CUSTODIAN CONTRACT
Between
PERMANENT PORTFOLIO FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
1. Employment of Custodian and Property to be Held by It....................1
2. Duties of the Custodian with Respect to Property of the Fund Held
By the Custodian in the United States....................................3
2.1 Holding Securities.............................................3
2.2 Delivery of Property...........................................3
2.3 Title to Property and Registration of Securities...............9
2.4 Bank Accounts.................................................10
2.5 Payments for Shares...........................................10
2.6 Availability of Federal Funds.................................11
2.7 Collection of Income..........................................11
2.8 Payment of Fund Monies........................................12
2.9 Liability for Payment in Advance of Receipt of
Property Purchased............................................15
2.10 Appointment of Agents.........................................15
2.11 Deposit of Fund Assets in Securities Systems..................16
2.11A Fund Assets Held in the Custodian’s Direct Paper System.......19
2.12 Segregated Account............................................21
2.13 Ownership Certificates for Tax Purposes.......................22
2.14 Proxies.......................................................22
2.15 Communications Relating to Portfolio Securities...............23
2.16 Reports to Fund by Independent Public Accountants.............24
3. Duties of the Custodian with Respect to Property of the Fund
Held Outside of the United States........................................24
3.1 Appointment of Chase as Sub-Custodian.........................24
3.2 Standard of Care; Liability...................................25
3.3 Fund’s Responsibility for Rules and Regulations...............26
4. Payments for Repurchases or Redemptions of Shares of the Fund............26
5. Proper Instructions......................................................27
6. Actions Permitted without Express Authority..............................27
7. Evidence of Authority....................................................28
8. Duties of Custodian with Respect to the Books of Account
and Calculation of Net Asset Value and Net Income........................28
9. Records..................................................................29
10. Opinion of Fund’s Independent Accountant.................................30
11. Compensation of Custodian................................................30
12. Responsibility of Custodian..............................................30
13. Effective Period, Termination and Amendment..............................32
14. Successor Custodian......................................................33
15. Interpretive and Additional Provisions...................................35
16. Additional Funds.........................................................35
17. Massachusetts Law to Apply...............................................36
18. Prior Contracts..........................................................36
CUSTODIAN CONTRACT
This Contract between Permanent Portfolio Fund, Inc., a corporation
organized and existing under the laws of Maryland, having its principal place of
business at 0 Xxxxxx Xxxxxx, Xxxxx 00, Xxxxxxxx, Xxxxxxxxxx 00000 hereinafter
called the “Fund”, and State Street Bank and Trust Company, a Massachusetts
trust company, having its principal place of business at 000 Xxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx, 00000, hereinafter called the “Custodian”,
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in two series,
referred to as the Permanent Portfolio and the Treasury Xxxx Portfolio (such
series together with all other series subsequently established by the Fund and
made subject to this Contract in accordance with Section 16, being herein
referred to as the “Portfolio(s)”);
NOW THEREFOR, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund including securities, precious metals, other
investments and cash it desires to be held within the United States (“domestic
securities”) and securities, precious metals, other investments and cash it
desires to be held outside the United States (“foreign securities”) pursuant to
Article 3 hereof pursuant to the provisions of the Articles of Incorporation, as
amended, of the Fund, The Fund on behalf of the Portfolio(s) agrees to deliver
to the Custodian all securities, precious metals, other investments and cash of
the Portfolios (hereinafter referred to collectively as the “Property”), and all
payments of Income, payments of principal or capital distributions received by
it with respect to all Property owned by the Portfolio(s) from time to time, and
the cash consideration received by it for such new or treasury shares of capital
stock, $.001 par value per share of the Portfolios, (“Shares”) as may be issued
or sold from time to time. The Custodian shall not be responsible for any
Property of a Portfolio held or received by the Portfolio and not delivered to
the Custodian.
Upon receipt of “Proper Instructions” (within the meaning of Section
5), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians authorized to act as such under the terms
of the Investment Company Act of 1940, but only in accordance with an applicable
vote by the Board of Directors of the Fund on behalf of the applicable
Portfolio(s), and provided that the Custodian shall have no more or less
responsibility or liability to the Fund on account of any actions or omissions
of any sub-custodian so employed than any such sub-custodian has to the
Custodian.
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2. Duties of the Custodian with Respect to Property of the Fund Held
By the Custodian in the United States
The provisions of this Article 2 shall apply to the duties of the
Custodian as they relate to Property, including domestic securities, held in the
United States.
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of each Portfolio all non-cash property, including all
domestic securities owned by such Portfolio to be held by it in the
United States, other than (a) domestic securities which are maintained
pursuant to Section 2.11 in a clearing agency which acts as a
securities depository or in a book-entry system authorized by the U.S.
Department of the Treasury, collectively referred to herein as
“Securities System” and (b) commercial paper of an Issuer for which
State Street Bank and Trust Company acts as issuing and paying agent
(“Direct Paper”) which is deposited and/or maintained in the Direct
Paper System of the Custodian pursuant to Section 2.11A.
2.2 Delivery of Property. The Custodian shall release and deliver Property,
including domestic securities, owned by a Portfolio held by the
Custodian in the United States or in a Securities System account of the
Custodian or in the Custodian’s Direct Paper book entry system account
(“Direct Paper System Account”) only upon receipt of Proper
Instructions from the Fund on behalf of the applicable Portfolio, which
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may be continuing instructions when deemed appropriate by the parties,
and only in the following cases:
1) Upon sale of such Property consisting of domestic
securities for the account of the Portfolio and receipt of
payment therefor;
2) Upon the sale of such Property consisting of precious
metals in the form of gold and silver effected by means of
commodity exchange receipts and consisting of Swiss franc
assets as more fully described in Exhibit A;
3) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered
into by the Portfolio;
4) In the case of a sale effected through a Securities System,
in accordance with the provisions of Section 2.11 hereof;
5) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
6) 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;
7) To the issuer thereof, or its agent, for transfer into the
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name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name
of any agent appointed pursuant to Section 2.10 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;
8) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with “street
delivery” custom; provided that in any such case, the
Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise
from the Custodian’s own negligence or willful misconduct;
9) For exchange or conversion pursuant to any plan of merger,
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consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit
agreement; provided that, in any such ease, the new
securities and cash, if any, are to be delivered to the
Custodian;
10) 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;
11) For delivery in connection with any loans of Property,
including domestic securities, made by the Portfolio, but
only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and the Fund on behalf
of the Portfolio, which may be in the form of cash or
obligations issued by the United States government, its
agencies or 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
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by the U.S. Department of the Treasury, the Custodian will
not be held liable or responsible for the delivery of
securities owned by the Portfolio prior to the receipt of
such collateral;
12) For delivery as security in connection with any borrowings
by the Fund on behalf of the Portfolio requiring a pledge
of assets by the Fund on behalf of the Portfolio, but only,
against receipt of amounts borrowed;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the “Exchange Act”) and a
member of The National Association of Securities Dealers,
Inc. (“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 Portfolio of the Fund;
14) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
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Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission
and/or any Contract Market, or any similar organization or
organizations, regarding account deposits in connection
with transactions by the Portfolio of the Fund;
15) Upon receipt of instructions from the transfer agent
(“Transfer Agent”) for the Fund, for delivery to such
Transfer Agent or to the holders of shares in connection
with distributions in kind, as may be described from time
to time in the currently effective prospectus and statement
of additional information of the Fund, related to the
Portfolio (“Prospectus”), in satisfaction of requests by
holders of Shares for repurchase or redemption; and
16) For any other proper corporate purpose, but only upon
receipt of, in addition to Proper Instructions from the
Fund on behalf of the applicable Portfolio, a certified
copy of a resolution of the Board of Directors or of the
Executive Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary,
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specifying the securities of the Portfolio 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 naming the person or persons to whom delivery
of such securities shall be made.
2.3 Title to Property and Registration of Securities. Except as otherwise
specifically provided herein with respect to specified assets of the
Fund, title to all Property shall be held in the name of the Portfolio
or of a nominee of the Fund on behalf of the Portfolio or of the
Custodian. Domestic securities held by the Custodian (other than bearer
securities) in the United States shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund has authorized
in writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment adviser as
the Portfolio, or in the name or nominee name of any agent appointed
pursuant to Section 2.10 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All domestic securities
accepted by the Custodian on behalf of the Portfolio under the terms of
this Contract shall be in “street name” or other good delivery form.
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2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of each Portfolio of the Fund, subject
only to draft or order by the Custodian acting pursuant to the terms of
this Contract, and shall hold in such account or accounts, subject to
the provisions hereof, all cash received by it from or for the account
of the Portfolio, other than cash maintained by the Portfolio in a bank
account established and used in accordance with Rule l7f-3 under the
Investment Company Act of 1940. Funds held by the Custodian for a
Portfolio may be deposited by it to its credit as Custodian in the
Banking Department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company shall be
qualified to act as a custodian under the Investment Company Act of
1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of each
applicable Portfolio be approved by vote of a majority of the Board of
Directors of the Fund. Such funds shall be deposited by the Custodian
in its capacity as Custodian and shall be withdrawable by the Custodian
only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from the distributor
for the Shares or from the Transfer Agent of the Fund and deposit into
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the account of the appropriate Portfolio such payments as are received
for Shares of that Portfolio issued or sold from time to time by the
Fund. The Custodian will provide timely notification to the Fund on
behalf of each such Portfolio and the Transfer Agent of any receipt by
it of payments for Shares of such Portfolio.
2.6 Availability of Federal Funds. Upon mutual agreement between the Fund
on behalf of each applicable Portfolio and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions from the Fund on behalf
of a Portfolio, make federal funds available to such Portfolio as of
specified times agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment for Shares of
such Portfolio which are deposited into the Portfolio’s account.
2.7 Collection of Income. The Custodian shall collect on a timely basis all
income and other payments with respect to registered domestic
securities held hereunder to which each Portfolio shall be entitled
either by law or pursuant to custom in the securities business, and
shall collect on a timely basis all income and other payments with
respect to bearer domestic securities and other Property if, on the
date of payment by the issuer, such securities or Property are held by
the Custodian or its agent and shall credit such income, as collected,
to such Portfolio’s custodian account. Without limiting the generality
of the foregoing, the Custodian shall detach and present for payment
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all coupons and other income items requiring presentation as and when
they become due and shall collect interest when due on Property
including domestic securities held hereunder. Income due each Portfolio
on Property including domestic securities loaned pursuant to the
provisions of Section 2.2 (11) shall be the responsibility of the Fund.
The Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or data
as may be necessary to assist the Fund in arranging for the timely
delivery to the Custodian of the income to which the Portfolio is
properly entitled.
2.8 Payment of Fund Monies. Upon receipt of Proper Instructions from the
Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account
of the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian
(or any bank, banking firm or trust company doing business
in the United States or abroad which is qualified under the
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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
Portfolio or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the ease of a purchase effected through a
Securities System, in accordance with the conditions set
forth in Section 2.11 hereof; or (c) in the case of a
purchase involving the Direct Paper System, in accordance
with the conditions set forth in Section 2.llA; or (d) in
the case of repurchase agreements, including reverse
repurchase agreements, entered into between the Fund on
behalf of the Portfolio and the Custodian, or another bank,
or a dealer, (i) against delivery of the domestic
securities either in certificate form or through an entry
crediting the Custodian’s account at the Federal Reserve
Bank with such securities or (ii) against delivery of the
receipt evidencing purchase by the Portfolio of domestic
securities owned by the Custodian along with written
evidence of the agreement by the Custodian to repurchase
such securities from the Portfolio;
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2) Upon the purchase of Property consisting of precious metals
in the form of gold and silver effected by means of
commodity exchange receipts and consisting of Swiss franc
assets as more fully described in Exhibit A hereto.
3) In connection with conversion, exchange or surrender of
domestic securities owned by the Portfolio as set forth in
Section 2.2 hereof;
4) For the redemption or repurchase of Shares issued by the
Portfolio as set forth in Section 4 hereof;
5) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following
payments for the account of the Portfolio: interest, taxes,
management, accounting, transfer agent and legal fees, and
operating expenses of the Fund whether or not such expenses
are to be in whole or part capitalized or treated as
deferred expenses;
6) For the payment of any dividends on Shares of the
Portfolio declared pursuant to the governing documents of
the Fund;
7) For payment of the amount of dividends received in respect
of domestic securities sold short;
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8) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of
the Portfolio, 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 Property Purchased. In
any and every case where payment for purchase of Property, including
domestic securities, for the account of a Portfolio is made by the
Custodian in advance of receipt of the Property purchased in the
absence of specific written instructions from the Fund on behalf of
such Portfolio to so pay in advance, the Custodian shall be absolutely
liable to the Fund for such Property to the same extent as if such
Property had been received by the Custodian.
2.10 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 amended, to act as a custodian, as its agent to carry out such
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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.
2.11 Deposit of Fund Assets in Securities Systems. The Custodian may deposit
and/or maintain domestic securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as “Securities System” in accordance
with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
1) The Custodian may keep domestic securities of the Portfolio
in a Securities System provided that such securities are
represented in an account (“Account”) of the Custodian in
the Securities System which shall not include any assets of
the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
2) The records of the Custodian with respect to domestic
securities of the Portfolio which are maintained in a
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Securities System shall identify by book-entry those
securities belonging to the Portfolio;
3) The Custodian shall pay for domestic securities purchased
for the account of the Portfolio upon (1) receipt of advice
from the Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry
on the records of the Custodian to reflect such payment and
transfer for the account of the Portfolio. The Custodian
shall transfer domestic securities sold for the account of
the Portfolio upon (i) receipt of advice from the
Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry
on the records of the Custodian to reflect such transfer
and payment for the account of the Portfolio. Copies of all
advices from the Securities System of transfers of
domestic securities for the account of the Portfolio shall
identify the Portfolio, be maintained for the Portfolio by
the Custodian and be provided to the Fund at its request.
Upon request, the Custodian shall furnish the Fund on
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behalf of the Portfolio confirmation of each transfer to or
from the account of the Portfolio in the form of a written
advice or notice and shall furnish to the Fund on behalf of
the Portfolio copies of daily transaction sheets reflecting
each day’s transactions in the Securities System for the
account of the Portfolio.
4) The Custodian shall provide the Fund for the Portfolio with
any report obtained by the Custodian on the Securities
System’s accounting system, internal accounting control and
procedures for safeguarding domestic securities deposited
in the Securities System;
5) The Custodian shall have received from the Fund on behalf
of the Portfolio the initial or annual certificate, as the
case may be, required by Article 13 hereof;
6) Anything to the contrary in this Contract notwithstanding,
the Custodian shall be liable to the Fund for the benefit
of the Portfolio for any loss or damage to the Portfolio
resulting from use of the Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian
or any of its agents or of any of its or their employees or
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from failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the
Securities System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian
with respect to any claim against the Securities System or
any other person which the Custodian may have as a
consequence of any such loss or damage if and to the extent
that the Portfolio has not been made whole for any such
loss or damage.
2.11A Fund Assets Held in the Custodian’s Direct Paper System. The Custodian
may deposit and/or maintain domestic securities owned by a Portfolio in
the Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to domestic securities in the
Direct Paper System will be effected in the absence of
Proper Instructions from the Fund on behalf of the
Portfolio;
2) The Custodian may keep domestic securities of the Portfolio
in the Direct Paper System only if such securities are
represented in an account (“Account”) of the Custodian in
the Direct Paper System which shall not include any assets
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of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
3) The records of the Custodian with respect to domestic
securities of the Portfolio which are maintained in the
Direct Paper System shall identify by book-entry those
securities belonging to the Portfolio;
4) The Custodian shall pay for domestic securities purchased
for the account of the Portfolio upon the making of an
entry on the records of the Custodian to reflect such
payment and transfer of securities to the account of the
Portfolio. The Custodian shall transfer domestic securities
sold for the account of the Portfolio upon the making of an
entry on the records of the Custodian to reflect such
transfer and receipt of payment for the account of the
Portfolio;
5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the
account of the Portfolio, in the form of a written advice
or notice, of Direct Paper on the next business day
following such transfer and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction sheets
reflecting each day’s transaction in the Securities System
for the account of the Portfolio;
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6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal
accounting control as the Fund may reasonably request from
time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may be
transferred cash and/or domestic securities, including domestic
securities maintained in an account by the Custodian pursuant to
Section 2.11 hereof, (i) in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the Custodian and
a broker-dealer registered under the Exchange Act and a member of the
NASD (or any futures commission merchant registered under the Commodity
Exchange Act), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities exchange
(or the Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by the
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Portfolio or commodity futures contracts or options thereon purchased
or sold by the Portfolio, (iii) for the purposes of compliance by the
Portfolio with the procedures required by Investment Company Act
Release No. 10666, or any subsequent release or releases of the
Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and (iv) for
other proper corporate purposes, but only, in the case of clause (iv),
upon receipt of, in addition to Proper Instructions from the Fund on
behalf of the applicable Portfolio, a certified copy of a resolution of
the Board of Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate purposes.
2.13 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 Property (excluding foreign securities) of
each Portfolio held by it and in connection with transfers of such
Property.
2.14 Proxies. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the domestic securities are registered otherwise
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than in the name of the Portfolio or a nominee of the Portfolio, all
proxies, without indication of the manner in which such proxies are to
be voted, and shall promptly deliver to the Portfolio such proxies, all
proxy soliciting materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. The Custodian shall
transmit promptly to the Fund for each Portfolio all written
information (including, without limitation, pendency of calls and
maturities of domestic securities and expirations of rights in
connection therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the maturity of
futures contracts purchased or sold by the Portfolio) received by the
Custodian from issuers of domestic securities being held for the
Portfolio. With respect to tender or exchange offers, the Custodian
shall transmit promptly to the Portfolio all written information
received by the Custodian from issuers of domestic securities whose
tender or exchange is sought and from the party (or his agents) making
the tender or exchange offer. If the Portfolio desires to take action
with respect to any tender offer, exchange offer or any other similar
transaction, the Portfolio shall notify the Custodian at least three
business days prior to the date on which the Custodian is to take such
action.
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2.16 Reports to Fund by Independent Public Accountants The Custodian shall
provide the Fund, on behalf of each of the Portfolios at such times as
the Fund may reasonably require, with reports by independent public
accountants on the accounting system, internal accounting control and
procedures for safeguarding Property, including securities, futures
contracts and options on futures contracts, and 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.
3. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States. The provision of this Article 3 shall apply to the
duties of the Custodian as they relate to foreign securities held outside the
United States.
3.1 Appointment of Chase as Sub-Custodian. The Custodian is authorized and
instructed by the Fund on behalf of the Portfolios to employ Chase
Manhattan Bank N.A. (“Chase”) as subcustodian for the foreign
securities (including cash incidental to transactions in such
securities) of the Portfolios on the terms and conditions set forth in
the Subcustody Contract between the Custodian and Chase which is
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attached hereto as Exhibit A (the “Subcustody Contract”). The Custodian
acknowledges that it has entered into the Subcustody Contract and
hereby agrees to provide such services to the Fund and the Portfolios
and in accordance with such Subcustody Contract as necessary for
foreign custody services to be provided pursuant thereto.
3.2 Standard of Care; Liability. Notwithstanding anything to the contrary
in this Contract, the Custodian shall not be liable to the Fund for any
loss, damage, cost, expense, liability or claim arising out of or in
connection with the maintenance of custody of the foreign securities of
the Portfolios by Chase or by any other banking institution or
securities depository employed pursuant to the terms of the Subcustody
Contract, except that the Custodian shall be liable for any such loss,
damage, cost, expense, liability or claim directly resulting from the
failure of the Custodian to exercise reasonable care in the performance
of its duties hereunder. At the election of the Fund on behalf of the
Portfolios, the Fund on behalf of the Portfolios shall be entitled to
be subrogated to the rights of the Custodian under the Subcustody
Contract with respect to any claims arising thereunder against Chase or
any other banking institution or securities depository employed by
Chase if and to the extent that the Fund and the Portfolios have not
been made whole therefor.
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3.3 Fund’s Responsibility for Rules and Regulations. As between the
Custodian and the Fund, the Fund on behalf of the Portfolios shall be
solely responsible to assure that the maintenance of foreign securities
pursuant to the’ terms of the Subcustody Contract comply with all
rules, regulations, interpretations and orders of the Securities and
Exchange Commission applicable to a registered investment company, and
the Custodian assumes no responsibility and makes no representations as
to such compliance.
4. Payments for Repurchases or Redemptions of Shares of the Fund. From
such funds as may be available for the purpose but subject to the limitations of
the Articles of Incorporation, as amended, of the Fund 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 a Portfolio, the Custodian is authorized upon receipt
of instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on
U.S. Trust Company of New York 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.
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5. Proper Instructions. Proper Instructions as used throughout this
Contract means a writing signed or initialed 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 Portfolios’ assets.
6. Actions Permitted without Express Authority. The Custodian may in its
discretion, without express authority from the Fund on behalf of each applicable
Portfolio:
1) make payments to itself or others for minor expenses of
handling Property or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Fund on behalf of the
Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
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3) endorse for collection, in the name of the Portfolio,
checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the Property of the
Portfolio except as otherwise directed by the Board of
Directors of the Fund.
7. Evidence of Authority. The Custodian shall be protected in acting upon
any instructions, notice, request, consent, certificate or other instrument or
paper believed by it to be genuine and to have been properly executed by or on
behalf of the Fund. The Custodian may receive and accept a certified copy of a
vote of the Board of Directors of the Fund as conclusive evidence (a) of the
authority of any person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Directors pursuant to the
Articles of Incorporation, as amended, of the Fund 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.
8. Duties of Custodian with Respect to the Books, of Account and
Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Directors of the Fund to keep
the books of account of each Portfolio and/or compute the net asset value per
share of the outstanding shares of each Portfolio or, if directed in writing to
do so by the Fund on behalf of the
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Portfolio, 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 Portfolio as described in the Fund’s currently effective
prospectus related to such Portfolio and shall advise the Fund and the Transfer
Agent daily of the total amounts of such net income and, if instructed in
writing by an officer of the Fund to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various components.
The calculations of the net asset value per share and the daily income of each
Portfolio shall be made at the time or times described from time to time in the
Fund’s currently effective prospectus related to such Portfolio.
9. Records
The Custodian shall with respect to each Portfolio 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-l and 31a-2 thereunder, applicable federal and state tax laws and any other
law or administrative rules or procedures which may be applicable to the Fund.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the Securities and Exchange Commission. The Custodian shall, at the Fund’s
request, supply the Fund with a tabulation of Property owned by each
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Portfolio and held by the Custodian and shall, when requested to do so by the
Fund and for such compensation as shall be agreed upon between the Fund and the
Custodian, include certificate numbers in such tabulations.
10. Opinion of Fund’s Independent Accountant
The Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Fund’s independent accountants with respect
to its activities hereunder in connection with the preparation of the Fund’s
Form N-lA, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and, with respect to any other requirements of such Commission.
11. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund on behalf of each applicable Portfolio and the Custodian.
12. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract, but shall be
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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. Notwithstanding the foregoing, the
responsibility of the Custodian with respect to redemptions effected by check
shall be in accordance with a separate Agreement entered into between the
Custodian and the Fund. If the Fund on behalf of a Portfolio requires the
Custodian to take any action with respect to securities, which action involves
the payment of money or which action may, in the opinion of the Custodian,
result in the Custodian or its nominee assigned to the Fund or the Portfolio
being liable for the payment of money or incurring liability of some other form,
the Fund on behalf of the Portfolio, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
If the Fund requires the Custodian to advance cash or securities for
any purpose for the benefit of a Portfolio or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominee’s own negligent
action, negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Portfolio shall be security therefor and
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should the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of such Portfolio’s assets to
the extent necessary to obtain reimbursement.
13. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue in full
force and effect until terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be terminated by either
party by an instrument in writing delivered or mailed, postage prepaid to the
other party, such termination to take effect not sooner than thirty (30) days
after the date of such delivery or mailing; provided, however that the Custodian
Shall not with respect to a Portfolio act under Section 2.11 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Directors of the Fund has approved the initial use
of a particular Securities System by such Portfolio and the receipt of an annual
certificate of the Secretary or an Assistant Secretary that the Board of
Directors has reviewed the use by such Portfolio of such Securities System, as
required in each case by Rule l7f-4 under the Investment Company Act of 1940, as
amended and that the Custodian shall not with respect to a Portfolio act under
Section 2.11A hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Directors has approved the
initial use of the Direct Paper System by such Portfolio and the receipt of an
annual certificate of the Secretary or an Assistant Secretary that the Board of
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Directors has reviewed the use by such Portfolio of the Direct Paper System;
provided further, however, that the Fund shall not amend or terminate this
Contract in contravention of any applicable federal or state regulations, or any
provision of the Articles of Incorporation, as amended, of the Fund, and further
provided, that the Fund on behalf of one or more of the Portfolios may at any
time by action of its Board of Directors (i) substitute another bank or trust
company for the Custodian by giving notice as described above to the Custodian,
or (ii) immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
14. Successor Custodian
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Directors of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office, of the
Custodian, duly endorsed and in the form for transfer, all Property of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the domestic securities of each such Portfolio
held in a Securities System.
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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
Property 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 Property held by the
Custodian on behalf of each applicable Portfolio and all instruments held by the
Custodian relative thereto held by it under this Contract on behalf of each
applicable Portfolio and to transfer to an account of such successor custodian
all of the domestic securities of each such Portfolio 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 Property remains 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
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its services during such period as the Custodian retains possession of such
Property and the provisions of this Contract relating to the duties and
obligations of the Custodian shall remain in full force and effect.
15. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor of
this Contract. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Articles of Incorporation,
as amended, of the Fund. No interpretive or additional provisions made as
provided in the preceding sentence shall be deemed to be an amendment of this
Contract.
16. Additional Funds
In the event that the Fund establishes one or more series of Shares in
addition to the Permanent Portfolio and the Treasury Xxxx Portfolio with respect
to which it desires to have the Custodian render services as custodian under the
terms hereof, it shall so notify the Custodian in writing, and if the Custodian
agrees in writing to provide such services, such series of Shares shall become a
Portfolio hereunder.
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17. 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.
18. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, the
existing custodian contracts between the Permanent Portfolio Fund, Inc. and the
Custodian dated October 15, 1982, as amended, relating to the custody of such
Fund’s assets. Any reference to the Custodian Contract between Permanent
Portfolio Fund, Inc. and the Custodian in documents executed prior to the date
hereof shall be deemed to refer to this Contract.
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 18th day of August, 1987.
ATTEST PERMANENT PORTFOLIO FUND, INC.
/s/ Xxxx X. Xxxxx By /s/ Xxxxx Xxxxx
--------------------- ------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ By /s/
--------------------- -------------------------------
Assistant Secretary Vice President
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EXHIBIT A
In reference to the Custodian Contract between Permanent Portfolio
Fund, Inc. and State Street Bank and Trust Company, it is understood and agreed
that transactions in, and payment in advance of delivery for gold, silver, or
Swiss francs, or future or forward contracts on gold, silver, or Swiss francs,
will, be made only in the following cases:
1. A transaction of gold or silver through the use of Comex receipts.
2. Futures transactions of currency or metal and the marking of
those transactions thereafter.
3. Forward transactions of currency or metal and the marking of
those transactions thereafter.
In all cases, written authorization must be forthcoming to execute the
above stated transactions without delivery versus payment.
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