AMENDMENT TO CUSTODY AGREEMENT
This Amendment ("Amendment") to the Custody Agreement is made as of June
29, 2001 by and between the Exeter Fund, Inc., a Maryland corporation (the
"Fund") and Boston Safe Deposit and Trust Company, a Massachusetts trust company
(the "Custodian").
WHEREAS, the Fund and the Custodian entered into a Custody Agreement dated as of
April 3, 1992 (the "Agreement");
WHEREAS, the Fund and the Custodian desire to amend certain provisions of the
Agreement to reflect revisions to Rule 17f-5 ("Rule 17f-5") and the adoption of
Rule 17f-7 ("Rule 17f-7") by the U.S. Securities Exchange Commission ("SEC")
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund and the Custodian desire to make certain other revisions to
the Agreement bearing upon the custody of assets of the Fund held outside of the
United States.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements hereinafter contained, the parties hereby amend the Agreement, as
follows:
I. Certain definitions are being incorporated into Section 1 of the
Agreement, as provided in Article I below.
II. Sub-Section 11(f) of the Agreement is restated, as set forth in Article
II below.
III. Sections 12, 13 and 14 of the Agreement are renumbered as Sections 15,
16, 17 and 18, respectively, and new Sections 12, 13 and 14 of the Agreement are
hereby added, as of the effective date of this Amendment, as provided in Article
III below.
Except as expressly superseded or modified by this Amendment, the
terms and provisions of the Agreement shall continue to apply with full force
and effect.
ARTICLE I. DEFINITIONS. Capitalized terms used in this Amendment that
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are not defined in this Amendment have the respective meanings given to such
terms in the Agreement. Capitalized terms relating to Rules 17f-5 and 17f-7 in
this Amendment shall have the respective meanings indicated below. The
following sub-sections are added to Section 1 of the Agreement:
(M) "Country Risk" means all factors reasonably related to the systemic
risk of holding Foreign Assets in a particular country including, but not
limited to, such country's political environment, economic and financial
infrastructure (including any Eligible Securities Depository operating in the
country), prevailing or developing custody and settlement practices,
nationalization, expropriation or other government actions; regulation of the
banking or securities industry; currency controls, restrictions, devaluations or
fluctuations; and market conditions which affect the value of securities.
(N) "Eligible Foreign Custodian" has the meaning set forth in paragraph
(a)(1) of Rule 17f-5, including a majority-owned or indirect subsidiary of a
U.S. Bank (as defined in Rule 17f-5), a bank holding company meeting the
requirements of an Eligible Foreign Custodian (as set forth in Rule 17f-5 or by
other appropriate action of the the SEC, or a foreign branch of a Bank (as
defined in Section 2(a)(5) of the 0000 Xxx) meeting the requirements of a
custodian under Section 17(f) of the 1940 Act; the term does not include any
Eligible Securities Depository.
(O) "Eligible Securities Depository" has the meaning set forth in paragraph
(b)(1) of Rule 17f-7.
(P) "Foreign Assets" means 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.
(Q) "Foreign Custody Manager" has the meaning set forth in paragraph (a)(3)
of Rule 17f-5.
(R) "Foreign Securities System" means an Eligible Securities Depository
listed on Schedule E to the Agreement.
(S) "Foreign Sub-Custodian" means a foreign banking institution serving as
an Eligible Foreign Custodian.
ARTICLE II. APPOINTMENT OF AGENTS AND SUB-CUSTODIANS
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Sub-Section 11(f) of the Agreement is restated as follows:
11. (F) With regard to Securities and monies that do not constitute Foreign
Assets, the Custodian may appoint one or more banking institutions, to act as
Sub-Custodian of Securities and moneys at any time owned by the Fund, upon terms
and conditions specified in a Certificate. The Custodian's obligations
concerning Foreign Assets and the use of Foreign Sub-Custodians and Eligible
Securities Depositories in connection therewith shall be governed by new
Sections 12, 13 and 14 of the Agreement, as provided below in this Amendment.
ARTICLE III. PROVISIONS GOVERNING FOREIGN ASSETS
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The provisions of Sections 12, 13 and 14 below govern the Custodian's
obligations concerning the Foreign Assets of the Fund. To the extent there is
any conflict or inconsistency between other provisions of the Agreement and
those of Sections 12, 13 and 14 below, the provisions of Sections 12, 13 and 14
below shall govern.
12. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
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(A) DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER. The Fund
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represents and warrants that, by resolution adopted by its Board of Directors
(the "Board"), the Board has delegated to the Custodian, subject to the criteria
set forth in paragraph (b) of Rule 17f-5, the responsibilities set forth in this
Section 12 with respect to Foreign Assets of the Fund held outside the United
States, and the Custodian hereby accepts such delegation and agrees to act as
Foreign Custody Manager with respect to the Fund in the manner and to the extent
provided below.
(B) COUNTRIES COVERED. The Foreign Custody Manager shall be responsible for
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performing the delegated responsibilities defined below only with respect to the
countries and custody arrangements for each such country listed on Schedule C to
the Agreement, which list of countries may be amended from time to time by the
Fund with the agreement of the Foreign Custody Manager. The Foreign Custody
Manager shall provide the Fund with a list of the Eligible Foreign Custodians
selected by the Foreign Custody Manager to maintain the assets of the Fund,
which list of Eligible Foreign Custodians may be amended from time to time in
the sole discretion of the Foreign Custody Manager, in which event, an updated
list will be provided in a timely fashion.
Upon the receipt by the Foreign Custody Manager of Written or Oral
Instructions to open an account or to place or maintain Foreign Assets in a
country listed on Schedule C, and the fulfillment by the Fund of the applicable
account opening requirements for such country, the Foreign Custody Manager shall
be deemed to have been delegated by the Board on behalf of the Fund
responsibility as Foreign Custody Manager with respect to that country and to
have accepted such delegation. Execution of this Amendment by the Fund shall be
deemed to be a Written Instruction to open an account, or to place or maintain
Foreign Assets, in each country listed on Schedule C in which the Custodian has
previously placed or currently maintains Foreign Assets pursuant to the terms of
the Agreement. Following the receipt of Written or Oral Instructions directing
the Foreign Custody Manager to close the account of the Fund with the Eligible
Foreign Custodian selected by the Foreign Custody Manager in a designated
country, the delegation by the Board on behalf of the Fund to the Custodian as
Foreign Custody Manager for that country shall be deemed to have been withdrawn
and the Custodian shall immediately cease to be the Foreign Custody Manager of
the Fund with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to any or all designated countries upon written
notice to the Fund. Sixty (60) days (or such longer period to which the
parties agree in writing) after actual receipt of any such notice by the Fund,
the Custodian shall have no further responsibility in its capacity as Foreign
Custody Manager to the Fund with respect to the country or countries as to which
the Custodian's acceptance of delegation is withdrawn.
(C) SCOPE OF DELEGATED RESPONSIBILITIES.
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1. SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the provisions
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of this Section 12, the Foreign Custody Manager may place and maintain the
Foreign Assets in the care of the Eligible Foreign Custodian selected by the
Foreign Custody Manager in each country listed on Schedule C, as amended from
time to time. In performing its delegated responsibilities as Foreign Custody
Manager to place or maintain Foreign Assets with an Eligible Foreign Custodian,
the Foreign Custody Manager shall determine that the Foreign Assets will be
subject to reasonable care, based on the standards applicable to custodians in
the country in which the Foreign Assets will be held by that Eligible Foreign
Custodian, after considering all factors relevant to the safekeeping of such
assets, including, without limitation, the factors specified in Rule 17f-5,
paragraph (c)(1).
2. CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS. The Foreign Custody
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Manager shall determine that the contract governing the foreign custody
arrangements with each Eligible Foreign Custodian selected by the Foreign
Custody Manager will satisfy the requirements of Rule 17f-5, paragraph (c)(2).
3. MONITORING. In each case in which the Foreign Custody Manager
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maintains Foreign Assets with an Eligible Foreign Custodian selected by the
Foreign Custody Manager, the Foreign Custody Manager shall establish a system to
monitor, in accordance with Rule 17f-5, paragraph (c)(3), (i) the
appropriateness of maintaining the Foreign Assets with such Eligible Foreign
Custodian and (ii) the performance of the contract governing the custody
arrangements established by the Foreign Custody Manager with the Eligible
Foreign Custodian. In the event the Foreign Custody Manager determines that the
custody arrangements with an Eligible Foreign Custodian it has selected are no
longer appropriate, the Foreign Custody Manager shall notify the Board in
accordance with Section 12(e).
(D) GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For purposes
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of this Section 12, the Board, or the Fund's investment adviser (the "Investment
Adviser"), shall be deemed to have considered and determined to accept such
Country Risk as is incurred by placing and maintaining the Foreign Assets in
each country for which the Custodian serves as Foreign Custody Manager of the
Fund.
(E) REPORTING REQUIREMENTS. The Foreign Custody Manager shall report
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placement of the Foreign Assets with a particular Eligible Foreign Custodian and
withdrawal of the Foreign Assets from an Eligible Foreign Custodian and the
placement of such Foreign Assets with another Eligible Foreign Custodian by
providing to the Board an amended list of Eligible Foreign Custodians at the end
of the calendar quarter in which any change to such list has occurred or at such
times as the Board deems reasonable and appropriate. The Foreign Custody
Manager shall make written reports notifying the Board of any other material
change in the foreign custody arrangements of the Fund described in this Section
12 after the occurrence of the material change.
(F) STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF THE FUND. In
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performing the responsibilities delegated to it, the Foreign Custody Manager
agrees to exercise reasonable care, prudence and diligence such as a person
having responsibility for the safekeeping of assets of management investment
companies registered under the 1940 Act would exercise.
(G) REPRESENTATIONS WITH RESPECT TO RULE 17F-5. The Foreign Custody Manager
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represents to the Fund that it is a U.S. Bank as defined in paragraph (a)(7) of
Rule 17f-5. The Fund represents to the Custodian that the Board has determined
that it is reasonable for the Board to rely on the Custodian to perform the
responsibilities delegated pursuant to this Agreement to the Custodian as the
Foreign Custody Manager of the Fund.
(H) EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS FOREIGN CUSTODY
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MANAGER. The Board's delegation to the Custodian as Foreign Custody Manager of
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the Fund shall be effective as of the date of this Amendment and shall remain in
effect until terminated at any time, without penalty, by written notice from the
terminating party to the non-terminating party. Termination will become
effective sixty (60) days after receipt by the non-terminating party of such
notice. The provisions of Section 12(b) shall govern the delegation to and
termination of the Custodian as Foreign Custody Manager of the Fund with respect
to designated countries.
13. ELIGIBLE SECURITIES DEPOSITORIES.
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(A) ANALYSIS AND MONITORING. The Custodian shall (i) provide the
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Fund's Investment Adviser with information relevant to the definition of an
Eligible Securities Depository (as set forth in paragraph (b)(1) of Rule l7f-7)
and an analysis of the custody risks associated with maintaining assets with the
Eligible Securities Depositories (as defined in Section 1(o), set forth in
Article I of this Amendment) for the countries in which custody services are
provided in accord with Schedule C, in accordance with paragraph (a)(1)(i)(A) of
Rule l7f-7, and (ii) monitor such risks on a continuing basis, and promptly
notify the Fund's Investment Adviser of any material change in such risks, in
accordance with paragraph (a)(1)(i)(B) of Rule 17f-7. Each risk analysis shall
indicate whether the particular securities depository is considered by the
Custodian to meet the Rule 17f-7 definition of an Eligible Securities
Depository, in the exercise of its standard of care.
(B) STANDARD OF CARE. The Custodian agrees to exercise reasonable care,
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prudence and diligence in performing the duties set forth in Section 13(a). With
respect to the provision of risk analyses and the monitoring of Eligible
Securities Depositories, the Custodian may employ agents, including, but not
limited to Foreign Custodians. Where agents are utilized, the Custodian will
exercise reasonable care, prudence and diligence in selecting such agents and
shall be entitled to rely upon information provided by agents so selected in the
performance of its duties and responsibilities under Section 13 (a), unless the
Custodian knew or should have known, in the exercise of reasonable care,
prudence and diligence, such information to be incorrect, incomplete or
misleading. The Custodian shall have no liability with respect to information
provided to it by third parties, except as provided herein. The Custodian shall
not be responsible for any losses resulting from the deposit or maintenance of
assets of the Fund with an Eligible Securities Depository, except for losses
arising as a result of a breach of its standard of care in the performance of
its duties hereunder.
14. DUTIES OF THE CUSTODIAN WITH RESPECT TO FOREIGN ASSETS OF THE FUND HELD
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OUTSIDE THE UNITED STATES.
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(A) HOLDING SECURITIES. The Custodian shall identify on its books as
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belonging to the Fund the Foreign Assets held by each Foreign Sub-Custodian or
Foreign Securities System. The Custodian may hold Foreign Assets for all of its
customers; including the Fund, with any Foreign Sub-Custodian in an account that
is identified as belonging to the Custodian for the benefit of its customers,
provided however, that (i) the records of the Custodian with respect to Foreign
Assets of the Fund which are maintained in such account shall identify those
securities as belonging to the Fund and (ii), to the extent permitted and
customary in the market in which the account is maintained, the custodian shall
require that securities so held by the Foreign Sub-Custodian be held separately
from any assets of such Foreign Sub-Custodian or of other customers of such
Foreign Sub-Custodian.
(B) FOREIGN SECURITIES SYSTEMS. Foreign Assets consisting of Securities
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shall be maintained in a Foreign Securities System in a designated country
through arrangements implemented by the Custodian or a Foreign Sub-Custodian, as
applicable, in such country.
(C) TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
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1. DELIVERY OF FOREIGN ASSETS. With respect to Foreign Assets of the Fund
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held by a Foreign Sub-Custodian, or in a Foreign Securities System account, the
Custodian shall perform, or cause the relevant Foreign Sub-Custodian to perform,
or cause the relevant Foreign Sub-Custodian to perform, the duties specified by
sub-paragraphs 1 through 13 of Section 4(g) of the Agreement.
2. PAYMENT OF FUND MONIES. With respect to Foreign Assets of the Fund held
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by a Foreign Sub-Custodian, the Custodian shall perform, or cause the relevant
Foreign Sub-Custodian to perform, the duties specified by sub-paragraphs 1
through 6 of Section 4(b) of the Agreement.
3. MARKET CONDITIONS. Settlement and payment for Foreign Assets received
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for the account of the Fund and delivery of Foreign Assets maintained for the
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account of the Fund may be effected in accordance with the customary established
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securities trading or processing practices and procedures in the country or
market in which the transaction occurs, including, without limitation,
delivering Foreign Assets without the concurrent receipt of securities (or other
property) or cash. In such circumstances, the Custodian shall have no
responsibility for nonreceipt of payments (or late payment) or nondelivery of
Securities or other property (or late delivery) by the counterparty.
The Custodian shall provide to the Board and upon Written or Oral
Instructions to the Fund's Investment Adviser the information with respect to
custody and settlement practices in countries in which the Custodian employs a
Foreign Sub-Custodian.
(D) REGISTRATION OF FOREIGN SECURITIES. The Foreign Assets maintained
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in the custody of a Foreign Sub-Custodian (other than bearer securities) shall
be registered in the name of the Fund or in the name of the Custodian or any
Foreign Sub-Custodian, or any nominee of the foregoing. The Custodian or a
Foreign Sub-Custodian shall not be obligated to accept Foreign Assets on behalf
of the Fund under the terms of this Agreement unless the form of such Foreign
Assets and the manner in which they are delivered are in accordance with
reasonable market practice.
(E) BANK ACCOUNTS. The Custodian shall identify on its books as belonging to
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the Fund cash (including cash denominated in foreign currencies) deposited on
the books of a Foreign Sub-Custodian. Where the Custodian maintains cash on the
books of the Custodian, it shall be subject to the laws of the Commonwealth of
Massachusetts as if with respect to domestic transactions; and where such
deposits are held on the books of the Custodian's London Branch, such deposits
shall be payable exclusively at the London Branch. All accounts referred to in
this Section shall be subject only to draft, or order by the Custodian (or, if
applicable, such Foreign Sub-Custodian) acting pursuant to the terms of this
Agreement to hold cash received by or from or for the account of the Fund.
(F) COMMUNICATIONS RELATING TO FOREIGN ASSETS. The Custodian shall transmit
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promptly to the Fund written information with respect to materials received by
the Custodian via the Foreign Sub-Custodians from issuers of the Foreign Assets
being held for the account of the Fund (including, without limitation, proxy
materials, pendency of calls and maturities of Foreign Assets and expirations of
rights in connection therewith). With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Fund written information with respect
to materials so received by the Custodian from issuers of the Foreign Assets
whose tender or exchange is sought or from the party (or its agents) making the
tender or exchange offer. The Custodian shall not be liable for any untimely
exercise of any tender, exchange or other right or power in connection with
Foreign Assets or other property of the Fund at any time held by it unless (i)
the Custodian or the respective Foreign Sub-Custodian is in actual possession of
such Foreign Assets or property and (ii) the Custodian receives timely Written
or Oral Instructions with regard to the exercise of any such right or power, and
both (i) and (ii) occur sufficiently in advance of the date on which the
Custodian is to take action to exercise such right or power.
(G) LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which
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the Custodian employs a Foreign Sub-Custodian shall, to the extent possible,
require the Foreign Sub-Custodian to exercise reasonable care in the performance
of its duties, and to indemnify, and hold harmless, the Custodian from and
against any loss, damage, cost, expense, liability or claim arising out of or in
connection with the Foreign Sub-Custodian's performance of such obligations. At
the Fund's election, the Custodian shall permit the Fund to be subrogated to the
rights of the Custodian with respect to any claims against a Foreign
Sub-Custodian 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.
(H) TAX LAW. The Custodian shall have no responsibility or liability for
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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 or of 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 with respect to the
Fund or the Custodian as custodian of the Fund by the tax law of countries 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 countries for which the Fund has provided such information.
(I) LIABILITY OF CUSTODIAN. Consistent with Section 13(b) of this
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Amendment, except as may arise from the Custodian's own negligence or willful
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misconduct or the negligence or willful misconduct of a Sub-Custodian, the
Custodian shall be without liability to the Fund for any loss, liability, claim
or expense resulting from or caused by anything which is part of Country Risk.
The Custodian shall be liable for the acts or omissions of a Foreign
Sub-Custodian to the same extent as set forth with respect to sub-custodians
generally in the Agreement and, regardless of whether assets are maintained in
the custody of a Foreign Sub-Custodian or a Foreign Securities System, the
Custodian shall not be liable for any loss, damage, cost, expense, liability or
claim resulting from or caused by events beyond its reasonable control,
including, but not limited to nationalization, expropriation, currency
restrictions, or acts of war or terrorism, or any other loss where the
Sub-Custodian has otherwise acted with reasonable care.
(J) SECTIONS 12 AND 13 TO PREVAIL IF CONFLICT. To the extent that the
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Custodian maintains the responsibilities delegated to it under Sections 12
and/or 13 of this Amendment, in the event of any conflict between the provisions
of Sections 12 or 13 of this Amendment, on the one hand, and this Section 14 of
this Amendment, on the other, the provisions of Sections 12 or 13, as the case
may be, shall prevail.
* * * *
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be executed
in its name and behalf by its duly authorized representative as of the date
first above written.
BOSTON SAFE DEPOSIT and TRUST COMPANY
WITNESSED BY:/s/ Xxxxxx Xxxxxxx
/s/Xxxxxxxxxxx Xxxxx
______________________
By:
First Vice President
Title:
EXETER FUND, INC.
WITNESSED BY:
/s/Xxxx. X. Xxxxxxx
/s/ B. Xxxxxx Xxxxxxx
By:
Executive Vice President
Title:
