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EXHIBIT 10.3
MASTER SERVICES AGREEMENT
THIS AGREEMENT made the o day of June, 1999,
BETWEEN:
THE TORONTO-DOMINION BANK
(a Canadian chartered bank)
(hereinafter referred to as "TD Bank")
OF THE FIRST PART,
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TD WATERHOUSE GROUP, INC. , a corporation
incorporated under the laws of the State of Delaware
(hereinafter referred to as the "Company")
OF THE SECOND PART.
WHEREAS TD Bank, TD Securities Inc. ("TDSI") and the Company have entered into a
series of agreements to (a) transfer to a newly-formed subsidiary of the
Company, namely TD Waterhouse Securities (Canada), Inc., TDSI's Canadian
discount brokerage business, brokerage and clearing business and assets and
liabilities of TD Bank related to its provision of services to such businesses
and (b) to transfer all of the stock of TD Bank's United Kingdom, Australia and
Hong Kong discount broker subsidiaries to the Company, subject to and in
accordance with the terms of those agreements;
AND WHEREAS TD Bank wishes to make available to Waterhouse Group and the Company
wishes to make available to TD Group certain services;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises,
the mutual covenants and agreements hereinafter set forth and for good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the Parties have agreed as follows:
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ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, including the recitals and the Exhibits and
Schedules, unless the context otherwise requires:
(a) "AFFILIATE" means, as to any person, any other person which, directly
or indirectly, Controls, is Controlled by or is under common Control
with such person;
(b) "CONTROL" means:
(i) when applied to a relationship between a person and a
corporation, the beneficial ownership by such person at the
relevant time of shares of such corporation carrying more than
the greater of 50% of the voting rights ordinarily exercisable
at meetings of shareholders of such corporation and the
percentage of voting rights ordinarily exercisable at meetings
of shareholders of such corporation that are sufficient to
elect a majority of the directors of such corporation; and
(ii) when applied to a relationship between a person and a
partnership or joint venture, the beneficial ownership by such
person at the relevant time of more than 50% of the ownership
interest of the partnership or such joint venture in
circumstances where it can reasonably be expected that such
person directs the affairs of the partnership or joint
venture;
(c) "CONTROLLED BY", "CONTROLLING" and similar words have corresponding
meanings; provided that a person (the "first-mentioned person") who
Controls a corporation, partnership or joint venture (the
"second-mentioned person") shall be deemed to Control (i) a
corporation, partnership or joint venture (the "third-mentioned
person") which is Controlled by the second-mentioned person, (ii) a
corporation, partnership or joint venture which is Controlled by the
third-mentioned person, and (iii) so on;
(d) "DIRECTION AND ESCROW AGREEMENT REGARDING THE 1999 GREEN LINE
REORGANIZATION" means the agreement entered into among TD Bank, TD
Securities Inc., TD Waterhouse Securities (Canada), Inc. and the
Company, dated the date hereof;
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(e) "EFFECTIVE TIME" means the time of the Transfer of the Transferred
Business and service operations as specified in the Direction and
Escrow Agreement Regarding the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇;
(f) "LOSSES" shall mean any losses, liabilities, claims, damages, costs,
and expenses, including counsel's and accountant's fees, disbursements
and court costs, judgements, fines and other amounts paid in
settlement;
(g) "MEMBERS OF TD GROUP", "MEMBERS OF WATERHOUSE GROUP" or other similar
phrase means one or more of the entities which comprise TD Group or
Waterhouse Group, as applicable;
(h) "TD GROUP" means The Toronto-Dominion Bank and its Affiliates from time
to time (including companies established or acquired after the date of
this Agreement), but excluding Waterhouse Group; and
(i) "WATERHOUSE GROUP" means TD Waterhouse Group, Inc. and all persons
which TD Waterhouse Group, Inc. Controls from time to time (including
companies established or acquired after the date of this Agreement).
1.2 ARTICLE, SECTION, EXHIBIT AND SCHEDULE REFERENCES
Except as otherwise expressly provided, a reference in this Agreement
to an "Article", "section", "subsection", "paragraph", "Exhibit" or
"Schedule" is a reference to an article, section, subsection,
paragraph, exhibit or schedule of or to this Agreement.
1.3 INTERPRETATION NOT AFFECTED BY HEADINGS
The headings in this Agreement are for convenience only and shall not
affect the construction or interpretation of this Agreement.
1.4 INCLUDED WORDS
When the context reasonably permits, words suggesting the singular
shall be construed as suggesting the plural and vice versa, and words
suggesting one gender shall be construed as suggesting other genders.
1.5 EXHIBITS
The following Exhibits are attached to and form a part of this
Agreement:
Exhibit "A" - Services in Canada;
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Exhibit "B" - Services in United States of America;
Exhibit "C" - Services in United Kingdom;
Exhibit "D" - Services in Australia; and
Exhibit "E" - Services in Hong Kong.
1.6 EFFECTIVE TIME OF AGREEMENT
This Agreement is effective from and after the Effective Time.
1.7 REPLACEMENT OF PORTION OF THE 1996 SERVICE AGREEMENT
The Company on behalf of TD Waterhouse Securities (Canada), Inc.
confirms and agrees that the services to be provided to it hereunder by
TD Bank and the provisions hereunder related thereto replace and
supercede all services and provisions to which TD Waterhouse Securities
(Canada), Inc. is entitled as an assignee of a portion of the benefits
set out in the master service agreement made as of January 1, 1996
between TD Bank and TD Securities Inc. to the extent that they relate
to the business of TD Waterhouse Securities (Canada), Inc.
ARTICLE 2
SERVICES AND COMPENSATION
2.1 SERVICES PROVIDED
(a) Upon the terms and subject to the conditions set forth in this
Agreement, TD Group or Waterhouse Group, as the case may be,
will provide or cause to be provided to the members of the
other's Group, as applicable, (the "Service Receiver") the
services (collectively, the "Services" and individually, a
"Service") set forth in Exhibits A through E (including any
schedules to such exhibits or other exhibits as may be added
to this Agreement by amendment from time to time) attached
hereto and incorporated herein by reference (collectively,
the "Exhibits" and individually, an "Exhibit"). The member
of TD Group or Waterhouse Group providing a Service is
herein referred to as the "Service Provider". Each Service
shall be subject to the terms identified in the Exhibit
related thereto. In the event any Service is terminated,
this master services agreement (the "Agreement") shall
remain in effect, unless otherwise terminated as provided in
Section 6.1 hereof. In the event of any conflict between the
terms of this Agreement and any Exhibit, the terms of this
Agreement shall govern, unless the terms of such Exhibit are
expressly stated to override the terms of this Agreement.
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(b) In addition, a member of Waterhouse Group may request that a
member of TD Group expand, terminate or otherwise modify
existing Services provided by such member of TD Group or
provide additional services, and a member of TD Group may
request that a member of Waterhouse Group expand, terminate or
otherwise modify existing Services provided by such member of
Waterhouse Group or provide additional services. Subject to
agreement on the appropriate compensation, which will be based
on the principles set out in Section 2.3 hereof, a member of
TD Group will agree to provide expanded, modified or
additional services to a member of Waterhouse Group where such
services were provided by such member of TD Group to such
member of Waterhouse Group (and vice-versa) within the year
immediately preceding the execution of this Agreement. With
respect to any other services, the parties will discuss,
without obligation, such expansion or modification of Services
or provision of additional services and an appropriate charge
for such services. Upon the request of a Service Receiver, a
Service Provider shall agree to terminate a Service on 90
days' advance notice, subject to agreement on an appropriate
reduction in the compensation payable hereunder. Any agreement
to expand, modify or terminate a Service or add an additional
service shall be implemented by an amendment to this Agreement
or its Exhibits, as applicable, in accordance with Section
7.10 hereof.
2.2 PERFORMANCE OF SERVICES
(a) A Service Provider shall perform Services with the same degree
of care, skill and prudence customarily exercised by it for
its own operations. In the event a Service Provider changes
the degree of care, skill and prudence customarily exercised
for its own operations, the Services performed by it hereunder
may be modified by such Service Provider to meet its revised
internal performance standards for the Services it provides
hereunder.
(b) Each party acknowledges that the Services will be provided
with respect to the business of a Service Receiver and all
other members of its Group as such business exists as of the
time of closing of the initial offering to the public of
common shares in the capital stock of the Company or as
otherwise mutually agreed by the parties. Each Service
Receiver agrees to use the Services in accordance with all
applicable federal, provincial, state and local laws,
regulations and tariffs and in accordance with reasonable
conditions, rules, regulations and specifications which are or
may be set forth in any manuals, materials, documents or
instructions of the Service Provider. Each Service Provider
reserves the right to take all actions in order to assure the
Services provided by it are provided in accordance with any
applicable laws, regulations and tariffs.
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(c) Any input or information reasonably required by a Service
Provider to perform Services pursuant to the provisions of
this Agreement shall be provided by the Service Receiver in
a manner consistent with the practices employed by the
parties during the year prior to the execution of this
Agreement. Should the failure to provide such input or
information render the performance of the Services
impossible or unreasonably difficult, the Service Provider
may, upon written notice to the Service Receiver, refuse to
provide such Services until such input or information is
provided. To the extent reasonably required for the Service
Provider's personnel to perform the Services, the Service
Receiver shall provide the Service Provider's personnel with
access to its equipment, office space and any other areas
and equipment necessary for the provision of Services;
provided that such access shall not unreasonably interfere
with the Service Receiver's conduct of its business.
(d) In providing Services, a Service Provider may, as it in its
sole discretion deems necessary or appropriate, (i) use its
personnel or that of other members of its Group, and (ii)
employ the services of third parties to the extent such third
party services are routinely utilized to provide similar
services to other Service Provider businesses or are
reasonably necessary for the efficient performance of any
Services.
(e) Nothing in this Agreement shall require a Service Provider to
favour a Service Receiver over a business of the Service
Provider or those of any member of its Group.
2.3 COMPENSATION
Each Service Provider shall be compensated for the Services rendered by
it under this Agreement as set forth in the applicable Exhibits hereto. Payments
shall be made by the Service Receiver the thirtieth (30th) day of the month
following the month in which such Services are performed either by cheque, wire
transfer, intracompany netting or at such other times or by such other method(s)
agreed to by the parties. The fees and charges to be set out in the Exhibits
will be determined as follows:
(i) charges for Services performed by a third party shall be based
upon the incremental costs charged by such third party to the
applicable Service Provider to perform those Services for the
applicable Service Receiver;
(ii) fees for Services provided by a Service Provider shall be
based upon the estimated or actual costs of providing such
Services to the applicable Service Receiver, which shall
include a reasonable allocation of Service Provider's direct
and indirect overhead costs (including, without limitation,
employee salaries, benefits and other costs) which Service
Provider estimates will be
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incurred or which are incurred in connection therewith, plus
(unless otherwise agreed to by the Service Provider), a
reasonable margin for profit. The determination of whether a
margin for profit is reasonable shall be, to the extent
practicable, based on the price an unaffiliated third party
service provider would charge for the Services; and
(iii) such other charges, fees, or commissions for Services
provided shall be based on the methodology as set forth in
the Exhibit or Exhibits for such Services.
ARTICLE 3
CONFIDENTIALITY
3.1 CONFIDENTIALITY OF INFORMATION
(a) All Confidential Information (as hereinafter defined)
disclosed by either of the parties to the other party
hereunder is confidential and proprietary to such disclosing
party. Each party, its affiliates, and subsidiaries and its or
their officers, directors, employees, agents, consultants and
contractors shall not use any of the Confidential
Information for any purpose other than as expressly
permitted hereunder. Confidential Information furnished by
either of the parties to the other party in connection with
this Agreement (or previously disclosed prior to execution
of this Agreement) and the transactions contemplated hereby
will be kept in confidence by such other party, including
its affiliates and subsidiaries and its or their officers,
directors, employees, agents, consultants and contractors,
in accordance with the policies of TD Bank and the Company,
as applicable, for maintaining the confidence of its own
information of similar content.
(b) The term "Confidential Information" shall mean and include:
(i) All trade secrets, other confidential business
information and other confidential information
learned in the course of performance by either party
of its obligations hereunder; and
(ii) Any information, data, software or computer programs
which are disclosed by either party to the other
party under or in contemplation of this Agreement.
Confidential Information may be either the property of the disclosing
party or information provided to the disclosing party by a corporate affiliate
of the disclosing party or by a third party.
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(c) Notwithstanding the foregoing, the term "Confidential
Information" shall not include information which:
(i) is or becomes part of the public domain other than by
way of a breach of this Agreement or through the
fault of the receiving party;
(ii) is or becomes available to the receiving party from a
source other than the disclosing party, which source
has no obligation of confidentiality to the
disclosing party in respect thereof;
(iii) is required by law, regulation or court order to be
disclosed by such party, in the opinion of its
counsel, provided that prior notice of such
disclosure has been given to the other party when
legally permissible, upon sufficient notice in order
to permit the other party to take such legal action
to prevent the disclosure as it deems reasonable,
appropriate or necessary; or
(iv) the parties have mutually agreed may be disclosed.
(d) This Section 3.1 shall survive any termination of this
Agreement, in whole or in part, for five (5) years.
(e) Upon the discovery of any inadvertent disclosure or
unauthorized use of Confidential Information, or upon
receiving notice of a prohibited disclosure or unauthorized
use from the other party to this Agreement, the receiving
party shall take all necessary actions to prevent any further
inadvertent or prohibited disclosure or unauthorized use and,
subject to Section 5.1, the disclosing party shall be entitled
to pursue any remedy which may be available to it.
ARTICLE 4
CONFLICT RESOLUTION
4.1 CONFLICT RESOLUTION
Any dispute, controversy or claim relating to this Agreement (a
"Dispute") shall initially be referred to the executive management of the
parties to the Dispute who shall attempt to resolve such Dispute in good faith.
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ARTICLE 5
LIMITATION OF LIABILITY AND WARRANTY
5.1 LIMITATION
(a) In the absence of gross negligence or reckless or wilful
misconduct on a Service Provider's part, and whether or not it
is negligent, such Service Provider shall not be liable for
any Losses arising out of any actual or alleged injury, loss
or damage of any nature whatsoever in providing or failing to
provide Services to a Service Receiver. Notwithstanding
anything to the contrary contained herein, in the event
a Service Provider commits an error with respect to or
incorrectly performs or fails to perform any Service, at
Service Receiver's request, such Service Provider shall use
reasonable efforts to correct such error, re-perform or
perform such Service; provided that the Service Provider shall
have no obligation to recreate any lost or destroyed data to
the extent the same cannot be cured by the reperformance of
the Service in question.
(b) Service Provider's liability for damages to Service Receiver
for any cause whatsoever, and regardless of the form of
action, whether in contract or in tort, including negligence,
gross negligence or wilful misconduct, shall be limited to the
payments made hereunder for the specified Service that
allegedly caused the damage during the period in which the
alleged damage was incurred by the Service Receiver. In no
event shall the Service Provider be liable for any damages
caused by the Service Receiver's failure to perform the
Service Receiver's responsibilities hereunder. A Service
Provider will not be liable to a Service Receiver for any
act or omission of any other entity (other than due to a
default by Service Provider in any agreement between Service
Provider and such other entity) furnishing any Service.
(c) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED
HEREIN OR AT LAW OR IN EQUITY, NEITHER PARTY SHALL BE
LIABLE TO THE OTHER FOR PUNITIVE, SPECIAL, INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT
LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS
INTERRUPTION OR ANY OTHER LOSS) ARISING FROM OR RELATING
TO ANY CLAIM MADE UNDER THIS AGREEMENT OR REGARDING
THE PROVISION OF OR THE FAILURE TO PROVIDE THE SERVICES.
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ARTICLE 6
TERM AND TERMINATION
6.1 TERM AND TERMINATION
(a) Unless earlier terminated as provided below, this Agreement
shall take effect upon the date first written above and shall
remain in effect until the later of: (i) the date specified by
TD Bank or the Company for the termination of this Agreement
in a notice given by TD Bank or the Company, as applicable, to
the other, or (ii) the first anniversary of the date such
notice is given.
(b) In addition, this Agreement may be terminated, in whole or in
part, upon the following conditions (but reserving all other
remedies and rights hereunder, in whole or in part, and
otherwise available in law or in equity) immediately by TD
Bank or the Company by the giving of written notice to the
other, without any prior notice, upon the occurrence of one or
more of the following events:
(i) the other entering into proceedings in bankruptcy or
insolvency;
(ii) the other making an assignment for the benefit of
creditors;
(iii) a petition being filed in respect of the other under
a bankruptcy law, a corporate reorganization law, or
any other law for relief as a debtor or having a
similar purpose or effect and such petition is not
vacated within thirty (30) business days from the
date of filing.; or
(iv) the other enters into liquidation, dissolution or
other similar proceedings.
ARTICLE 7
MISCELLANEOUS
7.1 FURTHER ASSURANCES
Each party will, from time to time and at all times after the Effective
Time, without further consideration, do such further acts and deliver all such
further assurances, deeds and documents as shall be reasonably required in order
to fully perform and carry out the terms of this Agreement.
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7.2 ENTIRE AGREEMENT
The provisions contained in any and all documents and agreements
collateral hereto shall at all times be read subject to the provisions of this
Agreement and, in the event of conflict, the provisions of this Agreement shall
prevail.
7.3 GOVERNING LAW
This Agreement shall be subject to and interpreted, construed and
enforced in accordance with the laws of Ontario and the laws of Canada
applicable therein and shall be treated as a contract made in Ontario. The
parties irrevocably attorn and submit to the jurisdiction of the courts of
Ontario and courts of appeal therefrom in respect of all matters arising out of
this Agreement.
7.4 ASSIGNMENT, ENUREMENT, ETC.
No party to this Agreement shall have the right to assign or otherwise
transfer its rights or obligations under this Agreement, except with the prior
written consent of the other party
hereto. This Agreement shall be binding upon and enure to the benefit of the
members of TD Group and the members of Waterhouse Group, all of which shall be
considered to be parties to this Agreement and their respective successors and
permitted assigns.
7.5 TIME OF ESSENCE
Time shall be of the essence in this Agreement.
7.6 NOTICES
The addresses and fax number of each party for notices shall be as
follows:
TD Bank o
Attention: o
Fax: o
Company: o
Attention: o
Fax: o
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Copy to: o
Attention: o
Fax: o
Any notice, communication or statement (a "notice") required, permitted
or contemplated hereunder shall be in writing and shall be delivered as follows:
(a) by delivery to a party between 8:00 a.m. and 4:00 p.m. local
time on a Business Day at the address of such party for
notices, in which case the notice shall be deemed to have been
received by that party when it is delivered; or
(b) by telecopier to a party to the telecopier number of such
party for notices, in which case, if the notice was telecopied
prior to 4:00 p.m. local time on a Business Day the notice
shall be deemed to have been received by that party when it
was telecopied and if it was faxed on a day which is not a
Business Day or is faxed after 4:00 p.m. local time on a
Business Day, it shall be deemed to have been received on the
next following Business Day.
A party may from time to time change its address for service or its fax
number for service by giving written notice of such change to the other party.
7.7 INVALIDITY OF PROVISIONS
If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction, that
shall not affect or impair:
(a) the legality, validity or enforceability in that jurisdiction
of any other provision of this Agreement; or
(b) the legality, validity or enforceability under the law of any
other jurisdiction of that or any other provision of this
Agreement.
7.8 WAIVER
No waiver by any party of any breach (whether actual or anticipated) of
any of the provisions contained herein shall take effect or be binding upon that
party unless the waiver is expressed in writing by a duly authorized
representative of that party. Any waiver so given shall extend only to the
particular breach so waived and shall not limit or affect any rights with
respect to any other or future breach.
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7.9 REMEDIES GENERALLY
No failure on the part of any party in exercising any right or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or remedy preclude any other or further exercise
thereof or the exercise of any other right or remedy hereunder or in law or in
equity or by statute or otherwise conferred.
7.10 AMENDMENT
This Agreement including any Exhibits hereto, shall not be varied in
its terms or amended by oral agreement or by representations or otherwise other
than by an instrument in writing dated subsequent to the date hereof, executed
by a duly authorized representative of each party.
7.11 COUNTERPART EXECUTION
This Agreement may be executed in counterpart and all executed
counterparts together shall constitute one agreement.
7.12 AGENCY
The parties acknowledge and agree that TD Bank and the Company have
entered into the Agreement on their own behalf and as agent for and on behalf of
the other members of their respective Groups (whether or not formally appointed
as agent on or before the date of this Agreement) and it is the express
intention of the parties that TD Bank and the Company on behalf of their
respective Groups, or the members of their respective Groups themselves, may
exercise and enforce all their rights and remedies provided herein in the same
manner as if each were a signatory hereto. TD Bank and the Company shall be
generally entitled to deal with the other on behalf of the members of their
respective Groups in respect of all matters concerning this Agreement without
any obligation whatsoever to investigate the authority of TD Bank or the
Company, as applicable, and notwithstanding anything contained herein, TD Bank
and the Company will continue to be bound by all of their obligations under this
Agreement as if no such agency relationship existed and shall remain liable to
perform the obligations of the other members of their respective Groups
hereunder to the extent that such persons fail to do so.
7.13 FORCE MAJEURE
No party shall be liable for any failure of or delay in the performance
of this Agreement or any Services hereunder for the period that such failure or
delay is due to acts of God, public enemy, war, strikes or labour disputes, or
any other cause beyond the parties' reasonable control.
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7.14 SERVICES NOT TRANSFER
For the avoidance of all doubt, the parties hereto acknowledge and
agree that this Agreement is for the provision of services and no transfer or
conveyance of property of one party to another arises hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement.
THE TORONTO-DOMINION BANK TD WATERHOUSE GROUP INC.
Per: Per:
Per: Per:
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TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION......................................................................................2
1.1 Definitions................................................................................2
1.2 Article, Section, Exhibit and Schedule References..........................................3
1.3 Interpretation Not Affected by Headings....................................................3
1.4 Included Words.............................................................................3
1.5 Exhibits...................................................................................3
1.6 Effective Time of Agreement................................................................4
1.7 Replacement of Portion of the 1996 Service Agreement.......................................4
ARTICLE 2
SERVICES AND COMPENSATION...........................................................................4
2.1 Services Provided..........................................................................4
2.2 Performance of Services....................................................................5
2.3 Compensation...............................................................................6
ARTICLE 3
CONFIDENTIALITY.....................................................................................7
3.1 Confidentiality of Information.............................................................7
ARTICLE 4
CONFLICT RESOLUTION.................................................................................8
4.1 Conflict Resolution........................................................................8
ARTICLE 5
LIMITATION OF LIABILITY AND WARRANTY................................................................8
5.1 Limitation.................................................................................8
ARTICLE 6
TERM AND TERMINATION................................................................................9
6.1 Term and Termination.......................................................................9
ARTICLE 7
MISCELLANEOUS......................................................................................10
7.1 Further Assurances........................................................................10
7.2 Entire Agreement..........................................................................10
7.3 Governing Law.............................................................................10
7.4 Assignment, Enurement, Etc................................................................11
7.5 Time of Essence...........................................................................11
7.6 Notices...................................................................................11
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7.7 Invalidity of Provisions..................................................................12
7.8 Waiver....................................................................................12
7.9 Remedies Generally........................................................................12
7.10 Amendment.................................................................................12
7.11 Counterpart Execution.....................................................................13
7.12 Agency....................................................................................13
7.13 Force Majeure.............................................................................13
7.14 Services Not Transfer.....................................................................13