CUSTODIAN CONTRACT
This Contract between FPA New Income, Inc., a Delaware 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.
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 by the
Custodian or in a Securities System account of the
Custodian only upon receipt of "Proper Instructions,"
as defined in Section Q 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;
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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 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 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 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 of similar
securities; PROVIDED that, in any such case,
the new securities and cash, if any, are to
be delivered to the Custodian;
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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 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.
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The Custodian acknowledges that the Fund, as
of the effective date of this Contract, has
not adopted any policies enabling it to loan
securities, engage in options transactions
and to make distributions in kind; and that
paragraphs 10, 12 and 13 will become
applicable until after the Fund has adopted
such a policy or policies.
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. 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 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 other banks or trust companies; 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
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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 receipt of Proper
Instruments, 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
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. COLLECTIONS. Unless and until the Custodian receives
Proper Instructions to the contrary, the Custodian
shall:
1. Present for payment for the account of the
Fund all securities which are called,
redeemed or retired or otherwise become
payable or which call for payment upon
presentation, and hold the cash received by
it upon such payment for the account of the
Fund; and
2. 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
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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 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 or 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
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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
7. For any other proper purposes, BUT ONLY upon
receipt of, or 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
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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 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. The above provisions regarding payment by
wire and redemption by shareholder check will only be
effective upon adoption by the Fund of policies so
permitting.
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.
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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 Exchange Act, 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;
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;
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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 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 to 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 established 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
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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.
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.
O. 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 notice 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, unless special arrangements to the
contrary have been agreed to by the Fund and the
Custodian.
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
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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 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 as described in
such vote, and such vote may be
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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 reasonable 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 to the Fund, at such times as the Fund may
reasonable 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 Contact;
such reports, which 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, 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.
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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 titles, 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; and provided further
that notwithstanding the foregoing, after receipt of securities or other
property of the Fund by the Custodian to be held by the Custodian and until the
delivery or other disposition of such securities or other property pursuant to
instructions of the Fund pursuant hereto, the Custodian assumes liability for
damage thereto or loss thereof or loss of any money or securities received as
dividends or of any split-ups, rights or other distribution or proceeds
therefrom caused as a result of the negligence, willfull misconduct or bad faith
by the Custodian in connection with the Custodian's handling of the securities.
The Custodian's responsibility for damage or loss arising from military power,
war, insurrection, or nuclear fission, fusion, or radioactivity shall be limited
to the use of the Custodian's best efforts to secure from transfer agents and
similar appropriate persons replacement of securities determined to be lost,
missing, or destroyed.
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.
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 not be
assigned by the Custodian without consent of the Fund, may be amended as to the
Contract or the fee ONLY by mutual written 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 sixty (60) 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
14
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.
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, of its own
selection, having an aggregate capital, surplus, and undivided profits, as shown
by its last published report, of not less than $25,000,000, all securities,
funds and other properties held by the Custodian and all instruments held by the
Custodian relative thereto and all other property held by it under this Contract
and to transfer to an account of such successor custodian all of the Fund's
securities held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of 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
provisions of the governing instruments of the Fund. No interpretive or
additional provisions made as provided n the preceding sentence shall be deemed
to be an amendment of this Contract.
15
XI. DIRECTORS
All reference to actions of or by Directors herein shall require action by
such Directors acting as a Board of Directors and not individually.
XII. MASSACHUSETTS LAW TO APPLY.
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with the Investment Company Act of 1940, other federal
securities laws where applicable, and 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 20th day of August, 1984.
FPA NEW INCOME, INC.
(seal) By: /s/ Xxxxx X. xx Xxxx, Xx.
-----------------------------------
Xxxxx X. xx Xxxx, Xx., Treasurer
STATE STREET BANK AND TRUST COMPANY
(seal) By: /s/ X. X. Xxxxxx, Xx.
-----------------------------------
Vice President
16
(LOGO)
STATE STREET BANK AND TRUST COMPANY
Custodian Fee Schedule
FPA PARAMOUNT FUND, INC.
FPA PERENNIAL FUND, INC.
* FPA NEW INCOME, 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 $250.
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
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 collateral $20.00
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 loaned 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 BOOKS
Monitoring for calls and processing coupons -- for each
coupon issue held -- monthly charge $ 5.00
VIII. HOLDING CHARGE
For each issue maintained -- monthly charge $ 5.00
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
officers 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 X. 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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