Quasar Distributors, LLC

                            615 East Michigan Street

                               Milwaukee, WI 53202



                                DEALER AGREEMENT





     This Agreement is made as of January 2, 2003, between Quasar Distributors,

LLC ("Quasar"), a Delaware limited liability company, and _______________

("Dealer"), a corporation organized and existing under the laws of

______________________________.



     WHEREAS, Prudent Bear Funds, Inc., a corporation or business trust, (the

"Fund Company") is registered under the Investment Company Act of 1940, as

amended ("1940 Act"), as an open-end management investment company and currently

offers for public sale shares of common stock or beneficial interest ("Shares")

in the separate series of the Fund Company listed on Schedule A (each, a

"Fund");



     WHEREAS, Quasar serves as principal underwriter in connection with the

offering and sale of the Shares of each Fund pursuant to a Distribution

Agreement, and



     WHEREAS, Dealer desires to serve as a selected dealer for the Shares of the

Funds.



     NOW, THEREFORE, in consideration of the promises and the mutual covenants

contained herein, Quasar and Dealer agree as follows:



     1. Offers and Sales of Shares; Services. The Dealer agrees to offer and

sell Shares only at the public offering price currently in effect, in accordance

with the terms of the then-current prospectus(es), including any supplements or

amendments thereto, of each Fund ("Prospectus"). The Dealer agrees to act only

as agent on behalf of its customers ("Customers") in such transactions and shall

not have authority to act as agent for the Funds, for Quasar, or for any other

dealer in any respect. All purchase orders are subject to acceptance by Quasar

and the relevant Fund and become effective only upon confirmation by Quasar or

an agent of the Fund. In its sole discretion, either the Fund or Quasar may

reject any purchase order and may, provided notice is given to the Dealer,

suspend sales or withdraw the offering of Shares entirely.



     In addition, Dealer will provide reasonable assistance in connection with

the distribution of Shares to Customers as requested from time to time, which

assistance may include forwarding sales literature and advertising provided by

Quasar. Dealer agrees to provide some or all of the following support services

to Customers who may from time to time acquire and beneficially own Shares as

Quasar and Dealer may mutually agree from time to time: (i) processing dividend

and distribution payments from each Fund on behalf of Customers; (ii) providing

information periodically to Customers showing their positions in Shares; (iii)

arranging for bank wires; (iv) responding to Customer inquiries relating to the

services performed by Dealer; (v) providing subaccounting with respect to Shares

beneficially owned by Customers or the information to each Fund necessary for

subaccounting; (vi) if required by law, forwarding shareholder communications

from each Fund (such as proxies, shareholder reports, annual and semi-annual

financial statements and dividend, distribution and tax notices) to Customers;

(vii) assisting in processing purchase, exchange and redemption requests from

Customers and in placing such orders with the Fund's service contractors; (viii)

assisting Customers in changing



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dividend options, account designations and addresses; and (ix) providing such

other similar services as Quasar or the Fund may reasonably request to the

extent Dealer is permitted to do under applicable statutes, rules and

regulations.



     2. Procedures for Purchases. The procedures relating to all orders and the

handling of them shall be made in accordance with the procedures set forth in

each Fund's Prospectus, and to the extent consistent with the Prospectus,

written instructions forwarded to Dealer by Quasar from time to time.



     3. Settlement and Delivery for Purchases. Transactions shall be settled by

the Dealer by payment in Federal funds of the full purchase price to the Fund's

transfer agent in accordance with applicable procedures. Payment for Shares

shall be received by the Fund's transfer agent by the later of (a) the end of

the third business day following the Dealer's receipt of the Customer's order to

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