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CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT dated May 13, 1996, between Tax-Free
Income Trust, a Massachusetts business trust, (the "Trust"), on
behalf of its underlying portfolio, Tax-Free High Yield Portfolio
and First National Bank of Minneapolis, a corporation organized
under the laws of the United States of America with its principal
place of business at Minneapolis, Minnesota (hereinafter also
called the "Custodian").
WHEREAS, the Trust 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 Trust and the Custodian agree as follows:
Section l. 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 Trust, notes, bonds, debentures,
evidences of indebtedness, options to buy or sell stocks or stock
indexes, certificates of interest or participation in any profit-
sharing agreements, collateral trust certificates, preorganization
certificates or subscriptions, transferable shares, investment
contracts, voting trust certificates, certificates of deposit for a
security, fractional or undivided interests in oil, gas or other
mineral rights, or any certificates of interest or participation
in, temporary or interim certificates for, receipts for, guarantees
of, or warrants or rights to subscribe to or purchase any of the
foregoing, acceptances and other obligations and any evidence of
any right or interest in or to any cash, property or assets and any
interest or instrument commonly known as a security. In addition,
for the purpose of this Agreement, the word "securities" also shall
include other instruments in which the Trust may invest including
currency forward contracts and commodities such as interest rate or
index futures contracts, margin deposits on such contracts or
options on such contracts.
The words "custodian order" shall mean a request or direction,
including a computer printout, directed to the Custodian and
signed in the name of the Trust 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 Trust will certify to the Custodian the names and signatures of
its present officers and other designated persons authorized on
behalf of the Trust to direct the Custodian by custodian order as
hereinbefore defined. The Trust agrees that whenever any change
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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 Trust as having been duly adopted by the Board of Directors or
the Executive Committee of the Board of Directors of the Trust
designating those persons currently authorized on behalf of the
Trust to direct the Custodian by custodian order, as hereinbefore
defined, and upon such filing (to be accompanied by the filing of
specimen signatures of the designated persons) the persons so
designated in said resolution shall constitute the current
certified list. The Custodian is authorized to rely and act upon
the names and signatures of the individuals as they appear in the
most recent certified list from the Trust which has been delivered
to the Custodian as hereinabove provided.
Section 3. Use of Subcustodians
The Custodian may make arrangements, where appropriate, with other
banks having not less than two million dollars aggregate capital,
surplus and undivided profits for the custody of securities and
cash.
The Custodian also may enter into arrangements for the custody of
"Foreign Securities" and cash entrusted to its care through
"Eligible Foreign Custodian," as those terms are defined by Rule
17f-5 under the Investment Company Act of 1940 (the "Act"), or such
other entity as permitted by the Securities and Exchange Commission
(the "SEC") (such Eligible Foreign Custodians, collectively,
"Foreign Custodial Agents") provided, if required by the SEC, that
the Board has given its prior approval to the use of, and
Custodian's contract with, each Foreign Custodial Agent by
resolution, and a certified copy of such resolution has been
provided to the Custodian. To the extent the provisions of this
Agreement are consistent with the requirements of the Act, rules,
orders or no-action letters of the SEC, they shall apply to all
such foreign custodianships. To the extent such provisions are
inconsistent with or additional requirements are established by the
Act or such rules, orders or no-action letters, the requirements of
the Act or such rules, orders or no-action letters will prevail and
the parties will adhere to such requirements; provided, however, in
the absence of notification from the Trust of any changes or
additions to such requirements, the Custodian shall have no duty or
responsibility to inquire as to any such changes or additions.
All subcustodians of the Custodian (such subcustodians,
collectively, the "Subcustodians"), including all Foreign Custodial
Agents, shall be subject to the instructions of the Custodian and
not to those of the Trust and shall act solely as agent of the
Custodian.
Section 4. Receipt and Disbursement of Money
(1) The Custodian shall open and maintain a separate account or
accounts in the name of the Trust and cause any Subcustodians to
open and maintain such account or accounts, subject only to checks,
drafts or directives by the Custodian or such Subcustodian pursuant
to the terms of this Agreement. The Custodian or such Subcustodian
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shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of the
Trust. The Custodian or such Subcustodian shall make payments of
cash to or for the account of the Trust from such cash only:
(a) for the purchase of securities for the portfolio of the
Trust upon the receipt of such securities by the
Custodian or such Subcustodian;
(b) for the purchase or redemption of shares of capital
stock of the Trust;
(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 Trust held by or to be delivered to the
Custodian;
(f) for payments in connection with the return of
securities loaned by the Trust upon receipt of such
securities or the reduction of collateral upon receipt
of proper notice;
(g) for payments for other proper corporate purposes; or
(h) upon the termination of this Agreement.
Before making any such payment for the purposes permitted under the
terms of items (a), (b), (c), (d), (e), (f) or (g) of paragraph (1)
of this section, the Custodian shall receive and may rely upon a
custodian order directing such payment and stating that the payment
is for such a purpose permitted under these items (a), (b), (c),
(d), (e), (f) or (g) and that in respect to item (g), a copy of a
resolution of the Board of Directors or of the Executive Committee
of the Board of Directors of the Trust signed by an officer of the
Trust 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
Trust to endorse and collect all checks, drafts or other orders
for the payment of money received by the Custodian for the account
of the Trust and drawn on or to the order of the Trust and to
deposit same to the account of the Trust pursuant to this
Agreement.
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(3) Subject to the prior authorization provisions of Section 3 of
this Agreement, the Trust authorizes the Custodian to establish and
maintain in each country or other jurisdiction in which the
principal trading market for any Foreign Securities is located, or
in which any Foreign Securities are to be presented for payment, an
account or accounts which may include nostro accounts with
Custodian branches and omnibus accounts of Custodian at Foreign
Custodial Agents for receipt of cash in such currencies as directed
by custodian order. For purposes of this Agreement, cash so held
in any such account shall be evidenced by separate book entries
maintained by Custodian and shall be deemed to be cash held by
Custodian. Cash received or credited by Custodian or any Custodian
branch or any Foreign Custodial Agent in a currency other than
United States dollars shall be maintained in such currency and
shall not be converted or remitted except in accordance with the
custodian order, except as permitted by Section 7.
Section 5. Receipt of Securities
Except as permitted by the second paragraph of this section, the
Custodian shall, and shall cause any Subcustodians to, hold in a
separate account or accounts, and physically segregated at all
times from those of any other persons, firms or corporations,
pursuant to the provisions hereof, all securities and cash received
for the account of the Trust. The Custodian shall, and shall cause
any Subcustodians to, record and maintain a record of all
certificate numbers. Securities so received shall be held in the
name of the Trust, in the name of an exclusive nominee duly
appointed by the Custodian or such Subcustodian, or in bearer form,
as appropriate.
Subject to such rules, regulations or guidelines as the SEC may
adopt, the Custodian may deposit all or any part of the securities
owned by the Trust in a securities depository which includes any
system for the central handling of securities established by a
national securities exchange or a national securities association
registered with the SEC under the Securities Exchange Act of 1934,
or such other person as may be permitted by the SEC, pursuant to
which system all securities of any particular class or series of
any issuer deposited within the system are treated as fungible and
may be transferred or pledged by bookkeeping entry without physical
delivery of such securities.
All securities are to be held or disposed of by the Custodian for,
and subject at all times to the instructions of, the Trust 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 Trust
and only for the account of the Trust as set forth in Section 6 of
this Agreement.
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Section 6. Transfer Exchange, Delivery, etc. of Securities
The Custodian shall have sole power to release or deliver any
securities of the Trust held by it pursuant to this Agreement. The
Custodian agrees to transfer, exchange or deliver securities held
by it or any Subcustodian only:
(a) for sales of such securities for the account of the Trust,
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;
(h) for loans of such securities by the Trust upon receipt of
collateral; or
(i) for other proper corporate purposes.
As to any deliveries made by the Custodian pursuant to items (a),
(b), (c), (d), (e), (f), (g) and (h), securities or cash received
in exchange therefore shall be delivered to the Custodian, a
Subcustodian, or to a securities depository. Before making any
such transfer, exchange or delivery, the Custodian shall receive a
custodian order or a facsimile from the Trust requesting such
transfer, exchange or delivery and stating that it is for a purpose
permitted under this section (whenever a facsimile is utilized, the
Trust will also deliver an original signed custodian order) and, in
respect to item (i), a copy of a resolution of the Board of
Directors or of the Executive Committee of the Board of Directors
of the Trust signed by an officer of the Trust 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
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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 Trust, the Custodian shall or shall cause a Subcustodian
to:
(a) present for payment all coupons and other income items held by
the Custodian or such Subcustodian for the account of the
Trust which call for payment upon presentation and hold all
cash received by it upon such payment for the account of the
Trust;
(b) present for payment all securities held by it or such
Subcustodian which mature or when called, redeemed, retired or
otherwise become payable;
(c) ascertain all stock dividends, rights and similar securities
to be issued with respect to any securities other than Foreign
Securities;
(d) collect and hold for the account of the Trust all stock
dividends, rights and similar securities issued with respect
to any securities;
(e) ascertain all interest and cash dividends to be paid to
security holders with respect to any securities other than
Foreign Securities;
(f) collect and hold all interest and cash dividends for the
account of the Trust;
(g) present for exchange securities converted pursuant to their
terms into other securities;
(h) exchange interim receipts or temporary securities for
definitive securities;
(i) execute in the name of the Trust such ownership and other
certificates as may be required to obtain payments in respect
thereto, provided that the Trust shall have furnished to the
Custodian or such Subcustodian any information necessary in
connection with such certificates; and
(j) convert interest and dividends received with respect to
Foreign Securities into United States dollars whenever it is
practicable to do so through customary banking channels,
including the Custodian's own banking facilities.
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Section 8. Settlement Procedures
Settlement procedures for transactions in Foreign Securities,
including receipts and payments of cash held in any nostro account
or omnibus account, shall be carried out in accordance with
instructions in the operational manual provided by the Custodian
(the "Operational Manual"). It is understood that such settlement
procedures may vary, as provided in the Operational Manual, from
securities market to securities market, to reflect particular
settlement practices in such markets.
With respect to any transaction involving Foreign Securities, the
Custodian or any Subcustodian in its discretion may cause the Trust
to be credited on the contractual settlement date with proceeds of
any sale or exchange of Foreign Securities and to be debited on the
contractual settlement date for the cost of Foreign Securities
purchased or acquired. The Custodian may reverse any such credit
or debit if the transaction with respect to which such credit or
debit was made fails to settle within a reasonable period,
determined by the Custodian in its discretion, after the
contractual settlement date except that if any Foreign Securities
delivered pursuant to this section are returned by the recipient
thereof, the Custodian may cause any such credits and debits to be
reversed at any time. With respect to any transactions as to which
the Custodian does not determine so to credit or debit the Trust,
the proceeds from the sale or exchange of Foreign Securities will
be credited and the cost of such Foreign Securities purchased or
acquired will be debited on the date such proceeds or Foreign
Securities are received by the Custodian.
Notwithstanding the preceding paragraph, settlement, payment and
delivery for Foreign Securities may be effected in accordance with
the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market
in which the transaction occurs, including, without limitation,
delivering Foreign Securities to the purchaser thereof or to a
dealer therefor against a receipt with the exception of receiving
later payment for such Foreign Securities from such purchaser or
dealer.
Section 9. Records
The Custodian hereby agrees that it shall create, maintain, and
retain all records relating to its activities and obligations under
this Agreement in such manner as will meet their obligations under
this Agreement and the obligations of the Trust under the Act,
particularly Section 31 thereof and Rules 31a-1 and 31a-2
thereunder and Section 17(f) thereof and the rules thereunder, and
applicable federal, state and foreign tax laws and other laws or
administrative rules or procedures, in each case as currently in
effect, which may be applicable to the Trust. All records so
maintained in connection with the performance of its duties under
this Agreement shall remain the property of the Trust and, in
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the event of termination of this Agreement, shall be delivered in
accordance with the provisions of this Agreement.
(a) With respect to securities and cash held by the Custodian's
branches, such securities and cash may be placed in an omnibus
account for the customers of the Custodian, and the Custodian
shall maintain separate book entry records for each such
omnibus account.
(b) With respect to securities and cash deposited by the Custodian
with a Foreign Custodial Agent, the Custodian shall indemnify
on its books as belonging to the Trust the securities and cash
shown on the Custodian's account on the books of such Foreign
Custodial Agent.
(c) With respect to securities and cash deposited with a
securities depository or clearing agency, incorporated or
organized under the laws of a country other than the United
States, which operates the central system for handling of
securities or equivalent book-entries in that country or which
operates a transnational system for the central handling or
securities or equivalent book-entries (on "Eligible Foreign
Securities Depository"), the Custodian shall cause the
securities and cash shown on the account on the books of the
Eligible Foreign Securities Depository to be identified as
belonging to the Custodian as agent for the Trust.
The Custodian hereby agrees that the books and records of the
Custodian (including any Custodian branch) pertaining to its
actions under this Agreement shall be open to the physical, on-
premises inspection and audit by the independent accountant (the
"Accountant") employed by, or other representatives of, the Trust,
and, upon the request of the Accountant, confirmation of the
contents of those records shall be provided by the Custodian. The
Custodian shall use its best efforts to cause any Foreign Custodial
Agent to afford access to the Accountant to the books and records
of such Foreign Custodial Agent with respect to securities and cash
held by such Foreign Custodial Agent for the Trust. the Custodian
also agrees to furnish the Accountant with such reports of the
Custodian's (including any Custodian branches') auditors as they
relate to the services provided under this Agreement and as are
necessary for the Accountant to conduct its examination of the
books and records pertaining to affairs of the Trust, and the
Custodian shall use its best efforts to obtain and furnish similar
reports of any Foreign Custodial Agent holding securities and cash
for the Trust.
Section 10. Registration of Securities
Securities which are ordinarily held in registered form may be
registered in the name of the Custodian's nominee or, as to any
securities in the physical possession of an entity other than the
Custodian, in the name of such entity's nominee. The Trust
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agrees to hold any such nominee harmless from any liability as a
holder of record of such securities. The Custodian may without
notice to the Trust cause any such securities to cease to be
registered in the name of any such nominee and to be registered in
the name of the Trust. In the event that any security registered
in the name of the Custodian's nominee or held by any Subcustodians
and registered in the name of such Subcustodian's nominee is called
for partial redemption by the issuer of such security, the
Custodian may allot, or cause to be allotted, the called portion to
the respective beneficial holders of such class of security in any
manner the Custodian deems to be fair and equitable.
Section 11. Transfer Taxes
The Trust shall pay or reimburse the Custodian and any Subcustodian
for any transfer taxes payable upon transfers of securities made
hereunder, including transfers resulting from the termination of
this Agreement. The Custodian shall, and shall use its best
efforts to cause any Subcustodian to, execute such certificates in
connection with securities delivered to it under this Agreement as
may be required, under any applicable law or regulation, to exempt
from taxation any transfers and/or deliveries of any such
securities which may be entitled to such exemption.
Section 12. Voting and Other Action
Neither the Custodian or any Subcustodian nor any nominee of the
Custodian or such Subcustodian shall vote any of the securities
held hereunder by or for the account of the Trust. The Custodian
shall, and shall use its best efforts to cause any Subcustodian to,
promptly deliver to the Trust 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 Trust), but without
indicating the manner in which such proxies are to be voted.
The Custodian shall, and shall use its best efforts to cause any
Subcustodian to, transmit promptly to the Trust all written
information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection
therewith) received by the Custodian or such Subcustodian from
issuers of the securities being held for the Trust. With respect
to tender or exchange offers, the Custodian shall, and shall use
its best efforts to cause any Subcustodian to, transmit promptly to
the Trust all written information received by the Custodian or such
Subcustodian from issuers of the securities whose tender or
exchange is sought and from the party (or his agents) making the
tender or exchange offer.
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Section 13. Custodian's Reports
The Custodian shall furnish the Trust as of the close of business
each day a statement showing all transactions and entries for the
account of the Trust. 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 Trust, internal auditors
employed by the Trust's investment adviser, and independent
auditors employed by the Trust. The Custodian shall furnish the
Trust in such form as may reasonably be requested by the Trust a
report, including a list of the securities held by it in custody
for the account of the Trust, 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 Trust. Should any report
ever be filed with any governmental authority pertaining to lost or
stolen securities, the Custodian will concurrently provide the
Trust with a copy of that report.
The Custodian also shall furnish such reports on its systems of
internal accounting control as the Trust may reasonably request
from time to time.
Section 14. Security Interest, Liens and Transfers of Beneficial
Ownership
The securities and cash held by the Custodian hereunder shall not
be subject to any right, change, security interest, lien or claim
of any kind in favor of the Custodian or its creditors, except a
claim of payment for their safe custody or administration, and
beneficial ownership of such securities and cash shall be freely
transferable without the payment of money or value other than for
safe custody or administration. Any agreement the Custodian shall
enter into with any Subcustodian, including any Foreign Custodial
Agent, shall contain a provision which is substantially identical
to the foregoing.
In the event that there shall be asserted any attachment or lien on
or against any securities or cash held in any omnibus account or
nostro account referred to in this Agreement which results from any
claim against the Custodian (including any branch) or any such
account, which is not directly related to transactions in
securities or cash for the Trust, the Custodian will use its best
efforts promptly to discharge such attachment or lien. If the
Custodian shall not have discharged such attachment or lien within
five business days, it shall notify the Trust of the existence of
the attachment or lien. If the attachment or lien is not
discharged on the date required for delivery or payment with
respect to any securities or cash in accordance with the provisions
of the Operation Manual:
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(a) in the case of such securities, at the option of the Trust,
the Custodian shall either immediately transfer to the Trust a like
amount of such securities (provided the same shall be reasonably
available) or immediately transfer an amount in United States
dollars equal to the market value of such securities, valued in
accordance with such procedures as may be mutually agreed to by the
parties thereto;
(b) in the case of cash, the Custodian shall immediately transfer
to the Trust an equal amount of cash in United States dollars.
Section 15. Compensation
For its services hereunder the Custodian shall be paid such
compensation and out-of-pocket or incidental expenses at such times
as may from time to time be agreed on in writing by the parties
hereto in a Custodian Fee Agreement.
Section 16. Standard of Care
The Custodian shall not be liable for any action taken in good
faith upon any custodian order or facsimile herein described or
certified copy of any resolution of the Board of Directors or of
the Executive Committee of the Board of Directors of the Trust, and
may rely on the genuineness of any such document which it may in
good faith believe to have been validly executed.
The Trust agrees to indemnify and hold harmless the Custodian, any
Subcustodian, or any nominee thereof from all taxes, charges,
expenses, assessments, claims and liabilities (including counsel
fees) incurred or assessed against any such entity in connection
with the performance of this Agreement, except such as may arise
from such entity's own negligent action, negligent failure to act
or willful misconduct. The Custodian is authorized to charge any
account of the Trust for such items. In the event of any advance
of cash for any purpose made by the Custodian resulting from orders
or instructions of the Trust, or in the event that the Custodian or
any nominee thereof shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the
performance of this Agreement, except such as may arise from such
entity's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the
Trust 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 Trust 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
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failure to enforce effectively such rights as it may have against
any securities depository or from use of a Subcustodian, unless
such loss or damage arises by reason of any negligence, mis-
feasance, or willful misconduct of officers or employees of the
Custodian, or from its failure to enforce effectively such rights
as it may have against such Subcustodian. Anything in the
foregoing to the contrary notwithstanding, the Custodian shall
exercise, in the performance of its obligations undertaken or
reasonably assumed with respect to this Agreement, including the
recommendation to the Board of Foreign Custodial Agents, reasonable
care, for which the Custodian shall be responsible to the same
extent as if it were performing such duties directly and holding
such securities and cash in Minnesota, United States of America.
The Custodian shall be indemnified and held harmless by the Trust
from and against any loss or liability for any action taken or
omitted to be taken hereunder in good faith upon custodian order
and may rely on the genuineness of all such orders and documents as
it in good faith believes to have been validly executed. The
Custodian shall be responsible for the securities and cash held by
or deposited with any Subcustodian to the same extent as if such
securities and cash were directly held by or deposited with the
Custodian. The Custodian hereby agrees that it shall indemnify and
hold the Trust harmless from and against any loss which shall occur
as a result of the failure of a foreign Custodial Agent holding the
securities and cash to exercise reasonable care with respect to the
safekeeping of such securities and cash to the extent that the
Custodian would be required to indemnify and hold the Trust
harmless if the Custodian were itself holding such securities and
cash in Minnesota. It is also understood that the Custodian shall
not have liability for loss except by reason of the Custodian's
negligence, fraud or willful misconduct, or by reason of
negligence, fraud or willful misconduct of any Subcustodian holding
such securities or cash for the Trust.
The Custodian warrants that the established procedures to be
followed by any Subcustodian, in the opinion of the Custodian after
due inquiry, afford protection for such securities and cash at
least equal to that afforded by the Custodian's established
procedures with respect to similar securities and cash held by the
Custodian (including its securities depositories) in Minnesota.
However, the Custodian shall have no liability for any loss or
liability occasioned by delay in the actual receipt by it or any
Subcustodian of notice of any payment, redemption, or other
transaction regarding securities unless such delay is a result of
its own negligence, fraud, or willful misconduct.
The Custodian shall not be responsible for any loss of the Trust,
or to take any action with respect to any attachment or lien on any
omnibus account or nostro account, except as provided in Section 14
of this Agreement, in such loss, attachment or lien arises by
reason of any cause or circumstances beyond the control of the
Custodian, including acts of civil or military
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authority, expropriation, national emergency, acts of God,
insurrection, war, riots, or failure of transportation,
communication or power supply, or the failure of any person, firm
or corporation (other than the Custodian or any Subcustodian acting
on behalf of the Custodian) to perform any obligation if such
failure results in any such loss.
Section 17. Insurance
The Custodian represents and warrants that it presently maintains
and shall maintain for the duration of this Agreement a bankers'
blanket bond (the "Bond") which provides standard fidelity and non-
negligent loss coverage with respect to securities and cash which
may be held by the Custodian and securities and cash which may be
held by any Subcustodian which may be utilized by the Custodian
pursuant to this Agreement. The Custodian agrees that, if at any
time the Custodian for any reason discontinues such coverage, it
shall immediately notify the Trust in writing. The Custodian
represents that only the named insured on the Bond, which includes
the Custodian but not any of its customers, is directly protected
against loss. The Custodian represents that while it might resist
a claim of one of its customers to recover for a loss not covered
by the Bond, as a practical matter, where a claim is brought and a
loss is possibly covered by the Bond, the Custodian would give
notice of the claim to its insurer, and the insurer would normally
determine whether to defend the claim against the Custodian or to
pay the claim on behalf of the Custodian.
The Custodian also represents that it does not intend to obtain any
insurance for the benefit of the Trust which protects against the
imposition of the proceeds of sale of any securities or against
confiscation, expropriation or nationalization of any securities or
the assets of the issuer of such securities by a government or any
foreign country in which the issuer of such securities is organized
or in which securities are held for safekeeping either by the
Custodian or any Subcustodian in such country. The Custodian
represents that it has discussed the availability of expropriation
insurance with the Trust. The Custodian also represents that it
has advised the Trust as to its understanding of the position of
the Staff of the SEC that any investment company investing in
securities of foreign issuers has the responsibility for reviewing
the possibility of the imposition of exchange control restrictions
which would affect the liquidity of such investment company's
assets and the possibility of exposure to political risk, including
the appropriateness of insuring against such risk. The Custodian
represents that the Trust has acknowledged that it has the
responsibility to review the possibility of such risks and what, if
any, action should be taken.
Section 18. Termination and Amendment of Agreement
The Trust 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.
PAGE 14
The Custodian may terminate this Agreement by giving the Trust
ninety days' written notice of such termination by registered mail
addressed to the Trust at its principal place of business.
The Trust may terminate this Agreement at any time by written
notice thereof delivered, together with a copy of the resolution of
the Board of Directors authorizing such termination and certified
by the Secretary of the Trust, by registered mail to the Custodian.
Upon such termination of this Agreement, assets of the Trust held
by the Custodian shall be delivered by the Custodian to a successor
custodian, if one has been appointed by the Trust, upon receipt by
the Custodian of a copy of the resolution of the Board of Directors
of the Trust certified by the Secretary, showing appointment of the
successor custodian, and provided that such successor custodian is
a bank or trust company, organized under the laws of the United
States or of any State of the United States, having not less than
two million dollars aggregate capital, surplus and undivided
profits. Upon the termination of this Agreement as a part of the
transfer of assets, either to a successor custodian or otherwise,
the Custodian will deliver securities held by it hereunder, when so
authorized and directed by resolution of the Board of Directors of
the Trust, 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 hereinbefore authorized,
this Agreement may be terminated at any time by the vote of a
majority of the outstanding shares of the Trust and after written
notice of such action to the Custodian.
Section 19. Limitations of Liability of the Trustees and
Unitholders of Trust
A copy of the Declaration of Trust, dated October 2, 1995, together
with all amendments, is on file in the office of the Secretary of
State of the Commonwealth of Massachusetts. The execution and
delivery of this Agreement have been authorized by the Trustees and
the Agreement has been signed by an authorized officer of the
Trust. It is expressly agreed that the obligations of the Trust
under this Agreement shall not be binding upon any of the Trustees,
unitholders, nominees, officers, agents or employees of the Trust,
personally, but bind only the assets and property of the Trust, as
provided in the Declaration of Trust.
PAGE 15
Section 20. 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.
TAX-FREE INCOME TRUST
Tax-Free High Yield Portfolio
By /s/ Xxxxxx X. Xxx
Xxxxxx X. Xxx
Vice President
FIRST NATIONAL BANK OF MINNEAPOLIS
By /s/ Xxxxxx Xxxxx
Xxxxxx Xxxxx
Vice President
