Exhibit 99.B4(b)
INVESTMENT ADVISORY AGREEMENT
THE BEAR XXXXXXX FUNDS
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
January 20, 1998
Bear Xxxxxxx Funds Management Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The above-named investment company (the "Fund"), with respect to the
series named on Schedule 1 hereto, as such Schedule may be revised from time to
time (each, a "Series"), herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing and reinvesting
the same in investments of the type and in accordance with the limitations
specified in its charter documents and in its offering documents (Part A and
Part B) as from time to time in effect, copies of which have been or will be
submitted to you, and in such manner and to such extent as from time to time may
be approved by the Fund's Board. The Fund desires to employ you to act as its
investment adviser.
You may render services through your own employees or the employees
of one or more affiliated companies that are qualified to act as an investment
adviser to the Fund under applicable laws and are under your common control as
long as all such persons are functioning as part of an organized group of
persons, and such organized group of persons, with respect to the services used
by the Fund, is managed at all times by your authorized officers. It is also
understood that you may from time to time, subject to the approval by the Fund's
Board and shareholders of the Series, as necessary, employ or associate yourself
with such person or persons as you may believe to be particularly fitted to
assist you in the performance of this Agreement. You will be as fully
responsible to the Fund for the acts and omissions of such persons as you are
for your own acts and omissions. The compensation of such person or persons
shall be paid by you and no obligation may be incurred on the Fund's behalf in
any such respect.
Subject to the supervision and approval of the Fund's Board, you
will provide investment management of each Series' portfolio in accordance with
such Series' investment objectives and policies as stated in the Fund's offering
documents (Part A and Part B) as from time to time in effect. In connection,
therewith, you will obtain and provide investment research
and will supervise the Series investments and conduct a continuous program of
investment, evaluation and, if appropriate, sale and reinvestment of such Series
assets. You will furnish to the Fund such statistical information, with respect
to the investments which a Series may hold or contemplate purchasing, as the
Fund may reasonably request. The Fund wishes to be informed of important
developments materially affecting the Series portfolio and shall expect you, on
your own initiative, to furnish to the Fund from time to time such information
as you may believe appropriate for this purpose.
You shall exercise your best judgment in rendering the services to
be provided to the Fund hereunder, and the Fund agrees as an inducement to your
undertaking the same that neither you nor any Sub-Investment Adviser shall be
liable hereunder for any error of judgment or mistake of law or for any loss
suffered by one or more Series, provided that nothing herein shall be deemed to
protect or purport to protect you or any Sub-Investment Adviser against any
liability to the Fund or the Series or to its security holders to which you
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence in the performance of your duties hereunder or by reason of your
reckless disregard of your obligations or duties hereunder (hereinafter
"Disabling Conduct") or to which any Sub-Investment Adviser would otherwise be
subject by reason of Disabling Conduct.
In consideration of services rendered pursuant to this Agreement,
the Fund will pay you on the first business day of each month a fee at the rate
set forth on Schedule 1 hereto or will pay you in accordance with the
methodology described on additional Schedules hereto. Net asset value shall be
computed on such days and at such time or times as described in the Fund's
then-current Part A and Part B. The fee for the period from the date of the
commencement of sales of a Series' shares (after any sales are made to you) to
the end of the month during which such sales shall have been commenced shall be
pro-rated according to the proportion which such period bears to the full
monthly period, and upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to you, the value of
each Series' net assets shall be computed in the manner specified in the Fund's
charter documents for the computation of the value of each Series' net assets.
You will bear all expenses in connection with the performance of
your services under this Agreement and will pay all fees of any Sub-Investment
Adviser in connection with its duties in respect of the Series. All other
expenses to be incurred in the operation of the Fund (other than those to be
borne by a Sub-Investment Adviser, if any) will be borne by the Fund, except to
the extent specifically assumed by you. The expenses to be borne by the Fund
include, without limitation, the following: organizational costs, taxes,
interest, loan commitment fees, interest and distributions paid on securities
sold short, brokerage fees and commissions, if any, fees of Board members,
Securities and Exchange Commission fees, state Blue Sky qualification fees,
advisory, administration and fund accounting fees, charges of custodians,
transfer and dividend disbursing agents fees, certain insurance premiums,
industry association fees, outside auditing and legal expenses, costs of
independent pricing services, costs of maintaining the Series' existence, costs
attributable to investor services (including, without limitation, telephone and
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personnel expenses), costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing shareholders, costs of shareholders' reports and meetings, and any
extraordinary expenses.
The Fund understands that you now act, and that from time to time
hereafter you may act, as investment adviser to one or more other investment
companies and fiduciary or other managed accounts, and the Fund has no objection
to your so acting, provided that when the purchase or sale of securities of the
same issuer is suitable for the investment objectives of two or more companies
or accounts managed by you which have available funds for investment, the
available securities will be allocated in a manner believed by you to be
equitable to each company or account. It is recognized that in some cases this
procedure may adversely affect the price paid or received by one or more Series
or the size of the position obtainable for or disposed of by one or more Series.
In addition, it is understood that the persons employed by you to
assist in the performance of your duties hereunder will not devote their full
time to such service and nothing contained herein shall be deemed to limit or
restrict your right or the right of any of your affiliates to engage in and
devote time and attention to other businesses or to render services of whatever
kind or nature.
Any person, even though also your officer, director, partner,
employee or agent, who may be or become an officer, Board member, employee or
agent of the Fund, shall be deemed, when rendering services to the Fund or
acting on any business of the Fund, to be rendering such services to or acting
solely for the Fund and not as your officer, director, partner, employee, or
agent or one under your control or direction even though paid by you.
You shall place all orders for the purchase and sale of portfolio
securities for the Series with brokers or dealers selected by you, which may
include brokers or dealers affiliated with you to the extent permitted by the
1940 Act and the Fund's policies and procedures applicable to the Series. You
shall use your best efforts to seek to execute portfolio transactions at prices
which, under the circumstances, result in total costs or proceeds being the most
favorable to the Series. In assessing the best overall terms available for any
transaction, you shall consider all factors it deems relevant, including the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, research services
provided to you, and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In no event shall you be under
any duty to obtain the lowest commission or the best net price for any Series on
any particular transaction, nor shall you be under any duty to execute any order
in a fashion either preferential to any Series relative to other accounts
managed by you or otherwise materially adverse to such other accounts.
In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to you and/or the other accounts over which you exercise
investment discretion. You are authorized to pay a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
transaction for the Series which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
you determine in good faith that the total
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commission is reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or your overall responsibilities with respect to accounts
over which you exercise investment discretion. You shall report to the Board of
Trustees of the Fund regarding overall commissions paid by the Series and their
reasonableness in relation to their benefits to the Series. Any transactions for
the Series that are effected through an affiliated broker-dealer on a national
securities exchange of which such broker-dealer is a member will be effected in
accordance with Section 11(a) of the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder. The Series hereby
authorizes any such broker or dealer to retain commissions for effecting such
transactions and to pay out of such retained commissions any compensation due to
others in connection with effectuating those transactions.
In executing portfolio transactions for the Series, you may, to the
extent permitted by applicable laws and regulations, but shall not be obligated
to, aggregate the securities to be sold or purchased with those of other
portfolios or its other clients if, in your reasonable judgment, such
aggregation (i) will result in an overall economic benefit to the Series, taking
into consideration the advantageous selling or purchase price, brokerage
commission and other expenses, and trading requirements, and (ii) is not
inconsistent with the policies set forth in the Fund's registration statement
and the Series's Prospectus and Statement of Additional Information. In such
event, you will allocate the securities so purchased or sold, and the expenses
incurred in the transaction, in an equitable manner, consistent with your
fiduciary obligations to the Series and such other clients.
The Fund will indemnify you and each Sub-Investment Adviser, your
officers, directors, employees and agents (each, an "indemnitee") against, and
hold each indemnitee harmless from, any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses) not
resulting from Disabling Conduct by the indemnitee. Indemnification shall be
made only following: (i) a final decision on the merits by a court or other body
before whom the proceeding was brought that the indemnitee was not liable by
reason of Disabling Conduct or (ii) in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that the indemnitee
was not liable by reason of Disabling Conduct by (a) the vote of a majority of a
quorum of Board members who are neither "interested persons" of the Fund nor
parties to the proceeding ("disinterested non-party Board members") or (b) an
independent legal counsel in a written opinion. Each indemnitee shall be
entitled to advances from the Fund for payment of the reasonable expenses
incurred by it in connection with the matter as to which it is seeking
indemnification in the manner and to the fullest extent permissible under the
New York Business Corporation Law. Each indemnitee shall provide to the Fund a
written affirmation of its good faith belief that the standard of conduct
necessary for indemnification by the Fund has been met and a written undertaking
to repay any such advance if it should ultimately be determined that the
standard of conduct has not been met. In addition, at least one of the following
additional conditions shall be met: (a) the indemnitee shall provide security in
form and amount acceptable to the Fund for its undertaking; (b) the Fund is
insured against losses arising by reason of the advance; or (c) a majority of a
quorum of disinterested non-party Board members, or independent legal counsel,
in a written opinion, shall have determined, based on a review of facts readily
available to the Fund at the time the advance is proposed to be made, that there
is reason to believe that the indemnitee will ultimately be found to be entitled
to indemnification. No provision of this Agreement shall be construed to protect
any Board member or officer of the
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Fund, or any indemnitee, from liability in violation of Sections 17(h) and (i)
of the Investment Company Act of 1940, as amended (the "1940 Act").
As to each Series, this Agreement shall continue until the date set
forth opposite such Series' name on Schedule 1 hereto (the "Reapproval Date")
and thereafter shall continue automatically for successive annual periods ending
on the day of each year set forth opposite the Series' name on Schedule 1 hereto
(the "Reapproval Day"), provided such continuance is specifically approved at
least annually by (i) the Fund's Board; or (ii) vote of a majority (as defined
in the 0000 Xxx) of such Series' outstanding voting securities, provided that in
either event its continuance also is approved by a majority of the Fund's Board
members who are not "interested persons" (as defined in the 0000 Xxx) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. As to each Series, this Agreement is
terminable without penalty, on 60 days' notice, by the Fund's Board or by vote
of holders of a majority of such Series' shares or, upon not less than 90 days'
notice, by you. This Agreement also will terminate automatically, as to the
relevant Series, in the event of its assignment (as defined in the 1940 Act).
The Fund recognizes that from time to time your directors, officers and
employees may serve as trustees, directors, partners, officers and employees of
other business trusts, corporations, partnerships or other entities (including
other investment companies), and that such other entities may include the name
"Bear Xxxxxxx" as part of their name, and that your corporation or its
affiliates may enter into investment advisory or other agreements with such
other entities. If you cease to act as the Fund's investment adviser, the Fund
agrees that, at your request, the Fund will take all necessary action to change
the name of the Fund to a name not including "Bear Xxxxxxx" in any form or
combination of words.
This Agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his capacity as an officer of the Fund. The
obligations of this Agreement shall only be binding upon the assets and property
of the relevant Series and shall not be binding upon any Board member, officer
or shareholder of the Fund individually.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
THE BEAR XXXXXXX FUNDS
By:_______________________
Accepted:
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BEAR XXXXXXX FUNDS MANAGEMENT INC.
By:_______________________________
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SCHEDULE 1
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Insiders Select Fund
For the period beginning beginning on the first day of the month
after which shareholders of the Fund have approved this Agreement, and ending
with the lastday of the twelfth full calendar month thereafter, and ending with
the last day of the twelfth full calendar month thereafter, the Fund will pay
you, at the end of each month, a monthly advisory fee calculated at an annual
rate of 1.0% of the Series' average daily net assets during such month (the
"Basic Fee"). Beginning with the thirteenth month, the Basic Fee will be
adjusted each month (the "Monthly Performance Adjustment") depending on the
extent to which the investment performance of the Class of shares expected to
bear the highest total Series operating expenses (as such Class from time to
time may be designated by the Fund's Board, the "Designated Class"), reflecting
the deduction of expenses, exceeds or is exceeded by the percentage change in
the investment record of the Standard & Poor's MidCap 400 Index (the "MidCap
400") for the immediately preceding twelve calendar months on a rolling basis.
The rate of the Monthly Performance Adjustment may increase or decrease the fee
payable to you by up to .50% per annum of the Series' average daily net assets.
The performance of the Designated Class during a performance period
will be calculated by first determining the change in the Class' net asset value
per share during the period, assuming the reinvestment of distributions during
that period, and then expressing this amount as a percentage of the net asset
value per share at the beginning of the period. The performance of the MidCap
400 during a performance period is calculated as the sum of the change in the
level of the index during the period, plus the value of any dividends or
distributions made by the companies whose securities comprise the index
accumulated to the end of the period.
After the Monthly Performance Adjustment is effective, the total
advisory fee, payable by the Fund to you at the end of each calendar month, will
be equal to the Basic Fee for the month adjusted upward or downward for the
month by the Monthly Performance Adjustment for the month. The monthly advisory
fee will be calculated as follows: (1) one-twelfth of the 1% annual basic fee
rate will be applied to the Series' average daily net assets over the most
recent calendar month, giving a dollar amount which will be the Basic Fee for
that month; (2) one-twelfth of the applicable performance adjustment fee rate
from the table below will be applied to the Series' average daily net assets
over the most recent month, giving a dollar amount which will be the Monthly
Performance Adjustment; and (3) the Monthly Performance Adjustment will then be
added to or subtracted from the Basic Fee and the result will be the amount
payable by the Fund to you as the total advisory fee for that month.
The full range of permitted fees on an annualized basis is as follows:
Percentage Point Difference Between Designated
Class' Performance (Net of Expenses Including Performance
Advisory Fees) and Percentage Change in the Adjustment
MidCap 400 Investment Record Basic Fee (%) Rate (%) Total Fee (%)
---------------------------- ------------- -------- -------------
+3.00 percentage points or more........... 1% .50% 1.50%
+2.75 percentage points or more but less
less than + 3.00 percentage points..... 1% .40% 1.40%
+2.50 percentage points or more but less
than + 2.75 percentage points.......... 1% .30% 1.30%
+2.25 percentage points or more but less
than + 2.50 percentage points.......... 1% .20% 1.20%
+2.00 percentage points or more but less
than + 2.25 percentage points.......... 1% .10% 1.10%
Less than + 2.00 percentage points but more
than -2.00 percentage points........... 1% 0% 1.00%
-2.00 percentage points or less but more
than -2.25 percentage points........... 1% -.10% .90%
-2.25 percentage points or less but more
than -2.50 percentage points........... 1% -.20% .80%
-2.50 percentage points or less but more 1%
than -2.75 percentage points............ -.30% .70%
-2.75 percentage points or less but more 1%
than -3.00 percentage points........... -.40% .60%
-3.00 percentage points or less........... 1% -.50% .50%
The period over which performance will be measured is a rolling 12-month period.
Approved by shareholders January 20, 1998
Reapproved February 4, 1998 and February 10, 1999
To be reapproved on or before March 31, 2000
