AMENDMENT TO THE CUSTODIAN CONTRACT
AGREEMENT made by and between State Street Bank and Trust Company (the
"Custodian") and LB SERIES FUND, (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated December 2, 1986 and amended February 1, 1989 and January 11, 1990
(the "Custodian Contract") governing the terms and conditions under which
the Custodian maintains custody of the securities and other assets of the
Fund; and
WHEREAS, the Custodian and the Fund desire to amend the Custodian Contract
to provide for the maintenance of the Fund's foreign securities, and cash
incidental to transactions in such securities, in the custody of certain
foreign banking institutions and foreign securities depositories acting as
sub-custodians in conformity with the requirements of Rule 17f-5 under the
Investment Company Act of 1940;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby amend the Custodian Contract by
the addition of the following terms and conditions:
1. APPOINTMENT OF FOREIGN SUB-CUSTODIANS.
The Fund hereby authorizes and instructs the Custodian to employ as
sub-custodians for the Fund's securities and other assets maintained outside
the United States the foreign banking institutions and foreign securities
depositories designated on Schedule A hereto ("foreign sub-custodians").
Upon receipt of "Proper Instructions", as defined in Section 2.17 of the
Custodian Contract, together with a certified resolution of the Fund's Board
of Trustees, the Custodian and the Fund may agree to amend Schedule A hereto
from time to time to designate additional foreign banking institutions and
foreign securities depositories to act as sub-custodian. Upon receipt of
Proper Instructions, the Fund may instruct the Custodian to cease the
employment of any one or more such sub-custodians for maintaining custody of
the Fund's assets.
2. ASSETS TO BE HELD.
The Custodian shall limit the securities and other assets maintained in
the custody of the foreign sub-custodians to: (1) "foreign securities", as
defined in paragraph (c)(1) of Rule 17F-5 under the Investment Company Act
of 1940, and (b) cash and cash equivalents in such amounts as the Custodian
or the Fund may determine to be reasonably necessary to effect the Fund's
foreign securities transactions. The Custodian shall identify on its books
as belonging to the Fund, the foreign securities of the Fund held by each
foreign sub-custodian.
3. FOREIGN SECURITIES DEPOSITORIES.
Except as may otherwise be agreed upon in writing by the Custodian and
the Fund, assets of the Funds shall be maintained in foreign securities
depositories only through arrangements implemented by the foreign banking
institutions serving as sub-custodians pursuant to the terms hereof. Where
possible, such arrangements shall include entry into agreements containing
the provisions set forth in Section 5 hereof.
4. AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS.
Each agreement with a foreign banking institution shall be
substantially in the form set forth in Exhibit 1 hereto and shall provide
that: (a) the Fund's assets will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of the foreign banking
institution or its creditors or agent, except a claim of payment for their
safe custody or administration; (b) beneficial ownership of the Fund's
assets will be freely transferable without the payment of money or value
other than for custody or administration; (c) adequate records will be
maintained identifying the assets as belonging to the Fund; (d) officers of
or auditors employed by, or other representatives of the Custodian,
including to the extent permitted under applicable law the independent
public accountants for the Fund, will be given access to the books and
records of the foreign banking institution relating to its actions under its
agreement with the Custodian; and (e) assets of the Fund held by the foreign
sub-custodian will be subject only to the instructions of the Custodian or
its agents.
5. ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND.
Upon request of the Fund, the Custodian will use its best efforts to
arrange for the independent accountants of the Fund to be afforded access to
the books and records of any foreign banking institution employed as a
foreign sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement with the
Custodian.
6. REPORTS BY CUSTODIAN.
The Custodian will supply to the Fund from time to time, as mutually
agreed upon, statements in respect of the securities and other assets of the
Fund held by foreign sub-custodians, including but not limited to an
identification of entities having possession of the Fund's securities and
other assets and advices or notifications of any transfers of securities to
or from each custodial account maintained by a foreign banking institution
for the Custodian on behalf of the Fund indicating, as to securities
acquired for the Fund, the identity of the entity having physical possession
of such securities.
7. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
(a) Except as otherwise provided in paragraph (b) of this Section 7,
the provision of Sections 2.2 and 2.7 of the Custodian Contract shall apply,
MUTATIS MUTANDIS to the foreign securities of the Fund held outside the
United States by foreign sub-custodians.
(b) Notwithstanding any provision of the Custodian Contract to the
contrary, settlement and payment for securities received for the account of
the Fund and delivery of securities maintained for the account of the Fund
may be effected in accordance with the customary established securities
trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with
the expectation of receiving later payment for such securities from such
purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-custodian
may be maintained in the name of such entity's nominee to the same extent as
set forth in Section 2.3 of the Custodian Contract, and the Fund agrees to
hold any such nominee harmless from any liability as a holder of record of
such securities.
8. LIABILITY OF FOREIGN SUB-CUSTODIANS.
Each agreement pursuant to which the Custodian employs a foreign
banking institution as a foreign sub-custodian shall require the institution
to exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Custodian and the Fund from and against
any loss, damage, cost, expense, liability or claim arising out of or in
connection with the institution's performance of such obligations. At the
election of the Fund, it shall be entitled to be subrogated to the rights of
the Custodian with respect to any claims against a foreign banking
institution as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Fund has not been made
whole for any such loss, damage, cost, expense, liability or claim.
9. LIABILITY OF CUSTODIAN.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to sub-
custodians generally in the Custodian Contract and, regardless of whether
assets are maintained in the custody of a foreign banking institution, a
foreign securities depository or a branch of a U.S. bank as contemplated by
paragraph 13 hereof, the Custodian shall not be liable for any loss, damage,
cost, expense, liability or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war or terrorism or any
loss where the sub-custodian has otherwise exercised reasonable care.
Notwithstanding the foregoing provisions of this paragraph 10, in delegating
custody duties to State Street London Ltd., the Custodian shall not be
relieved of any responsibility to the Fund for any loss due to such
delegation, except such loss as may result from (a) political risk
(including, but not limited to, exchange control restrictions, confiscation,
expropriation, nationalization, insurrection, civil strife or armed
hostilities) or (b) other losses (excluding a bankruptcy or insolvency of
State Street London Ltd. not caused by political risk) due to Acts of God,
nuclear incident or other losses under circumstances where the Custodian and
State Street London Ltd. have exercised reasonable care.
10. REIMBURSEMENT FOR ADVANCES.
If the Fund requires the Custodian to advance cash or securities for
any purpose including the purchase or sale of foreign exchange or of
contracts for foreign exchange, 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 Fund shall be security
therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of such
Fund assets to the extent necessary to obtain reimbursement.
11. MONITORING RESPONSIBILITIES.
The Custodian shall furnish annually to the Fund, during the month of
June, information concerning the foreign sub-custodians employed by the
Custodian. Such information shall be similar in kind and scope to that
furnished to the Fund in connection with the initial approval of the
Custodian Contract. In addition, the Custodian will promptly inform the
Fund in the event that the Custodian learns of a material adverse change in
the financial condition of a foreign sub-custodian or any material loss of
the assets of the Fund or in the case of any foreign sub-custodian not the
subject of an exemptive order from the Securities and Exchange Commission is
notified by such foreign sub-custodian that there appears to be a
substantial likelihood that its shareholders' equity will decline below $200
million (U.S. dollars or the equivalent thereof) or that its shareholders'
equity has declined below $200 million (in each case computed in accordance
with generally accepted U.S. accounting principles).
12. BRANCHES OF U.S. BANKS.
(a) Except as otherwise set forth in this amendment to the Custodian
Contract, the provisions hereof shall not apply where the custody of the
Funds assets is maintained in a foreign branch of a banking institution
which is a "bank" as defined by Section 2 (a)(5) of the Investment Company
Act of 1940 meeting the qualification set forth in Section 26(a) of said
Act. The appointment of any such branch as a sub-custodian shall be
governed by paragraph 1 of the Custodian Contract.
(b) Cash held for the Fund in the United Kingdom shall be maintained
in an interest bearing account established for the Fund with the Custodian's
London branch, which account shall be subject to the direction of the
Custodian, State Street London Ltd. or both.
13. TAX LAW.
The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or any
state or political subdivision thereof. It shall be the responsibility of
the Fund to notify the Custodian of the obligations imposed on the Fund or
the Custodian as custodian of the Fund by the tax law of jurisdictions other
than those mentioned in the above sentence, including responsibility for
withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting. The sole responsibility of the
Custodian with regard to such tax law shall be to use reasonable efforts to
assist the Fund with respect to any claim for exemption or refund under the
tax law of jurisdictions for which the Fund has provided such information.
14. APPLICABILITY OF CUSTODIAN CONTRACT.
Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force
and effect.
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 15th day of March, 1995.
ATTEST LB SERIES FUND, INC.
________________________________ By:__________________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
________________________________ By:___________________________________
Executive Vice President
Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of The Lutheran
Brotherhood Family of Funds for use as sub-custodians for the Fund's
securities and other assets:
(Insert banks and securities depositories)
Certified:
____________________________
Fund's Authorized Officer
Date:________________________
exhib8e1
