1
EXHIBIT 5(iii)
INVESTMENT MANAGEMENT AGREEMENT
COWEN GOVERNMENT SECURITIES FUND
A SERIES OF COWEN FUNDS, INC.
July 11, 1994
Cowen Asset Management
Xxxxx & Company
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Dear Sirs:
Cowen Funds, Inc. (the "Fund"), a corporation organized under the laws of the
State of Maryland, herewith confirms its agreement with Cowen Asset Management,
a division of Xxxxx & Company ("Cowen"), as follows:
1. Investment Description: Appointment
The Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in its
Articles of Incorporation, as amended, and in its Prospectuses and Statements of
Additional Information as from time to time in effect, and in such manner and to
such extent as may from time to time be approved by the Board of Directors of
the Fund. Copies of the Fund's Prospectuses, Statements of Additional
Information and Articles of Incorporation, as amended, have been or will be
submitted to Cowen. The Fund desires to employ and hereby appoints Cowen to act
as investment manager to its Cowen Opportunity Fund (the "Portfolio"). Cowen
accepts the appointment and agrees to furnish the services set forth below for
the compensation set forth below.
2. Services as Investment Manager
Subject to the supervision and direction of the Board of Directors of the Fund,
Cowen will (a) act in strict conformity with the Fund's Articles of
Incorporation and by-laws, the Investment Company Act of 1940 (the "Act") and
the Investment Advisers Act of 1940, as the same may from time to time be
amended, (b) manage the Portfolio in accordance with the Portfolio's investment
objective and policies as stated in the Portfolio's Prospectus and Statement of
Additional Information as from time to time in effect, (c) make general
investment decisions for the Portfolio including decisions concerning (i) the
specific types of securities to be held by the Portfolio and the proportion of
the Portfolio's assets that should be allocated to such investments during
particular market cycles and (ii) the
2
specific issuers whose securities will be purchased or sold by the Portfolio,
and (d) supply office facilities (which may be in Xxxxx'x own offices);
statistical and research data; data processing services; clerical, accounting
and bookkeeping services; internal auditing and legal services; internal
executive and administrative services; stationery and office supplies;
preparation of reports to shareholders of the Portfolio; preparation of tax
returns, reports to and filings with the Securities and Exchange Commission and
state Blue Sky authorities; calculation of the net asset value of shares of the
Portfolio; and general assistance in all aspects of the Portfolio's operations.
In providing those services, Cowen will supervise the Portfolio's investments
generally and conduct a continual program of evaluation of the Portfolio's
assets.
In connection with the performance of its duties under this Agreement, it is
understood that Cowen will from time to time employ or associate with itself
such person or persons as Cowen may believe to be particularly fitted to assist
it in the performance of this Agreement, it being understood that the
compensation of such person or persons shall be paid by Cowen and that no
obligation may be incurred on the Portfolio's behalf in any such respect. Cowen,
a limited partnership formed under the laws of the State of New York, will
notify the Fund of any change in its membership within a reasonable time after
such change.
3. Information Provided to the Fund: Books and Records
(a) Cowen will keep the Fund informed of developments materially affecting the
Portfolio, and will, on its own initiative, furnish the Fund from time to time
with whatever information Cowen believes is appropriate for this purpose.
(b) In compliance with the requirements of Rule 31a-3 under the Act, Cowen
hereby agrees that all records which it maintains 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.
4. Standard of Care
Cowen shall exercise its best judgment in rendering the services listed in
paragraph 2 above. Cowen shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, provided that nothing herein shall be
deemed to protect or purport to protect Cowen against any liability to the Fund
or to its shareholders to which Cowen could otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of Xxxxx'x reckless disregard of
3
its obligations and duties under this Agreement.
Any person, even though also a partner, officer, employee, or agent of Cowen,
who may be or become a Director, officer, 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
a Director, officer, employee, or agent or one under the control or direction of
Cowen even though paid by it.
5. Compensation
In consideration of the services rendered pursuant to this Agreement, the Fund
will pay Cowen on the first business day of each month a fee for the previous
month, calculated daily, at the annual rate of .90 of 1.00% of the Portfolio's
average daily net assets. The fee for the period from the date the Portfolio
commences investment operations to the end of the month during which the
Portfolio commences investment operations shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of a month, the fee for such part
of that month shall be prorated according to the proportion that 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
Cowen, the value of the Portfolio's net assets shall be computed at the times
and in the manner specified in the Portfolio's Prospectus and the Statement of
Additional Information as from time to time in effect.
6. Expenses
Cowen will bear all expenses in connection with the performance of its services
under this Agreement. The Portfolio will bear certain other expenses to be
incurred in its operation, including: taxes, interest, brokerage fees and
commissions, if any; fees of directors of the Fund who are not officers or
employees of Cowen; Securities and Exchange Commission fees and state Blue Sky
qualification fees; management, advisory and administration fees; charges of
custodians and transfer and dividend disbursing agents; certain insurance
premiums; outside auditing and legal expenses; costs of maintenance of corporate
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 of the shareholders, officers or Board of Directors of the Fund;
and any extraordinary expenses.
4
7. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Portfolio (including fees
pursuant to this Agreement, but excluding interest, taxes, brokerage expenses,
an applicable portion of distribution expenses and, with the prior written
consent of the appropriate state securities commissions, extraordinary expenses)
exceed the applicable expense limitation of any state having jurisdiction over
the Fund, Cowen will reimburse the excess expense. Xxxxx'x expense reimbursement
obligation will be limited to the amount of its fees received pursuant to this
Agreement, however, Cowen shall reimburse the Portfolio for such excess expenses
regardless of the amount of fees paid to it during such fiscal year to the
extent that the securities regulations of any state in which Fund shares are
registered and qualified for sale so require. This expense reimbursement, if
any, will be estimated, reconciled and paid on a monthly basis. From time to
time Cowen, in its sole discretion and as it deems appropriate, may assume
certain expenses of the Portfolio while retaining the ability to be reimbursed
by the Portfolio for such amounts prior to the end of the fiscal year. Cowen
will not be reimbursed for such amounts if such action would violate the of the
Portfolio's expenses.
8. Services to Other Companies or Accounts
The Fund understands that Cowen now acts and will continue to act as investment
adviser to fiduciary and other managed accounts and now acts and will continue
to act as investment manager, investment adviser, sub-investment adviser and/or
administrator to one or more other investment companies, and the Fund has no
objection to Xxxxx'x so acting, provided that whenever the Portfolio and one or
more other accounts or investment companies advised by Cowen have available
funds for investment, investments suitable and appropriate for each will be
allocated in a manner believed to be equitable to each entity. The Fund
recognizes that in some cases this procedure may adversely affect the size of
the position obtainable for the Portfolio. In addition, the Fund understands
that the persons employed by Cowen to assist in the performance of Xxxxx'x
duties hereunder will not devote their full time to such service and nothing
contained herein shall be deemed to limit or restrict the right of Cowen or any
affiliate of Cowen to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
9. Term of Agreement
This Agreement shall become effective on the date the Portfolio is approved by
shareholders and shall continue for an initial two year term and thereafter
shall continue automatically, provided such continuance is
5
specifically approved at least annually by (a) the Board of Directors of the
Fund or (b) a vote of a "majority" (as defined in the Act) of the Portfolio's
outstanding voting securities, provided that in either event the continuance is
also approved by a majority of the Board of Directors who are not "interested
persons" (as defined in that Act) of any party to this Agreement, by vote cast
in person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable, without penalty, on 60 days' written notice, by the
Board of Directors of the Fund or by vote of holders of a majority of the
Portfolio's shares, or upon 90 days' written notice, by Cowen. This Agreement
will also terminate automatically in the event of its assignment (as defined in
the Act and the Rules thereunder).
10. Amendment of this Agreement
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 change, waiver, discharge or termination is sought, and no
material amendment of this Agreement shall be effective until approved by vote
of the holders of a majority of the outstanding voting securities of the
Portfolio.
11. Miscellaneous
The captions in this Agreement are included for convenience of reference only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. If any provision of this Agreement shall be held
or made invalid by court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be invalidated or rendered unenforceable thereby. This
Agreement shall inure to the benefit of the parties hereto and their respective
successors and shall be governed by New York law without giving effect to the
conflict of law provisions thereof.
If the foregoing is in accordance with your understanding, kindly indicate your
acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
COWEN FUNDS, INC.
By: /s/ Xxxxxxxxx X. Xxxx, Vice President
Accepted and Agreed:
COWEN ASSET MANAGEMENT,
6
A DIVISION OF XXXXX & COMPANY
By: /s/ Xxxxx X. Xxxxx, President
