EXHIBIT (g)
TAX-MANAGED VALUE PORTFOLIO
BOSTON INCOME PORTFOLIO
March 15, 2001
Tax-Managed Value Portfolio and Boston Income Portfolio each hereby adopts and
agrees to become a party to the attached Master Custodian Agreement between the
▇▇▇▇▇ ▇▇▇▇▇ Hub Portfolios and Investors Bank & Trust Company. Enclosed is an
amended Appendix I to the Extension Agreement dated August 31, 2000.
TAX-MANAGED VALUE PORTFOLIO
BOSTON INCOME PORTFOLIO
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
President
Accepted and agreed to:
INVESTORS BANK & TRUST COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Title
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Director
APPENDIX I
Effective March 15, 2001
FUND PARTIES TO AGREEMENTS REFERENCED
IN PARAGRAPHS 1 AND 2
▇▇▇▇▇ ▇▇▇▇▇ Advisers Senior-Floating-Rate Fund ▇▇▇▇▇ ▇▇▇▇▇ Mutual Funds Trust
▇▇▇▇▇ ▇▇▇▇▇ California Municipal Income Trust ▇▇▇▇▇ ▇▇▇▇▇ New Jersey Municipal Income Trust
▇▇▇▇▇ ▇▇▇▇▇ Florida Municipal Income Trust ▇▇▇▇▇ ▇▇▇▇▇ New York Municipal Income Trust
▇▇▇▇▇ ▇▇▇▇▇ Growth Trust ▇▇▇▇▇ ▇▇▇▇▇ Ohio Municipal Income Trust
▇▇▇▇▇ ▇▇▇▇▇ Income Fund of Boston ▇▇▇▇▇ ▇▇▇▇▇ Pennsylvania Municipal Income Trust
▇▇▇▇▇ ▇▇▇▇▇ Institutional Senior Floating-Rate Fund ▇▇▇▇▇ ▇▇▇▇▇ Prime Rate Reserves
▇▇▇▇▇ ▇▇▇▇▇ Investment Trust ▇▇▇▇▇ ▇▇▇▇▇ Senior Income Trust
▇▇▇▇▇ ▇▇▇▇▇ Massachusetts Municipal Income Trust ▇▇▇▇▇ ▇▇▇▇▇ Series Trust
▇▇▇▇▇ ▇▇▇▇▇ Michigan Municipal Income Trust ▇▇▇▇▇ ▇▇▇▇▇ Special Investment Trust
▇▇▇▇▇ ▇▇▇▇▇ Municipal Income Trust ▇▇▇▇▇ ▇▇▇▇▇ Variable Trust
▇▇▇▇▇ ▇▇▇▇▇ Municipals Trust EV Classic Senior Floating-Rate Fund
▇▇▇▇▇ ▇▇▇▇▇ Municipals Trust II ▇▇▇▇▇ ▇▇▇▇▇ Medallion Funds Ltd.
FUND PARTIES TO AGREEMENT REFERENCED
IN PARAGRAPHS 1 AND 3
Alabama Municipals Portfolio Michigan Municipals Portfolio
Arizona Municipals Portfolio Minnesota Municipals Portfolio
Arkansas Municipals Portfolio Mississippi Municipals Portfolio
Asian Small Companies Portfolio Missouri Municipals Portfolio
Boston Income Portfolio National Limited Maturity Municipals Portfolio
California Limited Maturity Municipals Portfolio National Municipals Portfolio
California Municipals Portfolio New Jersey Limited Maturity Municipals Portfolio
Capital Appreciation Portfolio New Jersey Municipals Portfolio
Capital Growth Portfolio New York Limited Maturity Municipals Portfolio
Cash Management Portfolio New York Municipals Portfolio
Colorado Municipals Portfolio North Carolina Municipals Portfolio
Connecticut Municipals Portfolio Ohio Limited Maturity Municipals Portfolio
Emerging Markets Portfolio Ohio Municipals Portfolio
Floating Rate Portfolio Oregon Municipals Portfolio
Florida Insured Municipals Portfolio Pennsylvania Limited Maturity Municipals Portfolio
Florida Limited Maturity Municipals Portfolio Pennsylvania Municipals Portfolio
Florida Municipals Portfolio Rhode Island Municipals Portfolio
Georgia Municipals Portfolio Senior Debt Portfolio
Government Obligations Portfolio Small Company Growth Portfoli
Greater China Growth Portfolio South Asia Portfolio
Growth Portfolio South Carolina Municipals Portfolio
Growth & Income Portfolio Special Equities Portfolio
Hawaii Municipals Portfolio Strategic Income Portfolio
High Income Portfolio Tax-Managed Emerging Growth Portfolio
High Yield Municipals Portfolio Tax-Managed Growth Portfolio
Information Age Portfolio Tax-Managed International Growth Portfolio
Investment Grade Income Portfolio Tax-Managed Value Portfolio
Kansas Municipals Portfolio Tennessee Municipals Portfolio
Kentucky Municipals Portfolio Texas Municipals Portfolio
Louisiana Municipals Portfolio Utilities Portfolio
Maryland Municipals Portfolio Virginia Municipals Portfolio
Massachusetts Limited Maturity Municipals Portfolio West Virginia Municipals Portfolio
Massachusetts Municipals Portfolio Worldwide Health Sciences Portfolio
Massachusetts Municipals Portfolio
MASTER CUSTODIAN AGREEMENT
between
▇▇▇▇▇ ▇▇▇▇▇ HUB PORTFOLIOS
and
INVESTORS BANK & TRUST COMPANY
TABLE OF CONTENTS
-----------------
1. Definitions.........................................................1-2
2. Employment of Custodian and Property to be Held by It...............2-3
3. Duties of the Custodian with Respect to
Property of the Trust.................................................3
A. Safekeeping and Holding of Property...............................3
B. Delivery of Securities..........................................3-5
C. Registration of Securities........................................6
D. Bank Accounts.....................................................6
E. Payments for Interests, or Increases in Interests,
in the Trust...................................................6
F. Investment and Availability of Federal Funds......................6
G. Collections.....................................................6-7
H. Payment of Trust Monies.........................................7-8
I. Liability for Payment in Advance of
Receipt of Securities Purchased.................................8-9
J. Payments for Repurchases or Redemptions
of Interests of the Trust.........................................9
K. Appointment of Agents by the Custodian............................9
L. Deposit of Trust Portfolio Securities in Securities
Systems ....................................................9-11
M. Deposit of Trust Commercial Paper in an Approved
Book-Entry System for Commercial Paper.....................11-12
▇. ▇▇▇▇▇▇▇▇▇▇ Account...............................................13
O. Ownership Certificates for Tax Purposes..........................13
P. Proxies..........................................................13
Q. Communications Relating to Trust Portfolio ......................13
Securities
i
R. Exercise of Rights; Tender Offers.............................14
S. Depository Receipts...........................................14
T. Interest Bearing Call or Time Deposits.....................14-15
U. Options, Futures Contracts and Foreign
Currency Transactions......................................15-16
V. Actions Permitted Without Express Authority...................16
W. Advances by the Bank..........................................16
4. Duties of Bank with Respect to Books of Account and
Calculations of Net Asset Value......................................17
5. Records and Miscellaneous Duties..................................17-18
6. Opinion of Trust's Independent Public Accountants....................18
7. Compensation and Expenses of Bank....................................18
8. Responsibility of Bank............................................18-19
9. Persons Having Access to Assets of the Trust.........................19
10. Effective Period, Termination and Amendment;
Successor Custodian...............................................19-20
11. Interpretive and Additional Provisions...............................20
12. Notices..............................................................20
13. Massachusetts Law to Apply...........................................20
14. Adoption of the Agreement by the Trust...............................21
ii
MASTER CUSTODIAN AGREEMENT
This Agreement is made between each investment company advised by Boston
Management and Research which has adopted this Agreement in the manner provided
herein and Investors Bank & Trust Company (hereinafter called "Bank",
"Custodian" and "Agent"), a trust company established under the laws of
Massachusetts with a principal place of business in Boston, Massachusetts.
Whereas, each such investment company is registered under the Investment
Company Act of 1940 and has appointed the Bank to act as Custodian of its
property and to perform certain duties as its Agent, as more fully hereinafter
set forth; and
Whereas, the Bank is willing and able to act as each such investment
company's Custodian and Agent, subject to and in accordance with the provisions
hereof;
Now, therefore, in consideration of the premises and of the mutual
covenants and agreements herein contained, each such investment company and the
Bank agree as follows:
1. Definitions
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
(a) "Trust" shall mean the investment company which has adopted this
Agreement.
(b) "Board" shall mean the board of trustees of the Trust.
(c) "The Depository Trust Company", a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities Exchange
Act of 1934 which acts as a securities depository and which has been
specifically approved as a securities depository for the Trust by the Board.
(d) "Participants Trust Company", a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities Exchange
Act of 1934 which acts as a securities depository and which has been
specifically approved as a securities depository for the Trust by the Board.
(e) "Approved Clearing Agency" shall mean any other domestic clearing
agency registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act of 1934 which acts as a securities depository but
only if the Custodian has received a certified copy of a resolution of the Board
approving such clearing agency as a securities depository for the Trust.
(f) "Federal Book-Entry System" shall mean the book-entry system referred
to in Rule 17f-4(b) under the Investment Company Act of 1940 for United States
and federal agency securities (i.e., as provided in Subpart O of Treasury
Circular No. 300, 31 CFR 306, Subpart B of 31 CFR Part 350, and the book-entry
regulations of federal agencies substantially in the form of Subpart O).
(g) "Approved Foreign Securities Depository" shall mean a foreign
securities depository or clearing agency referred to in Rule 17f-4 under the
Investment Company Act of 1940 for foreign securities but only if the Custodian
has received a certified copy of a resolution of the Board approving such
depository or clearing agency as a foreign securities depository for the Trust.
1
(h) "Approved Book-Entry System for Commercial Paper" shall mean a system
maintained by the Custodian or by a subcustodian employed pursuant to Section 2
hereof for the holding of commercial paper in book-entry form but only if the
Custodian has received a certified copy of a resolution of the Board approving
the participation by the Trust in such system.
(i) The Custodian shall be deemed to have received "proper instructions" in
respect of any of the matters referred to in this Agreement upon receipt of
written or facsimile instructions signed by such one or more person or persons
as the Board shall have from time to time authorized to give the particular
class of instructions in question. Different persons may be authorized to give
instructions for different purposes. A certified copy of a resolution of the
Board may be received and accepted by the Custodian as conclusive evidence of
the authority of any such person to act and may be considered as in full force
and effect until receipt of written notice to the contrary. Such instructions
may be general or specific in terms and, where appropriate, may be standing
instructions. Unless the resolution delegating authority to any person or
persons to give a particular class of instructions specifically requires that
the approval of any person, persons or committee shall first have been obtained
before the Custodian may act on instructions of that class, the Custodian shall
be under no obligation to question the right of the person or persons giving
such instructions in so doing. Oral instructions will be considered proper
instructions if the Custodian 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 confirmed in
writing. The Trust authorizes the Custodian to tape record any and all
telephonic or other oral instructions given to the Custodian. Upon receipt of a
certificate signed by two officers of the Trust as to the authorization by the
President and the Treasurer of the Trust accompanied by a detailed description
of the communication procedures approved by the President and the Treasurer of
the Trust, "proper instructions" may also include communications effected
directly between electromechanical or electronic devices provided that the
President and Treasurer of the Trust and the Custodian are satisfied that such
procedures afford adequate safeguards for the Trust's assets. In performing its
duties generally, and more particularly in connection with the purchase, sale
and exchange of securities made by or for the Trust, the Custodian may take
cognizance of the provisions of the governing documents and registration
statement of the Trust as the same may from time to time be in effect (and
resolutions or proceedings of the holders of interests in the Trust or the
Board), but, nevertheless, except as otherwise expressly provided herein, the
Custodian may assume unless and until notified in writing to the contrary that
so-called proper instructions received by it are not in conflict with or in any
way contrary to any provisions of such governing documents and registration
statement, or resolutions or proceedings of the holders of interests in the
Trust or the Board.
(j) The term "Vote" when used with respect to the Board or the Holders of
Interests in the Trust shall include a vote, resolution, consent, proceeding and
other action taken by the Board or Holders in accordance with the Declaration of
Trust or By-Laws of the Trust.
2. Employment of Custodian and Property to be Held by It
The Trust hereby appoints and employs the Bank as its Custodian and Agent
in accordance with and subject to the provisions hereof, and the Bank hereby
accepts such appointment and employment. The Trust agrees to deliver to the
Custodian all securities, participation interests, cash and other assets owned
by it, and all payments of income, payments of principal and capital
distributions and adjustments received by it with respect to all securities and
participation interests owned by the Trust from time to time, and the cash
consideration received by it from time to time in exchange for an interest in
the Trust or for an increase in such an interest. The Custodian shall not be
responsible for any property of the Trust held by the Trust and not delivered by
the Trust to the Custodian. The Trust will also deliver to the Bank from time to
time copies of its currently effective declaration of trust, by-laws,
2
registration statement and placement agent agreement with its placement agent,
together with such resolutions, and other proceedings of the Trust as may be
necessary for or convenient to the Bank in the performance of its duties
hereunder.
The Custodian may from time to time employ one or more subcustodians to
perform such acts and services upon such terms and conditions as shall be
approved from time to time by the Board. Any such subcustodian so employed by
the Custodian shall be deemed to be the agent of the Custodian, and the
Custodian shall remain primarily responsible for the securities, participation
interests, moneys and other property of the Trust held by such subcustodian. Any
foreign subcustodian shall be a bank or trust company which is an eligible
foreign custodian within the meaning of Rule 17f-5 under the Investment Company
Act of 1940, and the foreign custody arrangements shall be approved by the Board
and shall be in accordance with and subject to the provisions of said Rule. For
the purposes of this Agreement, any property of the Trust held by any such
subcustodian (domestic or foreign) shall be deemed to be held by the Custodian
under the terms of this Agreement.
3. Duties of the Custodian with Respect to Property of the Trust
A. Safekeeping and Holding of Property The Custodian shall keep safely
all property of the Trust and on behalf of the Trust shall from time
to time receive delivery of Trust property for safekeeping. The
Custodian shall hold, earmark and segregate on its books and records
for the account of the Trust all property of the Trust, including all
securities, participation interests and other assets of the Trust (1)
physically held by the Custodian, (2) held by any subcustodian
referred to in Section 2 hereof or by any agent referred to in
Paragraph K hereof, (3) held by or maintained in The Depository Trust
Company or in Participants Trust Company or in an Approved Clearing
Agency or in the Federal Book-Entry System or in an Approved Foreign
Securities Depository, each of which from time to time is referred to
herein as a "Securities System", and (4) held by the Custodian or by
any subcustodian referred to in Section 2 hereof and maintained in any
Approved Book-Entry System for Commercial Paper.
B. Delivery of Securities The Custodian shall release and deliver
securities or participation interests owned by the Trust held (or
deemed to be held) by the Custodian or maintained in a Securities
System account or in an Approved Book-Entry System for Commercial
Paper account only upon receipt of proper instructions, which may be
continuing instructions when deemed appropriate by the parties, and
only in the following cases:
1) Upon sale of such securities or participation interests for
the account of the Trust, but only against receipt of payment
therefor; if delivery is made in Boston or New York City, payment
therefor shall be made in accordance with generally accepted
clearing house procedures or by use of Federal Reserve Wire
System procedures; if delivery is made elsewhere payment therefor
shall be in accordance with the then current "street delivery"
custom or in accordance with such procedures agreed to in writing
from time to time by the parties hereto; if the sale is effected
through a Securities System, delivery and payment therefor shall
be made in accordance with the provisions of Paragraph L hereof;
if the sale of commercial paper is to be effected through an
Approved Book-Entry System for Commercial Paper, delivery and
payment therefor shall be made in accordance with the provisions
of Paragraph M hereof; if the securities are to be sold outside
the United States, delivery may be made in accordance with
procedures agreed to in writing from time to time by the parties
3
hereto; for the purposes of this subparagraph, the term "sale"
shall include the disposition of a portfolio security (i) upon
the exercise of an option written by the Trust and (ii) upon the
failure by the Trust to make a successful bid with respect to a
portfolio security, the continued holding of which is contingent
upon the making of such a bid;
2) Upon the receipt of payment in connection with any repurchase
agreement or reverse repurchase agreement relating to such
securities and entered into by the Trust;
3) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Trust;
4) To the issuer thereof or its agent when such securities or
participation interests are called, redeemed, retired or
otherwise become payable; provided that, in any such case, the
cash or other consideration is to be delivered to the Custodian
or any subcustodian employed pursuant to Section 2 hereof;
5) To the issuer thereof, or its agent, for transfer into the
name of the Trust or into the name of any nominee of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Paragraph K hereof or into the name or nominee name
of any subcustodian employed pursuant to Section 2 hereof; or for
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities or
participation interests are to be delivered to the Custodian or
any subcustodian employed pursuant to Section 2 hereof;
6) To the broker selling the same for examination in accordance
with the "street delivery" custom; provided that the Custodian
shall adopt such procedures as the Trust from time to time shall
approve to ensure their prompt return to the Custodian by the
broker in the event the broker elects not to accept them;
7) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion of such securities, or pursuant to
any deposit agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian
or any subcustodian employed pursuant to Section 2 hereof;
8) In the case of warrants, rights or similar securities, the
surrender thereof in connection with the exercise of such
warrants, rights or similar securities, or the surrender of
interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian or any
subcustodian employed pursuant to Section 2 hereof;
4
9) For delivery in connection with any loans of securities made
by the Trust (such loans to be made pursuant to the terms of the
Trust's current registration statement), but only against receipt
of adequate collateral as agreed upon from time to time by the
Custodian and the Trust, which may be in the form of cash or
obligations issued by the United States government, its agencies
or instrumentalities; except that in connection with any
securities loans for which collateral is to be credited to the
Custodian's account in the book-entry system authorized by the
U.S. Department of Treasury, the Custodian will not be held
liable or responsible for the delivery of securities loaned by
the Trust prior to the receipt of such collateral;
10) For delivery as security in connection with any borrowings by
the Trust requiring a pledge or hypothecation of assets by the
Trust (if then permitted under circumstances described in the
current registration statement of the Trust), provided, that the
securities shall be released only upon payment to the Custodian
of the monies borrowed, except that in cases where additional
collateral is required to secure a borrowing already made,
further securities may be released for that purpose; upon receipt
of proper instructions, the Custodian may pay any such loan upon
redelivery to it of the securities pledged or hypothecated
therefor and upon surrender of the note or notes evidencing the
loan;
11) When required for delivery in connection with any redemption
or repurchase of an interest in the Trust in accordance with the
provisions of Paragraph J hereof;
12) For delivery in accordance with the provisions of any
agreement between the Custodian (or a subcustodian employed
pursuant to Section 2 hereof) and a broker-dealer registered
under the Securities Exchange Act of 1934 and, if necessary, the
Trust, relating to compliance with the rules of The Options
Clearing Corporation or of any registered national securities
exchange, or of any similar organization or organizations,
regarding deposit or escrow or other arrangements in connection
with options transactions by the Trust;
13) For delivery in accordance with the provisions of any
agreement among the Trust, the Custodian (or a subcustodian
employed pursuant to Section 2 hereof), and a futures commissions
merchant, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or of any contract market or
commodities exchange or similar organization, regarding futures
margin account deposits or payments in connection with futures
transactions by the Trust;
14) For any other proper corporate purpose, but only upon receipt
of, in addition to proper instructions, a certified copy of a
resolution of the Board specifying the securities to be
delivered, setting forth the purpose for which such delivery is
to be made, declaring such purpose to be proper corporate
purpose, and naming the person or persons to whom delivery of
such securities shall be made.
5
C. Registration of Securities Securities held by the Custodian (other
than bearer securities) for the account of the Trust shall be
registered in the name of the Trust or in the name of any nominee of
the Trust or of any nominee of the Custodian, or in the name or
nominee name of any agent appointed pursuant to Paragraph K hereof, or
in the name or nominee name of any subcustodian employed pursuant to
Section 2 hereof, or in the name or nominee name of The Depository
Trust Company or Participants Trust Company or Approved Clearing
Agency or Federal Book-Entry System or Approved Book-Entry System for
Commercial Paper; provided, that securities are held in an account of
the Custodian or of such agent or of such subcustodian containing only
assets of the Trust or only assets held by the Custodian or such agent
or such subcustodian as a custodian or subcustodian or in a fiduciary
capacity for customers. All certificates for securities accepted by
the Custodian or any such agent or subcustodian on behalf of the Trust
shall be in "street" or other good delivery form or shall be returned
to the selling broker or dealer who shall be advised of the reason
thereof.
D. Bank Accounts The Custodian shall open and maintain a separate bank
account or accounts in the name of the Trust, subject only to draft or
order by the Custodian acting in pursuant to the terms of this
Agreement, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of
the Trust other than cash maintained by the Trust in a bank account
established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Custodian for the
Trust may be deposited by it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or trust companies
as the Custodian may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company shall be
qualified to act as a custodian under the Investment Company Act of
1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall be approved in
writing by two officers of the Trust. Such funds shall be deposited by
the Custodian in its capacity as Custodian and shall be subject to
withdrawal only by the Custodian in that capacity.
E. Payments for Interests, or Increases in Interests, in the Trust The
Custodian shall make appropriate arrangements with the Transfer Agent
of the Trust to enable the Custodian to make certain it promptly
receives the cash or other consideration due to the Trust for payment
of interests in the Trust, or increases in such interests, in
accordance with the governing documents and registration statement of
the Trust. The Custodian will provide prompt notification to the Trust
of any receipt by it of such payments.
F. Investment and Availability of Federal Funds Upon agreement between
the Trust and the Custodian, the Custodian shall, upon the receipt of
proper instructions, which may be continuing instructions when deemed
appropriate by the parties, invest in such securities and instruments
as may be set forth in such instructions on the same day as received
all federal funds received after a time agreed upon between the
Custodian and the Trust.
G. Collections The Custodian shall promptly collect all income and other
payments with respect to registered securities held hereunder to which
the Trust shall be entitled either by law or pursuant to custom in the
securities business, and shall promptly collect all income and other
payments with respect to bearer securities if, on the date of payment
6
by the issuer, such securities are held by the Custodian or agent
thereof and shall credit such income, as collected, to the Trust's
custodian account. The Custodian shall do all things necessary and
proper in connection with such prompt collections and, without
limiting the generality of the foregoing, the Custodian shall
1) Present for payment all coupons and other income items
requiring presentations;
2) Present for payment all securities which may mature or be
called, redeemed, retired or otherwise become payable;
3) Endorse and deposit for collection, in the name of the Trust,
checks, drafts or other negotiable instruments;
4) Credit income from securities maintained in a Securities
System or in an Approved Book-Entry System for Commercial Paper
at the time funds become available to the Custodian; in the case
of securities maintained in The Depository Trust Company funds
shall be deemed available to the Trust not later than the opening
of business on the first business day after receipt of such funds
by the Custodian.
The Custodian shall notify the Trust as soon as reasonably
practicable whenever income due on any security is not promptly
collected. In any case in which the Custodian does not receive any due
and unpaid income after it has made demand for the same, it shall
immediately so notify the Trust in writing, enclosing copies of any
demand letter, any written response thereto, and memoranda of all oral
responses thereto and to telephonic demands, and await instructions
from the Trust; the Custodian shall in no case have any liability for
any nonpayment of such income provided the Custodian meets the
standard of care set forth in Section 8 hereof. The Custodian shall
not be obligated to take legal action for collection unless and until
reasonably indemnified to its satisfaction.
The Custodian shall also receive and collect all stock dividends,
rights and other items of like nature, and deal with the same pursuant
to proper instructions relative thereto.
H. Payment of Trust Monies Upon receipt of proper instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Trust in the following cases
only:
1) Upon the purchase of securities, participation interests,
options, futures contracts, forward contracts and options on
futures contracts purchased for the account of the Trust but only
(a) against the receipt of
(i) such securities registered as provided in Paragraph C
hereof or in proper form for transfer or
(ii) detailed instructions signed by an officer of the Trust
regarding the participation interests to be purchased or
7
(iii)written confirmation of the purchase by the Trust of
the options, futures contracts, forward contracts or options on
futures contracts by the Custodian (or by a subcustodian employed
pursuant to Section 2 hereof or by a clearing corporation of a
national securities exchange of which the Custodian is a member
or by any bank, banking institution or trust company doing
business in the United States or abroad which is qualified under
the Investment Company Act of 1940 to act as a custodian and
which has been designated by the Custodian as its agent for this
purpose or by the agent specifically designated in such
instructions as representing the purchasers of a new issue of
privately placed securities); (b) in the case of a purchase
effected through a Securities System, upon receipt of the
securities by the Securities System in accordance with the
conditions set forth in Paragraph L hereof; (c) in the case of a
purchase of commercial paper effected through an Approved
Book-Entry System for Commercial Paper, upon receipt of the paper
by the Custodian or subcustodian in accordance with the
conditions set forth in Paragraph M hereof; (d) in the case of
repurchase agreements entered into between the Trust and another
bank or a broker-dealer, against receipt by the Custodian of the
securities underlying the repurchase agreement either in
certificate form or through an entry crediting the Custodian's
segregated, non-proprietary account at the Federal Reserve Bank
of Boston with such securities along with written evidence of the
agreement by the bank or broker-dealer to repurchase such
securities from the Trust; or (e) with respect to securities
purchased outside of the United States, in accordance with
written procedures agreed to from time to time in writing by the
parties hereto;
2) When required in connection with the conversion, exchange or
surrender of securities owned by the Trust as set forth in
Paragraph B hereof;
3) When required for the reduction or redemption of an interest
in the Trust in accordance with the provisions of Paragraph J
hereof;
4) For the payment of any expense or liability incurred by the
Trust, including but not limited to the following payments for
the account of the Trust: advisory fees, interest, taxes,
management compensation and expenses, accounting, transfer agent
and legal fees, and other operating expenses of the Trust whether
or not such expenses are to be in whole or part capitalized or
treated as deferred expenses;
5) For distributions or payment to Holders of Interest in the
Trust; and
6) For any other proper corporate purpose, but only upon receipt
of, in addition to proper instructions, a certified copy of a
resolution of the Board, specifying the amount of such payment,
setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom such payment is to be made.
I. Liability for Payment in Advance of Receipt of Securities Purchased In
any and every case where payment for purchase of securities for the
account of the Trust is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written
instructions signed by two officers of the Trust to so pay in advance,
8
the Custodian shall be absolutely liable to the Trust for such
securities to the same extent as if the securities had been received
by the Custodian; except that in the case of a repurchase agreement
entered into by the Trust with a bank which is a member of the Federal
Reserve System, the Custodian may transfer trusts to the account of
such bank prior to the receipt of (i) the securities in certificate
form subject to such repurchase agreement or (ii) written evidence
that the securities subject to such repurchase agreement have been
transferred by book-entry into a segregated non-proprietary account of
the Custodian maintained with the Federal Reserve Bank of Boston or
(iii) the safekeeping receipt, provided that such securities have in
fact been so transferred by book-entry and the written repurchase
agreement is received by the Custodian in due course; and except that
if the securities are to be purchased outside the United States,
payment may be made in accordance with procedures agreed to in writing
from time to time by the parties hereto.
J. Payments for Repurchases or Redemptions of Interests in the Trust From
such funds as may be available for the purpose, but subject to any
applicable resolutions of the Board and the current procedures of the
Trust, the Custodian shall, upon receipt of written instructions from
the Trust or from the Trust's Transfer Agent, make funds and/or
portfolio securities available for payment to Holders of Interest in
the Trust who have caused the amount of their interests to be reduced,
or for their interest to be redeemed.
K. Appointment of Agents by the Custodian The Custodian may at any time
or times in its discretion appoint (and may at any time remove) any
other bank or trust company (provided such bank or trust company is
itself qualified under the Investment Company Act of 1940 to act as a
custodian or is itself an eligible foreign custodian within the
meaning of Rule 17f-5 under said Act) as the agent of the Custodian to
carry out such of the duties and functions of the Custodian described
in this Section 3 as the Custodian may from time to time direct;
provided, however, that the appointment of any such agent shall not
relieve the Custodian of any of its responsibilities or liabilities
hereunder, and as between the Trust and the Custodian the Custodian
shall be fully responsible for the acts and omissions of any such
agent. For the purposes of this Agreement, any property of the Trust
held by any such agent shall be deemed to be held by the Custodian
hereunder.
L. Deposit of Trust Portfolio Securities in Securities Systems The
Custodian may deposit and/or maintain securities owned by the Trust
(1) in The Depository Trust Company;
(2) in Participants Trust Company;
(3) in any other Approved Clearing Agency;
(4) in the Federal Book-Entry System; or
(5) in an Approved Foreign Securities Depository in each case only in
accordance with applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, and at all times subject to
the following provisions:
9
(a) The Custodian may (either directly or through one or more
subcustodians employed pursuant to Section 2 keep securities of the
Trust in a Securities System provided that such securities are
maintained in a non-proprietary account ("Account") of the Custodian
or such subcustodian in the Securities System which shall not include
any assets of the Custodian or such subcustodian or any other person
other than assets held by the Custodian or such subcustodian as a
fiduciary, custodian, or otherwise for its customers.
(b) The records of the Custodian with respect to securities of the
Trust which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Trust, and the Custodian
shall be fully and completely responsible for maintaining a
recordkeeping system capable of accurately and currently stating the
Trust's holdings maintained in each such Securities System.
(c) The Custodian shall pay for securities purchased in book-entry
form for the account of the Trust only upon (i) receipt of notice or
advice from the Securities System that such securities have been
transferred to the Account, and (ii) the making of any entry on the
records of the Custodian to reflect such payment and transfer for the
account of the Trust. The Custodian shall transfer securities sold for
the account of the Trust only upon (i) receipt of notice or advice
from the Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer and payment for the
account of the Trust. Copies of all notices or advices from the
Securities System of transfers of securities for the account of the
Trust shall identify the Trust, be maintained for the Trust by the
Custodian and be promptly provided to the Trust at its request. The
Custodian shall promptly send to the Trust confirmation of each
transfer to or from the account of the Trust in the form of a written
advice or notice of each such transaction, and shall furnish to the
Trust copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the Trust on
the next business day.
(d) The Custodian shall promptly send to the Trust any report or other
communication received or obtained by the Custodian relating to the
Securities System's accounting system, system of internal accounting
controls or procedures for safeguarding securities deposited in the
Securities System; the Custodian shall promptly send to the Trust any
report or other communication relating to the Custodian's internal
accounting controls and procedures for safeguarding securities
deposited in any Securities System; and the Custodian shall ensure
that any agent appointed pursuant to Paragraph K hereof or any
subcustodian employed pursuant to Section 2 hereof shall promptly send
to the Trust and to the Custodian any report or other communication
relating to such agent's or subcustodian's internal accounting
controls and procedures for safeguarding securities deposited in any
Securities System. The Custodian's books and records relating to the
Trust's participation in each Securities System will at all times
during regular business hours be open to the inspection of the Trust's
authorized officers, employees or agents.
(e) The Custodian shall not act under this Paragraph L in the absence
of receipt of a certificate of an officer of the Trust that the Board
has approved the use of a particular Securities System; the Custodian
shall also obtain appropriate assurance from the officers of the Trust
that the Board has annually reviewed the continued use by the Trust of
each Securities System, and the Trust shall promptly notify the
Custodian if the use of a Securities System is to be discontinued; at
the request of the Trust, the Custodian will terminate the use of any
such Securities System as promptly as practicable.
10
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage to the
Trust resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of its
agents or subcustodians or of any of its or their employees or from
any failure of the Custodian or any such agent or subcustodian to
enforce effectively such rights as it may have against the Securities
System or any other person; at the election of the Trust, it shall be
entitled to be subrogated to the rights of the Custodian with respect
to any claim against the Securities System or any other person which
the Custodian 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 such
loss or damage.
M. Deposit of Trust Commercial Paper in an Approved Book-Entry System for
Commercial Paper Upon receipt of proper instructions with respect to
each issue of direct issue commercial paper purchased by the Trust,
the Custodian may deposit and/or maintain direct issue commercial
paper owned by the Trust in any Approved Book-Entry System for
Commercial Paper, in each case only in accordance with applicable
Securities and Exchange Commission rules, regulations, and no-action
correspondence, and at all times subject to the following provisions:
(a) The Custodian may (either directly or through one or more
subcustodians employed pursuant to Section 2) keep commercial paper of
the Trust in an Approved Book-Entry System for Commercial Paper,
provided that such paper is issued in book entry form by the Custodian
or subcustodian on behalf of an issuer with which the Custodian or
subcustodian has entered into a book-entry agreement and provided
further that such paper is maintained in a non-proprietary account
("Account") of the Custodian or such subcustodian in an Approved
Book-Entry System for Commercial Paper which shall not include any
assets of the Custodian or such subcustodian or any other person other
than assets held by the Custodian or such subcustodian as a fiduciary,
custodian, or otherwise for its customers.
(b) The records of the Custodian with respect to commercial paper of
the Trust which is maintained in an Approved Book-Entry System for
Commercial Paper shall identify by book-entry each specific issue of
commercial paper purchased by the Trust which is included in the
Securities System and shall at all times during regular business hours
be open for inspection by authorized officers, employees or agents of
the Trust. The Custodian shall be fully and completely responsible for
maintaining a recordkeeping system capable of accurately and currently
stating the Trust's holdings of commercial paper maintained in each
such System.
(c) The Custodian shall pay for commercial paper purchased in
book-entry form for the account of the Trust only upon contemporaneous
(i) receipt of notice or advice from the issuer that such paper has
been issued, sold and transferred to the Account, and (ii) the making
of an entry on the records of the Custodian to reflect such purchase,
payment and transfer for the account of the Trust. The Custodian shall
transfer such commercial paper which is sold or cancel such commercial
paper which is redeemed for the account of the Trust only upon
contemporaneous (i) receipt of notice or advice that payment for such
paper has been transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such transfer or
redemption and payment for the account of the Trust. Copies of all
notices, advices and confirmations of transfers of commercial paper
for the account of the Trust shall identify the Trust, be maintained
for the Trust by the Custodian and be promptly provided to the Trust
11
at its request. The Custodian shall promptly send to the Trust
confirmation of each transfer to or from the account of the Trust in
the form of a written advice or notice of each such transaction, and
shall furnish to the Trust copies of daily transaction sheets
reflecting each day's transactions in the System for the account of
the Trust on the next business day.
(d) The Custodian shall promptly send to the Trust any report or other
communication received or obtained by the Custodian relating to each
System's accounting system, system of internal accounting controls or
procedures for safeguarding commercial paper deposited in the System;
the Custodian shall promptly send to the Trust any report or other
communication relating to the Custodian's internal accounting controls
and procedures for safeguarding commercial paper deposited in any
Approved Book-Entry System for Commercial Paper; and the Custodian
shall ensure that any agent appointed pursuant to Paragraph K hereof
or any subcustodian employed pursuant to Section 2 hereof shall
promptly send to the Trust and to the Custodian any report or other
communication relating to such agent's or subcustodian's internal
accounting controls and procedures for safeguarding securities
deposited in any Approved Book-Entry System for Commercial Paper.
(e) The Custodian shall not act under this Paragraph M in the absence
of receipt of a certificate of an officer of the Trust that the Board
has approved the use of a particular Approved Book-Entry System for
Commercial Paper; the Custodian shall also obtain appropriate
assurance from the officers of the Trust that the Board has annually
reviewed the continued use by the Trust of each Approved Book-Entry
System for Commercial Paper, and the Trust shall promptly notify the
Custodian if the use of an Approved Book-Entry System for Commercial
Paper is to be discontinued; at the request of the Trust, the
Custodian will terminate the use of any such System as promptly as
practicable.
(f) The Custodian (or subcustodian, if the Approved Book-Entry System
for Commercial Paper is maintained by the subcustodian) shall issue
physical commercial paper or promissory notes whenever requested to do
so by the Trust or in the event of an electronic system failure which
impedes issuance, transfer or custody of direct issue commercial paper
by book-entry.
(g) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage to the
Trust resulting from use of any Approved Book-Entry System for
Commercial Paper by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or subcustodians or
of any of its or their employees or from any failure of the Custodian
or any such agent or subcustodian to enforce effectively such rights
as it may have against the System, the issuer of the commercial paper
or any other person; at the election of the Trust, it shall be
entitled to be subrogated to the rights of the Custodian with respect
to any claim against the System, the issuer of the commercial paper or
any other person which the Custodian 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 such loss or damage.
12
N. Segregated Account The Custodian 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 cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Paragraph L hereof, (i) in
accordance with the provisions of any agreement among the Trust, the
Custodian and any registered broker-dealer (or any futures commission
merchant), relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities
exchange (or of the Commodity Futures Trading Commission or of any
contract market or commodities exchange), or of any similar
organization or organizations, regarding escrow or deposit or other
arrangements in connection with transactions by the Trust, (ii) for
purposes of segregating cash or U.S. Government securities in
connection with options purchased, sold or written by the Trust or
futures contracts or options thereon purchased or sold by the Trust,
(iii) 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 and (iv) for other proper purposes,
but only, in the case of clause (iv), upon receipt of, in addition to
proper instructions, a certificate signed by two officers of the
Trust, setting forth the purpose such segregated account and declaring
such purpose to be a proper purpose.
O. Ownership Certificates for Tax Purposes The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of the Trust held by it and in
connection with transfers of securities.
P. Proxies The Custodian shall, with respect to the securities held by it
hereunder, cause to be promptly delivered to the Trust all forms of
proxies and all notices of meetings and any other notices or
announcements or other written information affecting or relating to
the securities, and upon receipt of proper instructions shall execute
and deliver or cause its nominee to execute and deliver such proxies
or other authorizations as may be required. Neither the Custodian nor
its nominee shall vote upon any of the securities or execute any proxy
to vote thereon or give any consent or take any other action with
respect thereto (except as otherwise herein provided) unless ordered
to do so by proper instructions.
Q. Communications Relating to Trust Portfolio Securities The Custodian
shall deliver promptly to the Trust all written information
(including, without limitation, pendency of call and maturities of
securities and participation interests and expirations of rights in
connection therewith and notices of exercise of call and put options
written by the Trust and the maturity of futures contracts purchased
or sold by the Trust) received by the Custodian from issuers and other
persons relating to the securities and participation interests being
held for the Trust. With respect to tender or exchange offers, the
Custodian shall deliver promptly to the Trust all written information
received by the Custodian from issuers and other persons relating to
the securities and participation interests whose tender or exchange is
sought and from the party (or his agents) making the tender or
exchange offer.
13
R. Exercise of Rights; Tender Offers In the case of tender offers,
similar offers to purchase or exercise rights (including, without
limitation, pendency of calls and maturities of securities and
participation interests and expirations of rights in connection
therewith and notices of exercise of call and put options and the
maturity of futures contracts) affecting or relating to securities and
participation interests held by the Custodian under this Agreement,
the Custodian shall have responsibility for promptly notifying the
Trust of all such offers in accordance with the standard of reasonable
care set forth in Section 8 hereof. For all such offers for which the
Custodian is responsible as provided in this Paragraph R, the Trust
shall have responsibility for providing the Custodian with all
necessary instructions in timely fashion. Upon receipt of proper
instructions, the Custodian shall timely deliver to the issuer or
trustee thereof, or to the agent of either, warrants, puts, calls,
rights or similar securities for the purpose of being exercised or
sold upon proper receipt therefor and upon receipt of assurances
satisfactory to the Custodian that the new securities and cash, if
any, acquired by such action are to be delivered to the Custodian or
any subcustodian employed pursuant to Section 2 hereof. Upon receipt
of proper instructions, the Custodian shall timely deposit securities
upon invitations for tenders of securities upon proper receipt
therefor and upon receipt of assurances satisfactory to the Custodian
that the consideration to be paid or delivered or the tendered
securities are to be returned to the Custodian or subcustodian
employed pursuant to Section 2 hereof. Notwithstanding any provision
of this Agreement to the contrary, the Custodian shall take all
necessary action, unless otherwise directed to the contrary by proper
instructions, to comply with the terms of all mandatory or compulsory
exchanges, calls, tenders, redemptions, or similar rights of security
ownership, and shall thereafter promptly notify the Trust in writing
of such action.
S. Depository Receipts The Custodian shall, upon receipt of proper
instructions, surrender or cause to be surrendered foreign securities
to the depository used by an issuer of American Depository Receipts or
International Depository Receipts (hereinafter collectively referred
to as "ADRs") for such securities, against a written receipt therefor
adequately describing such securities and written evidence
satisfactory to the Custodian that the depository has acknowledged
receipt of instructions to issue with respect to such securities in
the name of a nominee of the Custodian or in the name or nominee name
of any subcustodian employed pursuant to Section 2 hereof, for
delivery to the Custodian or such subcustodian at such place as the
Custodian or such subcustodian may from time to time designate. The
Custodian shall, upon receipt of proper instructions, surrender ADRs
to the issuer thereof against a written receipt therefor adequately
describing the ADRs surrendered and written evidence satisfactory to
the Custodian that the issuer of the ADRs has acknowledged receipt of
instructions to cause its depository to deliver the securities
underlying such ADRs to the Custodian or to a subcustodian employed
pursuant to Section 2 hereof.
T. Interest Bearing Call or Time Deposits The Custodian shall, upon
receipt of proper instructions, place interest bearing fixed term and
call deposits with the banking department of such banking institution
(other than the Custodian) and in such amounts as the Trust may
designate. Deposits may be denominated in U.S. Dollars or other
currencies. The Custodian shall include in its records with respect to
the assets of the Trust appropriate notation as to the amount and
currency of each such deposit, the accepting banking institution and
other appropriate details and shall retain such forms of advice or
receipt evidencing the deposit, if any, as may be forwarded to the
Custodian by the banking institution. Such deposits shall be deemed
portfolio securities of the Trust for the purposes of this Agreement,
14
and the Custodian shall be responsible for the collection of income
from such accounts and the transmission of cash to and from such
accounts.
U. Options, Futures Contracts and Foreign Currency Transactions
1. Options. The Custodian shall, upon receipt of proper instructions
and in accordance with the provisions of any agreement between the
Custodian, any registered broker-dealer and, if necessary, the Trust,
relating to compliance with the rules of the Options Clearing
Corporation or of any registered national securities exchange or
similar organization or organizations, receive and retain
confirmations or other documents, if any, evidencing the purchase or
writing of an option on a security or securities index or other
financial instrument or index by the Trust; deposit and maintain in a
segregated account for the Trust, either physically or by book-entry
in a Securities System, securities subject to a covered call option
written by the Trust; and release and/or transfer such securities or
other assets only in accordance with a notice or other communication
evidencing the expiration, termination or exercise of such covered
option furnished by the Options Clearing Corporation, the securities
or options exchange on which such covered option is traded or such
other organization as may be responsible for handling such options
transactions. The Custodian and the broker-dealer shall be responsible
for the sufficiency of assets held in the Trust's segregated account
in compliance with applicable margin maintenance requirements.
2. Futures Contracts The Custodian shall, upon receipt of proper
instructions, receive and retain confirmations and other documents, if
any, evidencing the purchase or sale of a futures contract or an
option on a futures contract by the Trust; deposit and maintain in a
segregated account, for the benefit of any futures commission
merchant, assets designated by the Trust as initial, maintenance or
variation "margin" deposits (including mark-to-market payments)
intended to secure the Trust's performance of its obligations under
any futures contracts purchased or sold or any options on futures
contracts written by Trust, in accordance with the provisions of any
agreement or agreements among the Trust, the Custodian and such
futures commission merchant, designed to comply with the rules of the
Commodity Futures Trading Commission and/or of any contract market or
commodities exchange or similar organization regarding such margin
deposits or payments; and release and/or transfer assets in such
margin accounts only in accordance with any such agreements or rules.
The Custodian and the futures commission merchant shall be responsible
for the sufficiency of assets held in the segregated account in
compliance with the applicable margin maintenance and mark-to-market
payment requirements.
3. Foreign Exchange Transactions The Custodian shall, pursuant to
proper instructions, enter into or cause a subcustodian to enter into
foreign exchange contracts or options to purchase and sell foreign
currencies for spot and future delivery on behalf and for the account
of the Trust. Such transactions may be undertaken by the Custodian or
subcustodian with such banking or financial institutions or other
currency brokers, as set forth in proper instructions. Foreign
exchange contracts and options shall be deemed to be portfolio
securities of the Trust; and accordingly, the responsibility of the
Custodian therefor shall be the same as and no greater than the
15
Custodian's responsibility in respect of other portfolio securities of
the Trust. The Custodian shall be responsible for the transmittal to
and receipt of cash from the currency broker or banking or financial
institution with which the contract or option is made, the maintenance
of proper records with respect to the transaction and the maintenance
of any segregated account required in connection with the transaction.
The Custodian shall have no duty with respect to the selection of the
currency brokers or banking or financial institutions with which the
Trust deals or for their failure to comply with the terms of any
contract or option. Without limiting the foregoing, it is agreed that
upon receipt of proper instructions and insofar as funds are made
available to the Custodian for the purpose, the Custodian may (if
determined necessary by the Custodian to consummate a particular
transaction on behalf and for the account of the Trust) make free
outgoing payments of cash in the form of U.S. dollars or foreign
currency before receiving confirmation of a foreign exchange contract
or confirmation that the countervalue currency completing the foreign
exchange contract has been delivered or received. The Custodian shall
not be responsible for any costs and interest charges which may be
incurred by the Trust or the Custodian as a result of the failure or
delay of third parties to deliver foreign exchange; provided that the
Custodian shall nevertheless be held to the standard of care set forth
in, and shall be liable to the Trust in accordance with, the
provisions of Section 8.
V. Actions Permitted Without Express Authority The Custodian may in its
discretion, without express authority from the Trust:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Agreement, provided, that all such payments shall be accounted for by
the Custodian to the Treasurer of the Trust;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Trust, checks, drafts
and other negotiable instruments; and
4) in general, attend to all nondiscretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Trust except as
otherwise directed by the Trust.
W. Advances by the Bank. The Bank may, in its sole discretion, advance
funds on behalf of the Fund to make any payment permitted by this
Agreement upon receipt of any proper authorization required by this
Agreement for such payments by the Fund. Should such a payment or
payments, with advanced funds, result in an overdraft (due to
insufficiencies of the Fund'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 Fund payable on demand.
Such overdraft shall bear interest at the current rate charged by the
Bank for such secured loans unless the Fund shall provide the Bank
with agreed upon compensating balances. The Fund agrees that the Bank
shall have a continuing lien and security interest to the extent of
any overdraft or indebtedness or the extent required by law, whichever
is greater, in and to any property at any time held by it for the
Fund's benefit or in which the Fund 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 Fund authorizes
the Bank, in the Bank's 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 Fund on the
Bank's books.
16
4. Duties of Bank with Respect to Books of Account and Calculations of Net Asset
Value
The Bank shall as Agent (or as Custodian, as the case may be) 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 the Custodian 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 bill, repurchase agreement, subscription right,
security, participation interests or other asset or property for which market
quotations are not readily available. The Custodian 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 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.
5. Records and Miscellaneous Duties
The Bank shall create, maintain and preserve all records relating to its
activities and obligations under this Agreement in such manner as will meet the
obligations of the Trust under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or administrative rules
or procedures which may be applicable to the Trust. All books of account and
records maintained by the Bank in connection with the performance of its duties
under this Agreement shall be the property of the Trust, shall at all times
during the regular business hours of the Bank be open for inspection by
authorized officers, employees or agents of the Trust, and in the event of
termination of this Agreement shall be delivered to the Trust or to such other
person or persons as shall be designated by the Trust. Disposition of any
account or record after any required period of preservation shall be only in
accordance with specific instructions received from the Trust. The Bank shall
assist generally in the preparation of reports to holder of interest in the
Trust, to the Securities and Exchange Commission, including Form N-SAR, and to
others, audits of accounts, and other ministerial matters of like nature; and,
upon request, shall furnish the Trust's auditors with an attested inventory of
securities held with appropriate information as to securities in transit or in
the process of purchase or sale and with such other information as said auditors
may from time to time request. The Custodian shall also maintain records of all
receipts, deliveries and locations of such securities, together with a current
inventory thereof, and shall conduct periodic verifications (including sampling
counts at the Custodian) of certificates representing bonds and other
17
securities for which it is responsible under this Agreement in such manner as
the Custodian shall determine from time to time to be advisable in order to
verify the accuracy of such inventory. The Bank shall not disclose or use any
books or records it has prepared or maintained by reason of this Agreement in
any manner except as expressly authorized herein or directed by the Trust, and
the Bank shall keep confidential any information obtained by reason of this
Agreement.
6. Opinion of Trust's Independent Public Accountants
The Custodian shall take all reasonable action, as the Trust may from time
to time request, to enable the Trust to obtain from year to year favorable
opinions from the Trust's independent public accountants with respect to its
activities hereunder in connection with the preparation of the Trust's
registration statement and Form N-SAR or other periodic reports to the
Securities and Exchange Commission and with respect to any other requirements of
such Commission.
7. Compensation and Expenses of Bank
The Bank shall be entitled to reasonable compensation for its services as
Custodian and Agent, as agreed upon from time to time between the Trust and the
Bank. The Bank shall be entitled to receive from the Trust on demand
reimbursement for its cash disbursements, expenses and charges, including
counsel fees, in connection with its duties as Custodian and Agent hereunder,
but excluding salaries and usual overhead expenses.
8. Responsibility of Bank
So long as and to the extent that it is in the exercise of reasonable care,
the Bank as Custodian and Agent shall be held harmless in acting upon any
notice, request, consent, certificate or other instrument reasonably believed by
it to be genuine and to be signed by the proper party or parties.
The Bank as Custodian and Agent shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Trust) on all matters, and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice.
The Bank as Custodian and Agent shall be held to the exercise of reasonable
care in carrying out the provisions of this Agreement but shall be liable only
for its own negligent or bad faith acts or failures to act. Notwithstanding the
foregoing, nothing contained in this paragraph is intended to nor shall it be
construed to modify the standards of care and responsibility set forth in
Section 2 hereof with respect to subcustodians and in subparagraph f of
Paragraph L of Section 3 hereof with respect to Securities Systems and in
subparagraph g of Paragraph M of Section 3 hereof with respect to an Approved
Book-Entry System for Commercial Paper.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
subcustodians generally in Section 2 hereof, provided that, regardless of
whether assets are maintained in the custody of a foreign banking institution, a
foreign securities depository or a branch of a U.S. bank, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim resulting
from, or caused by, the direction of or authorization by the Trust to maintain
custody of any securities or cash of the Trust in a foreign country including,
but not limited to, losses resulting from nationalization, expropriation,
currency restrictions, acts of war, civil war or terrorism, insurrection,
revolution, military or usurped powers, nuclear fission, fusion or radiation,
earthquake, storm or other disturbance of nature or acts of God.
18
If the Trust requires the Bank in any capacity to take any action with
respect to securities, which action involves the payment of money or which
action may, in the opinion of the Bank, result in the Bank or its nominee
assigned to the Trust being liable for the payment of money or incurring
liability of some other form, the Trust, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
9. Persons Having Access to Assets of the Trust
(i) No trustee, officer, employee, or agent of the Trust shall have
physical access to the assets of the Trust held by the Custodian or be
authorized or permitted to withdraw any investments of the Trust, nor shall the
Custodian deliver any assets of the Trust to any such person. No officer or
director, employee or agent of the Custodian who holds any similar position with
the Trust or the investment adviser or the administrator of the Trust shall have
access to the assets of the Trust.
(ii) Access to assets of the Trust held hereunder shall only be available
to duly authorized officers, employees, representatives or agents of the
Custodian or other persons or entities for whose actions the Custodian shall be
responsible to the extent permitted hereunder, or to the Trust's independent
public accountants in connection with their auditing duties performed on behalf
of the Trust.
(iii) Nothing in this Section 9 shall prohibit any officer, employee or
agent of the Trust or of the investment adviser of the Trust from giving
instructions to the Custodian or executing a certificate so long as it does not
result in delivery of or access to assets of the Trust prohibited by paragraph
(i) of this Section 9.
10. Effective Period, Termination and Amendment; Successor Custodian
This Agreement shall become effective as of its execution, shall continue
in full force and effect until terminated by either party after August 31, 2000
by an instrument in writing delivered or mailed, postage prepaid to the other
party, such termination to take effect not sooner than sixty (60) days after the
date of such delivery or mailing; provided, that the Trust may at any time by
action of its Board, (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, in the event the
Custodian assigns this Agreement to another party without consent of the
non-interested trustees of the Trust, or (ii) immediately terminate this
Agreement in the event of the appointment of a conservator or receiver for the
Custodian by the Federal Deposit Insurance Corporation or by the Banking
Commissioner of The Commonwealth of Massachusetts or upon the happening of a
like event at the direction of an appropriate regulatory agency or court of
competent jurisdiction. Upon termination of the Agreement, the Trust shall pay
to the Custodian such compensation as may be due as of the date of such
termination (and shall likewise reimburse the Custodian for its costs, expenses
and disbursements).
This Agreement may be amended at any time by the written agreement of the
parties hereto. If a majority of the non-interested trustees of any of the
Trusts determines that the performance of the Custodian has been unsatisfactory
or adverse to the interests of Trust holders of any Trust or Trusts or that the
terms of the Agreement are no longer consistent with publicly available industry
standards, then the Trust or Trusts shall give written notice to the Custodian
of such determination and the Custodian shall have 60 days to (1) correct such
performance to the satisfaction of the non-interested trustees or (2)
renegotiate terms which are satisfactory to the non-interested trustees of the
Trusts. If the conditions of the preceding sentence are not met then the Trust
or Trusts may terminate this Agreement on sixty (60) days written notice.
19
The Board of the Trust shall, forthwith, upon giving or receiving notice of
termination of this Agreement, appoint as successor custodian, a bank or trust
company having such qualifications required by the Investment Company Act of
1940 and the Rules thereunder. The Bank, as Custodian, Agent or otherwise,
shall, upon termination of the Agreement, deliver to such successor custodian,
all securities then held hereunder and all funds or other properties of the
Trust deposited with or held by the Bank hereunder and all books of account and
records kept by the Bank pursuant to this Agreement, and all documents held by
the Bank relative thereto. In the event that no written order designating a
successor custodian shall have been delivered to the Bank on or before the date
when such termination shall become effective, then the Bank shall not deliver
the securities, funds and other properties of the Trust to the Trust but shall
have the right to deliver to a bank or trust company doing business in Boston,
Massachusetts of its own selection meeting the above required qualifications,
all funds, securities and properties of the Trust held by or deposited with the
Bank, and all books of account and records kept by the Bank pursuant to this
Agreement, and all documents held by the Bank relative thereto. Thereafter such
bank or trust company shall be the successor of the Custodian under this
Agreement.
11. Interpretive and Additional Provisions
In connection with the operation of this Agreement, the Custodian and the
Trust may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the governing instruments of the Trust. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Agreement.
12. Notices
Notices and other writings delivered or mailed postage prepaid to the Trust
addressed to ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or to such other address as the
Trust may have designated to the Bank, in writing with a copy to ▇▇▇▇▇ ▇▇▇▇▇
Management at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or to Investors
Bank & Trust Company, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ with a copy
to ▇▇▇▇▇ ▇▇▇▇▇ Management at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
shall be deemed to have been properly delivered or given hereunder to the
respective addressees.
13. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts.
The Custodian expressly acknowledges the provision in the Declaration of
Trust of the Trust (Section 5.2 and 5.6) limiting the personal liability of the
Trustees and officers of the Trust, and the Custodian hereby agrees that it
shall have recourse to the Trust for payment of claims or obligations as between
the Trust and the Custodian arising out of this Agreement, and the Custodian
shall not seek satisfaction from any Trustee or officer of the Trust.
20
14. Adoption of the Agreement by the Trust
The Trust represents that its Board has approved this Agreement and has
duly authorized the Trust to adopt this Agreement, such adoption to be evidenced
by a letter agreement between the Trust and the Bank reflecting such adoption,
which letter agreement shall be dated and signed by a duly authorized officer of
the Trust and duly authorized officer of the Bank. This Agreement shall be
deemed to be duly executed and delivered by each of the parties in its name and
behalf by its duly authorized officer as of the date of such letter agreement,
and this Agreement shall be deemed to supersede and terminate, as of the date of
such letter agreement, all prior agreements between the Trust and the Bank
relating to the custody of the Trust's assets.
* * * * *
TAX-MANAGED VALUE PORTFOLIO
PROCEDURES FOR ALLOCATIONS
AND DISTRIBUTIONS
February 13, 2001
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 ............................5
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 ...............................6
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........................7
Section 5.3 Special Allocations to Book and Tax Capital
Accounts ......................................7
Section 5.4 Other Adjustments to Book and Tax Capital
Accounts ......................................8
Section 5.5 Timing of Tax Allocations to Book and Tax
Capital Accounts ..............................7
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 ...........................9
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
TAX-MANAGED VALUE 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.
"Book Value" means, with respect to any asset, the asset's adjusted basis
for Federal income tax purposes, except as follows:
(a) Any asset contributed by a Holder to the Trust shall be treated as
having been purchased and the initial Book Value of such asset shall
be the fair market value of such asset as of the date of contribution;
(b) A revaluation of any asset under Section 5.1(a) or 5.1(b) shall be
treated as a purchase of such Trust asset, and the Book Value of such
Trust asset shall be adjusted to equal its Fair Market Value as of the
date of such revaluation;
(c) The distribution by the Trust of an asset to a Holder shall be treated
as a sale of such asset, and the Book Value of any Trust asset
distributed to any Holder shall be the Fair Market Value of such
assets as of the date of distribution.
1
"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
13, 2001, 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.
2
"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.
(iii) Gain or loss resulting from any disposition of a Trust asset
shall be computed by reference to the Book Value of the asset disposed of,
notwithstanding that the adjusted tax basis of such asset differs from its
Book Value.
"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.
3
"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 Tax-Managed Value 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 ▇▇▇▇▇▇; 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.
4
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
(i) in the case of Matched Income or Loss, in proportion to the corresponding
net allocations of Profit or Loss, and (ii) in the case of other items, in
proportion to the respective daily average Book Capital Account balances for the
Fiscal Year determined as of the date of such distribution.
4.3. Distributions Upon Liquidation of a Holder's Interest in the Trust.
Upon partial withdrwal or complete redemption 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.
5
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.
6
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.
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(c) ▇▇▇▇▇ ▇▇▇▇▇ Management may adopt such policies and modifications with
respect to allocation of Taxable Income and Taxable Loss among the Holders as
▇▇▇▇▇ ▇▇▇▇▇ Management deems appropriate in its sole discretion fo rpurposes of
satisfying relevant tax law considerations, including Section 704 of the Code
and the regulations thereunder.
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
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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. The Trust may atisfy any such request by a distribution of
cash or subject to Section 6.3, other assets.
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 by a cash distribution or, at the option of the
Trust, and subject to Section 6.3, by a distribution of assets.
6.3. Distribution in Kind. If specified by the redeeming Holder, the Trust
shall satisfy a Redemption request by distributing securities held in the Trust
at the time of the Redemption that were contirbuted to the Trust by such ▇▇▇▇▇▇.
Without the consent of Belvedere Capital Fund Company LLC (the "Company"), the
Trust shall not distribute securities that were contributed to the Trust by the
Company to any other person. If a withdrawing Holder receives a distribution in
kind, 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).
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ARTICLE VII
Liquidation
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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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