CUSTODIAN CONTRACT
Between
ALLIANCE TAX-FREE INCOME FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held By
It.....................................................1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian......................2
2.1 Holding Securities..............................2
2.2 Delivery of Securities..........................3
2.3 Registration of Securities .....................8
2.4 Bank Accounts...................................9
2.5 Payments for Shares.............................9
2.6 Availability of Federal Funds..................10
2.7 Collection of Income...........................10
2.8 Payment of Fund Monies.........................11
2.9 Liability for Payment in Advance of
Receipt of Securities Purchased................14
2.10 Payments for Repurchases or Redemptions
of Shares of the Fund..........................14
2.11 Appointment of Agents..........................15
2.12 Deposit of Fund Assets in Securities System....15
2.12A Fund Assets Held in the Custodian's Direct
Paper System...................................18
2.13 Segregated Account.............................20
2.14 Ownership Certificates for Tax Purposes........22
2.15 Proxies........................................22
2.16 Communications Relating to Portfolio
Securities.....................................22
2.17 Proper Instructions............................23
2.18 Actions Permitted Without Express Authority....24
2.19 Evidence of Authority..........................25
3. Duties of Custodian With Respect to the Books of
Account and Calculation of Net Asset Value and
Net Income............................................25
4. Records...............................................26
5. Opinion of Fund's Independent Accountants.............27
6. Reports to Fund by Independent Public Accountants.....27
7. Compensation of Custodian.............................27
8. Responsibility of Custodian...........................28
9. Effective Period, Termination and Amendment...........29
10. Successor Custodian...................................31
11. Interpretive and Additional Provisions................32
12. Additional Funds......................................33
13. Massachusetts Law to Apply............................33
14. Prior Contracts.......................................33
CUSTODIAN CONTRACT
This Contract between Alliance Tax-Free Income Fund,
Inc., a corporation organized and existing under the laws of
Maryland, having its principal place of business at 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 hereinafter called the
"Fund", and State Street Bank and Trust Company, a Massachusetts
trust company, having Its principal place of business at 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000, hereinafter called
the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in
separate series, with each.such series representing interests in
a separate portfolio of securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in
five series, the California Portfolio, High Bracket Tax Free
Portfolio, High Income Tax Free Portfolio, Insured California
Portfolio, and New York Portfolio (such series together with all
other series subsequently established by the Fund and made
subject to this Contract in accordance with paragraph 12, being
herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants
and agreements hereinafter contained, the parties hereto agree as
follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian
of the assets of the Portfolios of the Fund pursuant to the
provisions of the Articles of Incorporation. The Fund on behalf
of the Portfolio(s) agrees to deliver to the Custodian all
securities and cash of the Portfolios, and all payments of
income.$payments of principal or capital distributions received
by it with respect to all securities owned by the Portfolio(s)
from time to time, and the cash consideration received by it for
such new or treasury shares of beneficial interest of the Fund
representing interests in the Portfolios, ("Shares") as may be
issued or sold from time to time. The Custodian shall not be
responsible for any property of a Portfolio held or received by
the Portfolio and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the
meaning of Section 2.17), the Custodian shall on behalf of the
applicable Portfolio(s) from time to time employ one or more sub-
custodians, but only in accordance with SLn applicable vote by
the Board of Directors of the Fund on behalf of the applicable
Portfolio(s), and provided that the Custodian shall have no more
or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any
such sub-custodian has to the Custodian.
2. Duties of the Custodian with Respect to Property of the
2
Fund Held By the Custodian
2.1 Holding Securities. The Custodian shall hold and
physically segregate for the account of each Portfolio
all non-cash property, including all securities owned by
such Portfolio, other than (a) securities which are
maintained pursuant to Section 2.12 in a clearing agency
which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the
Treasury, collectively referred to herein as "Securities
System" and (b) commercial paper of an issuer for which
State Street Bank and Trust Company acts as issuing and
paying agent ("Direct Paper") which is deposited and/or
maintained in the Direct Paper System of the Custodian
pursuant to Section 2.12A.
2.2 Delivery of Securities. The Custodian shall release and
deliver securities owned by a Portfolio held by the
Custodian or in a Securities System account of the
Custodian or in the Custodian's Direct Paper book entry
system account ("Direct Paper System Account") only upon
receipt of Proper Instructions from the Fund on behalf
of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, and
only in the following cases:
3
1) Upon sale of such securities for the account
of the Portfolio and receipt of payment
therefor;
2) Upon the receipt of payment in connection with
any repurchase agreement related to such
securities entered into by the Portfolio;
3) In the case of a sale effected through a
Securities System, in accordance with the
provisions of Section 2.12 hereof;
4) To the depository agent in connection with
tender or other similar offers for securities
of the Portfolio;
5) To the issuer thereof or its agent when such
securities 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;
6) To the issuer thereof, or its agent, for
transfer into the name of the Portfolio or
into the name of any nominee or nominees of
the Custodian or into the name or nominee name
Of any agent appointed pursuant to Section
2.11 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1;
or for exchange for a different number of
4
bonds, certificates or other evidence
representing the same aggregate face amount or
number of units; provided that, in any such
case, the new securities are to be delivered
to the Custodian;
7) Upon the sale of such securities for the
account of the Portfolio, to the broker or its
clearing agent, against a receipt, for
examination in accordance with "street
delivery" custom; provided that in any such
case, the Custodian shall have no
responsibility or liability for any loss
arising from the delivery of such securities
prior to receiving payment for such securities
except as may arise from the Custodian's own
negligence or willful misconduct;
8) 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 contained in 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
5
Custodian; In the case of warrants, rights or
similar securities, the surrender thereof in
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;
10) For delivery in connection with any loans of
securities made by the Portfolio, but only
against receipt of adequate collateral as
agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which
may be in the form of cash or obligations
issued by the United States government, its
agencies or instrumental- ities, except that
in connection with any 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 the
Treasury, the Custodian will not be held
liable or responsible for the delivery of
securities owned by the Portfolio prior to the
receipt of such collateral;
6
11) For delivery as security in connection with
any borrowings by the Fund on behalf of the
Portfolio requiring a pledge of assets by the,
Fund on behalf of the Portfolio, but only
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions
of any agreement among the Fund on behalf of
the Portfolio, the Custodian and a broker-
dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and
a member of The National Association of
Securities Dealers, Inc. CtNASD"), relating to
compliance with the rules of The Options
Clearing Corporation and of any registered
national securities exchange, or of any
similar organization or organizations,
regarding escrow or other arrangements in
connection with transactions by the Portfolio
of the Fund;
13) For delivery in accordance with the provisions
of any agreement among the Fund on behalf of
the Portfolio, the Custodian, and a Futures
Commission Merchant registered under the
Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures
7
Trading Commission and/or any Contract Market,
or any similar organization or organizations,
regarding account deposits in connection with
transactions by the Portfolio) of the Fund;
14) Upon receipt of instructions from the transfer
agent ("Transfer Agent") for the Fund, for
delivery to such Transfer Agent or to the
holders of shares in connection with
distributions in kind, as may be described
from time to time in the currently effective
prospectus and statement of additional
information of the Fund, related to the
Portfolio ("Prospectus"), in satisfaction of
requests by holders of Shares for repurchase
or redemption; and
15) For any other proper corporate purpose, but
only upon receipt of, in addition to Proper
Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a
resolution of the Board of Directors or of the
Executive Committee signed by an officer of
the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities
of the Portfolio to be delivered, setting
forth the purpose for which such delivery is
8
to be made, declaring such purpose to be a
proper corporate purpose, and naming the
person or persons to whom delivery of such
securities shall be made.
2.3 Registration of Securities. Securities held by the
Custodian (other than bearer securities) shall be
registered in the name of the Portfolio or in the name
of any nominee of the Fund on behalf of the Portfolio or
of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund
has authorized in writing the appointment of a nominee
to be used in common with other registered investment
companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent
appointed pursuant to, Section 2.11 or in the name or
nominee name of any sub-custodian appointed pursuant to
Article 1. All securities accepted by the Custodian on
behalf of the Portfolio under the terms of this Contract
shall be in "street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the name of each
Portfolio of the Fund, subject only to draft or order by
the Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by
9
it from or for the account of the Portfolio, other than
cash maintained by the Portfolio 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 a Portfolio 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
it 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 on behalf of each
applicable Portfolio be approved by vote of a majority
of the Board of Directors of the Fund. Such funds shall
be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian
only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from
the distributor for the Shares or from the Transfer
Agent of the Fund and deposit into the account of the
appropriate Portfolio such payments as are received for
Shares of that Portfolio issued or sold from time to
time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such
10
Portfolio and the Transfer Agent of any receipt by it of
payments for Shares of such Portfolio
2.6 Availability of Federal Funds. Upon mutual agreement
between the Fund on 'behalf of each applicable Portfolio
and the Custodian, the Custodian shall, upon the receipt
of Proper Instructions from the Fund on behalf of a
Portfolio, make federal funds available to such
Portfolio as of specified timea agreed upon from time to
time by the Fund and the Custodian in the amount of
checks received in payment for Shares of such Portfolio
which are deposited into the Portfolio's account.
2.7 Collection of Income. The Custodian shall collect on a
timely basis all income and other payments with respect
to registered securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on
a timely basis all income and other payments with
respect to bearer securities if, on the date of payment
by the issuer, such securities are held by the Custodian
or its agent thereof and shall credit such Income, as
collected, to such Portfolio's custodian account.
Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all
coupons and other income items requiring presentation as
and when they become due and shall collect interest when
11
due on securities held hereunder. Income due each
Portfolio on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no
duty or responsibility in connection therewith, other
than to provide the Fund with such information or data
as may be necessary to assist the Fund in arranging for
the timely delivery to the Custodian of the incOme to
which the Portfolio is properly entitled.
2.8 Payment of Fund Monies. Upon receipt of Proper
Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall
pay out monies of a Portfolio in the following cases
only:
1) Upon the purchase of securities, options,
futures contracts or options on futures
contracts for the account of the Portfolio but
only (a) against the delivery of such
securities or evidence of title to such
options, futures contracts or options on
futures contracts to the Custodian (or any
bank, banking firm or trust company doing
business in the United States or abroad which
is qualified under the Investment Company Act
12
of 1940, as amended, to act as a custodian and
has been designated by the Custodian as its
agent for this purpose) registered in the name
of the Portfolio or in the name of a nominee
Of the Custodian referred to in Section 2.3
hereof or in proper form for transfer; (b) in
the case of a purchase effected through a
Securities System, in accordance with the
conditions set forth in Section 2.12 hereof;
or (c) In the case of a purchase involving the
Direct Paper System, in accordance with the
conditions set forth in Section 2.12A; or (d)
in the case of repurchase agreements entered
into between the Fund on behalf of the
Portfolio and the, Custodian, or another bank,
or a broker-deale'r which is a member of NASD,
(I) against delivery of the securities either
in certificate form or through an entry
crediting the Custodian's account at the
Federal Reserve Bank with such securities or
(ii) against delivery of the receipt
evidencing purchase by the Portfolio of
securities owned by the Custodian along with
written evidence of the agreement by the
13
Custodian to repurchase such securities from
the Portfolio;
2) In connection with conversion, exchange or
surrender of securities owned by the Portfolio
as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares
issued by the Portfolio as set forth in
Section 2.10 hereof;
4) For the payment of any expense or liability
incurred by the Portfolio, including but not
limited to the following payments for the
account of the Portfolio: interest, taxes,
management, accounting, transfer agent and
legal fees, and operating expenses of the Fund
whether or not such expenses are to be in
whole or part capitalized or treated as
deferred expenses;
5) For the payment of any dividends on Shares of
the Portfolio declared pursuant to the
governing documents of the Fund;
6) For payment of the amount of dividends
received in respect of securities sold short;
7) For any other proper purpose, but only upon
receipt of, in addition to Proper Instructions
from the Fund on behalf of the Portfolio, a
14
certified copy of a resolution of the Board of
Directors or of the Executive Committee of the
Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant
Secretary, 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 purpose, and naming the
person or persons to whom such payment is to
be made.
2.9 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 a
Portfolio is made by the Custodian in advance of receipt
of the securities purchased in the absence of specific
written instructions from the Fund on behalf of such
Portfolio to so pay in advance, the Custodian shall be
absolutely liable to the Fund for such securities to the
same extent as if the securities had been received by
the Custodian.
2.10 Payments for Repurchases or Redemptions of Shares of the
Fund. From such funds as may be available for the
purpose but subject to the limitations of the Articles
of Incorporation and any applicable votes of the Board
of Directors of the Fund pursuant thereto, the Custodian
15
shall, upon receipt of instructions from the Transfer
Agent, make funds available for payment to holders of
Shares who have delivered to the Transfer Agent a
request for redemption or repurchase of their Shares. In
connection with the redemption or repurchase of Shares
of a Portfolio, the Custodian is authorized upon receipt
of instructions from the Transfer Agent to wire funds to
or through a commercial bank designated by the redeeming
shareholders. In connection with the redemption or
repurchase of Shares of the Fund, the Custodian shall
honor checks drawn on the Custodian by a holder of
Shares, which checks have been furnished by the Fund to
the holder of Shares, when presented to the Custodian in
accordance with such procedures and controls as are
mutually agreed upon from time to time between the Fund
and the Custodian.
2.11 Appointment of Agent;. 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 itself
qualified under the Investment Company Act of 1940, as
amended, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the
Custodian may from time to time direct; provided,
however, that the appointment of any agent shall not
16
relieve the Custodian of its responsibilities or
liabilities hereunder.
2.12 Deposit of Fund Assets in Securities Systems. The
Custodian may deposit and/or maintain securities owned
by a Portfolio in 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, or in the book-entry system
authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to
herein as "Securities System" 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 keep securities of the
Portfolio in a Securities System provided that
such securities are represented in an account
("Account") of the Custodian in the Securities
System which shall not include any assets of
the Custodian 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
17
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
and be provided to the Fund at its request.
Upon request, the Custodian shall furnish the
Fund on behalf of the Portfolio confirmation
18
of each transfer to or from the account of the
Portfolio in the form of a written advice or
notice and shall furnish to the Fund on behalf
of the Portfolio copies of daily transaction
sheets reflecting each day's transactions in
the Securities System for the account of the
Portfolio.
4) The Custodian shall provide the Fund for the
Portfolio with any report obtained by the
Custodian on the Securities System's
accounting system, internal accounting control
and procedures for safeguarding securities
deposited in the Securities System;
5) The Custodian shall have received from the
Fund on behalf of the Portfolio the initial or
annual certificate, as the case may be,
required by Article 9 hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable
to the Fund for the benefit of the Portfolio
for any loss or damage to the Portfolio
resulting from use of the Securities System by
reason of any negligence, misfeasance or
misconduct of the Custodian or any of its
agents or of any of its or their employees or
19
from 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 tc
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 Portfolio has not been made whole for any
such loss or damage.
2.12A Fund Assets Held in the Custodian's Direct Paper System.
The Custodian may deposit and/or maintain securities
owned by a Portfolio in the Direct Paper System of the
Custodian subject to the following provisions:
1) No transaction relating to securities in the
Direct Paper System will be effected in the
absence of Proper Instructions from the Fund
on behalf of the Portfolio;
2) The Custodian may keep securities of the
Portfolio in the Direct Paper System only if
such securities are represented in an account
("Account") of the Custodian in the Direct
Paper System which shall not include any
assets of the Custodian other than assets held
20
as a fiduciary, custodian or otherwise for
customers;
3) The records of the Custodian with respect to
securities of the Portfolio which are
maintained in the Direct Paper System shall
identify by book-entry those securities
belonging to the Portfolio;
4) The Custodian shall pay for securities
purchased, for the account of the Portfolio
upon the making of an entry on the records of
the Custodian to reflect such payment and
transfer of securities to the account of the
Portfolio. The Custodian shall transfer
securities sold for the account of the
Portfolio upon the making of an entry on the
records of the Custodian to reflect such
transfer and receipt of payment for the
account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf
of the Portfolio confirmation of each transfer
to or from the account of the Portfolio, in
the form of a written advice or notice, of
Direct Paper on the next business day
following such transfer and shall furnish to
the Fund on behalf of the Portfolio copies of
21
daily transaction sheets reflecting each day's
transaction in the Securities System for the
account of the Portfolio;
6) The Custodian shall provide the Fund on behalf
of the Portfolio with any report on its system
of internal accounting control as the Fund may
reasonably request from time to time.
2.13 Segregated Account. The Custodian shall upon receipt of
Proper Instructions from the Fund on behalf of each
applicable Portfolio establish and maintain a segregated
account or accounts for and on behalf of each such
Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to
Section 2.12 hereof, (i) in accordance with the
provisions of any agreement among the Fund on behalf of
the Portfolio, the Custodian and a broker-dealer
registered under the Exchange Act and a member of the
NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or
any registered contract market), or of any similar
organization or organizations, regarding escrow or other
22
arrangements in connection with transactions by the
Portfolio, (ii) for purposes of segregating cash or
grovernment 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, 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 corporate purposes, but only,
in the case of clause (iv), upon receipt of, in addition
to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution
of the Board of Directors or of the Executive Committee
signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the
purpose or purposes of such segregated account and
declaring such purposes to be proper corporate purposes.
2.14 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
23
re spect to securities of each Portfolio held by it and
in connection with transfers of securities.
2.15 Proxies. The Custodian shall, with respect to the
securities held hereunder, cause to be promptly executed
by the registered holder of such securities, if the
securities are registered otherwise than in the name of
the Portfolio or a nominee of the Portfolio, all
proxies, without indication of the manner in which such
proxies are to be voted, and shall promptly deliver to
the Portfolio such proxies, all proxy soliciting
materials, and all notices relating to such securities.
2.16 Communications Relating to Portfolio Securities. The
Custodian shall transmit promptly to the Fund for each
Portfolio all written information (including, without
limitation, pendency of calls,and maturities of
securities and expirations of rights in connection
therewith and notices of exercise of call and put
options written by the Fund on behalf of the Portfolio
and the maturity of futures contracts purchased or sold
by the Portfolio) received by the Custodian from issuers
of the securities being held for the Portfolio. With
respect to tender or exchange offers, the Custodian
shall transmit promptly to the Portfolio all written
information received by the Custodian from issuers of
the securities whose tender or exchange is sought and
24
from the party (or his agents) making the tender or
exchange offer. If the Portfolio desires to take action
with respect to any tender offer, exchange offer or any
other similar transaction, the Portfolio shall notify
the Custodian at least three business days prior to the
date on which the Custodian is to take such action.
2.17 Proper Instructions. Proper Instructions as used
throughout this Article 2 means a writing signed or
initialled by one or more person or persons as the Board
of Directors shall have from time to time authorized.
Each such writing shZLll set forth the specific
transaction or type of transaction involved, including a
specific statement ol: the purpose for which such action
is requested. 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 Fund shall cause all oral instructions to
be confirmed in writing. Upon receipt of a certificate
of the Secretary or an Assistant Secretary as to the
authorization by the Board of Directors of the Fund
accompanied by a detailed description of procedures
approved by the Board of Directors, Proper Instructions
may include communications effected directly between
electro-mechanical or electronic devices provided that
25
the Board of Directors and the Custodian are satisfied
that such procedures afford adequate safeguards for the
Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the
Custodian pursuant to any three-party agreement which
requires a segregated asset account in accordance with
Section 2.13.
2.18 Actions Permitted without Express Authority. The
Custodian may in its discretion, without express
authority from the Fund on behalf of each applicable
Portfolio:
1) make payments to itself or others for minor
expenses of handling securities or other
similar items relating to its duties under
this Contract, provided that all such payments
shall be accounted for to the Fund on behalf
of the Portfolio;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the
Portfolio, checks, drafts and other negotiable
instruments; and
4) in general, attend to all non-discretionary
details in connection with the sale, exchange,
substitution, purchase, transfer and other
26
dealings with the securities and property of
the Portfolio except as otherwise directed by
the Board of Directors of the Fund.
2.19 Evidence of Authority. The Custodian shall be protected
in acting upon any instructions, notice, request,
consent, certificate or Other instrument or paper
believed by it to be genuine and to have been properly
executed by or on behalf of the Fund. The Custodian may
receive and accept a certified copy of a vote of the
Board of Directors of the Fund as conclusive evidence
(a) of the authority of any person to act in accordance
with such vote or (b) of any determination or of any
action by the Board of Directors pursuant to the
Articles of Incorporation as described in such vote, and
such vote may be considered as in full force and effect
until receipt by the Custodian of written notice to the
contrary.
3. Duties of Custodian with Respect to the Books of Account
and Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board of
Directors of the Fund to keep the books of account of each
Portfolio and/or compute the net asset value per share of the
outstanding shares of each Portfolio or, if directed in writing
to do so by the Fund on behalf of the Portfolio, shall itself
27
keep such books of account and/or compute such net asset value
per share. If so directed, the Custodian shall also calculate
daily the net income of the Portfolio as described in the Fund's
currently effective prospectus related to such Portfolio and
shall advise the Fund and the Transfer Agent daily of the total
amounts of such net income and, if instructed in writing by an
officer of the Fund to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various
components. The calculations of the net asset value per share and
the daily income of each Portfolio shall be made at the time or
times described from time to time in the Fund's currently
effective prospectus related to such Portfolio.
4. Records
The Custodian shall with respect to each Portfolio
create and maintain all records relSting to its activities and
obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940,
with particular attention to Section 31 thereof and Rules 3la-1
and 3la-2 thereunder, applicable federal and state tax laws and
any other law or administrative rules or procedures which may be
applicable to the Fund. All such records shall be the property of
the Fund and shall at all times during the regular business hours
of the Custodian be open for inspection by duly authorized
officers, employees or agents of the Fund and employees and
agents of the Securities and Exchange Commission. The Custodian
28
shall, at the Fund's request, supply the Fund with a tabulation
of securities owned by each Portfolio and held by the Custodian
and shall, when requested to ~do so by the Fund and for such
compensation as shall be agreed upon between the Fund and the
Custodian, include certificate numbers in such tabulations.
5. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the
Fund on behalf of each applicable Portfolio may.from time to time
request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities
hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the Securities
and Exchange Commission and with respect to any other
requirements of such Commission.
6. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each
of the Portfolios at such times as the Fund may reasonably
require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a
Securities System, relating to the services provided by the
Custodian under this Contract; such reports, shall be of
sufficient scope and in sufficient detail, as may reasonably be
required by the Fund to provide reasonable assurance that any
29
material inadequacies would bet disclosed by such examination,
and, if there are no such inadequacies, the reports shall so
state
7. Compensation of Custodian
The Custodian shall be entitled to reasonable
compensation for its services and expenses as Custodian, as
agreed upon from time to time between the Fund on behalf of each
applicable Portfolio and the Custodian.
8. Responsibility of Custodian
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 title thereto received by it or delivered
by it pursuant to this Contract and 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, including any futures
commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of
this Contract, but shall be kept indemnified by and shall be
without liability to the Fund for any action taken or omitted by
it in good faith without negligence. It shall be entitled to rely
on and may act upon advice of counsel (who may be counsel for the
Fund) on all matters, and shall be without liability for any
30
action 'reasonably taken or omitted pursuant to such advice.
Notwithstanding the foregoing, the responsibility of the
Custodian with respect to redemptions effected by check shall be
in accordance with a separate Agreement entered into between the
Custodian and the Fund.
If the Fund on behalf of a Portfolio requires the
Custodian to take any action with respect to securities, which
action involves the payment of' money or which action may, in the
opinion of the Custodian, result in the Custodian or its nominee
assigned to the Fund or the Portfolio being liable for the
payment of money or Incurring liability of some other form, the
Fund on behalf of the Portfolio, 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.
If the Fund requires the Custodian to advance cash or
securities for any purpose for the benefit of a Portfolio or in
the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract,
except such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct, any
property at any time held for the account of the applicable
Portfolio shall be security therefor and should the Fund fail to
repay the Custodian promptly, the Custodian shall be entitled to
31
utilize available cash and to dispose of such Portfolio's assets
to the extent necessary to obtain reimbursement.
9. Effective Period, Termination and Amendment
This Contract shall become effective as of its
execution, shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any time by
mutual agreement of the parties hereto and may be 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 thirty (30) days after the date of such
delivery or mailing; provided, however that the Custodian shall
not with respect to a Portfolio act under Section 2.12 hereof in
the absence of receipt of an initial certificate of the Secretary
or an Assistant Secretary that the Board of Directors of the Fund
has approved the initial use of a particular Securities System by
such Portfolio and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of Directors
has reviewed the use by such Portfolio of such Securities System,
as required in each case by Rule 17f-4 under the Investment
Company Act of 1940, as amended and that the Custodian shall not
with respect to a Portfolio act under Section 2.12A hereof in the
absence of receipt of an initial certificate of the Secretary or
an Assistant Secretary that the Board of Directors has approved
the Initial use of the Direct Paper System by such Portfolio and
the receipt of an annual certificate of the Secretary or an
32
Assistant Secretary that the Board of Directors has reviewed the
use by such Portfolio of the Direct Paper System; provided
further, however, that the Fund shall not amend or terminate this
Contract in contravention of any applicable federal or state
regulations, or any provision. of the Articles of Incorporation,
and further provided, that the Fund on behalf of one or more of
the Portfolios may at-any time by action of its Board of
Directors (I) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian,
or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency 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 Contract, the Fund on behalf of
each applicable Portfolio 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.
10. Successor Custodian
If a successor custodian for the Fund, of one or more of
the Portfolios shall be appointed by the Board of Directors of
the Fund, the Custodian shall., upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed
and in the form for transfer, all securities of each applicable
33
Portfolio then held by it hereunder and shall transfer to an
account of the successor custodian all of the securities of each
such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy
of a vote of the Board of Directors of the Fund, deliver at the
office of the Custodian and transfer such securities, funds and
other properties in accordance with such vote.
In the event that no written order designating a
successor custodian or certified copy of a vote of the Board of
Directors shall have been delivered to the Custodian on or before
the date when such termination shall become effective, then the
Custodian shall have the right: to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company
Act of 1940, doing business In Boston, Massachusetts, of its own
selection, having an aggregate! capital, surplus, and undivided
profits, as shown by its last published report, of not less than
425,000,000, all securities, funds and other properties held by
the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other
property held by it under this Contract on behalf of each
applicable Portfolio and to transfer to an account of such
successor custodian all of the securities of each such Portfolio
held in any Securities System. Thereafter, such bank or trust
34
company shall be the successor of the Custodian under this
Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to procure the
certified copy of the vote referred to or of the Board of
Directors to appoint a successor custodian, the Custodian shall
be entitled to fair compensation for its services during such
period as the Custodian retains possession of such securities,
funds and other properties and the provisions of this Contract
relating to the duties and obligations of the Custodian shall
remain in full force and effect.
11. Interpretive and Additional Provisions
In connection with the operation of this Contract, the
Custodian and the Fund on behalf of each of the Portfolios, may
from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint
opinion be consistent with the general tenor of this Contract.
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 Articles of Incorporation of the Fund. No
interpretive or additional provisions made as provided in the
35
preceding sentence shall be deemed to be an amendment of this
Contract.
12. Additional Funds
In the event that the. Fund establishes one or more
series of Shares in addition to the California Portfolio, High
Bracket Tax Free Portfolio, High Income Tax Free Portfolio,
Insured California Portfolio, and New York Portfolio with respect
to which it desires to have the Custodian render services as
custodian under the terms hereof, it shall so notify the
Custodian in writing, and if the Custodian agrees In writing to
provide such services, such series of Shares shall become a
Portfolio hereunder.
13. Massachusetts Law to Apply
This Contract shall be construed and the provisions
thereof interpreted under and in accordance with laws of The
Commonwealth of Massachusetts.
14. Prior Contracts
This Contract supersedes and terminates, as of the date
hereof, all prior contracts between the Fund on behalf of each of
the Portfolios and the Custodian relating to the custody of the
Fund's assets.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the i6th day of November, 1987.
36
ATTEST ALLIANCE TAX-FREE INCOME FUND, INC.
/s/ /s/
________________________ By_________________________________
Secretary President
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ /s/
_______________________ By_________________________________
Assistant Secretary Vice President
37
00250011.AO5
