As filed, via EDGAR, with the Securities and Exchange Commission on February 19,
1999.
File No.:33-53368
ICA No.: 811-07290
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|X| Preliminary proxy statement |_| Confidential, for Use of the
|_| Definitive proxy statement Commission Only(as permitted by
|_| Definitive additional materials Rule 14a-6(e)(2))
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
BEAR STEARNS INVESTMENT TRUST
-----------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE>
PRELIMINARY PROXY MATERIAL
FOR THE INFORMATION OF
THE SECURITIES AND EXCHANGE COMMISSION ONLY
BEAR STEARNS INVESTMENT TRUST
Emerging Markets Debt Portfolio
575 Lexington Avenue
New York, NY 10022
__________, 1999
Dear Shareholder:
You are invited to attend a Special Meeting of Shareholders of the Bear
Stearns Investment Trust ("BSIT") to be held at the offices of BSIT, 575
Lexington Avenue, New York, New York 10022, on April 15, 1999 at _____ Eastern
time.
At this Special Meeting, you are being asked to consider and approve an
Agreement and Plan of Reorganization and Liquidation (the "Plan") providing for
the transfer of the assets and liabilities of the Emerging Markets Debt
Portfolio (the "Portfolio"), a series of BSIT, to the Emerging Markets Debt
Portfolio ("New Portfolio") a newly-created separate series of The Bear Stearns
Funds ("BSF"), with the same investment objective and policies as the Portfolio.
We refer to the transactions contemplated in the Plan as the "reorganization."
You will not pay higher fees as a result of the reorganization.
We anticipate that the proposed reorganization will benefit
shareholders of your Portfolio by achieving economies of scale through the
elimination of costs associated with operating two separate entities (BSIT and
BSF), including having two separate boards and separate legal representation. We
believe that the Reorganization will ultimately reduce fund expenses, while
keeping the management of the Portfolio materially the same in all respects. The
Board of Trustees has given full and careful consideration to the proposed
reorganization and has concluded that it is in the best interests of your
Portfolio and its shareholders. We urge you to approve the proposed Plan.
If you and the other shareholders of the Portfolio approve the proposed
Plan and certain other conditions are satisfied, you will receive, in exchange
for your shares in the Portfolio, the same number of shares of New Portfolio,
with the same value as of the date of the reorganization.
<PAGE>
You will not be assessed any sales charge or other fee in connection
with the proposed Reorganization. BSIT expects to receive an opinion of counsel
stating that neither you nor your Portfolio will be liable for federal income
tax solely as a result of the reorganization.
We welcome your attendance at the Special Meeting. If you are unable to
attend, please sign, date and return the enclosed proxy card promptly in order
to spare additional proxy solicitation expenses.
Sincerely,
Doni L. Fordyce
President
<PAGE>
PRELIMINARY PROXY MATERIAL
FOR THE INFORMATION OF
THE SECURITIES AND EXCHANGE COMMISSION ONLY
THE BEAR STEARNS INVESTMENT TRUST
Emerging Markets Debt Portfolio
575 Lexington Avenue
New York, New York 10022
1-800-766-4111
Notice of Special Meeting of Shareholders
to be held April 15, 1999
A Special Meeting of Shareholders of the Emerging Markets Debt
Portfolio (the "Portfolio"), a separate non-diversified portfolio of the Bear
Stearns Investment Trust (the "Trust") will be held on April 15, 1999. The
Meeting will be held at the offices of the Trust, 575 Lexington Avenue, New
York, New York. At the Meeting, we will ask shareholders to vote on:
1. approving or disapproving an Agreement and Plan of Reorganization
and Liquidation (the "Plan") and the transactions contemplated in
the Plan to reorganize the Portfolio into Emerging Markets Debt
Portfolio ("New Portfolio"), a newly-created series of The Bear
Stearns Funds ("BSF") and to subsequently dissolve BSIT. A vote
to approve the Plan will also authorize the Portfolio to approve
an Investment Advisory Agreement between Bear Stearns Asset
Management Inc. ("BSAM") and BSF on behalf of New Portfolio and a
Distribution Plan.
2. any other business properly brought before the meeting.
Any shareholder who owned shares of the Portfolio on February 25, 1999
(the "Record Date") will receive notice of the Meeting and will be entitled to
vote at the Meeting or any adjournment of the Meeting. Please read the full text
of the Proxy Statement for a complete understanding of our proposal.
Dated: ______, 1999 By Order of the Board of Trustees,
Stephen A. Bornstein
Secretary
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You can help avoid the necessity and expense of sending follow-up letters to
ensure a quorum by promptly returning the enclosed proxy. If you are unable to
attend the Meeting, please mark, sign, date, and return the enclosed proxy so
that the necessary quorum may be represented at the Meeting. The enclosed
envelope requires no postage if mailed in the United States.
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<PAGE>
PRELIMINARY PROXY MATERIALS
FOR THE INFORMATION OF
THE SECURITIES AND EXCHANGE COMMISSION ONLY
BEAR STEARNS INVESTMENT TRUST
Emerging Markets Debt Portfolio
575 Lexington Avenue
New York, New York 10022
1-800-766-4111
Proxy Statement
Dated March __, 1999
Special Meeting of Shareholders
to be held
April 15, 1999
General Information
The Board of Trustees of Bear Stearns Investment Trust, a Massachusetts
Business Trust ("BSIT"), on behalf of the Emerging Markets Debt Portfolio (the
"Portfolio") has sent you this Proxy Statement to ask you to vote on a proposal
affecting your Portfolio. BSIT will hold a Special Meeting of Shareholders on
April 15, 1999 at 10:00 a.m., Eastern Time, at its offices located at 575
Lexington Avenue, New York, New York 10022 in order to consider the proposal
described below.
At the Special Meeting, you will be asked to approve or disapprove an
Agreement and Plan of Reorganization and Liquidation, and to consider any other
business that comes before the Special Meeting. We describe this reorganization
proposal below.
The Board of Trustees has fixed the close of business on February 25,
1999 as the record date to determine the shareholders who are entitled to notice
of the Special Meeting and to vote their shares. Shareholders are entitled to
cast one vote for each full share, and a fractional vote for each fractional
share held. We are first mailing this Proxy Statement, Notice of Meeting and
Proxy Card on or about March 5, 1999.
The Bear Stearns Funds ("BSF") and BSIT are both required by federal
law to file reports, proxy statements and other information with the Securities
and Exchange Commission (the "SEC"). The SEC maintains a Web site that contains
information about BSIT and BSF. Any such proxy material, reports and other
information can be inspected and copied at the public reference facilities of
the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's New
York Regional Office, Seven World Trade Center, New York, NY 10048. Copies of
such materials can be obtained from the
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Public Reference Branch, Office of Consumer Affairs and Information Services of
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
Proposal 1
Approval or Disapproval of the
Agreement and Plan of Reorganization and Liquidation
Introduction
The purpose of this proposal is to reorganize your Portfolio to make it a
part of The Bear Stearns Funds. Your Portfolio's investment objective and
polices would not change. The amount of fees that your Portfolio pays would
not change. Neither you nor your Portfolio would be liable for federal
income tax solely as a result of the reorganization.
The Proposed Reorganization
Your Portfolio is currently the only portfolio of Bear Stearns
Investment Trust ("BSIT"). Bear Stearns Asset Management Inc. ("BSAM"), the
investment adviser of your Portfolio, has proposed to reorganize your Portfolio
to make it a part of The Bear Stearns Funds ("BSF"). BSF currently consists of
10 distinct investment Portfolios.
In order to accomplish this reorganization, you are being asked to
approve an Agreement and Plan of Reorganization and Liquidation (the "Plan"). In
this Proxy Statement, we refer to the transactions contemplated in the Plan as
the "reorganization." A copy of the Plan is attached as Exhibit A to this Proxy
Statement.
If shareholders approve the Plan, your Portfolio would reorganize and
become a separate portfolio of BSF. The reorganization would occur approximately
on April 15, 1999.
Among other things, the Plan provides that,
- On the reorganization date, your Portfolio would transfer all its
assets and liabilities to Emerging Markets Debt Portfolio ("New
Portfolio"), a newly-created portfolio of BSF.
- In exchange, New Portfolio would issue to your Portfolio shares of
beneficial interest of New Portfolio. Your Portfolio would then
distribute to you the same number of shares (of the same Class of
shares) of New Portfolio that you own of your Portfolio as of the
reorganization date.
- You would then become a shareholder of New Portfolio.
- Your Portfolio, and BSIT, would then dissolve.
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New Portfolio was established to continue the operations of your
Portfolio at the time of the reorganization. It currently has no operations.
The Plan also provides for your Portfolio to take certain actions that
are necessary for New Portfolio to commence operations. In particular, after
your Portfolio receives shares as part of the transaction, but before it
distributes those shares to you and its other shareholders, your Portfolio will
approve the new Investment Advisory Agreement between BSAM and BSF on behalf of
New Portfolio and take certain other actions.
You should know the following about the proposed reorganization:
- New Portfolio is being created to continue the operations of your
Portfolio. It does not currently operate, and will begin operations
only when the reorganization occurs.
- New Portfolio has the same investment objective and policies as your
Portfolio.
- New Portfolio has the same investment adviser, distributor,
administrator, custodian, transfer agent and auditors as that of your
Portfolio.
- You will not pay any commissions or fees as part of the
reorganization.
- Neither you nor your Portfolio will be liable for any federal income
tax as a result of the reorganization.
- The amount of fees and expenses that you pay as a shareholder of your
Portfolio will not change as a result of the reorganization.
Why We Are Asking You to Approve the Reorganization
BSAM believes that reorganizing your Portfolio as part of BSF will
benefit shareholders.
Currently, BSIT and BSF operate as separate entities, each with a Board
of Trustees. BSAM believes that the reorganization would streamline operations
and would eliminate certain duplicate costs. For example, BSIT and BSF each
retain separate legal counsel. By combining BSIT and BSF, BSAM believes that
duplicate legal costs would be reduced, resulting in savings to your Portfolio.
(BSAM currently waives a portion of its advisory fee so as to limit the
aggregate amount of fees and expenses that your Portfolio pays, so these savings
may not be apparent until your Portfolio grows in size).
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Considerations by the Board of Trustees
On November 12, 1998, the Board of Trustees of BSIT approved the Plan.
The Board of Trustees concluded that the reorganization would not result in any
dilution of interests of shareholders and would be in the best interests of
shareholders.
In approving the Plan, the Board of Trustees relied upon
representations of BSAM concerning the operation of your Portfolio. The Board of
Trustees considered a number of factors, including:
- New Portfolio has the same investment objective and policies as your
Portfolio.
- New Portfolio has the same investment adviser, distributor,
administrator, custodian, transfer agent and auditors as that of your
Portfolio.
- You will not pay any commissions or fees as part of the
reorganization.
- Neither you nor your Portfolio will be liable for any federal income
tax as a result of the reorganization.
- The amount of fees and expenses that you pay as a shareholder of your
Portfolio will not change as a result of the reorganization.
Information About BSF and BSIT
BSIT and BSF are each organized as a Massachusetts business trust, and
have similar legal structures. Accordingly, shareholders of BSIT and BSF have
similar rights.
Your Portfolio has established four classes of shares: Class A, Class
B, Class C and Class Y, each with its own expense structure and other features.
New Portfolio has also established Class A, Class B, Class C and Class Y shares.
If shareholders approve the reorganization, you will receive the same Class of
shares of New Portfolio that you own at the time of the reorganization.
The Investment Adviser and Administrator
BSAM currently serves as investment adviser to your Portfolio and will
continue to serve as investment adviser to New Portfolio after the
reorganization. Bear Stearns Funds Management Inc. ("BSFM"), an affiliate of
BSAM, serves as Administrator of your Portfolio, and will serve as Administrator
of New Portfolio after the reorganization.
Currently, BSAM is entitled to receive an investment management fee
computed daily and payable monthly, based on your Portfolio's average daily net
assets as follows:
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Asset Level Investment Management Fee
- ----------- -------------------------
Up to $50 million 1.15%
More than $50 million up to $100 million 1.00%
More than $100 million 0.70%
As of February 25, 1999, your Portfolio had total net assets of
approximately $__ million.
Currently, BSFM provides administrative services to your Portfolio
under a Delegation Agreement. BSAM, out of its investment management fee, pays
BSFM an administration fee at an annual rate of 0.15% (before fee waiver) of
your Portfolio's average daily net assets. Your Portfolio does not pay this fee
directly.
If shareholders approve the reorganization, BSAM will enter into a new
Investment Advisory Agreement with BSF on behalf of New Portfolio. The
Investment Advisory Agreement will provide that BSAM will be entitled to receive
an investment advisory fee, computed daily and payable monthly, based on New
Portfolio's average daily net assets as follows:
Asset Level Investment Management Fee
- ----------- -------------------------
Up to $50 million 1.00%
More than $50 million up to $100 million 0.85%
More than $100 million 0.55%
In addition, BSF, on behalf of New Portfolio, will enter into a
separate Administration Agreement with BSFM to provide administrative services
to New Portfolio that are identical to those it now provides to your Portfolio
under its Delegation Agreement with BSAM. BSFM will be entitled to receive the
same fee it now receives under the Delegation Agreement, except that New
Portfolio will pay this fee directly.
If shareholders approve Proposal 1, your Portfolio will be authorized
to approve the new Investment Advisory Agreement between BSAM and BSF, on behalf
of New Portfolio. A copy of the new Investment Advisory Agreement is attached as
Exhibit B to this Proxy Statement.
Distribution Plan
Your Portfolio has adopted a Distribution Plan on behalf of its Class
A, Class B and Class C shares. Under the Distribution Plan, your Portfolio pays
Bear, Stearns & Co. Inc., the Distributor, a fee for distribution of shares. The
Distributor may use all or part of this fee to pay for services principally
intended to result in the sale of shares, and to compensate third parties for
providing similar services. Your Portfolio pays an annual
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distribution fee, calculated daily and paid monthly, based upon your
Portfolio's average daily net assets as follows:
Class of Shares Annual Distribution Fee
- --------------- -----------------------
Class A 0.10%
Class B 0.75
Class C 0.75
New Portfolio's Distribution Plan is the same as your Portfolio's
current Distribution Plan, and the fees paid under that Plan, will be the same
as your Portfolio now pays. Bear Stearns will continue to waive its distribution
fee to the extent that the fees would exceed the rules of the National
Association of Securities Dealers that limit the amount of asset-based sales
charges that an investment company may pay.
If shareholders approve Proposal 1, your Portfolio will be authorized
to approve New Portfolio's Distribution Plan.
Shareholder Servicing Plan
Your Portfolio has adopted a Shareholder Servicing Plan on behalf of
Class A, Class B and Class C shares, that allows your Portfolio to pay an annual
fee of up to 0.25% of the average daily net assets for services intended to
assist shareholders. These services include personal services provided by
financial institutions, and certain account maintenance and recordkeeping
services. Some or all of the shareholder servicing fee may be paid to financial
institutions that provide personal or account maintenance services under "mutual
fund supermarket" programs.
New Portfolio's Shareholder Servicing Plan and related agreements will
be the same as your Portfolio's current Shareholder Servicing Plan, and the fees
paid under that Plan, will be the same as your Portfolio is currently paying.
Fees and Expenses
The aggregate amount of fees and expenses that you pay as a shareholder
will not change as a result of the reorganization. As described above, New
Portfolio will pay an investment advisory fee and an administrative fee that
together will equal the amount that your Portfolio now pays under a single
investment management fee.
Dividend and Distribution Policy
Your Portfolio currently declares and pays dividends to shareholders
monthly effective January 1, 1999. New Portfolio will have the same policy.
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Federal Income Tax Liability
Neither you nor your Portfolio will be liable for federal income taxes
solely as a result of the reorganization. Your Portfolio will receive an opinion
of counsel concerning federal income taxes. This opinion, of course, is not
binding on the IRS or any court and does not preclude the IRS from adopting a
contrary position. You should consult your own tax adviser concerning the
potential tax consequences of the reorganization, including any applicable state
and local income tax consequences.
Recommendation of the Board of Trustees
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS APPROVE THE PLAN.
Other Information
General information about proxy voting. The Board of Trustees of BSIT
is soliciting your proxy to vote on the matters described in this proxy
statement. We expect to solicit proxies primarily by mail, but representatives
of Bear, Stearns & Co. Inc. or its affiliates or others may communicate with you
by mail or by telephone or other electronic means to discuss your vote. We will
ask broker-dealers and other institutions that hold shares for the benefit of
their customers to send the proxy materials to the beneficial owners and to
obtain authorization to vote on their behalf.
Only shareholders of record of BSIT at the close of business on the
record date, February 25, 1999, may vote at the special meeting. As of the
record date, each Class of BSIT had the number of shares issued and outstanding
listed below, each share being entitled to one vote:
Class Total Shares Outstanding
----- ------------------------
Class A
Class B
Class C
Class Y
As of February 25, 1999, the record date, the trustees and officers of
BSIT, as a group, owned less than 1% of the outstanding shares of BSIT. To the
best of the knowledge
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of BSIT, the following shareholders beneficially owned 5% or more of the
outstanding shares of BSIT as of February 25, 1999:
You may cast one vote for each proposal for each whole share that you
own of BSIT. We count your fractional shares as fractional votes. If we receive
your proxy before the special meeting date, we will vote your shares as you
instruct the proxies. If you sign and return your proxy, but do not specify
instructions, we will vote your shares in favor of each proposal. You may revoke
your proxy at any time before the special meeting if you notify us in writing,
or if you attend the special meeting in person and vote in person.
If a broker or nominee returns a proxy indicating that it did not
receive voting instructions from the beneficial owner, or if the beneficial
owner marked an abstention, we will count those shares when we determine if a
quorum is present, but those proxies, in effect, will count as a vote "against".
If shareholders do not approve the reorganization, then the
reorganization will not proceed, and the Board of Trustees will consider other
alternatives. BSIT would continue operating as an investment company and would
not dissolve.
Quorum and adjournments. BSIT requires that a quorum at the special
meeting be present, in person or by proxy, to conduct the Special Meeting. A
simple majority of all of the shares outstanding on the record date will be a
quorum. If a quorum is not present at the special meeting, the persons named as
proxies may propose one or more adjournments of the special meeting to permit
further solicitation of proxies. An affirmative vote of a majority of the shares
of BSIT present at the Special Meeting may adjourn the Special Meeting without
further notice, until BSIT obtains a quorum. In the event a quorum is present
but sufficient votes to approve a proposal are not received, the persons named
as proxies may propose one or more adjournments to permit further solicitation
of proxies. If this should occur, we will vote proxies for or against a motion
to adjourn in the same proportion to the votes received in favor or against the
proposal.
Required Vote. Approval of the proposed reorganization requires the
affirmative vote of more than 50% of all the outstanding shares of your
Portfolio as a whole. Classes do not vote separately.
Other Business. The Board of Trustee of BSIT knows of no other business
to be brought before the Special Meeting. If any other matters come before the
Special Meeting, the named proxies intend to vote on other matters according to
their best judgment unless you have instructed the proxies to the contrary.
Future Shareholder Proposals. BSIT is not required to hold annual
meetings, unless required to do so by law. If you have a proposal you wish to be
considered by shareholders, send your proposal to Bear Stearns Investment Trust,
575 Lexington Avenue, New York, New York 10022. We must receive your proposal in
sufficient time before the next meeting of shareholders for it to be included.
We do not guarantee that we will be able to include any proposal in a proxy
statement.
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Financial Statements. Deloitte & Touche, independent auditors of BSIT,
has audited the financial statements included in the Statement of Additional
Information for the year ended March 31, 1998. The Portfolio's most recent
annual and semiannual reports to shareholders are available at no cost. To
request a report, please call us toll-free at 1-800-766-4111 or write to us at
575 Lexington Avenue, New York, New York 10167.
Information About BSF
BSF is a business trust established under Massachusetts law. The
operations of BSF are governed by a Declaration of Trust dated September 29,
1994, as amended.
New Portfolio is a separate series of BSF. Shareholders of BSF have
rights under BSF's Declaration of Trust and applicable Massachusetts law that
are similar to the rights of BSIT shareholders under its Declaration of Trust
and applicable Massachusetts Law. You should be aware of the following features
of BSF Funds:
o Shares of each class of BSF participate equally in dividends and other
distributions attributable to that class, including any distributions
in the event of a liquidation.
o Each share of each portfolio of BSF is entitled to one vote for all
purposes.
o Shares of all portfolios of BSF vote for the election of Trustees and
on any other matter that affects each BSF portfolio in substantially
the same manner, except as otherwise required by law.
o As to matters that affect each portfolio differently, such as approval
of an investment advisory agreement, shares of each portfolio vote as
separate portfolios.
o On matters that affect the classes of a portfolio differently, shares
of each class vote separately.
o Massachusetts law does not require registered investment companies,
such as BSF or its portfolios, to hold annual meetings of shareholders
and it is anticipated that shareholder meetings will be held only when
specifically required by federal or state law.
o Shareholders have available certain procedures for the removal of
Trustees.
o BSF indemnifies Trustees and officers to the fullest extent permitted
under federal and Massachusetts law.
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IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN YOUR PROXY CARD PROMPTLY
AND RETURN IT IN THE ENCLOSED ENVELOPE TO AVOID UNNECESSARY EXPENSE AND DELAY.
NO POSTAGE IS NECESSARY.
By Order of the Board of Trustees,
Stephen A. Bornstein
Secretary
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[Logo]
Bear Stearns Investment Trust
575 Lexington Avenue
New York, New York 10022
BEAR STEARNS INVESTMENT TRUST
Emerging Markets Debt Portfolio
SPECIAL MEETING OF SHAREHOLDERS SCHEDULED
TO BE HELD ON April 15, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF BEAR STEARNS INVESTMENT
TRUST (the "Trust") on behalf of the Emerging Markets Debt Portfolio (the
"Portfolio"), for use at a Special Meeting of Shareholders to be held at the
offices of the Trust, 575 Lexington Avenue, New York, New York, on April 15,
1999, at 10:00 a.m., eastern time. The undersigned hereby appoints Stephen A.
Bornstein and Jack L. Malick, and each of them with full power of substitution,
as Proxies of the undersigned to vote at the above-stated Special Meeting, and
at all adjournments thereof, all shares of beneficial interest of the Portfolio
that are held of record by the undersigned on the record date for the Special
Meeting upon the matter enumerated below.
IF THIS PROXY CARD IS RETURNED, AND NO CHOICE IS INDICATED AS TO ANY MATTER,
THIS PROXY WILL BE VOTED AFFIRMATIVELY ON THE MATTERS PRESENTED. THE BOARD OF
TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" THE FOLLOWING PROPOSALS.
Please sign exactly as your name appears on this card. When account is joint
tenants, all should sign. When signing as executor, administrator, trustee, or
guardian, please give title. If a corporation or partnership, sign entity's name
and by authorized person.
IMPORTANT NOTICE: Please take a moment now to vote your shares. You may vote
directly over the phone by calling 800-XXX-XXXX. Representatives are available
from 9:00 a.m. to 11:00 p.m. eastern time. You may also fax your ballot to
800-XXX-XXXX or return it in the enclosed postage paid envelope. Thank you for
your prompt action.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION
ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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Emerging Markets Debt Portfolio
Vote On Proposals
For Against Abstain
1. To approve the Agreement and Plan [ ] [ ] [ ]
of Reorganization and Liquidation
as is more fully described in the
accompanying Proxy Statement
together with the transactions
contemplated thereby.
2. In their discretion the Proxies are
authorized to vote upon such other
business as may properly come
before the meeting.
- --------------------------------- ------- ------------------------ -----
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
<PAGE>
Exhibit A
AGREEMENT AND PLAN OF REORGANIZATION
AND LIQUIDATION
THIS AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION (the
"Agreement") is made as of the 12th day of November, 1998, by and among Bear
Stearns Investment Trust, a Massachusetts business trust (the "Trust"), for
itself and on behalf of its existing investment portfolio set forth on Schedule
A hereto (the "Acquired Portfolio"), and The Bear Stearns Funds, a Massachusetts
business trust (the "Company"), for itself and on behalf of its newly created
investment portfolio set forth on Schedule A hereto (the "Acquiring Portfolio").
In accordance with the terms and conditions set forth in this
Agreement, the parties desire that all or substantially all of the assets of the
Acquired Portfolio be transferred to the Acquiring Portfolio in exchange for
shares of specified classes (as relevant) of the Acquiring Portfolio ("Acquiring
Portfolio Shares") and the assumption by the Acquiring Portfolio of the
Liabilities (as defined in paragraph 1.3) of the Acquired Portfolio, and that
such Acquiring Portfolio Shares be distributed pro rata by the Acquired
Portfolio to its shareholders of record in complete liquidation of the Acquired
Portfolio immediately following the "Closing" as defined in this Agreement and
in complete cancellation of its shares.
In consideration of the premises and of the covenants and agreements
herein contained, the parties hereto agree as follows:
1. Reorganization of the Acquired Portfolio and Subsequent Liquidation
1.1 Subject to the terms and conditions, and based on the
representations and warranties contained in this Agreement, on the Closing Date,
as described in paragraph 3.1, the Acquired Portfolio shall assign, deliver and
otherwise transfer its assets as described in paragraph 1.2 (the "Acquired
Portfolio Assets") to the Acquiring Portfolio and the Acquiring Portfolio shall,
as consideration therefor, (i) deliver to the Acquired Portfolio such number of
full and fractional Acquiring Portfolio Shares as results from dividing (a) the
value of the Acquired Portfolio Assets, net of the Acquired Portfolio's
Liabilities, computed in the manner and as of the time and date set forth in
paragraph 2.1, by (b) the net asset value of one share of beneficial interest of
the Acquiring Portfolio, computed in the manner and as of the time and date set
forth in paragraph 2.2, and (ii) assume all of the Acquired Portfolio's
Liabilities.
1.2 With respect to the Acquired Portfolio, the Acquired Portfolio
Assets shall consist of all property and assets of any nature whatsoever,
including, without limitation, all cash, cash equivalents, securities, claims
and receivables (including dividend and interest receivables) owned by the
Acquired Portfolio, and any deferred or prepaid expenses shown as an asset on
the Acquired Portfolio's books on the Closing Date, as defined in paragraph 3.1.
At least fifteen (15) days prior to the Closing Date, the Acquired
Portfolio will provide the Acquiring Portfolio with (i) a list of the Portfolio
Assets and (ii) a list of the Acquired Portfolio's known Liabilities, and the
Acquiring Portfolio will provide the Acquired Portfolio with a copy of the
investment objective, policies and restrictions applicable to it. The Acquired
Portfolio reserves the right to sell any of the securities or other assets shown
on the list of the Acquired Portfolio's Assets prior to the Closing Date.
1.3 Liabilities include all liabilities and obligations whether
absolute or contingent, known or unknown, accrued or unaccrued.
1.4 Upon the Acquired Portfolio's consummation of the transaction
described in paragraph 1.1, the Acquired Portfolio will distribute the Acquiring
Portfolio Shares it received pursuant to paragraph 1.1 to its shareholders of
record determined as of the close of business on the Valuation Date
("Participating Shareholders of Record"). The distribution will be made pro rata
based upon the ratio that the percentage of the outstanding Acquired Portfolio
Shares owned by each Participating Shareholder of Record on the Valuation Date
bears to the total number of Acquiring Portfolio Shares received by the Acquired
Portfolio from the Acquiring Portfolio. Fractional shares will be carried to the
third decimal place. In exchange for Acquiring Portfolio Shares distributed, all
issued and outstanding shares of the Acquired Portfolio will be canceled
simultaneously therewith on the Acquired Portfolio's books; any outstanding
share certificates representing interests in the Acquired Portfolio
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thereafter will represent the right to receive such number of Acquiring
Portfolio Shares after the Closing as determined in accordance with paragraph
1.1.
1.5 The transactions described in paragraphs 1.1 and 1.4 above as they
relate to the Acquired Portfolio and the Acquiring Portfolio are collectively
referred to as a "Reorganization." It is intended by the parties hereto that the
Reorganization constitute a reorganization within the meaning of section
368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"). The
parties hereto hereby adopt this Agreement as a "plan of reorganization" within
the meaning of Treasury regulation sections 1.368-2(g) and 1.368-3(a).
1.6 As soon as reasonably practicable after the Closing (as defined in
paragraph 3.1) of the Reorganization of the Acquired Portfolio, the Trust will
take all necessary steps under and subject to its By-laws and Massachusetts law
to effect a termination of the Acquired Portfolio and to terminate the
qualification, classification and registration of the Acquired Portfolio at all
appropriate federal and state agencies. All reporting and other obligations of
the Trust shall remain the exclusive responsibility of the Trust up to and
including the date on which the particular Acquired Portfolio is terminated and
deregistered, subject to any reporting or other obligations described in
paragraph 4.10.
2. Valuation
2.1 With respect to the Acquired Portfolio, the value of the Acquired
Portfolio Assets shall be the value of such assets computed as of the close of
business on the business day immediately preceding the Closing (such time and
date being referred to as the "Valuation Date"), using the valuation procedures
set forth in the Acquired Portfolio's then-current Prospectus and Statement of
Additional Information.
2.2 The net asset value of each share of beneficial interest of the
Acquiring Portfolio shall be its net asset value per share computed on the
Valuation Date, using the valuation procedures set forth in the Acquiring
Portfolio's then-current Prospectus and Statement of Additional Information.
2.3 All computations of value contemplated by this Article 2 shall be
made by the Acquiring Portfolio's fund accountant (Deloitte & Touche LLP). The
Acquiring Portfolio shall cause its fund accountant to deliver a copy of its
valuation report to the Trust and to the Company at the Closing.
3. Closing and Closing Date
3.1 The closing for the Reorganization ("Closing") shall occur on ____,
1998, or on such other date as may be mutually agreed upon by the parties to
such Reorganization (the "Closing Date"). The Closing shall be held at the
offices of the Company or at any other location mutually agreeable to the
parties hereto. All transactions taking place at the Closing shall be deemed to
take place simultaneously as of the close of business, generally 4:00 p.m.
Eastern time on the Closing Date unless otherwise provided.
3.2 The custodian of the Acquiring Portfolio shall be given access to
the portfolio securities held by the Acquired Portfolio for the purpose of
examination no later than five (5) business days prior to the Valuation Date.
The Acquired Portfolio's securities (together with any cash or other assets)
shall be delivered by the Acquired Portfolio to the custodian for the account of
the Acquiring Portfolio on the Closing Date, in accordance with applicable
custody provisions under the Investment Company Act of 1940, as amended ("1940
Act"), and duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof. The portfolio securities shall be accompanied
by any necessary federal and state stock transfer stamps or a check for the
appropriate purchase price of such stamps. The cash delivered shall be in any
such form as is reasonably directed by the Acquiring Portfolio.
3.3 Notwithstanding anything herein to the contrary, in the event that
on the Valuation Date (a) the New York Stock Exchange shall be closed to trading
or trading thereon shall be restricted or (b) trading or the reporting of
trading on such exchange or elsewhere shall be disrupted so that, in the
judgment of the Company or the Trust, accurate appraisal of the value of the net
assets of the Acquiring Portfolio or Acquired Portfolio is impracticable, the
Valuation Date for the Reorganization shall be postponed until the first
business day after the day when trading shall have been fully resumed without
restriction or disruption and reporting shall have been restored and the Closing
Date shall be postponed to the day after the Valuation Date as so postponed.
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3.4 If requested by the Company and to the extent reasonably necessary
to enable the Acquiring Portfolio and its transfer agent and shareholder
servicing agents to perform and provide all necessary and appropriate
shareholder accounting, communications and related services, the Trust shall
deliver at the Closing: (a) a list, certified by its Secretary, of the names,
addresses and taxpayer identification numbers of all Participating Shareholders
of Record and the number and percentage ownership of outstanding shares of the
Acquired Portfolio owned by each such shareholder, all as of the Valuation Date,
and (b) such other documentation relating to such shareholders as is reasonably
requested. The Acquiring Portfolio shall issue and deliver to such Secretary a
confirmation evidencing the Acquiring Portfolio Shares to be credited on the
Closing Date or shall provide evidence satisfactory to the Trust that such
Acquiring Portfolio Shares have been credited to the Acquired Portfolio's
account on the books of the Acquiring Portfolio. At the Closing, each party
shall deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents of transfer, assignment or
conveyance as such other party or its counsel may reasonably request.
4. Covenants with Respect to the Acquiring Portfolio and the Acquired Portfolio
4.1 The Trust will call a special meeting of shareholders (the
"Meeting") for the purposes of (i) considering the approval of the transaction
contemplated by this Agreement by the shareholders of the Acquired Portfolio;
and (ii) considering such other business as may properly come before such
Meeting.
4.2 The Trust, on behalf of the Acquired Portfolio, covenants that the
Acquiring Portfolio Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof, other than in connection with the
Reorganization contemplated by this Agreement.
4.3 The Trust, on behalf of the Acquired Portfolio, will assist the
Acquiring Portfolio in obtaining such information as the Acquiring Portfolio
reasonably requests concerning the beneficial ownership of the shares of the
Acquired Portfolio.
4.4 Subject to the provisions hereof, the Company, on its own behalf
and on behalf of the Acquiring Portfolio, and the Trust, on its own behalf and
on behalf of the Acquired Portfolio, will take, or cause to be taken, all
actions, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated herein,
including the obtaining of any required regulatory approvals.
4.5 The Trust, on behalf of the Acquired Portfolio, shall furnish to
the Acquiring Portfolio within 15 days after the Closing Date, a final statement
of the Acquired Portfolio's assets and liabilities as of the Closing Date, which
statement shall be certified by the Trust as being determined in accordance with
generally accepted accounting principles consistently applied or in accordance
with another mutually agreed upon standard.
4.6 The Company has prepared and filed, or will prepare and file, with
the Securities and Exchange Commission (the "SEC") a registration statement on
Form N-1A under the Securities Act of 1933, as amended (the "1933 Act"),
relating to the transactions contemplated by this Agreement (the "Registration
Statement"). The Trust shall file on Schedule 14A a proxy statement, form of
proxy and materials related thereto with respect to the Acquired Portfolio to be
reorganized into the newly created Acquiring Portfolio. The Trust, on behalf of
the Acquired Portfolio, has provided or will provide the Company with such
information and documents relating to such Acquired Portfolio as are requested
by the Company and as are reasonably necessary for the preparation of the
Registration Statement, and information relating to the notice of meeting and
form of proxy, other information needed for the Registration Statement and any
other proxy solicitation materials to be used in connection with the Meeting
(collectively, the "Proxy Materials"). The Company will use all reasonable
efforts to have the Registration Statement become effective under the 1933 Act
as soon as practicable, and will take all actions, if any, required by law to
qualify the Existing Acquiring Portfolio Shares to be issued in the
Reorganization under the laws of the states in which such qualification is
required.
4.7 The Trust, on behalf of the Acquired Portfolio: (a) as soon after
the Closing Date as is reasonably practicable, shall prepare and file all
federal and other tax returns and reports of the Acquired Portfolio as may be
required by law to be filed with respect to all periods ending on or before the
Closing Date but not theretofore filed and (b) shall submit for payment to the
Acquiring Portfolio the amount of any federal and other taxes, if any, shown as
due thereon which were not paid on or before the Closing Date and shall reflect
on the unaudited statement of assets and liabilities of the Acquired Portfolio
referred to in paragraphs 1.3 and 4.5 all federal and other taxes, if any, that
remain unpaid as of the Closing Date.
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4.8 With respect to the Acquiring Portfolio, the Company agrees to use
all reasonable efforts to maintain in effect the approvals and authorizations
required by the 1933 Act, the 1940 Act and such of the state securities laws as
may be necessary and as it may deem appropriate in order to continue to conduct
its operations through the Closing Date and to consummate the Reorganization, as
contemplated herein. The Company agrees to use all reasonable efforts to operate
the Acquiring Portfolio substantially in accordance with its then current
Prospectus and Statement of Additional Information, including qualifying as a
regulated investment company under Subchapter M of the Code through the Closing
Date and for at least one (1) year thereafter, although the Acquiring Portfolio
may merge or consolidate during such one-year period with an investment company
with investment objectives, policies and restrictions and other characteristics
comparable to those of the Acquiring Portfolio.
4.9 If the Acquired Portfolio consummates a Reorganization, and all of
the other investment portfolios of the Trust have been reorganized into the
Company or otherwise terminated, then the Trust will file with the SEC as soon
as reasonably practicable thereafter an application for deregistration under the
1940 Act and will seek to obtain an order declaring that the Trust has ceased to
be an investment company under the 1940 Act, and will file any final regulatory
reports, including, but not limited to, any Form N-SAR and Rule 24f-2 filings,
and also will take all other steps as are necessary and proper to effect the
termination of the Trust in accordance with the laws of the State of
Massachusetts and other applicable requirements. Any reporting or other
responsibility of the Trust is and shall remain the responsibility of the Trust
up to and including the date on which the Trust is terminated and deregistered.
4.10 With respect to the Acquired Portfolio, the Company agrees to
indemnify and hold harmless each Trustee of the Trust at the time of execution
of this Agreement, whether or not such person is or becomes a Trustee of the
Company subsequent to the Closing Date of the Reorganization, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement,
actually and reasonably incurred by such Trustee in connection with any claim
that is asserted against such Trustee arising out of such person's service as a
Trustee of the Trust, provided that such indemnification shall be limited to the
full extent of the indemnification that is available to the trustees of the
Company pursuant to the provisions of the Company's Declaration of Trust and
applicable law.
4.11 For the period beginning at the Closing Date of the last
Reorganization to occur and ending not less than three years thereafter, the
Company shall provide for a liability policy covering the actions of the current
Trustees of the Trust for the period they served as such, which may be
accomplished by causing such persons to be added as insured under the liability
policy of the Company.
5. Representations and Warranties
5.1 The Company, on behalf of itself and the Acquiring Portfolio,
represents and warrants to the Trust and to the Acquired Portfolio whose assets
will be transferred to the Acquiring Portfolio, as follows:
(a) The Company is a business trust validly existing under the
laws of the State of Massachusetts and is duly registered as an
open-end, management investment company under the 1940 Act, and the
Acquiring Portfolio is a validly existing series of shares of the
Company representing interests in the Acquiring Portfolio under the
laws of the State of Massachusetts;
(b) The Company is not in violation of, and the execution,
delivery and performance of this Agreement will not result in a
violation of, the Company's Declaration of Trust or By-Laws, each as
amended to date, or result in a material breach or violation of, or
constitute a material default under, any agreement or other
undertaking to which the Company or the Acquiring Portfolio is a party
or by which any of them or their assets is bound;
(c) The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action on the part of the
Company and the Acquiring Portfolio, and assuming this Agreement is
enforceable against the Trust, this Agreement is a valid and binding
obligation of the Company and the Acquiring Portfolio enforceable in
accordance with its terms, subject as to enforcement to bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights and to general equity principles;
(d) Except as disclosed in writing to and accepted by the Trust,
no litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or to its
knowledge threatened against the Company or the Acquiring Portfolio or
any of their properties or assets,
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and the Company knows of no facts that might form the basis for the
institution of any such proceedings (other than routine inquiries and
examinations), and neither the Company nor the Acquiring Portfolio is
a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body that materially and
adversely affects, or is reasonably likely to materially and adversely
affect, its business or its ability to consummate the transactions
contemplated herein;
(e) All of the Company's issued and outstanding shares
representing interests in the Acquiring Portfolio are, and on the
Closing Date will be, duly authorized and validly issued and
outstanding, and fully paid and non-assessable by the Company and no
shareholder has any preemptive rights to purchase any such shares, and
the Acquiring Portfolio does not have outstanding any options,
warrants or other rights to subscribe for or purchase any of their
shares (other than dividend reinvestment plans of the Acquiring
Portfolio or as set forth in this Agreement), nor are there
outstanding any securities convertible into any shares of the
Acquiring Portfolio (except pursuant to exchange privileges described
in the current Prospectus and Statement of Additional Information of
the Acquiring Portfolio);
(f) The Acquiring Portfolio Shares to be issued and delivered by
the Company to the Acquired Portfolio pursuant to the terms hereof
will have been duly authorized as of the Closing Date and, when so
issued and delivered, will be duly authorized and validly issued,
fully paid and non-assessable, and have been or will be duly
registered under the 1933 Act and qualified for sale under the laws of
such states where such qualification is required;
(g) All issued and outstanding shares of the Acquiring Portfolio
have been offered and sold in compliance in all material respects with
applicable registration requirements of the 1933 Act and applicable
state securities laws;
(h) From the effective date of the Registration Statement through
the time of the Meeting and the Closing Date, the Registration
Statement (exclusive of those portions that are based upon written
information regarding the Trust and the Acquired Portfolio furnished
by the Trust which fully and fairly disclose such information) (i)
complies in all material respects with the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the 1940 Act,
and the rules and regulations thereunder and (ii) does not and will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading, and as of such dates and times,
any written information furnished by the Company to the Trust for use
in the Proxy Materials does not contain and will not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the information provided not misleading;
(i) The Statements of Assets and Liabilities, Statements of
Operations and Statements of Changes in Net Assets of the Acquiring
Portfolio as of and for the Acquiring Portfolio's most recent fiscal
year, certified by Deloitte & Touche LLP, and the unaudited Statements
of Assets and Liabilities, Statements of Operations and Statements of
Changes in Net Assets for the Acquiring Portfolio's most current
completed six month period within the fiscal year, if any (copies of
which have been or will be furnished to the Trust, if available)
fairly present, in all material respects, the Acquiring Portfolio's
financial condition as of such dates and its results of operations for
such periods in accordance with generally accepted accounting
principles consistently applied, and as of such dates there were no
liabilities of the Acquiring Portfolio (contingent or otherwise) known
to the Company that were not disclosed therein but that would be
required to be disclosed therein in accordance with generally accepted
accounting principles;
(j) Since the date of the most recent audited financial
statements, there has not been any material adverse change in the
Acquiring Portfolio's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of
business, except as otherwise disclosed in writing to and accepted by
the Company prior to the Closing Date (for the purposes of this
subparagraph (j), neither a decline in an Acquiring Portfolio's net
asset value per share nor a decrease in an Acquiring Portfolio's size
due to redemptions shall be deemed to constitute a material adverse
change);
(k) All federal and other tax returns and reports of the Company
and the Acquiring Portfolio required by law to be filed on or before
the Closing Date, if any, shall have been filed, and all federal and
other taxes owed by the Company or the Acquiring Portfolio shall have
been paid so far as due, and to the best of the Company's knowledge,
no such return is as of the date hereof under audit and no material
assessment has been asserted with respect to any such return;
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(l) For each full and partial taxable year from its inception
through the Closing Date, the Acquiring Portfolio has qualified as a
regulated investment company under Subchapter M of the Code; and
(m) The Company will provide to the Trust the Form N-1A
registration statement(s) concerning the Acquiring Portfolio, which
will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make any statements therein, in light of the circumstances under which
such statements were made, not materially misleading.
5.2 The Trust, on behalf of itself and the Acquired Portfolio,
represents and warrants to the Company and to the Acquiring Portfolio that will
receive the assets of the Acquired Portfolio, as follows:
(a) The Trust is a corporation validly existing under the laws of
the State of Massachusetts, and is duly registered as an open-end,
management investment company under the 1940 Act, and the Acquired
Portfolio is a validly existing series of shares of the Trust under
the laws of the State of Massachusetts;
(b) The Trust is not in violation of, and the execution, delivery
and performance of this Agreement will not result in a violation of,
the Trust's Declaration of Trust or By-Laws each as amended to date,
or result in a material breach or violation of, or constitute a
material default under, any agreement or other undertaking to which
the Trust or the Acquired Portfolio is a party or by which any of them
or their assets are bound;
(c) The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action on the part of the Trust,
and assuming this Agreement is enforceable against the Company, this
Agreement is a valid and binding obligation of the Trust, enforceable
in accordance with its terms, subject as to enforcement to bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights and to general equity principles;
(d) Except as otherwise disclosed in writing to and accepted by
the Company, no litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or to its knowledge threatened against the Trust or the
Acquired Portfolio or any of their properties or assets, and the Trust
knows of no facts that might form the basis for the institution of any
such proceedings (other than routine inquiries and examinations), and
neither the Trust nor the Acquired Portfolio is a party to or subject
to the provisions of any order, decree or judgment of any court or
governmental body that materially and adversely affects, or is
reasonably likely to materially and adversely affect, its business or
its ability to consummate the transactions contemplated herein;
(e) All of the Acquired Portfolio's issued and outstanding shares
representing interests in the Acquired Portfolio are, and on the
Closing Date will be, duly authorized and validly issued and
outstanding, and fully paid and non-assessable and all such shares
will, at the time of the Closing, be held by the Participating
Shareholders of Record as set forth on the books and records of the
Trust's transfer agent (and in the amounts set forth therein) and as
set forth in any list of Participating Shareholders of Record provided
to the Company pursuant to paragraph 3.4, and no Participating
Shareholders of Record will have any preemptive rights to purchase any
of such shares and the Acquired Portfolio does not have outstanding
any options, warrants or other rights to subscribe for or purchase any
of its shares (other than dividend reinvestment plans of the Acquired
Portfolio or as set forth in this Agreement), nor are there
outstanding any securities convertible into any shares of the Acquired
Portfolio (except pursuant to exchange privileges described in the
current Prospectus and Statement of Additional Information of the
Acquired Portfolio);
(f) All of the Acquired Portfolio's issued and outstanding shares
representing interests in the Acquired Portfolio have been offered and
sold in compliance in all material respects with applicable
registration requirements of the 1933 Act and applicable state
securities laws;
(g) From the effective date of the Registration Statement through
the time of the Meeting and the Closing Date, the Acquired Portfolio's
Proxy Materials (exclusive of any written information furnished by the
Company for use in the Proxy Materials which fully and fairly
discloses such information) (i) comply in all material respects with
the applicable provisions of the 1934 Act and the 1940 Act and the
rules and regulations thereunder and (ii) do not and will not contain
any untrue statement of a material fact or omit to
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state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and as of such dates and
time, any written information furnished by the Trust to the Company
for use in the Registration Statement does not and will not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the information provided not misleading;
(h) The Statements of Assets and Liabilities, Statements of
Operations and Statements of Changes in Net Assets of the Acquired
Portfolio as of and for the Acquired Portfolio's most recent fiscal
year, certified by Deloitte & Touche LLP and the unaudited Statements
of Assets and Liabilities, Statements of Operations and Statements of
Changes in Net Assets for the Acquired Portfolio's most recently
completed six month semi-annual fiscal period (copies of which have
been or will be furnished to the Company) fairly present, in all
material respects, such Acquired Portfolio's financial condition as of
such dates and its results of operations for such periods in
accordance with generally accepted accounting principles consistently
applied, and as of such dates there were no liabilities of the
Acquired Portfolio (contingent or otherwise) known to the Trust that
were not disclosed therein but that would be required to be disclosed
therein in accordance with generally accepted accounting principles;
(i) Since the date of the most recent audited financial
statements, there has not been any material adverse change in the
Acquired Portfolio's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of
business, except as otherwise disclosed in writing to and accepted by
the Company prior to the Closing Date (for the purposes of this
subparagraph (i), neither a decline in the Acquired Portfolio's net
asset value per share nor a decrease in the Acquired Portfolio's size
due to redemptions shall be deemed to constitute a material adverse
change);
(j) All federal and other tax returns and reports of the Trust
and the Acquired Portfolio required by law to be filed on or before
the Closing Date shall have been filed, and all federal and other
taxes owed by the Trust or the Acquired Portfolio shall have been paid
so far as due, and to the best of the Trust's knowledge, no such
return is as of the date hereof under audit and no material assessment
has been asserted with respect to any such return;
(k) For each full and partial taxable year from its inception
through the Closing Date, the Acquired Portfolio has qualified as a
regulated investment company under Subchapter M of the Code; and
(l) At the Closing Date, the Acquired Portfolio will have good
and marketable title, through its custodian, to its Portfolio Assets
and full right, power and authority to assign, deliver and otherwise
transfer such Portfolio Assets hereunder, and upon delivery and
payment for such Portfolio Assets as contemplated herein, the
corresponding Acquiring Fund will acquire good and marketable title
thereto, subject to no restrictions on the ownership or transfer
thereof other than such restrictions as might arise under the 1933
Act.
6. Conditions Precedent to Obligations of the Trust
The obligations of the Trust to complete the Reorganization with
respect to the Acquired Portfolio shall be subject, at the Trust's election
(subject to the limitations of paragraph 13), to the performance by the Company
(and by the Acquiring Portfolio), of all the obligations to be performed by it
hereunder on or before the Closing Date, and in addition thereto, the
satisfaction of the following conditions with respect to the Company (and the
Acquiring Portfolio):
6.1 All representations and warranties of the Company contained herein
shall be true and correct in all material respects as of the date hereof and,
except as they may be affected by the transactions contemplated herein, as of
the Closing Date, with the same force and effect as if made on and as of the
Closing Date.
6.2 The Company shall have delivered to the Trust at the Closing a
certificate executed by one of its officers, dated as of the Closing Date, to
the effect that the representations and warranties of the Company made herein
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated herein, and as to such other matters
as the Trust shall reasonably request.
6.3 The Trust shall have received at the Closing an opinion of legal
counsel to the Company, dated as of the Closing Date, in form (including
reasonable and customary qualifications and assumptions) reasonably satisfactory
to the Trust, substantially to the effect that:
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(i) the Company is a business trust validly existing under the
laws of the State of Massachusetts and is duly registered as an
open-end, management investment company under the 1940 Act, and the
Acquiring Portfolio is a validly existing series of shares of the
Company representing interests in the Acquiring Portfolio under the
laws of the State of Massachusetts; (ii) the execution, delivery and
performance of this Agreement will not result in a violation of the
Company's Declaration of Trust or By-Laws, each as amended to date;
(iii) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of the Company
and the Acquiring Portfolio, and this Agreement has been duly executed
and delivered by the Company and is a valid and binding obligation of
the Company and the Acquiring Portfolio, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights or remedies and to general equity principles (regardless of
whether considered at a proceeding in law or equity), equitable
defenses or waivers and the discretion of the court before which any
proceeding for specific performance, injunctive and other forms of
equitable relief may be brought; and (iv) the Acquiring Portfolio
Shares to be issued and delivered pursuant to the terms of this
Agreement will have been duly authorized as of the Closing Date and,
when so issued and delivered, will be validly issued, fully paid and
non-assessable (except as disclosed in the Acquiring Portfolio's then
current Prospectus and Statement of Additional Information).
In rendering such opinion, legal counsel to the Company may
rely on an opinion of Massachusetts counsel (with respect to matters of
Massachusetts law) and on certificates of officers or trustees of the
Company, in each case reasonably acceptable to the Trust.
6.4 As of the Closing Date, there shall have been no material change in
the investment objective, policies and restrictions of the Acquiring Portfolio
nor any increase in the rate of permissible investment advisory or other fees or
charges payable by any Acquiring Portfolio or its shareholders to the Acquiring
Portfolio's investment adviser, distributor and/or administrator from those fees
and charges described in the current Prospectus of such Acquiring Portfolio
delivered to the Trust, and there shall have been no change in any fee waiver or
expense reimbursement undertakings described in the Proxy Materials.
6.5 The Board of Trustees of the Company, including a majority of its
trustees who are not "interested persons" of the Company (as defined in the 1940
Act), shall have determined that this Agreement and the transactions
contemplated hereby are in the best interests of the Acquiring Portfolio and
that the interest of shareholders of the Acquiring Portfolio would not be
diluted as a result of such transactions.
7. Conditions Precedent to Obligations of the Company
The obligations of the Company to complete the Reorganization with
respect to the Acquiring Portfolio shall be subject, at the Company's election
(subject to the limitations of paragraph 13), to the performance by the Trust
(and the Acquired Portfolio), of all the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, the
satisfaction of the following conditions with respect to the Trust (and the
Acquired Portfolio):
7.1 All representations and warranties of the Trust contained herein
shall be true and correct in all material respects as of the date hereof and,
except as they may be affected by the transactions contemplated herein, as of
the Closing Date, with the same force and effect as if made on and as of the
Closing Date.
7.2 The Trust shall have delivered, in accordance with Article 1
hereof, to the Company on behalf of the Acquired Portfolio a Statement of
Portfolio Assets and Stated Liabilities of the Acquired Portfolio, together, if
required by the Company, with a list of such Acquired Portfolio's securities and
other assets showing the respective adjusted bases and holding periods thereof
for income tax purposes, as of the Closing Date, certified by an appropriate
officer of the Trust.
7.3 The Trust shall have delivered to the Company at the Closing a
certificate executed by one of its officers, and dated as of the Closing Date,
to the effect that the representations and warranties of the Trust made herein
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated herein, and as to such other matters
as the Company shall reasonably request.
A-8
<PAGE>
7.4 The Company shall have received at the Closing an opinion of legal
counsel to the Trust, dated as of the Closing Date, in form (including
reasonable and customary qualifications and assumptions) reasonably satisfactory
to the Company, substantially to the effect that:
(i) the Trust is a corporation duly incorporated and validly
existing under the laws of the State of Massachusetts and is duly
registered as an open-end, management investment company under the 1940
Act, and the Acquired Portfolio is a validly existing series of shares
of the Trust under the laws of the State of Massachusetts; (ii) the
execution, delivery and performance of this Agreement will not result
in a violation of the Trust's Charter or By-laws, each as amended to
date; and (iii) the execution, delivery and performance of this
Agreement have been duly authorized by all necessary action on the part
of the Trust and the Acquired Portfolio, and this Agreement has been
duly authorized and delivered by the Trust and is a valid and binding
obligation of the Trust, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights or remedies and to
general equity principles (regardless of whether considered in a
proceeding in law or equity), equitable defenses or waivers and the
discretion of the court before which any proceeding for specific
performance, injunctive and other forms of equitable relief may be
brought.
In rendering such opinion, legal counsel to the Trust may rely
on an opinion of Massachusetts counsel (with respect to matters of Massachusetts
law) and on certificates of officers or Trustees of the Trust, in each case
reasonably acceptable to the Company.
7.5 On the Closing Date, the Acquired Portfolio Assets of the Acquired
Portfolio shall include no assets that the Acquiring Portfolio, by reason of the
Company's Declaration of Trust, 1940 Act requirements or otherwise, may not
legally acquire.
7.6 The Board of Trustees of the Trust, including a majority of the
Trustees who are not "interested persons" of the Trust (as defined by the 1940
Act) shall have determined that this Agreement and the transactions contemplated
hereby are advisable and in the best interests of the Acquired Portfolio and
that the interests of the shareholders in the Acquired Portfolio would not be
diluted as a result of such transactions, and the Trust shall have delivered to
the Company at the Closing, a certificate, executed by an officer, to the effect
that the condition described in this subparagraph has been satisfied.
7.7 Prior to the Valuation Date, the Acquired Portfolio shall have
declared a dividend or dividends, with a record date and ex-dividend date prior
to the Valuation Date, which together with all previous dividends, shall have
the effect of distributing to its shareholders all of its net investment company
taxable income, if any, for the taxable periods or years ending on or before the
Closing (computed without regard to any deduction for dividends paid), and all
of its net capital gain, if any, realized in taxable periods or years ending on
or before the Closing Date.
8. Further Conditions Precedent to Obligations of the Trust and the Company
The obligations herein of the Trust, with respect to the Acquired
Portfolio, and of the Company, with respect to the Acquiring Portfolio, to
effect the Reorganization are each subject to the further conditions that on or
before the Closing Date:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the shareholders of the Acquired
Portfolio, and insofar as such transactions are to be consummated and require
the approval of the shareholders of the Trust voting together as a single class,
the requisite vote of the shareholders of the Trust, all in accordance with the
applicable provisions of the Trust's Declaration of Trust and By-laws and the
requirements of the 1940 Act, and evidence of such approval shall have been
delivered to the Company.
8.2 No action, suit or other proceeding shall be pending or threatened
before any court or governmental agency in which it is sought to restrain or
prohibit, or obtain damages or other relief in connection with, this Agreement
as it relates to the Reorganization or any of the transactions related thereto.
8.3 All consents of other parties and all other consents, approvals and
permits of federal, state and local regulatory authorities (including, without
limitation, those of the SEC and of state securities authorities, including
"no-action" positions of or exemptive orders from such federal and state
authorities, and those of the Office of the Comptroller of the Currency ("OCC")
and the Department of Labor with respect to the Employee Retirement
A-9
<PAGE>
Income Security Act of 1974 ("ERISA") or the Internal Revenue Service with
respect to the Code), deemed necessary by the Trust or the Company to permit
consummation, in all material respects, of the Reorganization and transactions
related thereto shall have been obtained, except where failure to obtain any
such consent, order or permit would not, in the reasonable opinion of the party
asserting that the condition to closing has not been satisfied, involve a risk
of a material adverse effect on the assets or properties of the Acquiring
Portfolio or the Acquired Portfolio involved in the Reorganization.
8.4 The Registration Statement on Form N-1A covering the continuous
offering of shares of the Acquiring Portfolio shall have become and shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
thereof shall have been issued and, to the best knowledge of the Company and the
Trust, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the 1933 Act.
8.5 The Trust and the Company shall receive an opinion of legal counsel
of the Company, dated the Closing Date of the Reorganization, with respect to
the Acquired Portfolio and the Acquiring Portfolio, addressed to, and in form
and substance satisfactory to, the Trust and the Company, to the effect that the
Reorganization will constitute a reorganization within the meaning of section
368(a)(1) of the Code, and the Acquired Portfolio and the Acquiring Portfolio
will each be a "party to a reorganization" within the meaning of section 368(b)
of the Code. Each party agrees to make reasonable covenants and representations
as to factual matters that are true and correct as of the Closing Date in
connection with the rendering of such opinion.
9. Expenses
The Trust and the Company confirm their understanding that each party
will be responsible for its own expenses in connection with the Reorganization.
10. Entire Agreement; Survival of Provisions of this Agreement
10.1 This Agreement together with the documents contemplated herein
constitute the entire agreement between the parties and supersede any prior or
contemporaneous understanding or arrangement with respect to the subject matter
hereof.
10.2 The representations and warranties contained in this Agreement or
in any document delivered pursuant hereto or in connection herewith shall not
survive the consummation of the transactions contemplated herein. The covenants
contained in this agreement shall not survive the consummation of such
transactions, except as otherwise provided herein.
A-10
<PAGE>
11. Termination
11.1 With respect to the Acquired Portfolio and the Acquiring
Portfolio, this Agreement may be terminated, and the Reorganization and any
related transactions involving the Acquired Portfolio and Acquiring Portfolio
contemplated hereby may be abandoned, at any time prior to the Closing:
(a) by the mutual written consent of the Trust and the
Company;
(b) by either the Trust or the Company by written notice to
the other, without liability to the terminating party on account of
such termination (provided the terminating party is not otherwise in
material default or breach of this Agreement) upon a finding by the
Board of the terminating party that in the judgment of such Board,
proceeding with the Reorganization would be inadvisable; or
(c) by either the Trust or the Company by written notice to
the other, without liability to the terminating party on account of
such termination (provided the terminating party is not otherwise in
material default or breach of this Agreement) if (i) the other party
shall fail to perform in any material respect its agreements contained
herein required to be performed prior to the Applicable Closing Date,
(ii) the other party materially breaches or shall have materially
breached any of its representations, warranties or covenants contained
herein, or (iii) any other condition herein expressed to be precedent
to the obligations of the terminating party has not been met and it
reasonably appears that it will not or cannot be met.
11.2 Termination of this Agreement pursuant to paragraph 11.1(a) shall
terminate all obligations of the parties hereto with respect to the Acquired
Portfolio and Acquiring Portfolio affected by such termination and there shall
be no liability for damages on the part of the Company (or the Acquiring
Portfolio), the Trust (or the Acquired Portfolio), or any of their trustees,
directors, officers or employees, to any other party or its trustees, directors,
officers or employees.
12. Amendments and Waivers
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the authorized officers of the
Trust and the Company; provided, however, that following the approval of this
Agreement by shareholders with respect to the Acquired Portfolio, no such
amendment may have the effect of changing the provisions for determining the
number of Acquiring Portfolio Shares to be issued to Participating Shareholders
of Record, or otherwise materially and adversely affecting the Acquired
Portfolio, without further approval by shareholders of the Acquired Portfolio in
accordance with paragraph 8.1 hereof. The parties may not waive the opinion
described in paragraph 8.5, and no waiver may materially and adversely affect
the rights of the shareholders of the Acquired Portfolio without the approval by
the shareholders of the Acquired Portfolio in accordance with paragraph 8.1
hereof.
13. Notices
Any notice, report, statement or demand required or permitted by any
provision of this Agreement shall be in writing and shall be given by prepaid
certified mail or overnight express courier, addressed as follows:
a. if to the Trust or the Acquired Portfolio:
Bear Stearns Funds Management Inc.
245 Park Avenue
New York, New York 10167
Attention:
with a copy to:
Bear Stearns Asset Management Inc.
575 Lexington Avenue
New York, New York 10022
A-11
<PAGE>
Attention:
and an additional copy to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Beth Kramer, Esq.
b. if to the Company or the Acquiring Portfolio:
Bear Stearns Funds Management Inc.
245 Park Avenue
New York, New York 10167
Attention:
with copies to:
Bear Stearns Asset Management Inc.
575 Lexington Avenue
New York, New York 10022
Attention:
and to:
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Attention: Jay G. Baris, Esq.
or to such other person or address as the Trust or the Company, respectively,
shall furnish to the other in writing.
14. Headings; Counterparts; Governing Law; Assignment; Limitation of Liability
14.1 The headings of Articles contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. All references herein to Articles, paragraphs, subparagraphs or
Schedules or Exhibits shall be construed as referring to the Articles,
paragraphs and subparagraphs hereof, or Schedules or Exhibits hereto,
respectively, except as is otherwise expressly provided. Whenever the terms
hereto, hereunder, herein or hereof are used in the Agreement, they shall be
construed as referring to this entire Agreement, rather than to any individual
paragraph, subparagraph or sentence.
14.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance
with the law of the State of New York, without reference to the conflict of laws
provisions or principles of its laws.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
A-12
<PAGE>
14.5 It is expressly agreed that the obligations of the Trust and the
Company hereunder shall not be binding upon any of the trustees, directors,
nominees, officers, agents or employees of the Trust or the Company, personally,
but shall bind only the assets and property of the Trust as provided in its
Declaration of Trust and the Company as provided in its Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above by their duly authorized
representatives.
The Trust, for itself and on
behalf of the Acquired Portfolio
ATTEST: By:_____________________________
Name:
By: ________________________ Title: President
Name:
Title: Assistant Secretary
The Company, for itself and on behalf
of the Acquiring Portfolio
By: ________________________________
Name:
Title: President
ATTEST:
By:________________________
Name: Jay G. Baris
Title: Assistant Secretary
A-13
<PAGE>
SCHEDULE A
Acquired Portfolio Acquiring Portfolio
Emerging Markets Debt Portfolio Emerging Markets Debt Portfolio of The
of Bear StearnsInvestment Trust Bear Stearns Funds
A-15
<PAGE>
Exhibit B
INVESTMENT ADVISORY AGREEMENT
THE BEAR STEARNS FUNDS
245 Park Avenue
New York, New York 10167
______________
Bear Stearns Asset Management Inc.
575 Lexington Avenue
New York, New York 10022
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. 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
each 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 any 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 you shall not 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 against any liability to the Fund or a 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") would otherwise be subject by reason of Disabling Conduct.
B-1
<PAGE>
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 opposite each Series' name 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. All other expenses to be incurred in the
operation of the Fund 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 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.
B-2
<PAGE>
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 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, 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 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 1940 Act) 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 1940 Act) 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).
B-3
<PAGE>
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 Stearns" 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 Stearns" 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 STEARNS FUNDS
By:_______________________
Accepted:
BEAR STEARNS ASSET MANAGEMENT INC.
By:____________________________
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<PAGE>
SCHEDULE 1
Name of Series Annual Fee as a Percentage
- -------------- of Average Daily Net Assets
---------------------------
Emerging Markets Debt Portfolio 1.00% of assets up to $50 million;
0.85% of assets of more than $50
million but not more than $100
million; 0.55% of assets above $100
million
B-5
