ADVISORY AGREEMENT
This Advisory Agreement, made the 30th day of September, 1997, and amended
and restated as of May 20, 2008, by and between BAMCO, Inc., a New York
corporation ("BAMCO") and Baron Small Cap Fund, a series of Baron Investment
Funds Trust (formerly known as Baron Asset Fund), a Massachusetts business
trust ("Client"),
Whereas Client is a series of an open-end, diversified management investment
company and is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), that wishes to employ BAMCO to manage Client's portfolio (the
"Account"), upon the terms and subject to the conditions hereinafter set forth;
and
Whereas BAMCO is an investment adviser registered under the Investment
Advisers Act of 1940, as amended, that is willing to manage the Account in the
manner, upon the terms and subject to the conditions hereinafter set forth;
Now Therefore, in consideration of the premises and mutual agreements
hereinafter set forth, the parties hereby agree as follows:
1. The Account shall consist of such cash, stocks, bonds and other
securities which, from time to time, Client places under the supervision of
BAMCO and/or which shall become part of the Account as a result of transactions
therein, deposits of cash proceeds from the sale of Client's shares or
otherwise.
2. Subject to the supervision of the Trustees of the Client, BAMCO shall
have full discretion and authority to manage the Account, subject to such
policies as set forth in Client's prospectus. Client shall provide the Adviser
with copies of its current prospectus and statement of additional information
which set forth the investment objectives, policies and investment restrictions
of the Account, Declaration of Trust and By-laws. BAMCO, as Client's agent and
attorney in fact and at Client's expense, is duly authorized without further
approval with respect to the Account, except as otherwise required by law,
(a) to make all investment decisions; (b) to vote all proxies with respect to
portfolio securities in the Account; (c) to buy, sell and otherwise trade in
securities; and (d) in furtherance of the foregoing, to do anything which BAMCO
shall deem requisite, appropriate or advisable, including, without limitation,
the submission of instructions to the custodian of the Account, and the
selection of such brokers or dealers as BAMCO shall determine.
3.(a) For BAMCO's services as investment adviser to Client, Client shall pay
BAMCO an advisory fee computed daily and payable monthly from Client's assets
equal to 1% per annum of the Client's average daily net asset value. The fee
shall be paid in arrears, within thirty (30) days after the end of each month.
The net asset value is determined as of the close of the New York Stock
Exchange on each day the Exchange is open. Securities traded on any national
stock exchange or quoted on the NASDAQ National Market System are valued on the
basis of the last sale price, or in the absence of any sale on the date of
valuation, the last sale price on the date the security last traded.
Other securities will be valued at the mean of the most recent bid and asked
prices if market quotations are not readily available. Where market quotations
are not readily available the securities will be valued at their fair value as
determined in good faith by Client's Trustees or their delegate. Odd lot
differentials and brokerage commissions will be excluded in calculating net
asset value.
(b) If BAMCO should serve for less than the whole of any month, its
compensation shall be determined on the basis of the average daily net asset
value of the Account for the month up to and including the date of
termination.
(c) If Client's expenses (exclusive of interest, taxes, brokerage,
extraordinary expenses and amounts paid by Client pursuant to its
distribution plan) in any fiscal year exceed the limits prescribed by any
state in which Client's shares of common stock ("Shares") are qualified for
sale, BAMCO shall, at each contract payment date, reduce its fee by the
amount of any excess up to the amount of BAMCO's advisory fee as determined
hereunder. Client undertakes to notify BAMCO of each state in which Client's
Shares are qualified for sale.
4.(a) BAMCO shall furnish office space and all necessary office facilities,
equipment and executive personnel for managing the Account without
reimbursement from Client.
(b) BAMCO shall pay the salaries and fees of all officers and Trustees of
Client who are "interested persons" (as defined in the 0000 Xxx) of BAMCO.
(c) BAMCO shall not be obligated to pay the following expenses:
(a) audit, accounting and legal fees; (b) custodian fees; (c) fees for
registering and qualifying Client's Shares with federal and state securities
commissions; (d) fees for preparing shareholder reports and proxy
solicitation materials; (e) fees associated with Client's Shares such as
administrative servicing, dividend disbursing, transfer agent and registrar
fees; (f) insurance; (g) compensation of Trustees of Client who are not
"interested persons" of BAMCO; (h) miscellaneous business expenses that are
not within paragraph 4(a) above; (i) costs associated with the public
offering of Client's Shares, including registration, filing, legal and
accounting fees and costs of printing Client's prospectus and other offering
documents; (j) taxes; and (k) brokerage commissions and fees incurred in
connection with portfolio transactions.
(d) BAMCO shall maintain all books and records with respect to Client's
securities transactions required by subparagraphs (b)(5), (6), (9) and
(10) and paragraph (f) of Rule 31a-1 under the 1940 Act and shall render to
Client's Trustees such periodic and special reports as the Trustees may
reasonably request.
(e) BAMCO shall provide Client's Custodian on each business day with
information relating to the execution of all portfolio transactions pursuant
to standing instructions.
(f) The investment management services provided by the Adviser hereunder
are not to be deemed exclusive, and BAMCO shall be free to render similar
services to others.
5. Client has delivered to BAMCO copies of each of the following documents
and will deliver to it all future amendments and supplements, if any:
(a) Declaration of Trust, filed with the Secretary of The State of
Delaware (such Declaration of Trust, as in effect on the date hereof and as
amended from time to time, is herein called the "Declaration of Trust");
(b) By-laws of the Trust (such By-laws, as in effect on the date hereof
and as amended from time to time, are herein called the "By-laws");
(c) Certified resolutions of the Trustees of Client authorizing the
appointment of BAMCO and approving the form of this Agreement;
(d) Registration Statement under the 1940 Act and the Securities Act of
1933, as amended, on Form N-1A (the "Registration Statement"), as filed with
the Securities and Exchange Commission (the "Commission") relating to Client
and Client's Shares and all amendments thereto;
(e) Notification of Registration of the Client under the 1940 Act on Form
N-8A as filed with the Commission and all amendments thereto; and
(f) Prospectus and Statement of Additional Information of the Trust (such
Prospectus and Statement of Additional Information, as currently in effect
and as amended or supplemented from time to time, being herein called the
"Prospectus").
6. BAMCO shall keep Client's books and records required to be maintained by
it pursuant to paragraph 9 hereof. BAMCO agrees that all records which it
maintains for Client are the property of the Client, and it will surrender
promptly to the Client any of such records upon Client's request. BAMCO further
agrees to preserve for the periods prescribed by Rule 31a-2 as promulgated by
the Commission under the 1940 Act any such records as are required to be
maintained by BAMCO pursuant to paragraph 9 hereof.
7.(a) BAMCO understands that it is the policy of Client to obtain the best
net results for Client's shareholders in the execution of brokerage
transactions for the Account. BAMCO shall select all brokers in accordance with
such policy and as set forth below.
(b) Client represents and warrants that it has adopted procedures in
conformity with Rule 17e-1 ("Procedures") of the 1940 Act to ensure that all
brokerage commissions paid for portfolio transactions are reasonable and
fair. Client shall inform BAMCO of such Procedures and any amendments
thereto. BAMCO shall provide Client
with such information as is required by the Procedures, including, among
other things, a written record of each portfolio transaction effected
pursuant to Rule 17e-1, setting forth the amount and source of the
commission, fee or other remuneration received or to be received; the
identity of the person acting as broker; the terms of the transaction; and,
each quarter, such information as is necessary to enable Client to determine
whether its procedures have been followed.
(d) Where brokers and dealers are used to effect portfolio transactions,
BAMCO may pay to those brokers and dealers, in return for research analysis,
advice and similar services and/or promotion of the Client's Shares, a
commission or spread which BAMCO determines is reasonable and consistent
with the Client's policies. Client agrees that such research and information
may be used by BAMCO to supplement the services it is required to perform
hereunder. BAMCO shall have no obligation to seek the lowest commission cost
to Client. BAMCO's selection of a broker will take into account factors such
as: price, reliability, financial responsibility, commission rates, the
ability of the broker to effect particular securities transactions, and
research and similar services, all of which may enhance general portfolio
management capabilities for BAMCO and/or its affiliates, notwithstanding
that Client may not be the direct or exclusive beneficiary of such services.
8. BAMCO and/or BCI shall direct the clearing broker to send promptly to
Client confirmations of purchases and sales and monthly statements prepared by
the clearing broker. BAMCO shall provide Client with monthly and quarterly
statements. On the written request of Client, BAMCO and/or BCI will send or
direct the sending of any copies of the foregoing to any other person.
9. BAMCO shall keep the books of account of the Fund and compute the net
asset value per share of the outstanding Shares. BAMCO shall also calculate
daily the net investment income of the Fund as described in the Fund's
currently effect Prospectus and shall advise the Fund and the transfer agent
daily of the total amounts of such investment income and, if instructed in
writing by an officer of the Fund to do so, shall advise the transfer agent
periodically of the division of such net investment income among its various
components. The calculations of the net asset value per share and the daily
income of the Fund shall be made at the time or times described from time to
time in the Fund's current Prospectus. BAMCO shall submit to all regulatory and
administrative bodies having jurisdiction over the services provided pursuant
to this Agreement, present or future, any information, reports, or other
material which any such body by reason of this Agreement may request or require
pursuant to applicable laws and regulations. BAMCO shall not disclose or use
any records it has prepared by reason of this Agreement in any manner except as
expressly authorized herein or directed by the Fund and shall keep confidential
any information obtained by reason of this Agreement.
10. Client understands and agrees that: (a) BAMCO is affiliated with Baron
Capital Management, Inc. a registered investment adviser; (b) BAMCO and/or its
affiliates will manage accounts and perform advisory services for others;
(c) depending upon investment objectives and cash availability and
requirements, BAMCO and/or its
affiliates may direct the sale of a particular security for certain accounts
and direct the purchase of such security for other accounts, and, accordingly,
transactions in particular accounts may not be consistent with transactions in
other accounts; (d) where there is a limited supply of a security, BAMCO in
conjunction with its affiliates will allocate investment opportunities in a
matter deemed equitable by BAMCO; (e) BAMCO and/or its affiliates, principals
and employees may from time to time have an interest, direct or indirect, in a
security which is purchased, sold or otherwise traded for the Account, and
BAMCO and/or its affiliates may effect transactions in said security for the
Account that may be the same as or different from the action which BAMCO, its
affiliates or such other persons may take with respect thereto for its or their
accounts.
11. Client and BAMCO represent and warrant that each (i) has adopted and
supplied to one another a copy of a written code of ethics complying with Rule
17j-1 of the Investment Company Act of 1940 and (ii) will obtain such reports
and maintain such records as are specified in Rule 17j-1.
12. Client acknowledges that the word "Baron" in Client's name is derived
from the name of the entities controlling, directly and indirectly, BAMCO,
which derive their names from Xx. Xxxxxx Xxxxx; and that such name is the
property of BAMCO, its affiliated companies and Xxxxxx Xxxxx for copyright
and/or other similar purposes. Client understands and agrees that Client may
use "Baron" as part of its name only for so long as BAMCO serves as investment
adviser to Client, and if BAMCO ceases to be Client's investment adviser,
Client will promptly take all steps necessary to change its name (to the extent
it lawfully can) to one that does not include "Baron," when it receives BAMCO's
written consent to continue using "Baron" in its name.
13. BAMCO shall have no liability to Client or its shareholders for any
error of judgment or mistake of law or for any loss suffered by Client,
provided that BAMCO shall not be protected against liabilities arising by
virtue of willful misfeasance, bad faith or gross negligence, or reckless
disregard of BAMCO's obligations hereunder.
14. Nothing in this Agreement shall limit or restrict the right of any of
BAMCO's directors, officers, or employees who may also be a Trustee, officer or
employee of Client to engage in any other business or to devote his time and
attention in part to the management or other aspects of any business, whether
of a similar or a dissimilar nature, nor limit or restrict BAMCO's right to
engage in any other business or to render services of any kind to any other
corporation, trust, firm, individual or association.
15. Except as otherwise provided herein or authorized by the Trustees of
Client from time to time, BAMCO shall for all purposes herein be deemed to be
an independent contractor and shall have no authority to act for or represent
Client in any way or otherwise be deemed an agent of Client.
16. During the term of this Agreement, Client agrees to furnish BAMCO at its
principal office all Prospectuses, proxy statements, reports to shareholders,
sales literature or other material prepared for distribution to shareholders of
Client or to the public, which refer to BAMCO in any way, prior to use thereof
and not to use such material if BAMCO reasonably objects in writing within five
business days (or such other time as may be mutually agreed) after receipt
thereof. In the event of termination of this Agreement, Client will continue to
furnish to BAMCO copies of any of the above-mentioned materials which refer in
any way to BAMCO. Client shall furnish or otherwise make available to BAMCO
such other information relating to the business affairs of Client as BAMCO at
any time, or from time to time, reasonably requests in order to discharge its
obligations hereunder.
17. This Agreement shall continue in effect for a period of two years from
the date of its execution, and thereafter only so long as such continuance is
specifically approved at least annually by Client's Trustees or by a vote of a
majority of the Trustees who are not parties to this Agreement or interested
persons of any such party.
18. This Agreement may be terminated at any time, without the payment of any
penalty, by the Trustees of Client or by vote of a majority of the outstanding
voting Shares of Client (as defined in the 0000 Xxx) on not less than sixty
days' written notice to BAMCO or by BAMCO on not less than sixty days' written
notice to Client.
19. This Agreement shall terminate automatically in the event of its
assignment (as defined in the 0000 Xxx) by either party.
20. This Agreement shall be construed in accordance with and governed by the
laws of the State of New York, to the extent federal law does not apply.
21. BAMCO shall have no responsibility of liability with respect to custody
arrangements or the acts, omissions or other conduct of the custodian.
22. It is understood and expressly stipulated that none of the Trustees,
officers, agents or shareholders of the Fund shall be personally liable
hereunder. All persons dealing with the Fund must look solely to the property
of the Fund for the enforcement of any claims against the Fund as neither the
Trustees, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
23. Any notice or other communication required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered mail,
postage prepaid, (1) to BAMCO at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; or
(2) to the Client at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
24. This Agreement contains the entire agreement and may not be amended or
modified in any respect unless in a writing signed by both parties obtained in
conformity with the requirements of the 1940 Act and the Rules thereunder. In
the event that any provision of this Agreement is declared to be invalid such
declaration shall not be deemed to affect the validity of any of the other
provisions.
25. Client acknowledges receipt of Part II of BAMCO's Form ADV which is
filed with the Securities and Exchange Commission, and which contains
information concerning BAMCO's services and fees.
Agreed to as of May 20, 0000
Xxx Xxxx, Xxx Xxxx
BAMCO, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Baron Investment Funds Trust on
behalf of Baron Small Cap Fund
By: /s/ Xxxxx X. Xxxxxxxxx
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