ACCOUNTING AND INTERESTHOLDER SERVICES AGREEMENT
AGREEMENT made as of this 14th day of February, 1997, between Worldwide
Developing Resources Portfolio, a New York trust (the "Trust"), and IBT Fund
Services (Canada) Inc., an Ontario corporation ("IBT").
WHEREAS, the Trust is registered under the Investment Company Act of 1940
as an open-end management investment company and desires to engage IBT to
provide certain trust accounting and interestholder recordkeeping services with
respect to the Trust and IBT has indicated its willingness to so act, subject to
the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. IBT APPOINTED. The Trust hereby appoints IBT to provide the services as
hereinafter described and IBT agrees to act as such upon the terms and
conditions hereinafter set forth.
2. DEFINITIONS. Whenever used herein, the terms listed below will have the
following meaning:
2.1 AUTHORIZED PERSON. Authorized Person will mean any of the persons duly
authorized to give Proper Instructions or otherwise act on behalf of the Trust
by appropriate resolution of its Board, and set forth in a certificate as
required by Section 3 hereof.
2.2 BOARD. Board will mean the Board of Trustees of the Trust.
2.3 PORTFOLIO SECURITY. Portfolio Security will mean any security owned by
the Trust.
2.4 INTERESTS. Interests will mean participation interests of the Trust.
3. CERTIFICATION AS TO AUTHORIZED PERSONS. The Secretary or Assistant
Secretary of the Trust will at all times maintain on file with IBT his or her
certification to IBT, in such form as may be acceptable to IBT, of (i) the names
and signatures of the Authorized Persons and (ii) the names of the Board
members, it being understood that upon the occurrence of any change in the
information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Trust, will sign a new or amended certification setting forth
the change and the new, additional or omitted names or signatures. IBT will be
entitled to rely and act upon the most recent Officers' Certificate given to it
by the Trust.
4. MAINTENANCE OF RECORDS. IBT will maintain records with respect to the
services provided by IBT hereunder and will furnish the Trust daily with a
statement of condition of the Trust. The books and records of IBT pertaining to
its actions under this Agreement and reports by IBT or its independent
accountants concerning its accounting systems and internal accounting controls
will be open to inspection and audit at reasonable times by officers of or
auditors employed by the Trust, and the staff of The U.S. Securities and
Exchange Commission, and will be preserved by IBT in accordance with procedures
established by the Trust.
IBT shall keep the books of account and render statements or copies from
time to time as reasonably requested by the Treasurer or any executive officer
of the Trust.
IBT, as fund accounting agent, shall assist generally in the preparation of
reports of a financial nature to Holders and others, audits of accounts, and
other ministerial matters of like nature.
5. DUTIES OF BANK WITH RESPECT TO BOOKS OF ACCOUNT AND CALCULATIONS OF NET
ASSET VALUE. Inasmuch as the Trust is treated as a partnership for federal
income tax purposes, the Bank shall as Agent keep and maintain the books and
records of the Trust in accordance with the Procedures for Allocations and
Distributions adopted by the Trustees of the Trust, as such Procedures may be in
effect from time to time. The Trust agrees promptly to furnish all revisions to
or restatements of such Procedures to the Bank.
The Bank shall as Agent keep such books of account (including records
showing the adjusted tax costs of the Trust's portfolio securities) and render
as at the close of business on each day a detailed statement of the amounts
received or paid out and of securities received or delivered for the account of
the Trust during said day and such other statements, including a daily trial
balance and inventory of the Trust's portfolio securities; and shall furnish
such other financial information and data as from time to time requested by the
Treasurer or any executive officer of the Trust; and shall compute and
determine, as of the close of business of the New York Stock Exchange, or at
such other time or times as the Board may determine, the net asset value of the
Trust and the net asset value of each interest in the Trust, such computations
and determinations to be made in accordance with the governing documents of the
Trust and the votes and instructions of the Board and of the investment adviser
at the time in force and applicable, and promptly notify the Trust and its
investment adviser and such other persons as the Trust may request of the result
of such computation and determination. In computing the net asset value IBT may
rely upon security quotations received by telephone or otherwise from sources or
pricing services designated by the Trust by proper instructions, and may further
rely upon information furnished to it by any authorized officer of the Trust
relative (a) to liabilities of the Trust not appearing on its books of account,
(b) to the existence, status and proper treatment of any reserve or reserves,
(c) to any procedures or policies established by the Board regarding the
valuation of portfolio securities or other assets, and (d) to the value to be
assigned to any bond, note, debenture, Treasury xxxx, repurchase agreement,
subscription right, security, participation interests or other asset or property
for which market quotations are not readily available. IBT shall also compute
and determine at such time or times as the Trust may designate the portion of
each item which has significance for a holder of an interest in the Trust in
computing and determining its U.S. federal income tax liability including, but
not limited to, each item of income, expense and realized and unrealized gain or
loss of the Trust which is attributable for federal income tax purposes to each
such holder.
6. INTERESTHOLDER SERVICES. IBT shall keep appropriate records of the
holdings of each interestholder on a daily basis. IBT shall also keep each
interestholder's subscription agreement with the Portfolio.
7. COMPENSATION OF IBT. For the services to be rendered and the facilities
provided by IBT hereunder, the Trust shall pay to IBT a fee from the assets of
the Trust computed and paid monthly, in accordance with an agreed upon schedule,
as the same may be changed by mutual agreement of the parties from time to time.
8. CONCERNING IBT.
8.1 PERFORMANCE OF DUTIES AND STANDARD OF CARE. IBT shall not be liable for
any error of judgment or mistake of law or for any act or omission in the
performance of its duties hereunder, except for willful misfeasance, bad faith
or gross negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties hereunder.
IBT will be entitled to receive and act upon the advice of independent
counsel of its own selection, which may be counsel for the Trust, and will be
without liability for any action taken or thing done or omitted to be done in
accordance with this Agreement in good faith in conformity with such advice. In
the performance of its duties hereunder, IBT will be protected and not be
liable, and will be indemnified and held harmless by the Trust for any
reasonable action taken or omitted to be taken by it in good faith reliance upon
the terms of this Agreement, any Officers' Certificate, and or written
instructions received from an Authorized Person, resolution of the Board,
telegram, notice, request, certificate or other instrument reasonably believed
by IBT to be genuine and for any other loss to the Trust except in the case of
IBT's gross negligence, willful misfeasance or bad faith in the performance of
its duties or reckless disregard of its obligations and duties hereunder.
Notwithstanding anything in this Agreement to the contrary, in no event
shall IBT be liable hereunder or to any third party:
(a) for any losses or damages of any kind resulting from acts of God,
earthquakes, fires, floods, storms or other disturbances of restrictions,
acts of war, civil war or terrorism, insurrection, nuclear fusion, fission
or radiation, the interruption, loss or malfunction or utilities,
transportation, or computers (hardware or software) and computer
facilities, the unavailability of energy sources and other similar
happenings or events except as results from IBT's own gross negligence,
willful misfeasance or bad faith in the performance of its duties; or
(b) for special, punitive or consequential damages arising from the
provision of services hereunder, even if IBT has been advised of the
possibility of such damages.
8.2 SUBCONTRACTORS. IBT, subject to approval of the Trust, may subcontract
for the performance of IBT's obligations hereunder with any one or more persons,
provided, however, that unless the Trust otherwise expressly agrees in writing,
IBT shall be as fully responsible to the Trust for the acts and omissions of any
subcontractor as it would be for its own acts or omissions. In the event IBT
obtains a judgment, settlement or other monetary recovery for the wrongful
conduct of the subcontractor, the Trust shall be entitled to such recovery if
such conduct resulted in a loss to the Trust and IBT agrees to pursue such
claims vigorously. To the extent possible, such sub-contractors shall provide
services outside the United States.
8.3 ACTIVITIES OF IBT. The services provided by IBT to the Trust are not to
be deemed to be exclusive, IBT being free to render administrative, fund
accounting and/or other services to other parties. It is understood that members
of the Board, officers, and shareholders of the Trust are or may become
similarly interested in the Trust and that IBT and/or any of its affiliates may
become interested in the Trust as a shareholder of the Trust or otherwise.
8.4 INSURANCE. IBT need not maintain any special insurance for the benefit
of the Trust, but will maintain customary insurance for its obligations
hereunder.
9. TERMINATION. This Agreement may be terminated at any time without
penalty upon sixty days written notice delivered by either party to the other by
means of registered mail, and upon the expiration of such sixty days, this
Agreement will terminate. At any time after the termination of this Agreement,
the Fund will have access to the records of IBT relating to the performance of
its duties hereunder and IBT shall cooperate in the transfer of such records to
its successor.
10. CONFIDENTIALITY. Both parties hereto agree that any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person without the consent of the other party,
except as may be required by applicable law or at the request of a governmental
agency. The parties further agree that a breach of this provision would
irreparably damage the other party and accordingly agree that each of them is
entitled, without bond or other security, to an injunction or injunctions to
prevent breaches of this provision.
11. NOTICES. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below; namely:
(a) In the case of notices sent to the Trust to:
C/O IBT Trust Company (Cayman) Ltd.
The Bank of Nova Scotia Building
P. O. Box 501
Xxxxxx Town
Grand Cayman, Cayman Island
British West Indies
(b) In the case of notices sent to IBT to:
IBT Fund Services (Canada), Inc.
Suite 5850, One First Canadian Place
P. O. Xxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxx Xxxxxxx
or at such other place as such party may from time to time designate in writing.
12. AMENDMENTS. This Agreement may not be altered or amended, except by an
instrument in writing, executed by both parties, and in the case of the Trust,
duly authorized and approved by its respective Board.
13. GOVERNING LAW. This Agreement will be governed by the laws of Ontario.
14. COUNTERPARTS. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
Worldwide Developing Resources Portfolio
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
Signed in Xxxxxxxx, Bermuda
IBT Fund Services (Canada), Inc.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
WORLDWIDE DEVELOPING RESOURCES PORTFOLIO
PROCEDURES FOR ALLOCATIONS
AND DISTRIBUTIONS
February 14, 1997
TABLE OF CONTENTS
PAGE
ARTICLE I--INTRODUCTION .......................................................1
ARTICLE II--DEFINITIONS .......................................................1
ARTICLE III--CAPITAL ACCOUNTS
Section 3.1 Capital Accounts of Holders ............................4
Section 3.2 Book Capital Accounts ..................................4
Section 3.3 Tax Capital Accounts ...................................4
Section 3.4 Compliance with Treasury Regulations ...................5
ARTICLE IV--DISTRIBUTIONS OF CASH AND ASSETS
Section 4.1 Distributions of Distributable Cash ...................5
Section 4.2 Division Among Holders ................................5
Section 4.3 Distributions Upon Liquidation of a Holder's
Interest in the Trust ..............................5
Section 4.4 Amounts Withheld ......................................5
ARTICLE V--ALLOCATIONS
Section 5.1 Allocation of Items to Book Capital Accounts...........6
Section 5.2 Allocation of Taxable Income and Tax Loss
to Tax Capital Accounts.............................6
Section 5.3 Special Allocations to Book and Tax Capital
Accounts ...........................................7
Section 5.4 Other Adjustments to Book and Tax Capital
Accounts ...........................................7
Section 5.5 Timing of Tax Allocations to Book and Tax
Capital Accounts ...................................8
Section 5.6 Redemptions During the Fiscal Year ....................8
ARTICLE VI--WITHDRAWALS
Section 6.1 Partial Withdrawals ...................................8
Section 6.2 Redemptions ...........................................8
Section 6.3 Distribution in Kind...................................8
ARTICLE VII--LIQUIDATION
Section 7.1 Liquidation Procedure .................................8
Section 7.2 Alternative Liquidation Procedure .....................9
Section 7.3 Cash Distributions Upon Liquidation ...................9
Section 7.4 Treatment of Negative Book Capital
Account Balance ....................................9
i
PROCEDURES FOR
ALLOCATIONS AND DISTRIBUTIONS
OF
WORLDWIDE DEVELOPING RESOURCES PORTFOLIO
(the "Trust")
ARTICLE I
INTRODUCTION
The Trust is treated as a partnership for federal income tax purposes.
These procedures have been adopted by the Trustees of the Trust and will be
furnished to the Trust's accountants for the purpose of allocating Trust gains,
income or loss and distributing Trust assets. The Trust will maintain its books
and records, for both book and tax purposes, using the accrual method of
accounting.
ARTICLE II
DEFINITIONS
Except as otherwise provided herein, a term referred to herein shall have
the same meaning as that ascribed to it in the Declaration. References in this
document to "HEREOF", "HEREIN" and "HEREUNDER" shall be deemed to refer to this
document in its entirety rather than the article or section in which any such
word appears.
"BOOK CAPITAL ACCOUNT" shall mean, for any Holder at any time in any Fiscal
Year, the Book Capital Account balance of the Holder on the first day of the
Fiscal Year, as adjusted each day pursuant to the provisions of Section 3.2
hereof.
"CAPITAL CONTRIBUTION" shall mean, with respect to any Holder, the amount
of money and the Fair Market Value of any assets actually contributed from time
to time to the Trust with respect to the Interest held by such Holder.
"CODE" shall mean the U.S. Internal Revenue Code of 1986, as amended from
time to time, as well as any non-superseded provisions of the Internal Revenue
Code of 1954, as amended (or any corresponding provision or provisions of
succeeding law).
"DECLARATION" shall mean the Trust's Declaration of Trust, dated February
14, 1997, as amended from time to time.
"DESIGNATED EXPENSES" shall mean extraordinary Trust expenses attributable
to a particular Holder that are to be borne by such Holder.
"DISTRIBUTABLE CASH" for any Fiscal Year shall mean the gross cash proceeds
from Trust activities, less the portion thereof used to pay or establish
Reserves, plus such portion of the Reserves as the Trustees, in their sole
discretion, no longer deem necessary to be held as Reserves. Distributable Cash
shall not be reduced by depreciation, amortization, cost recovery deductions, or
similar allowances.
"FAIR MARKET VALUE" of a security, instrument or other asset on any
particular day shall mean the fair value thereof as determined in good faith by
or on behalf of the Trustees in the manner set forth in the Registration
Statement.
"FISCAL YEAR" shall mean an annual period determined by the Trustees which
ends on such day as is permitted by the Code.
"HOLDERS" shall mean as of any particular time all holders of record of
Interests in the Trust.
"INTEREST(S)" shall mean the interest of a Holder in the Trust, including
all rights, powers and privileges accorded to Holders by the Declaration, which
interest may be expressed as a percentage, determined by calculating, at such
times and on such bases as the Trustees shall from time to time determine, the
ratio of each Holder's Book Capital Account balance to the total of all Holders'
Book Capital Account balances.
"INVESTMENTS" shall mean all securities, instruments or other assets of the
Trust of any nature whatsoever, including, but not limited to, all equity and
debt securities, futures contracts, and all property of the Trust obtained by
virtue of holding such assets.
"MATCHED INCOME OR LOSS" shall mean Taxable Income, Tax-Exempt Income or
Tax Loss of the Trust comprising interest, original issue discount and dividends
and all other types of income or loss to the extent the Taxable Income,
Tax-Exempt Income, Tax Loss or Loss items not included in Tax Loss arising from
such items are recognized for tax purposes at the same time that Profit or Loss
are accrued for book purposes by the Trust.
"NET UNREALIZED GAIN" shall mean the excess, if any, of the aggregate Fair
Market Value of all Investments over the aggregate adjusted bases, for federal
income tax purposes, of all Investments.
"NET UNREALIZED LOSS" shall mean the excess, if any, of the aggregate
adjusted bases, for federal income tax purposes, of all Investments over the
aggregate Fair Market Value of all Investments.
"PROFIT" AND "LOSS" shall mean, for each Fiscal Year or other period, an
amount equal to the Taxable Income or Tax Loss for such Fiscal Year or period
with the following adjustments:
(i) Any Tax-Exempt Income shall be added to such Taxable Income or
subtracted from such Tax Loss; and
(ii) Any expenditures of the Trust for such year or period described
in Section 705(a)(2)(B) of the Code or treated as expenditures under
Section 705(a)(2)(B) of the Code pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing
Profit or Loss or specially allocated shall be subtracted from such Taxable
Income or added to such Tax Loss.
"REDEMPTION" shall mean the complete withdrawal of an Interest of a Holder
the result of which is to reduce the Book Capital Account balance of that Holder
to zero.
"REGISTRATION STATEMENT" shall mean the Registration Statement of the Trust
on Form N-1A as filed with the U.S. Securities and Exchange Commission under the
1940 Act, as the same may be amended from time to time.
"RESERVES" shall mean, with respect to any Fiscal Year, funds set aside or
amounts allocated during such period to reserves which shall be maintained in
amounts deemed sufficient by the Trustees for working capital and to pay taxes,
insurance, debt service, renewals, or other costs or expenses, incident to the
ownership of the Investments or to its operations.
"TAX CAPITAL ACCOUNT" shall mean, for any Holder at any time in any Fiscal
Year, the Tax Capital Account balance of the Holder on the first day of the
Fiscal Year, as adjusted each day pursuant to the provisions of Section 3.3
hereof.
"TAX-EXEMPT INCOME" shall mean income of the Trust for such Fiscal Year or
period that is exempt from federal income tax and not otherwise taken into
account in computing Profit or Loss.
"TAX LOT" shall mean securities or other property which are both purchased
or acquired, and sold or otherwise disposed of, as a unit.
"TAXABLE INCOME" or "TAX LOSS" shall mean the taxable income or tax loss of
the Trust, determined in accordance with Section 703(a) of the Code, for each
Fiscal Year as determined for federal income tax purposes, together with each of
the Trust's items of income, gain, loss or deduction which is separately stated
or otherwise not included in computing taxable income and tax loss.
"TREASURY REGULATIONS" shall mean the Income Tax Regulations promulgated
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"TRUST" shall mean Worldwide Developing Resources Portfolio, a trust fund
formed under the laws of the State of New York by the Declaration.
"TRUSTEES" shall mean each signatory to the Declaration, so long as such
signatory shall continue in office in accordance with the terms thereof, and all
other individuals who at the time in question have been duly elected or
appointed and have qualified as Trustees in accordance with the provisions
thereof and are then in office.
The "1940 ACT" shall mean the U.S. Investment Company Act of 1940, as
amended from time to time, and the rules and regulations thereunder.
ARTICLE III
CAPITAL ACCOUNTS
3.1. CAPITAL ACCOUNTS OF HOLDERS. A separate Book Capital Account and a
separate Tax Capital Account shall be maintained for each Holder pursuant to
Section 3.2 and Section 3.3. hereof, respectively. In the event the Trustees
shall determine that it is prudent to modify the manner in which the Book
Capital Accounts or Tax Capital Accounts, or any debits or credits thereto, are
computed in order to comply with the Treasury Regulations, the Trustees may make
such modification, provided that it is not likely to have a material effect on
the amounts distributable to any Holder pursuant to Article VII hereof upon the
dissolution of the Trust.
3.2. BOOK CAPITAL ACCOUNTS. The Book Capital Account balance of each Holder
shall be adjusted each day by the following amounts:
(a) increased by any increase in Net Unrealized Gains or decrease in
Net Unrealized Losses allocated to such Holder pursuant to Section 5.1(a)
hereof;
(b) decreased by any decrease in Net Unrealized Gains or increase in
Net Unrealized Losses allocated to such Holder pursuant to Section 5.1(b)
hereof;
(c) increased or decreased, as the case may be, by the amount of
Profit or Loss, respectively, allocated to such Holder pursuant to Section
5.1(c) hereof;
(d) increased by any Capital Contribution made by such Holder; and,
(e) decreased by any distribution, including any distribution to
effect a withdrawal or Redemption, made to such Holder by the Trust.
Any adjustment pursuant to Section 3.2 (a), (b) or (c) above shall be
prorated for increases in each Holder's Book Capital Account balance resulting
from Capital Contributions, or distributions or withdrawals from the Trust or
Redemptions by the Trust occurring, during such Fiscal Year as of the day after
the Capital Contribution, distribution, withdrawal or Redemption is accepted,
made or effected by the Trust.
3.3. TAX CAPITAL ACCOUNTS. The Tax Capital Account balance of each Holder
shall be adjusted at the following times by the following amounts:
(a) increased daily by the adjusted tax bases of any Capital
Contribution made by such Holder to the Trust;
(b) increased daily by the amount of Taxable Income and Tax-Exempt
Income allocated to such Holder pursuant to Section 5.2 hereof at such
times as the allocations are made under Section 5.2 hereof;
(c) decreased daily by the amount of cash distributed to the Holder
pursuant to any of these procedures including any distribution made to
effect a withdrawal or Redemption; and
(d) decreased by the amount of Tax Loss allocated to such Holder
pursuant to Section 5.2 hereof at such times as the allocations are made
under Section 5.2 hereof.
3.4. COMPLIANCE WITH TREASURY REGULATIONS. The foregoing provisions and
other provisions contained herein relating to the maintenance of Book Capital
Accounts and Tax Capital Accounts are intended to comply with Treasury
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Treasury Regulations.
The Trustees shall make any appropriate modifications in the event
unanticipated events might otherwise cause these procedures not to comply with
Treasury Regulations Section 1.704-1(b), including the requirements described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(1) and Treasury Regulations
Section 1.704-1(b)(2)(iv). Such modifications are hereby incorporated into these
procedures by this reference as though fully set forth herein.
ARTICLE IV
DISTRIBUTIONS OF CASH AND ASSETS
4.1. DISTRIBUTIONS OF DISTRIBUTABLE CASH. Except as otherwise provided in
Article VII hereof, Distributable Cash for each Fiscal Year may be distributed
to the Holders at such times, if any, and in such amounts as shall be determined
in the sole discretion of the Trustees. In exercising such discretion, the
Trustees shall distribute such Distributable Cash so that Holders that are
regulated investment companies can comply with the distribution requirements set
forth in Code Section 852 and avoid the excise tax imposed by Code Section 4982.
4.2. DIVISION AMONG HOLDERS. All distributions to the Holders with respect
to any Fiscal Year pursuant to Section 4.1 hereof shall be made to the Holders
in proportion to the Taxable Income, Tax-Exempt Income or Tax Loss allocated to
the Holders with respect to such Fiscal Year pursuant to the terms of these
procedures.
4.3. DISTRIBUTIONS UPON LIQUIDATION OF A HOLDER'S INTEREST IN THE TRUST.
Upon liquidation of a Holder's interest in the Trust, the proceeds will be
distributed to the Holder as provided in Section 5.6, Article VI, and Article
VII hereof. If such Holder has a negative book capital account balance, the
provisions of Section 7.4 will apply.
4.4. AMOUNTS WITHHELD. All amounts withheld pursuant to the Code or any
provision of any state or local tax law with respect to any payment or
distribution to the Trust or the Holders shall be treated as amounts distributed
to such Holders pursuant to this Article IV for all purposes under these
procedures. The Trustees may allocate any such amount among the Holders in any
manner that is in accordance with applicable law.
ARTICLE V
ALLOCATIONS
5.1. ALLOCATION OF ITEMS TO BOOK CAPITAL ACCOUNTS.
(a) INCREASE IN NET UNREALIZED GAINS OR DECREASE IN NET UNREALIZED
LOSSES. Any decrease in Net Unrealized Loss due to realization of items
shall be allocated to the Holder receiving the allocation of Loss, in the
same amount, under Section 5.1(c) hereof. Subject to Section 5.1(d) hereof,
any increase in Net Unrealized Gains or decrease in Net Unrealized Loss on
any day during the Fiscal Year shall be allocated to the Holders' Book
Capital Accounts at the end of such day, in proportion to the Holders'
respective Book Capital Account balances at the commencement of such day.
(b) DECREASE IN NET UNREALIZED GAINS OR INCREASE IN NET UNREALIZED
LOSSES. Any decrease in Net Unrealized Gains due to realization of items
shall be allocated to the Holder receiving the allocation of Profit, in the
same amount, under Section 5.1(c) hereof. Subject to Section 5.1(d) hereof,
any decrease in Net Unrealized Gains or increase in Net Unrealized Loss on
any day during the Fiscal Year shall be allocated to the Holders' Book
Capital Accounts at the end of such day, in proportion to the Holders'
respective Book Capital Account balances at the commencement of such day.
(c) PROFIT AND LOSS. Subject to Section 5.1(d) hereof, Profit and Loss
occurring on any day during the Fiscal Year shall be allocated to the
Holders' Book Capital Accounts at the end of such day in proportion to the
Holders' respective Book Capital Account balances at the commencement of
such day.
(d) OTHER BOOK CAPITAL ACCOUNT ADJUSTMENTS.
(i) Any allocation pursuant to Section 5.1(a), (b) or (c) above
shall be prorated for increases in each Holder's Book Capital Account
resulting from Capital Contributions, or distributions or withdrawals
from the Trust or Redemptions by the Trust occurring, during such
Fiscal Year as of the day after the Capital Contribution,
distribution, withdrawal or Redemption is accepted, made or effected
by the Trust.
(ii) For purposes of determining the Profit, Loss, and Net
Unrealized Gain or Net Unrealized Loss or any other item allocable to
any Fiscal Year, Profit, Loss, and Net Unrealized Gain or Net
Unrealized Loss and any such other item shall be determined by or on
behalf of the Trustees using any reasonable method under Code Section
706 and the Treasury Regulations thereunder.
5.2. ALLOCATION OF TAXABLE INCOME AND TAX LOSS TO TAX CAPITAL ACCOUNTS.
(a) TAXABLE INCOME AND TAX LOSS. Subject to Section 5.2(b) and Section
5.3 hereof, which shall take precedence over this Section 5.2(a), Taxable
Income or Tax Loss for any Fiscal Year shall be allocated at least annually
to the Holders' Tax Capital Accounts as follows:
(i) First, Taxable Income and Tax Loss, whether constituting
ordinary income (or loss) or capital gain (or loss), derived from the
sale or other disposition of a Tax Lot of securities or other property
shall be allocated as of the date such income, gain or loss is
recognized for federal income tax purposes solely in proportion to the
amount of unrealized appreciation (in the case of such income or
capital gain, but not in the case of any such loss) or depreciation
(in the case of any such loss, but not in the case of any such income
or capital gain) from that Tax Lot which was allocated to the Holders'
Book Capital Accounts each day that such securities or other property
was held by the Trust pursuant to Section 5.1(a) and (b) hereof; and
(ii) Second, any remaining amounts at the end of the Fiscal Year,
to the Holders in proportion to their respective daily average Book
Capital Account balances determined for the Fiscal Year of the
allocation.
(b) MATCHED INCOME OR LOSS. Notwithstanding the provisions of Section
5.2(a) hereof, Taxable Income, Tax-Exempt Income or Tax Loss accruing on
any day during the Fiscal Year constituting Matched Income or Loss, shall
be allocated daily to the Holders' Tax Capital Accounts solely in
proportion to and to the extent of corresponding allocations of Profit or
Loss to the Holders' Book Capital Accounts pursuant to the first sentence
of Section 5.1(c) hereof.
5.3. SPECIAL ALLOCATIONS TO BOOK AND TAX CAPITAL ACCOUNTS.
(a) The Designated Expenses computed for each Holder shall be
allocated separately (not included in the allocations of Matched Income or
Loss, Loss or Tax Loss) to the Book Capital Account and Tax Capital Account
of each Holder.
(b) If the Trust incurs any nonrecourse indebtedness, then allocations
of items attributable to nonrecourse indebtedness shall be made to the Tax
Capital Account of each Holder in accordance with the requirements of
Treasury Regulations Section 1.704-1(b)(4)(iv)(d).
(c) In accordance with Code Section 704(c) and the Treasury
Regulations thereunder, Taxable Income and Tax Loss with respect to any
property contributed to the capital of the Trust shall be allocated to the
Tax Capital Account of each Holder so as to take into account any variation
between the adjusted tax basis of such property to the Trust for federal
income tax purposes and such property's Fair Market Value at the time of
contribution to the Trust.
5.4. OTHER ADJUSTMENTS TO BOOK AND TAX CAPITAL ACCOUNTS.
(a) Any election or other decision relating to such allocations shall
be made by the Trustees in any manner that reasonably reflects the purpose
and intention of these procedures.
(b) Each Holder will report its share of Trust income and loss for
federal income tax purposes in accordance with the allocations effected
pursuant to Section 5.2 hereof.
5.5. TIMING OF TAX ALLOCATIONS TO BOOK AND TAX CAPITAL ACCOUNTS. Allocation
of Taxable Income, Tax-Exempt Income and Tax Loss pursuant to Section 5.2 hereof
for any Fiscal Year, unless specified above to the contrary, shall be made only
after corresponding adjustments have been made to the Book Capital Accounts of
the Holders for the Fiscal Year as provided pursuant to Section 5.1 hereof.
5.6. REDEMPTIONS DURING THE FISCAL YEAR. If a Redemption occurs prior to
the end of a Fiscal Year, the Trust will treat the Fiscal Year as ended for the
purposes of computing the redeeming Holder's distributive share of Trust items
and allocations of all items to such Holder will be made as though each Holder
were receiving its allocable share of Trust items at such time. All items so
allocated to the redeeming Holder will be subtracted from the items to be
allocated among the other non-redeeming Holders at the actual end of the Fiscal
Year. All items allocated among the redeeming and non-redeeming Holders will be
made subject to the rules of Code Sections 702, 704, 706 and 708 and the
Treasury Regulations promulgated thereunder.
ARTICLE VI
WITHDRAWALS
6.1. PARTIAL WITHDRAWALS. At any time any Holder shall be entitled to
request a withdrawal of such portion of the Interest held by such Holder as such
Holder shall request.
6.2. REDEMPTIONS. At any time a Holder shall be entitled to request a
Redemption of all of its Interest. A Holder's Interest may be redeemed at any
time during the Fiscal Year as provided in Section 6.3 hereof by a cash
distribution or, at the option of a Holder, by a distribution of a proportionate
amount except for fractional shares of each Trust asset if the Trust so agrees.
However, the Holder may be redeemed by a distribution of a proportionate amount
of the Trust's assets only at the end of a Fiscal Year. However, if the Holder
has contributed any property to the Trust other than cash, if such property
remains in the Trust at the time the Holder requests withdrawal, then such
property will be sold by the Trust prior to the time at which the Holder
withdraws from the Trust.
6.3. DISTRIBUTION IN KIND. If a withdrawing Holder receives a distribution
in kind of its proportionate part of Trust property, then unrealized income,
gain, loss or deduction attributable to such property shall be allocated among
the Holders as if there had been a disposition of the property on the date of
distribution in compliance with the requirements of Treasury Regulations Section
1.704-1(b)(2)(iv)(e).
ARTICLE VII
LIQUIDATION
7.1. LIQUIDATION PROCEDURE. Subject to Section 7.4 hereof, upon dissolution
of the Trust, the Trustees shall liquidate the assets of the Trust, apply and
distribute the proceeds thereof as follows:
(a) first to the payment of all debts and obligations of the Trust to
third parties, including without limitation the retirement of outstanding
debt, including any debt owed to Holders or their affiliates, and the
expenses of liquidation, and to the setting up of any Reserves for
contingencies which may be necessary; and
(b) then in accordance with the Holders' positive Book Capital Account
balances after adjusting Book Capital Accounts for allocations provided in
Article V hereof and in accordance with the requirements described in
Treasury Regulations Section 1.704-1(b)(2) (ii)(b)(2).
7.2. ALTERNATIVE LIQUIDATION PROCEDURE. Notwithstanding the foregoing, if
the Trustees shall determine that an immediate sale of part or all of the Trust
assets would cause undue loss to the Holders, the Trustees, in order to avoid
such loss, may, after having given notification to all the Holders, to the
extent not then prohibited by the law of any jurisdiction in which the Trust is
then formed or qualified and applicable in the circumstances, either defer
liquidation of and withhold from distribution for a reasonable time any assets
of the Trust except those necessary to satisfy the Trust's debts and obligations
or distribute the Trust's assets to the Holders in liquidation.
7.3. CASH DISTRIBUTIONS UPON LIQUIDATION. Except as provided in Section 7.2
hereof, amounts distributed in liquidation of the Trust shall be paid solely in
cash.
7.4. TREATMENT OF NEGATIVE BOOK CAPITAL ACCOUNT BALANCE. If a Holder has a
negative balance in its Book Capital Account following the liquidation of its
Interest, as determined after taking into account all capital account
adjustments for the Fiscal Year during which the liquidation occurs, then such
Holder shall restore the amount of such negative balance to the Trust by the
later of the end of the Fiscal Year or 90 days after the date of such
liquidation so as to comply with the requirements of Treasury Regulations
Section 1.704-1(b)(2)(ii)(b)(3). Such amount shall, upon liquidation, be paid to
creditors of the Trust or distributed to other Holders in accordance with their
positive Book Capital Account balances.
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