CUSTODIAN CONTRACT
Between
ALLIANCE MORTGAGE STRATEGY TRUST, INC.
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
1. Employment of Custodian and Property to be Held By
it.................................................
2. Duties of the of the Custodian with Respect to
Property of the Fund Held by the Custodian.........
2.1 Holding Securities...........................
2.2 Delivery of Securities.......................
2.3 Registration of Securities...................
2.4 Bank Accounts................................
2.5 Payments for Shares..........................
2.6 Availability of Federal Funds................
2.7 Collection of Income.........................
2.8 Payment of Fund Monies.......................
2.9 Liability for Payment in Advance of Receipt
of Securities Purchased......................
2.10 Payments for Repurchases or Redemptions of
Shares of the Fund...........................
2.11 Appointment of Agents........................
2.12 Deposit of Fund Assets in Securities System..
2.12A Fund Assets Held in the Custodian's Direct
Paper System.................................
2.13 Segregated Account...........................
2.14 Ownership Certificates for Tax Purposes......
2.15 Proxies......................................
2.16 Communications Relating to Fund Portfolio
Securities...................................
2.17 Proper Instructions..........................
2.18 Actions Permitted Without Express Authority..
2.19 Evidence of Authority........................
3. Duties of Custodian With Respect to the Books of
Account and Calculation of Net Asset Value and Net
Income.............................................
4. Records...........................
5. Opinion of Fund's Independent Accountant...........
6. Reports to Fund by Independent Public Accountants..
7. Compensation of Custodian..........................
8. Responsibility of Custodian........................
9. Effective Period, Termination and Amendment........
10. Successor Custodian................................
11. Interpretive and Additional Provisions ............
2
12. Massachusetts Law to Apply.........................
13. Prior Contracts....................................
3
CUSTODIAN CONTRACT
This Contract between Alliance Mortgage Strategy Trust,
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, that 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 its assets pursuant to the provisions of the Articles of
Incorporation. The Fund agrees to deliver to the Custodian all
securities and cash owned by it, and all payments of income,
payments of principal or capital distributions received by it
with respect to all securities owned by the Fund from time to
time, and the cash consideration received by it for such new or
treasury shares of capital stock ("Shares") of the Fund as may be
issued or sold from time to time. The Custodian shall not be
responsible for any property of the Fund held or received by the
Fund and not delivered to the Custodian.
4
Upon receipt of "Proper Instructions" (within the
meaning of Section 2.17), the Custodian shall from time to time
employ one or more sub-custodians, but only in accordance with an
applicable vote by the Board of Directors of the Fund, 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
Fund Held By the Custodian
2.1 Holding Securities. The Custodian shall hold and
physically segregate for the account of the Fund all
non-cash property, including all securities owned by the
Fund, 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 a "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 the Fund held by the
5
Custodian or in a Securities System account of the
Custodian or in the Custodian's Direct Paper book entry
system account ("Direct Paper Account") only upon
receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties,
only in the following cases:
1) Upon sale of such securities for the account
of the Fund 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 Fund;
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 portfolio
securities of the Fund;
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 Fund or into the
name of any nominee or nominees of the
6
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 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 Fund, 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
7
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
Custodian;
9) 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 Fund, but only against
receipt of adequate collateral as agreed upon
from time to time by the Custodian and the
Fund, which may be in the form of cash or
obligations issued by the United States
government, its agencies or instrumentalities,
except that in connection with any 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
8
Treasury, the Custodian will not be held
liable or responsible for the delivery of
securities owned by the Fund prior to the
receipt of such collateral;
11) For delivery as security in connection with
any borrowings by the Fund requiring a pledge
of assets by the Fund, but only against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions
of any agreement among the Fund, 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. ("NASD"), 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 Fund;
13) For delivery in accordance with the provisions
of any agreement among the Fund, the
Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act,
relating to compliance with the rules of the
9
Commodity Futures Trading Commission and/or
any Contract Market, or any similar
organization or organizations, regarding
account deposits in connection with
transactions by 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 Fund's currently
effective prospectus and statement of
additional information ("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, 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 to be
delivered, setting forth the purpose for which
such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and
10
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 Fund or in the name of any
nominee of the Fund or of any nominee of the Custodian
which nominee shall be assigned exclusively to the Fund,
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 Fund, 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 Fund under
the terms of this Contract shall be in "street name" or
other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name",
the Custodian shall utilize its best efforts only to
timely collect income due the Fund on such securities
and to notify the Fund on a best efforts basis only of
relevant corporate actions including, without
limitation, pendency of calls, maturities, tender or
exchange offers.
11
2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the name 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 it from or for
the account of the Fund, other than cash maintained by
the Fund in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company
Act of 1940. Funds held by the Custodian for the Fund
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 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 Fund's Shares or from the
12
Transfer Agent of the Fund and deposit into the Fund's
account such payments as are received for Shares of the
Fund issued or sold from time to time by the Fund. The
Custodian will provide timely notification to the Fund
and the Transfer Agent of any receipt by it of payments
for Shares of the Fund.
2.6 Availability of Federal Funds. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall,
upon the receipt of Proper Instructions, make federal
funds available to the Fund as of specified times agreed
upon from time to time by the Fund and the Custodian in
the amount of checks received in payment for Shares of
the Fund which are deposited into the Fund's account.
2.7 Collection of Income. Subject to the provisions of
Section 2.3, the Custodian shall collect on a timely
basis all income and other payments with respect to
registered securities held hereunder to which the Fund
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 the Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian
13
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 due on
securities held hereunder. Income due the Fund 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 Fund is
properly entitled.
2.8 Payment of Fund Monies. Upon receipt of Proper
Instructions, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall
pay out monies of the Fund in the following cases only:
1) Upon the purchase of securities, options,
futures contracts or options on futures
contracts for the account of the Fund 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
14
Investment Company Act 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 Fund 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; (c) in the case of a
purchase involving the Direct Paper System, in
accordance with the conditions set forth in
Section 2.12A; (d) in the case of repurchase
agreements entered into between the Fund and
the Custodian, or another bank, or a broker-
dealer 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 Fund of securities owned by the Custodian
along with written evidence of the agreement
by the Custodian to repurchase such securities
from the Fund or (e) for transfer to a time
15
deposit account of the Fund in any bank,
whether domestic or foreign; such transfer may
be effected prior to receipt of a confirmation
from a broker and/or the applicable bank
pursuant to Proper Instructions from the Fund
as defined in Section 2.17;
2) In connection with conversion, exchange or
surrender of securities owned by the Fund as
set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares
issued by the Fund as set forth in Section
2.10 hereof;
4) For the payment of any expense or liability
incurred by the Fund, including but not
limited to the following payments for the
account of the Fund: 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 declared
pursuant to the governing documents of the
Fund;
16
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, a 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. Except as specifically stated
otherwise in this Contract, in any and every case where
payment for purchase of securities for the account of
the Fund is made by the Custodian in advance of receipt
of the securities purchased in the absence of specific
written instructions from the Fund 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.
17
2.10 Payments for Repurchases or Redemptions of Shares of he
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
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 the Fund, 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 Agents. 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
18
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
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 the Fund 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 Fund
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
19
fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to
securities of the Fund which are maintained in
a Securities System shall identify by book-
entry those securities belonging to the Fund;
3) The Custodian shall pay for securities
purchased for the account of the Fund 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 Fund. The Custodian shall transfer
securities sold for the account of the Fund
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 Fund. Copies of all
advices from the Securities System of
transfers of securities for the account of the
Fund shall identify the Fund, be maintained
for the Fund by the Custodian and be provided
20
to the Fund at its request. Upon request, the
Custodian shall furnish the Fund confirmation
of each transfer to or from the account of the
Fund in the form of a written advice or notice
and shall furnish to the Fund copies of daily
transaction sheets reflecting each day's
transactions in the Securities System for the
account of the Fund.
4) The Custodian shall provide the Fund 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 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 any loss or damage to the Fund
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
from failure of the Custodian or any such
21
agent to enforce effectively such rights as it
may have against the Securities System; at the
election of the Fund, it shall be entitled to
be subrogated to the rights the Custodian with
respect to any claim other against the
Securities System or any person which the
Custodian may have as a consequence of any
such loss or damage if and to the extent that
the Fund 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 the Fund 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;
2) The Custodian may keep securities of the Fund
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
as a fiduciary, custodian or otherwise for
customers;
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3) The records of the Custodian with respect to
securities of the Fund which are maintained in
the Direct Paper System shall identify by
book-entry those securities belonging to the
Fund;
4) The Custodian shall pay for securities
purchased for the account of the Fund 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 Fund. The
Custodian shall transfer securities sold for
the account of the Fund 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 Fund;
5) The Custodian shall furnish the Fund
confirmation of each transfer to or from the
account of the Fund, 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 copies of daily
transaction sheets reflecting each day's
transaction in the Securities System for the
account of the Fund;
23
6) The Custodian shall provide the Fund 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 establish and maintain a segregated
account or accounts for and on behalf of the Fund, 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, 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
arrangements in connection with transactions by the
Fund, (ii) for purposes of segregating cash or
government securities in connection with options
purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold
24
by the Fund, (iii) for the purpose of compliance by the
Fund 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, 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
respect to securities of the Fund 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 Fund or a nominee of the Fund, all proxies, without
25
indication of the manner in which such proxies are to be
voted, and shall promptly deliver to the Fund such
proxies, all proxy soliciting materials and all notices
relating to such securities.
2.16 Communications Relating to Fund Portfolio Securities
Subject to the provisions of Section 2.3, the 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 and notices of exercise
of call and put options written by the Fund and the
maturity of futures contracts purchased or sold by the
Fund) 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. If the
Fund desires to take action with respect to any tender
offer, exchange offer or any other similar transaction,
the Fund shall notify the Custodian at least three
business days prior to the date on which the Custodian
is to take such action.
26
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 shall set forth the specific
transaction or type of transaction involved, including a
specific statement of 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
the Board of Directors and the Custodian are satisfied
that such procedures afford adequate safeguards for the
Fund's assets. For purposes of this Section, Proper
Instructions shall include instructions received by the
Custodian pursuant to any three-party agreement which
27
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:
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;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the
Fund, 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
dealings with the securities and property of
the Fund 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
28
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 the Fund
and/or compute the net asset value per share of the outstanding
shares of the Fund or, if directed in writing to do so by the
Fund, shall itself 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 Fund as described in
the Fund's currently effective prospectus 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.
29
The calculations of the net asset value per share and the daily
income of the Fund shall be made at the time or times described
from time to time in the Fund's currently effective prospectus.
4. Records
The Custodian shall create and maintain all records
relating 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 31a-1 and 31a-2 thereunder. 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 shall, at the Fund's request,
supply the Fund with a tabulation of securities owned by the Fund
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 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
30
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, 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 material inadequacies would be 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 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,
31
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 action reasonably
taken or omitted pursuant to such advice.
If the Fund 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 being
liable for the payment of money or incurring liability of some
other form, the Fund, 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, its affiliates,
subsidiaries or agents, to advance cash or securities for any
purpose (including but not limited to securities settlements,
foreign exchange contracts and assumed settlement) or in the
event that the Custodian or its nominee shall incur or be
32
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 Fund shall be
security therefor and should the Fund fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available
cash and to dispose of Fund 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 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 and the receipt of an
annual certificate of the Secretary or an Assistant Secretary
that the Board of Directors has reviewed the use by the Fund of
such Securities System, as required in each case by Rule 17f-4
33
under the Investment Company Act of 1940, as amended and that the
Custodian shall not 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 and the receipt of an
annual certificate of the Secretary or an Assistant Secretary
that the Board of Directors has reviewed the use by the Fund 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 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 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.
34
10. Successor Custodian
If a successor custodian 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 then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities
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
$25,000,000, all securities, funds and other properties held by
the Custodian and all instruments held by the Custodian relative
thereto and all other property held by it under this Contract and
35
to transfer to an account of such successor custodian all of the
Fund's securities held in any Securities System. Thereafter,
such bank or trust 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 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
36
additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.
12. 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.
13. Prior Contracts
This Contract supersedes and terminates, as of the date
hereof, all prior contracts between the Fund 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 day of 1992.
ATTEST ALLIANCE MORTGAGE STRATEGY TRUST,
INC
/s/ Xxxxxxxxxx X. Xxxxx /s/ Xxxxx X. Xxxxxxx
________________________ By:____________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Xxxxx X. XxXxxxxx /s/ Xxxxxx X. Xxxxx
_______________________ By:____________________________
37
00250110.AY4
