INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 29th day of April, 1993, by and between BULL & BEAR
SPECIAL EQUITIES FUND, INC., a Maryland corporation (the "Fund") and BULL & BEAR
ADVISERS, INC., a Delaware corporation (the "Investment Manager").
WITNESSETH:
In consideration of the mutual promises and agreements herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed between the parties hereto as follows:
1. The Fund hereby employs the Investment Manager to manage the investment and
reinvestment of the assets of the Fund, including the regular furnishing of
advice with respect to the Fund's portfolio transactions subject at all times to
the control and final direction of the Board of Directors of the Fund, for the
period and on the terms set forth in this Agreement. The Investment Manager
hereby accepts such employment and agrees during such period to render the
services and to assume the obligations herein set forth, for the compensation
herein provided. The Investment Manager shall for all purposes herein be deemed
to be an independent contractor and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Fund in any way, or
otherwise be deemed an agent of the Fund.
2. The Fund assumes and shall pay all the expenses required for the conduct of
its business including, but not limited to, salaries of administrative and
clerical personnel, brokerage commissions, taxes, insurance, fees of the
transfer agent, custodian, legal counsel and auditors, association fees, costs
of FILING, printing and mailing proxies, reports and notices to shareholders,
preparing, filing and printing the prospectus and statement of additional
information, payment of dividends, costs of stock certificates, costs of
shareholders meetings, fees of the independent directors, necessary office space
rental, all expenses relating to the registration or qualification of shares of
the Fund under applicable Blue Sky laws and reasonable fees and expenses of
counsel in connection with such registration and qualification and such
non-recurring expenses as may arise, including, without limitation, actions,
suits or proceedings affecting the Fund and the legal obligation which the Fund
may have to indemnify its officers and directors with respect thereto.
3. The Investment Manager may, but shall not be obligated to, pay or provide for
the payment of expenses which are primarily intended to result in the sale of
the Fund's shares or the servicing and maintenance of shareholder accounts,
including, without limitation, payments for: advertising, direct mail and
promotional expenses; compensation to and expenses, including overhead and
telephone and other communication expenses, of the Investment Manager and its
affiliates, the Fund, and selected dealers and their affiliates who engage in or
support the distribution of shares or who service shareholder accounts;
fulfillment expenses including the costs of printing and distributing
prospectuses, statements of additional information, and reports for other than
existing shareholders; the costs of preparing, printing and distributing sales
literature and advertising materials; and, internal costs incurred by the
Investment Manager and its affiliates and allocated to efforts to distribute
shares of the Fund such as office rent and equipment, employee salaries,
employee bonuses and other overhead expenses. Such payments may be for the
Investment Manager's own account or may be made on behalf of the Fund pursuant
to a written
agreement relating to any plan of distribution of the Fund pursuant to Rule
12b-I under the Investment Company Act of 1940, as from time to time amended
(the "1940 Act").
4. If requested by the Fund's Board of Directors, the Investment Manager may
provide other services to the Fund such as, without limitation, the functions of
billing, accounting, certain shareholder communications and services,
administering state and Federal registrations, filings and controls and other
administrative services. Any services so requested and performed will be for the
account of the Fund and the costs of the Investment Manager in rendering such
services shall be reimbursed by the Fund, subject to examination by those
directors of the Fund who are not interested persons of the Investment Manager
or any affiliate thereof.
5. The services of the Investment Manager are not to be deemed exclusive, and
the Investment Manager shall be free to render similar services to others in
addition to the Fund so long as its services hereunder are not impaired thereby.
6. The Investment Manager shall create and maintain all necessary books and
records in accordance with all applicable laws, rules and regulations, including
but not limited to records required by Section 31(a) of the 1940 Act and the
rules thereunder, as the same may be amended from time to time, pertaining to
the investment management services performed by it hereunder and not otherwise
created and maintained by another party pursuant to a written contract with the
Fund. Where applicable, such records shall be maintained by the Investment
Manager for the periods and in the places required by Rule 3la-2 under the 1940
Act. The books and records pertaining to the Fund which are in the possession of
the Investment Manager shall be the property of the Fund. The Fund, or the
Fund's authorized representatives, shall have access to such books and records
at all times during the Investment Manager's normal business hours. Upon the
reasonable request of the Fund, copies of any such books and records shall be
provided by the Investment Manager to the Fund or the Fund's authorized
representatives.
7. As compensation for its services, the Investment Manager will be paid by the
Fund a fee payable monthly and computed at the annual rate of 1% of the first
$10 million of average daily net assets of the Fund, 7/8 of 1 % of such net
assets over $ 10 million up to $30 million, 3/4 of 1% of such net assets over
$30 million up to $150 million, 5/8 of 1% of such net assets over $150 million
up to $500 million, and 1/2 of 1% of such net assets over $500 million. The
aggregate net assets for each day shall be computed by subtracting the
liabilities of the Fund from the value of its assets, such amount to be computed
as of the calculation of the net asset value per share on each business day.
8. The Investment Manager shall direct portfolio transactions to broker/dealers
for execution on terms and at rates which it believes, in good faith, to be
reasonable in view of the overall nature and quality of services provided by a
particular broker/dealer, including brokerage and research services and sales of
Fund shares and shares of the other Bull & Bear Funds. With respect to brokerage
and research services, the Investment Manager may consider in the selection of
broker/dealers brokerage or research provided and payment may be made of a fee
higher than that charged by another broker/dealer which does not furnish
brokerage or research services or which furnishes brokerage or research services
deemed to be of lesser value, so long as the criteria of Section 28(e)
of the Securities Exchange Act of 1934, as amended (the "1934 Act") or other
applicable law are met. Although the Investment Manager may direct portfolio
transactions without necessarily obtaining the lowest price at which such
broker/dealer, or another, may be willing to do business, the Investment Manager
shall seek the best value for the Fund on each trade that circumstances in the
market place permit, including the value inherent in on-going
2
relationships with quality brokers. To the extent any such brokerage or research
services may be deemed to be additional compensation to the Investment Manager
from the Fund, it is authorized by this Agreement. The Investment Manager may
place Fund brokerage through an affiliate of the Investment Manager, provided
that: THE Fund not deal with such affiliate in any transaction in which such
affiliate acts as principal; the commissions, fees or other remuneration
received by such affiliate be reasonable and fair compared to the commissions,
fees or other remuneration paid to other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time; and such brokerage be
undertaken in compliance with applicable law. The Investment Manager's fees
under this Agreement shall not be reduced by reason of any commissions, fees or
other remuneration received by such affiliate from the Fund.
9. The Investment Manager shall waive all or part of its fee or reimburse the
Fund monthly if and to the extent the aggregate operating expenses of the Fund
exceed the most restrictive limit imposed by any state in which shares of the
Fund are qualified for sale. In calculating the limit of operating expenses, all
expenses excludable under state regulation or otherwise shall be excluded. If
this Agreement is in effect for less than all of a fiscal year, any such limit
will be applied proportionately.
10. Subject to and in accordance with the Articles of Incorporation and By-laws
of the Fund and of the Investment Manager, it is understood that directors,
officers, agents and shareholders of the Fund are or may be interested in the
Fund as directors, officers, shareholders or otherwise, that the Investment
Manager is or may be interested in the Fund as a shareholder or otherwise and
that the effect and nature of any such interests shall be governed by law and by
the provisions, if any, of said Articles of Incorporation or By-laws.
11. This Agreement shall become effective upon the date hereinabove
written and, unless sooner terminated as provided herein, this Agreement shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, this Agreement shall continue automatically for successive periods
of twelve months each, provided that such continuance is specifically approved
at least annually (a) by the Board of Directors of the Fund or by the holders of
a majority of the outstanding voting securities of the Fund as defined in the
1940 Act and (b) by a vote of a majority of the Directors of the Fund who are
not parties to this Agreement, or interested persons of any such party. This
Agreement may be terminated without penalty at any time either by vote of the
Board of Directors of the Fund or by vote of the holders of a majority of the
outstanding voting securities of the Fund on 60 days' written notice to the
Investment Manager, or by the Investment Manager on 60 days' written notice to
the Fund. This Agreement shall immediately terminate in the event of its
assignment.
12. The Investment Manager shall not be liable to the Fund or any shareholder of
the Fund 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, but
nothing herein contained shall be construed to protect the Investment Manager
against any liability to the Fund by reason of willful misfeasance, bad faith,
or gross negligence in the performance of its duties or by reason of its
reckless disregard of obligations and duties under this Agreement.
13. As used in this Agreement, the terms "interested person," "assignment," and
"majority of the outstanding voting securities" shall have the meanings provided
therefor in the 1940 Act, and the rules and regulations thereunder.
3
14. This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject hereof whether
oral or written. If any provision of this Agreement shall be held or made
invalid by a court or regulatory agency decision, statute, rule or otherwise,
the remainder of THIS Agreement shall not be affected thereby.
15. This Agreement shall be construed in accordance with and governed by the
laws of the State of New York, provided, however, that nothing herein shall be
construed in a manner inconsistent with the 1940 Act or any rule or regulation
promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
BULL & BEAR ADVISERS, INC.
By:
BULL & BEAR SPECIAL EQUITIES FUND, INC.
By:
