EXHIBIT G(3)
FOREIGN CUSTODY MANAGER AGREEMENT
AGREEMENT dated as of November 12, 1998, between The Bear Steams Funds (the
"Trust"), a business trust formed and existing under the laws of the
Commonwealth of Massachusetts, acting on behalf of each of the series of the
Trust identified on Exhibit A hereto (each, a "Fund") and Custodial Trust
Company ("CTC"), a bank organized and existing under the laws of the State of
New Jersey.
WHEREAS, CTC serves as custodian for the assets of each Fund pursuant to
the custody agreement with the Trust which is set forth opposite the name of
such Fund on Exhibit A hereto;
WHEREAS, the Trust desires that the Funds maintain their Foreign Assets (as
hereinafter defined) in one or more foreign countries;
WHEREAS, the Trust wishes to appoint CTC as a Foreign Custody Manager on
the terms and conditions contained herein;
WHEREAS, CTC wishes to serve as a Foreign Custody Manager and perform the
duties set forth herein on the term and conditions contained herein;
NOW THEREFORE, in consideration of the agreements made herein, the Trust
and CTC hereby agrees as follows:
ARTICLE I
DEFINITIONS
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1.1 Specific Definitions. Whenever used in this Agreement, the following
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terms, unless the context otherwise requires, shall mean:
(a) "Board" means the Board of Trustees of the Trust.
(b) "Compulsory Foreign Securities Depository" means any Foreign
Securities Depository the use of which is mandatory (i) under applicable
law or regulation, (ii) because securities cannot be withdrawn from it, or
(iii) because maintaining securities outside it is not consistent with
prevailing custodial practices.
(c) "Eligible Foreign Custodian" has the same meaning as in the Rule,
except that it does not include any Compulsory Foreign Securities
Depository.
(d) "Foreign Assets" of any Fund means investments of such Fund (including
foreign currencies) for which the primary market is outside the United
States, and such cash and cash equivalents as such Fund considers necessary
to effect its transactions in such investments.
(e) "Foreign Securities Depository" means any securities depository or
clearing agency within the meaning of Sections (a)(1)(ii) or (iii) of the
Rule.
(f) "Qualified Foreign Bank" has the same meaning as in the Rule.
(g) "Rule" means Rule 17f-5 under the Investment Company Act of 1940, as
amended, as effective on June 16, 1997.
(h) "Specified Country" means any country listed on Exhibit B hereto (as
amended from time to time) in which Foreign Assets of any Fund are or are
to be held in custody.
1.2 Other Definitions. Capitalized terms used in this Agreement and not
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otherwise defined in this Agreement shall have the meanings given such terms in
the Rule.
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ARTICLE II
CTC AS A FOREIGN CUSTODY MANAGER
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2.1 Delegation and Acceptance. The Trust hereby delegates to CTC, and CTC
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hereby accepts such delegation and agrees to perform, with respect to each
Specified Country, the duties of Foreign Custody Manager set forth in this
Agreement.
2.2 Standard of Care. In performing the duties of Foreign Custody Manager set
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forth in this Agreement, CTC shall exercise reasonable care, prudence and
diligence such as a bailee for hire having responsibility for the safekeeping of
the assets of the Funds would exercise.
ARTICLE III
DUTIES OF FOREIGN CUSTODY MANAGER
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3.1 Selection of Eligible Foreign Custodians. (a) For each Specified Country
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in which Foreign Assets of the Funds are not held (or are not to be held) in
custody solely by an overseas branch of a U.S. Bank, CTC shall select from among
the Eligible Foreign Custodians in such Specified Country (if there are any) one
or more Eligible Foreign Custodians in whose care Foreign Assets held or to be
held in custody in such Specified Country may be placed and maintained, provided
that CTC has determined with respect to each such selected Eligible Foreign
Custodian (i) that Foreign Assets placed and maintained with it will be subject
to reasonable care based on the standards applicable to custodians in the
relevant market, and (ii) that any custody arrangement with such Eligible
Foreign Custodian will be governed by a written contract containing the
provisions specified in Section 3.1(c) below (or, in the case of a Foreign
Securities Depository, by such a contract, by the rules or established practices
or procedures of the depository, or by any combination of the foregoing) which
will provide reasonable care for such Foreign Assets based on the standards
applicable to custodians in the relevant market.
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(b) In making with respect to any Eligible Foreign Custodian the
determination required by Section 3.1(a)(i) above, CTC shall consider all
factors that it deems relevant to the safekeeping of Foreign Assets by such
Eligible Foreign Custodian including, without limitation:
(i) such Eligible Foreign Custodian's practices, procedures and internal
controls, including, but not limited to, the physical protection available
for certificated securities, the method of keeping custodial records, and
security and data protection practices;
(ii) whether such Eligible Foreign Custodian has the requisite financial
strength to provide reasonable care for the Foreign Assets of the Funds
placed in its care;
(iii) the general standing and reputation of such Eligible Foreign
Custodian and, in the case of a Foreign Securities Depository, its
operating history and number of participants; and
(iv) whether each Fund whose Foreign Assets are placed in the care of such
Eligible Foreign Custodian will have jurisdiction over and be able to
enforce judgments against it, due to, for example, such Eligible Foreign
Custodian having an office in the United States, or having otherwise
submitted to jurisdiction in the United States, or having appointed an
agent for the service of process in the United States.
(c) CTC shall not with respect to any written contract with any Eligible
Foreign Custodian make the determination required by Section 3.1(a)(ii)
above unless such contract contains at least (i) provisions that provide:
(A) for indemnification or insurance (or any combination of the
foregoing) such that the Funds will be adequately protected against the
risk of loss of Foreign Assets held in accordance with such contract;
(B) that Foreign Assets in the care of such Eligible Foreign Custodian
will not be subject to any right, charge, security interest, lien or claim
of any kind in favor of such Eligible Foreign Custodian 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 Eligible Foreign
Custodian arising under bankruptcy, insolvency or similar laws;
(C) that beneficial ownership of Foreign Assets in the care of such
Eligible Foreign Custodian will be freely transferable without the payment
of money or value to such Eligible Foreign Custodian other than for safe
custody or administration;
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(D) that adequate records will be maintained identifying the Foreign Assets
of the Funds in the care of such Eligible Foreign Custodian either as
belonging to the Funds or as being held by a third party for their benefit;
(E) that the independent public accountants of any Fund whose Foreign
Assets are in the care of such Eligible Foreign Custodian will be given
access to such records (concerning such Foreign Assets) or confirmation of
the contents of such records; and
(F) that such Eligible Foreign Custodian will provide, for delivery to any
Fund whose Foreign Assets are in its care, sufficient and timely periodic
reports with respect to the safekeeping of such Foreign Assets, including,
but not limited to, notification of any transfer to or from such Fund's
account or a third party account containing such Foreign Assets;
or (ii) in lieu of any or all of the foregoing provisions (the "Omitted
Provisions"), such other provisions as CTC may determine will provide, in their
entirety, the same or greater level of care for the Foreign Assets in the care
of such Eligible Foreign Custodian as the Omitted Provisions in their entirety.
3.2 Conditions of Selection Process. (a) In selecting an Eligible Foreign
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Custodian in any Specified Country in the manner provided for in Section 3.1
above, CTC need not examine all Eligible Foreign Custodians in such Specified
Country, but may select the first Eligible Foreign Custodian with respect to
which it makes the determinations required by Section 3.1(a) above.
(b) The Trust understands that in making any selection of an Eligible Foreign
Custodian pursuant to Section 3.1 above, CTC may, without independent
examination on its part but subject to the standard of care to which it is held
in Section 2.2 above, rely upon examinations performed and determinations made
by Citibank, N.A. or such other operator of a global custody system as the Trust
may from time to time approve.
3.3 Monitoring. By means of a system established either by CTC or by Citibank,
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N.A. or such other operator of a global custody system as the Trust may from
time to time approve, and
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subject to Section 3.4 below, CTC shall monitor at reasonable intervals (but at
least annually) (a) based on factors that include those specified in Section 3.1
(b) above, the continuing appropriateness of maintaining the Foreign Assets of
each Fund with each Eligible Foreign Custodian in whose care the Foreign Assets
of such Fund have been placed pursuant to Section 3.1 above and (b) based on the
factors specified in Section 3.1(c) above, the continuing appropriateness of the
written contract that governs each Fund's custody arrangement with each such
Eligible Foreign Custodian.
3.4 Appropriateness. In making any determination of appropriateness pursuant
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to Section 3.3 above, CTC shall not be required to consider or evaluate any
prevailing country risk associated with investment in a particular country.
Country risk includes, but is not limited to (a) nationalization, expropriation
or other governmental actions, (b) market conditions which affect the orderly
execution of securities transactions or affect the value of securities, (c)
currency devaluations and other currency fluctuations, and (d) systemic risks of
holding assets in a particular country such as (i) financial infrastructure,
(ii) prevailing custody and settlement practices (including the use of
Compulsory Foreign Securities Depositories), (iii) regulation of the banking and
securities industries (including laws and regulations relating to the
safekeeping and recovery of assets held pursuant to custody agreements), and
(iv) currency controls and restrictions.
3.5 Reporting. (a) At such times as the Board and CTC may agree, but no less
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often than annually, CTC shall provide the Board with written reports of (i) the
placement of any Foreign Assets of any Fund with a particular Eligible
Custodian, and (ii) any material change in the custody arrangements of any Fund
with any Eligible Foreign Custodian (including, in the case of
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any Foreign Securities Depository, any material change in such Depository's
rules or established practices or procedures).
(b) CTC shall promptly advise the Trust whenever a custody arrangement of any
Fund with any Eligible Foreign Custodian selected by CTC pursuant to Section 3.1
above no longer meets the requirements of the Rule.
3.6 Limitation Regarding Compulsorv Foreign Securities Depositories.
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Notwithstanding anything in this Agreement to the contrary, CTC's duties as
Foreign Custody Manager under this Agreement shall not apply to Compulsory
Foreign Securities Depositories or to any custody arrangement with any of them.
3.7 Prior Notice. The Trust understands that CTC in order to perform its
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duties with respect to custody arrangements in a particular Specified Country
may require reasonable advance notice of a Fund's intention to invest in such
Specified Country.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
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4.1 Representations of the Trust. The Trust represents and warrants (a) that
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this Agreement has been duly authorized, executed and delivered by the Trust,
and constitutes a valid and legally binding obligation of the Trust enforceable
in accordance with its terms, (b) that no statute, regulation, rule, order,
judgement or contract binding on the Trust prohibits the Trust's execution or
performance of this Agreement, and (c) that the Board and/or the investment
adviser of each Fund has or will have considered the country risks (as described
in part in Section 3.4 above) associated with investment in each Specified
Country in which such Fund has or will have invested.
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4.2 Representations of CTC. CTC represents and warrants (a) that it is duly
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organized and existing under the laws of the State of New Jersey, with full
corporate power to carry on its businesses as now conducted, to enter into this
Agreement and to perform its obligations hereunder, (b) that this Agreement has
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been duly authorized, executed and delivered by CTC, and constitutes a valid and
legally binding obligation of CTC enforceable in accordance with its terms, and
(c) that no statute, regulation, rule, order, judgement or contract binding on
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CTC prohibits its execution or performance of this Agreement.
ARTICLE V
LIABILITIES AND INDEMNIFICATION
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5.1 Limitation on CTC Liability. CTC shall be without liability to any Fund or
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the Trust for any loss, damage, cost, expense (including attorneys' fees and
disbursements), liability or claim which does not arise from CTC's failure to
adhere to the standard of care imposed in Section 2.2 above. In no event shall
CTC be liable (i) for any such loss, damage, cost, expense, liability or claim
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arising from war, riots, civil commotion, strikes, labor disputes, governmental
actions, laws or regulations, embargoes, natural disasters, or any other such
cause or contingency (whether constituting a form of country risk or not) beyond
the control of CTC or any Eligible Foreign Custodian selected by it pursuant to
this Agreement, or (ii) for special, incidental or consequential damages, even
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if CTC has been advised of the possibility of such damages.
5.2 Indemnification by CTC. CTC shall indemnify and hold harmless the Trust
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and each Fund from and against any and all costs, expenses, damages, liabilities
or claims (including reasonable attorney's and accountants' fees) arising from
any failure by CTC to perform its obligations under this Agreement at the
standard of care to which it is held in Section 2.2 above if such failure arises
from bad faith, willful misconduct or negligence on the part of CTC,
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provided that neither the Trust nor any Fund shall be indemnified and held
harmless from and against special, incidental or consequential damages, even if
CTC has been advised of the possibility of such damages.
5.3 Indemnification by Funds. Each Fund, severally and not jointly, shall
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indemnify and hold harmless CTC from and against any and all costs, expenses,
damages, liabilities or claims (including reasonable attorneys' and accountants'
fees) arising from CTC's performance of its obligations under this Agreement
with respect to such Fund, provided that CTC shall not be indemnified and held
harmless from and against (a) any such costs, expenses, damages, liabilities or
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claims arising from bad faith, willful misconduct or negligence on the part of
CTC, or (b) special, incidental or consequential damages, even if the Trust or
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any Fund has been advised of the possibility of such damages.
5.4 Express Duties Only. CTC shall have no duties or obligations whatsoever
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except such duties and obligations as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in this Agreement
against CTC. CTC shall have no discretion whatsoever with respect to the
management, disposition or investment of the assets of any Fund and is not a
fiduciary to the Trust or any Portfolio. In no event shall CTC be liable for any
country risks (as described in part in Section 3.4 above) associated with
investments in a particular country.
ARTICLE VI
MISCELLANEOUS
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6.1 Address for Notices. Unless otherwise specified herein, all demands,
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notices, instructions, and other communications to be given hereunder shall be
sent, delivered or given to
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the recipient at the address, or the relevant telephone number, set forth after
its name hereinbelow:
If to the Trust:
THE BEAR XXXXXXX FUNDS
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx
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Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to CTC:
CUSTODIAL TRUST COMPANY
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Senior Vice President - Compliance
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Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address as either party hereto shall have provided to the other
by notice given in accordance with this Section 6.1.
6.2 No Waiver. No failure by either party hereto to exercise, and no delay by
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such party in exercising, any right hereunder shall operate as a waiver thereof.
The exercise by either party hereto of any right hereunder shall not preclude
the exercise of any other right, and the remedies provided herein are cumulative
and not exclusive of any remedies provided at law or in equity.
6.3 Amendments. This Agreement and the Exhibits hereto cannot be changed
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orally and no amendment to this Agreement or any of such Exhibits shall be
effective unless evidenced by an instrument in writing executed by the parties
hereto.
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6.4 Counterparts. This Agreement may be executed in one or more counterparts,
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and by the parties hereto on separate counterparts, each of which shall be
deemed an original but all of which together shall constitute but one and the
same instrument.
6.5 Severability. If any provision of this Agreement shall be invalid, illegal
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or unenforceable in any respect under any applicable law, the validity, legality
and enforceability of the remaining provisions shall not be affected or impaired
thereby.
6.6 Successors and Assigns. This Agreement shall be binding upon and shall
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inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement shall not be assignable by
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either party hereto without the written consent of the other party. Any
purported assignment in violation of this Section 6.6 shall be void.
6.7 Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of New York, without regard to the
conflict of law principles thereof.
6.8 Jurisdiction. Any suit, action or proceeding with respect to this
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Agreement may be brought in the Supreme Court of the State of New York, County
of New York, or in the United States District Court for the Southern District of
New York, and the parties hereto hereby submit to the non-exclusive jurisdiction
of such courts for the purpose of any such suit, action or proceeding, and
hereby waive for such purpose any other preferential jurisdiction by reason of
their present or future domicile or otherwise.
6.9 Headings. The headings of sections in this Agreement are for convenience
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of reference only and shall not affect the meaning or construction of any
provision of this Agreement.
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6.10 Termination. This Agreement shall automatically terminate as soon as none
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of the custody agreements set forth in Exhibit A hereto are in effect, and may
otherwise be terminated by either party giving to the other party a notice in
writing specifying the date of such termination, which shall not be less than
thirty (30) days after the date of the giving of such notice.
6.11 Fees. In consideration of the services provided by CTC hereunder, each
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Fund shall pay to CTC such compensation and out-of-pocket expenses as may be
agreed upon from time to time.
6.12 Conflicts With Custody Agreements. In the event of any conflict between
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this Agreement and any of the custody agreements set forth in Exhibit A hereto,
the terms of this Agreement shall prevail.
6.13 Separate Funds. Every reference in this Agreement to a Fund shall be
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deemed a reference solely to the particular Fund referred to. Under no
circumstances shall the rights, obligations or remedies with respect to a
particular Fund constitute a right, obligation or remedy applicable to any other
Fund. In particular, and without otherwise limiting the scope of this Section
6.13, CTC shall have no right to set off claims against one Fund by applying
thereto the property of any other Fund.
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IN WITNESS WHEREOF, the Trust, on behalf of each Fund individually and not
jointly, and CTC have caused this Agreement to be executed by their respective
officers thereunto duly authorized, all as of the date first above written.
CUSTODIAL TRUST COMPANY THE BEAR XXXXXXX FUNDS on behalf of
each Fund identified on Exhibit A
attached hereto, individually and
not jointly
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxxx
Title: President Title: Vice President & Treasurer
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Exhibit A
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Name of Fund Custody Agreement dated
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Balanced Portfolio December 22, 1997
High Yield Total Return Portfolio Ibid
International Equity Portfolio Ibid
Focus List Portfolio June 23, 1997
The Insiders Select Portfolio June 7, 1995
Large Cap Value Portfolio February 22, 1995
S & P Stars Portfolio Ibid
Small Cap Value Portfolio Ibid
Total Return Bond Portfolio Ibid
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Exhibit B
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Countries
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Australia
Austria
Belgium
Canada
Denmark
Finland
France
Germany
Hong Kong
Ireland
Italy
Japan
Malaysia
Mexico
The Netherlands
New Zealand
Norway
Portugal
Singapore
Spain
Sweden
Switzerland
United Kingdom
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