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As filed with the Securities and Exchange Commission on MARCH 28, 1997
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(MARK ONE)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended DECEMBER 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-9667
BULL & BEAR GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-1897916
(State of incorporation) (I.R.S. Employer Identification No.)
11 HANOVER SQUARE, NEW YORK, NEW YORK 10005
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 785-0900
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
No voting stock was held by non-affiliates of the registrant as of March
15, 1997.
The number of shares outstanding of each of the registrant's classes of
common stock, as of March 15, 1997:
Class A Non-Voting Common Stock, par value $.01 per share - 1,350,017 shares
Class B Voting Common Stock, par value $.01 per share - 20,000 shares
TABLE OF CONTENTS
PART I
ITEM PAGE
1. Business .............................................................. 2
2. Properties ............................................................ 6
3. Legal Proceedings ..................................................... 6
4. Submission of Matters to a Vote of Security Holder .................... 7
PART II
5. Market for Company's Common Equity and Related Stockholder Matters ......7
6. Selected Financial Data .................................................7
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations ............................................9
8. Financial Statements and Supplementary Data ............................12
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ..............................28
PART III
10. Directors and Executive Officers ......................................29
11. Executive Compensation ...............................................31
12. Security Ownership of Certain Beneficial Owners and Management ........38
13. Certain Relationships and Related Transactions ........................39
PART IV
14. Exhibits, Consolidated Financial Statements and Schedules,
and Reports on Form 8-K ............................................40
PART I
ITEM 1. BUSINESS
Bull & Bear Group, Inc., a Delaware corporation (the "Company"), is a
holding company with seven principal subsidiaries: Bull & Bear Advisers, Inc.
("BBAI"), Bull & Bear Securities, Inc. ("BBSI"), Investor Service Center, Inc.
("ISC"), Midas Management Corporation ("MMC"), Rockwood Advisers, Inc. ("RAI"),
Bull & Bear NJ Properties, Inc. ("NJ Properties") and Hanover Direct Advertising
Company, Inc. ("Hanover Direct").
BBAI, MMC and RAI act as investment managers to open-end and closed-end
management investment companies (the "Funds") registered under the Investment
Company Act of 1940 (the "Act"). The open-end Funds are: Bull & Bear Special
Equities Fund, Inc.; Bull & Bear Gold Investors Ltd.; Bull & Bear U.S. and
Overseas Fund, a series of shares issued by Bull & Bear Funds I, Inc.; Bull &
Bear Dollar Reserves, a series of shares of Bull & Bear Funds II, Inc.; Midas
Fund, Inc.; and Rockwood Fund, Inc. The closed-end funds are: Bull & Bear Global
Income Fund, Inc., Bull & Bear U.S. Government Securities Fund, Inc. and Bull &
Bear Municipal Income Fund, Inc.
BBSI was organized in 1984 to operate a discount brokerage service. BBSI
has access to every major U.S. stock, option and bond exchange as well as the
over-the-counter market. Investors may use the discount brokerage services
provided by BBSI to trade stocks, bonds and options at substantial commission
discounts from full cost rates, access their investment in any of the Funds to
pay for securities purchased, or invest proceeds of sales of securities in the
Funds. BBSI is registered with the Securities and Exchange Commission ("SEC") as
a broker/dealer and is a member of the National Association of Securities
Dealers, Inc. ("NASD") and Securities Investor Protection Corporation ("SIPC").
ISC was organized in 1985 and is registered with the SEC as a
broker/dealer and is a member of the NASD. ISC acts as the principal distributor
and shareholder administrator for the open-end Funds.
NJ Properties was organized in 1994 to invest in real estate. Bull & Bear
Properties, Inc. ("Properties") was sold in 1996 in a stock sale.
Hanover Directwas organized in 1988 and acts as an advertising agency,which
places advertising for ISC on behalf of the Funds and for BBSI. Currently, the
commission revenue generated by Hanover Direct from ISC and BBSI represents a
recapture of sums paid for advertising and, rather than additional income,
represents a reduction in advertising expense of ISC and BBSI. Hanover Direct
has not performed any work for unaffiliated clients.
The Company owns and has granted seven of the Funds and its subsidiaries a
non-exclusive license to use the service marks "Bull & Bear," "Bull & Bear
Performance Driven," and "Performance Driven" under certain terms and conditions
on a royalty free basis. Such license may be withdrawn from a Fund in the event
the investment manager of the Fund is not a subsidiary of the Company or in
other cases, at the discretion of the Company.
-2-
INVESTMENT MANAGEMENT BUSINESS
The Company is engaged, through its subsidiaries, in the business of
managing investment companies registered under the Act. The Funds and their
respective net assets as of December 31, 1996 were as follows:
Bull & Bear Dollar Reserves $ 64,214,000
Bull & Bear Global Income Fund, Inc. 30,373,000
Bull & Bear Gold Investors Ltd. 22,685,000
Bull & Bear Municipal Income Fund, Inc. 11,491,000
Bull & Bear Special Equities Fund, Inc. 49,840,000
Bull & Bear U.S. and Overseas Fund 9,836,000
Bull & Bear U.S. Government Securities Fund, Inc. 10,751,000
Midas Fund, Inc. 200,457,000
Rockwood Fund, Inc. 1,273,000
-------------
TOTAL NET ASSETS $400,920,000
The fund management industry along with the entire financial services
sector of the economy has been rapidly changing to meet the increasing needs of
investors. Competition for management of financial resources has increased as
banks, insurance companies and broker/dealers have introduced products and
services traditionally offered by independent fund management companies. There
are also many fund management groups with substantially more resources than the
Company. While Congress, governmental agencies and special interest groups have
been struggling with regulatory problems created by consolidation of the
financial services industry, the Company continues to develop products to meet
the specialized requirements of investors. While the Company's business is not
seasonal, it is affected by the financial markets, which in turn, are dependent
upon current and future economic conditions.
Drastic material declines in the securities markets can have a significant
effect on the Company's business. Volatile stock markets may affect management
and distribution fees earned by the Company's subsidiaries. If the market value
of securities owned by the Funds declines, assets under management will decline
and shareholder redemptions may occur, either by transfer out of the equity
Funds and into the money market Fund, Bull & Bear Dollar Reserves, which has
lower management and distribution fee rates than the equity Funds, or by
redemptions out of the Funds entirely. Lower asset levels in the Funds may also
cause or increase reimbursements to the Funds pursuant to the expense
limitations described below.
In general, investment management services are rendered to the Funds
pursuant to written contractual agreements. Such agreements relate to the
general management of the affairs of each Fund, in addition to supervising the
acquisition and sale of each Fund's portfolio investments. As provided in the
agreements, BBAI, MMC and RAI may receive management fees ranging from 0.4% to
1.0% per annum of the Funds' average daily net assets. The Act requires that
such contractual agreements be initially approved by the Funds' Board of
Directors, including a majority of all of the directors who are not "interested
persons" (as defined in the Act), and by the vote of a majority of the
outstanding shares of the Fund (as defined in the Act). Agreements, if approved,
may be for a term of up to two years, and thereafter their continuance must be
approved at least annually by a majority of the directors of the Fund, including
a majority of those directors of the Fund who are not "interested persons", or
by such a vote of "disinterested" directors and the vote of a majority of the
outstanding shares of the Fund. In addition, all such agreements are subject to
termination on 60 days' notice by majority vote of the Board of Directors or the
shareholders and are subject to automatic termination in the event of
assignment. Depending on the assets of the Fund involved and other factors, the
termination of any of the agreements for investment management services between
any of the Funds, BBAI, MMC and RAI may have a serious adverse impact upon the
Company.
-3-
Pursuant to contracts with these Funds, BBAI, MMC and RAI are entitled to
management fees, which are received monthly and are based on annual percentages
of the average daily net assets of the Funds. Under the contracts, BBAI, MMC and
RAI are required to reimburse the Funds for certain expenses to the extent that
such expenses exceed limitations prescribed by any state in which shares of the
Funds are qualified for sale, although currently the Funds are not subject to
any such limits. In addition, in the case of Midas Fund, Inc., MMC has agreed to
be subject to the following expense limitation for a period of two years from
the date of the investment management agreement, August 25, 1995, which
limitation is calculated as an amount not in excess of the fee payable by the
Fund if and to the extent that the aggregate operating expenses of the Fund
(excluding interest expense, Rule 12b-1 Plan of Distribution fees, taxes,
brokerage fees and commissions) are in excess of 2.0% of the first $10 million
of average net assets of the Fund, plus 1.5% of the next $20 million of average
net assets, plus 1.25% of average net assets above $30 million. In addition,
from time to time BBAI, MMC and RAI may waive or reimburse management fees to
increase a Fund's performance. BBAI, MMC and RAI have a subadvisory agreement
with respect to Bull & Bear Gold Investors Ltd., Midas Fund, Inc. and Rockwood
Fund, Inc., respectively. BBAI, MMC and RAI, not the respective Funds, pay the
Subadvisers, Lion Resource Management Limited and Aspen Securities and Advisory,
Inc., based upon the net fees, performance and net assets of the Funds.
Each of the open-end Funds has adopted a plan of distribution pursuant to
Rule 12b-1 under the Act (the "Plan"). Pursuant to the Plans, ISC may receive as
compensation amounts ranging from one-quarter of one percent to one percent per
annum of the Funds' average daily net assets for distribution and service
activities. The service fee portion is intended to cover services provided to
shareholders in the Funds and the maintenance of shareholder accounts. The
distribution fee portion is to cover all other activities and expenses primarily
intended to result in the sale of the Funds' shares.
In 1996, Bull & Bear Municipal Income Fund and Bull & Bear U.S. Government
Securities Fund converted from open-end investment companies to closed-end
investment companies pursuant to the vote of each Fund's shareowners. In
February 1997, Bull & Bear Global Income Fund converted from an open-end
investment company to a closed-end investment company pursuant to the vote of
the Fund's shareowners. Upon conversion, the Distribution, 12b-1 Plan, and
Shareholder Administration Agreements between the respective Fund and ISC were
terminated and substantially similar Investment Management Agreements between
BBAI and each Fund were approved.
The Act requires that a plan of distribution be initially approved by the
Fund's Board of Directors, including a majority of the directors who are not
"interested persons" and who have no financial interest in the Plan, and by the
vote of a majority of the outstanding shares of the Fund. If approved, a plan of
distribution may be for a term of one year, and thereafter it must be approved
at least annually by the entire Board of Directors and by a majority of the
"disinterested" directors. In addition, all plans of distribution are subject to
termination at any time by majority vote of the disinterested directors or
shareholders.
BBAI, MMC and RAI are registered with the SEC as investment advisers under
the Investment Advisers Act of 1940. ISC is registered with the SEC as a
broker/dealer under the Securities Exchange Act of 1934 and is a member of the
NASD. The Funds are registered with the SEC under the Act. The activities of
BBAI, MMC and RAI and of the Funds are subject to regulation under Federal and
state securities laws. The provisions of these laws, including those relating to
the contractual arrangements between the Funds and their investment manager, are
primarily designed to protect the shareholders of the Funds and not the
shareholders of the Company.
-4-
DISCOUNT BROKERAGE BUSINESS
BBSI, with access to every major U.S. stock, option and bond exchange as
well as the over-the-counter market, provides discount brokerage services to
investors throughout the United States and various foreign countries.
Substantial commission savings off full service rates as well as prompt,
courteous service and professional order execution are available to all accounts
regardless of how often trades are made. All accounts are carried by U.S.
Clearing Corp., a New York Stock Exchange member firm. The SIPC, of which BBSI
and U.S. Clearing Corp. are members, protects each account against broker/dealer
insolvency (not market losses) for up to $500,000, of which $100,000 may be in
cash. In addition, Aetna Casualty and Surety Company protects each account for
an additional $49,500,000 in securities value.
BBSI offers investors commission savings of up to 84% over full cost
brokers (as of March 29, 1997) and guarantees commissions 20% less than Charles
Schwab & Co. on every stock, bond and option trade. BBSI customers may save an
additional 10% in commissions with every trade entered via personal computer
through Bull & Bear OnLine Investment Center(sm) and by touch tone telephone
using Bull & Bear TeleQuote/TeleTrade(sm). BBSI customers earn American Airlines
AAdvantage miles with every trade -- 500 AAdvantage miles for each of the
customer's first five trades and then 100 miles per trade thereafter (limited to
35,000 miles in any 12 month period).
BBSI provides its customers free investment information such as:
* Standard & Poor's Market Month: Timely investment information with customer
statements each month.
* Standard & Poor's Stock Guide: Information, ranking and rating changes on
6,800 stocks each month.
* Standards & Poor's Stock Reports: Up-to-date information on over 4,600
companies by mail or by fax.
* Standard & Poor's Stock Screens: Thousands of stocks screened by objective
and investment results.
BBSI also offers its customers a no-fee cash management service featuring
unlimited free check writing with no check writing minimum (Bull & Bear
Performance Plus Account(R)), the Bull & Bear No-Fee IRA(R), and Bull & Bear
Mutual Funds Network (including a no transaction fee, no-load mutual funds
service).
Volatile stock markets could have a significant effect on the brokerage
commissions earned by BBSI by affecting the number of transactions processed.
BBSI is responsible for potential losses resulting from trade errors of BBSI
personnel and customers' bad debts, including under- margined accounts. As a
discount broker, BBSI does not give investment advice and therefore management
believes it is less likely to be involved in significant litigation with
customers, as may be typical in the ordinary course of business of a broker that
does give investment advice to its customers.
-5-
ITEM 2. PROPERTIES
The principal office of the Company is located at 11 Hanover Square, New
York, New York 10005. The approximate area of the office is 11,400 square feet.
The rent is approximately $144,000 per annum plus $32,550 per annum for
electricity. The lease expires on December 31, 1998 and is cancelable at the
option of the Company on three months' notice. BBSI has a branch office at 395
East Palmetto Boulevard, Boca Raton, Florida consisting of approximately 1,000
square feet. The rent is approximately $22,200 per annum and is cancelable at
the option of the Company on six months' notice.
NJ Properties purchased land and a two story office building located in
Red Bank, New Jersey in 1994. The building consists of approximately 13,000
square feet. The building was purchased for cash, has no mortgage and was
purchased as an investment. The building is currently being renovated for
possible rental.
ITEM 3. LEGAL PROCEEDINGS
The Company and its directors are defendants in a lawsuit brought on April
24, 1995 by Maxus Investment Group, Maxus Capital Partners, Maxus Asset
Management, Inc., and Maxus Securities Corp. (collectively "Maxus"), which now
claim to collectively own or control 144,000 shares, or approximately 10.7% of
the Class A common stock of the Company. The action, seeking declaratory and
injunctive relief, was filed in the federal district court for the Southern
District of New York and purports to be brought on the plaintiffs' own behalf
and derivatively on behalf of the Company. On April 11, 1996, the district court
dismissed as a matter of law all claims brought by the plaintiffs except those
relating to the voiding of 1993 exercises, the exercise of certain 1990 stock
options and plaintiffs' request for attorneys' fees from the Company. Defendants
thereafter filed answers denying liability. The Company believes that the
lawsuit is without merit and intends to continue defending the remaining claims
vigorously.
From time to time, the Company and/or its subsidiaries are threatened or
named as defendants in litigation arising in the normal course of business. As
of December 31, 1996, neither the Company nor any of its subsidiaries was
involved in any other litigation that, in the opinion of management, would have
a material adverse impact on the consolidated financial statements.
-6-
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS DURING
FOURTH QUARTER OF THE YEAR ENDED DECEMBER 31, 1996
NONE
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Class A Common Stock trades on the Nasdaq SmallCap Market tier
of the Nasdaq Stock Market under the symbol BNBGA. The Company's Class B Common
Stock has no public trading market. There are in excess of 300 holders of record
of Class A Common Stock and 1 holder of Class B Common Stock as of December 31,
1996. In addition, there are an indeterminate number of beneficial owners of
Class A Common Stock that are held in "street name". No dividends have been paid
on either class of Common Stock in the past five years and the Company does not
expect to pay any such dividends in the foreseeable future. The high and low
sales prices of the Class A Common Stock during each quarterly period over the
last two years were as follows:
1996 1995
--------------------- ----------------
HIGH LOW HIGH LOW
First Quarter $6-3/4 $1-5/8 $1-3/4 $1-1/4
Second Quarter $5-3/8 $3-1/4 $2-5/8 $1-1/4
Third Quarter $4 $2-1/2 $1-15/16 $1-37/64
Fourth Quarter $3-1/4 $2-7/8 $2-1/8 $1-3/4
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data for the five years ended December 31, 1996 is
presented on the following pages.
-7-
BULL & BEAR GROUP, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
FOR THE YEARS ENDED DECEMBER 31,
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
REVENUES:
Management, distribution and administration fees $4,922,945 $3,322,348 $3,786,066 $4,092,229 $3,386,153
Brokerage commissions 2,351,983 1,821,513 1,768,527 2,047,999 1,488,856
Dividends, interest and other 142,084 147,169 (7,378) 227,422 602,206
------------ ------------ -------------- ------------ ------------
7,417,012 5,291,030 5,547,215 6,367,650 5,477,215
----------- ----------- ----------- ----------- -----------
EXPENSES:
General and administrative 4,040,219 3,195,115 3,225,891 3,519,704 3,072,364
Marketing 1,821,297 779,026 1,361,155 1,389,204 1,356,060
Clearing and brokerage charges 708,535 576,096 532,832 619,673 512,968
Subadvisory fees 705,248 22,496 37,728 34,629 16,655
Professional fees 296,874 431,934 170,284 170,687 212,320
Amortization and depreciation 138,116 97,399 98,094 125,399 193,156
------------ ------------- ------------- ------------ ------------
7,710,289 5,102,066 5,425,984 5,859,296 5,363,523
----------- ----------- ----------- ----------- -----------
Income (loss) before provision for income taxes (293,277) 188,964 121,231 508,354 113,692
INCOME TAXES 27,248 32,588 37,771 39,149 38,198
------------ ------------- ------------- ------------- -------------
NET INCOME (LOSS) $ (320,525) $ 156,376 $ 83,460 $ 469,205 $ 75,494
=========== =========== ============ =========== ============
NET INCOME (LOSS) PER SHARE OF WEIGHTED AVERAGE
COMMON STOCK OUTSTANDING:
Primary and fully diluted
Net income (loss) $(.22) $.10 $.05 $.32 $.05
===== ==== ==== ==== ====
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Primary 1,463,279 1,549,815 1,610,443 1,480,654 1,434,922
=========== =========== =========== =========== ===========
Fully diluted 1,469,354 1,551,564 1,610,658 1,483,272 1,446,922
=========== =========== =========== =========== ===========
TOTAL ASSETS $4,273,110 $4,963,792 $4,240,241 $4,711,438 $3,817,556
========== ========== ========== ========== ==========
LONG-TERM OBLIGATIONS $ 22,093 $ - $ - $ - $ -
============ =============== =============== ============== ============
-8-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1996 COMPARED TO 1995
Total revenues for the year increased $2,125,982 or 40.2%. Management and
distribution fees increased $1,429,766 or 85.5% and $284,319 or 22.1%,
respectively, and shareholder administration fees decreased $113,488 or 31.2%.
The increase in management and distribution fees was due to an overall increase
in the net asset levels of the Funds from which these revenues are generated.
Shareholder administration fees represent reimbursement for actual expenses
incurred. Such fees decreased as the costs for providing these services
decreased. Net assets under management were approximately $237.4 million at
December 31, 1995, $317.6 million at March 31, 1996, $393.2 million at June 30,
1996, $432.1 million at September 30, 1996, and $400.9 million at December 31,
1996. Brokerage commissions increased $530,470 or 29.1% while brokerage
customers' equity increased to $187 million or 28%. The increase in brokerage
commissions was due to an increase in customer transaction activity and the
continued growth in the number of discount brokerage accounts and customers'
equity. Dividends, interest and other amounted to $142,084 in 1996 compared to
$147,169 in 1995. Dividends and interest decreased $5,085 or 3.5% due to lower
earnings on the Company's short term investments.
Total expenses increased $2,608,223 or 51.1% for the year. General and
administrative expenses increased $845,104 or 26.4% because of higher
compensation, higher bonuses paid to employees of the Company relating to the
growth in the Company's businesses and higher expense reimbursements for the
Funds. Marketing expenses increased $1,042,271 or 133.8% primarily related to
the launching of the Midas Fund during the first six months of 1996. In
addition, the Company incurred increased marketing expenses relating to the
introduction of Bull & Bear Online Investment Center and the promotion of the
American Airlines(R) AAdvantage Miles(R) program through Bull & Bear Securities,
Inc. Clearing and brokerage charges increased $132,439 or 23.0% because of an
increased level of discount brokerage customer transactions processed.
Professional fees decreased $135,060 or 31.3% due to lower litigation costs
relating to the Maxus lawsuit. Subadvisory fees increased $682,752 because of
the growth in assets of the Midas Fund. Amortization and depreciation increased
$40,717 or 41.8% for the year.
Net loss for 1996 was $320,525 or $.22 per share as compared to net income
of $156,376 or $.10 per share in 1995.
1995 COMPARED TO 1994
Total revenues for the year decreased $256,185 or 4.6%. Management,
distribution and shareholder administration fees decreased $192,611 or 10.3% and
$167,532 or 11.5%, and $103,575 or 22.2%, respectively. The decrease in
management and distribution fees was due to an overall decrease in the net asset
levels of the Funds from which these revenues are generated. Shareholder
administration fees represent reimbursement for actual expenses incurred. Such
fees decreased as the costs for providing these services decreased. Net assets
under management were approximately $236.1 million at December 31, 1994, $235.0
million at March 31, 1995, $236.9 million at June 30, 1995, $245.9 million at
September 30, 1995 and $237.4 million at December 31, 1995. Brokerage
commissions increased $52,986 or 3.0% while brokerage customers' equity increase
to $145.9 million or 32.2%. The increase in brokerage commissions was due to a
increase in customer transaction activity, the continued growth in the number of
discount brokerage accounts and customers' equity. Dividends, interest and other
amounted to $147,169 in 1995 compared to ($7,378) in 1994. Dividends and
interest increased $56,773 or 62.8% due to higher earnings on the Company's
short term investments.
-9-
Total expenses decreased $323,918 or 6.0% for the year. General and
administrative expenses decreased $30,776 or 1.0%. Marketing expenses decreased
$582,129 or 42.8%. Clearing and brokerage charges increased $43,264 or 8.1% as a
result of the previously noted increase in brokerage commissions. Professional
fees increased $223,922 or 107.6% due to the increase in legal fees primarily
associated with the lawsuit brought by Maxus. Subadvisory fees increased $22,496
due to the new subadvisory agreements with Lion Resource Management Limited
effective August 25, 1995 for Midas Fund and Bull & Bear Gold Investors Ltd.
Amortization and depreciation decreased $695 or 0.7% for the year.
Net income for 1995 was $156,376 or $.10 per share as compared to $83,460
or $.05 per share in 1994.
LIQUIDITY AND CAPITAL RESOURCES
The following table reflects the Company's consolidated working capital,
total assets, long-term debt and shareholders' equity as of the dates indicated.
DECEMBER 31,
1996 1995 1994
---- ---- ----
Working Capital $2,293,200 $2,792,059 $2,779,722
Total Assets $4,273,110 $4,963,792 $4,240,241
Long-Term Debt $ 22,093 $ - $ -
Shareholders' Equity $3,917,886 $4,170,095 $3,909,699
For the year ended 1996, working capital, total assets and shareholders'
equity decreased $498,859, $690,682 and $252,209, respectively. Long-term debt
increased $22,093.
Working capital decreased as a result of the net loss for 1996 and the
acquisition of intangible assets and fixed assets offset by the non-cash items
of depreciation and amortization. The decrease in shareholders' equity was
primarily the result of the net loss for 1996 of $320,525 offset by the issuance
of common stock on exercise of stock options of $3,750 and the increase in
unrealized capital gains on marketable securities of $64,566. Total assets
decreased as a result of the net loss and the decrease in current liabilities
offset by the increase in unrealized gains on marketable securities. Long-term
debt increased due to the capitalized lease obligations for equipment.
For the year 1995, working capital, total assets and shareholders' equity
increased $12,337, $723,551 and $260,396, respectively.
Working capital increased as a result of the net income for 1995, the
non-cash expense items of depreciation and amortization offset by the
acquisition of intangible assets and fixed assets. The increase in shareholders'
equity was primarily the result of the net income for 1995 of $156,376, the
issuance of common stock on exercise of stock options of $33,000 and the
unrealized capital gains on marketable securities of $66,020. Total assets
increased as a result of net income, the unrealized gains on marketable
securities and the increase in current liabilities.
For the year 1994, shareholders' equity increased $109,710 and working
capital and total assets decreased $520,846 and $471,197, respectively.
-10-
The decrease in working capital in 1994 was due to the liquidation and
dissolution on December 30, 1994 of Dover Regional Financial Shares ("Dover"), a
closed-end registered investment company, which resulted in the distribution of
its assets to the minority shareholders and the purchase of real estate held for
investment of $260,088. These decreases in working capital were offset by
working capital generated from net income from operations of $83,460 and by the
non-cash expense items of depreciation and amortization of $98,094. The increase
in shareholders' equity was due primarily to the net income for the year. As
discussed previously, significant changes in the securities market can have a
dramatic effect on the Company's results of operations. Based on current
information available, management believes that current resources are sufficient
to meet the Company's liquidity needs.
Management knows of no contingencies that are reasonably likely to result
in a material decrease in the Company's liquidity or that are likely to
adversely affect the Company's capital resources. This includes the restrictions
placed on the transfer of funds to the Company from BBSI and ISC as a result of
their regulatory net capital requirements. At December 31, 1996, the amount
subject to these restrictions was $275,000 or 6.4% of total assets.
EFFECTS OF INFLATION AND CHANGING PRICES
Since the Company derives revenue from investment management, distribution
and shareholder administration services from the Funds and from discount
brokerage services, it is not possible for it to discuss or predict with
accuracy the impact of inflation and changing prices on its revenues from
continuing operations.
-11-
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements required by Regulation S-X and Supplementary
Financial Information required by Regulation S-K are presented herein.
FINANCIAL STATEMENTS AND SUPPORTING SCHEDULES
TABLE OF CONTENTS
PAGE
Report of Independent Certified Public Accountants 13
Consolidated Balance Sheets,
December 31, 1996 and 1995 14
Consolidated Statements of Income,
Years ended December 31, 1996, 1995 and 1994 15
Consolidated Statements of Changes in Shareholders' Equity,
Years ended December 31, 1996, 1995 and 1994 16
Consolidated Statements of Cash Flows,
Years ended December 31, 1996, 1995 and 1994 17
Notes to Consolidated Financial Statements 19
-12-
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
BULL & BEAR GROUP, INC.:
We have audited the accompanying consolidated balance sheets of Bull & Bear
Group, Inc. and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Bull & Bear Group,
Inc. and subsidiaries at December 31, 1996 and 1995, and the consolidated
results of their operations and their consolidated cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
TAIT, WELLER & BAKER
PHILADELPHIA, PENNSYLVANIA
FEBRUARY 7, 1997
-13-
BULL & BEAR GROUP, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
1996 1995
---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 747,444 $ 1,467,674
Marketable securities (Note 3) 1,176,547 1,257,062
Management, distribution and shareholder
administration fees receivable 207,944 179,209
Interest, dividends and other receivables 204,684 248,241
Prepaid expenses and other current assets 289,712 433,570
------------- -------------
TOTAL CURRENT ASSETS 2,626,331 3,585,756
------------ ------------
REAL ESTATE HELD FOR INVESTMENT, NET 438,187 308,799
EQUIPMENT, FURNITURE AND FIXTURES, NET 237,851 207,194
EXCESS OF COST OVER NET BOOK VALUE OF SUBSIDIARIES,
NET (Note 2) 765,665 735,368
OTHER ASSETS 205,076 126,675
------------- -------------
1,646,779 1,378,036
------------ ------------
TOTAL ASSETS $ 4,273,110 $ 4,963,792
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 134,544 $ 610,242
Accrued professional fees 81,285 111,486
Accrued payroll and other related costs 53,012 43,208
Accrued other expenses 40,388 15,381
Current portion of capitalized lease obligation (Note 4) 12,282 -
Other current liabilities 11,620 13,380
-------------- --------------
TOTAL CURRENT LIABILITIES 333,131 793,697
------------- -------------
CAPITALIZED LEASE OBLIGATION (Note 4) 22,093 -
-------------- -----------------
CONTINGENCIES (Note 11) - -
SHAREHOLDERS' EQUITY (Notes 3, 5, 6, and 7) Common Stock, $.01 par value Class
A, 10,000,000 shares authorized;
1,350,017 and 1,348,017 shares
issued and outstanding 13,501 13,481
Class B, 20,000 shares authorized;
20,000 shares issued and outstanding 200 200
Additional paid-in capital 6,236,077 6,232,347
Retained earnings (deficit) (2,462,478) (2,141,953)
Unrealized gains on marketable securities 130,586 66,020
------------- --------------
TOTAL SHAREHOLDERS' EQUITY 3,917,886 4,170,095
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,273,110 $ 4,963,792
=========== ===========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-14-
BULL & BEAR GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
1996 1995 1994
---- ---- ----
REVENUES:
Management, distribution and
shareholder administration fees $4,922,945 $3,322,348 $3,786,066
Brokerage commissions and fees 2,351,983 1,821,513 1,768,527
Dividends, interest and other 142,084 147,169 (7,378)
------------ ------------ --------------
7,417,012 5,291,030 5,547,215
----------- ----------- -----------
EXPENSES:
General and administrative (Note 10) 4,040,219 3,195,115 3,225,891
Marketing 1,821,297 779,026 1,361,155
Clearing and brokerage charges 708,535 576,096 532,832
Subadvisory fees 705,248 22,496 37,728
Professional fees 296,874 431,934 170,284
Amortization and depreciation 138,116 97,399 98,094
------------ ------------- -------------
7,710,289 5,102,066 5,425,984
----------- ----------- -----------
Income (loss) before income taxes (293,277) 188,964 121,231
Income taxes (Note 9) 27,248 32,588 37,771
------------- ------------- -------------
NET INCOME (LOSS) $ (320,525) $ 156,376 $ 83,460
=========== =========== ============
PER SHARE DATA:
Primary and fully diluted
Net income $(.22) $.10 $.05
===== ==== ====
AVERAGE SHARES OUTSTANDING:
Primary 1,463,279 1,549,815 1,610,443
========= ========= =========
Fully diluted 1,469,354 1,551,564 1,610,658
========= ========= =========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-15-
BULL & BEAR GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
NUMBER OF SHARES AMOUNT
NOTES
RECEIVABLE
FOR UNREALIZED
ADDITIONAL COMMON RETAINED GAINS ON TOTAL
CLASS A CLASS B CLASS A CLASS B PAID-IN STOCK EARNINGS MARKETABLE SHAREHOLDERS'
COMMON COMMON COMMON COMMON CAPITAL ISSUED (DEFICIT) SECURITIES EQUITY
------ ------ ------ ------ ----------- --------- ---------- ----------- ----------
BALANCE, DECEMBER 31, 1993 1,498,152 20,000 $14,982 $200 $6,491,596 $(325,000)$(2,381,789)$ - $3,799,989
Issuance of Class A common stock
on exercise of stock options 5,000 - 50 - 6,200 - - - 6,250
Collection of note receivable - - - - - 20,000 - - 20,000
Net income - - - - - - 83,460 - 83,460
---------- ----------------- --------------------- -------------- ---------- ----------------------
BALANCE, DECEMBER 31, 1994 1,503,152 20,000 15,032 200 6,497,796 (305,000) (2,298,329) - 3,909,699
Voiding of 1993 exercise of stock
options and cancellation of
notes receivable (Note 7) (280,000) - (2,800) - (297,200) 300,000 - - -
Issuance of Class A common stock
on exercise of stock options 274,020 - 2,740 - 291,280 - - - 294,020
Received in exchange for exercise
of stock options (149,155) - (1,491) - (259,529) - - - 261,020)
Collection of note receivable - - - - - 5,000 - - 5,000
Net income - - - - - - 156,376 - 156,376
Unrealized gains on marketable
securities - - - - - - - 66,020 66,020
---------- ----------------- --------------------- -------------- --------- ----------- -----------
BALANCE, DECEMBER 31, 1995 1,348,017 20,000 13,481 200 6,232,347 - (2,141,953) 66,020 4,170,095
Issuance of Class A common stock
on exercise of stock options 2,000 - 20 - 3,730 - - - 3,750
Net loss - - - - - - (320,525) - (320,525)
Unrealized gains on marketable
securities - - - - - - - 64,566 64,566
---------- ----------------- --------------------- -------------- ----------- ---------- ----------
BALANCE, DECEMBER 31, 1996 1,350,017 20,000 $13,501 $200 $6,236,077 $ - $(2,462,478) $130,586 $3,917,886
========= ====== ======= ==== ========== ======================== ======== ==========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-16-
BULL & BEAR GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
1996 1995 1994
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $ (320,525) $ 156,376 $ 83,460
----------- ------------ -------------
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS)
TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Depreciation and amortization 138,116 97,399 98,094
Increase in cash value of life insurance (30,000) (30,000) (16,675)
Realized/unrealized (gain) loss on investments (32,725) (26,048) 97,774
(Increase) decrease in:
Management, distribution and shareholder
administration fees receivable (28,735) (18,642) 62,628
Interest, dividends and other receivables 43,557 (32,387) (12,556)
Prepaid expenses and other current assets 143,858 (199,301) (6,571)
Other assets (48,401) 12,802 4,668
Increase (decrease) in:
Accounts payable (475,698) 412,719 (151,530)
Accrued expenses 4,610 51,156 (64,095)
Other current liabilities (1,760) (720) (802)
-------------- ---------------- ----------------
TOTAL ADJUSTMENTS (287,178) 266,978 10,935
------------ ------------- --------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (607,703) 423,354 94,395
------------ ------------- --------------
-17-
BULL & BEAR GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
YEARS ENDED DECEMBER 31,
1996 1995 1994
---- ---- ----
CASH FLOWS FROM INVESTING ACTIVITIES:
Improvement to real estate held for investment $ (204,642) $ (2,105) $ (235,087)
Capital expenditures (100,799) (58,744) (37,076)
Proceeds from sale of Properties 43,763 - -
Proceeds from sales of investments 963,318 414,790 2,671,623
Purchases of investments (785,512) (1,396,250) (1,281,644)
Acquisition of intangible assets (66,780) (267,411) -
------------- ------------- -----------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (150,652) (1,309,720) 1,117,816
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Collection of note receivable - 5,000 20,000
Issuance of notes receivable - - (80,000)
Increase in capitalized lease obligation 46,416 - -
Repayments of capitalized lease obligation (12,041) - -
Proceeds from issuance of
Class A Common Stock 3,750 33,000 6,250
Redemption of Minority Interest - - (364,480)
------------------ ------------------- -------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 38,125 38,000 (418,230)
------------- -------------- -------------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (720,230) (848,366) 793,981
CASH AND CASH EQUIVALENTS:
Beginning of year 1,467,674 2,316,040 1,522,059
----------- ------------ ------------
END OF YEAR $ 747,444 $ 1,467,674 $ 2,316,040
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE:
The Company did not pay any Federal income taxes in 1996, 1995 or 1994.
The Company paid $1,309 in interest in 1996 and no interest in 1995 or 1994.
Common stock received and retired in exchange for exercise of stock options
was $261,020 in 1995.
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-18-
BULL & BEAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Bull & Bear Group, Inc. ("Company") is a holding company. Its
subsidiaries' business consists of providing investment management,
distribution and shareholder administration services for the Bull &
Bear Funds, Midas Fund and Rockwood Fund ("Funds") and discount
brokerage services.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Bull &
Bear Group, Inc. and all of its subsidiaries. Substantially all
intercompany accounts and transactions have been eliminated.
ACCOUNTING ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of
the financial statements, as well as the reported amounts of revenues
and expenses during the reported period. Actual results could differ
from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable, and accrued expenses and other liabilities
approximate fair value because of the short maturity of these items.
Marketable securities are recorded at market value which represents the
fair value of the securities.
CASH AND CASH EQUIVALENTS
Investments in money market funds are considered to be cash
equivalents. At December 31, 1996 and 1995, the Company and
subsidiaries had invested approximately $657,500 and $1,196,300,
respectively, in an affiliated money market fund.
MARKETABLE SECURITIES
The Company and its non-broker/dealer subsidiaries' marketable
securities are considered to be "available-for-sale" and recorded at
market value, with the unrealized gain or loss included in
stockholders' equity. Marketable securities for the broker/dealer
subsidiaries are valued at market with unrealized gains and losses
included in earnings.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
In the normal course of business, the Company's customer activities
involve the execution and settlement of customer transactions. These
activities may expose the Company to risk of loss in the event the
customer is unable to fulfill its contracted obligations, in which case
the Company may have to purchase or sell financial instruments at
prevailing market prices. Any loss from such transactions is not
expected to have a material effect on the Company's financial
statements.
-19-
BULL & BEAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
DECEMBER 31, 1996, 1995 AND 1994
BROKERAGE INCOME AND EXPENSES
Brokerage commission and fee income and clearing and brokerage expenses
are recorded on a settlement date basis. The difference between
recording such income and expenses on a settlement date basis as
opposed to trade date, as required by generally accepted accounting
principles, is not material to the consolidated financial statements.
INCOME TAXES
The Company and its wholly-owned subsidiaries file consolidated income
tax returns. The Company's method of accounting for income taxes
conforms to Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes." This method requires the recognition of
deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the financial reporting
basis and the tax basis of assets and liabilities.
REAL ESTATE HELD FOR INVESTMENT AND EQUIPMENT
Real estate held for investment is recorded at cost and is depreciated
on the straight-line basis over its estimated useful life. At December
31, 1996 and 1995, accumulated depreciation amounted to approximately
$27,400 and $123,100, respectively. Equipment, furniture and fixtures
are recorded at cost and are depreciated on the straight-line basis
over their estimated useful lives, 3 to 10 years. At December 31, 1996
and 1995, accumulated depreciation amounted to approximately $749,300
and $680,000, respectively.
EXCESS OF COST OVER NET BOOK VALUE OF SUBSIDIARIES
The excess of cost over net book value of subsidiaries is capitalized
and amortized over fifteen and forty years using the straight-line
method. At December 31, 1996 and 1995, accumulated amortization
amounted to approximately $585,100 and $548,700, respectively.
Periodically, the Company reviews its intangible assets for events or
changes in circumstances that may indicate that the carrying amounts of
the assets are not recoverable.
EARNINGS PER SHARE
Primary and fully diluted earnings per share for the years ended
December 31, 1996, 1995 and 1994 are determined by dividing net income
by the weighted average number of common shares outstanding after
giving effect for common stock equivalents arising from stock options
assumed converted to common stock.
RECLASSIFICATIONS
Certain reclassifications of the 1995 and 1994 financial statements
have been made to conform to the 1996 presentation.
-20-
BULL & BEAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
DECEMBER 31, 1996, 1995 AND 1994
2. ACQUISITION
During the year ended December 31, 1996, the Company acquired the
management of Rockwood Fund for approximately $31,300. This purchase was
capitalized as part of excess of cost over net book value and is being
amortized over 15 years using the straight-line method.
During the year ended December 31, 1995, the Company purchased the assets
relating to the management of Midas Fund, Inc. for $182,500, plus related
costs of approximately $84,900. In addition, the Company expended
approximately $35,500 in connection with this purchase in 1996. This
purchase was capitalized as part of excess of cost over net book value and
is being amortized over 15 years using the straight-line method.
3. MARKETABLE SECURITIES
At December 31, 1996, marketable securities consisted of:
Broker/dealer securities - at market
U.S. Treasury Notes, due 5/15/97 - 6/30/99 (cost $956,925) $ 961,000
-----------
Other companies
Available-for-sale securities - at market
Unaffiliated mutual funds 37,251
Affiliated mutual funds 7,662
Equity securities 170,634
------------
Total available-for-sale securities (cost - $84,961) 215,547
------------
$1,176,547
At December 31, 1995, marketable securities consisted of:
Broker/dealer securities - at market
U.S. Treasury Note, due 7/31/97 $ 200,876
Affiliated mutual funds 62,494
------------
Total broker/dealer securities (cost - $264,104) 263,370
------------
Other companies
Available-for-sale securities - at market
Unaffiliated mutual funds 29,024
Affiliated mutual funds 6,220
Equity securities 181,413
U.S. Treasury Notes, due 5/15/97 - 6/30/99 777,035
------------
Total available-for-sale securities (cost - $927,672) 993,692
------------
$1,257,062
At December 31, 1996 and 1995, the Company had $130,586 and $66,020,
respectively, of unrealized gains on "available-for-sale securities" which
is reported as a separate component of consolidated shareholders' equity.
-21-
BULL & BEAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
DECEMBER 31, 1996, 1995 AND 1994
4. LEASE COMMITMENTS
The Company has a lease for approximately 11,400 square feet of office
space. The rent is approximately $144,000 per annum plus $32,550 per annum
for electricity. The lease expires December 31, 1998 and is cancelable at
the option of the Company on three months' notice. In addition, the
Company's discount broker/dealer has a branch office in Boca Raton,
Florida consisting of approximately 1,000 square feet. The rent is
approximately $22,200 per annum and is cancelable at the option of the
Company on six months' notice.
The Company leases office equipment under capital leases expiring in 1999.
The related property is included in furniture and equipment at a cost of
$45,457 at December 31, 1996. Depreciation expense of $13,889 has been
recognized on this property as of December 31, 1996. Future annual minimum
lease payments under the capital leases together with the present value of
the net minimum lease payments are as follows:
YEAR ENDING DECEMBER 31,
1997 $13,201
1998 15,173
1999 7,586
---------
Total minimum lease payments 35,960
Less amount representing interest and executory costs 1,585
---------
Present value of minimum lease payments $34,375
=======
5. SHAREHOLDERS' EQUITY
The Class A and Class B Common Stock are identical in all respects except
for voting rights, which are vested solely in the Class B Common Stock.
The Company also has 1,000,000 shares of Preferred Stock, $.01 par value,
authorized. As of December 31, 1996 and 1995, none of the Preferred Stock
was issued.
6. NET CAPITAL REQUIREMENTS
The Company's broker/dealer subsidiaries are member firms of the National
Association of Securities Dealers, Inc. and are registered with the
Securities and Exchange Commission as broker/dealers. Under the Uniform
Net Capital Rule (Rule 15c3-1 under the Securities Exchange Act of 1934),
a broker/dealer must maintain minimum net capital, as defined, of not less
than (a) $250,000 or, when engaged solely in the sale of redeemable shares
of registered investment companies, $25,000, or (b) 6-2/3% of aggregate
indebtedness, whichever is greater; and a ratio of aggregate indebtedness
to net capital, as defined, of not more than 15 to 1. At December 31,
1996, these subsidiaries had net capital of approximately $566,900 and
$605,800; net capital requirements of $250,000 and $25,000; excess net
capital of approximately $316,900 and $580,800; and the ratios of
aggregate indebtedness to net capital were approximately .30 to 1 and .48
to 1, respectively.
-22-
BULL & BEAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
DECEMBER 31, 1995, 1994 AND 1993
7. STOCK OPTIONS
On December 6, 1995, the Company adopted a Long-Term Incentive Plan which
provides for the granting of a maximum of 300,000 options to purchase
Class A Common Stock to directors, officers and key employees of the
Company or its subsidiaries. The plan was amended on February 5, 1996.
With respect to non-employee directors, only automatic grants of stock
options of 10,000 are available on the date the non-employee director is
elected, except for the current two non-employee directors who were
granted 10,000 options each on December 6, 1995. The option price per
share may not be less than the fair value of such shares on the date the
option is granted, and the maximum term of an option may not exceed ten
years except as to non-employee directors for which the maximum term is
five years. If the recipient of any option owns 10% or more of the Class B
shares, the option price must be at least 110% of the fair market value
and the option must be exercised within five years of the date the option
is granted. The plan also provides for reload options in which
non-qualified options may be granted to officers and key employees when
payment of the option price of the original outstanding options is with
previously owned shares of the Company. These reload options have to be
equal to the number of shares surrendered in payment of the option price
of the original options, have an option price equal to the fair market
value of such shares on the date the reload option is granted, and have
the same expiration date as the original option.
The 1990 Incentive Stock Option Plan provided for the granting of a
maximum of 500,000 options to purchase Class A Common Stock to directors,
officers and key employees of the Company. The option price per share may
not be less than the greater of 100% of the fair market value or the par
value of such shares on the date the option is granted, and the maximum
term of an option may not exceed ten years. If the recipient of any option
owns 10% or more of the total combined voting power of all classes of
stock, the option price must be at least 110% of the fair market value and
the option must be exercised within five years of the date the option is
granted.
The Company applied APB Opinion 25 and related interpretations in
accounting for its stock option plans. Accordingly, no compensation cost
has been recognized for its stock option plans. Proforma compensation cost
for the Company's plans is required by Financial Accounting Standards No.
123 "Accounting for Stock-Based Compensation (SFAS 123)" and has been
determined based on the fair value at the grant dates for awards under
these plans consistent with the method of SFAS 123. For purposes of
proforma disclosure, the estimated fair value of the options is amortized
to expense over the options' vesting period. The Company's proforma
information follows:
YEARS ENDED DECEMBER 31,
1996 1995
---- ----
Net income (loss): As reported $(320,525) $156,376
Proforma $(463,738) $149,218
Earnings per share
Primary and fully diluted: As reported $(.22) $.10
Proforma $(.32) $.10
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted
average assumptions used for grants in 1996 and 1995, respectively:
expected volatility of 93.82% and 95.90%, risk-free interest rate of 5.30%
and 5.90% and expected life of five years for all grants.
-23-
BULL & BEAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
DECEMBER 31, 1996, 1995 AND 1994
A summary of the status of the Company's stock option plans as of December
31, 1996 and 1995, and changes during the years ending on those dates is
presented below:
WEIGHTED
NUMBER AVERAGE
OF EXERCISE
STOCK OPTIONS SHARES PRICE
OUTSTANDING AT DECEMBER 31, 1994 146,000 $1.12
Voided exercise of previously issued stock options
(see below) 280,000 $1.07
Granted 29,000 $1.91
Exercised (268,020) $1.07
Canceled (137,980) $1.05
--------
OUTSTANDING AT DECEMBER 31, 1995 49,000 $1.76
Granted 229,000 $1.95
Exercised (2,000) $1.88
Canceled (27,000) $1.91
---------
OUTSTANDING AT DECEMBER 31, 1996 249,000 $1.92
========
There were no options exercisable at December 31, 1996 and 1995. The
weighted-average fair value of options granted were $1.42 and $1.45 for
the years ended December 31, 1996 and 1995, respectively.
The following table summarizes information about stock options outstanding
at December 31, 1996:
OPTIONS OUTSTANDING
WEIGHTED-AVERAGE
RANGE OF NUMBER REMAINING WEIGHTED-AVERAGE
EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE
$1.50 - $1.625 20,000 3.2 years $1.54
$1.875 - $2.75 229,000 4.1 years $1.95
In addition, there were 20,000 non-qualified stock options with an
exercise price of $1.75 outstanding as of December 31, 1996.
The Company's Board of Directors determined, at a meeting of the board
held on November 6, 1995, that the 1993 exercise of the 280,000 incentive
stock options by certain officers be voided and the 4.86% promissory notes
given in consideration ("1993 Notes") and Class A shares issued therefor
("1993 Shares") be canceled. As a result, the stock options were restored
to their previous outstanding status. Further, on November 6, 1995,
241,020 of these stock options were exercised. In December 1995, an
additional 7,000 of these stock options were exercised. The Company
received $7,000 in cash and 149,155 shares of Class A shares in payment
for the exercise of these options. The shares acquired by the Company were
canceled and retired. The cancellation of the 1993 Notes resulted in a
reduction of interest income of $29,768 in 1995.
-24-
BULL & BEAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
DECEMBER 31, 1996, 1995 AND 1994
8. PENSION PLAN
The Company has a 401(k) retirement plan for substantially all of its
qualified employees. Contributions to this are based upon a percentage of
earnings of eligible employees and are accrued and funded on a current
basis. Total pension expense for the years ended December 31, 1996, 1995
and 1994 was approximately $39,900, $31,100 and $27,500, respectively.
9. INCOME TAXES
The provision for income taxes charged to operations was as follows:
1996 1995 1994
---- ---- ----
Current
State and local $27,248 $32,588 $37,771
Federal - - -
------------- ------------- -----------
$27,248 $32,588 $37,771
======= ======= =======
Deferred tax assets (liabilities) are comprised of the following at
December 31, 1996 and 1995:
1996 1995
---- ----
Unrealized appreciation on investments $ (45,800) $ (29,400)
Net operating loss carryforwards 509,500 436,600
---------- ----------
Net deferred tax assets 463,700 407,200
Deferred tax asset valuation allowance (463,700) (407,200)
---------- ----------
Net deferred tax assets $ - $ -
================ ============
The full amount of the deferred tax asset was offset by a valuation
allowance due to uncertainties associated with the ultimate realization of
the net operating loss carryforwards. The change in the valuation
allowance for the year ended December 31, 1996 was the result of the net
operating loss for the year and the increase in the unrealized
appreciation on investments.
For the year ended December 31, 1996, the provision for income taxes
differs from the amount of income taxes determined by applying the
applicable U.S. statutory federal tax rates to pre-tax income as a result
of utilization of net operating loss carryforwards.
At December 31, 1996, the Company had net operating loss carryforwards for
Federal income tax purposes of approximately $1,498,600, of which
$1,033,100, $187,800, $62,700 and $215,000 expire in 2004, 2005, 2006 and
2011, respectively.
-25-
BULL & BEAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
DECEMBER 31, 1996, 1995 AND 1994
10. RELATED PARTIES
MANAGEMENT, DISTRIBUTION AND SHAREHOLDER ADMINISTRATION FEES
All management and distribution fees are from providing services to the
Funds. All such services are provided pursuant to agreements that set
forth the fees to be charged for these services. These agreements are
subject to annual review and approval by each Fund's Board of Directors
and a majority of the Fund's non-interested directors. Shareholder
administration fees represent reimbursement of costs incurred by
subsidiaries of the Company on behalf of the open-end Funds. Such
reimbursement amounted to approximately $249,700, $363,200 and $466,800
for the years ended December 31, 1996, 1995 and 1994, respectively.
In connection with investment management services, the Company's
investment managers waived management fees from the Funds in the amount
of approximately $535,900, $270,200 and $256,900 for the years ended
December 31, 1996, 1995 and 1994, respectively, and are included in
general and administrative expenses in the Statement of Income.
Certain officers of the Company also serve as officers and/or directors of
the Funds.
Commencing August 1992, the Company has a key man life insurance policy
on the life of the Company's Chairman which provides for the payment of
$1,000,000 to the Company upon his death. As of December 31, 1996, the
policy had a cash surrender value of approximately $76,700 and is
included in other assets in the balance sheet.
The Company's discount broker/dealer received brokerage commissions of
approximately $179,500, $153,200 and $108,100 from the Funds for the
years ended December 31, 1996, 1995 and 1994, respectively.
11. CONTINGENCIES
The Company and its directors are defendants in a lawsuit brought on April
24, 1995 by Maxus Investment Group, Maxus Capital Partners, Maxus Asset
Management, Inc., and Maxus Securities Corp. (collectively "Maxus"), which
now claim to collectively own or control 144,000 shares, or approximately
10.7% of the Class A Common stock of the Company. The action, seeking
declaratory and injunctive relief, was filed in the federal district court
for the Southern District of New York and purports to be brought on the
plaintiffs' own behalf and derivatively on behalf of the Company. On April
11, 1996, the district court dismissed as a matter of law all claims
brought by the plaintiffs except those relating to the voiding of 1993
exercises, the exercise of certain 1990 stock options and plaintiffs'
request for attorneys' fees from the Company. Defendants thereafter filed
answers denying liability. The Company believes that the lawsuit is
without merit and intends to continue defending the remaining claims
vigorously.
-26-
BULL & BEAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
DECEMBER 31, 1996, 1995 AND 1994
From time to time, the Company and/or its subsidiaries are threatened or
named as defendants in litigation arising in the normal course of
business. As of December 31, 1996, neither the Company nor any of its
subsidiaries was involved in any other litigation that, in the opinion of
management, would have a material adverse impact on the consolidated
financial statements.
In July 1994, the Company entered into a Death Benefit Agreement
("Agreement") with the Company's Chairman. Following his death, the
Agreement provides for annual payments equal to 80% of his average annual
salary for the three year period prior to his death subject to certain
adjustments to his wife until her death. The Company's obligations under
the Agreement are not secured and will terminate if he leaves the
Company's employ under certain conditions.
-27-
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
THREE MONTHS ENDED
MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1996
REVENUES $1,526,469 $2,054,758 $1,904,869 $1,930,916
========== ========== ========== ==========
INCOME (LOSS)
Net Income (Loss) $ (418,274) $ (199,710) $ 134,673 $ 162,786
=========== =========== =========== ===========
INCOME (LOSS) PER SHARE
Net Income (Loss) $(.30) $(.13) $.09 $.12
===== ===== ==== ====
1995
REVENUES $1,292,575 $1,323,620 $1,362,963 $1,311,872
========== ========== ========== ==========
INCOME (LOSS)
Net Income (Loss) $ 113,764 $ 115,490 $ 50,894 $ (123,772)
=========== =========== ============ ===========
INCOME (LOSS) PER SHARE
Net Income (Loss) $.07 $.07 $.03 $(.07)
==== ==== ==== =====
1994
REVENUES $1,579,794 $1,375,965 $1,412,499 $1,178,957
========== ========== ========== ==========
INCOME (LOSS)
Net Income (Loss) $ (163,608) $ (12,946) $ 93,642 $ 166,372
=========== ============ ============ ===========
INCOME (LOSS) PER SHARE
Net Income (Loss) $(.11) $(.01) $.06 $.11
===== ===== ==== ====
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no changes in or disagreements with the Company's accountants
on accounting and financial disclosure matters during the two years ended
December 31, 1996.
-28-
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The following list contains the names, ages, positions and lengths of
service of all directors and executive officers of the Company.
NAME POSITION YEARS OF SERVICE AGE
DIRECTOR OFFICER
Bassett S. Winmill Chairman of the Board 20 20 67
Robert D. Anderson Vice Chairman of the Board, 20 20 67
Mark C. Winmill Co-President, 8 10 39
Chief Financial Officer,
Director
Thomas B. Winmill, Esq. Co-President, 8 9 37
General Counsel, Director
Edward G. Webb, Jr. Director 11* - 57
Charles A. Carroll Director 5 - 66
Steven A. Landis Senior Vice President - 2 41
William J. Maynard Secretary - 2 32
James R. Mitchell, II Senior Vice President - 3 35
Joseph Leung Treasurer, - 2 31
Chief Accounting Officer
* 1985 TO 1990 AND 1992 TO PRESENT.
-29-
Set forth below is a description of the business experience of the
directors and executive officers of the Company during the past five years.
BASSETT S. WINMILL - Chairman of the Board of Directors. He is also
Chairman of the investment companies managed by Company subsidiaries. He is a
member of the New York Society of Security Analysts, the Association for
Investment Management and Research, and the International Society of Financial
Analysts.
ROBERT D. ANDERSON - Vice Chairman of the Board of Directors. He is also
Vice Chairman of the investment companies managed by Company subsidiaries and of
the subsidiaries of the Company. He is a member of the Board of Governors of the
Mutual Fund Educational Alliance.
MARK C. WINMILL - Co-President, Chief Financial Officer and Director. He is
also President of Bull & Bear Securities, Inc. and Co-President and Chief
Financial Officer of the investment companies managed by Company subsidiaries
and certain other subsidiaries of the Company. He is a son of Bassett S. Winmill
and a brother of Thomas B. Winmill.
THOMAS B. WINMILL, ESQ. - Co-President, General Counsel and Director. He is
also President of Bull & Bear Advisers, Inc. and Co-President of the investment
companies managed by Company subsidiaries and certain other subsidiaries of the
Company. He is a member of the New York State Bar. He is a son of Bassett S.
Winmill and a brother of Mark C. Winmill.
EDWARD G. WEBB, JR. - Director. He has been President of Webb Associates,
Ltd since 1996. From 1990 to 1996, he was Investment Director for Home Insurance
Company. Prior to that, he served as a Senior Vice President and Director of the
Company.
CHARLES A. CARROLL - Director. From 1989 to the present, he has been
affiliated with Kalin Associates, Inc., a member firm of the New York Stock
Exchange. STEVEN A. LANDIS - Senior Vice President. He is also Senior Vice
President
of the mutual funds managed by Company subsidiaries. From 1993 to 1995 he was
Associate Director of Proprietary Trading at Barclays De Zoete Wedd Securities,
Inc., from 1992 to 1993 he was Director, Bond Arbitrage at WG Trading Company,
and from 1989 to 1992 he was Vice President of Wilkinson Boyd Capital Markets.
WILLIAM J. MAYNARD - Secretary. He is also Vice President and Secretary of
the mutual funds managed by Company subsidiaries. He is a member of the New York
State Bar. From 1991 to 1994 he was associated with the law firm of Skadden,
Arps, Slate, Meagher & Flom.
JAMES R. MITCHELL, II - Senior Vice President. He is also Senior Vice
President of BBSI since 1994. From 1992 to 1994 he was Vice President of BBSI.
JOSEPH LEUNG, CPA - Treasurer and Chief Accounting Officer. He is also
Treasurer and Chief Accounting Officer of the mutual funds managed by Company
subsidiaries. From 1992 to 1995 he held various positions with Coopers & Lybrand
L.L.P., a public accounting firm. From 1991 to 1992 he was the accounting
supervisor at Retirement Systems Group, a mutual fund company.
Each director is elected by the vote or written consent of the holder of a
majority of the Class B Common Stock and holds office until the next meeting of
the Class B common stockholder and until his successor is elected and qualified,
or until his earlier death, resignation or removal.
-30-
Based solely on the information from Forms 3, 4, and 5 furnished to it,
the Company believes that the directors, officers, and owners of more than 10
percent of the Class A Common Stock of the Company have not failed to file on a
timely basis reports required by Section 16(a) of the Securities Exchange Act of
1934 during the most recent fiscal year or prior fiscal years.
Based on information available to the Company, including a December 4,
1996 letter from its counsel, Maxus (See Note 11) owns 144,000 shares or 10.7%
of the outstanding Class A Common Stock of the Company. Such entities have not
furnished the Company with any form under Section 16 of the Securities Exchange
Act of 1934.
ITEM 11. EXECUTIVE COMPENSATION
The following information and tables set forth the information required
under the Securities and Exchange Commission's executive compensation rules. Any
information not presented is omitted because the item is not applicable or not
required since the Company qualifies as a small business issuer.
SUMMARY COMPENSATION TABLE
The following table sets forth, for the three years ended December 31,
1996, the compensation paid to the chief executive officers and the other
executive officers whose total annual salary and bonus exceeded $100,000 in
1996.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION ALL OTHER
NAME AND SALARY BONUS OTHER ANNUAL COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) COMPENSATION* (A) (B)
- ------------------ ---- -------- --------- ------------- --- ---
Bassett S. Winmill 1996 $170,000 $28,333 - $5,166 $4,750
Chairman 1995 $160,000 $10,000 - $4,788 $4,620
1994 $160,000 $ 6,667 - $3,790 $3,000
Robert D. Anderson 1996 $ 90,000 $15,000 - $2,142 $3,211
Vice Chairman 1995 $ 89,000 $ 5,562 - $2,104 $3,310
1994 $ 89,000 $ 3,708 - $2,104 $1,844
Mark C. Winmill 1996 $110,000 $18,115 - $ 152 $3,997
Co-President 1995 $100,000 $ 6,250 - $ 132 $3,462
1994 $100,000 $ 4,167 - $ 132 $2,083
Thomas B. Winmill 1996 $110,000 $18,115 - $ 152 $4,066
Co-President 1995 $100,000 $ 6,250 - $ 132 $3,678
1994 $100,000 $ 4,167 - $ 132 $2,083
Brett B. Sneed 1996 $112,000 $18,667 - $1,062 $4,220
Senior Vice President 1995 $110,000 $15,125 - $ 662 $4,091
1994 $110,000 $ - - $ 662 $2,420
Steven A. Landis 1996 $112,000 $18,667 - $ 241 $1,750
Senior Vice President 1995 $ 86,167 $ 8,250 - $ 150 $ -
1994$ - $ - - $ - $ -
-31-
* Information omitted as perquisites do not exceed the lesser of $50,000 or
10% of the total annual salary and bonus for the year for the named
executive officers.
(a) Represents term life insurance
(b) Represents Company's matching contributions to 401(k) Plan.
OPTION GRANTS TABLE
The following table sets forth, for the year ended December 31, 1996,
information regarding the options granted to each of the executive officers
named in the Summary Compensation Table.
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
---- ---------------------------- ----------------------- -- ---
Bassett S. Winmill 50,000 21.8 $2.0625 2/5/01 $16,525 $47,875
Mark C. Winmill 50,000 21.8 $1.8750 2/5/01 $25,900 $57,250
Thomas B. Winmill 50,000 21.8 $1.8750 2/5/01 $25,900 $57,250
Robert D. Anderson 20,000 8.7 $1.8750 2/5/01 $10,360 $22,900
Brett B. Sneed 20,000 8.7 $1.8750 2/5/01 $10,360 $22,900
Steven A. Landis 20,000 8.7 $1.8750 2/5/01 $10,360 $22,900
Of the above options, 205,000 are exercisable on February 5, 1998, with
the remaining 5,000 options of Bassett S. Winmill exercisable on February 5,
1999.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth, for the year ended December 31, 1996,
information regarding the outstanding options for each of the executive officers
named in the Summary Compensation Table.
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED DOLLAR 12-31-96 (#) 12-31-96 ($)
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
Bassett S. Winmill - - 0/50,000 0/$46,875
Mark C. Winmill - - 0/50,000 0/$56,250
Thomas B. Winmill - - 0/50,000 0/$56,250
Brett B. Sneed - - 0/20,000 0/$22,500
Robert D. Anderson - - 0/20,000 0/$22,500
Steven A. Landis - - 0/20,000 0/$22,500
LONG-TERM INCENTIVE PLAN AWARDS TABLE
There were no long-term incentive plan awards made during the year ended
December 31, 1996.
-32-
COMPENSATION OF DIRECTORS
Edward G. Webb, Jr. and Charles A. Carroll were the only individuals who
received compensation for their service as directors of the Company in 1996.
They were each paid $500 per quarter as a retainer and $2,000 per quarterly
meeting attended plus expenses. For the year ended December 31, 1996, Mr. Webb
and Mr. Carroll were each paid $10,500 for attending all four meetings and a
special telephonic meeting. Mr. Webb and Mr. Carroll each also received an
option to purchase 10,000 shares of Class A Common Stock at an exercise price of
$1.75 per share.
EMPLOYMENT CONTRACTS
The Company has no employment or termination contracts with any of its
employees.
REPRICING OF OPTIONS TABLE
There was no repricing of options during the year ended December 31, 1996.
1995 LONG-TERM INCENTIVE PLAN
On December 6, 1995, the Board of Directors of the Company ("Board") and
the Class B voting common stockholder adopted the Bull & Bear Group, Inc. 1995
Long-Term Incentive Plan ("Plan"), under which options and stock-based awards
(collectively, "Awards") may be made to directors, officers and employees of the
Company or its subsidiaries. Under the Plan, only automatic Awards are made to
non-employee directors ("Non-Employee Directors"). The Plan was amended by the
Board and the Class B voting common stockholder on February 5, 1996. The amended
Plan is described below.
The purpose of the Plan is to assist the Company and its subsidiaries in
attracting and retaining highly competent officers and directors and otherwise
on behalf of the Company. The Plan also acts as an incentive in motivating
selected officers and key employees to achieve long-term objectives of the
Company, which will inure to the benefit of all stockholders of the Company. Any
proceeds raised by the Company under the Plan will be used for working capital
purposes.
GENERAL PROVISIONS
Duration of the Plan; Share Authorization. The Plan will terminate on
December 6, 2005, unless terminated earlier by the Board.
Three hundred thousand (300,000) shares of the Company's Class A Common
Stock ("Shares") are available for Awards under the Plan. The Shares to be
offered under the Plan are authorized and unissued Shares, or issued Shares that
have been reacquired by the Company and held in its treasury. Holders of Shares
do not have voting rights except as specifically provided by the Delaware
General Corporation Law.
Shares covered by any unexercised portions of terminated options, Shares
forfeited by Participants, and Shares subject to any Awards that are otherwise
surrendered by a Participant without receiving any payment or other benefit with
respect thereto may again be subject to new Awards under the Plan. In the event
the purchase price of an option or tax withholding relating to an Award is paid
in whole or in part through the delivery of Shares, the number of Shares
issuable in connection with the exercise of the option may not again be
available for the grant of Awards under the Plan.
-33-
Plan Administration. The Plan is administered by the Stock Option
Committee ("Committee") of the Board. The Committee is composed of at least two
directors of the Company, each of whom is a "disinterested person" as defined in
Rule 16b-3 promulgated by the SEC ("Rule 16b-3") under Section 16 of the
Securities Exchange Act of 1934, as amended ("Exchange Act"). The Committee will
determine the officers and other key employees who will be eligible for and
granted Awards, determine the amount and type of Awards, establish and modify
administrative rules relating to the Plan, impose such conditions and
restrictions on Awards as it determines appropriate and take such other action
as may be necessary or advisable for the proper administration of the Plan. The
Committee may, with respect to Participants who are not subject to Section 16 of
the Exchange Act, delegate such of its powers and authority under the Plan as it
deems appropriate to certain officers or employees of the Company.
Plan Participants. Any employee of the Company or its subsidiaries,
whether or not a director of the Company, may be selected by the Committee to
receive an Award under the Plan. Non-Employee Directors only receive automatic
and non-discretionary stock options and are not eligible to receive any other
Awards under the Plan.
AWARDS AVAILABLE UNDER THE PLAN
Awards to employees under the Plan may take the form of stock options or
Restricted Share Awards. Awards under the Plan may be granted alone or in
combination with other Awards. The stock options awarded to Non-Employee
Directors are automatic and non-discretionary in operation. The consideration
for issuance of Awards under the Plan is the continued services of the employees
and non-employee directors to the Company and its subsidiaries.
Stock Options Granted to Employees. Stock options ("Incentive Stock
Options") meeting the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended from time to time, or any successor thereto ("Code"), and
stock options that do not meet such requirements ("Non- Qualified Stock
Options") are both available for grant to employees under the Plan.
The term of each option will be determined by the Committee, but no option
will be exercisable prior to six months from the date of grant or more than ten
years after the date of grant. If, however, an Incentive Stock Option is granted
to a Participant who, at the time of grant of the option, owns (or is deemed to
own under Section 424(d) of the Code) more than 10% (a "Ten Percent
Shareholder") of the Company's Class B common stock, par value $0.01 per share
("Company Voting Securities"), the option is not exercisable more than five
years after the date of grant. Options may also be subject to restrictions on
exercise, such as exercise in periodic installments, performance targets and
waiting periods, as determined by the Committee.
The exercise price of each option is determined by the Committee; however,
the per share exercise price of an option must be at least equal to 100% of the
Fair Market Value (as defined below) of a Share on the date of grant of such
option. If, however, an Incentive Stock Option is granted to a Ten Percent
Shareholder, the per share exercise price of the option must be at least equal
to 110% of the Fair Market Value of a Share on the date of grant of such option.
Fair Market Value of a Share means, as of any given date, the most recently
reported sale price of a Share on such date as of the time when Fair Market
Value is being determined on the principal national securities exchange on which
the Shares are then traded or, if the Shares are not then traded on a national
securities exchange, the most recently reported sale price of the Shares on such
date as of the time when Fair Market Value is being determined on Nasdaq;
provided, however, that, if there were no sales reported as of such date, Fair
Market Value is the last sale price previously reported. In the event the Shares
are not admitted to trade on a securities exchange or quoted on Nasdaq, the Fair
Market Value of a Share as of any given date is as determined in good faith by
the Committee. Notwithstanding the foregoing, the Fair Market Value of a Share
will never be less than par value per share.
-34-
Subject to whatever installment exercise and waiting period provisions the
Committee may impose, options may be exercised in whole or in part at any time
prior to expiration of the option by giving written notice of exercise to the
Company specifying the number of Shares to be purchased. Such notice must be
accompanied by payment in full of the purchase price in such form as the
Committee may accept (including payment in accordance with a cashless exercise
program under which, if so instructed by the Participant, Shares may be issued
directly to the Participant's broker or dealer upon receipt of the purchase
price in cash from the broker or dealer). If and to the extent determined by the
Committee in its sole discretion at or after grant, payment in full or in part
may also be made in the form of Shares duly owned by the Participant (and for
which the Participant has good title, free and clear of any liens and
encumbrances) or by reduction in the number of Shares issuable upon such
exercise based, in each case, on the Fair Market Value of the Shares on the date
the option is exercised. In the case of an Incentive Stock Option, however, the
right to make payment of the purchase price in the form of Shares may be
authorized only at the time of grant.
Stock options granted under the Plan are not transferable except by will
or the laws of descent and distribution and may be exercised, during the
Participant's lifetime, only by the Participant.
Unless the Committee provides for a shorter period of time, upon a
Participant's termination of employment other than by reason of death or
disability, the Participant may, within three months from the date of such
termination of employment, exercise all or any part of his or her options as
were exercisable at the date of termination of employment but only if (x) the
Participant resigns or retires and the Committee consents to such resignation or
retirement and (y) such termination of employment is not for cause. In no event,
however, may any option be exercised after the time when it would otherwise
expire. If such termination of employment is for cause or the Committee does not
so consent, the right of such Participant to exercise such options will
terminate at the date of termination of employment.
Further, unless the Committee provides for a shorter period of time, upon
a Participant's becoming disabled (such date being the "Disability Date"), the
Participant may, within one year after the Disability Date, exercise all or a
part of his or her options that were exercisable upon such Disability Date. In
no event, however, may any option be exercised after the time when it would
otherwise expire.
Further, unless the Committee provides for a shorter period of time, in
the event of the death of a Participant while employed by the Company or prior
to the expiration of the option as provided for in the event of disability, to
the extent all or any part of the option was exercisable as of the date of death
of the Participant, the right of the Participant's beneficiary to exercise the
option will expire upon the expiration of one year from the date of the
Participant's death (but in no event more than one year from the Participant's
Disability Date) or on the stated termination date of the option, whichever is
earlier. In the event of the Participant's death, the Committee may, in its sole
discretion, accelerate the right to exercise all or any part of an Option that
would not otherwise be exercisable.
To the extent all or any part of an option was not exercisable as of the
date of a Participant's termination of employment, such right will expire at the
date of such termination of employment. Notwithstanding the foregoing, the
Committee, in its sole discretion and under such terms as it deems appropriate,
may permit a Participant who will continue to render significant services to the
Company after his or her termination of employment to continue to accrue service
with respect to the right to exercise his or her options during the period in
which the individual continues to render such services.
-35-
Reload Options. The Committee may provide, at the time of grant of
Incentive Stock Options and at or after the time of grant of Non-Qualified Stock
Options, that, if a Participant surrenders Shares in full or partial payment of
the purchase price of an option, then, concurrent with such surrender, the
Participant, subject to the availability of Shares under the Plan, will be
granted a new Non-Qualified Stock Option (a "Reload Option") covering a number
of Shares equal to the number so surrendered. No Reload Option may be granted to
a Non-Employee Director. A Reload Option may be granted in connection with the
exercise of an option that is itself a Reload Option. Each Reload Option will
have the same expiration date as the original option and a per share exercise
price equal to the Fair Market Value of a Share on the date of grant of the
Reload Option. A Reload Option is exercisable at such time or times as the
Committee determines (except that no Reload Option is exercisable during the
first six months after grant) and will be subject to such other terms and
conditions as the Committee may prescribe.
Restricted Shares. The Committee may award restricted Shares ("Restricted
Shares") to a Participant. Such a grant gives a Participant the right to receive
Shares subject to a risk of forfeiture based upon certain conditions. The
forfeiture restrictions on the Restricted Shares may be based upon performance
standards, length of service or other criteria as the Committee may determine.
Until all restrictions are satisfied, lapsed or waived, the Company will
maintain control over the Restricted Shares but the Participant will be entitled
to receive dividends on the Restricted Shares; provided, however, that any
Shares distributed as a dividend or otherwise with respect to any Restricted
Shares as to which the restrictions have not yet lapsed will be subject to the
same restrictions as such Restricted Shares. When all restrictions have been
satisfied and/or waived or have lapsed, the Company will deliver to the
Participant or, in the case of the Participant's death, his or her beneficiary,
stock certificates for the appropriate number of Shares, free of all
restrictions (except those imposed by law). None of the Restricted Shares may be
assigned or transferred (other than by will or the laws of descent and
distribution), pledged or sold prior to lapse or release of the applicable
restrictions.
All of a Participant's Restricted Shares and rights thereto are forfeited
to the Company unless the Participant continues in the service of the Company or
any parent or subsidiary of the Company as an employee until the expiration of
the forfeiture period, and all other applicable restrictions of the Restricted
Shares. Notwithstanding the foregoing, the Committee may, in its sole
discretion, waive the forfeiture period and any other applicable restrictions on
a Participant's Restricted Share Award, provided that the Participant must at
that time have completed at least one year of employment after the date of
grant.
Non-Employee Director Options. The Plan provides for the grant of a
Non-Qualified Stock Option ("Non-Employee Director Option") to purchase 10,000
Shares to each Non-Employee Director on the date said Non-Employee Director is
elected as such for the first time. However, with respect to directors Edward G.
Webb, Jr. and Charles A. Carroll, they were each granted a Non-Employee Director
Option on December 6, 1995. The per share exercise price for such Non- Employee
Director Options is the Fair Market Value of a Share on the date of grant.
Accordingly, the per share exercise price of the options granted to Messrs.
Carroll and Webb was $1.75. All such options are Non-Qualified Stock Options and
have a five year term. Each such option is fully exercisable six months after
the date of grant, but is forfeited if the person ceases to be a Non- Employee
Director within six months of the date of grant of such option.
If a Non-Employee Director's service with the Company terminates by reason
of death or disability, his or her options may be exercised for a period of one
year from the date of such disability or death or until the expiration of the
option, whichever is shorter. If a Non-Employee Director's service with the
Company terminates other than by reason of death or disability, his or her
options may be exercised for a period of three months from the date of such
termination or until the expiration of the option, whichever is shorter.
-36-
TERMINATION AND AMENDMENT
The Board may amend or terminate the Plan at any time it is deemed
necessary or appropriate; provided, however, that no amendment may be made,
without the affirmative approval of the holder of Company Voting Securities,
that would require stockholder approval under Rule 16b-3, the Code or other
applicable law unless the Board determines that compliance with Rule 16b-3
and/or the Code is no longer desired.
Except as provided by the Committee, in its sole discretion, at the time
of an Award or pursuant to certain antidilution provisions (as discussed below),
no Award granted under the Plan to a Participant may be modified (unless such
modification does not materially decrease the value of the Award) after the date
of grant except by express written agreement between the Company and the
Participant, provided that any such change (a) may not be inconsistent with the
terms of the Plan, and (b) must be approved by the Committee.
The Board has the right and the power to terminate the Plan at any time.
No Award may be granted under the Plan after the termination of the Plan, but
the termination of the Plan will not have any other effect and any Award
outstanding at the time of the termination of the Plan may be exercised after
termination of the Plan at any time prior to the expiration date of such Award
to the same extent such Award would have been exercisable had the Plan not
terminated.
ANTIDILUTION PROVISIONS
Recapitalization. The number and kind of shares subject to outstanding
Awards, the purchase price or exercise price of such Awards, and the number and
kind of shares available for Awards subsequently granted under the Plan will be
appropriately adjusted to reflect any stock dividend, stock split, combination
or exchange of shares, merger, consolidation or other change in capitalization
with a similar substantive effect upon the Plan or the Awards granted under the
Plan. The Committee has the power and sole discretion to determine the nature
and amount of the adjustment to be made in each case. However, in no event will
any adjustment be made in accordance with the Plan's antidilution provisions to
any previous grant of Restricted Shares if an adjustment has been or will be
made to the Shares awarded to a Participant in such person's capacity as a
stockholder.
Sale or Reorganization. After any reorganization, merger or consolidation
in which the Company is the surviving entity, each Participant will, at no
additional cost, be entitled upon the exercise of an Award outstanding prior to
such event, and in connection with the payout after such event of any Award
outstanding at the time of such event, to receive (subject to any required
action by stockholders), in lieu of the number of Shares receivable or
exercisable pursuant to such option, the number and class of shares of stock or
other securities to which such Participant would have been entitled pursuant to
the terms of the reorganization, merger or consolidation if, at the time of such
reorganization, merger or consolidation, such Participant had been the holder of
record of a number of Shares equal to the number of Shares receivable or
exercisable pursuant to such Award. Comparable rights will accrue to each
Participant in the event of successive reorganizations, mergers or
consolidations of the character described above.
Options to Purchase Stock of Acquired Companies. After any reorganization,
merger or consolidation in which the Company is a surviving entity, the
Committee may grant substituted options under the provisions of the Plan,
pursuant to Section 424 of the Code, replacing old options granted under a plan
of another party to the reorganization, merger or consolidation whose stock
subject to the old options may no longer be issued following such merger or
consolidation. The foregoing adjustments and manner of application of the
foregoing provisions will be determined by the Committee in its sole discretion.
Any such adjustments may provide for the elimination of any fractional Shares
that might otherwise become subject to any options.
-37-
LOANS
The Company is entitled, if the Committee in its sole discretion deems it
necessary or desirable, to lend money to a Participant for purposes of (a)
exercising his or her rights under an Award hereunder or (b) paying any income
tax liability related to an Award; provided, however, that Non-Employee
Directors are not eligible to receive such loans and provided, further, that the
portion of the per share exercise price of an option equal to the par value per
Share may not be paid by means of a promissory note. Such a loan must be
evidenced by a recourse promissory note payable to the order of the Company
executed by the Participant and containing such other terms and conditions as
the Committee may deem desirable. The interest rate on such loans must be
sufficient to avoid imputed interest under the Code.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) Bassett S. Winmill, Chairman of the Board of Directors, owns all of
the issued and outstanding shares of the Company's Class B Common Stock, which
represents 100% of the Company's voting securities.
(b) The following table sets forth, as of December 31, 1996, information
relating to beneficial ownership by individual directors of the Company,
executive officers named in the Summary Compensation Table and by directors and
executive officers of the Company as a group, of the currently issued and
outstanding Class A Common Stock of the Company.
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (3) OF CLASS
------------------------ ------------------------ --------
Bassett S. Winmill 223,104 16.5%
Robert D. Anderson 98,414 7.3%
Thomas B. Winmill 79,870 (1) 5.9%
Mark C. Winmill 30,800 2.3%
Edward G. Webb, Jr. 6,684 (2)
Charles A. Carroll 10,000 (2)
Brett B. Sneed 20,000 1.5%
All directors and executive officers
as a group (11 persons) 468,872 34.7%
(1) Includes 36,000 and 10,000 shares held by Thomas B. Winmill's
wife and sons, respectively of which he disclaims beneficial
ownership.
(2) Less than 1%.
(3) The nature of the beneficial ownership for all the Class A
Common Stock is investment power.
-38-
(c) OTHER INFORMATION
In June 1994, the Board of Directors of the Company rejected an offer of
$3.50 per share contained in a letter dated May 17, 1994 to the Company from
Maxus Investment Group. Maxus, of Pepper Pike, Ohio, which was part of a group
that purportedly at that time owned 26.5% of the Company's Class A stock,
offered $3.50 per share for the balance of the Class A stock outstanding subject
to due diligence and the agreement by the holder of the Class B voting stock, to
sell all his Class B voting stock. The holder of the Class B voting stock
indicated to Maxus, as he had on numerous previous occasions, that he had no
intention of selling his Class B voting stock. In July 1994, the Board of
Directors of the Company unanimously determined not to proceed with a revised
proposal of Maxus Investment Group to liquidate the Company and guarantee
shareholders no less than $5.00 per share, as reflected in Maxus' letters dated
June 17, 1994 and June 28, 1994. The holder of the Class B voting stock advised
Maxus that he had no intention of selling his Class B stock or voting such stock
for any proposal or transaction involving the merger, sale, acquisition,
reorganization, dissolution, or any like extraordinary transaction involving the
Company (See also Note 11).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following sets forth the reportable items regarding indebtedness of
management in excess of $60,000. In connection with the exercise of stock
options and related tax expense, the Company received notes with an interest
rate of 4.86% per annum payable on the earlier of November 1, 1998 or within 60
days of termination of employment.
LARGEST AMOUNT
AMOUNT OF OUTSTANDING AT
NAME AND RELATIONSHIP INDEBTEDNESS DECEMBER 31, 1996
Bassett S. Winmill, Chairman $83,888 $80,000
-39-
PART IV
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES, AND
REPORTS ON FORM 8-K
(a) (1) Financial Statements
See Item 8 for a list of the financial statements filed
as part of this report.
(2) Financial Statement Schedules by Regulation S-X are not
required under the related instructions or are
inapplicable, and therefore have been omitted.
(3) Exhibits
(2) Not applicable
(3) Certificate of Incorporation as amended October
24, 1989 as filed as an exhibit to Form 10-K for
the year ended December 31, 1992 and incorporated
herein by reference and By-Laws amended as of
October 1, 1993 as filed as an exhibit to Form
10-K for the year ended December 31, 1993 and
incorporated herein by reference.
(4) Instruments defining the rights of security
holders, including indentures (see Article Four of
Certificate of Incorporation).
(9) Not applicable.
(10) Material Contracts
(a) Investment Management Agreements,
Distribution Agreements, Plans of
Distribution ("12b-1 Plans") and Shareholder
Administration Agreements between
subsidiaries of the Company and the Funds
and Non-Exclusive License Agreements between
the Company and the Funds:
SHAREHOLDER NON-EXCLUSIVE
MANAGEMENT DISTRIBUTION 12B-1 ADMINISTRATION LICENSE
FUND AGREEMENT AGREEMENT PLAN AGREEMENT AGREEMENT
(i) Bull & Bear Dollar Reserves (2) (2) (2) (5) (7)
(ii) Bull & Bear Gold Investors Ltd. (2) (2) (2) (5) (7)
(iii) Bull & Bear Global Income Fund, Inc. (7) - - - (7)
(iv) Bull & Bear U.S. and Overseas Fund (2) (2) (2) (5) (7)
(v) Bull & Bear Special Equities Fund, Inc. (2) (2) (2) (5) (7)
(vi) Bull & Bear Municipal Income Fund, Inc. (7) - - - (7)
(vii) Bull & Bear U.S. Government Securities
Fund, Inc. (7) - - - (7)
(viii) Midas Fund, Inc. (6) (6) (6) (6) (7)
(ix) Rockwood Fund, Inc. (7) (7) (7) (7) (7)
(1) Filed as exhibits to Form 10-K for the
year ended December 31, 1991 and
incorporated herein by reference.
(2) Filed as exhibits to Form 10-K for the
year ended December 31, 1993 and
incorporated herein by reference.
(3) Filed as exhibits to Form 10-K for the
year ended December 31, 1989 and
incorporated herein by reference.
(4) Filed as exhibits to Form 10-K for the
year ended December 31, 1990 and
incorporated herein by reference.
(5) Filed as exhibits to Form 10-K for the
year ended December 31, 1994 and
incorporated herein by reference.
-40-
(6) Filed as exhibits to Form 10-K for the
year ended December 31, 1995 and
incorporated herein by reference.
(7) Filed as exhibits to Form 10-K for the
year ended December 31, 1996 and filed
herewith.
(b) Bull & Bear Group, Inc. 1995 Long-Term
Incentive Plan, as adopted December 6, 1995
and amended February 6, 1996, filed as
exhibit to Form 10-K for the year ended
December 31, 1995 and incorporated herein by
reference.
(c) Section 422A Incentive Stock Option Plan, as
adopted December 5, 1990, filed as exhibit
to Form 10-K for the year ended December 31,
1990 and incorporated herein by reference.
(e) Investment Management Transfer Agreements
between the investment management
subsidiaries of the Company and filed as
exhibit to Form 10-K for the year ended
December 31, 1992 and incorporated herein by
reference.
(e) Bull & Bear Investment Plan, filed as an
exhibit to Form 10-K for the year ended
December 31, 1993 and incorporated herein by
reference.
(f) Death Benefit Agreement dated July 22, 1994
and filed as exhibit to Form 10-K for the
year ended December 31, 1994 and
incorporated herein by reference.
(g) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees - Bassett S. Winmill filed as an exhibit to Form 10-K for
the year ended December 31, 1995 and incorporated herein by
reference.
(h) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees - Robert D. Anderson filed as an exhibit to Form 10-K
for the year ended December 31, 1995 and incorporated herein by
reference.
(i) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees - Mark C. Winmill filed as an exhibit to Form 10-K for the
year ended December 31, 1995 and incorporated herein by
reference.
(j) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees - Thomas B. Winmill filed as an exhibit to Form 10-K for
the year ended December 31, 1995 and incorporated herein by
reference.
(k) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees - Steven A. Landis filed as an exhibit to Form 10-K for
the year ended December 31, 1995 and incorporated herein by
reference.
(l) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees - Edward G. Webb, Jr. filed as an exhibit to Form 10-K for
the year ended December 31, 1995 and incorporated herein by
reference.
-41-
(m) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees - Charles A. Carroll filed as an exhibit to Form 10-K for
the year ended December 31, 1995 and incorporated herein by
reference.
(11) Statement Regarding Computation of Per Share Earnings
(12) Not applicable.
(13) Not applicable.
(16) Not applicable.
(18) Not applicable.
(21) Wholly-Owned Subsidiaries of the Company
(22) Not applicable.
(23) Not applicable.
(24) Not applicable.
(27) Not applicable.
(28) Not applicable.
(99) Not applicable.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the last
quarter of the period covered by this report.
-42-
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Company has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
BULL & BEAR GROUP, INC.
March 28, 1997 By: /s/ Joseph Leung
Joseph Leung
Treasurer, Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Company and in
the capacities and on the dates indicated.
March 28, 1997 By: /s/ Bassett S. Winmill
----------------------
Bassett S. Winmill,
Chairman of the Board, Director
March 28, 1997 By: /s/ Robert D. Anderson
----------------------
Robert D. Anderson,
Vice Chairman, Director
March 28, 1997 By: /s/ Mark C. Winmill
Mark C. Winmill,
Co-President, Chief Financial Officer,
Director
March 28, 1997 By: /s/ Thomas B. Winmill
---------------------
Thomas B. Winmill, Esq.
Co-President, General Counsel,
Director
March 28, 1997 By: /s/ Edward G. Webb, Jr.
-----------------------
Edward G. Webb, Jr.
Director
March 28, 1997 By: /S/ Charles A. Carroll
----------------------
Charles A. Carroll,
Director
-43-
INDEX TO EXHIBITS
(3) Exhibits
(10) Material Contracts
(a) Investment Management Agreement between a subsidiary of the Company
and Rockwood Fund, Inc.
(b) Distribution Agreement between a subsidiary of the Company and Rockwood
Fund, Inc.
(c) Plan of Distribution between a subsidiary of the Company and Rockwood
Fund, Inc.
(d) Shareholder Administration Agreement between a subsidiary of the Company
and Rockwood Fund, Inc.
(e) Investment Management Agreement between a subsidiary of the Company
and Bull & Bear Municipal Income Fund, Inc.
(f) Investment Management Agreement between a subsidiary of the Company
and Bull & Bear U.S. Government Securities Fund, Inc.
(g) Investment Management Agreement between a subsidiary of the Company
and Bull & Bear Global Income Fund, Inc.
(h) Non-Exclusive License Agreement between the Company and Bull & Bear
Funds I, Inc.
(i) Non-Exclusive License Agreement between the Company and Bull & Bear
Funds II, Inc.
(j) Non-Exclusive License Agreement between the Company and Bull & Bear Gold
Investors, Ltd.
(k) Non-Exclusive License Agreement between the Company and Bull & Bear
Global Income Fund, Inc.
(l) Non-Exclusive License Agreement between the Company and Midas Fund, Inc.
(m) Non-Exclusive License Agreement between the Company and Bull & Bear
Municipal Income Fund, Inc.
(n) Non-Exclusive License Agreement between the Company and Rockwood Fund,
Inc.
(o) Non-Exclusive License Agreement between the Company and Bull & Bear
Special Equities Fund, Inc.
(p) Non-Exclusive License Agreement between the Company and Bull & Bear U.S.
Government Securities Fund, Inc.
(11) Statement Regarding Computation of Per Share Earnings
(21) Wholly-Owned Subsidiaries of the Company
-44-
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of this 28th day of February, 1997, by and between
ROCKWOOD FUND, INC. a Maryland corporation (the "Fund") and ROCKWOOD ADVISERS,
INC., a Delaware corporation (the "Investment Manager").
WHEREAS the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company and
offers for public sale shares of common stock; and
WHEREAS the Fund desires to retain the Investment Manager to furnish
certain investment advisory and portfolio management services to the Fund, and
the Investment Manager desires to furnish such services;
NOW THEREFORE, 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 thereof, including the regular furnishing
of advice with respect to the Fund's portfolio transactions subject at all times
to the control and oversight of the Fund's Board of Directors, 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, (a) salaries of administrative and
clerical personnel; (b) brokerage commissions; (c) taxes and governmental fees;
(d) costs of insurance and fidelity bonds; (e) fees of the transfer agent,
custodian, legal counsel and auditors; (f) association fees; (g) costs of
preparing, printing and mailing proxy materials, reports and notices to
shareholders; (h) costs of preparing, printing and mailing the prospectus and
statement of additional information and supplements thereto; (i) payment of
dividends and other distributions; (j) costs of stock certificates; (k) costs of
Board and shareholders meetings; (l) fees of the independent directors; (m)
necessary office space rental; (n) all fees and expenses (including expenses of
counsel) relating to the registration and qualification of shares of the Fund
under applicable federal and state securities laws and maintaining such
registrations and qualifications; and (o) 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 a plan of distribution adopted pursuant to
Rule 12b-1 under 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 31a-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, with respect to the Fund the Investment
Manager will be paid by the Fund a fee payable monthly and computed at the
annual rate of 1% of the first $200 million of average daily net assets of the
Fund, .95% of such net assets over $200 million up to $400 million, .90% of such
net assets over $400 million up to $600 million, .85% of such net assets over
$600 million up to $800 million, .80% of such net assets over $800 million up to
$1 billion, and .75% of such net assets over $1 billion. 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 other investment companies or
series thereof for which the Investment Manager or an affiliate thereof serves
as investment adviser. The Investment Manager may also allocate portfolio
transactions to broker/dealers that remit a portion of their commissions as a
credit against Fund expenses. 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, 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 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 remunera tion 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 or such lesser amount as may be agreed to by the
Fund's Board of Directors and the Investment Manager. 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 or the Fund's shareholders 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 or the Fund's
shareholders 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.
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.
ROCKWOOD FUND, INC.
By:/s/Thomas B. Winmill
ROCKWOOD ADVISERS, INC.
By:/s/Robert D. Anderson
DISTRIBUTION AGREEMENT
AGREEMENT made as of February 28, 1997, between ROCKWOOD FUND, INC.
("Fund"), a corporation organized and existing under the laws of the State of
Maryland, and Investor Service Center, Inc. ("Distributor"), a corporation
organized and existing under the laws of the State of Delaware.
WHEREAS the Fund is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company; and
WHEREAS the Fund desires to retain the Distributor as principal
distributor in connection with the offering and sale of the shares of common
stock ("Shares") and of such other series as may hereafter be designated
("Series") by the Fund's Board of Directors ("Board"); and
WHEREAS the Distributor is willing to act as principal distributor for
such Shares and for each such Series on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Distributor as its exclusive
agent to be the principal distributor to sell and to arrange for the sale of the
Shares on the terms and for the period set forth in this Agreement. The
Distributor hereby accepts such appointment and agrees to act hereunder.
2. Services and Duties of the Distributor.
(a) The Distributor agrees to sell the Shares on a best efforts basis
from time to time during the term of this Agreement as agent for the Fund and
upon the terms described in the Registration Statement. As used in this
Agreement, the term "Registration Statement" shall mean the currently effective
registration statement of the Fund, and any supplements thereto, under the
Securities Act of 1933, as amended ("1933 Act"), and the 1940 Act.
(b) Upon the later of the date of this Agreement or the initial offering
of the Shares to the public by a Series, the Distributor will hold itself
available to receive purchase orders, satisfactory to the Distributor for Shares
of that Series and will accept such orders on behalf of the Fund as of the time
of receipt of such orders and promptly transmit such orders as are accepted to
the Fund's transfer agent. Purchase orders shall be deemed effective at the time
and in the manner set forth in the Registration Statement.
(c) The Distributor in its discretion may enter into agreements to sell
Shares to such registered and qualified retail dealers, as it may select. In
making agreements with such dealers, the Distributor shall act only as principal
and not as agent for the Fund.
(d) The offering price of the Shares of each Series shall be the net
asset value per Share as next determined by the Fund following receipt of an
order at the Distributor's principal office. The Fund shall promptly furnish the
Distributor with a statement of each computation of net asset value.
(e)The Distributor shall not be obligated to sell any certain number of
Shares..
(f) The Distributor shall provide ongoing shareholder services, which
include responding to shareholder inquiries, providing shareholders with
information on their investments in the Series and any other services now or
hereafter deemed to be appropriate subjects for the payments of "service fees"
under Rule 2830 of the National Association of Securities Dealers, Inc.'s
Conduct Rules (collectively, "service activities").
(g) The Distributor shall have the right to use any lists of
shareholders of the Fund or any other lists of investors which it obtains in
connection with its provision of services under this Agreement; provided,
however, that the Distributor shall not sell or knowingly provide such lists of
shareholders to any unaffiliated person unless reasonable payment is made to the
Fund.
3. Authorization to Enter into Dealer Agreements and to Delegate Duties as
Distributor. With respect to any or all Series, the Distributor may enter into a
dealer agreement with respect to sales of the Shares or the provision of service
activities with any registered and qualified dealer. In a separate contract or
as part of any such dealer agreement, the Distributor also may delegate to
another registered and qualified dealer ("sub-distributor") any or all of its
duties specified in this Agreement, provided that such separate contract or
dealer agreement imposes on the sub- distributor bound thereby all applicable
duties and conditions to which the Distributor is subject under this Agreement,
and further provided that such separate contract meets all requirements of the
1940 Act and rules thereunder.
4. Services Not Exclusive. The services furnished by the Distributor hereunder
are not to be deemed exclusive and the Distributor shall be free to furnish
similar services to others so long as its services under this Agreement are not
impaired thereby. Nothing in this Agreement shall limit or restrict the right of
any director, officer or employee of the Distributor, who may also be a
director, officer or employee of the Fund, to engage in any other business or to
devote his or her time and attention in part to the management or other aspects
of any other business, whether of a similar or a dissimilar nature.
5. Compensation for Distribution and Service Activities.
(a) As compensation for its distribution and service activities under
this Agreement with respect to each Series and its shareholders, the Distributor
shall receive from the Fund a fee (or fees) at the rate and under the terms and
conditions of the Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act
("Plan") adopted by the Fund with respect to the Series, as such Plan is amended
from time to time, and subject to any further limitations on such fee as the
Board may impose.
(b) The Distributor may reallow any or all of the fees it is paid to
such dealers as the Distributor may from time to time determine.
6. Duties of the Fund.
(a) The Fund reserves the right at any time to withdraw offering Shares
of any or all Series by written notice to the Distributor at its principal
office.
(b) The Fund shall determine in its sole discretion whether certificates
shall be issued with respect to the Shares. If the Fund has determined that
certificates shall be issued, the Fund will not cause certificates representing
Shares to be issued unless so requested by shareholders. If such request is
transmitted by the Distributor, the Fund will cause certificates evidencing
Shares to be issued in such names and denominations as the Distributor shall
from time to time direct.
(c) The Fund shall keep the Distributor fully informed of its affairs
and shall make available to the Distributor copies of all information, financial
statements, and other papers which the Distributor may reasonably request for
use in connection with the distribution of Shares, including, without
limitation, certified copies of any financial statements prepared for the Fund
by its independent public accountant and such reasonable number of copies of the
most current prospectus, statement of additional information, and annual and
interim reports of any Series as the Distributor may request, and the Fund shall
cooperate fully in the efforts of the Distributor to sell and arrange for the
sale of the Shares of the Series and in the performance of the Distributor's
duties under this Agreement.
(d) The Fund shall take, from time to time, all necessary action,
including payment of the related filing fee, as may be necessary to register
Shares of each Series under the 1933 Act to the end that there will be available
for sale such number of Shares as the Distributor may be expected to sell. The
Fund agrees to file, from time to time, such amendments, reports, and other
documents as may be necessary in order that there will be no untrue statement of
a material fact in the Registration Statement, nor any omission of a material
fact which omission would make the statements therein misleading.
(e) The Fund shall use its best efforts to qualify and maintain the
qualification of an appropriate number of Shares of each Series for sale under
the securities laws of such states or other jurisdictions as the Distributor and
the Fund may approve, and, if necessary or appropriate in connection therewith,
to qualify and maintain the qualification of the Fund as a broker or dealer in
such jurisdictions; provided that the Fund shall not be required to amend its
Articles of Incorporation or By-Laws to comply with the laws of any
jurisdiction, to maintain an office in any jurisdiction, to change the terms of
the offering of the Shares in any jurisdiction from the terms set forth in its
Registration Statement, to qualify as a foreign corporation in any jurisdiction,
or to consent to service of process in any jurisdiction other than with respect
to claims arising out of the offering of the Shares. The Distributor shall
furnish such information and other material relating to its affairs and
activities as may be required by the Fund in connection with such
qualifications.
7. Expenses of the Fund. The Fund shall bear all costs and expenses of
registering the Shares with the Securities and Exchange Commission and state and
other regulatory bodies, and shall assume expenses related to communications
with shareholders of each Series, including (i) fees and disbursements of its
counsel and independent public accountant; (ii) the preparation, filing and
printing of registration statements and/or prospectuses or statements of
additional information required under the federal securities laws; (iii) the
preparation and mailing of annual and interim reports, prospectuses, statements
of additional information and proxy materials to shareholders; and (iv) the
qualifications of Shares for sale and of the Fund as a broker or dealer under
the securities laws of such jurisdictions as shall be selected by the Fund and
the Distributor pursuant to Paragraph 6(e) hereof, and the costs and expenses
payable to each such jurisdiction for continuing qualification therein.
8. Expenses of the Distributor. Distributor shall bear all costs and expenses of
(i) preparing, printing and distributing any materials not prepared by the Fund
and other materials used by the Distributor in connection with the sale of
Shares under this Agreement, including the additional cost of printing copies of
prospectuses, statements of additional information, and annual and interim
shareholder reports other than copies thereof required for distribution to
existing share holders or for filing with any Federal or state securities
authorities; (ii) any expenses of advertising incurred by the Distributor in
connection with such offering; (iii) the expenses of registration or
qualification of the Distributor as a broker or dealer under federal or state
laws and the expenses of continuing such registration or qualification; and (iv)
all compensation paid to the Distributor's employees and others for selling
Shares, and all expenses of the Distributor, its employees and others who engage
in or support the sale of Shares as may be incurred in connection with their
sales efforts.
9. Indemnification.
(a) The Fund agrees to indemnify, defend and hold the Distributor, its
officers and directors, and any person who controls the Distributor within the
meaning of Section 15 of the 1933 Act, free and harmless from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Distributor, its officers,
directors or any such controlling person may incur under the 1933 Act, or under
common law or otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in the Registration Statement or arising
out of or based upon any alleged omission to state a material fact required to
be stated in the Registration Statement or necessary to make the statements
therein not misleading, except insofar as such claims, demands, liabilities or
expenses arise out of or are based upon any such untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information furnished in writing by the Distributor to the Fund for use in
the Registration Statement; provided, however, that this indemnity agreement
shall not inure to the benefit of any person who is also an officer or director
of the Fund or who controls the Fund within the meaning of Section 15 of the
1933 Act, unless a court of competent jurisdiction shall determine, or it shall
have been determined by controlling precedent, that such result would not be
against public policy as expressed in the 1933 Act; and further provided, that
in no event shall anything contained herein be so construed as to protect the
Distributor against any liability to the Fund or to the shareholders of any
Series to which the Distributor 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 under this Agreement. The
Fund shall not be liable to the Distributor under this indemnity agreement with
respect to any claim made against the Distributor or any person indemnified
unless the Distributor or other such person shall have notified the Fund in
writing of the claim within a reasonable time after the summons or other first
written notification giving information of the nature of the claim shall have
been served upon the Distributor or such other person (or after the Distributor
or the person shall have received notice of service on any designated agent).
However, failure to notify the Fund of any claim shall not relieve the Fund from
any liability which it may have to the Distributor or any person against whom
such action is brought otherwise than on account of this indemnity agreement.
The Fund shall be entitled to participate at its own expense in the defense or,
if it so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity agreement. If the Fund elects to assume the defense of
any such claim, the defense shall be conducted by counsel chosen by the Fund and
satisfactory to indem nified defendants in the suit whose approval shall not be
unreasonably withheld. In the event that the Fund elects to assume the defense
of any suit and retain counsel, the indemnified defendants shall bear the fees
and expenses of any additional counsel retained by them. If the Fund does not
elect to assume the defense of a suit, it will reimburse the indemnified
defendants for the reasonable fees and expenses of any counsel retained by the
indemnified defendants. The Fund agrees to notify the Distributor promptly of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of any of its
Shares.
(b) The Distributor 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 (including any loss arising out of the
receipt by the Distributor of inadequate consideration in connection with an
order to purchase Shares whether in the form of fraudulent check, draft or wire;
a check returned for insufficient funds; or any other inadequate consideration
(hereinafter "Check Loss")), except a loss resulting from the willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement; provided, however, that the Fund shall not be liable for Check Loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Distributor.
(c) The Distributor agrees to indemnify, defend, and hold the Fund, its
officers and directors and any person who controls the Fund within the meaning
of Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the cost of investigating
or defending against such claims, demands or liabilities and any counsel fees
incurred in connection therewith) which the Fund, its directors or officers, or
any such controlling person may incur under the 1933 Act or under common law or
otherwise arising out of or based upon any alleged untrue statement of a
material fact contained in information furnished in writing by the Distributor
to the Fund for use in the Registration Statement, arising out of or based upon
any alleged omission to state a material fact in connection with such infor
mation required to be stated in the Registration Statement necessary to make
such information not misleading, or arising out of any agreement between the
Distributor and any retail dealer, or arising out of any supplemental sales
literature or advertising used by the Distributor in connection with its duties
under this Agreement. The Distributor shall be entitled to participate, at its
own expense, in the defense or, if it so elects, to assume the defense of any
suit brought to enforce the claim, but if the Distributor elects to assume the
defense, the defense shall be conducted by counsel chosen by the Distributor and
satisfactory to the indemnified defendants whose approval shall not be
unreasonably withheld. In the event that the Distributor elects to assume the
defense of any suit and retain counsel, the defendants in the suit shall bear
the fees and expenses of any additional counsel retained by them. If the
Distributor does not elect to assume the defense of any suit, it will reimburse
the indemnified defendants in the suit for the reasonable fees and expenses of
any counsel retained by them.
10. Services Provided to the Fund by Employees of the Distributor. Any person,
even though also an officer, director, employee or agent of the Distributor who
may be or become an officer, director, employee or agent of the Fund, shall be
deemed, when rendering services to the Fund or acting in any business of the
Fund, to be rendering such services to or acting for solely the Fund and not as
an officer, director, employee or agent or one under the control or direction of
the Distributor even though paid by the Distributor.
11. Duration and Termination.
(a) This Agreement shall become effective as of the date first written
above, provided that, with respect to any Series, this Agreement shall not take
effect unless such action has first been approved by vote of a majority of the
Board and by vote of a majority of those directors of the Fund who are not
interested persons of the Fund, and have no direct or indirect financial
interest in the operation of the Plan relating to the Series or in any
agreements related thereto (all such directors collectively being referred to
herein as the "Independent Directors"), cast in person at a meeting called for
the purpose of voting on such action.
(b) Unless sooner terminated as provided herein, this Agreement shall
continue in effect for one year 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 (i) by a vote of a majority of the Independent Directors, cast
in person at a meeting called for the purpose of voting on such approval, and
(ii) by the Board or with respect to any given Series by vote of a majority of
the outstanding voting securities of such Series.
(c) Notwithstanding the foregoing, with respect to any Series, this
Agreement may be terminated at any time, without the payment of any penalty, by
vote of the Board, by vote of a majority of the Independent Directors or by vote
of a majority of the outstanding voting securities of the Shares of such Series
on sixty days' written notice to the Distributor or by the Distributor at any
time, without the payment of any penalty, on sixty days' written notice to the
Fund or such Series. This Agreement will automatically terminate in the event of
its assignment.
(d) Termination of this Agreement with respect to any given Series shall
in no way affect the continued validity of this Agreement or the performance
thereunder with respect to any other Series.
12. 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.
13. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of New York and the 1940 Act. To the extent that the
applicable laws of the State of New York conflict with the applicable provisions
of the 1940 Act, the latter shall control.
14.Notice. Any notice required or permitted to be given by either party to
the other shall be deemed sufficient upon receipt in writing at the other
party's principal offices.
15. 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 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. As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meaning as such terms have in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated as of the day and year first above
written.
ATTEST: ROCKWOOD FUND, INC.
/s/William J. Maynard By: /s/Thomas B. Winmill
ATTEST: INVESTOR SERVICE CENTER, INC.
/s/William J. Maynard By: /s/Robert D. Anderson
PLAN OF DISTRIBUTION
WHEREAS ROCKWOOD FUND, INC. (the "Fund") is registered under the Investment
Company Act of 1940, as amended ("1940 Act"), as an open-end management
investment company, and offers for public sale shares of common stock; and
WHEREAS the Fund has entered into a Distribution Agreement ("Agreement")
with Investor Service Center, Inc. (the "Distributor") pursuant to which the
Distributor has agreed to serve as the principal distributor for the Fund;
NOW, THEREFORE, the Fund hereby adopts this plan of distribution ("Plan")
with respect to the Fund in accordance with Rule 12b-1 under the 1940 Act.
1. As Distributor for the Fund, the Distributor may spend such amounts as it
deems appropriate on any activities or expenses primarily intended to result in
the sale of the Fund's shares or the servicing and maintenance of shareholder
accounts, including, but not limited to: advertising, direct mail, and
promotional expenses; compensation to the Distributor and its employees;
compensation to and expenses, including overhead and telephone and other
communication expenses, of the Distributor, the Investment Manager, the Fund,
and selected broker/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 distribut ing 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 Distributor and
allocated by the Distributor to its efforts to distribute shares of the Fund or
service shareholder accounts such as office rent and equipment, employee
salaries, employee bonuses and other overhead expenses.
2. A. The Fund is authorized to pay to the Distributor, as compensation for the
Distributor's distribution and service activities as defined in paragraph 13
hereof with respect to its shareholders, a fee at the rate of 0.25% on an
annualized basis of its average daily net assets. All or a portion of such fee
may be designated by the Fund's board of directors ("Board") as a fee for
service activities or as a fee for distribution activities. Such fee shall be
calculated and accrued daily and paid monthly or at such other intervals as the
Board shall determine.
B. The Fund may pay fees to the Distributor at a lesser rate than the fees
specified in paragraph 2A of this Plan as mutually agreed to by the Board and
the Distributor.
3. This Plan shall not take effect until it has been approved by:
A. the vote of at least a majority of the outstanding voting securities of
the Fund; and
B. the vote cast in person at a meeting called for the purpose of voting
on this Plan of a majority of both (i) those directors of the Fund who are not
interested persons of the Fund and have no direct or indirect financial interest
in the operation of this Plan or any agreement related to it (the "Plan
Directors"), and (ii) all of the directors then in office.
4. This Plan shall continue in effect for one year from its execution or
adoption and thereafter for so long as such continuance is specifically approved
at least annually in the manner provided for approval of this Plan in paragraph
3B.
5. The Distributor shall provide to the Board and the Board shall review, at
least quarterly, a written report of the amounts expended under this Plan and
the purposes for which such expenditures were made. A reasonable allocation of
overhead and other expenses of the Distributor related to its distribution
activities and service activities, including telephone and other communication
expenses, may be included in the information regarding amounts expended for such
activities.
6. This Plan may not be amended to increase materially the amount of fees
provided for in paragraphs 2A and 2B hereof unless such amendment is approved by
a vote of a majority of the outstanding voting securities of the Fund, and no
material amendment to this Plan shall be made unless approved by the Board and
the Plan Directors in the manner provided for approval of this Plan in paragraph
3B.
7. The amount of the fees payable by the Fund to the Distributor under
paragraphs 2A and 2B hereof is not related directly to expenses incurred by the
Distributor on behalf of the Fund in serving as distributor, and paragraph 2
hereof does not obligate the Fund to reimburse the Distributor for such
expenses. The fees set forth in paragraphs 2A and 2B hereof will be paid by the
Fund to the Distributor unless and until this Plan is terminated or not renewed.
If this Plan is terminated or not renewed, any expenses incurred by the
Distributor on behalf of the Fund in excess of payments of the fees specified in
paragraphs 2A and 2B hereof which the Distributor has received or accrued
through the termination date are the sole responsibility and liability of the
Distributor, and are not obligations of the Fund.
8. Any other agreements related to this Plan shall not take effect until
approved in the manner provided for approval of this Plan in paragraph 3B.
9. The Distributor shall use its best efforts in rendering services to the Fund
hereunder, but in the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties or reckless disregard of its
obligations and duties hereunder, the Distributor shall not be liable to the
Fund, the Fund or to any shareholder of the Fund for any act or failure to act
by the Distributor or any affiliated person of the Distributor or for any loss
sustained by the Fund, the Fund or the Fund's shareholders.
10. This Plan may be terminated at any time by vote of a majority of the Plan
Directors, or by vote of a majority of the outstanding voting securities of the
Fund.
11. While this Plan is in effect, the selection and nomination of directors who
are not interested persons of the Fund shall be committed to the discretion of
the directors who are not interested persons.
12. The Fund shall preserve copies of this Plan and any other agreements related
to this Plan and all reports made pursuant to paragraph 5 hereof, for a period
of not less than six years from the date of this Plan, or the date of any such
agreement or of any such report, as the case may be, the first two years in an
easily accessible place.
13. For purposes of this Plan, "distribution activities" shall mean any
activities in connection with the Distributor's performance of its services
under this Plan or the Agreement that are not deemed "service activities."
"Service activities" shall mean activities covered by the definition of "service
fee" contained in Rule 2830 of the National Association of Securities Dealers,
Inc.'s Conduct Rules.
14.As used in this Plan, the terms: "majority of the outstanding voting
securities" and "interested person" shall have the same meaning as those terms
have in the 1940 Act.
IN WITNESS WHEREOF, the Fund has executed this Plan as of the day and
year set forth below in the City and State of New York.
DATE: February 28, 1997
ATTEST: ROCKWOOD FUND, INC.
/s/ William J. Maynard By:/s/ Thomas B. Winmill
SHAREHOLDER ADMINISTRATION AGREEMENT
AGREEMENT made as of February 28, 1997 between Rockwood Fund, Inc., a
Maryland corporation ("Fund"), and Investor Service Center, Inc. ("ISC"), a
Delaware corporation.
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Fund desires to retain ISC to provide certain shareholder
services for the Fund and each Series of shares now existing or as hereinafter
may be established; and
WHEREAS, as a convenience to the Fund and its shareholders ISC is
willing to furnish such services at cost and without a view to profit thereby;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints ISC as agent to perform the services
for the period and on the terms set forth in this Agreement. ISC accepts such
appointment and agrees to furnish the services herein set forth, in return for
the reimbursement specified in paragraph 3 of this Agreement. ISC agrees to
comply with all relevant provisions of the 1940 Act and the Securities Exchange
Act of 1934, as amended ("1934 Act"), and applicable rules and regulations
thereunder in performing such services.
2. Services and Duties of ISC. ISC shall be responsible for the following
services relating to shareholders of the Fund ("Shareholders"): (a) assisting
the transfer agent in receiving and responding to written and telephone
Shareholder inquiries concerning their accounts; (b) processing Shareholder
telephone requests for transfers, purchases, redemptions, changes of address and
similar matters; (c) assisting as necessary in proxy solicitation; (d) providing
a service center for coordinating, researching and answering general inquiries,
as well as those required by legal process, regarding Shareholder account data;
and (e) administering and correcting Fund records as authorized by the Board of
Directors of the Fund.
3. Reimbursement. For the performance of its obligations hereunder, the Fund
will reimburse ISC the actual costs incurred with respect thereto, including,
without limitation, the following costs and all other expenses related to the
performance of ISC's obligations hereunder: (a) benefits, payroll taxes, and
search costs of ISC personnel; (b) telephone; (c) rent; (d) equipment, including
telephone PBX, answering machine, call distributor, conversation recording
machine and maintenance thereon; (e) blue sky registration and filing for ISC
and its registered representatives; (f) travel and meals; (g) mail, postage, and
overnight delivery services; (h) allocated E&O and fidelity bond insurance; (i)
publications, memberships, and subscriptions; (j) office supplies; (k) printing;
(l) Shareholder service related training courses; and (m) corporate audit and
franchise taxes. Such costs and expenses shall be allocated among the Fund and
the other investment companies or series thereof for which ISC or any affiliate
thereof provides services similar to those provided hereunder based on the
relative number of open Shareholder accounts and other factors deemed
appropriate by the Board of Directors of the Fund.
4. Cooperation with Accountants. ISC shall cooperate with the Fund's independent
public accountants and shall take all reasonable action in the performance of
its obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion, including but not limited to the opinion included in the Fund's
semi-annual reports on Form N-SAR.
5.Equipment Failures. In the event of failures beyond ISC's control, ISC shall
take reasonable steps to minimize service interruptions but shall have no
liability with respect thereto.
6. Responsibility of ISC. ISC shall be under no duty to take any action on
behalf of the Fund or any Series except as specifically set forth herein or as
may be specifically agreed to by ISC in writing. In the performance of its
duties hereunder, ISC shall be obligated to exercise care and diligence, but
shall not be liable for any act or omission which does not constitute willful
misfeasance, bad faith or gross negligence on the part of ISC or reckless
disregard by ISC of its duties under this Agreement. Without limiting the
generality of the foregoing or of any other provision of this Agreement, in
connection with its duties under this Agreement, ISC shall not be liable for
delays or errors occurring by reason of circumstances beyond ISC's control,
including acts of civil or military authorities, national emergencies, labor
difficulties, fire, mechanical breakdown, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
7. Indemnification. The Fund agrees to indemnify and hold harmless ISC and its
agents from all taxes, charges, expenses, assessments, claims and liabilities
including (without limitation) liabilities arising under the Securities Act of
1933, as amended, the 1934 Act and any state and foreign securities and blue sky
laws and regulations, all as or to be amended from time to time, and expenses,
including (without limitation) attorneys' fees and disbursements arising
directly or indirectly from any action or matter which ISC takes or does or
omits to take or do.
8. Duration and Termination. This Agreement shall continue until terminated by
the Fund with respect to any or all Series thereof, or by ISC. Termination of
this Agreement with respect to any given Series shall in no way affect the
continued validity of this Agreement or the performance thereunder with respect
to any other Series.
9.Amendments. This Agreement or any part thereof may be changed or waived only
by an instrument in writing signed by the party against which enforcement of
such change or waiver is sought.
10. Miscellaneous. This Agreement embodies the entire contract and understanding
between the parties hereto. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions thereof or otherwise affect their construction or effect. 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 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 designated below as of the date first above written.
ATTEST: ROCKWOOD FUND, INC.
/s/William J. Maynard By: /s/Thomas B. Winmill
ATTEST: INVESTOR SERVICE CENTER, INC.
/s/ William J. Maynard By:/s/Robert D. Anderson
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made on November 8, 1996, by and between BULL & BEAR MUNICIPAL
INCOME FUND, INC. a Maryland corporation (the "Fund") and BULL & BEAR ADVISERS,
INC., a Delaware corporation (the "Investment Manager").
WHEREAS the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as a closed-end management investment company; and
WHEREAS the Fund desires to retain the Investment Manager to furnish
certain investment advisory and portfolio management services to the Fund, and
the Investment Manager desires to furnish such services;
NOW THEREFORE, 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 its assets, including the regular furnishing of
advice with respect to the Fund's portfolio transactions subject at all times to
the control and oversight of the Fund's Board of Directors, 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 and qualification 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. 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.
4. 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.
5. 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 31a-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.
6. As compensation for its services provided pursuant to this Agreement,
the Fund will pay to the Investment Manager a fee from its assets, such fee to
be computed weekly and paid monthly in arrears at the annual rate of 0.60% of
the first $500 million and 0.50% over $500 million of the Fund's net assets. If
this Agreement becomes effective or terminates before the end of any month, the
fee for the period from the effective date to the end of the month or from the
beginning of such month to the date of termination, as the case may be, shall be
protected according to the proportion which such period bears to the full month
in which such effectiveness or termination occurs.
7. 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 shares of the Fund and shares of other funds in the Bull &
Bear fund complex. The Investment Manager may also allocate portfolio
transactions to broker/dealers that remit a portion of their commissions as a
credit against Fund expenses. 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, 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 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 remunera tion received by such affiliate from the Fund.
8. 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.
9. 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.
10. A. This Agreement shall become effective upon the date hereinabove
written provided that this Agreement shall not take effect unless it has first
been approved (i) by a vote of a majority of Directors of the Fund who are not
parties to this Agreement, or interested persons of any such party and (ii) by
vote of the holders of a majority of the Fund's outstanding voting securities.
B. 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 (i) 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 and (ii) by the Board of Directors of the Fund or by the holders of a
majority of the outstanding voting securities of the Fund.
C. 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 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.
11. 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 or the Fund's shareholders 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 or
the Fund's shareholders 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.
12. 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.
13. 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.
14. 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 MUNICIPAL INCOME FUND, INC.
By: /s/ Robert D. Anderson
BULL & BEAR ADVISERS, INC.
By: /s/ Thomas B. Winmill
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made on September 12, 1996, by and between BULL & BEAR U.S.
GOVERNMENT SECURITIES FUND, INC. a Maryland corporation (the "Fund") and BULL &
BEAR ADVISERS, INC., a Delaware corporation (the "Investment Manager").
WHEREAS the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as a closed-end management investment company; and
WHEREAS the Fund desires to retain the Investment Manager to furnish
certain investment advisory and portfolio management services to the Fund, and
the Investment Manager desires to furnish such services;
NOW THEREFORE, 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 its assets, including the regular furnishing of
advice with respect to the Fund's portfolio transactions subject at all times to
the control and oversight of the Fund's Board of Directors, 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 and qualification 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. 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.
4. 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.
5. 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 31a-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.
6. As compensation for its services provided pursuant to this Agreement,
the Fund will pay to the Investment Manager a fee from its assets, such fee to
be computed weekly and paid monthly in arrears at the annual rate of 0.70% of
the first $250 million, 0.625% from $250 million to $500 million, and 0.50% over
$500 million of the Fund's net assets. If this Agreement becomes effective or
terminates before the end of any month, the fee for the period from the
effective date to the end of the month or from the beginning of such month to
the date of termination, as the case may be, shall be protected according to the
proportion which such period bears to the full month in which such effectiveness
or termination occurs.
7. 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 shares of the Fund and shares of other funds in the Bull &
Bear fund complex. The Investment Manager may also allocate portfolio
transactions to broker/dealers that remit a portion of their commissions as a
credit against Fund expenses. 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, 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 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 remunera tion received by such affiliate from the Fund.
8. 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.
9. 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.
10. A. This Agreement shall become effective upon the date hereinabove
written provided that this Agreement shall not take effect unless it has first
been approved (i) by a vote of a majority of Directors of the Fund who are not
parties to this Agreement, or interested persons of any such party and (ii) by
vote of the holders of a majority of the Fund's outstanding voting securities.
B. 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 (i) 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 and (ii) by the Board of Directors of the Fund or by the holders of a
majority of the outstanding voting securities of the Fund.
C. 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 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.
11. 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 or the Fund's shareholders 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 or
the Fund's shareholders 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.
12. 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.
13. 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.
14. 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 U.S. GOVERNMENT SECURITIES FUND, INC.
By: /s/ Robert D. Anderson
BULL & BEAR ADVISERS, INC.
By: /s/ Thomas B. Winmill
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 7th day of February, 1997, by and between BULL
& BEAR GLOBAL INCOME FUND, INC. a Maryland corporation ("Fund") and BULL & BEAR
ADVISERS, INC., a Delaware corporation ("Investment Manager").
WHEREAS the Fund is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as a closed-end management investment company; and
WHEREAS the Fund desires to retain the Investment Manager to furnish
certain investment advisory and portfolio management services to the Fund, and
the Investment Manager desires to furnish such services;
NOW THEREFORE, 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 thereof, including the regular furnishing
of advice with respect to the Fund's portfolio transactions subject at all times
to the control and oversight of the Fund's Board of Directors, 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, (a) salaries of administrative and
clerical personnel; (b) brokerage commissions; (c) taxes and governmental fees;
(d) costs of insurance and fidelity bonds; (e) fees of the transfer agent,
custodian, legal counsel and auditors; (f) association fees; (g) costs of
preparing, printing and mailing proxy materials, reports and notices to
shareholders; (h) costs of preparing, printing and mailing the prospectus and
statement of additional information and supplements thereto; (i) payment of
dividends and other distributions; (j) costs of stock certificates; (k) costs of
Board and shareholders meetings; (l) fees of the independent directors; (m)
necessary office space rental; (n) all fees and expenses (including expenses of
counsel) relating to the registration and qualification of shares of the Fund
under applicable federal and state securities laws and maintaining such
registrations and qualifications; and (o) 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. 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.
4. 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.
5. 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 31a-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.
6. As compensation for its services, with respect to the Fund the Investment
Manager will be paid by the Fund a fee payable monthly and computed at the
annual rate of 1% of the first $200 million of average daily net assets of the
Fund, .95% of such net assets over $200 million up to $400 million, .90% of such
net assets over $400 million up to $600 million, .85% of such net assets over
$600 million up to $800 million, .80% of such net assets over $800 million up to
$1 billion, and .75% of such net assets over $1 billion. 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.
7. 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 other investment companies or series thereof for which
the Investment Manager or an affiliate thereof serves as investment adviser. The
Investment Manager may also allocate portfolio transactions to broker/dealers
that remit a portion of their commissions as a credit against Fund expenses.
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, 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
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.
8. 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 or such lesser amount as may be agreed to by the
Fund's Board of Directors and the Investment Manager. 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.
9. 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.
10. 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.
11. 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 or the Fund's shareholders 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 or the Fund's
shareholders 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.
12. 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.
13. 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.
14. 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 GLOBAL INCOME FUND, INC.
By: /s/ Robert D. Anderson
BULL & BEAR ADVISERS, INC.
By: /s/ Thomas B. Winmill
NON-EXCLUSIVE LICENSE AGREEMENT
AGREEMENT dated as of January 17, 1997 between BULL & BEAR GROUP, INC.,
a Delaware corporation (the "Licensor") and BULL & BEAR FUNDS I, INC., a
Maryland corporation (the "Licensee").
W I T N E S S E T H
WHEREAS, the Licensor is the owner of all right, title and interest in
and to the service marks listed on Annex A hereto, as such Annex may be amended
from time to time, (hereinafter collectively referred to as the "Licensed
Marks"), and
WHEREAS, the Licensee has requested a non-exclusive license to use the
Licensed Marks in connection with its corporate activities,
NOW, THEREFORE, the parties hereto agree as follows:
2The Licensor grants to the Licensee the non-exclusive right to use the Licensed
Marks in connection with its activities as an investment company.
2The grant of the license provided for in paragraph 1 herein is personal,
indivisible, non-exclusive and not subject to succession or transfer.
2The Licensee agrees to follow all rules reasonably imposed by the Licensor to
protect the Licensor's rights in the Licensed Marks.
2The Licensee agrees that the nature and quality of all services rendered by the
Licensee in connection with the Licensed Marks shall conform to standards set by
the Licensor and be under control of the Licensor.
2The license provided for in this Agreement may be terminated in the event the
Investment Manager of the Licensee shall not be Bull & Bear Advisers, Inc. or
some other corporation controlling, controlled by, or under the common control
of the Licensor.
2In the event of termination as provided for in paragraph 5 herein, the Licensee
agrees to promptly do all such acts and things as may be necessary to terminate
its use of the Licensed Marks and will, after such termination, make no further
reference to the Licensed Marks or any confusingly similar term in its business.
2The Licensor and the Licensee agree to do all such further acts and things to
effect the purposes of this Agreement. 2The representations and warranties
contained herein shall continue after and survive the termination of this
Agreement. No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by each
party hereto. This agreement may not be assigned by the Licensee without the
prior written consent of the Licensor, although the Licensor may assign this
Agreement at any time without notice or penalty. Subject to the Licensee's
Articles of Incorporation, with such amendments, if any, as may be in effect as
of the date hereof, this Agreement supersedes any prior agreement between the
parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
BULL & BEAR GROUP, INC.
By: /s/ Thomas B. Winmill
BULL & BEAR FUNDS I, INC.
By: /s/ William J. Maynard
ANNEX A
1. Bull & Bear Performance Account
2. Bull & Bear Performance Plus Account
3. Performance
4. Bull & Bear
5. Performance Driven
6. Bull & Bear Performance Driven
7. Bull & Bear Stockfax
2Bull & Bear No-Fee IRA
2Performance Plus
NON-EXCLUSIVE LICENSE AGREEMENT
AGREEMENT dated as of January 17, 1997 between BULL & BEAR GROUP, INC.,
a Delaware corporation (the "Licensor") and BULL & BEAR FUNDS II, INC., a
Maryland corporation (the "Licensee").
W I T N E S S E T H
WHEREAS, the Licensor is the owner of all right, title and interest in
and to the service marks listed on Annex A hereto, as such Annex may be amended
from time to time, (hereinafter collectively referred to as the "Licensed
Marks"), and
WHEREAS, the Licensee has requested a non-exclusive license to use the
Licensed Marks in connection with its corporate activities, NOW, THEREFORE, the
parties hereto agree as follows:
2The Licensor grants to the Licensee the non-exclusive right to use the Licensed
Marks in connection with its activities as an investment company.
2The grant of the license provided for in paragraph 1 herein is personal,
indivisible, non-exclusive and not subject to succession or transfer.
2The Licensee agrees to follow all rules reasonably imposed by the Licensor to
protect the Licensor's rights in the Licensed Marks.
2The Licensee agrees that the nature and quality of all services rendered by the
Licensee in connection with the Licensed Marks shall conform to standards set by
the Licensor and be under control of the Licensor.
2The license provided for in this Agreement may be terminated in the event the
Investment Manager of the Licensee shall not be Bull & Bear Advisers, Inc. or
some other corporation controlling, controlled by, or under the common control
of the Licensor.
2In the event of termination as provided for in paragraph 5 herein, the Licensee
agrees to promptly do all such acts and things as may be necessary to terminate
its use of the Licensed Marks and will, after such termination, make no further
reference to the Licensed Marks or any confusingly similar term in its business.
2The Licensor and the Licensee agree to do all such further acts and things to
effect the purposes of this Agreement. 2The representations and warranties
contained herein shall continue after and survive the termination of this
Agreement. No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by each
party hereto. This agreement may not be assigned by the Licensee without the
prior written consent of the Licensor, although the Licensor may assign this
Agreement at any time without notice or penalty. Subject to the Licensee's
Articles of Incorporation, with such amendments, if any, as may be in effect as
of the date hereof, this Agreement supersedes any prior agreement between the
parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
BULL & BEAR GROUP, INC.
By: /s/ Thomas B. Winmill
BULL & BEAR FUNDS II, INC.
By: /s/ William J. Maynard
ANNEX A
8. Bull & Bear Performance Account
9. Bull & Bear Performance Plus Account
10. Performance
11. Bull & Bear
12. Performance Driven
13. Bull & Bear Performance Driven
14. Bull & Bear Stockfax
2Bull & Bear No-Fee IRA
2Performance Plus
NON-EXCLUSIVE LICENSE AGREEMENT
AGREEMENT dated as of January 17, 1997 between BULL & BEAR GROUP, INC.,
a Delaware corporation (the "Licensor") and BULL & BEAR GOLD INVESTORS LTD., a
Maryland corporation (the "Licensee").
W I T N E S S E T H
WHEREAS, the Licensor is the owner of all right, title and interest in
and to the service marks listed on Annex A hereto, as such Annex may be amended
from time to time, (hereinafter collectively referred to as the "Licensed
Marks"), and
WHEREAS, the Licensee has requested a non-exclusive license to use the
Licensed Marks in connection with its corporate activities,
NOW, THEREFORE, the parties hereto agree as follows:
2The Licensor grants to the Licensee the non-exclusive right to use the Licensed
Marks in connection with its activities as an investment company.
2The grant of the license provided for in paragraph 1 herein is personal,
indivisible, non-exclusive and not subject to succession or transfer.
2The Licensee agrees to follow all rules reasonably imposed by the Licensor to
protect the Licensor's rights in the Licensed Marks.
2The Licensee agrees that the nature and quality of all services rendered by the
Licensee in connection with the Licensed Marks shall conform to standards set by
the Licensor and be under control of the Licensor.
2The license provided for in this Agreement may be terminated in the event the
Investment Manager of the Licensee shall not be Bull & Bear Advisers, Inc. or
some other corporation controlling, controlled by, or under the common control
of the Licensor.
2In the event of termination as provided for in paragraph 5 herein, the Licensee
agrees to promptly do all such acts and things as may be necessary to terminate
its use of the Licensed Marks and will, after such termination, make no further
reference to the Licensed Marks or any confusingly similar term in its business.
2The Licensor and the Licensee agree to do all such further acts and things to
effect the purposes of this Agreement. 2The representations and warranties
contained herein shall continue after and survive the termination of this
Agreement. No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by each
party hereto. This agreement may not be assigned by the Licensee without the
prior written consent of the Licensor, although the Licensor may assign this
Agreement at any time without notice or penalty. Subject to the Licensee's
Articles of Incorporation, with such amendments, if any, as may be in effect as
of the date hereof, this Agreement supersedes any prior agreement between the
parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
BULL & BEAR GROUP, INC.
By: /s/ Thomas B. Winmill
BULL & BEAR GOLD INVESTORS LTD.
By: /s/ William J. Maynard
ANNEX A
15. Bull & Bear Performance Account
16. Bull & Bear Performance Plus Account
17. Performance
18. Bull & Bear
19. Performance Driven
20. Bull & Bear Performance Driven
21. Bull & Bear Stockfax
2Bull & Bear No-Fee IRA
2Performance Plus
NON-EXCLUSIVE LICENSE AGREEMENT
AGREEMENT dated as of January 17, 1997 between BULL & BEAR GROUP, INC.,
a Delaware corporation (the "Licensor") and BULL & BEAR GLOBAL INCOME FUND,
INC., a Maryland corporation (the "Licensee").
W I T N E S S E T H
WHEREAS, the Licensor is the owner of all right, title and interest in
and to the service marks listed on Annex A hereto, as such Annex may be amended
from time to time, (hereinafter collectively referred to as the "Licensed
Marks"), and
WHEREAS, the Licensee has requested a non-exclusive license to use the
Licensed Marks in connection with its corporate activities,
NOW, THEREFORE, the parties hereto agree as follows:
2The Licensor grants to the Licensee the non-exclusive right to use the Licensed
Marks in connection with its activities as an investment company.
2The grant of the license provided for in paragraph 1 herein is personal,
indivisible, non-exclusive and not subject to succession or transfer.
2The Licensee agrees to follow all rules reasonably imposed by the Licensor to
protect the Licensor's rights in the Licensed Marks.
2The Licensee agrees that the nature and quality of all services rendered by the
Licensee in connection with the Licensed Marks shall conform to standards set by
the Licensor and be under control of the Licensor.
2The license may be withdrawn by the Licensor at any time, in its sole
discretion and without prior notice, in which case the Licensee shall have no
further right whatsoever to use the Licensed Marks and the Licensee's
shareholders, officers and directors shall promptly take whatever action may be
necessary to eliminate all use of and reference to the Licensed Marks in the
Licensor's name and otherwise.
2In the event of termination as provided for in paragraph 5 herein, the Licensee
agrees to promptly do all such acts and things as may be necessary to terminate
its use of the Licensed Marks and will, after such termination, make no further
reference to the Licensed Marks or any confusingly similar term in its business.
2The Licensor and the Licensee agree to do all such further acts and things to
effect the purposes of this Agreement.
2The representations and warranties contained herein shall continue after and
survive the termination of this Agreement. No provision of this Agreement may be
amended or modified in any manner except by a written agreement properly
authorized and executed by each party hereto. This agreement may not be assigned
by the Licensee without the prior written consent of the Licensor, although the
Licensor may assign this Agreement at any time without notice or penalty.
Subject to the Licensee's Articles of Incorporation, with such amendments, if
any, as may be in effect as of the date hereof, this Agreement supersedes any
prior agreement between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
BULL & BEAR GROUP, INC.
By: /s/ Thomas B. Winmill
BULL & BEAR GLOBAL INCOME FUND, INC.
By: /s/ William J. Maynard
ANNEX A
22. Bull & Bear Performance Account
23. Bull & Bear Performance Plus Account
24. Performance
25. Bull & Bear
26. Performance Driven
27. Bull & Bear Performance Driven
28. Bull & Bear Stockfax
2Bull & Bear No-Fee IRA
2Performance Plus
NON-EXCLUSIVE LICENSE AGREEMENT
AGREEMENT dated as of January 17, 1997 between BULL & BEAR GROUP, INC.,
a Delaware corporation (the "Licensor") and MIDAS FUND, INC., a Maryland
corporation (the "Licensee").
W I T N E S S E T H
WHEREAS, the Licensor is the owner of all right, title and interest in
and to the service marks listed on Annex A hereto, as such Annex may be amended
from time to time, (hereinafter collectively referred to as the "Licensed
Marks"), and
WHEREAS, the Licensee has requested a non-exclusive license to use the
Licensed Marks in connection with its corporate activities,
NOW, THEREFORE, the parties hereto agree as follows:
2The Licensor grants to the Licensee the non-exclusive right to use the Licensed
Marks in connection with its activities as an investment company.
2The grant of the license provided for in paragraph 1 herein is personal,
indivisible, non-exclusive and not subject to succession or transfer.
2The Licensee agrees to follow all rules reasonably imposed by the Licensor to
protect the Licensor's rights in the Licensed Marks.
2The Licensee agrees that the nature and quality of all services rendered by the
Licensee in connection with the Licensed Marks shall conform to standards set by
the Licensor and be under control of the Licensor.
2The license may be withdrawn by the Licensor at any time, in its sole
discretion and without prior notice, in which case the Licensee shall have no
further right whatsoever to use the Licensed Marks and the Licensee's
shareholders, officers and directors shall promptly take whatever action may be
necessary to eliminate all use of and reference to the Licensed Marks in the
Licensor's name and otherwise.
2In the event of termination as provided for in paragraph 5 herein, the Licensee
agrees to promptly do all such acts and things as may be necessary to terminate
its use of the Licensed Marks and will, after such termination, make no further
reference to the Licensed Marks or any confusingly similar term in its business.
2The Licensor and the Licensee agree to do all such further acts and things to
effect the purposes of this Agreement.
2The representations and warranties contained herein shall continue after and
survive the termination of this Agreement. No provision of this Agreement may be
amended or modified in any manner except by a written agreement properly
authorized and executed by each party hereto. This agreement may not be assigned
by the Licensee without the prior written consent of the Licensor, although the
Licensor may assign this Agreement at any time without notice or penalty.
Subject to the Licensee's Articles of Incorporation, with such amendments, if
any, as may be in effect as of the date hereof, this Agreement supersedes any
prior agreement between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
BULL & BEAR GROUP, INC.
By: /s/ Thomas B. Winmill
MIDAS FUND, INC.
By: /s/ William J. Maynard
ANNEX A
29. Bull & Bear Performance Account
30. Bull & Bear Performance Plus Account
31. Performance
32. Bull & Bear
33. Performance Driven
34. Bull & Bear Performance Driven
35. Bull & Bear Stockfax
2Bull & Bear No-Fee IRA
2Performance Plus
NON-EXCLUSIVE LICENSE AGREEMENT
AGREEMENT dated as of January 17, 1997 between BULL & BEAR GROUP, INC.,
a Delaware corporation (the "Licensor") and BULL & BEAR MUNICIPAL INCOME FUND,
INC., a Maryland corporation (the "Licensee").
W I T N E S S E T H
WHEREAS, the Licensor is the owner of all right, title and interest in
and to the service marks listed on Annex A hereto, as such Annex may be amended
from time to time, (hereinafter collectively referred to as the "Licensed
Marks"), and
WHEREAS, the Licensee has requested a non-exclusive license to use the
Licensed Marks in connection with its corporate activities,
NOW, THEREFORE, the parties hereto agree as follows:
2The Licensor grants to the Licensee the non-exclusive right to use the Licensed
Marks in connection with its activities as an investment company.
2The grant of the license provided for in paragraph 1 herein is personal,
indivisible, non-exclusive and not subject to succession or transfer.
2The Licensee agrees to follow all rules reasonably imposed by the Licensor to
protect the Licensor's rights in the Licensed Marks.
2The Licensee agrees that the nature and quality of all services rendered by the
Licensee in connection with the Licensed Marks shall conform to standards set by
the Licensor and be under control of the Licensor.
2The license may be withdrawn by the Licensor at any time, in its sole
discretion and without prior notice, in which case the Licensee shall have no
further right whatsoever to use the Licensed Marks and the Licensee's
shareholders, officers and directors shall promptly take whatever action may be
necessary to eliminate all use of and reference to the Licensed Marks in the
Licensor's name and otherwise.
2In the event of termination as provided for in paragraph 5 herein, the Licensee
agrees to promptly do all such acts and things as may be necessary to terminate
its use of the Licensed Marks and will, after such termination, make no further
reference to the Licensed Marks or any confusingly similar term in its business.
2The Licensor and the Licensee agree to do all such further acts and things to
effect the purposes of this Agreement.
2The representations and warranties contained herein shall continue after and
survive the termination of this Agreement. No provision of this Agreement may be
amended or modified in any manner except by a written agreement properly
authorized and executed by each party hereto. This agreement may not be assigned
by the Licensee without the prior written consent of the Licensor, although the
Licensor may assign this Agreement at any time without notice or penalty.
Subject to the Licensee's Articles of Incorporation, with such amendments, if
any, as may be in effect as of the date hereof, this Agreement supersedes any
prior agreement between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
BULL & BEAR GROUP, INC.
By: /s/ Thomas B. Winmill
BULL & BEAR MUNICIPAL INCOME FUND, INC.
By: /s/ William J. Maynard
ANNEX A
36. Bull & Bear Performance Account
37. Bull & Bear Performance Plus Account
38. Performance
39. Bull & Bear
40. Performance Driven
41. Bull & Bear Performance Driven
42. Bull & Bear Stockfax
2Bull & Bear No-Fee IRA
2Performance Plus
NON-EXCLUSIVE LICENSE AGREEMENT
AGREEMENT dated as of January 17, 1997 between BULL & BEAR GROUP, INC.,
a Delaware corporation (the "Licensor") and ROCKWOOD FUND, INC., a Maryland
corporation (the "Licensee").
W I T N E S S E T H
WHEREAS, the Licensor is the owner of all right, title and interest in
and to the service marks listed on Annex A hereto, as such Annex may be amended
from time to time, (hereinafter collectively referred to as the "Licensed
Marks"), and
WHEREAS, the Licensee has requested a non-exclusive license to use the
Licensed Marks in connection with its corporate activities, NOW, THEREFORE, the
parties hereto agree as follows:
2The Licensor grants to the Licensee the non-exclusive right to use the Licensed
Marks in connection with its activities as an investment company.
2The grant of the license provided for in paragraph 1 herein is personal,
indivisible, non-exclusive and not subject to succession or transfer.
2The Licensee agrees to follow all rules reasonably imposed by the Licensor to
protect the Licensor's rights in the Licensed Marks.
2The Licensee agrees that the nature and quality of all services rendered by the
Licensee in connection with the Licensed Marks shall conform to standards set by
the Licensor and be under control of the Licensor.
2The license may be withdrawn by the Licensor at any time, in its sole
discretion and without prior notice, in which case the Licensee shall have no
further right whatsoever to use the Licensed Marks and the Licensee's
shareholders, officers and directors shall promptly take whatever action may be
necessary to eliminate all use of and reference to the Licensed Marks in the
Licensor's name and otherwise.
2In the event of termination as provided for in paragraph 5 herein, the Licensee
agrees to promptly do all such acts and things as may be necessary to terminate
its use of the Licensed Marks and will, after such termination, make no further
reference to the Licensed Marks or any confusingly similar term in its business.
2The Licensor and the Licensee agree to do all such further acts and things to
effect the purposes of this Agreement.
2The representations and warranties contained herein shall continue after and
survive the termination of this Agreement. No provision of this Agreement may be
amended or modified in any manner except by a written agreement properly
authorized and executed by each party hereto. This agreement may not be assigned
by the Licensee without the prior written consent of the Licensor, although the
Licensor may assign this Agreement at any time without notice or penalty.
Subject to the Licensee's Articles of Incorporation, with such amendments, if
any, as may be in effect as of the date hereof, this Agreement supersedes any
prior agreement between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
BULL & BEAR GROUP, INC.
By: /s/ Thomas B. Winmill
ROCKWOOD FUND, INC.
By: /s/ William J. Maynard
ANNEX A
43. Bull & Bear Performance Account
44. Bull & Bear Performance Plus Account
45. Performance
46. Bull & Bear
47. Performance Driven
48. Bull & Bear Performance Driven
49. Bull & Bear Stockfax
2Bull & Bear No-Fee IRA
2Performance Plus
NON-EXCLUSIVE LICENSE AGREEMENT
AGREEMENT dated as of January 17, 1997 between BULL & BEAR GROUP, INC.,
a Delaware corporation (the "Licensor") and BULL & BEAR SPECIAL EQUITIES FUND,
INC., a Maryland corporation (the "Licensee").
W I T N E S S E T H
WHEREAS, the Licensor is the owner of all right, title and interest in
and to the service marks listed on Annex A hereto, as such Annex may be amended
from time to time, (hereinafter collectively referred to as the "Licensed
Marks"), and
WHEREAS, the Licensee has requested a non-exclusive license to use the
Licensed Marks in connection with its corporate activities,
NOW, THEREFORE, the parties hereto agree as follows:
2The Licensor grants to the Licensee the non-exclusive right to use the Licensed
Marks in connection with its activities as an investment company.
2The grant of the license provided for in paragraph 1 herein is personal,
indivisible, non-exclusive and not subject to succession or transfer.
2The Licensee agrees to follow all rules reasonably imposed by the Licensor to
protect the Licensor's rights in the Licensed Marks.
2The Licensee agrees that the nature and quality of all services rendered by the
Licensee in connection with the Licensed Marks shall conform to standards set by
the Licensor and be under control of the Licensor.
2The license provided for in this Agreement may be terminated in the event the
Investment Manager of the Licensee shall not be Bull & Bear Advisers, Inc. or
some other corporation controlling, controlled by, or under the common control
of the Licensor.
2In the event of termination as provided for in paragraph 5 herein, the Licensee
agrees to promptly do all such acts and things as may be necessary to terminate
its use of the Licensed Marks and will, after such termination, make no further
reference to the Licensed Marks or any confusingly similar term in its business.
2The Licensor and the Licensee agree to do all such further acts and things to
effect the purposes of this Agreement. 2The representations and warranties
contained herein shall continue after and survive the termination of this
Agreement. No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by each
party hereto. This agreement may not be assigned by the Licensee without the
prior written consent of the Licensor, although the Licensor may assign this
Agreement at any time without notice or penalty. Subject to the Licensee's
Articles of Incorporation, with such amendments, if any, as may be in effect as
of the date hereof, this Agreement supersedes any prior agreement between the
parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
BULL & BEAR GROUP, INC.
By: /s/ Thomas B. Winmill
BULL & BEAR SPECIAL EQUITIES FUND, INC.
By: /s/ William J. Maynard
ANNEX A
50. Bull & Bear Performance Account
51. Bull & Bear Performance Plus Account
52. Performance
53. Bull & Bear
54. Performance Driven
55. Bull & Bear Performance Driven
56. Bull & Bear Stockfax
2Bull & Bear No-Fee IRA
2Performance Plus
NON-EXCLUSIVE LICENSE AGREEMENT
AGREEMENT dated as of January 17, 1997 between BULL & BEAR GROUP, INC.,
a Delaware corporation (the "Licensor") and BULL & BEAR U.S. GOVERNMENT
SECURITIES FUND, INC., a Maryland corporation (the "Licensee").
W I T N E S S E T H
WHEREAS, the Licensor is the owner of all right, title and interest in
and to the service marks listed on Annex A hereto, as such Annex may be amended
from time to time, (hereinafter collectively referred to as the "Licensed
Marks"), and
WHEREAS, the Licensee has requested a non-exclusive license to use the
Licensed Marks in connection with its corporate activities,
NOW, THEREFORE, the parties hereto agree as follows:
2The Licensor grants to the Licensee the non-exclusive right to use the Licensed
Marks in connection with its activities as an investment company.
2The grant of the license provided for in paragraph 1 herein is personal,
indivisible, non-exclusive and not subject to succession or transfer.
2The Licensee agrees to follow all rules reasonably imposed by the Licensor to
protect the Licensor's rights in the Licensed Marks.
2The Licensee agrees that the nature and quality of all services rendered by the
Licensee in connection with the Licensed Marks shall conform to standards set by
the Licensor and be under control of the Licensor.
2The license may be withdrawn by the Licensor at any time, in its sole
discretion and without prior notice, in which case the Licensee shall have no
further right whatsoever to use the Licensed Marks and the Licensee's
shareholders, officers and directors shall promptly take whatever action may be
necessary to eliminate all use of and reference to the Licensed Marks in the
Licensor's name and otherwise.
2In the event of termination as provided for in paragraph 5 herein, the Licensee
agrees to promptly do all such acts and things as may be necessary to terminate
its use of the Licensed Marks and will, after such termination, make no further
reference to the Licensed Marks or any confusingly similar term in its business.
2The Licensor and the Licensee agree to do all such further acts and things to
effect the purposes of this Agreement.
2The representations and warranties contained herein shall continue after and
survive the termination of this Agreement. No provision of this Agreement may be
amended or modified in any manner except by a written agreement properly
authorized and executed by each party hereto. This agreement may not be assigned
by the Licensee without the prior written consent of the Licensor, although the
Licensor may assign this Agreement at any time without notice or penalty.
Subject to the Licensee's Articles of Incorporation, with such amendments, if
any, as may be in effect as of the date hereof, this Agreement supersedes any
prior agreement between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
BULL & BEAR GROUP, INC.
By: /s/ Thomas B. Winmill
BULL & BEAR U.S. GOVERNMENT SECURITIES FUND, INC.
By: /s/ William J. Maynard
ANNEX A
57. Bull & Bear Performance Account
58. Bull & Bear Performance Plus Account
59. Performance
60. Bull & Bear
61. Performance Driven
62. Bull & Bear Performance Driven
63. Bull & Bear Stockfax
2Bull & Bear No-Fee IRA
2Performance Plus
EXHIBIT 11 - STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
1996 1995 1994
---------------------------------------------------------------------------
FULLY FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED PRIMARY DILUTED
Weighted average
common shares
outstanding 1,369,402 1,369,402 1,499,516 1,499,516 1,523,152 1,523,152
Weighted average common
shares issuable upon
exercise of stock
options under the
treasury stock method 93,877 99,952 50,299 52,048 87,291 87,506
Weighted average
common shares
issuable upon
exercise of
warrants under
the treasury
stock method - - - -
Weighted average
common shares
and common
share equivalents
utilized for
earnings per
share computation 1,463,279 1,469,354 1,549,815 1,551,564 1,610,443 1,610,658
-45-
EXHIBIT 21 - WHOLLY-OWNED SUBSIDIARIES OF THE COMPANY
Bull & Bear Securities, Inc.,
a Delaware corporation
Investor Service Center, Inc.,
a Delaware corporation
Bull & Bear NJ Properties, Inc.,
a Delaware corporation
Hanover Direct Advertising Company, Inc.,
a Delaware corporation
Bull & Bear Advisers, Inc.,
a Delaware corporation
Lion Exploration, Inc.,
a Delaware corporation
Midas Management Corporation
a Delaware corporation
Rockwood Advisers, Inc.
a Delaware Corporation