Exhibit No. 8
CUSTODIAN AGREEMENT
AGREEMENT made this 20th day of March, 1987, between PAINEWEBBER
INVESTMENT SERIES ("Fund") and Xxxxx Brothers Xxxxxxxx & Co. ("Custodian").
WITNESSETH: That in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. The Fund is a Massachusetts business trust registered a an open-end
management investment company under the Investment Company Act of 1940, as
amended, and intends to offer for sale series of shares of beneficial interest,
including PaineWebber Master Global Income Fund, each corresponding to a
separate portfolio. The Fund hereby employs and appoints the Custodian as a
custodian for Master Global Income Fund ("Portfolio") for the term and subject
to the provisions of this Agreement. The Custodian shall not be under any duty
or obligation to require the Portfolio to deliver to it any securities or funds
owned by the Portfolio and shall have no responsibility or liability for or on
account of securities or funds not so delivered. The Fund will deposit with the
Custodian copies of the Declaration of Trust and By-Laws (or comparable
documents) of the Fund and all amendments thereto, and copies of such votes and
other proceedings of the Fund or the Portfolio as may be necessary for or
convenient to the Custodian in the performance of its duties.
2. Except for securities and funds held by any Subcustodian appointed
pursuant to the provisions of Section 3 hereof ("Subcustodian"), the Custodian
shall have and perform the following powers and duties:
A. Safekeeping - To keep safely the securities and other assets of the
Portfolio that have been delivered to the Custodian and, on behalf of the
Portfolio, from time to time to receive delivery of securities and other assets
for safekeeping.
B. Manner of Holding Securities - To hold securities of the Portfolio
(1) by physical possession of the share certificates or other instruments
representing such securities in registered or bearer form, or (2) in book-entry
form by a Securities System (as said term is defined in Section 2S and in
accordance with the provisions thereof).
C. Registered Name; Nominee - To hold registered securities of the
Portfolio (1) in the name of the Custodian or the Portfolio or any nominee
thereof, or in the name of any agent appointed pursuant to Section 6E ("Agent")
or any nominee thereof, or (2) in street certificate form, so-called, and in any
case with or without any indication of fiduciary capacity, provided, securities
are held in an account of the Custodian containing only assets of the Portfolio
or only assets held as fiduciary or custodian for customers.
D. Purchases - Upon receipt of Proper Instructions, as defined in
Section 2V, and insofar as funds are available for the purpose, to pay for and
receive securities purchased for the account of the Portfolio, payment being
made only upon receipt of the securities (1) by the Custodian, (2) by a clearing
corporation of a national securities exchange of which the Custodian is a
member, or (3) by a Securities System. However, (i) in the case of repurchase
agreements entered into by the Portfolio, the Custodian (as well as a
Subcustodian or an Agent) may release funds to a Securities System prior to the
receipt or advice from the Securities System that the securities underlying such
repurchase agreement have been transferred by book entry into the Account (as
defined in Section 2S) of the Custodian (or such Subcustodian or Agent)
maintained with such Securities System, provided that the Custodian's
instructions to the Securities System
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require that the Securities System may make payment of such funds to the other
party to the repurchase agreement only upon transfer by book entry into the
Account of the securities underlying the repurchase agreement, and (ii) in the
case of time deposits, call account deposits, currency deposits, and other
deposits, contracts or options or foreign exchange transactions pursuant to
Sections 2K, 2L and 2M, the Custodian may make payment therefor before receipt
of an advice or confirmation evidencing said deposit or entry into such
transaction.
E. Exchanges - Upon receipt of Proper Instructions, to exchange
securities held by it for the account of the Portfolio for other securities in
connection with any reorganization, recapitalization, split-up of shares, change
of par value, conversion or other event relating to the securities or the issuer
of such securities, and to deposit any such securities in accordance with the
terms of any reorganization or protective plan. Without Proper Instructions, the
Custodian may surrender securities in temporary form for definitive securities,
may surrender securities for transfer into a name or nominee name as permitted
in Section 2C, and may surrender securities for a different number of
certificates or instruments representing the same number of shares or same
principal amount of indebtedness, provided the securities to be issued are to be
delivered to the Custodian.
F. Sales of Securities - Upon receipt of Proper Instructions, to make
delivery of securities which have been sold for the account of the Portfolio,
but only against payment therefor (1) in cash, by a certified check, bank
cashier's check bank credit, or bank wire transfer, (2) by credit to the account
of the Custodian with a clearing corporation of a national securities exchange
of which the Custodian is a member, or (3) credit to the account of the
Custodian or an Agent of the Custodian with a Securities System in accordance
with the provisions of Section 2S.
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G. Depositary Receipts - Upon receipt of Proper Instructions, to
instruct a Subcustodian or an Agent to surrender securities to the depositary
used by an issuer of American Depositary Receipts or International Depositary
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 Subcustodian or Agent that the depositary
has acknowledged receipt of instructions to issue with respect to such
securities ADRs in the name of the Custodian, or a nominee of the Custodian for
delivery to the Custodian in Boston, Massachusetts, or at such other place as
the Custodian may from time to time designate.
Upon receipt of Proper Instructions, to 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 depositary to
deliver the securities underlying such ADRs to a Subcustodian or an Agent.
H. Exercise of Rights; Tender Offers - Upon timely receipt of Proper
Instructions, to deliver to the issuer or trustee thereof, or to the agent of
either, warrants, puts, calls, right or similar securities for the purpose of
being exercised or solely provided that the new securities and cash, if any,
acquired by such action are to be delivered to the Custodian, and, upon receipt
of Proper Instructions, to deposit securities upon invitations for tenders of
securities, provided that the consideration is to be paid or delivered or the
tendered securities are to be returned to the Custodian.
I. Stock Dividends, Rights, Etc. - To receive and collect all stock
dividends, rights and other items of like nature; and to deal with the same
pursuant to Proper Instructions relative thereto.
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J. Borrowings - Upon receipt of Proper Instructions, to deliver
securities of the Portfolio to lenders or their agents . collateral for
borrowings effected by the Portfolio, provided that such borrowed money is
payable to or upon the Custodian's order as Custodian for the Portfolio.
K. Demand Deposit Bank Accounts - To open and maintain an account or
accounts in the name of the Portfolio on the Custodian's books subject only to
draft or order by the Custodian. All funds received by the Custodian from or for
the account of the Portfolio shall be deposited in said account(s). The
responsibilities of the Custodian to the Portfolio for deposits accepted on the
Custodian's books shall be that of a U. S. bank for a similar deposit.
If and when authorized by Proper Instructions, the Custodian may open
and operate an additional account(s) in such other bank or trust companies as
may be designated by the Fund in such instructions (any such bank or trust
company so designated by the Fund being referred to hereafter as a "Banking
Institution"), provided that such account(s) (hereinafter collectively referred
to as "demand deposit bank accounts") shall be in the name of the Custodian for
account of the Portfolio and subject only to the Custodian's draft or order.
Such demand deposit bank accounts may be opened with Banking Institutions in the
United States an in other countries and may be denominated in either U. S.
Dollar or other currencies as the Fund may determine. All such deposit shall be
deemed to be portfolio securities of the Portfolio and accordingly the
responsibility of the Custodian therefor shall the same as and no greater than
the Custodian's responsibility respect of other portfolio securities of the
Portfolio.
L. Interest Bearing Call or Prime Deposits - To place interest bearing
fixed term and call deposits with such banks are in such amounts for the account
of the Portfolio as the Fund may authorize pursuant to Proper Instructions. Such
deposits may be placed with the Custodian
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or with Subcustodians or other Banking Institutions as the Fund may determine.
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 Portfolio
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, other than
those placed with the Custodian, shall be deemed portfolio securities of the
Portfolio and the responsibilities of the Custodian therefor shall be the same
as those for demand deposit bank accounts placed with other banks, as described
in Section __ of this Agreement. The responsibility of the Custodian for such
deposits accepted on the Custodian's books shall be that of a U. S. bank for a
similar deposit.
M. Foreign Exchange Transactions - Pursuant to Proper Instructions, 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
Portfolio. Such transactions may be undertaken by the Custodian with such
Banking Institutions, including the Custodian and Subcustodian(s) as principals,
as approved and authorized by the Fund. Foreign exchange contracts and options
other than those executed with the Custodian, shall be deemed to be portfolio
securities of the Portfolio and the responsibilities of the Custodian therefor
shall be the same as those for demand deposit bank accounts placed with other
banks as described in Section K of this Agreement.
N. Stock Loans - Upon receipt of Proper Instructions, to deliver
securities of the Portfolio, in connection with loans or securities by the
Portfolio, to the borrower thereof prior to receipt of the collateral, if any,
for such borrowing, provided that for stock loans secured by cash collateral the
Custodian's instructions to the Securities System require that the Securities
System
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may deliver the securities to the borrower thereof only upon receipt of the
collateral for such borrowing.
O. Collections - To collect, receive and deposit in said account or
accounts all income and other payments with respect to the securities held
hereunder, and to 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 Portfolio or in connection with
transfer of securities, and pursuant to Proper Instructions, with respect to
collection or receipt of funds or transfer of securities which involve an
investment decision, to take all other necessary or proper actions.
P. Dividends, Distributions and Redemptions - Upon receipt of Proper
Instructions from the Fund, or upon receipt of instructions from the Fund's
transfer agent, dividend disbursing agent, shareholder servicing agent: or agent
with comparable duties (the "Shareholder Servicing Agent") (given by such person
or persons and in such manner on behalf of the Shareholder Servicing Agent as
the Fund shall have authorized), the Custodian shall release funds or securities
to the Shareholder Servicing Agent or otherwise apply funds or securities,
insofar as available, for the payment of dividends or other distributions
Portfolio shareholders. Upon receipt of Proper Instructions from the Fund, or
upon receipt of instructions from the Shareholder Servicing Agent (given by such
person or persons and in such manner on behalf of the Shareholder Servicing
Agent as the Fund shall have authorized), the Custodian shall release funds or
securities, insofar as available, to the Shareholder Servicing Agent or as such
Agent shall otherwise instruct for payment to Portfolio shareholders who have
delivered to such Agent a request for repurchase or redemption of their shares
of the Portfolio.
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Q. Proxies, Notices, Etc. - Promptly to deliver or mail to the Fund all
forms of proxies and all notices of meetings and other notices or announcements
affecting or relating to securities owned by the Portfolio that are received by
the Custodian, and upon receipt of Proper Instructions, to 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
such securities execute any proxy to vote thereon or give any consent or take
any other action with respect thereto (except as otherwise here provided) unless
ordered to do so by Proper Instructions.
R. Nondiscretionary Details - Without the necessity of express
authorization from the Fund, (1) to attend to all nondiscretionary details in
connection with the sale, exchange substitution, purchase, transfer or other
dealings with securities, funds or other property of the Portfolio held by the
Custodian except as otherwise directed from time to time by the Trustees of the
Fund, and (2) to make payments to itself or others for minor expenses of
handling securities or other similar items relating to the Custodian's duties
under this Agreement, provided that all such payments shall be accounted for to
the Fund.
S. Deposit of Portfolio Assets in Securities Systems - The Custodian
may deposit and/or maintain securities owned by the Portfolio in (i) The
Depository Trust Company, (ii) any bookentry system as provided in Subpart O of
Treasury Circular Xx. 000, 00 XXX 000, Xxxxxxx X of 31 CFR Part 350, or the
bookentry regulations of federal agencies substantially in the form of Subpart
O, or (iii) 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 and whose use the Fund has previously
approved in writing (each of the foregoing being referred to in this Agreement
as a "Securities System"). Utilization of a
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Securities System shall be in accordance with applicable Federal Reserve Board
and Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
1) The Custodian may deposit and/or maintain Portfolio securities,
either directly or through one or more Agents appointed by the Custodian
(provided that any such agent shall be qualified to act as a custodian of the
Fund pursuant to the Investment Company Act of 1940 and the rules and
regulations thereunder), in Securities System provided that such securities are
represented in an account ("Account") of the Custodian or such Agent in the
Securities System which shall not include any assets of the Custodian or Agent
other than assets held as a fiduciary, custodian, or otherwise for customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Portfolio,
3) The Custodian shall pay for securities purchased for the account of
the Portfolio upon (i) receipt of advice from the Securities System that such
securities have been transferred to the Account, and (ii) the making of an entry
on the records of the Custodian to reflect such payment and transfer for the
account of the Portfolio. The Custodian shall transfer securities sold for the
account of the Portfolio upon (i) receipt of 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 Portfolio. Copies of all advices from the
Securities System of transfers of securities for the account of the Portfolio
shall identify the Portfolio, be maintained for the Portfolio by the Custodian
or an Agent as referred to above, and provided to the Fund at its request. The
Custodian shall furnish the Fund confirmation of each transfer to or from the
account of the
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Portfolio in the form of a written advice or notice and shall furnish to the
Fund copies of daily transaction sheets reflecting each day's transactions in
the Securities System for the account of the Portfolio on the next business day;
4) The Custodian shall provide the Fund with any report obtained by the
Custodian or any Agent as referred to above on the Securities System's
accounting system, internal accounting contract and procedures for safeguarding
securities deposited in the Securities System; and the Custodian and such Agents
shall send to the Fund such reports on their own systems of internal accounting
control as the Fund may reasonably request from time to time.
5) At the written request of the Fund, the Custodian will terminate the
use of any such Securities System on behalf of the Portfolio as promptly as
practicable.
T. Other Transfers - To deliver securities, funds and other property of
the Portfolio to a Subcustodian or another custodian of the Portfolio; and, upon
receipt of Proper Instructions, to make such other disposition of securities,
funds or other property of the Portfolio in a manner other than or for purposes
other than as enumerated elsewhere in this Agreement, provided that the
instructions relating to such disposition shall include a statement of the
purpose for which the delivery is to be made, the amount of securities to be
delivered and the name of the person or persons to whom delivery is to be made.
U. Investment Limitations - In performing its duties generally, and
more particularly in connection with the purchase, sale and exchange of
securities made by or for the Portfolio, the Custodian may assume unless and
until notified in writing to the contrary that Proper Instructions received by
it are not in conflict with or in any way contrary to any provisions of the
Fund's Declaration of Trust or By-Laws (or comparable documents) votes or
proceedings of the shareholders or Trustees of the Fund or the Fund's
Registration Statement on Form N-lA. The
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Custodian shall in no event be liable to the Portfolio for any violation or any
investment limitations to which the Portfolio is subject or other limitations
with respect to the Fund's powers to make expenditures, encumber securities,
borrow or take similar actions affecting the Portfolio.
V. Proper Instructions - "Proper Instructions" shall mean a tested
telex from the Fund or a written request, direction, instruction or
certification signed or initialled on behalf of the Fund by one or more person
or persons as the Board of Trustees of the Fund shall have from time to time
authorized, provided, however, that no such instructions directing the delivery
of securities or the payment of funds to an authorized signatory of the Fund
shall be signed by such person. Those persons authorized to give Proper
Instructions may be identified by the Board of Trustees by name, title or
position and will include at least one officer empowered by the Board to name
other individuals who are authorized to give Proper Instructions on behalf of
the Portfolio Telephonic or other oral instructions given by any one of the
above persons 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. Oral instructions will be
confirmed by tested telex or in writing in the manner set forth above but the
lack of such confirmation shall in no way affect any action taken by the
Custodian in reliance upon such oral instructions. The Fund authorizes the
Custodian to tape record any and all telephonic or other oral instructions given
to the Custodian by or on behalf of the Fund (including any of its officers,
Trustees, employees or agents) and will deliver to the Custodian a similar
authorization from any investment manager or adviser or person or entity with
similar responsibilities which is authorized to give Proper Instructions on
behalf of the Portfolio to the Custodian. Proper Instructions may relate to
specific transactions or to types or classes of transactions, and may be in the
form of standing instructions.
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Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices or systems, in addition to
tested telex, provided that the Fund and the Custodian agree to the use of such
device or system.
W. Segregated Account - The Custodian shall upon receipt of Proper
Instructions establish and maintain on its books a segregated account or
accounts for and on behalf of the Portfolio into which account or accounts may
be transferred cash and/or securities of the Portfolio, including securities
maintained by the Custodian pursuant to Section 2S hereof, (i) in accordance
with provisions of any agreement among the Fund, the Custodian and a
broker-dealer registered under the Securities Exchange Act of 19__ and a member
of the National Association of Securities Dealers, Inc. (or any futures
commission merchant registered under the Commodity Exchange Act) relating to
compliance with the rules of the Options Clearing Corporation and of any
registered national securities exchange (or the Commodity Futures Trading
Commission any registered contract market), or any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Portfolio, (ii) for purposes of segregating cash or
securities in connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon purchased or sold by
the Portfolio, (iii) for the purposes of compliance by the Portfolio with the
procedures required by Investment Company Act Release No. 10666, any subsequent
release or releases of the Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered investment companies, and (iv)
as mutually agreed from time to time between the Fund and the Custodian.
3. Securities, funds and other property of the Portfolio may be held by
any Subcustodian appointed pursuant to the provisions of this Section 3. The
Custodian may, at any
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time and from time to time, appoint any bank or trust company (meeting the
requirements of a custodian or an "eligible foreign custodian" under the
Investment Company Act of 1940 and the rules and regulations thereunder) to act
as a Subcustodian for the Portfolio, provided that the Fund shall have approved
in writing (1) any such bank or trust company and the subcustodian agreement to
be entered into between such bank or trust company and the Custodian, and (2)
the country or countries in which and the securities depositories, if any,
through which the Subcustodian is authorized to hold securities, cash and other
property of the Portfolio. Upon such approval by the Fund, the Custodian is
authorized on behalf of the Portfolio to notify each Subcustodian of its
appointment as such.
Those Subcustodians and the countries where and the securities
depositories through which they may hold securities, cash and other property of
the Portfolio which the Fund has approved to date are set forth on Appendix A
hereto. Such Appendix shall be amended from time to time as Subcustodians and/or
countries and/or securities depositories are changed, added or deleted. The Fund
shall be responsible for informing the Custodian sufficiently in advance of a
proposed investment which is to be held in a country not listed on Appendix A,
in order that there shall be sufficient time for the Fund's Board of Trustees to
consider approval of a subcustodian in the country as required by the preceding
paragraph and for the Custodian to effect the appropriate arrangements with such
Subcustodian, including entry into a proposed subcustodian agreement and
submission of such subcustodian agreement to the Fund's Board of Trustees for
approval.
If the Portfolio shall have invested in a security to be held in a
country before the foregoing procedures have been completed, such security shall
be held by such agent as the Custodian may appoint. In any event, the Custodian
shall be liable to the Portfolio for the actions
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of such agent if and only to the extent the Custodian shall have recovered from
such agent for any damages caused the Portfolio by such agent. At the request of
the Fund, Custodian agrees to remove any securities held on behalf of the
Portfolio by such agent, if practical, to an approved Subcustodian Under such
circumstances Custodian will collect income and report to corporate actions on a
best efforts basis.
With respect to the securities and funds held by a Subcustodian, either
directly or indirectly, including demand and interest bearing deposits,
currencies or other deposits and foreign exchange contracts as referred to in
Sections 2K, 2L or 2M, the Custodian shall be liable to the Portfolio if and
only to the extent that such Subcustodian is liable to the Custodian and the
Custodian recovers under the applicable subcustodian agreement. The Custodian
shall nevertheless be liable to the Portfolio for its own negligence in
transmitting any instructions received by it from the Fund for the account of
the Portfolio and for its own negligence in connection with the delivery of any
securities or funds held by it to any such Subcustodian.
In the event that any Subcustodian appointed pursuant to the provisions
of this Section 3 fails to perform any of its obligations under the terms and
conditions of the applicable subcustodian agreement, the Custodian shall use its
best efforts to cause such Subcustodian to perform such obligations. In the
event that the Custodian is unable to cause such Subcustodian to perform fully
its obligations thereunder, the Custodian shall forthwith upon the Fund's
request terminate such Subcustodian in accordance, with the termination
provisions under the applicable subcustodian agreement. At the election of the
Fund, it shall have the right to enforce, to the extent permitted by the
subcustodian agreement as applicable law, the Custodian's rights against any
such Subcustodian for loss or damage caused the Portfolio by such Subcustodian.
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The Custodian may, at any time in its discretion upon notification to
the Fund, terminate any Subcustodian of the Portfolio in accordance with the
termination provisions under the applicable Subcustodian Agreement, and at the
written request of the Fund, the Custodian will terminate any Subcustodian in
accordance with the termination provisions under the applicable Subcustodian
Agreement.
If necessary or desirable, the Custodian may appoint another
subcustodian to replace a Subcustodian terminated pursuant to the foregoing
provisions of this Section 3, such appointment to be made upon approval of the
successor subcustodian by the Fund's Board of Trustees in accordance with the
provisions of this Section 3.
The Custodian will not amend any subcustodian agreement or agree to
change or permit any changes thereunder except upon the prior written approval
of the Fund.
In the event the Custodian makes any payment to a Subcustodian under
the indemnification provisions of any subcustodian agreement no more than thirty
days after written notice to the Fund of the Custodian's intention to make such
payment, the Portfolio will reimburse the Custodian the amount of such payment
except in respect of any negligence or misconduct of the Custodian.
4. The Custodian may assist generally in the preparation of reports to
Portfolio shareholders and others, audits of accounts and other ministerial
matters of like nature.
5. The Fund hereby also appoints the Custodian as the Portfolio's
financial agent. With respect to the appointment as financial agent, the
Custodian shall have and perform the following powers and duties:
A. Records - To create, maintain and retain such records relating to
its activities and obligations under this Agreement are required under the
Investment Company Act of 1940 and
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the rules and regulations thereunder (including Section 31 thereof and Rule
31a-1 and 31a-2 thereunder) and under applicable Federal and State tax laws. All
such records will be the property of the Fund and in the event of termination of
this Agreement shall be delivered to the successor custodian.
B. Accounts - To keep books of account and render statements including
interim monthly and complete quarterly financial statements, or copies thereof,
from time to time as reasonably requested by Proper Instructions.
C. Access to Records - The books and records maintained by the
Custodian pursuant to Sections 5A and 5B shall at all times during the
Custodian's regular business hours be open to inspection and audit by officers
of, attorneys for and auditors employed by the Fund and by employees and agents
of the Securities and Exchange Commission, provided that all such individuals
shall observe all security requirements of the Custodian applicable to its own
employees having access to similar records within the Custodian and such
regulations as may be reasonably imposed by the Custodian.
D. Calculation of Net Asset Value - To compute and determine the net
asset value per share of shares of the Portfolio as of the close of business on
the New York Stock Exchange on each day on which such Exchange is open, unless
otherwise directed by Proper Instructions. Such computation and determination
shall be made in accordance with (1) the provisions of the current effective
prospectus, Declaration of Trust and By-Laws of the Fund, as they may from time
to time be amended and delivered to the Custodian, (2) the votes of the Board of
Trustees of the Fund at the time in force and applicable, as they may from time
to time be delivered to the Custodian, and (3) Proper Instructions from such
officers of the Fund or other persons as are from time to time authorized by the
Board of Trustees of the Fund to give instructions with
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respect to computation and determination of the net asset value. On each day
that the Custodian shall compute the net asset value per share of the Portfolio
the Custodian shall provide the Fund with written reports which permit the Fund
to verify that portfolio transactions have been recorded in accordance with the
Fund's instructions.
In computing the net asset value, the Custodian may rely upon any
information furnished by Proper Instructions, including without, limitation any
information (1) as to accrual of liabilities of the Portfolio and as to
liabilities of the Portfolio not appearing on the books of account kept by the
Custodian, (2) as to the existence, status and proper treatment of Portfolio
reserves, if any, authorized by the Fund, (3) as to the sources of quotations to
be used in computing the net asset value, including those listed in Appendix B,
(4) as to the fair value to be assigned to any securities or other property for
which price quotations are not readily available, and (5) as to the sources of
information with respect to "corporate actions" affecting portfolio securities
of the Portfolio, including those listed in Appendix B. (Information as to
"corporate actions" shall include information as to dividends, distributions,
stock splits, stock dividends, rights offerings, conversions, exchanges,
recapitalizations, mergers, redemptions, calls, maturity dates and similar
transactions, including the ex-dividend and record dates and the amounts or
other terms thereof.)
In like manner, the Custodian shall compute and determine the net asset
value of the Portfolio as of such other times as the Board of Trustees of the
Fund from time to time may reasonably request.
Notwithstanding any other provisions of this Agreement, including
Section 6C, the following provisions shall apply with respect to the Custodian's
foregoing responsibilities in this Section 5D: The Custodian shall be held to
the exercise of reasonable care in computing and
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determining net asset value as provided in this Section 5D, but shall not be
held accountable or liable for any losses, damages or expenses the Portfolio or
any shareholder or former shareholder of the Portfolio or any other party may
suffer or incur arising from or based upon errors or delays in the determination
of such net asset value unless such error or delay was due to the Custodian's
negligence, gross negligence or reckless or willful misconduct in determination
of such net asset value. (The parties hereto acknowledge, however, that the
Custodian's causing an error or delay in the determination of net asset value
does not in and of itself constitute negligent gross negligence or reckless or
willful misconduct.) In no event shall the Custodian be liable or responsible to
the Portfolio, a present or former shareholder of the Portfolio or any other
part for any error or delay which continued or was undetected after the date of
an audit of the Portfolio performed by the certified public accountants employed
by the Fund if, in the exercise of reasonable care, such accountants should have
become aware of such error or delay in the course of performing such audit. The
Custodian's liability for any such negligence, gross negligence or reckless
willful misconduct which results in an error in determination of such net asset
value, regardless of the nature or characterization of such damages, shall be
limited solely to the direct, out-of-pocket loss the Portfolio, shareholder or
former shareholder shall actually incur, measured by the difference between the
actual and the erroneously computed net asset value.
Without limiting the foregoing, the Custodian shall not be held
accountable or liable to the Portfolio, any shareholder former shareholder
thereof or any other person for any delays or losses, damages or expenses any of
them may suffer or incur resulting from (1) errors or delays in the computation
of net asset value resulting from equipment failure or interruption of power
sources, (2) the Custodian's failure to receive timely and suitable notification
concerning quotations or corporate actions relating or affecting portfolio
securities of the Portfolio or (3) any
18
errors in the computation of the net asset value based upon or arising out of
quotations or information as to corporate actions received by the Custodian
either (i) from a source which the Custodian was authorized pursuant to the
second paragraph of this Section 5D to rely upon or (ii) from a source which in
the Custodian's reasonable judgment was as reliable a source for successful
quotations or information as the sources authorized pursuant to that paragraph.
Nevertheless, the Custodian will use its best judgment in determining whether to
verify through other sources information it has received as to quotations or
corporate action if the Custodian believes that any such information is
incorrect
In the event of any error or delay in the determination of such net
asset value for which the Custodian may be liable, the Fund will make reasonable
efforts to mitigate any loss suffered by the Portfolio or its present or former
shareholders or any other party, in order to reduce the Custodian's exposure to
liability, such as by taking reasonable steps to collect from any Portfolio
shareholder or former shareholder who has received any overpayment upon
redemption of shares such overpaid amount or to collect from any Portfolio
shareholder who has underpaid upon a purchase of shares the amount of such
underpayment or to reduce the number of shares issued to such shareholder.
E. Disbursement -- Upon receipt of Proper Instructions, to pay or cause
to be paid, insofar as funds are available for the purpose, bills, statements
and other obligations of the Portfolio (including but not limited to interest
charges, taxes, management fees, compensation to Fund officers and employees,
and other operating expenses of the Portfolio).
6. A. The Custodian shall not be liable for any action taken or omitted
in reliance upon Proper Instructions reasonably believed by it to be genuine or
upon any other
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written notice, request, direction, instruction, certificate or other instrument
reasonably believed by it to be genuine and signed by the proper party or
parties.
The Secretary or Assistant Secretary of the Fund shall certify to the
Custodian the names, signatures and scope of authority of all persons authorized
to give Proper Instructions or any other such notice, request, direction,
instruction, certificate or instrument on behalf of the Portfolio, the names and
signatures of the officers of the Fund, the name and address of the Shareholder
Servicing Agent, and any resolutions, votes, instructions or directions of the
Fund's Board of Trustees or shareholders. Such certificate may be accepted and
relied upon by the Custodian as conclusive evidence of the facts set forth
therein and may be considered in full force and effect until receipt of a
similar certificate to the contrary.
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of the thereto received by it or
delivered by it pursuant to this Agreement.
The Custodian shall be entitled, at the expense of the Portfolio, to
receive and act upon advice of (i) counsel regularly retained by the Custodian
in respect of custodian matters, (ii) counsel for the Fund, or (iii) such other
counsel as the Fund and the Custodian may agree upon, with respect to all
matters, and the Custodian shall be without liability for any action reasonably
taken or omitted pursuant to such advice.
B. With respect to the portfolio securities, cash and other property of
the Portfolio held by a Securities System, the Custodian shall be liable to the
Portfolio only for any loss or damage to the Portfolio resulting from use of the
Securities System if caused by any negligence, misfeasance or misconduct of the
Custodian or any of its agents or of any of its or their
20
employees or from any failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the Securities System. At the
election of the Fund, 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
to the Portfolio of and to the extent that the Portfolio has not been made whole
for any such loss or damage.
C. Except as may otherwise be set forth in this Agreement with respect
to particular matters, the Custodian shall be held only to the exercise of
reasonable care and diligence in carrying out the provisions of this Agreement,
provided that the Custodian shall not thereby be required to take any action
which is in contravention of any applicable law. The Portfolio agrees to
indemnify and hold harmless the Custodian and its nominees from all claims and
liabilities (including counsel fees) incurred or assessed against it or its
nominees in connection with the performance of this Agreement, except such as
may arise from its its nominee's breach of the relevant standard of conduct set
fort in this Agreement. Without limiting the foregoing indemnification
obligation of the Portfolio, the Portfolio agrees to indemnify the Custodian and
any nominee in whose name portfolio securities or other property of the Fund is
registered against any liability Custodian or such nominee may incur by reason
of taxes assessed the Custodian or such nominee or other costs, liability or
expense incurred by the Custodian or such nominee resulting directly or
indirectly from the fact that portfolio securities or other property of the
Portfolio is registered in the name of the Custodian or such nominee.
It is also understood that the Custodian shall not be liable for any
loss involving any securities, currencies, deposits or other property of the
Portfolio, whether maintained by it, a Subcustodian, a securities depository, an
agent of the Custodian a Subcustodian, a Securities
21
System, or a Banking Institution, or loss arising from a foreign currency
transaction or contract, resulting from a Sovereign Risk. A "Sovereign Risk"
shall mean nationalization, expropriation, devaluation, revaluation,
confiscation, seizure, cancellation, destruction or similar act by any
governmental authority, de facto or de jure; or enactment promulgation,
imposition or enforcement by any such governmental authority of currency
restrictions, exchange controls, taxes, levies or other charges affecting the
Portfolio's property; or an act of war, terrorism, insurrection or revolution;
or any other similar act or event beyond the Custodian's control.
D. The Custodian shall be entitled to receive reimbursement from the
Portfolio on demand, in the manner provided in Section __ for its cash
disbursements, expenses and charges (including the fees and expenses of any
Subcustodian or any Agent) in connection with this Agreement, but excluding
salaries and usual overhead expenses.
E. The Custodian may at any time or times in its discretion appoint
(and may at any time remove) any other bank or trust company which is qualified
to act as a custodian under the Investment Company Act of 1940, as amended, as
the Custodian's agent ("Agent")) to carry out such of the provisions of this
Agreement as the Custodian may from time to time direct, provided however, that
the appointment of such Agent (other than an Agent appointed pursuant to the
third paragraph of Section 3) shall not relieve the Custodian of any of its
responsibilities under this agreement.
F. Upon request, the Fund shall deliver to the Custodian such proxies,
powers of attorney or other instruments as may be reasonable and necessary or
desirable in connection with the performance by the Custodian or any
Subcustodian of their respective obligations under this Agreement or any
applicable subcustodian agreement.
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7. The Portfolio shall pay the Custodian a custody fee based on such
fee schedule as may from time to time be agreed upon in writing by the Custodian
and the Fund. Such fee, together with amounts for which the Custodian is to be
reimbursed in accordance with Section 6D, shall be billed to the Fund for the
account of Portfolio in such a manner as to permit payment either by a dire cash
payment to the Custodian or by placing Portfolio transaction with the Custodian
resulting in an agreed-upon amount of commissions being paid to the Custodian
within an agreed-upon period of time.
8. This Agreement shall continue in full force and effect until
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid, to the other party, such termination to take effect not sooner
than seventy five (75) days after the date of such delivery or mailing. In the
event of termination the Custodian shall be entitled to receive prior to
delivery of the securities, funds and other property held by it a accrued fees
and umreimbursed expenses the payment of which is contemplated by Sections 6D
and 7, upon receipt by the Fund of a statement setting forth such fees and
expenses.
In the event of the appointment of a successor custodian, it is agreed
that the funds and securities owned by the Portfolio and held by the Custodian
or any Subcustodian shall be delivered to the successor custodian, and the
Custodian agrees to cooperate with the Fund in execution of documents and
performance of other actions necessary or desirable in order to substitute the
successor custodian for the Custodian under this Agreement.
9. The Custodian agrees that any claims by it against the Fund under
this Agreement may be satisfied only from the assets of the Fund; that the
person executing this Agreement has executed it on behalf of the Fund and not
individually, and that the obligations of the Fund arising out of this Agreement
are not binding upon such person or the Fund's shareholders
23
individually but are binding only upon the assets and property of the Fund; and
that no shareholders, trustees or officers of the Fund may be held personally
liable or responsible for any obligations of the Fund arising out of this
Agreement.
This Agreement constitutes the entire understanding and agreement of
the parties hereto with respect to the subject matter hereof. No provision of
this Agreement may be amended or terminated except by a statement in writing
signed by the party against which enforcement of the amendment or termination is
sought.
In connection with the operation of this Agreement, the Custodian and
the Fund may agree in writing from time to time on such provisions
interpretative 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. No
interpretative or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Agreement.
10. This instrument is executed and delivered in The Commonwealth of
Massachusetts and shall be governed by and construed according to the laws of
said Commonwealth.
11. Notices and other writings delivered or mailed postage prepaid to
the Fund addressed to the Fund at PaineWebber Incorporated, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Mutual Fund Administrator, or to
such other address as the Fund may have designated to the Custodian in writing,
or to the Custodian at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention:
Manager, ,Securities Department, or to such other address as the Custodian may
have designated to the Fund in writing, shall be deemed to have been properly
delivered given hereunder to the respective addressee.
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12. This Agreement shall be binding on and shall inure to the benefit
of the Fund and the Custodian and their respective successors and assigns,
provided that neither party hereto may assign this Agreement or any of its
rights or obligations hereunder without the prior written consent of the other
party.
13. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original. This Agreement shall become effective when
one or more counterparts has been signed and delivered by each of the parties.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and behalf on the day and year first above written.
PAINEWEBBER INVESTMENT SERIES XXXXX BROTHERS XXXXXXXX & CO.
By: /s/ Xxxxxx X. X'Xxxxxxx per pro /s/
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