AMENDMENT TO THE CUSTODIAN AGREEMENT
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THIS AMENDMENT, dated as of June 21, 2001, between FIRST INVESTORS LIFE
INTERNATIONAL SECURITIES FUND, a series of an open-end management investment
company organized under the laws of the State of Massachusetts and registered
with the Commission under the 1940 Act (the FUND), and XXXXX BROTHERS XXXXXXXX &
CO., a limited partnership formed under the laws of the State of New York
(BBH&CO. or the CUSTODIAN), amends the Custodian Agreement between the parties
dated March 8, 1990 (the "Custodian Agreement").
W I T N E S S E T H:
WHEREAS, the Fund has employed BBH&Co. to act as custodian for the Fund
and to provide related services, all as provided in the Custodian Agreement;
WHEREAS, the Securities and Exchange Commission has promulgated Rules
17f-5 and 17f-7 under the Investment Company Act of 1940 ("1940 Act"), which
establish rules regarding the Fund's investments held outside the United States
at subcustodians or through Securities Depositories; and
WHEREAS, BBH&Co. is willing to provide services in connection with such
Rules in accordance with the terms of this Amendment to the Custody Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Fund and BBH&Co. hereby agree, as follows:
1. That Section T. DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS of the
Custody Agreement is hereby amended by the addition of the following
after the current sub-section 5):
6. Unless instructed otherwise by the Fund, the Custodian may deposit
and/or maintain non-U.S. Investments of the Fund in any non-U.S.
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Securities Depository provided such Securities Depository meets
the requirements of an "eligible securities depository" under Rule
17f-7 promulgated under the 1940 Act, or any successor rule or
regulation ("Rule 17f-7") or which by order of the Securities and
Exchange Commission is exempted therefrom. Prior to the time that
securities are placed with such depository, but subject to the
provisions of Section 6.2.4 below, the Custodian shall have
prepared an analysis of the custody risks associated with
maintaining assets with the Securities Depository and shall have
established a system to monitor such risks on a continuing basis
in accordance with subsection 6.2.3 of this Section. Additionally,
the Custodian may, at any time and from time to time, appoint (a)
any bank, trust company or other entity meeting the requirements
of an "eligible foreign custodian" under Rule 17f-5 or which by
order of the Securities and Exchange Commission is exempted
therefrom, or (b) any bank as defined in Section 2(a)(5) of the
1940 Act meeting the requirements of a custodian for investment
company assets under Section 17(f) of the 1940 Act and the rules
and regulations thereunder, to act on behalf of the Fund as a
Subcustodian for purposes of holding Investments of the Fund
outside the United States. Such appointment of foreign
Subcustodians shall be subject to approval of the Fund in
accordance with Subsections 6.2.1 and 6.2.2 hereof, and use of
non-U.S. Securities Depositories shall be subject to the terms of
Subsections 6.2.3 and 6.2.4 hereof. An Instruction to open an
account in a given country shall comprise authorization of the
Custodian to hold assets in such country in accordance with the
terms of this Agreement. The Custodian shall not be required to
make independent inquiry as to the authorization of the Fund to
invest in such country.
6.2.1. BOARD APPROVAL OF FOREIGN SUBCUSTODIANS. Unless
and except to the extent that the Board has delegated to, and
the Custodian has accepted delegation of, review of certain
matters concerning the appointment of Subcustodians pursuant
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to Subsection 6.2.2, the Custodian shall, prior to the
appointment of any Subcustodian for purposes of holding
Investments of the Fund outside the United States, obtain
written confirmation of the approval of the Board of Trustees
or Directors of the Fund or their delegated foreign custody
manager with respect to (a) the identity of a Subcustodian,
and (b) the Subcustodian agreement which shall govern such
appointment, such approval to be signed by an Authorized
Person.
6.2.2. DELEGATION OF BOARD REVIEW OF SUBCUSTODIANS. From
time to time, the Custodian may agree to perform certain
reviews of Subcustodians and of Subcustodian Contracts as
delegate of the Fund's Board. In such event, the Custodian's
duties and obligations with respect to this delegated review
will be performed in accordance with the terms of the
attached 17f-5 Delegation Schedule to this Agreement.
6.2.3. MONITORING AND RISK ASSESSMENT OF SECURITIES
DEPOSITORIES. Prior to the placement of any assets of the
Fund with a Securities Depository, the Custodian: (a) shall
provide to the Fund or its authorized representative an
assessment of the custody risks associated with maintaining
assets within such Securities Depository; and (b) shall have
established a system to monitor the custody risks associated
with maintaining assets with such Securities Depository on a
continuing basis and to promptly notify the Fund or its
Investment Adviser of any material changes in such risk. In
performing its duties under this subsection, the Custodian
shall use reasonable care, prudence and diligence and may
rely on such reasonable sources of information as may be
available including but not limited to: (i) published ratings
or published articles; (ii) information supplied by a
Subcustodian that is a participant in such Securities
Depository; (iii) industry surveys or publications; and (iv)
information supplied by the depository itself, by its
auditors (internal or external) or by the relevant Foreign
Financial Regulatory Authority. It is acknowledged that
information procured through some or all of these sources may
not be independently verifiable by the Custodian and that
direct access to Securities Depositories is limited under
most circumstances. Accordingly, the Custodian shall be
liable only for failure to exercise reasonable care, prudence
and diligence in accordance with Rule 17f-7 (a). The risk
assessment shall be provided to the Fund or its Investment
Advisor by such means as the Custodian shall reasonably
establish and as agreed to by the Fund or its Investment
Adviser and the Custodian from time to time. Advice of
material change in such assessment may be provided by the
Custodian in the manner established as customary between the
Fund and the Custodian for transmission of material market
information.
6.2.4. SPECIAL TRANSITIONAL RULE. It is acknowledged
that Rule 17f-7 has an effective date of July 1, 2001 and
that the Custodian will require a period of time to fully
prepare risk assessment information and to establish a risk
monitoring system as provided in Subsection 6.2.3.
Accordingly, until July 1, 2001, the Custodian shall use
reasonable efforts to implement the measures required by
Subsection 6.2.3, and shall in the interim provide to the
Fund or its Investment Advisor the depository information
customarily provided and shall promptly inform the Fund or
its Investment Advisor of any material development affecting
the custody risks associated with the maintenance of assets
with a particular Securities Depository of which it becomes
aware in the course of its general duties under this
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Agreement or from its duties under Section 6.2.3 as such
duties have been implemented at any given time.
For purposes of this amendment, the following definitions
shall apply:
FOREIGN FINANCIAL REGULATORY AUTHORITY shall have the
meaning given by Section 2(a)(50) of the 1940 Act.
SECURITIES DEPOSITORY shall mean a central or book entry
system or agency established under Applicable Law for
purposes of recording the ownership and/or entitlement
to investment securities for a given market that, if a
foreign Securities Depository, meets the definitional
requirements of Rule 17f-7 under the 1940 Act.
All defined terms used herein shall have the meaning given in the
Custodian Agreement as amended by this Amendment.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be
duly executed as of the date first above written.
FIRST INVESTORS LIFE INTERNATIONAL SECURITIES FUND
By: /s/ Xxxxxxxx Xxxxx
----------------------------------------
(Xxxxxxxx Xxxxx)
Vice President and Secretary
By: XXXXX BROTHERS XXXXXXXX & CO.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
Partner
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17f-5 DELEGATION SCHEDULE
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By its execution of this Delegation Schedule, dated June 21, 2001,
FIRST INVESTORS LIFE INTERNATIONAL SECURITIES FUND, a series of an open-end
management investment company registered with the Securities and Exchange
Commission (the "Commission") under the Investment Company Act of 1940, as
amended, (the "1940 Act"), acting through its Board of Directors/Trustees or its
duly appointed representative (the "Fund"), hereby appoints XXXXX BROTHERS
XXXXXXXX & CO., a New York limited partnership with an office in Boston,
Massachusetts (the "Delegate") as its delegate to perform certain functions with
respect to the custody of Fund's Assets outside the United States.
1. MAINTENANCE OF FUND'S ASSETS ABROAD. The Fund, acting through its Board or
its duly authorized representative, hereby instructs Delegate pursuant to the
terms of the Custodian Agreement to place and maintain the Fund's Assets in
countries outside the United States in accordance with Instructions received
from the Fund's investment adviser. Such instruction shall represent a Proper
Instruction under the terms of the Custodian Agreement. The Fund acknowledges
that - (a) the Delegate shall perform services hereunder only with respect to
the countries where it provides custodial services to the Fund under the
Custodian Agreement; (b) depending on conditions in the particular country,
advance notice may be required before the Delegate shall be able to perform its
duties hereunder in or with respect to such country (such advance notice to be
reasonable in light of the specific facts and circumstances attendant to
performance of duties in such country and the Delegate shall at least annually
provide a list of countries for which no advance notice is required); and (c)
nothing in this Delegation Schedule shall require the Delegate to provide
delegated or custodial services in any country, and there may from time to time
be countries as to which the Delegate determines it will not provide delegation
services and the Delegate will provide the Fund or its authorized representative
with notice of removal of countries from its custody network.
2. DELEGATION. Pursuant to the provisions of Rule 17f-5 under the 1940 Act as
amended, the Board hereby delegates to the Delegate, and the Delegate hereby
accepts such delegation and agrees to perform, only those duties set forth in
this Delegation Schedule concerning the safekeeping of the Fund's Assets in each
of the countries as to which it acts as the Board's delegate. The Delegate is
hereby authorized to take such actions on behalf of or in the name of the Fund
as are reasonably required to discharge its duties under this Delegation
Schedule, including, without limitation, to cause the Fund's Assets to be placed
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with a particular Eligible Foreign Custodian in accordance herewith. The Fund
confirms to the Delegate that the Fund or its investment adviser or subadviser
has considered the Sovereign Risk and prevailing country risk as part of its
continuing investment decision process, including such factors as may be
reasonably related to the systemic risk of maintaining the Fund's Assets in a
particular country, including, but not limited to, financial infrastructure,
prevailing custody and settlement systems and practices (including the use of
any Securities Depository in the context of information provided by the
Custodian in the performance of its duties as required under Rule 17f-7 and the
terms of the Custodian Agreement governing such duties), and the laws relating
to the safekeeping and recovery of the Fund's Assets held in custody pursuant to
the terms of the Custodian Agreement; provided, however, that, in compliance
with Rule 17f-5, neither Sovereign Risk or Country Risk shall include the
custody risk of particular Eligible Foreign Custodian of the Fund's foreign
assets.
3. SELECTION OF ELIGIBLE FOREIGN CUSTODIAN AND CONTRACT ADMINISTRATION. The
Delegate shall perform the following duties with respect to the selection of
Eligible Foreign Custodians and administration of certain contracts governing
the Fund's foreign custodial arrangements:
(a) SELECTION OF ELIGIBLE FOREIGN CUSTODIAN. The Delegate shall place and
maintain the Fund's Assets with an Eligible Foreign Custodian; PROVIDED that the
Delegate shall have determined that the Fund's Assets will be subject to
reasonable care based on the standards applicable to custodians in the relevant
market after considering all factors relevant to the safekeeping of such assets
including without limitation:
(i) The Eligible Foreign Custodian's practices, procedures, and internal
controls, including, but not limited to, the physical protections available
for certificated securities (if applicable), the controls and procedures for
dealing with any Securities Depository, the method of keeping custodial
records, and the security and data protection practices;
(ii) Whether the Eligible Foreign Custodian has the requisite financial
strength to provide reasonable care for the Fund's Assets;
(iii) The Eligible Foreign Custodian's general reputation and standing;
and
(iv) Whether the Fund will have jurisdiction over and be able to enforce
judgments against the Eligible Foreign Custodian, such as by virtue of the
existence of any offices of such Eligible Foreign Custodian in the United
States or such Eligible Foreign Custodian's appointment of an agent for
service of process in the United States or consent to jurisdiction in the
United States.
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The Delegate shall be required to make the foregoing determination to the best
of its knowledge and belief based only on information reasonably available to
it.
(b) CONTRACT ADMINISTRATION. The Delegate shall determine that the foreign
custody arrangements with an Eligible Foreign Custodian shall be governed by a
written contract that the Delegate has determined will provide reasonable care
for Fund assets based on the standards applicable to custodians in the relevant
market. Each such contract shall, except as set forth in the last paragraph of
this subsection (b), include provisions that provide:
(i) For indemnification or insurance arrangements (or any combination of
the foregoing) such that the Fund will be adequately protected against the
risk of loss of assets held in accordance with such contract;
(ii) That the Fund's Assets will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of the Eligible
Foreign Custodian or its creditors except a claim of payment for their safe
custody or administration or, in the case of cash deposits, liens or rights
in favor of creditors of such Custodian arising under bankruptcy, insolvency
or similar laws;
(iii) That beneficial ownership of the Fund's Assets will be freely
transferable without the payment of money or value other than for safe
custody or administration;
(iv) That adequate records will be maintained identifying the Fund's
Assets as belonging to the Fund or as being held by a third party for the
benefit of the Fund;
(v) That the Fund's independent public accountants will be given access
to those records described in (iv) above or confirmation of the contents of
such records; and
(vi) That the Fund will receive sufficient and timely periodic reports
with respect to the safekeeping of the Fund's Assets, including, but not
limited to, notification of any transfer to or from the Fund's account or a
third party account containing the Fund's Assets.
Such contract may contain, in lieu of any or all of the provisions specified in
this Section 3 (b), such other provisions that the Delegate determines will
provide, in their entirety, the same or a greater level of care and protection
for the Fund's Assets as the specified provisions, in their entirety.
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(c) LIMITATION TO DELEGATED SELECTION. Notwithstanding anything in this
Delegation Schedule to the contrary, the duties under this Section 3 shall apply
only to Eligible Foreign Custodians selected by the Delegate and shall not apply
to Securities Depositories or to any Eligible Foreign Custodian that the
Delegate is directed to use pursuant to Section 7.
4. MONITORING. The Delegate shall establish a system to monitor at reasonable
intervals the appropriateness of maintaining the Fund's Assets with each
Eligible Foreign Custodian that has been selected by the Delegate pursuant to
Section 3 of this Delegation Schedule. The Delegate shall monitor the continuing
appropriateness of placement of the Fund's Assets in accordance with the
criteria established under Section 3(a) of this Delegation Schedule. The
Delegate shall monitor the continuing appropriateness of the contract governing
the Fund's arrangements in accordance with the criteria established under
Section 3(b) of this Delegation Schedule.
5. REPORTING. At least annually and more frequently as mutually agreed between
the parties, the Delegate shall provide to the Board written reports specifying
placement of the Fund's Assets with each Eligible Foreign Custodian selected by
the Delegate pursuant to Section 3 of this Delegation Schedule and shall
promptly report as to any material changes to such foreign custody arrangements.
Delegate will prepare such a report with respect to any Eligible Foreign
Custodian that the Delegate has been instructed to use pursuant to Section 7
only to the extent specifically agreed with respect to the particular situation.
6. WITHDRAWAL OF FUND'S ASSETS. If the Delegate determines that an arrangement
with a specific Eligible Foreign Custodian selected by the Delegate under
Section 3 of this Delegation Schedule no longer meets the requirements of said
Section, Delegate shall withdraw the Fund's Assets from the non-complying
arrangement as soon as reasonably practicable; PROVIDED, however, that if in the
reasonable judgment of the Delegate, such withdrawal would require liquidation
of any of the Fund's Assets or would materially impair the liquidity, value or
other investment characteristics of the Fund's Assets, it shall be the duty of
the Delegate to promptly provide information regarding the particular
circumstances and to act only in accordance with Proper Instructions of the Fund
or its Investment Advisor with respect to such liquidation or other withdrawal.
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7. DIRECTION AS TO ELIGIBLE FOREIGN CUSTODIAN. Notwithstanding this Delegation
Schedule, the Fund, acting through its Board, its Investment Adviser or its
other authorized representative, may direct the Delegate to place and maintain
the Fund's Assets with a particular Eligible Foreign Custodian, including
without limitation with respect to investment in countries as to which the
Custodian will not provide delegation services. In such event, the Delegate
shall be entitled to rely on any such instruction as a Proper Instruction under
the terms of the Custodian Agreement and shall have no duties under this
Delegation Schedule with respect to such arrangement save those that it may
undertake specifically in writing with respect to each particular instance.
8. STANDARD OF CARE. In carrying out its duties under this Delegation Schedule,
the Delegate agrees to exercise reasonable care, prudence and diligence such as
a person having responsibility for safekeeping the Fund's Assets would exercise.
9. REPRESENTATIONS. The Delegate hereby represents and warrants that it is a
U.S. Bank meeting the definition of Rule 17f-5 (a)(7) and that this Delegation
Schedule has been duly authorized, executed and delivered by the Delegate and is
a legal, valid and binding agreement of the Delegate.
The Fund hereby represents and warrants that its Board of Directors has
determined that it is reasonable to rely on the Delegate to perform the
delegated responsibilities provided for herein and that this Delegation Schedule
has been duly authorized, executed and delivered by the Fund and is a legal,
valid and binding agreement of the Fund.
10. EFFECTIVENESS; TERMINATION. This Delegation Schedule shall be effective as
of the date on which this Delegation Schedule shall have been accepted by the
Delegate, as indicated by the date set forth below the Delegate's signature.
This Delegation Schedule may be terminated at any time, without penalty, by
written notice from the terminating party to the non-terminating party. Such
termination shall be effective on the 30th day following the date on which the
non-terminating party shall receive the foregoing notice. The foregoing to the
contrary notwithstanding, this Delegation Schedule shall be deemed to have been
terminated concurrently with the termination of the Custodian Agreement.
11. NOTICES. Notices and other communications under this Delegation Schedule are
to be made in accordance with the arrangements designated for such purpose under
the Custodian Agreement unless otherwise indicated in a writing referencing this
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Delegation Schedule and executed by both parties.
12. DEFINITIONS. Capitalized terms in this Delegation Schedule have the
following meanings:
a. ELIGIBLE FOREIGN CUSTODIAN - shall have the meaning set forth in Rule
17f-5(a)(1) and shall also include a U.S. Bank.
b. FUND'S ASSETS - shall mean any of the Fund's investments (including
foreign currencies) for which the primary market is outside the United
States, and such cash and cash equivalents as are reasonably necessary to
effect the Fund's transactions in such investments.
c. PROPER INSTRUCTIONS - shall have the meaning set forth in the Custodian
Agreement.
d. SECURITIES DEPOSITORY - shall have the meaning set forth in Rule 17f-7.
e. SOVEREIGN RISK - shall have the meaning set forth in Section 5.C of the
Custodian Agreement.
f. U.S. BANK - shall mean a bank which qualifies to serve as a custodian of
assets of investment companies under Section 17(f) of the Act.
13. GOVERNING LAW AND JURISDICTION. This Delegation Schedule shall be construed
in accordance with the laws of the State of New York. The parties hereby submit
to the exclusive jurisdiction of the Federal courts sitting in the State of New
York or the Commonwealth of Massachusetts or of the state courts of either such
State or such Commonwealth.
14. FEES. Delegate shall perform its functions under this Delegation Schedule
for the compensation determined under the Custodian Agreement.
15. INTEGRATION. This Delegation Schedule sets forth all of the Delegate's
duties with respect to the selection and monitoring of Eligible Foreign
Custodians, the administration of contracts with Eligible Foreign Custodians,
the withdrawal of assets from Eligible Foreign Custodians and the issuance of
reports in connection with such duties. This Delegation Schedule constitutes the
entire agreement between the Fund and Delegate with respect to the subject
matter hereof. Accordingly, this Delegation Schedule supercedes the Foreign
Custody Manager Delegation Agreement heretofore in effect. The terms of the
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Custodian Agreement shall apply generally as to matters not expressly covered in
this Delegation Schedule, including dealings with the Eligible Foreign
Custodians in the course of discharge of the Delegate's obligations under the
Custodian Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the date first above written.
FIRST INVESTORS LIFE INTERNATIONAL SECURITIES FUND
By: /s/ Xxxxxxxx Xxxxx
----------------------------------------
(Xxxxxxxx Xxxxx)
Vice President and Secretary
By: XXXXX BROTHERS XXXXXXXX & CO.
By: /S/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
Partner
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