INVESTMENT MANAGEMENT AGREEMENT
Exhibit g.1
AGREEMENT, dated as of [ ], 2006, among DWS DREMAN VALUE INCOME EDGE FUND,
INC., a Maryland corporation (the “Fund”), and Deutsche Investment Management Americas, Inc., a
Delaware corporation (the “Adviser”).
WHEREAS, the Fund is engaged in business as a closed-end investment company registered under
the Investment Company Act of 1940, as amended (the “Investment Company Act”);
WHEREAS, the Fund engages in the business of investing and reinvesting the assets of the Fund
in accordance with the investment objective, policies and restrictions specified in the Prospectus
(the “Prospectus”) of the Fund included in the Fund’s initial Registration Statement on Form N-2,
as amended from time to time (the “Registration Statement”), filed by the Fund under the
Investment Company Act and the Securities Act of 1933, as amended;
WHEREAS, the Adviser is engaged principally in rendering investment management services and
is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the
“Advisers Act”);
WHEREAS, the Fund desires to retain the Adviser to provide investment management services to
the Fund on the terms set out in this Agreement, and the Adviser is willing to provide investment
management services to the Fund on the terms set out in this Agreement; and
NOW, THEREFORE, in consideration of the premises and the covenants contained in this
Agreement, the Fund and the Adviser agree as follows:
1. Appointment and Services.
(a) The Fund appoints the Adviser to act as investment manager to the Fund. The
Adviser accepts its appointment and agrees to provide the services set out in this
Agreement for the compensation set out in this Agreement.
(b) Subject to the terms of this Agreement, and the oversight of the Board of
Directors, the Adviser will provide continuing investment management of the assets of the
Fund in accordance with the investment objective, policies and restrictions set forth in
the Prospectus of the Fund or as adopted by the Board of Directors; the applicable
provisions of the Investment Company Act, and the rules and regulations thereunder; the
provisions of the Internal Revenue Code of 1986, as amended (the “Code”), relating to
regulated investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations. In connection with the services
provided under this Agreement, the Adviser will use best efforts to manage the Fund so that
it will qualify as a regulated investment company under Subchapter M of the Code and
regulations issued under the Code. The Adviser will also monitor, to the extent not
monitored by the Fund’s administrator or other agent, the Fund’s compliance with its
investment and tax guidelines and other compliance policies. The Fund will have the
benefit of the investment analysis and research, the review of current economic
conditions and trends and the consideration of long-range investment policy generally
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available to the Adviser’s investment advisory clients. In managing the Fund in accordance
with the requirements set out in this Section 1, the Adviser will be entitled to receive and act
upon advice of counsel for the Fund.
(c) The Adviser will determine the securities and other instruments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers, foreign currency dealers, futures
commission merchants or others pursuant to the Adviser’s determinations and all in accordance with
the Fund’s policies as set out in the Prospectus and SAI of the Fund or as adopted by the Board of
Directors and disclosed to the Adviser. The Adviser will determine what portion of the Fund’s
portfolio will be invested in securities and other assets and what portion, if any, should be held
uninvested in cash or cash equivalents.
(d) The Adviser will provide assistance to the Board of Directors in valuing the securities
and other instruments held by the Fund, to the extent reasonably required by such valuation
policies and procedures as may be adopted by the Fund.
(e) The Adviser will maintain in accordance with applicable law, all books and records
required of investment advisers under the Advisers Act, and will make available to the Board of
Directors such records upon request.
(f) The Adviser also agrees to make available to the Board of Directors the following:
(i) periodic reports on the investment performance of the Fund;
(ii) additional reports and information related to the Adviser’s duties under
this Agreement as the Board of Directors may reasonably request; and
(iii) to the extent held by the Adviser, all of the Fund’s investment records and
ledgers as are necessary to assist the Fund in complying with the requirements of
the Investment Company Act and other applicable laws.
To the extent required by law, the Adviser will furnish to regulatory authorities having the
requisite authority any information or reports in connection with the services provided under this
Agreement that may be requested.
(g) The Adviser will also provide to the Fund’s administrator, custodian, fund accounting
agent, shareholder service agents, transfer agents and other service providers, as required, and to
the extent held by the Adviser, information relating to all transactions concerning the assets
belonging to the Fund, in each case subject to compliance with applicable privacy standards.
2. Investment Management Fee.
(a) For all services to be rendered, payments to be made and costs to be assumed by the
Adviser as provided under this Agreement, the Fund will pay the Adviser
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in United States Dollars following the last day of each month the unpaid balance of a
fee equal to the sum of all the management accruals from the previous month. The management
accrual is calculated on a daily basis by multiplying a Fund’s prior day’s Managed
Assets1 by 100 basis points (1.0%) and dividing that product by the number of
days in that year. The Adviser will be entitled to receive during any month such interim
payments of its fee under this Section 2 as it may request, provided that no such payment
will exceed 75 percent of the amount of its fee then accrued on the books of a Fund and
unpaid.
(b) The Fund shall pay the Adviser, as compensation for the Adviser’s services
performed, facilities furnished and expenses assumed hereunder, a fee at an annual rate equal
to 1.0% of the Fund’s average daily Managed Assets. “Managed Assets” means the total assets
of the Fund (including any assets attributable to any leverage that may be outstanding) minus
the sum of accrued liabilities (other than debt representing financial leverage). The
management fee payable hereunder shall be computed daily and paid monthly in arrears.
(c) The Adviser may from time to time agree not to impose all or a portion of its fee
otherwise payable under this Agreement and/or undertake to pay or reimburse a Fund for all or
a portion of its expenses not otherwise required to be paid by or reimbursed by the Adviser.
Unless otherwise agreed, any fee reduction or undertaking may be discontinued or modified by
the Adviser at any time. For the month and year in which this Agreement becomes effective or
terminates, there will be an appropriate pro ration of any fee based on the number of days
that the Agreement is in effect during such month and year, respectively.
(d) All rights to compensation under this Agreement for services performed as of the
termination of this Agreement shall survive the termination.
3. Expenses.
(a) Except
as otherwise specifically provided in this Section 3 or
as determined by the Board of Directors, to the extent permitted by applicable law, the
Adviser will pay the compensation and expenses of all Directors, officers and executive
employees of the Fund (including a Fund’s share of payroll taxes) who are affiliated persons
of the Adviser, and the Adviser will make available, without expense to the Fund, the
services of such of its directors, officers and employees as may duly be elected officers of
the Fund, subject to their individual consent to serve and to any limitations imposed by
law. The Adviser will provide at its expense the services described in this Agreement.
(b) The Adviser will not be required to pay any expenses of the Fund other than those
specifically allocated to it in this Section 3. In particular, but without limiting the
generality of the foregoing, the Adviser will not be responsible, except to the extent of
the reasonable compensation of such of the Fund’s Directors and officers as are directors,
officers or employees of the Adviser whose services may be involved, for the
| 1 | “Managed Assets” means the Fund’s average daily total assets, including the assets attributable to leverage, minus liabilities (other than debt representing financial leverage). |
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following expenses of a Fund: fees payable to the Adviser; outside legal, accounting
or auditing expenses including with respect to expenses related to negotiation,
acquisition, or distribution of portfolio investments; maintenance of books and records
which are maintained by the Fund, a Fund’s custodian or other agents of the Fund; taxes and
governmental fees; fees and expenses of a Fund’s accounting agent, custodians,
subcustodians, depositories (for securities and/or commodities), transfer agents, dividend
disbursing agents and registrars; payment for portfolio pricing or valuation services to
pricing agents, accountants, bankers and other specialists, if any; brokerage commissions
or other costs of acquiring or disposing of any portfolio securities or other instruments
of a Fund; and litigation expenses and other extraordinary expenses not incurred in the
ordinary course of a Fund’s business.
4. Delegation of Investment Management Services. Subject to the prior approval of a majority
of the members of the Board of Directors, including a majority of the Directors who are not
“interested persons,” and, to the extent required by applicable law, by the shareholders of the
Fund, the Adviser may, through a sub-advisory agreement or other arrangement, delegate to a
sub-advisor any of the duties enumerated in this Agreement, including the management of all or a
portion of the assets being managed. Subject to the prior approval of a majority of the members
of the Board of Directors, including a majority of the Directors who are not “interested persons,”
and, to the extent required by applicable law, by the shareholders of a Fund, the Adviser may
adjust such duties, the portion of assets being managed, and the fees to be paid by the Adviser;
provided, that in each case the Adviser will continue to oversee the services provided by such
company or employees and any such delegation will not relieve the Adviser of any of its obligations
under this Agreement.
5. Selection of Brokers and Affiliated Transactions.
(a) Subject to the policies established by, and any direction from the Fund’s
Board of Directors, the Adviser will be responsible for selecting the brokers or dealers
that will execute the purchases and sales of securities for the Fund. Subject to the
foregoing, it is understood that the Adviser will not be deemed to have acted unlawfully, or
to have breached a fiduciary duty to the Fund or be in breach of any obligation owing to the
Fund under this Agreement, or otherwise, solely by reason of its having directed a
securities transaction on behalf of the Fund to a broker-dealer in compliance with the
provisions of Section 28(e) of the Securities Exchange Act of 1934.
(b) Subject to the policies established by, and any direction from, the Fund’s Board of
Directors, the Adviser may direct any of its affiliates to execute portfolio transactions
for the Fund on an agency basis. The commissions paid to the Adviser’s affiliates must be
in accordance with Rule 17e-1 under the Investment Company Act.
(c) The Adviser and any of its affiliates will not deal with the Fund or any of its
affiliates in any transaction in which the Adviser or any of its affiliates acts as a
principal with respect to any part of the Fund order, except in compliance with the
Investment Company Act, the rules and regulations under the Investment Company Act and any
applicable SEC or SEC staff guidance or interpretation. If the Adviser or any of its
affiliates is participating in an underwriting or selling group, a Fund may not buy
securities from the group except in accordance with policies established by the Board of
Directors in compliance with the Investment Company Act, the rules and regulations
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under the Investment Company Act and any applicable SEC or SEC staff guidance or
interpretation.
(d) The Adviser will promptly communicate to the Fund’s administrator and to the
officers and the Directors of the Fund such information relating to portfolio transactions as
they may reasonably request.
6. Limitation of Liability of Manager.
(a) As an inducement to the Adviser undertaking to provide services to the Fund pursuant to
this Agreement, the Fund agrees that the Adviser will not be liable under this Agreement 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 in this Agreement will be deemed to
protect or purport to protect the Adviser against any liability to the Fund or its shareholders to
which the Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.
(b) The rights of exculpation provided under this Section 6 are not to be construed so as to
provide for exculpation of any person described in this Section for any liability (including
liability under U.S. federal securities laws that, under certain circumstances, impose
liability even on persons that act in good faith) to the extent (but only to the extent) that
exculpation would be in violation of applicable law, but will be construed so as to effectuate the
applicable provisions of this Section 6 to the maximum extent permitted by applicable law.
7. Term and Termination.
(a) This Agreement will remain in force with respect to each party until September 30, 2008
and continue in force from year to year thereafter, but only so long as such continuance is
specifically approved at least annually (a) by the vote of a majority of the Directors who are not
parties to this Agreement or “interested persons” of any party to this Agreement, cast in person at
a meeting called for the purpose of voting on such approval, and (b) by the vote of a majority of
the Directors of the Fund, or by the vote of a majority of the outstanding voting securities of the
Fund. The requirement that continuance of this Agreement be “specifically approved at least
annually” will be construed in a manner consistent with the Investment Company Act, the rules and
regulations under the Investment Company Act and any applicable SEC or SEC staff guidance or
interpretation.
(b) This Agreement may be terminated at any time, without the payment of any penalty, by the
vote of a majority of the outstanding voting securities of the Fund or by the Fund’s Board of
Directors on 60 days’ written notice to the Adviser, or by the Adviser on 60 days’ written notice
to the Fund. This Agreement will terminate automatically in the event of its assignment (as
defined under the Investment Company Act).
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8. Amendment. 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 whom
enforcement of the change, waiver, discharge, or termination is sought, and no amendment of this
Agreement will be effective until approved in a manner consistent with the Investment Company Act,
rules and regulations under the Investment Company Act and any applicable SEC or SEC staff guidance
or interpretation.
9. Services Not Exclusive. The Adviser’s services to the Fund pursuant to this Agreement are not
exclusive and it is understood that the Adviser may render investment advice, management and
services to other Persons (including other investment companies) and to engage in other
activities, so long as its services under this Agreement are not impaired by such other activities.
It is understood and agreed that officers or directors of the Adviser may serve as officers or
Directors of the Fund, and that officers or Directors of the Fund may serve as officers or
directors of the Adviser to the extent permitted by law; and that the officers and directors of the
Adviser are not prohibited from engaging in any other business activity or from rendering services
to any other person, or from serving as partners, officers, or directors of any other firm, fund or
corporation, including other investment companies. Whenever the Fund and one or more other accounts
or investment companies advised by the Adviser have available funds for investment, investments
suitable and appropriate for each will be allocated in accordance with procedures believed by the
Adviser to be equitable to each entity over time. Similarly, opportunities to sell securities will
be allocated in a manner believed by the Adviser to be equitable to each entity over time. The Fund
recognizes that in some cases this procedure may adversely affect the size of the position that may
be acquired or disposed of for a Fund.
10. Avoidance of Inconsistent Position. In connection with purchases or sales of portfolio
securities and other investments for the account of the Fund, neither the Adviser nor any of its
directors, officers, or employees will act as a principal or agent or receive any commission,
except in accordance with applicable law and policies and procedures adopted by the Board of
Directors. The Adviser or its agent will arrange for the placing of all orders for the purchase
and sale of portfolio securities and other investments for the Fund’s account with brokers or
dealers selected by it in accordance with Fund policies as expressed in the Registration Statement
or in policies and procedures adopted by the Board of Directors. If any occasion should arise in
which the Adviser gives any advice to its clients concerning the shares of the Fund, it will act
solely as investment counsel for such clients and not in any way on behalf of the Fund.
11. Delivery of Documents. Copies of the Registration Statement and the Fund’s Prospectus have
been furnished to the Adviser by the Fund. The Fund has also furnished the Adviser with copies
properly certified or authenticated of each of the following additional documents related to the
Fund:
(i) Articles of Incorporation as in effect on the date hereof; and
(ii)
By-Laws of the Fund as in effect on the date hereof.
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The Fund will promptly furnish the Adviser from time to time with copies, properly certified or
authenticated, of all amendments of or supplements, if any, to the foregoing, including the
Prospectus and the Registration Statement.
13. Miscellaneous.
(a) The captions in this Agreement are included for convenience of reference only and
in no way define or limit any of the provisions hereof or othenvise affect their construction or
effect. This Agreement may be executed simultaneously in two or more counterparts, each of which
will be deemed an original, but all of which together will constitute one and the same instrument.
(b) Any question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the Investment Company Act will be
resolved by reference to such term or provision of the Investment Company Act and to
interpretations thereof, if any, by the United States Courts or in the absence of any controlling
decision of any such court, by rules, regulations or orders of the SEC issued pursuant to the
Investment Company Act. In addition, where the effect of a requirement of the Investment Company
Act reflected in any provision of this Agreement is modified or interpreted by any applicable
order or orders of the SEC or any rules or regulations adopted by, or interpretative releases of,
the SEC thereunder, such provision will be deemed to incorporate the effect of such order, rule,
regulation or interpretative release.
(c) This Agreement will be construed in accordance with the laws of The State of Maryland
without regard to choice of law or conflicts of law principles thereof,
provided that nothing in this Agreement will be construed in a manner inconsistent with the
Investment Company Act, or in a manner which would cause a Fund to fail to comply with the
requirements of Subchapter M of the Code.
(d) This Agreement constitutes the entire agreement between the parties concerning the
subject matter, and supersedes any and all prior understandings.
(e) If any provision, term or part of this Agreement is deemed to be void, unenforceable, or
invalid for any reason by a court decision, statute, rule, or otherwise, the remaining provisions
of this Agreement will remain in full force and effect as if such invalid provision, term or part
was not a part of this Agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the day and
year first written above.
| DWS DREMAN VALUE INCOME EDGE FUND, INC. | ||||||
| By: | ||||||
| [Name] | ||||||
| [Title] | ||||||
| DEUTSCHE INVESTMENT MANAGEMENT AMERICAS, INC. | ||||||
| By: | ||||||
| [Name] | ||||||
| [Title] | ||||||
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