CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT dated September 9, 1999, is between AXP Market
Advantage Series, Inc., a Minnesota corporation (the "Corporation"), on behalf
of its underlying series funds, AXP International Equity Index Fund, AXP Mid Cap
Index Fund, AXP Nasdaq 100 Index Fund, AXP S&P 500 Index Fund and AXP Total
Stock Market Index Fund (each individually a "Fund") and American Express Trust
Company, a corporation organized under the laws of the State of Minnesota with
its principal place of business at Minneapolis, Minnesota (the "Custodian").
WHEREAS, the Fund desires that its securities and cash be hereafter held and
administered by Custodian pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein made, the Fund
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
Fund, 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 Custodian
Agreement, the word "securities" also shall include other instruments in which
the Fund 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 for direction, including a
computer printout, directed to the Custodian and signed in the name of the Fund
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 Fund will certify to the Custodian the names and signatures of its present
officers and other designated persons authorized on behalf of the Fund to direct
the Custodian by custodian order as herein before defined. The Fund 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 Fund
as having been duly adopted by the Corporation's Board of Directors (the
"Board") or the Executive Committee of the Board designating those persons
currently authorized on behalf of the Fund to direct the Custodian by custodian
order, as herein before 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 Fund which
has been delivered to the Custodian as herein above provided.
Section 3. Use of Subcustodians
The Custodian may make arrangements, where appropriate, with banks having not
less than two million dollars aggregate capital, surplus and undivided profits
for the custody of securities. Any such bank selected by the Custodian to act as
subcustodian shall be deemed to be the agent of the Custodian.
The Custodian also may enter into arrangements for the custody of securities
entrusted to its care through foreign branches of U.S. banks; through foreign
banks, banking institutions or trust companies; through foreign subsidiaries of
U.S. banks or bank holding companies, or through foreign securities depositories
or clearing agencies (hereinafter also called, collectively, the "Foreign
Subcustodian") or indirectly through an agent, established under the first
paragraph of this section, if and to the extent permitted by Section 17(f) of
the Investment Company Act of 1940 (the "1940 Act") and the rules promulgated by
the Securities and Exchange Commission ("SEC") thereunder, or any "no-action"
letter received from the staff of the SEC. To the extent the existing provisions
of the Custodian Agreement are consistent with the requirements of such Section,
rules, order or no-action letter, they shall apply to all such foreign
custodianships. To the extent such provisions are inconsistent with or
additional requirements are established by such Section, rules, order or
no-action letter, the requirements of such Section, rules, order or no-action
letter will prevail and the parties will adhere to such requirements; provided,
however, in the absence of notification from the Fund 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.
Section 4. Receipt and Disbursement of Money
(1) The Custodian shall open and maintain a separate account or accounts in
the name of the Fund or cause its agent to open and maintain such
account or accounts subject only to checks, drafts or directives by the
Custodian pursuant to the terms of this Agreement. The Custodian or its
agent shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of the Fund.
The Custodian or its agent shall make payments of cash to or for the
account of the Fund from such cash only:
(a) for the purchase of securities for the portfolio of the Fund
upon the receipt of such securities by the Custodian or its
agent unless otherwise instructed on behalf of the Fund;
(b) for the purchase or redemption of shares of capital stock of
the Fund;
(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 Fund
held by or to be delivered to the Custodian;
(f) for payments in connection with the return of securities
loaned by the Fund upon receipt of such securities or the
reduction of collateral upon receipt of proper notice;
(g) for payments for other proper corporate purposes;
(h) or upon the termination of this Agreement.
Before making any such payment for the purposes permitted under these
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 or
of the Executive Committee of the Board of directors 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 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 Fund to
endorse and collect all checks, drafts or other orders for the payment
of money received by the Custodian for the account of the Fund and
drawn on or to the order of the Fund and to deposit same to the account
of the Fund pursuant to this Agreement.
Section 5. Receipt of securities
Except as permitted by the second paragraph of this section, the Custodian or
its agent shall 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 received by it for the account
of the Fund. The Custodian shall record and maintain a record of all certificate
numbers. Securities so received shall be held in the name of the Fund, in the
name of an exclusive nominee duly appointed by the Custodian 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 Fund 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 Commission, 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 Fund 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 Fund and only for the account of the Fund 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
Fund held by it pursuant to this Agreement. The Custodian agrees to transfer,
exchange or deliver securities held by it or its agent hereunder only:
(a) for sales of such securities for the account of the Fund, upon
receipt of payment therefor;
(b) when such securities are called, redeemed, retired or
otherwise become payable;
(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; for loans of such
securities by the Fund upon receipt of collateral; or
(h) for other proper corporate purposes.
As to any deliveries made by the Custodian pursuant to items (a), (b), (c), (d),
(e), (f) and (g), securities or cash received in exchange therefore shall be
delivered to the Custodian, its agent, or to a securities depository. Before
making any such transfer, exchange or delivery, the Custodian shall receive a
custodian order or a facsimile from the Fund requesting such transfer, exchange
or delivery and stating that it is for a purpose permitted under Section 6
(whenever a facsimile is utilized, the Fund will also deliver an original signed
custodian order) and, in respect to item (h), a copy of a resolution of the
Board or of the Executive Committee of the Board of directors signed by an
officer of the Fund 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
Fund, the Custodian shall or shall cause its agent to:
(a) present for payment all coupons and other income items held by
the Custodian or its agent for the account of the Fund which
call for payment upon presentation and hold all cash received
by it upon such payment for the account of the Fund;
(b) present for payment all securities held by it or its agent
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 held by the
Custodian or its agent hereunder, and to collect and hold for
the account of the Fund all such securities; and
(d) ascertain all interest and cash dividends to be paid to
security holders with respect to any securities held by the
Custodian or its agent, and to collect and hold such interest
and cash dividends for the account of the Fund.
Section 8. Voting and Other Action
Neither the Custodian nor any nominee of the Custodian shall vote any of the
securities held hereunder by or for the account of the Fund. The Custodian shall
promptly deliver to the Fund 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.
Custodian shall transmit promptly to the Fund all written information
(including, without limitation, pendency of calls and maturities of securities
and expirations of rights in connection therewith) received by the Custodian
from issuers of the securities being held for the Fund. With respect to tender
or exchange offers, the Custodian shall transmit promptly to the Fund all
written information received by the Custodian 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 9. Transfer Taxes
The Fund shall pay or reimburse the Custodian for any transfer taxes payable
upon transfers of securities made hereunder, including transfers resulting from
the termination of this Agreement. The Custodian shall execute such certificates
in connection with securities delivered to it 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 10. Custodian's Reports
The Custodian shall furnish the Fund as of the close of business each day a
statement showing all transactions and entries for the account of the Fund. 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 Fund, internal auditors employed by the
Fund's investment adviser, and independent auditors employed by the Fund. The
Custodian shall furnish the Fund in such form as may reasonably be requested by
the Fund a report, including a list of the securities held by it in custody for
the account of the Fund, identification of any subcustodian, and identification
of such securities held by such subcustodian, as of the close of business of 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 Fund. Should any report ever be filed with
any governmental authority pertaining to lost or stolen securities, the
Custodian will concurrently provide the Fund with a copy of that report.
The Custodian also shall furnish such reports on its systems of internal
accounting control as the Fund may reasonably request from time to time.
Section 11. Concerning Custodian
For its services hereunder the Custodian shall be paid such compensation at such
times as may from time to time be agreed on in writing by the parties hereto in
a Custodian Fee Agreement.
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 or of the Executive Committee of the Board, and may rely
on the genuineness of any such document which it may in good faith believe to
have been validly executed.
The Fund agrees to indemnify and hold harmless Custodian and its nominee from
all taxes, charges, expenses, assessments, claims and liabilities (including
counsel fees) incurred or assessed against it or its nominee in connection with
the performance of this Agreement, except such as may arise from the Custodian's
or its nominee's own negligent action, negligent failure to act or willful
misconduct. Custodian is authorized to charge any account of the Fund for such
items. In the event of any advance of cash for any purpose made by Custodian
resulting from orders or instructions of the Fund, or in the event that
Custodian or its nominee 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 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 Fund 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 Fund 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 an agent, 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 agent.
Section 12. Termination and Amendment of Agreement
The Fund 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 Fund ninety days'
written notice of such termination by registered mail addressed to the Fund at
its principal place of business.
The Fund may terminate this Agreement at any time by written notice thereof
delivered, together with a copy of the resolution of the Board authorizing such
termination and certified by the Secretary of the Fund, by registered mail to
the Custodian.
Upon such termination of this Agreement, assets of the Fund held by the
Custodian shall be delivered by the Custodian to a successor custodian, if one
has been appointed by the Fund, upon receipt by the Custodian of a copy of the
resolution of the Board 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, 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; 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 herein before authorized, this Agreement
may be terminated at any time by the vote of a majority of the outstanding
shares of the Fund and after written notice of such action to the Custodian.
Section 13. 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.
This Agreement supersedes all prior agreements between the parties.
AXP MARKET ADVANTAGE SERIES, INC.
AXP International Equity Index Fund
AXP Mid Cap Index Fund
AXP Nasdaq 100 Index Fund
AXP S&P 500 Index Fund
AXP Total Stock Market Index Fund
By: /s/Xxxxxx X. Xxx
Xxxxxx X. Xxx
Vice President
AMERICAN EXPRESS TRUST COMPANY
By: /s/Xxxxxxxxxxx X. Xxxxx
Xxxxxxxxxxx X. Xxxxx
Vice President
