its subcustodian (the "Subcustodian") under the Global Custody
Agreement between Key Trust and the Subcustodian.
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 Trust'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 Trust quarterly written reports regarding
the placement of assets of each Series 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 each Series 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 each Series 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
paragraph (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 Subcustodian (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 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
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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 in order to
assist the Trust in determining the appropriateness of placing Trust assets
therein.
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, information
gathered through BNY's subcustodian network, or through publicly available
information otherwise obtained 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,
devaluation's 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 its execution or performance of this Agreement; (b) BNY's appointment
as a Foreign Custody Manager has been approved and ratified by its Board at a
meeting duly called and at which a quorum was at all times present; and (c) the
Board or the Trust's investment advisor has considered the Country Risks
associated with investment in each Specified Country and will have considered
such risks prior to causing any settlement instructions to be given by Key Trust
to the Subcustodian 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.
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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 for
special, indirect or consequential damages, or for lost profits or loss of
business, arising in connection with this Agreement.
2. The Trust agrees to indemnify BNY and hold it harmless from and
against any and all costs, expenses, damages, liabilities or claims, including
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 B NY to the
extent any such costs, expenses, damages, liabilities or claims arise out of
BNY's failure to exercise the reasonable care, prudence and diligence required
by Section 2 of Article II hereof.
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 b e liable for any Country Risks associated with
investments in a particular country.
ARTICLE VI
MISCELLANEOUS
1. This Agreement constitutes the entire agreement among the Trust and
BNY, and no provision in the Global Custody Agreement between Key Trust and the
Subcustodian shall affect the duties and obligations of BNY hereunder, nor shall
any provision in this Agreement affect the duties or obligations of the
Subcustodian under the Global Custody Agreement.
2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to BNY, shall b e sufficiently given if received by
it at its offices at Xxx Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
______________________ , 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 12 7 Public Square, Xxxxxxxxx, Xxxx 00000, Attention:
Xxxxxxxx X. Xxxxxx with a copy to Xxxxxxx Xxxxx, 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 the parties hereto. This Agreement shall extend to
and shall be binding upon the parties hereto, and their
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respective successors and assigns; provided however, that this Agreement shall
not be assignable by any party without the written consent of the other party.
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 parties hereto hereby consent to the jurisdiction of a state or
federal court situated in New York City, New York in connection with any dispute
arising hereunder. The parties hereby irrevocably waive, to the fullest extent
permitted by applicable law, any objection which they may now or hereafter have
to the laying of venue of any such proceeding brought in such a court and any
claim that such proceeding brought in such a court has been brought in an
inconvenient forum. The parties hereby irrevocably waive 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 Global Custody Agreement between Key Trust and the Subcustodian, and may
otherwise be terminated by any party giving to the other parties 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.
9. Every reference to a Series will be deemed a reference solely to the
particular Series. Under no circumstances shall the rights, obligations or
remedies with respect to a particular Series constitute a right, obligation or
remedy applicable to any other Series. In particular, and without limitation,
BNY shall have no right to set off claims of a Series by applying property of
any other Series.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the date
first above written.
THE VICTORY PORTFOLIOS
By /s/ Xxxxxx X. Xxxxxxxx
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Title: Secretary
THE BANK OF NEW YORK
By /s/ Xxxxxx Xxxxxx
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Title: Vice President
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SCHEDULE
Specified Countries
