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CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT dated July 23, 1986, between IDS Special Tax-Exempt
Series Trust, a Massachusetts Business Trust (hereinafter also called the
"Trust") 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 expects that it will offer more than one series of capital
stock with the investments of each series being maintained in a separate fund
and desires that its securities and cash be hereafter held and administered by
the Custodian pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein made, the 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.
The word "fund" shall mean the components of assets that are represented by a
separate series of capital stock of the Trust.
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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 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 Trustees or
the Executive Committee of the Board of Trustees 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. All subcustodians of the
Custodian (such subcustodians, collectively, the "Subcustodians") 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 or cause any Subcustodian to open and maintain such account or
accounts, subject only to checks, drafts or directives by the Custodian or such
Subcustodian pursuant to the terms of this Agreement. The Custodian or such
Subcustodian shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of the 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 purposes of the Trust; or
(h) upon the termination of this Agreement.
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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 Trustees or of the Executive Committee of
the Board of Trustees 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 purpose of the Trust, 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.
Section 5. Receipt of Securities
Except as permitted by the second paragraph of this section, the Custodian
shall, and shall cause any Subcustodian 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
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 Securities and Exchange
Commission 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
Securities and Exchange Commission 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 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 purposes of the Trust.
As to any deliveries made by the Custodian pursuant to items (a), (b), (c), (d),
(e), (f), (g) and (h), securities or cash received in exchange therefore shall
be delivered to the Custodian, a Subcustodian, or a securities depository.
Before making any such transfer, exchange or delivery, the Custodian shall
receive a custodian order or a facsimile from the 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 Trustees or of the Executive Committee of the
Board of Trustees 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 purpose to be a proper purpose of the Trust, and naming
the person or persons to whom such transfer, exchange or delivery of such
securities shall be made.
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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 upon such payment for the account of the Trust;
(b) present for payment all securities held by it or such Sub-
custodian 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;
(d) collect and hold for the account of the Trust all such 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;
(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; and
(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.
Section 8. 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 cause any Subcustodian to, execute such certificates in connection
with securities delivered to it or such Subcustodian under this Agreement as may
be required, under any applicable law or regulation, to exempt from taxation any
transfers and/or deliveries of any such securities which may be entitled to such
exemption.
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Section 9. 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 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.
Section 10. 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 on the
last business day of each month, which shall be certified by a duly authorized
officer of the Custodian. It is further understood that additional reports may
from time to time be requested by the 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.
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Section 11. Security Interests, Liens and Transfers of Beneficial
Ownership
The Trust agrees to indemnify and hold harmless the Custodian. any Subcustodian
or any nominees thereof from all taxes, charges, expenses, assessments, claims
and liabilities (including counsel fees) incurred or assessed against any such
entity in connection with the performance of this Agreement, except such as may
arise from such entity's own negligent action, negligent failure to act or
willful misconduct. The Custodian is authorized to charge any account of the
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, any Subcustodian 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.
Section 12. Compensation
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.
Section 13. 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 Trustees or of the Executive Committee of the Board
of Trustees 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 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 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.
Section 14. 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.
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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 Trustees
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 Trustees 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
Trustees 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.
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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 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.
Attest: IDS SPECIAL TAX-EXEMPT
TRUST SERIES TRUST
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Secretary Vice President
FIRST NATIONAL BANK
OF MINNEAPOLIS
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Vice President
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