CUSTODIAN CONTRACT
This Contract between FPA Perennial Fund, Inc., a Maryland corporation,
hereinafter called the "Fund," and State Street Bank and Trust Company,
hereinafter called the "Custodian,"
WITNESSETH: That in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
I. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT.
The Fund hereby employs the Custodian as the Custodian of its
assets. The Fund agrees to deliver to the Custodian all securities and
similar investments and all cash owned or received by it, including all
payments of income or capital received by it with respect to all securities
and similar investments owned by the Fund from time to time and the cash or
other consideration received by it for such shares of common stock ("Shares")
of the Fund as may be issued or sold from time to time. The Custodian shall
not be responsible for any property of the Fund held or received by the Fund
and not delivered to the Custodian.
The Custodian may from time to time employ one or more
sub-custodians, but only in accordance with applicable action by the
Directors of the Fund, and provided that so long as the Custodian has
exercised reasonable care in the selection of any sub-custodian, 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.
II. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY
THE CUSTODIAN.
A. HOLDING SECURITIES. The Custodian shall hold and physically segregate
for the account of the Fund all non-cash property, including all
securities owned by the Fund, other than securities which are
maintained pursuant to Section L of Article II hereof in a
"Securities System" as defined in such section.
B. DELIVERY OF SECURITIES. The Custodian shall release and deliver
securities owned by the Fund held
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by the Custodian or in a Securities System account of the Custodian
only upon receipt of "Proper Instructions," as defined in Section P
of Article II hereof which may be continuing instructions when
deemed appropriate by the parties, and only in the following cases:
1. Upon the sale of such securities for the account of the Fund and
receipt of payment thereof;
2. Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
3. In the case of a sale effected through a Securities System, in
accordance with the provisions of Section L of Article II hereof;
4. To the depository agent in connection with tender or other
similar offers for such securities;
5. To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
PROVIDED that, in any such case, the cash or other consideration
is to be delivered to the Custodian;
6. To the issuer thereof or its agent for transfer into the name of
any nominee or nominees of the Custodian or into the name or
nominee name of any agent appointed pursuant to Section K of
Article II hereof or into the name or nominee name of any
sub-custodian appointed pursuant to Article I hereof; or for
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number
of units; or for exchange of interim receipts or temporary
securities for definitive securities; PROVIDED that in any such
case, the new securities are to be delivered to the Custodian;
7. To the broker selling the same for examination in accordance with
the "street delivery" custom; PROVIDED that the Custodian shall
adopt such procedures, as the Fund from time to time shall
approve, to ensure their prompt return
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to the Custodian by the broker in the event the broker elects not
to accept them;
8. For exchange or conversion pursuant to any plan of merger,
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
case, the new securities and cash, if any, are to be delivered to
the Custodian;
9. In the case of warrants, rights or similar securities, the
surrender thereof upon the exercise of such warrants, rights or
similar securities; PROVIDED that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
10. For delivery in connection with any loans of securities made by
the Fund, BUT ONLY against receipt of adequate collateral as
specified from time to time by action of the Directors of the
Fund, which may be in the form of cash or obligations issued by
the United States government, its agencies or instrumentalities;
11. For delivery as security in connection with any borrowings by the
Fund requiring a pledge or hypothecation of assets by the Fund,
BUT ONLY against receipt of amounts borrowed;
12. For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered
under the Securities Exchange Act of 1934 (the "Exchange Act")
and a member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by the Fund;
13. Upon receipt of instructions from the transfer agent for the
Fund, for delivery to such
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transfer agent or to holders of Shares of the Fund in connection
with distributions in kind, as may be described from time to time
in the Fund's currently effective prospectus, in satisfaction of
requests by holders of Shares of the Fund for repurchase or
redemption; and
14. For any other proper corporate purposes, BUT ONLY upon receipt
of, in addition to Proper Instructions, a certified copy of a
resolution of the Directors or of the Executive Committee signed
by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities to be delivered,
setting forth the purpose for which such delivery is to be made,
declaring such purposes to be proper corporate purposes, and
naming the person or persons to whom delivery of such securities
shall be made.
C. REGISTRATION OF SECURITIES. Securities held by the Custodian (other
than bearer securities) shall be registered in the name of the Fund
or in the name of any nominee of the Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to the Fund,
UNLESS the Fund has authorized in writing the appointment of a
nominee to be used in common with other registered investment
companies having the same investment adviser as the Fund, or in the
name or nominee name of any agent appointed pursuant to Section K of
Article II hereof or in the name or nominee name of any sub-custodian
appointed pursuant to Article I hereof. All securities accepted by
the Custodian on behalf of the Fund under the terms of this Contract
shall be in "street" or other good delivery form. The Fund shall from
time to time furnish the Custodian appropriate instruments to enable
the Custodian to register in the name of the nominee of the Custodian
any securities held by the custodian hereunder which may be registered
in the name of the Fund.
D. BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or accounts in the name of the Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Contract,
and shall hold in such account or accounts, subject to the provisions
hereof, all cash
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received by it from or for the account of the Fund, other than cash
maintained by the Fund in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of 1940.
Funds held by the Custodian for the Fund may be deposited by it to its
credit as Custodian in the Banking Department of the Custodian or in
such other banks or trust companies as it may in its discretion deem
necessary or desirable; PROVIDED, however, that every such bank or
trust company shall be qualified to act as a custodian under the
Investment Company Act of 1940 and that each such bank or trust
company and the funds to be deposited with each such bank or trust
company shall be approved by action of the 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. If requested by the Fund, the Custodian shall furnish the
Fund, not later than twenty days after the last business day of each
month, a statement reflecting the current status of its internal
reconciliation of the closing balance as of that day in all accounts
described in this Paragraph to the balance shown on the daily cash
report for that day rendered to the Fund.
E. PAYMENTS FOR SHARES. The Custodian shall receive from the distributor
of the Fund's Shares or from the transfer agent of the Fund (the
"Transfer Agent") and deposit into the Fund's account such payments
as are received for Shares of the Fund issued or sold from time to
time by the Fund. The Custodian will provide timely notification to
the Fund and the Transfer Agent of any receipt by it of payments for
Shares of the Fund.
F. INVESTMENT AND AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall, upon the
receipt of Proper Instructions, which may be continuing instructions
when deemed appropriate by the parties:
1. Invest in such instruments as may be set forth in such
instructions on the same day as received all federal funds
received after a time agreed upon between the Custodian and the
Fund; and
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2. Make federal funds available to the Fund as of specified times
agreed upon from time to time by the Fund and the Custodian in
the amount of checks received in payment for Shares of the Fund
which are deposited into the Fund's account.
G. COLLECTION OF INCOME. The Custodian shall collect on a timely basis
all income and other payments with respect to registered securities
held hereunder to which the Fund shall be entitled either by law or
pursuant to custom in the securities business, and shall collect on a
timely basis all income and other payments with respect to bearer
securities if, on the date of payment by the issuer, such securities
are held by the Custodian or agent thereof and shall deposit such
income, as collected, into the Fund's account. Without limiting the
generality of the foregoing, the Custodian shall detach and present
for payment all coupons and other income items requiring presentation
as and when they become due, shall collect interest when due on
securities held hereunder, and shall endorse and deposit, in the name
of the Fund, checks, drafts and other negotiable instruments on the
same day as received. All securities accepted by the Custodian
pursuant to Subsection 1 of Section H of Article II hereof shall be
accompanied by payment of, or a "due xxxx" for, any dividends,
interest, or other distributions of the issuer, due to the Fund.
H. PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases
only:
1. Upon the purchase of securities for the account of the Fund BUT
ONLY (a) against the delivery of such securities to the Custodian
(or any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the Investment
Company Act of 1940, as amended, to act as a custodian and has
been designated by the Custodian as its agent for this purpose)
registered in the name of the Fund or in the name of a nominee
of the Custodian referred to in Section C
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of Article II hereof or in proper form for transfer; (b) in
the case of a purchase effected through a Securities System,
in accordance with the conditions set forth in Section L of
Article II hereof; or (c) in the case of repurchase agreements
entered into between the Fund and the Custodian, or another
bank, or a broker-dealer which is a member of the NASD, (i)
against delivery of the securities either in certificate form
or through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities; or (ii) against
delivery of the receipt evidencing purchase by the Fund of
securities owned by the Custodian along with written evidence
of the agreement by the Custodian to repurchase such
securities from the Fund provided that the specific securities
purchased by the Fund are identified by book-entry in the
records of the Custodian bank;
2. In connection with the conversion, exchange or surrender of
securities owned by the Fund as set forth in Section B of
Article II hereof;
3. For the redemption or repurchase of Shares of the Fund as set
forth in Section J of Article II hereof;
4. For the payment of any expense of liability incurred by the
Fund, including but not limited to the following payments for
the account of the Fund: interest, taxes, management,
accounting, transfer agent and legal fees and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5. For the repayment of any loan made by the Fund but only (a)
against surrender of the note or notes evidencing the loan and
(b) against redelivery of any securities pledged or
hypothecated to secure such loan;
6. For the payment of any dividends or other distributions
declared pursuant to the governing documents of the Fund; and
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7. For any other proper purposes, BUT ONLY upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the 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.
I. LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASE.
In any and every case where payment for purchase of securities for
the account of the Fund is made by the Custodian in advance of the
receipt of the securities purchased in the absence of specific
written instructions from the Fund to so pay in advance, the
Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been
received by the Custodian, EXCEPT that in the case of repurchase
agreements entered into by the Fund with a bank which is a member
of the Federal Reserve System, the Custodian may transfer funds to
the account of such bank prior to the receipt of written evidence
that the securities subject to such repurchase agreement have been
transferred by book-entry into a segregated nonproprietary account
of the Custodian maintained with the Federal Reserve Bank of Boston
or of the Safe-keeping receipt, provided that such securities have
in fact been so transferred by book-entry.
J. 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 governing documents of the Fund and any
applicable action of the 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 of the
Fund who have delivered to the Transfer Agent a request for
redemption or repurchase of Shares of the Fund. In connection with
the redemption or repurchase of shares of the Fund, the Custodian
is authorized upon receipt of instructions from the
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Transfer Agent to wire funds to or through a commercial bank
designated by the redeeming shareholders. In connection with the
redemption or repurchase of Shares of the Fund, the Custodian shall
honor checks drawn on the Custodian by a holder of such Shares,
which checks have been furnished by the Fund to the holder of such
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.
K. 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 of the provisions of this Article II as the
Custodian may from time to time direct; PROVIDED, however, that the
appointment of any agent shall not relieve the Custodian of any of
its responsibilities or liabilities hereunder, and that the
Custodian shall hold the Fund harmless from the acts and omissions
of any agent appointed pursuant to this paragraph.
L. DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Custodian may
deposit and/or maintain securities owned by the Fund in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by
the U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities Systems" in
accordance with applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, if any, and subject to
the following provisions:
1. The Custodian may keep securities of the Fund in a Securities
System provided that such securities are represented in an
account ("Account") of the Custodian in the Securities System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian, or otherwise for
customers;
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2. The records of the Custodian with respect to securities of the
Fund which are maintained in a Securities System shall
identify by book-entry those securities belonging to the Fund;
3. The Custodian shall pay for securities purchased for the
account of the Fund upon (i) receipt of the advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the
account of the Fund. The Custodian shall transfer securities
sold for the account of the Fund upon (i) receipt of advice
from the Securities System that payment for such securities
has been transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies of all advices
from the Securities System of transfers of securities for the
account of the Fund shall identify the Fund, be maintained for
the Fund by the Custodian and be provided to the Fund at its
request. The Custodian shall furnish the Fund confirmation of
each transfer to or from the account of the Fund in the form
of a written advice or notice and shall furnish to the Fund
copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the
Fund on the next business day;
4. The Custodian shall provide the Fund with any report obtained
by the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System;
5. The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article VIII,
hereof; and
6. Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage
to the Fund resulting from use of the Securities System by
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reason of any negligence, misfeasance or misconduct of the
Custodian or any of its agents or of any of its or their
employees or from any failure of the Custodian or any such
agents 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 Fund has not been made whole for any such loss or
damage.
M. SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or
accounts for and on behalf of the Fund, into which account or
accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant to
Section B(12) of Article II hereof, (i) in accordance with the
provisions of any agreement among the Fund, the Custodian and a
broker-dealer registered under the Exchange Act and a member of the
NASD, relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or
of any similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the Fund,
(ii) for the purposes of compliance by the Fund with the procedures
required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies and (iii) for other proper
corporate purposes, BUT ONLY, in the case of clause (iii), upon
receipt of, in addition to Proper Instructions, a certified copy of
a resolution of the Board of Directors or of the Executive
Committee signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such purposes to
be proper corporate purposes.
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N. OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall
execute ownership and other certificate and affidavits for all
federal and state tax purposes in connection with receipt of income
or other payments with respect to securities of the Fund held by it
and in connection with transfers of securities.
0. PROXIES. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than
in the name of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly
deliver to the Fund such proxies, all proxy soliciting materials
and all notices relating to such securities.
P. COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES. The Custodian
shall transmit promptly to the Fund all written information
(including, without limitation, pendency of calls and maturities of
securities and expirations of conversion and other rights in
connection therewith and notices of exercise of call options
written by the Fund) received by the Custodian from issuers of the
securities being held for the Fund. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the Fund
all written information received by the Custodian from issuers of
the securities whose tender or exchange is sought and from the
party (or his agents) making the tender or exchange offer. If the
Fund desires to take action with respect to any tender offer,
exchange offer or any other similar transaction, the Fund shall
notify the Custodian at least three business days prior to the date
on which the Custodian is to take such action.
Q. PROPER INSTRUCTIONS. "Proper Instructions" as used throughout this
Article II means a writing signed by one or more person or persons as
shall have been from time to time authorized by action of the
Directors of the Fund. 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
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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 by the
following business day. The Custodian shall use reasonable efforts
to insure that all such written confirmations are received in a
timely manner from the Fund. Upon receipt of a certificate of the
Secretary or an Assistant Secretary as to the authorization by the
Directors of the Fund accompanied by a detailed description of
procedures approved by the Directors, Proper Instructions may
include communications effected directly between electro-mechanical
or electronic devices provided that the Directors and the Custodian
are satisfied that such procedures afford adequate safeguards for
the Fund's assets.
R. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The Custodian may in its
discretion, without express authority from the Fund:
1. Make payments to itself or others for minor expenses of
handling securities or other similar items relating to its duties
under this Contract, PROVIDED that all such payments shall be
accounted for to the Fund;
2. Surrender securities in temporary form for securities in
definitive form; and
3. In general, attend to all nondiscretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Fund except as otherwise directed by action of the
Directors of the Fund.
S. 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 action of the 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 Directors pursuant to the
governing instruments of the Funds
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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.
III. RECORDS AND REPORTS.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet
the obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, 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 remain the property of the Fund, shall be subject to the
provisions of Article IX hereof, and shall be open to the inspection and
audit at reasonable times by duly authorized officers, employees or agents of
the Fund and employees and agents of the Securities and Exchange Commission.
The Custodian shall, at the Fund's request, supply the Fund with a tabulation
of securities owned by the Fund and held by the Custodian and shall, render
to the Fund a daily report of all monies received or paid on behalf of the
Fund and of the resultant cash balance, a list of all security transactions
that remain unsettled at such time, and such other reports as the Fund may
reasonably request.
IV. OPINION OF FUND'S INDEPENDENT ACCOUNTANT.
The Custodian shall take all reasonable action, as the Fund may
from time to time request, to obtain from year to year favorable opinions
from the fund's independent accountants with respect to its activities
hereunder in connection with the preparation of the Fund's Form N-1 and Form
N-1R or other annual reports to the Securities and Exchange Commission and
with respect to any other requirements of such Commission.
V. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS.
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Contract;
such reports, which shall be of sufficient scope and in sufficient detail, as
may
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reasonably be required by the Fund, to provide reasonable assurance that any
material inadequacies would be disclosed, shall state in detail material
inadequacies disclosed by such examination, and, if there are no such
inadequacies, shall so state.
VI. COMPENSATION OF CUSTODIAN.
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between
the Fund and the Custodian.
VII. 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 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 in any case the Fund may be asked to indemnify the Custodian
hereunder, the Fund shall be fully and promptly advised of all pertinent
facts concerning the situation in question, and the Custodian shall use all
reasonable care to identify and notify the Fund promptly concerning any
situation which presents or appears likely to present the probability of such
a claim for indemnification against the Fund. The Fund shall have the option
to defend the Custodian against any claim which may be the subject of this
indemnification, and in the event that the Fund so elects it will so notify
the Custodian, and thereupon the Fund shall take over complete defense of the
claim, and the Custodian shall sustain no further legal or other expenses in
such situation for which it shall seek indemnification. The Custodian shall
in no case confess any claim or make any compromise in any case in which the
Fund will be asked to indemnify the Custodian except with the Fund's consent.
If the Fund requires the Custodian to take any action with respect
to securities, which action involves the payment of money or which action
may, in the opinion of the Custodian, result in the Custodian or its nominee
assigned to the Fund being liable for the payment of money or incurring
liability of some other form, the Fund, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
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VIII. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT.
This contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided,
may be amended at any time by mutual agreement of the parties hereto and may
be terminated by either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such termination to take effect
not sooner than thirty (30) days after the date of such delivery or mailing;
PROVIDED, however, that the Custodian shall not act under Section L of
Article II hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Directors of the Fund have
approved the initial use of a particular Securities System and the receipt of
an annual certificate of the Secretary or an Assistant Secretary that the
Directors have reviewed the use by the Fund of such Securities System, as
required in each case by Rule 17f-4 under the Investment Company Act of 1940,
as amended; PROVIDED FURTHER, however, that the Fund shall not amend or
terminate this Contract in contravention of any applicable federal or state
laws or regulations, or any provision of the governing documents of the Fund,
and FURTHER PROVIDED, that the Fund may at any time by action of its
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.
IX. SUCCESSOR CUSTODIAN.
If a successor custodian shall be appointed by action of the
Directors of the Fund, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian; duly endorsed and in the
form for transfer, all securities then held by it hereunder and all funds and
other properties of the Fund deposited with or held by it hereunder.
If no successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of action of the Directors
of the Fund, deliver at the office of the Custodian such securities, funds
and other properties in accordance with such action.
16
In the event that no written order designating a successor
custodian or certified copy of action of the Directors shall have been
delivered to the Custodian on or before the date when such termination shall
become effective, then the Custodian shall have the right to deliver to a
bank or trust company, which is a "bank" as defined in the Investment Company
Act of 1940, doing business in Boston, Massachusetts, of its own selection,
having an aggregate capital, surplus, and undivided profits, as shown by its
last published report, of not less than $25,000,000, all securities, funds
and other properties held by the Custodian and all instruments held by the
Custodian relative thereto and all other property held by it under this
Contract. Thereafter, such bank or trust company shall be the successor of
the Custodian under this Contract.
In the event that securities, funds and other properties remain in
the possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of action referred to above
or of the Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties
and the provisions of this Contract relating to the duties and obligations of
the Custodian shall remain in full force and effect.
X. INTERPRETIVE AND ADDITIONAL PROVISIONS.
In connection with the operation of this Contract, the Custodian
and the Fund may from time to time agree on such provisions interpretive of
or in addition to the provisions of this Contract as may in their joint
opinion be consistent with the general tenor of this Contract. Any such
interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, PROVIDED that no such interpretive or
additional provisions shall contravene any applicable federal or state laws
or regulations or any provision of the governing instruments 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.
XI. DIRECTORS.
All references to actions of or by Directors herein shall require
action by such Directors acting as a Board of Directors and not individually.
17
XII. MASSACHUSETTS LAW TO APPLY.
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, each of the parties has caused this instrument
to be executed in its name and behalf by its fully authorized representative
and its seal to be hereunder affixed as of the 19th day of January, 1984.
FPA PERENNIAL FUND, INC.
SEAL By: /s/ Xxxxx xx Xxxx, Xx. Treas.
------------------------------
STATE STREET BANK AND TRUST
COMPANY
SEAL By: X.X. Xxxxxx, Xx.
-------------------------------
VICE PRESIDENT
18
[LOGO]
STATE STREET BANK AND TRUST COMPANY
Custodian Fee Schedule
FPA PARAMOUNT FUND, INC.
FPA PERENNIAL FUND, INC.
* FPA NEW INCOME FUND, INC.
FPA CAPITAL FUND, INC.
SOURCE CAPITAL, INC.
Effective August 1, 1987
------------------------------------------------------------------------------
I. ADMINISTRATION
CUSTODY AND PORTFOLIO ACCOUNTING SERVICE - Maintain custody of fund
assets. Settle portfolio purchases and sales. Report buy and sell fails.
Determine and collect portfolio income. Make cash disbursements and
report cash transactions. Maintain investment ledgers, provide selected
portfolio transaction, position and income reports.
The administration fee shown below is an annual charge, billed and
payable monthly, based on average monthly net assets.
ANNUAL FEES PER PORTFOLIO
Custody and
Fund Net Assets Portfolio Acct.
----------------- ---------------
First $20 Million 1/ 40 of 1%
Next $80 Million 1/ 80 of 1%
Excess 1/200 of 1%
Minimum Monthly
Asset Charges $1,000
* The New Income Fund, Inc. will be subject to a minimum monthly charge of
$25O.
II. GLOBAL CUSTODY - Services provided include:
Cash Movements, Foreign Communication, Foreign Exchange
(local currency settlements).
FUND NET ASSETS ANNUAL FEES
----------------- ---------------
First $50 Million 18 Basis Points
Next $50 Million 15 Basis Points
Over $100 Million 12 Basis Points
Minimum Per Client $5,000.00 Annually
[LOGO]
III. PORTFOLIO TRADES - FOR EACH LINE ITEM PROCESSED
State Street Bank Repos $ 7.00
DTC or Fed Book Entry $12.00
New York Physical Settlements $30.00
All other trades $16.00
IV. OPTIONS
Option charge for each option written or
closing contract, per issue, per broker $25.00
Option expiration charge, per issue, per broker $15.00
Option exercised charge, per issue, per broker $15.00
V. LENDING OF SECURITIES
Deliver loaned securities versus cash $20.00
collateral
Deliver loaned securities versus securities
collateral $30.00
Receive/deliver additional cash collateral $ 6.00
Substitutions of securities collateral $30.00
Deliver cash collateral versus receipt of
loaned securities $15.00
Deliver securities collateral versus receipt
of loaned securities $25.00
Loan administration -- xxxx-to-market per
day, per loan $ 3.00
VI. INTEREST RATE FUTURES
Transactions -- no security movement $ 8.00
VII. COUPON BONDS
Monitoring for calls and processing coupons--
for each coupon issue held -- monthly charge $ 5.00
VIII. HOLDINGS CHARGE
For each issue maintained -- monthly charge $ 5.00
[LOGO]
IX. PRINCIPAL REDUCTION PAYMENTS
Per paydown $10.00
X. DIVIDEND CHARGES (For items held at the Request
of Traders over record date in street form) $50.00
XI. SPECIAL SERVICES
Fees for activities of a non-recurring nature such as fund
consolidations or reorganizations, extraordinary security shipments and
the preparation of special reports will be subject to negotiation.
Fees for tax accounting/recordkeeping for options, financial futures,
and other special items will be negotiated separately.
XII. OUT-OF-POCKET EXPENSES
A billing for the recovery of applicable out-of-pocket expenses will be
made as of the end of each month. Out-of-pocket expenses include, but
are not limited to the following:
Telephone
Wire Charges ($4.70 per wire in and $4.55 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer -- $8.00 Each
Transfer Fees
Sub-custodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over $2,500
$4.25
GNMA Transfer - $15 each
XIII. PAYMENT
The above fees will be charged against the fund's custodian checking
account five (5) days after the invoice is mailed to the fund's offices
and proper fund authorization is granted.
FPA PARAMOUNT FUND, INC.
FPA PERENNIAL FUND, INC.
FPA NEW INCOME FUND, INC.
FPA CAPITAL FUND, INC.
SOURCE CAPITAL, INC. STATE STREET BANK AND TRUST CO.
By /s/ Xxxxx xx Xxxx, Xx. By /s/ X.X. Xxxxxx, Xx.
--------------------------------- ---------------------------
Title TREASURER Title VICE PRESIDENT
------------------------------ -------------------------
Date August 12, 1987 Date August 12, 1987
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