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[LETTERHEAD OF STRONG CAPITAL MANAGEMENT, INC.]
September 4, 1996
Xx. Xxxxx X. Xxxxxxx
Xxxxxxx Capital Management, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Portfolio Trading
Dear Xxxxx:
We appreciate this opportunity to confirm our agreement
under which Strong Capital Management, Inc. ("Strong") will assume
administrative responsibility for executing portfolio trades on behalf of
Xxxxxxx Capital Management, Inc. ("Xxxxxxx"), for the benefit of
certain clients of Xxxxxxx.
1. NATURE OF SERVICES/SCOPE OF DUTIES - Strong agrees to use its best
efforts to act as the "Trading Desk" for Xxxxxxx with respect to such
transactions as Xxxxxxx may from time to time request Strong to perform and to
execute portfolio trades on behalf of the following discretionary clients to
Xxxxxxx: (i) the Strong Xxxxxxx Value Fund; and (ii) any and all subadvisory or
similar relationships that Strong and Xxxxxxx jointly enter into (the "Xxxxxxx
clients").
The parties agree that Xxxxxxx shall be responsible for issuing
instructions to Strong as to (i) which securities shall be purchased or sold and
(ii) the amount of securities to be purchased or sold. Subject to the
instructions and/or oversight of Xxxxxxx, and unless Xxxxxxx issues specific
instructions otherwise, Xxxxxx agrees to use its best efforts to, where
appropriate: (i) choose the broker-dealer through which the securities will be
purchased or sold; (ii) choose the price at which the transaction will be
effected; (iii) "work" the order in the manner deemed most appropriate by
Xxxxxx; (iv) choose the time of execution; (v) ensure that the executing
broker-dealer reports the transaction to Strong; and (vi) provide Xxxxxxx with
such reasonable reports about trading activity as the parties may mutually agree
to (collectively, the "Services").
Xxxxxxx acknowledges that, in providing the Services, Xxxxxx will use
the same brokerage placement customs and practices that Strong applies when
executing portfolio trades for its
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discretionary clients and will treat Xxxxxxx transactions in the same manner as
it treats transactions for its discretionary clients.
3. COMMISSION RATE SCHEDULE - In providing the Services, Strong will use
its best efforts to execute portfolio trades in accordance with the commission
rates set forth in the attached commission schedule, as it may be modified in
the future.
4. EXPENSES - Xxxxxxx agrees to reimburse Strong on a quarterly basis
for the annual compensation expenses of Strong associates involved in
providing the Services to Xxxxxxx, which includes salary, discretionary bonus,
and benefits as calculated in good faith by Xxxxxx. Where only a portion of an
associate's time is devoted to the services, Xxxxxxx will reimburse Strong only
for the pro rata portion of that associate's time devoted to the Services. In
addition, Xxxxxxx agrees to reimburse Strong for the non-compensation benefits
provided to Associates involved in providing the services (e.g., health
benefits, 401k, etc.), which amount shall not exceed 20% of each associate's
base salary and discretionary bonus that are allocable to providing the
Services to Xxxxxxx. Xxxxxxx agrees to make such payment to Strong within
thirty (30) days of the end of each quarter.
At the end of each fiscal year for Strong, Xxxxxx will notify Xxxxxxx
of the amount of the discretionary bonus to be awarded to any associate involved
in providing the Services to Xxxxxxx so that Xxxxxxx may determine whether it
wishes to make any additional grant of discretionary bonus to the associate[s]
(and Xxxxxxx shall reimburse Strong for any such additional grant of
discretionary bonus).
5. XXXXXXXXX - Xxxxxxx acknowledges that, except in the case of gross
negligence or willful misfeasance, (i) Strong shall not be liable hereunder for
any action performed or omitted to be performed or for any errors of judgment in
providing the Services and (ii) Xxxxxxx agrees to defend and indemnify Strong in
the event of any claim or assertion made against Strong relating to the Services
by any client or other party.
6. CONTACT PERSON - Any questions about the Services shall be directed
to Xxxx Xxxxxxx (or such other Strong associates as the parties may in the
future agree to).
7. TERMINATION - Either party may terminate this agreement on thirty (30)
days written notice to the other party.
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Please confirm the foregoing by signing below and returning the
enclosed copy of this letter to me.
Sincerely,
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
General Counsel
CONFIRMED:
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
President
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XXXXXXX CAPITAL MANAGEMENT, INC.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
October 22, 1996
Xx. Xxxxxx X. Xxxxx
Strong Capital Management, Inc.
One Hundred Heritage Reserve
PO Box 2936
Milwaukee, WI 53201
Dear Xxx:
As I believe you are aware, we propose that the trading agreement
dated September 4, 1996 between Xxxxxxx Capital Management, Inc. and Strong
Capital Management, Inc. be supplemented by including in such agreement the
provisions contained in the Addendum attached hereto. If you are in agreement
with such amendment and supplementation of the trading agreement, please sign
below and return the enclosed copy of this letter to me.
Very truly yours,
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
President
Confirmed:
STRONG CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxx
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ADDENDUM TO TRADING AGREEMENT BETWEEN
XXXXXXX CAPITAL MANAGEMENT, INC., AND
STRONG CAPITAL MANAGEMENT, INC.
Compliance and Maintenance of Records -- Strong agrees that, in
the provision of the Services to Strong Xxxxxxx Value Fund, Inc. (the "Fund") on
behalf of Xxxxxxx, it will (i) act consistently with the obligations of Xxxxxxx
to the Fund as set forth in the Investment Advisory Agreement dated as of August
13, 1985 between such parties; (2) act consistently with the disclosures
relating to brokerage and trading contained in the Registration Statement on
Form N- 1A of the Fund, as such Registration Statement may be amended from time
to time; and (3) comply with all applicable provisions of the Investment Company
Act of 1940, as amended (the "1940 Act"), and the rules and regulations
thereunder. Without limiting the generality of the foregoing, Xxxxxx agrees to
maintain and preserve, in accordance with the 1940 Act and the rules and
regulations thereunder, and for the periods prescribed by Rule 31a-2 under the
1940 Act, books and records with respect to securities transactions required to
be maintained by Rule 31a-1 under the 1940 Act.
Xxxxxx further agrees that all records which it maintains
on behalf of Xxxxxxx on behalf of the Fund are the Fund's property and that
Xxxxxx will surrender them to Xxxxxxx and/or the Fund, the Fund's independent
auditors, or as may be required by any government agency having jurisdiction
over Xxxxxxx and/or the Fund, promptly upon written request. The provisions of
this Section shall survive any termination of this Agreement.
