CUSTODIAN AGREEMENT
between
UBS INVESTOR PORTFOLIOS TRUST
and
INVESTORS BANK & TRUST COMPANY
UBS036.edg
TABLE OF CONTENTS
PAGE
1. Bank Appointed Custodian.......................................... 1
2. Definitions....................................................... 1
2.1 Authorized Person.............................................. 1
2.2 Board.......................................................... 1
2.3 Security....................................................... 1
2.4 Portfolio Security............................................. 2
2.5 Officers' Certificate.......................................... 2
2.6 Book-Entry System.............................................. 2
2.7 Depository..................................................... 2
2.8 Proper Instructions............................................ 2
2.9 Foreign Securities............................................. 2
2.10 Series......................................................... 2
3. Separate Accounts................................................. 3
4. Certification as to Authorized Persons............................ 3
5. Custody of Cash................................................... 3
5.1 Purchase of Securities......................................... 3
5.2 Withdrawals.................................................... 4
5.3 Distributions and Expenses of Fund............................. 4
5.4 Payment in Respect of Securities............................... 4
5.5 Repayment of Loans............................................. 4
5.6 Repayment of Cash.............................................. 4
5.7 Foreign Exchange Transactions.................................. 4
5.8 Other Authorized Payments...................................... 4
5.9 Termination.................................................... 4
6. Securities........................................................ 5
6.1 Segregation and Registration................................... 5
6.2 Voting and Proxies............................................. 5
6.3 Book-Entry System.............................................. 5
6.4 Use of a Depository............................................ 6
6.5 Use of Book-Entry System for Commercial Paper.................. 8
6.6 Use of Immobilization Programs................................. 8
6.7 Eurodollar CDs................................................. 9
PAGE
6.8 Options and Futures Transactions............................... 9
6.9 Segregated Account............................................. 10
6.10 Interest Bearing Call or Time Deposits......................... 11
6.11 Transfer of Securities......................................... 11
7. Withdrawals....................................................... 13
8. Merger, Dissolution, etc. of one or more Series of the Trust 13
9. Actions of Bank Without Prior Authorization....................... 13
10. Collection and Defaults.......................................... 14
11. Maintenance of Records........................................... 15
12. Fund Evaluation.................................................. 15
13. Concerning the Bank.............................................. 16
13.1 Performance of Duties and
Standard of Care............................................ 16
13.2 Agents and Subcustodians with Respect to Property
Held in the United States................................... 17
13.3 Duties of the Bank with Respect to Property
Held Outside of the United States........................... 17
13.4 Insurance..................................................... 20
13.5 Fees and Expenses of Bank..................................... 20
13.6 Advances by Bank............................................. 21
14. Termination...................................................... 21
15. Confidentiality.................................................. 22
16. Notices.......................................................... 22
17. Amendments....................................................... 23
18. Parties.......................................................... 23
19. Governing Law.................................................... 23
20. Counterparts..................................................... 23
21. Limitation of Liability........................................ 23
22. Entire Agreement............................................... 23
23. Attachments:...................................................
1 Schedule A - List of Series
1 Schedule B - Income Collection Standards
1 Schedule C - Fee Schedule
CUSTODIAN AGREEMENT
AGREEMENT made as of this [ ]day of February, 1996, between the UBS
INVESTOR PORTFOLIOS TRUST, an unincorporated business trust organized under the
laws of the state of New York (the "Trust") and INVESTORS BANK & TRUST COMPANY
(the "Bank").
The Trust, an open-end management investment company, (the Series of
which are listed in Schedule A herein), desires to place and maintain all of its
portfolio securities and cash in the custody of the Bank. The Bank has at least
the minimum qualifications required by Section 17(f)(1) of the Investment
Company Act of 1940, as amended (the "1940 Act"), to act as custodian of the
portfolio securities and cash of the Trust, and 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. BANK APPOINTED CUSTODIAN. The Trust hereby appoints the Bank as
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described and the Bank 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 4 hereof.
2.2 BOARD. Board will mean the Board of Trustees of the Trust.
2.3 SECURITY. The term security as used herein will have the same
meaning as when such term is used in the Securities Act of 1933, as amended,
including, without limitation, any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any profit
sharing agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of
deposit for a security, fractional undivided interest in oil, gas, or other
mineral rights, any put, call, straddle, option, or privilege on any security,
certificate of deposit, or group or index of securities (including any interest
therein or based on the value thereof), or any put, call, straddle, option, or
privilege entered into on a national securities exchange relating to a foreign
currency, or, in general, any interest or instrument commonly known as a
"security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the foregoing, and
futures, forward contracts and options thereon.
2.4 PORTFOLIO SECURITY. Portfolio Security will mean any Security
owned by the Trust.
2.5 OFFICERS' CERTIFICATE. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Trust.
2.6 BOOK-ENTRY SYSTEM. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor or successors and its nominee or nominees.
2.7 DEPOSITORY. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934, as amended
("Exchange Act"), its successor or successors and its nominee or nominees. The
term "Depository" shall further mean and include any other person authorized to
act as a depository under the 1940 Act, its successor or successors and its
nominee or nominees, specifically identified in a certified copy of a resolution
of the Board.
2.8 PROPER INSTRUCTIONS. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by two Authorized Persons
as shall have been designated in an Officers' Certificate, such instructions to
be given in such form and manner as the Bank and the Trust shall agree upon from
time to time, and (ii) instructions (which may be continuing instructions)
regarding other matters signed or initialed by such one or more persons from
time to time designated in an Officers' Certificate as having been authorized by
the Board. Oral instructions will be considered Proper Instructions if the Bank
reasonably believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Trust shall cause all
oral instructions to be promptly confirmed in writing. The Bank shall act upon
and comply with any subsequent Proper Instruction which modifies a prior
instruction and the sole obligation of the Bank with respect to any follow-up or
confirmatory instruction shall be to make reasonable efforts to detect any
discrepancy between the original instruction and such confirmation and to report
such discrepancy to the Trust. The Trust shall be responsible, at the Trust's
expense, for taking any action, including any reprocessing, necessary to correct
any such discrepancy or error, and to the extent such action requires the Bank
to act, the Trust shall give the Bank specific Proper Instructions as to the
action required. Upon receipt of an Officers' Certificate as to the
authorization by the Board accompanied by a detailed description of procedures
approved by the Trust, Proper Instructions may include communication effected
directly between electro-
mechanical or electronic devices provided that the Board and the Bank are
satisfied that such procedures afford adequate safeguards for the Trust's
assets.
2.9 FOREIGN SECURITIES. The term Foreign Securities as used herein will
have the same meaning as when such term is used in Rule 17f-5 of the 0000 Xxx.
2.10 SERIES. Series shall mean any Series or portfolio of the Trust
wherein shareholders of such Series have a pro rata interest in the assets of
that Series, but have no interest in the assets of any other Trust Series.
3. SEPARATE ACCOUNTS. The Bank will segregate the assets of each Series
or portfolio to which this Agreement relates into a separate account for each
such Series or portfolio containing the assets of such Series or portfolio (and
all investment earnings thereon). Unless the context otherwise requires, any
reference in this Agreement to any actions to be taken by the Trust shall be
deemed to refer to the Trust acting on behalf of one or more of its Series, any
reference in this Agreement to any assets of the Trust, including, without
limitation, any Portfolio Securities and cash and earnings thereon, shall be
deemed to refer only to assets of the applicable Series, any duty or obligation
of the Bank hereunder to the Trust shall be deemed to refer to duties and
obligations with respect to the individual Series and any obligation or
liability of the Trust hereunder shall be binding only with respect to the
individual Series, and shall be discharged only out of the assets of such
Series.
4. CERTIFICATION AS TO AUTHORIZED PERSONS. The Secretary or Assistant
Secretary of the Trust will at all times maintain on file with the Bank his or
her certification to the Bank, in such form as may be acceptable to the Bank, of
(i) the names and signatures of the Authorized Persons and (ii) the names of the
Board, 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. The Bank will
be entitled to rely and act upon any Officers' Certificate given to it by the
Trust which has been signed by Authorized Persons named in the most recent
certification.
5. CUSTODY OF CASH. As custodian for the Trust, the Bank will open and
maintain a separate account or accounts in the name of each Series of the Trust
or in the name of the Bank, as Custodian of the Trust, and will deposit to the
account of the Trust all of the cash of the Trust, except for cash held by a
subcustodian appointed pursuant to subsections 13.2 or 13.3 hereof, including
borrowed funds, delivered to the Bank, subject only to draft or order by the
Bank acting pursuant to the terms of this Agreement. Upon receipt by the Bank of
Proper Instructions (which may be continuing instructions) or in the case of
payments for redemptions and repurchases of outstanding shares of common stock
of the Trust, notification from the Trust's transfer agent as provided in
Section 7, requesting such payment, designating the payee or the account or
accounts to which the Bank will release funds for deposit, and stating that it
is for a purpose permitted under the terms of this Section 5, specifying the
applicable subsection, the Bank will make payments of cash held for the accounts
of the Trust, insofar as funds are available for that purpose, only as permitted
in subsections 5.1-5.9 below.
5.1 PURCHASE OF SECURITIES. Upon the purchase of securities for the
Trust, against contemporaneous receipt of such securities by the Bank registered
in the name of the Trust or in the name of, or properly endorsed and in form for
transfer to, the Bank, or a nominee of the Bank, or receipt for the account of
the Bank pursuant to the provisions of Section 6 below, each such payment to be
made at the purchase price shown on a broker's confirmation (or transaction
report in the case of Book-Entry Paper) of purchase of the securities received
by the Bank before such payment is made, as confirmed in the Proper Instructions
received by the Bank before such payment is made.
5.2 WITHDRAWALS. In such amount as may be necessary for the
withdrawal of beneficial interests in the Trust in accordance with Section 7 of
this Agreement.
5.3 DISTRIBUTIONS AND EXPENSES OF FUND. For the payment on the
account of the Trust of dividends or other distributions to investors as may
from time to time be declared by the Board, interest, taxes, management or
supervisory fees, distribution fees, shareholder servicing fees, fees of the
Bank for its services hereunder and reimbursement of the expenses and
liabilities of the Bank as provided hereunder, fees of any transfer agent, fees
for legal, accounting, and auditing services, or other operating expenses of the
Trust. Each disbursement made pursuant to this subsection and subsection 5.8
effected by wire transfer must be subject to the prior authorization of the
Trust (or an Authorized Person) from outside the United States and any such
disbursements made by the mailing of a check shall be mailed to the payee from
outside of the United States.
5.4 PAYMENT IN RESPECT OF SECURITIES. For payments, in connection
with the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Trust held by or to be delivered to the Bank.
5.5 REPAYMENT OF LOANS. To repay loans of money made to the Trust,
but, in the case of final payment, only upon redelivery to the Bank of any
Portfolio Securities pledged or hypothecated therefor and upon surrender of
documents evidencing the loan.
5.6 REPAYMENT OF CASH. To repay the cash delivered to the Trust for
the purpose of collateralizing the obligation to return to the Trust
certificates borrowed from the Trust representing Portfolio Securities, but only
upon redelivery to the Bank of such borrowed certificates.
5.7 FOREIGN EXCHANGE TRANSACTIONS. For payments in connection with
foreign exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery which may be entered into by the Bank on behalf of
the Trust upon the receipt of Proper Instructions, such Proper Instructions to
specify the currency broker or banking institution (which may be the Bank, or
any other subcustodian or agent hereunder, acting as principal) with which the
contract or option is made, and the Bank shall have no duty with respect to the
selection of such currency brokers or banking institutions with which the Trust
deals or for their failure to comply with the terms of any contract or option.
5.8 OTHER AUTHORIZED PAYMENTS. For other authorized transactions of
the Trust, or other obligations of the Trust incurred for proper Trust purposes;
provided that before making any such payment the Bank will also receive a
certified copy of a resolution of the Board signed by an Authorized Person
(other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Trust, or
specifying the amount of the obligation for which payment is to be made, setting
forth the purpose for which such obligation was incurred and declaring such
purpose to be a proper purpose of the Trust.
5.9 TERMINATION. Upon the termination of this Agreement as
hereinafter set forth pursuant to Section 8 and Section 14 of this Agreement.
6. SECURITIES.
6.1 SEGREGATION AND REGISTRATION. Except as otherwise provided
herein, and except for securities to be delivered to any subcustodian appointed
pursuant to subsections 13.2 or 13.3 hereof, the Bank as custodian, will receive
and hold pursuant to the provisions hereof, in a separate account or accounts
and physically segregated at all times from those of other persons, any and all
Portfolio Securities which may now or hereafter be delivered to it by or for the
account of the Trust. All such Portfolio Securities will be held or disposed of
by the Bank for, and subject at all times to, the instructions of the Trust
pursuant to the terms of this Agreement. Subject to the specific provisions
herein relating to Portfolio Securities that are not physically held by the
Bank, the Bank will register all Portfolio Securities (unless otherwise directed
by Proper Instructions or an Officers' Certificate), in the name of a registered
nominee of the Bank as defined in the Internal Revenue Code and any Regulations
of the Treasury Department issued thereunder, and will execute and deliver all
such certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state. The Bank will use its best efforts
to the end that the specific Portfolio Securities held by it hereunder will be
at all times identifiable.
The Trust will from time to time furnish to the Bank
appropriate instruments to enable it to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any Portfolio
Securities which may from time to time be registered in the name of the Trust.
6.2 VOTING AND PROXIES. Neither the Bank nor any nominee of the Bank
will vote any of the Portfolio Securities held hereunder, except in accordance
with Proper Instructions or an Officers' Certificate. The Bank will execute and
deliver, or cause to be executed and delivered, to the Trust all notices,
proxies and proxy soliciting materials with respect to such Portfolio
Securities, such proxies to be executed by the registered holder of such
Securities (if registered otherwise than in the name of the Trust), but without
indicating the manner in which such proxies are to be voted.
6.3 BOOK-ENTRY SYSTEM. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits of
Fund assets in the Book-Entry System, and (ii) for any subsequent changes to
such arrangements following such approval, the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the Book-Entry
System provided that such Portfolio Securities are represented in an account
("Account") of the Bank (or its agent) in such system which shall not include
any assets of the Bank (or such agent) other than assets held as a fiduciary,
custodian, or otherwise for customers;
(b) The records of the Bank (and any such agent) with respect
to the Trust's participation in the Book-Entry System through the Bank (or any
such agent) will identify by book entry Portfolio Securities which are included
with other securities deposited in the Account and shall at all times during the
regular business hours of the Bank (or such agent) be open for inspection by
duly authorized officers, employees or agents of the Trust. Where securities are
transferred to the account of each Series, the Bank shall also, by book entry or
otherwise, identify as belonging to that Series a quantity of securities in
fungible bulk of securities (i) registered in the name of the Bank or its
nominee, or (ii) shown on the Bank's account on the books of the Federal Reserve
Bank;
(c) The Bank (or its agent) shall pay for securities purchased
for the account of the Trust or shall pay cash collateral against the return of
Portfolio Securities loaned by the Trust upon (i) receipt of advice from the
Book-Entry System that such Securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Bank (or its agent) to reflect
such payment and transfer for the account of the Trust. The Bank (or its agent)
shall transfer securities sold or loaned for the account of the Trust upon
(i) receipt of advice from the Book-Entry System that
payment for securities sold or payment of the initial cash collateral against
the delivery of securities loaned by the Trust has been transferred to the
Account; and
(ii) the making of an entry on the records of the
Bank (or its agent) to reflect such transfer and payment for the account of the
Trust. Copies of all advices from the Book-Entry System of transfers of
securities for the account of the Trust shall identify the Trust, be maintained
for the Trust by the Bank and shall be provided to the Trust at its request. The
Bank shall send the Trust a confirmation, as defined by Rule 17f-4 of the 1940
Act, of any transfers to or from the account of the Trust;
(d) The Bank will promptly provide the Trust with any report
obtained by the Bank or its agent on the Book-Entry System's accounting system,
internal accounting control and procedures for safeguarding securities deposited
in the Book-Entry System; and
(e) The Bank shall be liable to the Trust for any loss or
damage to the Trust resulting from use of the Book-Entry System by reason of any
gross negligence, willful misfeasance or bad faith of the Bank or any of its
agents or of any of its or their employees or
from any reckless disregard by the Bank or any such agent of its duty to use its
best efforts to enforce such rights as it may have against the Book-Entry
System; at the election of the Trust, it shall be entitled to be subrogated for
the Bank in any claim against the Book-Entry System or any other person which
the Bank or its agent may have as a consequence of any such loss or damage if
and to the extent that the Trust has not been made whole for any loss or damage.
6.4 USE OF A DEPOSITORY. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits in
DTC or other such Depository and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officers' Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio Securities including
stock dividends, rights and other items of like nature, and to receive and remit
to the Bank on behalf of the Trust all income and other payments thereon and to
take all steps necessary and proper in connection with the collection thereof,
provided that such securities are maintained in an account which does not
include any assets of the Bank other than assets held as fiduciary, custodian or
otherwise for customers;
(b) Registration of Portfolio Securities may be made in the
name of any nominee or nominees used by such Depository;
(c) Payment for securities purchased and sold may be made
through the clearing medium employed by such Depository for transactions of
participants acting through it. Upon any purchase of Portfolio Securities,
payment will be made only upon delivery of the securities to or for the account
of the Trust and the Trust shall pay cash collateral against the return of
Portfolio Securities loaned by the Trust only upon delivery of the Securities to
or for the account of the Trust; and upon any sale of Portfolio Securities,
delivery of the Securities will be made only against payment thereof or, in the
event Portfolio Securities are loaned, delivery of Securities will be made only
against receipt of the initial cash collateral to or for the account of the
Trust;
(d) The Bank shall be liable to the Trust for any loss or
damage to the Trust resulting from use of a Depository by reason of any gross
negligence, willful misfeasance or bad faith of the Bank or its employees or
from any reckless disregard by the Bank of its duty to use its best efforts to
enforce such rights as it may have against a Depository. The Trust, at its
option, shall be entitled to be subrogated to the rights of the Bank with
respect to any claims against a Depository as a consequence of any loss, damage,
cost, expense, liability or claim if and to the extent that the Trust has not
been made whole for any such loss, damage, cost, expense, liability or claim. In
this connection, the Bank shall use its best efforts to ensure that:
(i) the Depository obtains replacement of any
certificated Portfolio Security deposited with it in the event such Security is
lost, destroyed, wrongfully taken or otherwise not available to be returned to
the Bank upon its request;
(ii) any proxy materials received by a Depository
with respect to Portfolio Securities deposited with such Depository are
forwarded immediately to the Bank for prompt transmittal to the Trust;
(iii) such Depository immediately forwards to the
Bank confirmation of any purchase or sale of Portfolio Securities and of the
appropriate book entry made by such Depository to the Trust's account;
(iv) such Depository prepares and delivers to the
Bank such records with respect to the performance of the Bank's obligations and
duties hereunder as may be necessary for the Trust to comply with the
recordkeeping requirements of Section 31(a) of the 1940 Act and the rules and
regulations thereunder; and
(v) such Depository delivers to the Bank and the
Trust all internal accounting control reports, whether or not audited by an
independent public accountant, as well as such other reports as the Trust may
reasonably request in order to verify the Portfolio Securities held by such
Depository.
6.5 USE OF BOOK-ENTRY SYSTEM FOR COMMERCIAL PAPER. Provided (i) the
Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book- Entry Paper") and (ii) for each year
following such approval the Board has received and approved the arrangements,
upon receipt of Proper Instructions and upon receipt of confirmation from an
Issuer (as defined below) that the Trust has purchased such Issuer's Book-Entry
Paper, the Bank shall issue and hold in book-entry form, on behalf of the Trust,
commercial paper issued by issuers with whom the Bank has entered into a
book-entry agreement (the "Issuers"). In maintaining its Book-Entry Paper
system, the Bank agrees that:
(a) The Bank will maintain all Book-Entry Paper held by the
Trust in an account of the Bank that includes only assets held by it for
customers.
(b) The records of the Bank with respect to the Trust's
purchase of Book- Entry Paper through the Bank will identify, by book-entry,
commercial paper belonging to the Trust which is included in the Book-Entry
Paper system and shall at all times during the regular business hours of the
Bank be open for inspection by duly authorized officers, employees or agents of
the Trust.
(c) The Bank shall pay for Book-Entry Paper purchased for the
account of the Trust upon the contemporaneous (i) receipt of advice from the
Issuer that such sale of Book- Entry Paper has been effected, and (ii) making of
an entry on the records of the Bank to reflect such payment and transfer for the
account of the Trust.
(d) The Bank shall cancel such Book-Entry Paper obligation
upon the maturity thereof upon the contemporaneous (i) receipt of advice that
payment for such Book-Entry Paper has been transferred to the Trust, and (ii)
making of an entry on the records of the Bank to reflect such payment for the
account of the Trust.
(e) The Bank shall transmit to the Trust a transaction journal
confirming each transaction in Book-Entry Paper for the account of the Trust on
the next business day following the transaction.
(f) The Bank will send to the Trust such reports on its system
of internal accounting control with respect to the Book-Entry Paper system as
the Trust may reasonably request from time to time.
6.6 USE OF IMMOBILIZATION PROGRAMS. Provided (i) the Bank has
received a certified copy of a resolution of the Board specifically approving
the maintenance of Portfolio Securities in an immobilization program operated by
a bank which meets the requirements of Section 26(a)(1) of the 1940 Act, and
(ii) for each year following such approval the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter into
such immobilization program with such bank acting as a subcustodian hereunder.
6.7 EURODOLLAR CDS. Any Portfolio Securities which are Eurodollar
CDs may be physically held by the European branch of the U.S. banking
institution that is the issuer of such Eurodollar CD (a "European Branch"),
provided that such Securities are identified on the books of the Bank as
belonging to a Series of the Trust and that the books of the Bank identify the
European Branch holding such Securities. Notwithstanding any other provision of
this Agreement to the contrary, except as stated in the first sentence of this
subsection 6.7, the Bank shall be under no other duty with respect to such
Eurodollar CDs belonging to the Trust, and shall have no liability to the Trust
or its shareholders with respect to the actions, inactions, whether negligent or
otherwise of such European Branch in connection with such Eurodollar CDs, except
for any loss or damage to the Trust resulting from the Bank's own gross
negligence, willful misfeasance or bad faith in the performance of its duties
hereunder.
6.8 OPTIONS AND FUTURES TRANSACTIONS.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter.
1. The Bank shall take action as to put options ("puts") and
call options ("calls") purchased or sold (written) by the Trust regarding escrow
or other arrangements (i) in accordance with the provisions of any agreement
entered into upon receipt of Proper Instructions between the Bank, any
broker-dealer registered under the Exchange Act and a member of the National
Association of Securities Dealers, Inc. (the "NASD"), and, if necessary, the
Trust relating to the compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange, or of any
similar organization or organizations.
2. Unless another agreement requires it to do so, the Bank
shall be under no duty or obligation to see that the Trust has deposited or is
maintaining adequate margin, if required, with any broker in connection with any
option, nor shall the Bank be under duty or obligation to present such option to
the broker for exercise unless it receives Proper Instructions from the Trust.
The Bank shall have no responsibility for the legality of any put or call
purchased
or sold on behalf of the Trust, the propriety of any such purchase or sale, or
the adequacy of any collateral delivered to a broker in connection with an
option or deposited to or withdrawn from a Segregated Account (as defined in
subsection 6.9 below). The Bank specifically, but not by way of limitation,
shall not be under any duty or obligation to: (i) periodically check or notify
the Trust that the amount of such collateral held by a broker or held in a
Segregated Account is sufficient to protect such broker of the Trust against any
loss; (ii) effect the return of any collateral delivered to a broker; or (iii)
advise the Trust that any option it holds, has or is about to expire. Such
duties or obligations shall be the sole responsibility of the Trust.
(b) Puts, Calls and Futures Traded on Commodities Exchanges.
1. The Bank shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Trust in accordance with the
provisions of any agreement among the Trust, the Bank and a Futures Commission
Merchant registered under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or any Contract
Market, as defined in the Commodity Exchange Act, or any similar organization or
organizations, regarding account deposits in connection with transactions by the
Trust.
2. The responsibilities and liabilities of the Bank as to
futures, puts and calls traded on commodities exchanges, any Futures Commission
Merchant account and the Segregated Account shall be limited as set forth in
subparagraph (a)(2) of this subsection 6.8 as if such subparagraph referred to
Futures Commission Merchants rather than brokers, and Futures and puts and calls
thereon instead of options.
6.9 SEGREGATED ACCOUNT. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of the Trust, into which Account or Accounts may be transferred upon
receipt of Proper Instructions cash and/or Portfolio Securities:
(a) in accordance with the provisions of any agreement among
the Trust, the Bank and a broker-dealer registered under the Exchange Act and a
member of the NASD or any Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract Market, or of
any similar organizations regarding escrow or other arrangements in connection
with transactions by the Trust;
(b) for the purpose of segregating cash or securities in
connection with options purchased or written by the Trust or commodity futures
purchased or written by the Trust;
(c) for the deposit of liquid assets, such as cash, U.S.
Government securities or other high grade debt obligations, having a market
value (marked to market on a daily basis) at all times equal to not less than
the aggregate purchase price due on the settlement dates of all the Trust's then
outstanding forward commitment or "when-issued" agreements relating to the
purchase of Portfolio Securities and all the Trust's then outstanding
commitments under reverse repurchase agreements entered into with broker-dealer
firms;
(d) for the purposes of compliance by the Trust with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of Segregated Accounts by registered investment
companies;
(e) for other proper corporate purposes, but only, in the case
of this clause (e), upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board, or of the Executive Committee
signed by an officer of the Trust and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such Segregated Account and
declaring such purposes to be proper corporate purposes; and
(f) assets may be withdrawn from the Segregated Account
pursuant to Proper Instructions only
(i) with respect to assets deposited in accordance
with the provisions of any agreements referenced in (a) or (b) above, in
accordance with the provisions of such agreements;
(ii) with respect to assets deposited pursuant to (c)
or (d) above, for sale or delivery to meet the Trust's obligations under
outstanding firm commitment or when- issued agreements for the purchase of
Portfolio Securities and under reverse repurchase agreements;
(iii) for exchange for other liquid assets of equal
or greater value deposited in the Segregated Account;
(iv) to the extent that the Trust's outstanding
forward commitment or when-issued agreements for the purchase of portfolio
securities or reverse repurchase agreements are sold to other parties or the
Trust's obligations thereunder are met from assets of the Trust other than those
in the Segregated Account;
(v) for delivery upon settlement of a forward
commitment agreement for the sale of Portfolio Securities; or
(vi) with respect to assets deposited pursuant to (e)
above, in accordance with the purposes of such account as set forth in Proper
Instructions.
6.10 INTEREST BEARING CALL OR TIME DEPOSITS. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by the Trust of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect to
the assets of the Trust appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of
advice or receipt evidencing the deposit, if any, as may be forwarded to the
Bank by the Deposit Bank. Such deposits shall be deemed Portfolio Securities of
the Trust and the responsibility of the Bank therefore shall be the same as and
no greater than the Bank's responsibility in respect of other Portfolio
Securities of the Trust.
6.11 TRANSFER OF SECURITIES. The Bank will transfer, exchange,
deliver or release Portfolio Securities held by it hereunder, insofar as such
Securities are available for such purpose, provided that before making any
transfer, exchange, delivery or release under this subsection the Bank will
receive Proper Instructions requesting such transfer, exchange or delivery
stating that it is for a purpose permitted under the terms of this subsection
6.11, specifying the applicable subsection, or describing the purpose of the
transaction with sufficient particularity to permit the Bank to ascertain the
applicable subsection, only
(a) upon sales of Portfolio Securities for the account of the
Trust, against contemporaneous receipt by the Bank of payment therefor in full,
each such payment to be in the amount of the sale price shown in a broker's
confirmation, DTC confirmation or such other evidence as agreed upon by the
Company and the Bank, of sale of the Portfolio Securities received by the Bank
before such payment is made, as confirmed in the Proper Instructions received by
the Bank before such payment is made;
(b) in exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of subscription,
purchase or sale or other similar rights represented by such Portfolio
Securities, or for the purpose of tendering shares in the event of a tender
offer therefor, provided however that in the event of an offer of exchange,
tender offer, or other exercise of rights requiring the physical tender or
delivery of Portfolio Securities, the Bank shall have no liability for failure
to so tender in a timely manner unless such Proper Instructions are received by
the Bank at least two business days prior to the date required for tender, and
unless the Bank (or its agent or subcustodian hereunder) has actual possession
of such Security at least two business days prior to the date of tender;
(c) upon conversion of Portfolio Securities pursuant to their
terms into other securities;
(d) for the purpose of withdrawing in-kind beneficial
interests in the Trust upon authorization from the Trust;
(e) in the case of option contracts owned by the Trust, for
presentation to the endorsing broker;
(f) when such Portfolio Securities are called, redeemed or
retired or otherwise become payable;
(g) for the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to the Trust by
any bank, including the Bank;
provided, however, that such Portfolio Securities will be released only upon
payment to the Bank for the account of the Trust of the moneys borrowed, except
that in cases where additional collateral is required to secure a borrowing
already made, and such fact is made to appear in the Proper Instructions,
further Portfolio Securities may be released for that purpose without any such
payment. In the event that any such pledged Portfolio Securities are held by the
Bank, they will be so held for the account of the lender. After notice to the
Trust from the lender, in accordance with the normal procedures of the lender,
that an event of deficiency or default on the loan has occurred, the Bank may
deliver such pledged Portfolio Securities to or for the account of the lender;
(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the Proper Instructions received
by the Bank before such payment is made;
(i) for the purpose of delivering securities lent by the Trust
to a bank or broker dealer, but only against receipt in accordance with street
delivery custom except as otherwise provided herein, of adequate collateral as
agreed upon from time to time by the Trust and the Bank, and upon receipt of
payment in connection with any repurchase agreement relating to such securities
entered into by the Trust;
(j) for other authorized transactions of the Trust or for
other proper corporate purposes; provided that before making such transfer, the
Bank will also receive a certified copy of resolutions of the Board, signed by
an authorized officer of the Trust (other than the officer certifying such
resolution) and certified by its Secretary or Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Trust or such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made; and
(k) for delivery in accordance with the provisions of any
agreement among the Trust, the Bank and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in connection with
transactions by the Trust; and
(l) upon termination of this Agreement as hereinafter set
forth pursuant to Section 8 and Section 14 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (e), (f), (g), (h) and (i) hereof securities or cash receivable in exchange
therefor shall be delivered to the Bank.
7. WITHDRAWALS. In the case of payment of assets of the Trust held by
the Bank in connection with withdrawal of beneficial interests in the Trust, the
Bank will rely on notification by the Trust's transfer agent of receipt of a
request for withdrawal before such payment is made. Payment shall be made in
accordance with the Articles and By-laws of the Trust, from assets available for
said purpose. Each withdrawal effected by wire transfer must be subject to the
prior
authorization of the Trust (or an Authorized Person) from outside the United
States; any disbursements made by the mailing of a check shall be mailed to the
payee from outside of the United States; any withdrawal effected by the transfer
of securities held in a Book-Entry system (or its equivalent) must be subject to
the prior authorization of the Trust (or an Authorized Person) from outside the
United States; and any withdrawals effected by the physical transfer of
definitive securities shall be sent to the transferee from outside the United
States.
All notices and correspondence to the Trust shall be sent to the Trust
at its office outside the United States.
8. MERGER, DISSOLUTION, ETC. OF ONE OR MORE SERIES OF THE TRUST. In the
case of the following transactions, not in the ordinary course of business,
namely, the merger of the Trust into or the consolidation of such Series of the
Trust with another investment company, the sale by the Trust of all, or
substantially all, of its assets to another investment company, or the
liquidation or dissolution of the Trust and distribution of its assets, the Bank
will deliver the Portfolio Securities held by it under this Agreement and
disburse cash only upon the order of the Trust set forth in an Officers'
Certificate, accompanied by a certified copy of a resolution of the Board
authorizing any of the foregoing transactions. Upon completion of such delivery
and disbursement and the payment of the fees, disbursements and expenses of the
Bank, this Agreement will terminate.
9. ACTIONS OF BANK WITHOUT PRIOR AUTHORIZATION. Notwithstanding
anything herein to the contrary, unless and until the Bank receives an Officers'
Certificate to the contrary, it will without prior authorization or instruction
of the Trust or the transfer agent:
(a) endorse for collection and collect on behalf of and in the
name of the Trust all checks, drafts, or other negotiable or transferable
instruments or other orders for the payment of money received by it for the
account of the Trust and hold for the account of the Trust all income,
dividends, interest and other payments or distribution of cash with respect to
the Portfolio Securities held thereunder;
(b) present for payment all coupons and other income items
held by it for the account of the Trust which call for payment upon presentation
and hold the cash received by it upon such payment for the account of the Trust;
(c) receive and hold for the account of the Trust all
securities received as a distribution on Portfolio Securities as a result of a
stock dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder.
(d) execute as agent on behalf of the Trust all necessary
ownership and other certificates and affidavits required by the Internal Revenue
Code or the regulations of the Treasury Department issued thereunder, or by the
laws of any state, now or hereafter in effect, inserting the Trust's name on
such certificates as the owner of the securities covered thereby, to the extent
it may lawfully do so and as may be required to obtain payment in respect
thereof. The Bank will execute and deliver such certificates in connection with
Portfolio Securities delivered to it or by it under this Agreement as may be
required under the provisions of the Internal Revenue
Code and any Regulations of the Treasury Department issued thereunder, or under
the laws of any State;
(e) present for payment all Portfolio Securities which are
called, redeemed, retired or otherwise become payable, and hold cash received by
it upon payment for the account of the Trust; and
(f) exchange interim receipts or temporary securities for
definitive securities.
10. COLLECTIONS AND DEFAULTS. The Bank will use all reasonable efforts
to collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Trust notice actually received by it of any call for redemption,
offer of exchange, right of subscription, reorganization or other proceedings
affecting such Securities. Absent the default of the payer of such income, the
Bank will credit the Trust with the appropriate amount if such income remains
past due beyond a specified number of days. The exact number of days may be
agreed upon and modified from time to time by written agreement between the Bank
and the Trust. Such agreement will be attached to this Agreement as Schedule B.
If Portfolio Securities upon which such income is payable are in default or
payment is refused after due demand or presentation, the Bank will notify the
Trust in writing of any default or refusal to pay within two business days from
the day on which it receives knowledge of such default or refusal. In addition,
the Bank will send the Trust a written report once each month showing any income
on any Portfolio Security held by it which is more than ten days overdue on the
date of such report.
11. MAINTENANCE OF RECORDS. The Bank will maintain records with respect
to transactions for which the Bank is responsible pursuant to the terms and
conditions of this Agreement, and in compliance with the applicable rules and
regulations of the 1940 Act and will furnish the Trust daily with a statement of
condition of the Trust, a portfolio of investments and other reports as may be
requested. The Bank will furnish to the Trust at the end of every month, and at
the close of each quarter of the Trust's fiscal year, a list of the Portfolio
Securities and the aggregate amount of cash held by it for the Trust along with
a month-end statement of condition and other reports and financial statements as
may be agreed upon from time to time between the parties. The books and records
of the Bank pertaining to its actions under this Agreement and reports by the
Bank or its independent accountants concerning its accounting system, procedures
for safeguarding securities and internal accounting controls will be open to
inspection and audit at reasonable times by officers of or auditors employed by
the Trust and will be preserved by the Bank in the manner and in accordance with
the applicable rules and regulations under the 1940 Act. The Bank recognizes
that the books and records it maintains for the Trust, pursuant to this
Agreement, are the property of the Trust and the Bank agrees to surrender such
books and records upon the request of the Trust or any Authorized Person of the
Trust. The information forwarded to the Trust daily pursuant to this Section 11
and subsection 13.3(f) shall be sufficiently detailed to enable the Trust to
maintain detailed amortized accounting and tax books on a daily basis. The
records contemplated by this Section 11 shall be forwarded to the Trust at its
Cayman Islands offices used by the Trust in compiling and maintaining its
corporate records and books of account.
12. FUND EVALUATION. The Bank shall compute and, unless otherwise
directed by the Board, determine as of the close of regular trading on the New
York Stock Exchange on each day on which said Exchange is open for unrestricted
trading and as of such other days, or hours, if any, as may be authorized by the
Board the net asset value of the Trust, such determination to be made in
accordance with the provisions of the Articles and By-laws of the Trust and
Prospectus and Statement of Additional Information relating to the Trust, as
they may from time to time be amended, and any applicable resolutions of the
Board at the time in force and applicable; and promptly notify the Trust, or
such other persons as the Trust may request of the results of such computation
and determination. In computing the net asset value hereunder, the Bank may rely
in good faith upon information furnished to it by any Authorized Person in
respect of (i) the manner of accrual of the liabilities of the Trust and in
respect of liabilities of the Trust not appearing on its books of account kept
by the Bank, (ii) reserves, if any, authorized by the Board or that no such
reserves have been authorized, (iii) the source of the quotations to be used in
computing the net asset value, (iv) the value to be assigned to any security for
which no price quotations are available, and (v) the method of computation of
the net asset value, and the Bank shall not be responsible for any loss
occasioned by such reliance or for any good faith reliance on any quotations
received from a source pursuant to (iii) above.
In addition, the Bank shall determine daily the net asset value of each
investor's interest in the Trust and shall allocate daily on a book basis and
annually or as mutually agreed on a tax basis among the investors in the Trust
on a pro rata basis all incremental investment activity.
All services and activities provided for in this Section 12 shall be
undertaken from and occur at a location outside the United States.
13. CONCERNING THE BANK.
13.1 PERFORMANCE OF DUTIES AND STANDARD OF CARE.
In performing its duties hereunder and any other duties listed on any Schedule
hereto, if any, the Bank 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, the Bank will be protected
and not be liable, and will be indemnified and held harmless for any action
taken or omitted to be taken by it in good faith reliance upon the terms of this
Agreement, any Officers' Certificate, Proper Instructions, resolution of the
Board, telegram, notice, request, certificate or other instrument reasonably
believed by the Bank to be genuine and for any other loss to the Trust except in
the case of its gross negligence, willful misfeasance or bad faith in the
performance of its duties or reckless disregard of its obligations and duties
hereunder.
The Bank will be under no duty or obligation to inquire into and will
not be liable for:
(a) the validity of the issue of any Portfolio Securities
purchased by or for the Trust, the legality of the purchases thereof or the
propriety of the price incurred therefor;
(b) the legality of any sale of any Portfolio Securities by or
for the Trust or the propriety of the amount for which the same are sold;
(c) the legality of an issue or sale of beneficial interests
in the Trust;
(d) the legality of the withdrawal of any beneficial interests
in the Trust;
(e) the legality of the declaration of any dividend by the
Trust or the legality of the distribution of any Portfolio Securities as payment
in kind of such dividend; and
(f) any property or moneys of the Trust unless and until
received by it or its agent, and any such property or moneys delivered or paid
by it pursuant to the terms hereof.
Moreover, the Bank will not be under any duty or obligation to
ascertain whether any Portfolio Securities at any time delivered to or held by
it for the account of the Trust are such as may properly be held by the Trust
under the provisions of its Articles, By-laws, any federal or state statutes or
any rule or regulation of any governmental agency.
Notwithstanding anything in this Agreement to the contrary, in no event
shall the Bank be liable hereunder or to any third party for any losses or
damages of any kind resulting from acts of God, earthquakes, fires, floods,
storms or other disturbances of nature, epidemics, strikes, riots,
nationalization, expropriation, currency restrictions, acts of war, civil war or
terrorism, insurrection, nuclear fusion, fission or radiation, the interruption,
loss or malfunction of 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 the Bank's own gross
negligence. The Bank agrees however, to maintain adequate backup facilities and
disaster recovery programs in an effort to minimize disruption of service caused
by any of the conditions noted above.
13.2 AGENTS AND SUBCUSTODIANS WITH RESPECT TO PROPERTY OF THE TRUST
HELD IN THE UNITED STATES. The Bank, upon written consent of the Board, may
employ agents in the performance of its duties hereunder and shall be
responsible for the acts and omissions of such agents as if performed by the
Bank hereunder. Without limiting the foregoing, certain duties of the Bank
hereunder may be performed by one or more affiliates of the Bank.
AT THE REQUEST OF THE TRUST, AND Upon receipt of Proper Instructions,
the Bank will employ subcustodians, designated by the Trust, provided that any
such subcustodian meets at least the minimum qualifications required by Section
17(f)(1) of the 1940 Act to act as a custodian of the Trust's assets with
respect to property of the Trust held in the United States, and has previously
been approved by the Board. The Bank shall have no liability to the Trust or any
other person by reason of any act or omission of any such subcustodian and the
Trust shall indemnify the Bank and hold it harmless from and against any and all
actions, suits and claims, arising directly or indirectly out of the performance
of any such subcustodian. Upon request of the Bank, the Trust shall assume the
entire defense of any action, suit, or claim subject to the foregoing indemnity.
The Trust shall pay all fees and expenses of any such subcustodian.
13.3 DUTIES OF THE BANK WITH RESPECT TO PROPERTY OF THE TRUST HELD
OUTSIDE OF THE UNITED STATES.
(a) APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Trust hereby
authorizes and instructs the Bank to employ as sub-custodians for the Trust's
Foreign Securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated by
the Board (each, a "Selected Foreign Sub-Custodian"). Upon receipt of Proper
Instructions, together with a certified resolution of the Board, the Bank and
the Trust may agree to designate additional foreign banking institutions and
foreign securities depositories to act as Selected Foreign Sub-Custodians
hereunder. Upon receipt of Proper Instructions, the Trust may instruct the Bank
to cease the employment of any one or more such Selected Foreign Sub-Custodians
for maintaining custody of the Trust's assets, and the Bank shall so cease to
employ such sub-custodian as soon as alternate custodial arrangements have been
implemented.
(b) FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise
be agreed upon in writing by the Bank and the Trust, assets of the Trust shall
be maintained in foreign securities depositories that qualify as eligible
foreign custodians under rule 17f-5 of the 1940 Act, pursuant to written
agreement between such depositories and the Bank. Where possible, such
arrangements shall include entry into agreements containing the provisions set
forth in subparagraph (d) hereof. Notwithstanding the foregoing, except as may
otherwise be agreed upon in writing by the Bank and the Trust, the Trust
authorizes the deposit in Euro-clear, the securities clearance and depository
facilities operated by Xxxxxx Guaranty Trust Company of New York in Brussels,
Belgium, of Foreign Securities eligible for deposit therein and to utilize such
securities depository in connection with settlements of purchases and sales of
securities and deliveries and returns of securities, until notified to the
contrary pursuant to subparagraph (a) hereunder.
(c) SEGREGATION OF SECURITIES. The Bank shall identify on its
books as belonging to the Trust the Foreign Securities held by each Selected
Foreign Sub-Custodian. Each agreement pursuant to which the Bank employs a
foreign banking institution shall require that such institution establish a
custody account for the Bank and hold in that account, Foreign Securities and
other assets of the Trust, and, in the event that such institution deposits
Foreign Securities in a foreign securities depository, that it shall identify on
its books as belonging to the Bank the securities so deposited.
(d) AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each of the
agreements pursuant to which a foreign banking institution holds assets of the
Trust (each, a "Foreign Sub- Custodian Agreement") shall be substantially in the
form previously made available to the Trust and shall provide that: (a) the
Trust's assets will not be subject to any right, charge, security interest, lien
or claim of any kind in favor of the foreign banking institution or its
creditors or agent, except a claim of payment for their safe custody or
administration (including, without limitation, any fees or taxes payable upon
transfers or reregistration of securities); (b) beneficial ownership of the
Trust's assets will be freely transferable without the payment of money or value
other than for custody or administration (including, without limitation, any
fees or taxes payable upon transfers or reregistration of securities); (c)
adequate records will be maintained identifying the assets as belonging to Bank;
(d) officers of or auditors employed by, or other representatives of the Bank,
including to the extent permitted under applicable law, the independent public
accountants for the Trust, will be given access to the books and records of the
foreign banking institution relating to its actions under its agreement with the
Bank; and (e) assets of the Trust held by the Selected Foreign Sub-Custodian
will be subject only to the instructions of the Bank or its agents.
(e) ACCESS OF INDEPENDENT ACCOUNTANTS OF THE TRUST. Upon
request of the Trust, the Bank will use its best efforts to arrange for the
independent accountants of the Trust to be afforded access to the books and
records of any foreign banking institution employed as a Selected Foreign
Sub-Custodian insofar as such books and records relate to the performance of
such foreign banking institution under its Foreign Sub-Custodian Agreement.
(f) REPORTS BY BANK. The Bank will supply to the Trust from
time to time, as mutually agreed upon, statements in respect of the securities
and other assets of the Trust held by Selected Foreign Sub-Custodians, including
but not limited to an identification of entities having possession of the
Foreign Securities and other assets of the Trust.
(g) TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. Transactions with
respect to the assets of the Trust held by a Selected Foreign Sub-Custodian
shall be effected pursuant to Proper Instructions from the Trust to the Bank and
shall be effected in accordance with the applicable Foreign Sub-Custodian
Agreement. If at any time any Foreign Securities shall be registered in the name
of the nominee of the Selected Foreign Sub-Custodian, the Trust agrees to hold
any such nominee harmless from any liability by reason of the registration of
such securities in the name of such nominee.
Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for Foreign Securities received for the account of the
Trust and delivery of Foreign Securities maintained for the account of the Trust
may be effected in accordance with the customary established securities trading
or securities processing practices and procedures in the jurisdiction or market
in which the transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor (or an agent for
such purchaser or dealer) against a receipt with the expectation of receiving
later payment for such securities from such purchaser or dealer.
In connection with any action to be taken with respect to the Foreign
Securities held hereunder, including, without limitation, the exercise of any
voting rights, subscription rights, redemption rights, exchange rights,
conversion rights or tender rights, or any other action in connection with any
other right, interest or privilege with respect to such Securities
(collectively, the "Rights"), the Bank shall promptly transmit to the Trust such
information in connection therewith as is made available to the Bank by the
Foreign Sub-Custodian, and shall promptly forward to the applicable Foreign
Sub-Custodian any instructions, forms or certifications with respect to such
Rights, and any instructions relating to the actions to be taken in connection
therewith, as the Bank shall receive from the Trust pursuant to Proper
Instructions. Notwithstanding the foregoing, the Bank shall have no further duty
or obligation with respect to such Rights, including, without limitation, the
determination of whether the Trust is entitled to participate in such Rights
under applicable U.S. and foreign laws, or the determination of whether any
action proposed to be taken with respect to such Rights by the Trust or by the
applicable
Foreign Sub-Custodian will comply with all applicable terms and conditions of
any such Rights or any applicable laws or regulations, or market practices
within the market in which such action is to be taken or omitted.
(h) LIABILITY OF SELECTED FOREIGN SUB-CUSTODIANS. Each Foreign
Sub- Custodian Agreement with a foreign banking institution shall require the
institution to exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Bank and each Fund from and against certain
losses, damages, costs, expenses, liabilities or claims arising out of or in
connection with the institution's performance of such obligations, all as set
forth in the applicable Foreign Sub-Custodian Agreement. The Trust acknowledges
that the Bank, as a participant in Euro-clear, is subject to the Terms and
Conditions Governing the Euro-Clear System, a copy of which has been made
available to the Trust. The Trust acknowledges that pursuant to such Terms and
Conditions, Xxxxxx Guaranty Brussels shall have the sole right to exercise or
assert any and all rights or claims in respect of actions or omissions of, or
the bankruptcy or insolvency of, any other depository, clearance system or
custodian utilized by Euro-clear in connection with the Trust's securities and
other assets.
(i) LIABILITY OF BANK. The Bank shall have no more or less
responsibility or liability on account of the acts or omissions of any Selected
Foreign Sub-Custodian employed hereunder than any such Selected Foreign
Sub-Custodian has to the Bank provided that this provision shall not protect the
Bank in the event of the Bank's own negligence or bad faith and, without
limiting the foregoing, the Bank shall not be liable for any loss, damage, cost,
expense, liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism, political risk (including,
but not limited to, exchange control restrictions, confiscation, insurrection,
civil strife or armed hostilities) other losses due to Acts of God, nuclear
incident or any loss where the Selected Foreign Sub-Custodian has otherwise
exercised reasonable care.
(j) MONITORING RESPONSIBILITIES. The Bank, shall furnish at
the organizational meeting of the Board and annually thereafter to the Trust,
information concerning the Selected Foreign Sub-Custodians employed hereunder
for use by the Trust in evaluating such Selected Foreign Sub-Custodians to
ensure compliance with the requirements of Rule 17f-5 of the 1940 Act. In
addition, the Bank will promptly inform the Trust in the event that the Bank is
notified by a Selected Foreign Sub-Custodian that there appears to be a
substantial likelihood that its shareholders' equity will decline below $200
million (U.S. dollars or the equivalent thereof) or that its shareholders'
equity has declined below $200 million (in each case computed in accordance with
generally accepted U.S. accounting principles) or any other capital adequacy
test applicable to it by exemptive order, or if the Bank has actual knowledge of
any material loss of the assets of the Trust held by a Foreign Sub-Custodian. In
addition the Bank will, upon request by the Trust, furnish shareholder equity
reports to the Trust. The Bank will not add to or otherwise modify the schedule
of foreign sub-custodians without appropriate notification to the Trust,
including information concerning new or proposed foreign sub-custodians to
ensure compliance with the requirements of rule 17f-5 of the 1940 Act.
(k) TAX LAW. The Bank shall have no responsibility or
liability for any obligations now or hereafter imposed on the Trust or the Bank
as custodian of the Trust by the
tax laws of any jurisdiction, and it shall be the responsibility of the Trust to
notify the Bank of the obligations imposed on the Trust or the Bank as the
custodian of the Trust by the tax law of any non-U.S. jurisdiction, including
responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Trust with respect to any claim for exemption
or refund under the tax law of jurisdictions for which the Trust has provided
such information.
13.4 INSURANCE. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Trust held by it as it uses
in respect of its own similar property but it need not maintain any special
insurance for the benefit of the Trust.
13.5. FEES AND EXPENSES OF BANK. The Trust will pay or reimburse the
Bank from time to time for any transfer taxes payable upon transfer of Portfolio
Securities made hereunder, and for all necessary proper disbursements, expenses
and charges made or incurred by the Bank in the performance of this Agreement
(including any duties listed on any Schedule hereto, if any) including any
indemnities for any loss, liabilities or expense to the Bank as provided above.
For the services rendered by the Bank hereunder, the Trust will pay to the Bank
such compensation or fees at such rate and at such times as shall be agreed upon
in writing by the parties from time to time. The Bank will also be entitled to
reimbursement by the Trust for all reasonable expenses incurred in conjunction
with termination of this Agreement.
13.6 ADVANCES BY BANK. The Bank may, in its sole discretion, advance
funds on behalf of the Trust to make any payment permitted by this Agreement
upon receipt of any proper authorization required by this Agreement for such
payments by the Trust. Should such a payment or payments, with advanced funds,
result in an overdraft (due to insufficiencies of the Trust's account with the
Bank, or for any other reason) this Agreement deems any such overdraft or
related indebtedness, a loan made by the Bank to the Trust payable on demand and
bearing interest at the current rate charged by the Bank for such loans unless
the Trust shall provide the Bank with agreed upon compensating balances. The
Trust agrees that the Bank shall have a continuing lien and security interest to
the extent of any overdraft or indebtedness, in and to any property at any time
held by it for the Trust's benefit or in which the Trust has an interest and
which is then in the Bank's possession or control (or in the possession or
control of any third party acting on the Bank's behalf). The Trust authorizes
the Bank, in its sole discretion, at any time to charge any overdraft or
indebtedness, together with interest due thereon against any balance of account
standing to the credit of the Trust on the Bank's books. The Bank agrees to
credit the Trust for interest on any cash balances left uninvested at the Bank.
The Bank will present an accounting of all interest owed by the Trust on
overdrafts and to the Trust on uninvested cash balances on a monthly basis with
its xxxx for custody services.
14. TERMINATION.
(a) This Agreement may be terminated at any time after one
year from the date of this Agreement 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; provided,
however, that the effective date of such termination may be postponed to a date
not more than ninety days from the date of delivery of such notice (i) by the
Bank in order to prepare for the transfer by the Bank of all of the assets of
the Trust held hereunder, and (ii) by the Trust in order to give the Trust an
opportunity to make suitable arrangements for a successor custodian. The Trust
may, however, immediately terminate this Agreement if a conservator or receiver
is appointed for the Bank by the Commonwealth of Massachusetts, Division of
Banks or upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction. At any time after the
termination of this Agreement, the Trust will, at its request, have access to
the records of the Bank relating to the performance of its duties as custodian.
(b) In the event of the termination of this Agreement, the
Bank will immediately upon receipt or transmittal, as the case may be, of notice
of termination, commence and prosecute diligently to completion the transfer of
all cash and the delivery of all Portfolio Securities duly endorsed and all
records maintained under Section 11 to the successor custodian when appointed by
the Trust. The obligation of the Bank to deliver and transfer over the assets of
the Trust held by it directly to such successor custodian will commence as soon
as such successor is appointed and will continue until completed as aforesaid.
If the Trust does not select a successor custodian within ninety (90) days from
the date of delivery of notice of termination the Bank may, subject to the
provisions of subsection 14(c), deliver the Portfolio Securities and cash of the
Trust held by the Bank to a bank or trust company of its own selection which
meets the requirements of Section 17(f)(1) of the 1940 Act and has a reported
capital, surplus and undivided profits aggregating not less than $2,000,000, to
be held as the property of the Trust under terms similar to those on which they
were held by the Bank, whereupon such bank or trust company so selected by the
Bank will become the successor custodian of such assets of the Trust with the
same effect as though selected by the Board.
(c) Prior to the expiration of ninety (90) days after notice
of termination has been given, the Trust may furnish the Bank with an order of
the Trust advising that a successor custodian cannot be found willing and able
to act upon reasonable and customary terms and that there has been submitted to
the investors of the Trust the question of whether the Trust will be liquidated
or will function without a custodian for the assets of the Trust held by the
Bank. In that event the Bank will deliver the Portfolio Securities and cash of
the Trust held by it, subject as aforesaid, in accordance with one of such
alternatives which may be approved by the requisite vote of investors, upon
receipt by the Bank of a copy of the minutes of the meeting of investors at
which action was taken, certified by the Trust's Secretary and an opinion of
counsel to the Trust in form and content satisfactory to the Bank.
15. CONFIDENTIALITY. Both parties hereto agree than 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.
16. 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:
UBS INVESTORS PORTFOLIOS TRUST c/o Signature Financial Group (Cayman) Limited
P.O. Box 2494
Elizabethan Square
Xxxxxx Town, Grand Cayman
Cayman Islands, British West Indies
with copies to:
Union Bank of Switzerland, New York Branch
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn.: Xxxxxxx X. Xxxxxxxx
and
Union Bank of Switzerland, New York Branch
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn.: Xxx Xxxxxxxx
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxx
or at such other place as such party may from time to time designate in writing.
17. 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, such alteration or amendment will be authorized and approved by its
Board.
18. PARTIES. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Trust
without the written consent of the Bank or by the Bank without the written
consent of the Trust, authorized and approved by its Board; and provided further
that termination proceedings pursuant to Section 14 hereof will not be deemed to
be an assignment within the meaning of this provision.
19. GOVERNING LAW. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
20. 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.
21. LIMITATION OF LIABILITY. A copy of the Declaration of Trust of the
Trust is on file with the Secretary of the Trust and notice is hereby given that
this Agreement has been executed on behalf of the Trust by an officer of the
Trust as an officer and not individually and the obligations of the Trust
arising out of this Agreement are not binding upon any of the trustees, officers
or investors of the Trust individually but are binding only upon the assets and
property of the Trust.
22. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supercedes and terminates, as of the date hereof, all
prior agreements between the Bank and the Trust, whether written or oral,
relating to the custody of the Trust's assets.
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.
UBS INVESTOR PORTFOLIOS TRUST
By:
Name:
Title:
ATTEST:______________________
INVESTORS BANK & TRUST COMPANY
By:
Name:
Title:
ATTEST:______________________
SCHEDULE A
UBS BOND PORTFOLIO
UBS U.S. EQUITY PORTFOLIO
UBS INTERNATIONAL EQUITY PORTFOLIO
