FOREIGN CUSTODY MANAGER AGREEMENT
AGREEMENT made as of July 2, 2001, between The Victory Portfolios (the
"Trust"), on behalf of its series portfolios listed in Exhibit A (the
"Funds"), and The Bank of New York ("BNY").
W I T N E S S E T H:
WHEREAS, the Fund 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. "Responsibilities" shall mean the responsibilities delegated to BNY
under the Rule 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.
5. "Rule" shall mean Rule 17f-5 under the Investment Company Act of
1940, as amended.
6. "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 KeyBank National
Association (KeyBank")
has given settlement instructions to The Bank of New York as its subcustodian
(the "Subcustodian") under the Global Custody Agreement between KeyBank 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 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 Fund's foreign
custody arrangements written reports notifying the Board of the placement of
assets of the Fund with a particular Eligible Foreign Custodian within a
Specified Country and of any material change in the arrangements (including
the contract governing such arrangements) with respect to assets of the Fund
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 Fund 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 Fund's foreign custody
arrangements with each Eligible Foreign Custodian are governed by a written
contract with the Custodian 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 an Eligible Foreign Custodian 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 the performance of the
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contract governing such arrangement; and (e) advise the Trust whenever BNY
determines under the Monitoring System that an arrangement (including, any
material change in the contract governing such arrangement) described in
preceding clause (d) no longer meets the requirements of the Rule.
2. 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) an Eligible Foreign Custodian's use of any depositories that act as or
operate a system or a transnational system for the central handling of
securities or any equivalent book-entries; (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 VI.
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 the Trust 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.
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ARTICLE IV.
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
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.
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 V.
MISCELLANEOUS
1. This Agreement constitutes the entire agreement between the Trust and
BNY, and no provision in the Global Custody Agreement between KeyBank 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 be sufficiently given if received by
it at its offices at 000 Xxxxxx Xxxxxx, 00xx Xxxxx,, 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 Xxxxxx Xxxxxx, Xxxxxxxxx, XX 00000,
Attention: Xxxxxxxx X. Xxxxxx with a
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copy to Xxxxxxx Xxxxx or at such other place as a 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 jurisdiction of a state or
federal court situated in New York City, New York in connection with any
dispute arising hereunder. The Trust hereby irrevocably waives, to the fullest
extent permitted by applicable law, any objection which it 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 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 Global Custody Agreement between KeyBank and the subcustodian, 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.
9. The Trust has entered into this Agreement on behalf of each Fund
listed on Schedule A individually, and not jointly. The rights and
obligations of the Trust described in this Agreement apply to each individual
Fund. No Fund shall have any liability for any costs or expenses incurred by
any other Fund. In seeking to enforce a claim against any Fund, BNY shall
look to the assets only of that Fund and not to the assets of any other Fund.
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10. A copy of each Certificate of Trust of the Trusts is on file with
the Secretary of the State of Delaware, and notice is hereby given that these
instruments are executed on behalf of the Trustees of the Trust as trustees
and not individually and that the obligations of this Agreement are not
binding upon any of the Trustees or shareholders individually but are binding
only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the Fund and BNY 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/ Xxxxx Xxxxxxxx
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Title: Secretary
THE BANK OF NEW YORK
By: /s/ Xxxxx Xxxxx
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Title: Vice President
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SCHEDULE A
TO FOREIGN CUSTODY AGREEMENT DATED JULY 2, 2001
BETWEEN THE VICTORY PORTFOLIOS
AND THE BANK OF NEW YORK
Xxxxxxx Xxxxxxxxxxxxx Growth Fund
Victory Balanced Fund
Victory Convertible Securities Fund
Victory Real Estate Investment Fund
SCHEDULE 1
Specified Countries
