PAGE 1
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT dated July 23rd, 1986, between IDS Bond
Fund, Inc., a Minnesota Corporation (hereinafter also called the
"Corporation") and First National Bank of Minneapolis, a
corporation organized under the laws of the United States of
America with its principal place of business at Minneapolis,
Minnesota (hereinafter also called the "Custodian").
WHEREAS, the Corporation desires that its securities and cash be
hereafter held and administered by the Custodian pursuant to the
terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Corporation and the Custodian agree as follows:
Section 1. Definitions
The word "securities" as used herein shall be construed to include,
without being limited to, shares, stocks, treasury stocks,
including any stocks of this Corporation, notes, bonds, debentures,
evidences of indebtedness, options to buy or sell stocks or stock
indexes, certificates of interest or participation in any profit-
sharing agreements, collateral trust certificates, preorganization
certificates or subscriptions, transferable shares, investment
contracts, voting trust certificates, certificates of deposit for a
security, fractional or undivided interests in oil, gas or other
mineral rights, or any certificates of interest or participation
in, temporary or interim certificates for, receipts for, guarantees
of, or warrants or rights to subscribe to or purchase any of the
foregoing, acceptances and other obligations and any evidence of
any right or interest in or to any cash, property or assets and any
interest or instrument commonly known as a security. In addition,
for the purpose of this Agreement, the word "securities" also shall
include other instruments in which the Corporation may invest
including currency forward contracts and commodities such as
interest rate or index futures contracts, margin deposits on such
contracts or options on such contracts.
The words "custodian order" shall mean a request or direction,
including a computer printout, directed to the Custodian and signed
in the name or the Corporation by any two individuals designated in
the current certified list referred to in Section 2.
The word "facsimile" shall mean an exact copy or likeness which is
electronically transmitted for instant reproduction.
Section 2. Names, Titles and Signatures of Authorized Persons
The Corporation will certify to the Custodian the names and
signatures of its present officers and other designated persons
authorized on behalf of the Corporation to direct the Custodian by
custodian order as hereinbefore defined. The Corporation agrees
that whenever any change occurs in this list it will file with the
Custodian a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Corporation as having been duly adopted
by the Board of Directors or the Executive Committee of the Board
PAGE 2
of Directors of the Corporation designating those persons currently
authorized on behalf of the Corporation to direct the Custodian by
custodian order, as hereinbefore defined, and upon such filing (to
be accompanied by the filing of specimen signatures of the
designated persons) the persons so designated in said resolution
shall constitute the current certified list. The Custodian is
authorized to rely and act upon the names and signatures of the
individuals as they appear in the most recent certified list from
the Corporation which has been delivered to the Custodian as
hereinabove provided.
Section 3. Use of Subcustodians
The Custodian may make arrangements, where appropriate, with other
banks having not less than two million dollars aggregate capital,
surplus and undivided profits for the custody of securities and
cash.
The Custodian also may enter into arrangements for the custody of
"Foreign Securities" and cash entrusted to its care through an
"Eligible Foreign Custodian," as those terms are defined by Rule
17f-5 under the Investment Company Act of 1940 (the "Act"), or such
other entity as permitted by the Securities and Exchange Commission
(the "SEC") (such Eligible Foreign Custodians, collectively,
"Foreign Custodial Agents") provided, if required by the SEC, that
the Board has given its prior approval to the use of, and
Custodian's contract with, each Foreign Custodial Agent by
resolution, and a certified copy of such resolution has been
provided to the Custodian. To the extent the provisions of this
Agreement are consistent with the requirements of the Act, rules,
orders or no-action letters of the SEC, they shall apply to all
such foreign custodianships. To the extent such provisions are
inconsistent with or additional requirements are established by the
Act or such rules, orders or no-action letters, the requirements of
the Act or such rules, orders or no-action letters will prevail and
the parties will adhere to such requirements; provided, however, in
the absence of notification from the Corporation of any changes or
additions to such requirements, the Custodian shall have no duty or
responsibility to inquire as to any such changes or additions.
All subcustodians of the Custodian (such subcustodians,
collectively, the "Subcustodians"), including all Foreign Custodial
Agents, shall be subject to the instructions of the Custodian and
not to those of the Corporation and shall act solely as agent of
the Custodian.
Section 4. Receipt and Disbursement of Money
(1) The Custodian shall open and maintain a separate account or
accounts in the name of the Corporation and cause any Subcustodians
to open and maintain such account or accounts, subject only to
checks, drafts or directives by the Custodian or such Subcustodian
pursuant to the terms of this Agreement. The Custodian or such
Subcustodian shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account
of the Corporation. The Custodian or such Subcustodian shall make
payments of cash to or for the account of the Corporation from such
cash only:
PAGE 3
(a) for the purchase of securities for the portfolio of the
Corporation upon the receipt of such securities by the
Custodian or such Subcustodian;
(b) for the purchase or redemption of shares of capital
stock of the Corporation;
(c) for the payment of interest, dividends, taxes,
management fees, or operating expenses (including,
without limitation thereto, fees for legal, accounting
and auditing services);
(d) for payment of distribution fees, commissions, or
redemption fees, if any;
(e) for payments in connection with the conversion,
exchange or surrender of securities owned or subscribed
to by the Corporation held by or to be delivered to the
Custodian;
(f) for payments in connection with the return of
securities loaned by the Corporation upon receipt of
such securities or the reduction of collateral upon
receipt of proper notice;
(g) for payments for other proper corporate purposes; or
(h) upon the termination of this Agreement.
Before making any such payment for the purposes permitted under the
terms of items (a), (b), (c), (d), (e), (f) or (g) of paragraph (1)
of this section, the Custodian shall receive and may rely upon a
custodian order directing such payment and stating that the payment
is for such a purpose permitted under these items (a), (b), (c),
(d), (e), (f) or (g) and that in respect to item (g), a copy of a
resolution of the Board of Directors or of the Executive Committee
of the Board of Directors of the Corporation signed by an officer
of the Corporation and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose to be a proper corporate purpose, and naming the person or
persons to whom such payment is made. Notwithstanding the above,
for the purposes permitted under items (a) or (f) of paragraph (1)
of this section, the Custodian may rely upon a facsimile order.
(2) The Custodian is hereby appointed the attorney-in-fact of the
Corporation to endorse and collect all checks, drafts or other
orders for the payment of money received by the Custodian for the
account of the Corporation and drawn on or to the order of the
Corporation and to deposit same to the account of the Corporation
pursuant to this Agreement.
(3) Subject to the prior authorization provisions of Section 3 of
this Agreement, the Corporation authorizes the Custodian to
establish and maintain in each country or other jurisdiction in
which the principal trading market for any Foreign Securities is
located, or in which any Foreign Securities are to be presented for
payment, an account or accounts which may include nostro accounts
with Custodian branches and omnibus accounts of Custodian at
PAGE 4
Foreign Custodial Agents for receipt of cash in such currencies as
directed by custodian order. For purposes of this Agreement, cash
so held in any such account shall be evidenced by separate book
entries maintained by Custodian and shall be deemed to be cash held
by Custodian. Cash received or credited by Custodian or any
Custodian branch or any Foreign Custodial Agent in a currency other
than United States dollars shall be maintained in such currency and
shall not be converted or remitted except in accordance with the
custodian order, except as permitted by Section 7.
Section 5. Receipt of Securities
Except as permitted by the second paragraph of this section, the
Custodian shall, and shall cause any Subcustodians to, hold in a
separate account or accounts, and physically segregated at all
times from those of any other persons, firms or corporations,
pursuant to the provisions hereof, all securities and cash received
for the account of the Corporation. The Custodian shall, and shall
cause any Subcustodians to, record and maintain a record of all
certificate numbers. Securities so received shall be held in the
name of the Corporation, in the name of an exclusive nominee duly
appointed by the Custodian or such Subcustodian, or in bearer form,
as appropriate.
Subject to such rules, regulations or guidelines as the SEC may
adopt, the Custodian may deposit all or any part of the securities
owned by the Corporation in a securities depository which includes
any system for the central handling of securities established by a
national securities exchange or a national securities association
registered with the SEC under the Securities Exchange Act of 1934,
or such other person as may be permitted by the SEC, pursuant to
which system all securities of any particular class or series of
any issuer deposited within the system are treated as fungible and
may be transferred or pledged by bookkeeping entry without physical
delivery of such securities.
All securities are to be held or disposed of by the Custodian for,
and subject at all times to the instructions of, the Corporation
pursuant to the terms of this Agreement. The Custodian shall have
no power or authority to assign, hypothecate, pledge or otherwise
dispose of any such securities, except pursuant to the directive of
the Corporation and only for the account of the Corporation as set
forth in Section 6 of this Agreement.
Section 6. Transfer Exchange, Delivery, etc. of Securities
The Custodian shall have sole power to release or deliver any
securities of the Corporation held by it pursuant to this
Agreement. The Custodian agrees to transfer, exchange or deliver
securities held by it or any Subcustodian only:
(a) for sales of such securities for the account of the
Corporation, upon receipt of payment therefor;
(b) when such securities are called, redeemed, retired or
otherwise become payable;
PAGE 5
(c) for examination upon the sale of any such securities in
accordance with "street delivery" custom which would
include delivery against interim receipts or other
proper delivery receipts;
(d) in exchange for or upon conversion into other
securities alone or other securities and cash whether
pursuant to any plan of merger, consolidation,
reorganization, recapitalization or readjustment, or
otherwise;
(e) for the purpose of exchanging interim receipts or
temporary certificates for permanent certificates;
(f) upon conversion of such securities pursuant to their
terms into other securities;
(g) upon exercise of subscription, purchase or other
similar rights represented by such securities;
(h) for loans of such securities by the Corporation upon
receipt of collateral; or
(i) for other proper corporate purposes.
As to any deliveries made by the Custodian pursuant to items (a),
(b), (c), (d), (e), (f), (g) and (h), securities or cash received
in exchange therefore shall be delivered to the Custodian, a
Subcustodian or a securities depository. Before making any such
transfer, exchange or delivery, the Custodian shall receive a
custodian order or a facsimile from the Corporation requesting such
transfer, exchange or delivery and stating that it is for a purpose
permitted under this section (whenever a facsimile is utilized, the
Corporation will also deliver an original signed custodian order)
and, in respect to item (i), a copy of a resolution of the Board of
Directors or of the Executive Committee or the Board of Directors
of the Corporation signed by an officer of the Corporation and
certified by its Secretary or an Assistant Secretary, specifying
the securities, setting forth the purpose for which such payment,
transfer, exchange or delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or
persons to whom such transfer, exchange or delivery of such
securities shall be made.
Section 7. Custodian's Acts Without Instructions
Unless and until the Custodian receives a contrary custodian order
from the Corporation, the Custodian shall or shall cause a
Subcustodian to:
(a) present for payment all coupons and other income items
held by the Custodian or such Subcustodian for the
account of the Corporation which call for payment upon
presentation and hold all cash received upon such
payment for the account of the Corporation;
PAGE 6
(b) present for payment all securities held by it or such
Subcustodian which mature or when called, redeemed,
retired or otherwise become payable;
(c) ascertain all stock dividends, rights and similar
securities to be issued with respect to any securities
other than Foreign Securities;
(d) collect and hold for the account of the Corporation all
stock dividends, rights and similar securities issued
with respect to any securities;
(e) ascertain all interest and cash dividends to be paid to
security holders with respect to any securities other
than Foreign Securities;
(f) collect and hold all interest and cash dividends for
the account of the Corporation;
(g) present for exchange securities converted pursuant to
their terms into other securities;
(h) exchange interim receipts or temporary securities for
definitive securities;
(i) execute in the name of the Corporation such ownership
and other certificates as may be required to obtain
payments in respect thereto, provided that the
Corporation shall have furnished to the Custodian or
such Subcustodian any information necessary in
connection with such certificates; and
(j) convert interest and dividends received with respect to
Foreign Securities into United States dollars whenever
it is practicable to do so through customary banking
channels, including the Custodian's own banking
facilities.
Section 8. Settlement Procedures
Settlement procedures for transactions in Foreign Securities,
including receipts and payments of cash held in any nostro account
or omnibus account, shall be carried out in accordance with
instructions in the operational manual provided by the Custodian
(the "Operational Manual"). It is understood that such settlement
procedures may vary, as provided in the Operational Manual, from
securities market to securities market, to reflect particular
settlement practices in such markets.
With respect to any transaction involving Foreign Securities, the
Custodian or any Subcustodian in its discretion may cause the
Corporation to be credited on the contractual settlement date with
the proceeds of any sale or exchange of Foreign Securities and to
be debited on the contractual settlement date for the cost of
Foreign Securities purchased or acquired. The Custodian may
reverse any such credit or debit if the transaction with respect to
which such credit or debit was made fails to settle within a
reasonable period, determined by the Custodian in its discretion,
PAGE 7
after the contractual settlement date except that if any Foreign
Securities delivered pursuant to this section are returned by the
recipient thereof, the Custodian may cause any such credits and
debits to be reversed at any time. With respect to any
transactions as to which the Custodian does not determine so to
credit or debit the Corporation, the proceeds from the sale or
exchange of Foreign Securities will be credited and the cost of
such Foreign Securities purchased or acquired will be debited on
the date such proceeds or Foreign Securities are received by the
Custodian.
Notwithstanding the preceding paragraph, settlement, payment and
delivery for Foreign Securities may be effected in accordance with
the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market
in which the transaction occurs, including, without limitation,
delivering Foreign Securities to the purchaser thereof or to a
dealer therefor against a receipt with the expectation of receiving
later payment for such Foreign Securities from such purchaser or
dealer.
Section 9. Records
The Custodian hereby agrees that it shall create, maintain, and
retain all records relating to its activities and obligations under
this Agreement in such manner as will meet their obligations under
this Agreement and the obligations of the Corporation under the
Act, particularly Section 31 thereof and Rules 31a-1 and 31a-2
thereunder and Section 17(f) thereof and the rules thereunder, and
applicable federal, state and foreign tax laws and other laws or
administrative rules or procedures, in each case as currently in
effect, which may be applicable to the Corporation. All records so
maintained in connection with the performance of its duties under
this Agreement shall remain the property of the Corporation and, in
the event of termination of this Agreement, shall be delivered in
accordance with the provisions of this Agreement.
(a) With respect to securities and cash held by the
Custodian's branches, such securities and cash may be
placed in an omnibus account for the customers of the
Custodian, and the Custodian shall maintain separate
book entry records for each such omnibus account.
(b) With respect to securities and cash deposited by the
Custodian with a Foreign Custodial Agent, the Custodian
shall identify on its books as belonging to the
Corporation the securities and cash shown on the
Custodian's account on the books of such Foreign
Custodial Agent.
PAGE 8
(c) With respect to securities and cash deposited with a
securities depository or clearing agency, incorporated
or organized under the laws of a country other than the
United States, which operates the central system for
handling of securities or equivalent book-entries in
that country or which operates a transnational system
for the central handling of securities or equivalent
book-entries (on "Eligible Foreign Securities
Depository"), the Custodian shall cause the securities
and cash shown on the account on the books of the
Eligible Foreign Securities Depository to be identified
as belonging to the Custodian as agent for the
Corporation.
The Custodian hereby agrees that the books and records of the
Custodian (including any Custodian branch) pertaining to its
actions under this Agreement shall be open to the physical, on-
premises inspection and audit by the independent accountant (the
"Accountant") employed by, or other representatives of, the
Corporation, and, upon the request of the Accountant, confirmation
of the contents of those records shall be provided by the
Custodian. The Custodian shall use its best efforts to cause any
Foreign Custodial Agent to afford access to the Accountant to the
books and records of such Foreign Custodial Agent with respect to
securities and cash held by such Foreign Custodial Agent for the
Corporation. The Custodian also agrees to furnish the Accountant
with such reports of the Custodian's (including any Custodian
branches') auditors as they relate to the services provided under
this Agreement and as are necessary for the Accountant to conduct
its examination of the books and records pertaining to affairs of
the Corporation, and the Custodian shall use its best efforts to
obtain and furnish similar reports of any Foreign Custodial Agent
holding securities and cash for the Corporation.
Section 10. Registration of Securities
Securities which are ordinarily held in registered form may be
registered in the name of the Custodian's nominee or, as to any
securities in the physical possession of an entity other than the
Custodian, in the name of such entity's nominee. The Corporation
agrees to hold any such nominee harmless from any liability as a
holder of record of such securities. The Custodian may without
notice to the Corporation cause any such securities to cease to be
registered in the name of any such nominee and to be registered in
the name of the Corporation. In the event that any security
registered in the name of the Custodian's nominee or held by any
Subcustodians and registered in the name of such Subcustodian's
nominee is called for partial redemption by the issuer of such
security, the Custodian may allot, or cause to be allotted, the
called portion to the respective beneficial holders of such class
of security in any manner the Custodian deems to be fair and
equitable.
PAGE 9
Section 11. Transfer Taxes
The Corporation shall pay or reimburse the Custodian and any
Subcustodian for any transfer taxes payable upon transfers of
securities made hereunder, including transfers resulting from the
termination of this Agreement. The Custodian shall, and shall use
its best efforts to cause any Subcustodian to, execute such
certificates in connection with securities delivered to it or such
Subcustodian under this Agreement as may be required, under any
applicable law or regulation, to exempt from taxation any transfers
and/or deliveries of any such securities which may be entitled to
such exemption.
Section 12. Voting and Other Action
Neither the Custodian or any Subcustodian nor any nominee of the
Custodian or such Subcustodian shall vote any of the securities
held hereunder by or for the account of the Corporation. The
Custodian shall, and shall use its best efforts to cause any
Subcustodian to, promptly deliver to the Corporation all notices,
proxies and proxy soliciting materials with relation to such
securities, such proxies to be executed by the registered holder of
such securities (if registered otherwise than in the name of the
Corporation), but without indicating the manner in which such
proxies are to be voted.
The Custodian shall, and shall use its best efforts to cause any
Subcustodian to, transmit promptly to the Corporation all written
information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection
therewith) received by the Custodian or such Subcustodian from
issuers of the securities being held for the Corporation. With
respect to tender or exchange offers, the Custodian shall, and
shall use its best efforts to cause any Subcustodian to, transmit
promptly to the Corporation all written information received by the
Custodian or such Subcustodian from issuers of the securities whose
tender or exchange is sought and from the party (or his agents)
making the tender or exchange offer.
Section 13. Custodian's Reports
The Custodian shall furnish the Corporation as of the close of
business each day a statement showing all transactions and entries
for the account of the Corporation. The books and records of the
Custodian pertaining to its actions as Custodian under this
Agreement and securities held hereunder by the Custodian shall be
open to inspection and audit by officers of the Corporation,
internal auditors employed by the Corporation's investment adviser,
and independent auditors employed by the Corporation. The
Custodian shall furnish the Corporation in such form as may
reasonably be requested by the Corporation a report, including a
list of the securities held by it in custody for the account of the
Corporation, identification of any subcustodian, and identification
of such securities held by such subcustodian, as of the close of
business on the last business day of each month, which shall be
certified by a duly authorized officer of the Custodian. It is
further understood that additional reports may from time to time be
requested by the Corporation. Should any report ever be filed
PAGE 10
with any governmental authority pertaining to lost or stolen
securities, the Custodian will concurrently provide the Corporation
with a copy of that report.
The Custodian also shall furnish such reports on its systems of
internal accounting control as the Corporation may reasonably
request from time to time.
Section 14. Security Interests, Liens and Transfers of Beneficial
Ownership
The securities and cash held by the Custodian hereunder shall not
be subject to any right, change, security interest, lien or claim
of any kind in favor of the Custodian or its creditors, except a
claim of payment for their safe custody or administration, and
beneficial ownership of such securities and cash shall be freely
transferable without the payment of money or value other than for
safe custody or administration. Any agreement the Custodian shall
enter into with any Subcustodian, including any Foreign Custodial
Agent, shall contain a provision which is substantially identical
to the foregoing.
In the event that there shall be asserted any attachment or lien on
or against any securities or cash held in any omnibus account or
nostro account referred to in this Agreement which results from any
claim against the Custodian (including any branch) or any such
account, which is not directly related to transactions in
securities or cash for the Corporation, the Custodian will use its
best efforts promptly to discharge such attachment or lien. If the
Custodian shall not have discharged such attachment or lien within
five business days, it shall notify the Corporation of the
existence of the attachment or lien. If the attachment or lien is
not discharged on the date required for delivery or payment with
respect to any securities or cash in accordance with the provisions
of the Operational Manual:
(a) in the case of such securities, at the option of the
Corporation, the Custodian shall either immediately
transfer to the Corporation a like amount of such
securities (provided the same shall be reasonably
available) or immediately transfer an amount in United
States dollars equal to the market value of such
securities, valued in accordance with such procedures
as may be mutually agreed to by the parties hereto;
(b) in the case of cash, the Custodian shall immediately
transfer to the Corporation an equal amount of cash in
United States dollars.
Section 15. Compensation
For its services hereunder the Custodian shall be paid such
compensation and out-of-pocket or incidental expenses at such times
as may from time to time be agreed on in writing by the parties
hereto in a Custodian Fee Agreement.
PAGE 11
Section 16. Standard of Care
The Custodian shall not be liable for any action taken in good
faith upon any custodian order or facsimile herein described or
certified copy of any resolution of the Board of Directors or of
the Executive Committee of the Board of Directors of the
Corporation, and may rely on the genuineness of any such document
which it may in good faith believe to have been validly executed.
The Corporation agrees to indemnify and hold harmless the
Custodian, any Subcustodian, or any nominees thereof from all
taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) incurred or assessed against any such
entity in connection with the performance of this Agreement, except
such as may arise from such entity's own negligent action,
negligent failure to act or willful misconduct. The Custodian is
authorized to charge any account of the Corporation for such items.
In the event of any advance of cash for any purpose made by the
Custodian resulting from orders or instructions of the Corporation,
or in the event that the Custodian or any nominee thereof shall
incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this
Agreement, except such as may arise from such entity's own
negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Corporation
shall be security therefor.
The Custodian shall maintain a standard of care equivalent to that
which would be required of a bailee for hire and shall not be
liable for any loss or damage to the Corporation resulting from
participation in a securities depository unless such loss or damage
arises by reason of any negligence, misfeasance, or willful
misconduct of officers or employees of the Custodian, or from its
failure to enforce effectively such rights as it may have against
any securities depository or from use of a Subcustodian, unless
such loss or damage arises by reason of any negligence,
misfeasance, or willful misconduct of officers or employees of the
Custodian, or from its failure to enforce effectively such rights
as it may have against such Subcustodian. Anything in the
foregoing to the contrary notwithstanding, the Custodian shall
exercise, in the performance of its obligations undertaken or
reasonably assumed with respect to this Agreement, including the
recommendation to the Board of Foreign Custodial Agents, reasonable
care, for which the Custodian shall be responsible to the same
extent as if it were performing such duties directly and holding
such securities and cash in Minnesota, United States of America.
The Custodian shall be indemnified and held harmless by the
Corporation from and against any loss or liability for any action
taken or omitted to be taken hereunder in good faith upon custodian
order and may rely on the genuineness of all such orders and
documents as it in good faith believes to have been validly
executed. The Custodian shall be responsible for the securities
and cash held by or deposited with any Subcustodian to the same
extent as if such securities and cash were directly held by or
deposited with the Custodian. The Custodian hereby agrees that it
shall indemnify and hold the Corporation harmless from and against
any loss which shall occur as a result of the failure of a Foreign
Custodial Agent holding the securities and cash to exercise
PAGE 12
reasonable care with respect to the safekeeping of such securities
and cash to the extent that the Custodian would be required to
indemnify and hold the Corporation harmless if the Custodian were
itself holding such securities and cash in Minnesota. It is also
understood that the Custodian shall not have liability for loss
except by reason of the Custodian's negligence, fraud or willful
misconduct, or by reason of negligence, fraud or willful misconduct
of any Subcustodian holding such securities or cash for the
Corporation.
The Custodian warrants that the established procedures to be
followed by any Subcustodian, in the opinion of the Custodian after
due inquiry, afford protection for such securities and cash at
least equal to that afforded by the Custodian's established
procedures with respect to similar securities and cash held by the
Custodian (including its securities depositories) in Minnesota.
However, the Custodian shall have no liability for any loss or
liability occasioned by delay in the actual receipt by it or any
Subcustodian of notice of any payment, redemption, or other
transaction regarding securities unless such delay is a result of
its own negligence, fraud, or willful misconduct.
The Custodian shall not be responsible for any loss of the
Corporation, or to take any action with respect to any attachment
or lien on any omnibus account or nostro account, except as
provided in Section 14 of this Agreement, if such loss, attachment
or lien arises by reason of any cause or circumstances beyond the
control of the Custodian or any Subcustodian acting on behalf of
the Custodian, including acts of civil or military authority,
expropriation, national emergency, acts of God, insurrection, war,
riots, or failure of transportation, communication or power supply,
or the failure of any person, firm or corporation (other than the
Custodian or any Subcustodian acting on behalf of the Custodian) to
perform any obligation if such failure results in any such loss.
Section 17. Insurance
The Custodian represents and warrants that it presently maintains
and shall maintain for the duration of this Agreement a bankers'
blanket bond (the "Bond") which provides standard fidelity and non-
negligent loss coverage with respect to securities and cash which
may be held by the Custodian and securities and cash which may be
held by any Subcustodian which may be utilized by the Custodian
pursuant to this Agreement. The Custodian agrees that, if at any
time the Custodian for any reason discontinues such coverage, it
shall immediately notify the Corporation in writing. The Custodian
represents that only the named insured on the Bond, which includes
the Custodian but not any of its customers, is directly protected
against loss. The Custodian represents that while it might resist
a claim of one of its customers to recover for a loss not covered
by the Bond, as a practical matter, where a claim is brought and a
loss is possibly covered by the Bond, the Custodian would give
notice of the claim to its insurer, and the insurer would normally
determine whether to defend the claim against the Custodian or to
pay the claim on behalf of the Custodian.
PAGE 13
The Custodian also represents that it does not intend to obtain any
insurance for the benefit of the Corporation which protects against
the imposition of exchange control restrictions or the transfer
from any foreign jurisdiction of the proceeds of sale of any
securities or against confiscation, expropriation or
nationalization of any securities or the assets of the issuer of
such securities by a government of any foreign country in which the
issuer of such securities is organized or in which securities are
held for safekeeping either by the Custodian or any Subcustodian in
such country. The Custodian represents that it has discussed the
availability of expropriation insurance with the Corporation. The
Custodian also represents that it has advised the Corporation as to
its understanding of the position of the Staff of the SEC that any
investment company investing in securities of foreign issuers has
the responsibility for reviewing the possibility of the imposition
of exchange control restrictions which would affect the liquidity
of such investment company's assets and the possibility of exposure
to political risk, including the appropriateness of insuring
against such risk. The Custodian represents that the Corporation
has acknowledged that it has the responsibility to review the
possibility of such risks and what, if any, action should be taken.
Section 18. Termination and Amendment of Agreement
The Corporation and the Custodian mutually may agree from time to
time in writing to amend, to add to, or to delete from any
provision of this Agreement.
The Custodian may terminate this Agreement by giving the
Corporation ninety days' written notice of such termination by
registered mail addressed to the Corporation at its principal place
of business.
The Corporation may terminate this Agreement at any time by written
notice thereof delivered, together with a copy of the resolution of
the Board of Directors authorizing such termination and certified
by the Secretary of the Corporation, by registered mail to the
Custodian.
Upon such termination of this Agreement, assets of the Corporation
held by the Custodian shall be delivered by the Custodian to a
successor custodian, if one has been appointed by the Corporation,
upon receipt by the Custodian of a copy of the resolution of the
Board of Directors of the Corporation certified by the Secretary,
showing appointment of the successor custodian, and provided that
such successor custodian is a bank or trust company, organized
under the laws of the United States or of any State of the United
States, having not less than two million dollars aggregate capital,
surplus and undivided profits. Upon the termination of this
Agreement as a part of the transfer of assets, either to a
successor custodian or otherwise, the Custodian will deliver
securities held by it hereunder, when so authorized and directed by
resolution of the Board of Directors of the Corporation, to a duly
appointed agent of the successor custodian or to the appropriate
transfer agents for transfer of registration and delivery as
directed. Delivery of assets on termination of this Agreement
shall be effected in a reasonable, expeditious and orderly manner;
PAGE 14
and in order to accomplish an orderly transition from the Custodian
to the successor custodian, the Custodian shall continue to act as
such under this Agreement as to assets in its possession or
control. Termination as to each security shall become effective
upon delivery to the successor custodian, its agent, or to a
transfer agent for a specific security for the account of the
successor custodian, and such delivery shall constitute effective
delivery by the Custodian to the successor under this Agreement.
In addition to the means of termination hereinbefore authorized,
this Agreement may be terminated at any time by the vote of a
majority of the outstanding shares of the Corporation and after
written notice of such action to the Custodian.
Section 19. General
Nothing expressed or mentioned in or to be implied from any
provision of this Agreement is intended to, or shall be construed
to give any person or corporation other than the parties hereto,
any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any covenant, condition or provision herein
contained, this Agreement and all of the covenants, conditions and
provisions hereof being intended to be and being for the sole and
exclusive benefit of the parties hereto and their respective
successors and assigns.
This Agreement shall be governed by the laws of the State of
Minnesota.
Attest: IDS BOND FUND, INC.
/s/ Xxxxxxx X. Xxxxxx By /s/ Xxxxxx X. Xxx
Xxxxxxx X. Xxxxxx Xxxxxx X. Xxx
Secretary Vice President
FIRST NATIONAL BANK OF
MINNEAPOLIS
By________________________
By________________________
