INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
This INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
("Agreement"), made this 10th day of December, 1985, by and between ▇▇▇▇ ▇▇▇▇▇
Special Situations Trust, Inc. (the "Fund"), a Maryland corporation having its
principal place of business at ▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
and ▇▇▇▇ ▇▇▇▇▇ Fund Adviser, Inc, (the "Adviser"), a Maryland corporation with
the same address.
WHEREAS, the Fund has filed a Registration Statement with the
Securities and Exchange Commission for the purpose of registering as an
open-end, diversified investment company under the Investment Company Act of
1940 (the "1940 Act") and for the purpose of registering its shares of common
stock for sale to the public under the Securities Act of 1933; and
WHEREAS, the Fund wishes to retain the Adviser to provide investment
advisory, management, and administrative services to the Fund; and
WHEREAS, the Adviser is willing to furnish such services on the terms
and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. The Fund hereby appoints the Adviser as investment adviser and
administrator of the Fund for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. The Fund shall at all times keep the Adviser fully informed with
regard to the securities owned by it, its funds available, or to become
available, for investment, and generally as to the condition of its affairs. It
shall furnish the Adviser with such other documents and information with regard
to its affairs as the Adviser may from time to time reasonably request.
3. (a) Subject to the direction and control of the Fund's Board of
Directors, the Adviser shall regularly provide the Fund with investment
research, advice, management and supervision and shall furnish a continuous
investment program for the Fund's portfolio of securities consistent with the
Fund's investment objective, policies, and limitations as stated in the Fund's
current Prospectus and Statement of Additional Information, The Adviser shall
determine from time to time what securities will be purchased, retained or sold
by the Fund, and shall implement those decisions, all subject to the provisions
of the Fund's Articles of Incorporation and By-laws, the 1940 Act, the
applicable rules and regulations of the Securities and Exchange Commission, and
other applicable federal and state law, as well
as the investment objective, policies, and limitations of the Fund. The Adviser
will place orders pursuant to its investment determinations for the Fund either
directly with the issuer or with any broker or dealer. In placing orders with
brokers and dealers the Adviser will attempt to obtain the best net price and
the most favorable execution of its orders; however, the Adviser may, in its
discretion, purchase and sell portfolio securities to and from brokers and
dealers who provide the Fund with research, analysis, advice and similar
services, and the Adviser may pay to these brokers, in return for research and
analysis, a higher commission or spread than may be charged by other brokers. In
no instance will portfolio securities be purchased from or sold to the Adviser,
or any affiliated person thereof except in accordance with the rules and
regulations promulgated by the Securities and Exchange Commission pursuant to
the ▇▇▇▇ ▇▇▇. The Adviser shall also provide advice and recommendations with
respect to other aspects of the business and affairs of the Fund, and shall
perform such other functions of management and supervision as may be directed by
the Board of Directors of the Fund.
(b) The Fund authorizes any entity or person associated with the
Adviser which is a member of a national securities exchange to effect any
transaction on the exchange for the account of the Fund which is permitted by
Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder, and the Fund hereby consents to the retention of compensation by
such entity or person for such transactions in accordance with Rule
11a2-2(T)(a)(2)(iv).
4. (a) The Adviser, at its expense, shall supply the Board of Directors
and officers of the Fund with all statistical information and reports reasonably
required by them and reasonably available to the Adviser and shall furnish the
Fund with office facilities, including space, furniture and equipment and all
personnel reasonably necessary for the operation of the Fund. The Adviser shall
oversee the maintenance of all books and records with respect to the Fund's
securities transactions and the Fund's books of account in accordance with all
applicable federal and state laws and regulations. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Adviser hereby agrees that
any records which it maintaines for the Fund are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. The Adviser further agrees to arrange for the preservation of
the records required to be maintained by Rule 31a-1 under the 1940 Act for the
periods prescribed by Rule 31a-2 under the 1940 Act. The Adviser shall authorize
and permit any
of its directors, officers and employees, who may be elected as directors or
officers of the Fund, to serve in the capacities in which they are elected.
(b) Other than as herein specifically indicated, the Adviser shall not
be responsible for the Fund's expenses. Specifically, the Adviser will not be
responsible, except to the extent of the reasonable compensation of employees of
the Fund whose services may be used by the Adviser hereunder, for any of the
following expenses of the Fund, which expenses shall be borne by the Fund: legal
expenses; interest; taxes; governmental fees; fees, voluntary assessments and
other expenses incurred in connection with membership in investment company
organizations; the cost (including brokerage commissions or charges, if any) of
securities purchases or sold by the Fund and any losses incurred in connection
therewith; fees of custodians, transfer agents, registrars or other agents,
expenses of preparing share certificates; expenses relating to the redemption or
repurchase of the Fund's shares; expenses of registering and qualifying Fund
shares for sale under applicable federal and state law and maintaining such
registrations and qualifications; expenses of preparing, setting in print,
printing and distributing prospectuses, proxy statements, reports, notices and
dividends to Fund shareholders; cost of stationery; costs of stockholders' and
other meetings of the Fund; traveling expenses of officers, directors and
employees of the Fund; if any; and the Fund's pro rata portion of premiums on
any fidelity bond and other insurance covering the Fund and its officers and
directors.
5. No director, officer or employee of the Fund shall receive from the
Fund any salary or other compensation as such director, officer or employee
while he is at the same time a director, officer or employee of the Adviser or
any affiliated company of the Adviser, This paragraph shall not apply to
directors, executive committee members, consultants and other persons who are
not regular members of the Adviser's or any affiliated company's staff.
6. As compensation for the services performed and the facilities
furnished and expenses assumed by the Adviser, including the services of any
consultants retained by the Adviser, the Fund shall pay the Adviser as promptly
as possible after the last day of each month, a fee, calculated daily, of 1%
annually of the average daily net assets of the Fund for the first $100 million
of average daily net assets and 0.75% annually of average daily net assets
exceeding $100 million. The first payment of the fee shall be made as promptly
as possible at the end of the month next succeeding the effective date of this
Agreement, and shall constitute a full payment of the fee due the Adviser for
all services prior to that date. In the event that the Adviser's right to such
fee commences on a date other than the last day of the month, the fee for such
month shall be based on the average daily assets of the Fund in that period from
the
date of commencement to the last day of the month. If this Agreement is
terminated as of any date not the last day of a month, such fee shall be paid as
promptly as possible after such date of termination, shall be based on the
average daily net assets of the Fund in that period from the beginning of such
month to such date of termination, and shall be that proportion of such average
daily net assets as the number of business days in such period bears to the
number of business days in such month. The average daily net assets of the Fund
shall in all cases be based only on business days and be computed as of the time
of the regular close of business of the New York Stock Exchange, or such other
time as may be determined by the Board of Directors of the Fund. Each such
payment shall be accompanied by a report of the Fund prepared either by the Fund
or by a reputable form of independent accountants which shall show the amount
properly payable to the Adviser under this Agreement and the detailed
computation thereof.
7. The Adviser assumes no responsibility under this Agreement other
than to render the services called for hereunder in good faith, and shall not be
responsible for any action of the Board of Directors of the Fund in following or
declining to follow any advice or recommendations of the Adviser; provided that
nothing in this Agreement shall protect the Adviser against any liability to the
Fund or its stockholders to which it would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence of the performance of its
duties or by reason of its reckless disregard of its obligations and duties
hereunder.
8. Nothing in this Agreement shall limit or restrict the right of any
director, officer, or employee of the Adviser who may also be a director,
officer, or employee of the Fund, to engage in any other business or to devote
his time and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature, nor to limit or
restrict the right of the Adviser to engage in any other business or to render
services of any kind, including investment advisory and management services, to
any other corporation, firm, individual or association.
9. As used in this Agreement, the terms "securities" and "net assets"
shall have the meanings ascribed to them in the Articles of Incorporation of the
Fund; and the terms "assignment", "interested person", and "majority of the
outstanding voting securities" shall have the meanings given to them by Section
2(a) of the 1940 Act, subject to such exemptions as may be granted by the
Securities and Exchange Commission by any rule, regulation or order.
10. Subject to the provisions of paragraphs 11 and 13 below, this
Agreement will remain in effect for one year from the date of its execution and
from year to year thereafter, provided
that the Adviser does not notify the Fund in writing at least sixty (60) days
prior to the expiration date in any year that it does not wish continuance of
the Agreement for an additional year.
11. This Agreement shall terminate automatically in the event of its
assignment by the Adviser and shall not be assignable by the Fund without the
consent of the Adviser. This Agreement may also be terminated at any time,
without the payment of any penalty, by the Board of Directors of the Fund or by
vote of a majority of the outstanding voting securities of the Fund by sixty
(60) days' written notice addressed to the Adviser at its principal place of
business.
12. In the event this Agreement is terminated by either party or upon
written notice from the Adviser at any time, the Fund hereby agrees that it will
eliminate from its corporate name any reference to the name of "▇▇▇▇ ▇▇▇▇▇". The
Fund shall have the non-exclusive use of the name "▇▇▇▇ ▇▇▇▇▇" in whole or in
part so long as this Agreement is effective or until such notice is given.
13. This Agreement shall continue in effect only so long as
specifically approved annually by vote of a majority of the directors of the
Fund who are not parties to this Agreement or interested persons of such
parties, cast in personal at a meeting called for that purpose, and either by
vote of the holders of a majority of the outstanding voting securities of the
Fund or by majority vote of the Fund's Board of Directors.
14. No provision of this Agreement may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the amendment of this Agreement shall be effective
until approved by vote of the holders of a majority of the Fund's outstanding
voting securities.
15. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
Attest: ▇▇▇▇ ▇▇▇▇▇ SPECIAL SITUATIONS
TRUST, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Attest: ▇▇▇▇ ▇▇▇▇▇ FUND ADVISER, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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