SUB-INVESTMENT ADVISORY AGREEMENT
BEAR XXXXXXX FUNDS MANAGEMENT INC.
000 XXXX XXXXXX
XXX XXXX, XXX XXXX 00000
September 9, 1997
Xxxxxx & Xxxxxx Associates, Inc.
0000 X. Xxxxxx Xxxxxx-Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Dear Sirs:
As you are aware, each Series of The Bear Xxxxxxx Funds (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 Prospectus and Statement of Additional Information
as from time to time in effect, copies of which have been or will be submitted
to you, and in which manner and to such extent as from time to time may be
approved by the Fund's Board of Trustees (the "Board"). The Fund intends to
employ us (the "Adviser") to act as its investment adviser pursuant to a written
agreement (the "Investment Advisory Agreement"), a copy of which has been
provided to you. The Adviser desires to employ you to act as the sub-investment
adviser to the International Equity Portfolio (the "Series") starting when the
Series is initially offered to the public, which is expected to occur on or
about January 1, 1998 and you desire to accept such employment.
In this connection, it is understood that from time to time
you will employ or associate with yourself such person or persons as you may
believe to be particularly fitted to assist you in the performance of this
Agreement. Such person or persons shall be officers or employees who are
employed by you or the Fund. The compensation of such person or persons shall be
paid by you and no obligation shall be incurred on the Fund's behalf in any such
respect.
Subject to the supervision and approval of the Adviser, you
will provide investment management of the Series' portfolio in accordance with
the Series' investment objectives and policies as stated in its Prospectus and
Statement of Additional Information as from time to time in effect. In
connection therewith, you
will supervise the Series' investments and conduct a continuous program of
investment, evaluation and, if appropriate, sales and reinvestment of the
Series' assets. You will furnish to the Adviser or the Fund such statistical
information, with respect to the investments which the Series may hold or
contemplate purchasing, as the Adviser or the Fund may reasonably request. The
Fund and the Adviser wish to be informed of important developments materially
affecting the Series' portfolio and shall expect you, on your own initiative, to
furnish to the Fund or the Adviser 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 hereunder, and, to the extent provided in the Investment
Advisory Agreement, the Fund has agreed as an inducement to your undertaking the
same that you shall not be liable hereunder for any error of judgment or mistake
of law or for any loss suffered by the Fund, provided that nothing herein shall
be deemed to protect or purport to protect you against any liability to the
Adviser, the Fund or the Fund's security holders to which you would otherwise be
subject by reasons of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
In consideration of services rendered pursuant to this
Agreement, the Adviser will pay you, in arrears, by the twentieth day of each
month, a fee calculated as set forth on Schedule 1 hereto.
Net asset value shall be computed on such days and at such
time or times as described in the Series' then-current Prospectus and Statement
of Additional Information. The fee for the period from the date following the
commencement of sales of the Series' shares 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 within 10 business days of
the date of termination of this Agreement.
For the purpose of determining fees payable to you, the value
of the Series' net assets shall be computed in the manner specified in the
Fund's charter documents for the computation of the value of the Series' net
assets.
You will bear all of your expenses in connection with the
performance of your services under this Agreement. Except to the extent
specifically assumed by you, all expenses to be incurred in the operation of the
Series (other than those borne by the Adviser) will be borne by the Series,
including, 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 and expenses of Board
members, Securities and Exchange Commission and state
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Blue Sky qualification fees, advisory, administration, distribution and fund
accounting fees, charges of custodians, transfer and dividend disbursing agents'
fees, fees paid pursuant to a Rule 12b-1 Plan, 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
personnel expenses), costs or shareholders' reports and meetings, and any
extraordinary expenses.
The Adviser 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 Adviser
has no objection to your so acting and continuing to so act pursuant to your
current agreements, provided that, during the term of this Agreement, (i) if you
charge a management fee to any other investment company with an investment
objective and policies comparable to that of the Series that is less than the
fees as set forth in Schedule 1, you shall notify us and adjust the fees for
managing the Series to reflect such lower fee, and (ii) you shall not enter any
advisory relationship with any other investment company sponsored or managed by
someone other than the Adviser if that investment company has an investment
objective and policies comparable to that of the Series and a lower overall fee
structure.
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 services 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 or the Adviser to the
extent permitted by the Investment Company Act of 1940, as amended (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 you deem 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
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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 the Series relative to other
accounts managed by you or otherwise materially adverse to such other accounts.
In arranging for the execution of a particular transaction,
you may select brokers or dealers 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 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 a broker-dealer that is affiliated with the Adviser, 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 your 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' Prospectus and Statement of Additional Information. In such
event, you hereby agree to 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 Adviser
recognizes that in some cases this procedure may adversely affect the price paid
or received by the Series or the size of the position obtainable for or disposed
of by the Series.
This Agreement shall continue until September 8, 1999, and
thereafter shall continue automatically for successive annual periods ending on
September 8, of each year, provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) the vote of a majority (as
defined in the 1940 Act of the
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Fund's 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 said Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable without penalty (i) by the
Adviser upon 60 days' notice to you, (ii) by the Fund's Board or by vote of the
holders of a majority of the Fund's shares upon 60 days' notice to you, or (iii)
by you upon not less than 90 days' notice to the Fund and the Adviser. This
Agreement also will terminate automatically in the event of its assignment (as
defined in said Act). In addition, notwithstanding anything herein to the
contrary, if the Investment Advisory Agreement terminates for any reason, this
Agreement shall terminate effective upon the date the Investment Advisory
Agreement terminates.
All assets of the Fund shall be maintained for safekeeping
with the Fund's custodian (and sub-custodian network) and you shall not have
custody of the assets of the Fund. Each party hereto also represents and
warrants that it is duly authorized to enter this Agreement and has caused this
Agreement to be executed by a duly authorized representative.
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,
BEAR XXXXXXX FUNDS MANAGEMENT INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Xxxxxxx X. Xxxxxxx
Title:____________________________
Accepted:
XXXXXX & XXXXXX ASSOCIATES, INC.
By: /s/ Xxxxx Xxxxxx
----------------
Xxxxx Xxxxxx
Title: Chairman
Attest:
By: /s/
----------------
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SCHEDULE 1
In consideration of the services rendered pursuant to this
Agreement, the Adviser will pay to Xxxxxx & Xxxxxx Associates, Inc. a monthly
payment calculated on an annual basis as set forth below:
Portfolio's Average Annual Fee as a Percentage
Daily Net Assets at of Total Average Daily
Relevant Month-End Net Assets
------------------ ----------
Up to $25 million 0.00%
More than $25 million up to $50 million 0.20%
More than $50 million up to $65 million 0.45%
More than $65 million 0.60%
