EXHIBIT 4
ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT, made this 18th day of June, 1998, by and
between BAMCO, Inc., a New York corporation ("BAMCO") and Baron Capital
Funds Trust , a Delaware business trust ("Client") and all series thereof
("Series"),
WHEREAS Client is 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 promises 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 of the 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) BAMCO may use Baron Capital, Inc. ("BCI"), a broker-dealer
affiliated with BAMCO, as broker as long as BCI's execution of transactions
is consistent with Client's policy referred to above.
(c) 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 to BCI 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) For BCI's services as broker to Client, Client shall pay to
BCI brokerage commissions consistent with Rule 17e-1 that are fair and
reasonable compared to the commission, fee or other remuneration received
by other brokers in connection with comparable transactions involving
similar securities being purchased or sold on a securities exchange during
a comparable period of time.
(e) Where brokers and dealers other than BCI 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 higher commission or spread than may be charged
by BCI or other brokers or dealers, if BAMCO determines that such
commission or spread 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.
Whether using BCI or others, BAMCO shall have no obligation to seek the
lowest commission cost to Client. BAMCO's selection of a broker other than
BCI 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 currently effective Prospectus.
BAMCO shall submit to all regulatory and administrative bodies having
jurisdiction over the services provide 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 which 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 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," absent BAMCO's written consent.
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
more than sixty days' written notice to BAMCO or by BAMCO on not more 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 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 July , 0000
Xxx Xxxx, Xxx Xxxx
BAMCO, INC.
By:
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BARON CAPITAL FUND TRUST
By:
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