MANAGEMENT AGREEMENT
As in effect December 14, 1988
AGREEMENT made this 1st day of April 1987 by and between AFFILIATED FUND,
INC., a Maryland Corporation (hereinafter called the "Corporation"), and LORD,
XXXXXX & CO., a New York partnership (hereinafter called the "Investment
Manager").
WHEREAS, the Corporation desires to continue the investment management
services of the Investment Manager and the Investment Manager is willing to
provide services of the nature desired upon the terms and conditions hereinafter
provided.
NOW, THEREFORE, in consideration of the mutual covenants and of other good
and valuable consideration, receipt of which is hereby acknowledged, it is
agreed as follows:
1. The Corporation hereby employs the Investment Manager under the terms
and conditions of this Agreement, and the Investment Manager hereby accepts such
employment and agrees to perform supervisory functions of the Corporation with
respect to the investment and reinvestment of its property and assets (whether
or not held in trust or in the custody of a bank or trust company subject to the
Corporation's direction or control) including, without limitation, the
supervision of its investment portfolio and the recommendation of investment
policies and procedures within the limitations set forth in the Corporation's
Registration Statement on file with the Securities and Exchange Commission under
the Securities Act of 1933 and the Investment Company Act of 1940.
The Investment Manager agrees to maintain an adequate organization of
competent persons to perform the supervisory functions mentioned herein.
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All recommendations with respect to the investment portfolios will be made
to the Corporation's trading department which, with the approval of authorized
officers of the Corporation, will execute all trades in accordance with the
Corporation's investment procedures.
The Investment Manager reserves the right, in its discretion, to purchase
or otherwise obtain statistical information and services from other sources,
including affiliated persons of the Investment Manager.
Notwithstanding the provisions of this paragraph 1, the investment policies
and procedures and all other actions of the Corporation are, and shall at all
times be, subject to the control and direction of its Board of Directors.
2. The Corporation agrees to pay the Investment Manager for its services
under this Agreement and for the expenses assumed, a management fee computed and
payable monthly at the annual rate of .50 of 1% of the value of the
Corporation's average daily net assets not in access of $200,000,000, .40 of 1%
of such excess of $200,000,000 and not in excess of $500,000,000, .375 of 1% of
such assets in excess of $500,000,000 and not in excess of $700,000,000, .35 of
1% of such assets in excess of $700,000,000 and not in excess of $900,000,000.
The value of the net assets of the Corporation shall include all assets held in
trust or in custody of any bank, savings bank or trust company for the
Corporation, subject to its control or direction, and shall be determined as
provided in the Articles of Incorporation of the Corporation. The fee shall be
paid on the first day of each month for the preceding month.
The Investment Manager may receive research and other statistical
information from broker-dealers and from other sources and, in accordance with
section 28(e) of the
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Securities Exchange Act of 1934, a broker-dealer may be paid a commission for a
transaction involving portfolio securities of the Corporation exceeding the
amount another broker-dealer would have charged for the same transaction if it
is determined by the Investment Manager that such amount of commission is
reasonable in relation to the value of the research services provided by the
executing broker-dealer, viewed in terms of either the particular transaction or
the overall responsibilities of the Investment Manager with respect to the
Corporation and other accounts (investment companies and other investment
clients) with respect to which it exercises investment discretion. Such research
services may be used by the Investment Manager in serving all its accounts, and
not all of such research services need necessarily be used by the Investment
Manager in connection with its services to the Corporation.
It is understood that any supplemental advisory or statistical services
which may be provided to the Corporation or to the Investment Manager from time
to time by independent broker-dealers or persons other than the Investment
Manager, for whatever reason, shall not reduce the amount of the fees payable to
the Investment Manager hereunder. It is recognized that such supplementary
advisory or statistical services may be useful to the Investment Manager and the
Corporation, but their value is indeterminable and is not to be considered a
substitute for the services provided by the Investment Manager hereunder.
3. It is understood that the services of the Investment Manager are not
deemed to be exclusive, and nothing in this Agreement shall prevent the
Investment Manager, or any officer, director, partner or employee thereof, from
providing similar services to other investment companies and other clients
(whether or not their investment objectives and
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policies are similar to those of the Corporation) or to engage in other
activities. When other clients of the Investment Manager desire to purchase or
sell the same portfolio security at the same time as the Corporation, it is
understood that such purchases and sales will be made as nearly as practicable
on a pro rata basis in proportion to the amounts desired to be purchased or sold
by each client.
4. The Corporation will, at its own expense, furnish to the Investment
Manager periodic (but not less than semi-annually) statements of its books of
account, including balance sheets and earnings statements, and all other
information which may reasonably be required, from time to time, by the
Investment Manager, and will, at its own expense, at all times keep the
Investment Manager fully advised as to the cash, securities and other property
then comprising its assets, and furnish daily detailed price makeup sheets with
respect to its investment portfolio and its shares of its capital stock
outstanding.
5. The Investment Manager shall be under no obligation to pay any fees,
costs, expenses or other charges of the Corporation, except for the salaries of
its executives, the compensation, if any, of its directors who are affiliated
with the Investment Manager, the rental for its office space, and the ordinary
and necessary office and clerical expenses relating to research, statistical and
investment work. The Corporation will pay all other fees, costs, expenses or
charges relating to its assets and operations, including without limitation:
office and clerical expenses not relating to research, statistical and
investment work, extraordinary office expenses, fees and expenses of directors
not affiliated with the Investment Manager; governmental fees; interest charges;
taxes and association membership dues; fees and charges for legal and auditing
services; fees and expenses of any custodians or trustees with
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respect to custody of its assets; fees, charges and expenses of dividend
disbursing agents, registrars and transfer agents (including the cost of keeping
all necessary shareholder records and accounts, and of handling any problems
relating thereto and the expense of furnishing to all shareholders statements of
their accounts after every transaction including the expense of mailing); costs
and expenses of repurchase and redemption of its shares; costs and expenses of
preparing, printing and mailing to shareholders stock certificates, proxy
statements and materials, prospectuses, reports and notices; costs of preparing
reports to governmental agencies; brokerage fees and commissions of every kind
and expenses in connection with the execution of portfolio security transactions
(including the cost of any service or agency designed to facilitate the purchase
and sale of portfolio securities); and all postage, insurance premiums, and any
other fee, cost, expense or charge of any kind incurred by and on behalf of the
Corporation and not expressly assumed by the Investment Manager under this
Agreement.
Notwithstanding any other provision of this Agreement, if expenses
(including the management fee hereunder but excluding interest, taxes, brokerage
fees, and where permitted, extraordinary expenses) borne by the Corporation in
any fiscal year exceed expense limitations applicable to the Corporation imposed
by state securities administrators, as such limitations may be lowered or raised
from time to time, the Investment Manager will provide for the payment of any
such expenses by waiving its fee hereunder and, to the extent such waiver may
not be sufficient, by direct reimbursement.
If the Investment Manager pays for other expenses of the Corporation or
furnishes without charge to the Corporation services the cost of which is to be
borne by the
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Corporation under this Agreement, the Investment Manager shall not be deemed to
have waived its rights under this Agreement to have the Corporation pay for such
expenses or provide or pay for such services in the future.
6. The Investment Manager agrees that it shall observe and be bound by all
of the provisions of the Articles of Incorporation (including any amendments
thereto) of the Corporation which shall in any way limit or restrict or prohibit
or otherwise regulate any action by the Investment Manager.
7. Other than to abide by the provisions hereof and render the services
called for hereunder in good faith, the Investment Manager assumes no
responsibility under this Agreement and, having so acted, the Investment Manager
shall not be held liable or accountable for any mistakes of law or fact, or for
any error or omission of its officers, directors, partners or employees, or for
any loss or damage arising or resulting therefrom suffered by the Corporation or
any of its stockholders, creditors, directors or officers; provided however,
that nothing herein shall be deemed to protect the Investment Manager against
any liability to the Corporation or to its stockholders by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder, or by reason of the reckless disregard of its obligations and duties
hereunder. The Investment Manager shall not be responsible for any action of the
Board of Directors of the Corporation in following or declining to follow any
advice or recommendation of the Investment Manager.
8. Neither this Agreement nor any other transaction between the parties
hereto pursuant to this Agreement shall be invalidated or in any way affected by
the fact that any or all of the directors, officers, stockholders, or other
representatives of the Corporation are or
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may be interested in the Investment Manager, or any successor or assignee
thereof, or that any or all of the directors, officers, partners, or other
representatives of the Investment Manager are or may be interested in the
Corporation, except as otherwise may be provided in the Investment Company Act
of 1940. The Investment Manager in acting hereunder shall be an independent
contractor and not any agent of the Corporation.
9. This Agreement shall become effective on April 1, 1987, and is renewable
annually thereafter by specific approval of the Board of Directors of the
Corporation or by vote of a majority of the outstanding voting securities of the
Corporation; any such renewal shall be approved by the vote of a majority of the
directors who are not parties to this Agreement or interested persons of the
Investment Manager or of the Corporation, cast in person at a meeting called for
the purpose of voting on such renewal.
This Agreement may be terminated without penalty at any time by the
Corporation on 60 days' written notice. This Agreement shall automatically
terminate in the event of its assignment. The terms "interested persons",
"assignment" and "vote of a majority of the outstanding voting securities" shall
have the same meaning as those terms are defined in the Investment Company Act
of 1940 as amended.
10. The Investment Manager reserves the right to grant the use of the name
"LORD XXXXXX" or "LORD, XXXXXX & CO.", or any derivative thereof, to any other
investment company or business enterprise. The Investment Manager reserves the
right to withdraw from the Corporation the use of the name "LORD XXXXXX" and the
use of its registered service xxxx; at such time of withdrawal of the right to
use the name "LORD XXXXXX", the Investment Manager agrees that the question of
continuing this Agreement
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may be submitted to a vote of the Corporation's shareholders. In the event of
such withdrawal or the termination of this Agreement, for any reason, the
Corporation will, on the written request of the Investment Manager, take such
action as may be necessary to change its name and eliminate all reference to the
words "LORD XXXXXX" in any form, and will no longer use such registered service
xxxx.
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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officers and its corporate seal to be affixed
hereto, and the Investment Manager has caused this Agreement to be executed by
one of its partners all on the day and year first above written.
AFFILIATED FUND, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------
President
/s/ Xxxxxx Xxxxx
--------------------
Assistant Secretary
LORD, XXXXXX & CO.
By: /s/ Xxxx X. XxXxxxxx
-----------------------
Partner
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