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
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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 0000 Xxx.
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
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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.
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
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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/ Xxxxxx X. Xxxxxxx
XXXXXXXX ADVISERS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
