MANAGEMENT AGREEMENT
AGREEMENT made as of this 17th day of May 2001 by and between LORD XXXXXX
BLEND TRUST, a Delaware business trust (hereinafter called the "Trust"), and
LORD, XXXXXX & CO., a New York partnership (hereinafter called the "Investment
Manger").
WHEREAS, the Trust, desires to obtain 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 Trust 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 Trust 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
Trust's direction or control) including, without limitation, the supervision of
its investment portfolios and the recommendation of investment policies and
procedures within the limitations set forth in the Trust's Registration
Statement on file with the Securities and Exchange Commission under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended (the
"Act").
The Investment Manager agrees to maintain an adequate organization of
competent persons to perform the supervisory functions mentioned herein.
All recommendations with respect to the investment portfolios will be made
to the Trust's trading department which, with the approval of authorized
officers of the Trust, will execute all trades in accordance with the Trust's
investment procedures.
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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 Trust are, and shall at all times
be, subject to the control and direction of its trustees.
2. The Trust will pay the Investment Manager for its services under this
Agreement and for the expenses assumed, an annual management fee computed and
payable monthly at the annual rate of .75% of the value of the Trust's average
daily net assets. The value of the net assets shall include all assets held in
trust or in custody of any bank, savings bank or trust company for the Trust,
subject to its control or direction, and shall be determined as provided in the
Declaration and Agreement of Trust of the Trust. The fee shall be paid on the
first day of each month for the preceding month.
While recognizing that principal transactions, including riskless principal
transactions, are not afforded the protection of the safe harbor in Section 28
(e) of the Securities Exchange Act of 1934, the Investment Manager may receive
research and other statistical information from broker-dealers and from other
sources and, in accordance with said Section 28(e), a broker-dealer may be paid
a commission for a transaction involving portfolio securities of the Trust
exceeding the amount another broker-dealer would have charged for the same
transaction if it is determined by the Investment Manger in good faith 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 Trust 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 Trust.
It is understood that any supplemental advisory or statistical services
which may be provided to the Trust or to the Investment Manager from time to
time by independent broker-dealers or persons other than the Investment Manager,
for whatever reason, shall
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not reduce the amount of the fees payable to the Investment Manager hereunder.
It is recognized that such supplementary advisory or statistical services be
useful to the Investment Manager and the Trust, 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 Manger, 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 policies are similar to those of
the Trust) 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 Trust, 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 Trust 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 statement, and all other information which
may reasonably be required, form 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 beneficial interest outstanding.
5. The Investment Manager shall be under no obligation to pay any fees,
costs, expenses or other charges of the Trust, except for the compensation of
its officers, the compensation, if any, of its trustees 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 work
and supervision of the Trust's investment portfolio, to be performed by the
Investment Manager under paragraph 1 of this Agreement. The Trust will pay its
own fees, costs, expenses or charges relating to its assets and operations,
including without limitation: office and clerical expenses not relating to
research, statistical work and supervision of its investment portfolio; fees and
expenses of trustees not affiliated with the Investment Manager; governmental
fees; interest charges; taxes; association membership dues; fees and charges for
legal and auditing
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services; fees and expenses of any custodians or trustees with 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 ownership 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 Trust
and not expressly assumed by the Investment Manager under this Agreement.
Notwithstanding the above, to encourage sales of shares of beneficial
interest in the Trust, the Investment Manager may, but is not required to, waive
its fee hereunder attributable to the Trust and directly pay or reimburse the
Trust for any portion of the operating expenses of such Trust not expressly
assumed by the Investment Manager under this Agreement. The amount of any such
expenses so voluntarily paid or reimbursed by the Investment Manager shall be
paid back to the Investment Manager by the Trust without interest to the extent
provided as follows. No such pay-back will be made prior to the first day of the
calendar quarter after the net assets first reach $50 million (the "commencement
date"). Thereafter, until the first day of the calendar quarter after the net
assets first reach $100 million (the "recalculation date"), if the ratio of
operating expenses (determined before taking into account any fee waiver or
payment or reimbursement of expenses by the Investment Manager) to average net
assets ("expense ratio") is less than the percentage set forth in an Addendum to
this Agreement between the Investment Manager and the Trust, such Trust shall
repay the Investment Manager an amount equal in dollars to the difference
between the expenses included in the determination of such expense ratio and the
expenses required to achieve such percentage set forth in the addendum to this
Agreement. The expense ratios will be determined on a
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full fiscal year basis and, if the commencement date does not begin at the start
of a fiscal year, the determination will be based on the remaining portion of
the fiscal year annualized. Beginning with the recalculation date, the
reimbursement of expenses shall be measured by the difference between the
expenses included in the determination of such expense ratio and those at the
expense ratio set forth in an Addendum to this Agreement between the Investment
Manager and the Trust. Any such repayments shall be made promptly (but in any
event within 60 days) after the end of the fiscal years of the Trust with
respect to which they are payable, and no such repayment shall exceed the amount
of the expenses paid or reimbursed by the Investment Manager and not previously
paid back. The amount of any expenses paid or reimbursed that is subject to the
repayment provisions of this paragraph and not repaid as provide above prior to
termination of this Agreement, or by the end of the fifth full fiscal year after
the commencement date that shares of the Trust are first publicly sold,
whichever first occurs, shall not be repaid to the Investment Manager.
Notwithstanding any other provision of this Agreement, if expenses
(including management fees hereunder but excluding interest, taxes, brokerage
fees, and where permitted, extraordinary expenses) borne by the Trust in any
fiscal year exceed expense limitations applicable to the Trust imposed by state
securities administrators, as such limitations may be lowered or raised from
time to time, the Investment Manager will reimburse the Trust for any such
excess. If the Investment Management pays for other expenses of the Trust or
furnishes without charge to the Trust services the cost of which is to be borne
by the Trust under this Agreement, the Investment Manger shall not be deemed to
have waived its rights under this Agreement to have the Trust pay for such
expenses or provide or pay for such services in the future. The Investment
manager may also advance the payment of expenses, subject to reimbursement by
the Trust in the ordinary course of business.
6. The Investment Manager agrees that it shall observe and be bound by
all of the provisions of the Declaration and Agreement of Trust (including any
amendments thereto) of the Trust which in any way limit or restrict or prohibit
or otherwise regulate any action by the Investment Manager.
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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 Trust or any
of its shareholders, creditors, trustees or officers; provided however, that
nothing herein shall be deemed to protect the Investment Manager against any
liability to the Trust or its shareholders 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 reasonable for any action of the Trustees of the
Trust 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 trustees, officers, shareholders, or other
representatives of the Trust are or may be interested in the Investment Manager,
or any successor or assignee thereof, or that any or all of the officers,
partners, or other representatives of the Investment Manager are or may be
interested in the Trust, except as otherwise may be provided in the Act. The
Investment in acting hereunder shall be an independent contractor and not any
agent of the Trust.
9. This Agreement shall become effective upon the date hereof and shall
continue in force for two years from the date hereof, and is renewable annually
thereafter by specific approval of the trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Trust; any such renewal
shall be approved by the vote of a majority of the trustees who are not parties
to this Agreement or interested persons of the Investment Manager or of the
Trust, cast in person at a meeting called for this purpose of voting on such
renewal.
This Agreement may be terminated without penalty at any time by the
trustees of the Trust 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
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majority of the outstanding voting securities" shall have the same meaning as
those terms are defined in the Act.
10. The Investment Manager reserves the right to grant the use of the name
"LORD XXXXXX" or "LORD, XXXXXX & CO.," or any derivative thereof, or any other
part of the name of the Trust to any other investment company, any series of an
investment company or any business enterprise. The Investment Manager reserves
the right to withdraw from the Trust 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 may be submitted to a vote of the Trust's
shareholders. In the event of such withdrawal or the termination of this
Agreement, for any reason, the Trust will, on the written request of the
Investment Manager, take such action as my 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.
11. The obligations of the Trust, including those imposed hereby, are not
personally binding upon, nor shall resort be had to the private property of, any
of the trustees, shareholders, officers, employees or agents of the Trust
individually, but are binding only upon the assets and property of the Trust.
Any and all personal liability, either at common law or in equity, or by statute
or constitution, of every such trustee, shareholder, officer, employee or agent
for any breach by the Trust of any agreement, representation or warranty
hereunder is hereby expressly waived as a condition of and in consideration for
the execution of this Agreement by the Trust.
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IN WITNESS WHEREOF, the Trust has caused this Agreement to be executed by
its duly authorized officers and its seal to be affixed hereto, and the
Investment Manger has caused this Agreement to be executed by one of its
partners all on the day and the year first above written.
LORD XXXXXX BLEND TRUST
By: /s/ Xxxx X. Xxxxxxx
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Vice President
/s/ Xxxxxxxxx X. Xxxxxxx
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Assistant Secretary
LORD, XXXXXX & CO.
By: /s/ Xxxxxx X. Xxx
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A Partner
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