EXHIBIT (g)(11)
AMENDMENT TO THE CUSTODIAN AGREEMENT
THIS AMENDMENT, dated as of ______________________, 2001, between
XXXXXXXX- XXXXXXXXX INSTITUTIONAL FUNDS, (the FUND) an open-end management
investment company organized under the laws of the State of Delaware and
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended (the 0000 XXX) on behalf of each of the
portfolios listed on the Appendix "C" to the Custodian Agreement, as the same
may be amended from time to time (each a PORTFOLIO and collectively the
PORTFOLIOS), 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 May 1, 1999 (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 which
establish rules regarding the Fund's investments held outside the United
States at subcustodians or through Securities Depositories (INVESTMENTS); and
WHEREAS, BBH&CO is willing to provide services in connection with
such Rules in accordance with the terms of this Amendment to the Custodian
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 8.2 of the Custodian Agreement shall be amended and
restated in its entirety as follows:
8.2 FOREIGN SECURITIES DEPOSITORIES AND SUBCUSTODIANS. 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. 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 8.2.4 below, the Custodian shall have prepared an
assessment 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 8.2.3 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 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 8.2.1 and 8.2.2 hereof, and use of non-U.S.
Securities Depositories shall be subject to the terms of Subsections 8.2.3
and 8.2.4 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.
8.2.1 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 to Subsection 8.2.2, 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 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.
8.2.2 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.
8.2.3 MONITORING AND RISK ASSESSMENT OF SECURITIES
DEPOSITORIES. Prior to the placement of any assets of the Fund with a
non-U.S. 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; (ii) information supplied by a Subcustodian that is
a participant in such Securities Depository; (iii) industry surveys or
publications; (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 not be responsible for errors or omissions in its
duties hereunder provided that it has performed its monitoring and
assessment duties with reasonable care, prudence and diligence. The
risk assessment shall be provided to the Fund or its Investment
Advisor by such means as the Custodian shall reasonably establish.
Advices 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. To the
extent that a custody arrangement with an Eligible Securities
Depository no longer meets the requirements described herein, the
Fund's assets must be withdrawn from the depository as soon as
reasonably practicable. If withdrawal is not possible, the Fund and
the Custodian will confer to discuss appropriate steps to ensure
compliance with 17f-7.
8.2.4 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 8.2.3. Accordingly, until July 1, 2001, the Custodian shall
use reasonable efforts to implement the measures required by
Subsection 8.2.3, 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 Agreement or from its duties under Section 8.2.3 as
such duties have been implemented at any given time.
2. In addition, that the definitions under the Custodian Agreement shall be
amended as follows:
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.
XXXXXXXX XXXXXXXXX INSTITUTIONAL FUNDS
on behalf of each of the portfolios listed on the Appendix "C"
to the Custodian Agreement
By:_______________________________
By: XXXXX BROTHERS XXXXXXXX & CO.
By: ________________________________
