EXHIBIT D(2)
SUB-INVESTMENT ADVISORY AGREEMENT
BEAR XXXXXXX ASSET MANAGEMENT INC.
000 XXXXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
April 17, 2000
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").
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 of execution of
this Agreement to the end of the month during which this Agreement has been
executed 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 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
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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 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
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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 become effective upon its execution, shall remain
in force for a period of two (2) years from that date and thereafter shall
continue automatically for successive annual periods, 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 0000 Xxx) of the 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 Series'
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 Series' 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 Series. 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.
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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 ASSET MANAGEMENT INC.
By: /s/ Xxxx Xxxxxxx
----------------------------
Title: Senior Managing Director
Accepted:
XXXXXX & XXXXXX ASSOCIATES, INC.
By: /s/ Xxxxx X. Xxxxxx
------------------------
Title: Chairman
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SCHEDULE 1
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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:
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Portfolio's Average Annual Fee as a Percentage
Daily Net Assets at of Total Average Daily
Relevant Month-End Net Assets
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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%
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