Exhibit 99(d)(4)
FORM OF
ADVISORY CONTRACT
THE LIPPER FUNDS, INC.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
June 20, 2001
Lipper & Company, L.L.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
This will confirm the agreement between the undersigned (the "Company") and
you (the "Investment Adviser") as follows:
1. The Company is an open-end investment company which currently has four
investment portfolio - Lipper High Income Bond Fund, Lipper U.S. Equity Fund,
Lipper Prime Europe Equity Fund and Lipper Merger Fund. The Company proposes to
engage in the business of investing and reinvesting the assets of the Lipper
Merger Fund (the "Fund") in the manner and in accordance with the investment
objective and limitations specified in the Company's Articles of Incorporation,
as amended (the "Articles") and the currently effective prospectus, including
the documents incorporated by reference therein (the "Prospectus"), relating to
the Company and the Fund, included in the Company's Registration Statement, as
amended from time to time (the "Registration Statement"), filed by the Company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and the
Securities Act of 1933, as amended. Copies of the documents referred to in the
preceding sentence have been furnished to the Investment Adviser. Any amendments
to these documents shall be furnished to the Investment Adviser.
2. The Company employs the Investment Adviser to (a) make investment
strategy decisions for the Fund, (b) manage the investing and reinvesting of the
Fund's assets as specified in paragraph 1, (c) place purchase and sale orders on
behalf of the Fund and (d) provide continuous supervision of the Fund's
investment portfolio.
3. (a) The Investment Adviser shall, at its expense, provide the Fund with
office space, office facilities and personnel reasonably necessary for
performance of the services to be provided by the Investment Adviser pursuant to
this Agreement, and provide the Fund with persons satisfactory to the Company's
Board of Directors to serve as officers and employees of the Fund.
(b) Except as provided in subparagraph (a), the Company shall be
responsible for all of the Fund's expenses and liabilities, including
organizational expenses; taxes; interest; fees (including fees paid to its
directors who are not affiliated with the Investment Adviser or any of its
affiliates); fees payable to the SEC; state securities qualification fees; costs
of preparing and printing prospectuses for regulatory purposes and for
distribution to existing shareholders; advisory and administration fees; charges
of the custodian and transfer agent; insurance premiums; auditing and legal
expenses; costs of shareholders' reports and shareholders' meetings; any
extraordinary expenses; and brokerage fees and commissions, if any, in
connection with the purchase or sale of portfolio securities; and payments to
the Fund's distributor for activities intended to result in the sale of Fund
shares.
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4. As manager of the Fund's assets, the Investment Adviser shall make
investments for the Fund's account in accordance with the investment objective
and limitations set forth in the Articles, the Prospectus, the 1940 Act, the
provisions of the Internal Revenue Code of 1986, as amended, relating to
regulated investment companies, applicable banking laws and regulations, and
policy decisions adopted by the Company's Board of Directors from time to time.
The Investment Adviser shall advise the Company's officers and Board of
Directors, at such times as the Company's Board of Directors may specify, of
investments made for the Fund's account and shall, when requested by the
Company's officers or Board of Directors, supply the reasons for making such
investments.
5. The Investment Adviser is authorized on behalf of the Company, from time
to time when deemed to be in the best interests of the Company and to the extent
permitted by applicable law, to purchase and/or sell securities in which the
Investment Adviser or any of its affiliates underwrites, deals in and/or makes a
market and/or may perform or seek to perform investment banking services for
issuers of such securities. The Investment Adviser is further authorized, to the
extent permitted by applicable law, to select brokers for the execution of
trades for the Company, which broker may be an affiliate of the Investment
Adviser, provided that the best competitive execution price is obtained at the
time of the trade execution.
6. In consideration of the Investment Adviser's undertaking to render the
services described in this agreement, the Company agrees that the Investment
Adviser shall not be liable under this agreement for any error of judgment or
mistake of law or for any loss suffered by the Company in connection with the
performance of this agreement, provided that nothing in this agreement shall be
deemed to protect or purport to protect the Investment Adviser against any
liability to the Company or its stockholders to which the Investment Adviser
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Investment Adviser's duties under this
agreement or by reason of the Investment Adviser's reckless disregard of its
obligations and duties under this Agreement ("disabling conduct"). The Fund will
indemnify the Investment Adviser against, and hold it harmless from, any and all
losses, claims, damages, liabilities or expenses (including reasonable counsel
fees and expenses), including any amounts paid in satisfaction of judgments, in
compromise or as fines or penalties, not resulting from disabling conduct by the
Investment Adviser. Indemnification shall be made only following: (i) a final
decision on the merits by a court or other body before whom the proceeding was
brought that the Investment Adviser was not liable by reason of disabling
conduct, or (ii) in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that the Investment Adviser was not liable by
reason of disabling conduct by (a) the vote of a majority of a quorum of
directors of the Fund who are neither "interested persons" of the Fund (as
defined in the 1940 Act) nor parties to the proceeding ("disinterested non-party
directors"), or (b) an independent legal counsel in a written opinion. The
Investment Adviser shall be entitled to advances from the Fund for payment of
the reasonable expenses (including reasonable counsel fees and expenses)
incurred by it in connection with the matter as to which it is seeking
indemnification in the manner and to the fullest extent permissible under law.
The Investment Adviser shall provide to the Fund a written affirmation of its
good faith belief that the standard of conduct necessary for indemnification by
the Fund has been met and a written undertaking to repay any such advance if it
should ultimately be determined that the standard of conduct has not been met.
In addition, at least one of the following additional conditions shall be met:
(a) the Investment Adviser shall provide security in form and amount acceptable
to the Fund for its undertaking; (b) the Fund is insured against losses arising
by reason of the advance; or (c) a majority of a quorum of disinterested
non-party directors, or independent legal counsel, in a written opinion, shall
have determined, based on a review of facts readily available to the Fund at the
time the advance is proposed to be made, that there is reason to believe that
the Investment Adviser will ultimately be found to be entitled to
indemnification.
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7. In consideration of the services to be rendered by the Investment
Adviser under this agreement, the Company shall pay the Investment Adviser a
monthly fee on the first business day of each month at an annual rate of 1.35%
of the average daily value (as determined on the days and at the time set forth
in the Prospectus for determining net asset value per share) of the Fund's net
assets during the preceding month. If the fee payable to the Investment Adviser
pursuant to this paragraph 7 begins to accrue before the end of any month or if
this agreement terminates before the end of any month, the fee for the period
from such date to the end of such month or from the beginning of such month to
the date of termination, as the case may be, shall be prorated according to the
proportion which such period bears to the full month in which such effectiveness
or termination occurs. For purposes of calculating each such monthly fee, the
value of the Fund's net assets shall be computed in the manner specified in the
Prospectus and the Articles for the computation of the value of the Fund's net
assets in connection with the determination of the net asset value of shares of
the Fund's capital stock.
8. If the aggregate expenses incurred by, or allocated to, the Fund in any
fiscal year shall exceed the expense limitations applicable to the Fund imposed
by state securities laws or regulations thereunder, as such limitations may be
raised or lowered from time to time, the Investment Adviser shall reimburse the
Fund for such excess. The Investment Adviser's reimbursement obligation will be
limited to the amount of fees it received under this agreement during the period
in which such expense limitations were exceeded, unless otherwise required by
applicable laws or regulations. With respect to portions of a fiscal year in
which this agreement shall be in effect, the foregoing limitations shall be
prorated according to the proportion which that portion of the fiscal year bears
to the full fiscal year. Any payments required to be made by this paragraph 8
shall be made once a year promptly after the end of the Company's fiscal year.
9. This agreement shall continue in effect until two years from the date
hereof and thereafter for successive annual periods, provided that such
continuance is specifically approved at least annually (a) by the vote of a
majority of the Fund's outstanding voting securities (as defined in the 1940
Act) or by the Company's Board of Directors and (b) by the vote, cast in person
at a meeting called for the purpose, of a majority of the Company's directors
who are not parties to this agreement or "interested persons" (as defined in the
1940 Act) of any such party. This agreement may be terminated at any time,
without the payment of any penalty, by a vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act) or by a vote of a
majority of the Company's entire Board of Directors on 60 days' written notice
to the Investment Adviser or by the Investment Adviser on 60 days' written
notice to the Company. This agreement shall terminate automatically in the event
of its assignment (as defined in the 1940 Act).
10. Upon expiration or earlier termination of this agreement, the Company
shall, if reference to "Lipper" is made in the corporate name of the Company or
in the name of the Fund and if the Investment Adviser requests in writing, as
promptly as practicable change its corporate name and the name of the Fund so as
to eliminate all reference to "Lipper", and thereafter the Company and the Fund
shall cease transacting business in any corporate name using the words "Lipper"
or any other reference to the Investment Adviser or "Lipper". The foregoing
rights of the Investment Adviser and obligations of the Company shall not
deprive the Investment Adviser, or any affiliate thereof which has "Lipper" in
its name, of, but shall be in addition to, any other rights or remedies to which
the Investment Adviser and any such affiliate may be entitled in law or equity
by reason of any breach of this agreement by the Company, and the failure or
omission of the Investment Adviser to request a change of the Company's or the
Fund's name or a cessation of the use of the name of "Lipper" as described in
this paragraph 10 shall not under any circumstances be deemed a waiver of the
right to require such change or cessation at any time thereafter for the same or
any subsequent breach.
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11. Except to the extent necessary to perform the Investment Adviser's
obligations under this agreement, nothing herein shall be deemed to limit or
restrict the right of the Investment Adviser, or any affiliate of the Investment
Adviser, or any employee of the Investment Adviser, to engage in any other
business or to devote time and attention to the management or other aspects of
any other business, whether of a similar or dissimilar nature, or to render
services of any kind to any other corporation, firm, individual or association.
12. This agreement shall be governed by the laws of the State of New York.
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If the foregoing correctly sets forth the agreement between the Company and
the Investment Adviser, please so indicate by signing and returning to the
Company the enclosed copy hereof.
Very truly yours,
THE LIPPER FUNDS, INC.
By:
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Name: Xxxxxxx Xxxxxxxx
Title: Director
ACCEPTED:
By: LIPPER & COMPANY, L.L.C.
By:
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Name: Xxxxxx Xxxxxx
Title: Executive Vice President
