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INVESTMENT MANAGEMENT AGREEMENT
Between
X. XXXX PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
and
X. XXXX PRICE ASSOCIATES, INC.
INVESTMENT MANAGEMENT AGREEMENT, made as of April 24, 1997 by
and between X. XXXX PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.,
a Maryland corporation (hereinafter called the "Fund"), and X. XXXX
PRICE ASSOCIATES, INC., a corporation organized and existing under
the laws of the State of Maryland (hereinafter called the
"Manager").
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as an open-end
management investment company and is registered as such under the
federal Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Manager is engaged principally in the business of
rendering investment supervisory services and is registered as an
investment adviser under the federal Investment Advisers Act of
1940, as amended; and
WHEREAS, the Fund desires the Manager to render investment
supervisory services to the Fund in the manner and on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual promises hereinafter set forth, the parties hereto agree as
follows:
1. Duties and Responsibilities of Manager.
A. Investment Management Services. The Manager shall act
as investment manager and shall supervise and direct the
investments of the Fund in accordance with the Fund's investment
objectives, program and restrictions as provided in its prospectus,
as amended from time to time, and such other limitations as the
Fund may impose by notice in writing to the Manager. The Manager
shall obtain and evaluate such information relating to the economy,
industries, businesses, securities markets and securities as it may
deem necessary or useful in the discharge of its obligations
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hereunder and shall formulate and implement a continuing program
for the management of the assets and resources of the Fund in a
manner consistent with its investment objectives. In furtherance
of this duty, the Manager, as agent and attorney-in-fact with
respect to the Fund, is authorized, in its discretion and without
prior consultation with the Fund, to:
(i) buy, sell, exchange, convert, lend, and
otherwise trade in any stocks, bonds, and other
securities or assets; and
(ii) place orders and negotiate the commissions (if
any) for the execution of transactions in securities
with or through such brokers, dealers, underwriters or
issuers as the Manager may select.
B. Financial, Accounting, and Administrative Services. The
Manager shall maintain the corporate existence and corporate
records of the Fund; maintain the registrations and qualifications
of Fund shares under federal and state law; monitor the financial,
accounting, and administrative functions of the Fund; maintain
liaison with the various agents employed by the Fund (including the
Fund's transfer agent, custodian, independent accountants and legal
counsel) and assist in the coordination of their activities on
behalf of the Fund.
C. Reports to Fund. The Manager shall furnish to or place
at the disposal of the Fund such information, reports, evaluations,
analyses and opinions as the Fund may, at any time or from time to
time, reasonably request or as the Manager may deem helpful to the
Fund.
D. Reports and Other Communications to Fund Shareholders.
The Manager shall assist the Fund in developing all general
shareholder communications, including regular shareholder reports.
E. Fund Personnel. The Manager agrees to permit
individuals who are officers or employees of the Manager to serve
(if duly elected or appointed) as officers, directors, members of
any committee of directors, members of any advisory board, or
members of any other committee of the Fund, without remuneration
from or other cost to the Fund.
F. Personnel, Office Space, and Facilities of Manager. The
Manager at its own expense shall furnish or provide and pay the
cost of such office space, office equipment, office personnel, and
office services as the Manager requires in the performance of its
investment advisory and other obligations under this Agreement.
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2. Allocation of Expenses.
A. Expenses Paid by Manager.
(1) Salaries and Fees of Officers. The Manager shall
pay all salaries, expenses, and fees of the officers and
directors of the Fund who are affiliated with the Manager.
(2) Assumption of Fund Expenses by Manager. The
payment or assumption by the Manager of any expense of the
Fund that the Manager is not required by this Agreement to
pay or assume shall not obligate the Manager to pay or
assume the same or any similar expense of the Fund on any
subsequent occasion.
B. Expenses Paid by Fund. The Fund shall bear all expenses
of its organization, operations, and business not specifically
assumed or agreed to be paid by the Manager as provided in this
Agreement. In particular, but without limiting the generality of
the foregoing, the Fund shall pay:
(1) Custody and Accounting Services. All expenses of
the transfer, receipt, safekeeping, servicing and
accounting for the Fund's cash, securities, and other
property, including all charges of depositories,
custodians, and other agents, if any;
(2) Shareholder Servicing. All expenses of maintaining
and servicing shareholder accounts, including all charges
of the Fund's transfer, shareholder recordkeeping, dividend
disbursing, redemption, and other agents, if any;
(3) Shareholder Communications. All expenses of
preparing, setting in type, printing, and distributing
reports and other communications to shareholders;
(4) Shareholder Meetings. All expenses incidental to
holding meetings of Fund shareholders, including the
printing of notices and proxy material, and proxy
solicitation therefor;
(5) Prospectuses. All expenses of preparing, setting
in type, and printing of annual or more frequent revisions
of the Fund's prospectus and of mailing them to
shareholders;
(6) Pricing. All expenses of computing the Fund's net
asset value per share, including the cost of any equipment
or services used for obtaining price quotations;
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(7) Communication Equipment. All charges for equipment
or services used for communication between the Manager or
the Fund and the custodian, transfer agent or any other
agent selected by the Fund;
(8) Legal and Accounting Fees and Expenses. All
charges for services and expenses of the Fund's legal
counsel and independent auditors;
(9) Directors' Fees and Expenses. All compensation of
directors, other than those affiliated with the Manager,
and all expenses incurred in connection with their service;
(10) Federal Registration Fees. All fees and expenses
of registering and maintaining the registration of the Fund
under the Act and the registration of the Fund's shares
under the Securities Act of 1933, as amended (the "'33
Act"), including all fees and expenses incurred in
connection with the preparation, setting in type, printing,
and filing of any registration statement and prospectus
under the '33 Act or the Act, and any amendments or
supplements that may be made from time to time;
(11) State Filing Fees. All fees and expenses imposed
on the Fund as appropriate, with respect to the sale of
Fund shares for sale under securities laws of various
states or jurisdictions, and under all other laws
applicable to the Fund or its business activities
(including registering the Fund as a broker-dealer, or any
officer of the Fund or any person as agent or salesman of
the Fund in any state);
(12) Issue and Redemption of Fund Shares. All expenses
incurred in connection with the issue, redemption, and
transfer of Fund shares, including the expense of
confirming all share transactions, and of preparing and
transmitting the Fund's stock certificates;
(13) Bonding and Insurance. All expenses of bond,
liability, and other insurance coverage required by law or
deemed advisable by the Fund's board of directors;
(14) Brokerage Commissions. All brokers' commissions
and other charges incident to the purchase, sale, or
lending of the Fund's portfolio securities;
(15) Taxes. All taxes or governmental fees payable by
or with respect of the Fund to federal, state, or other
governmental agencies, domestic or foreign, including stamp
or other transfer taxes;
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(16) Trade Association Fees. All fees, dues, and other
expenses incurred in connection with the Fund's membership
in any trade association or other investment organization;
and
(17) Nonrecurring and Extraordinary Expenses. Such
nonrecurring expenses as may arise, including the costs of
actions, suits, or proceedings to which the Fund is a party
and the expenses the Fund may incur as a result of its
legal obligation to provide indemnification to its
officers, directors, and agents.
3. Management Fee. The Fund shall pay the Manager a fee
("Fee") which will consist of two components: a Group Management
Fee ("Group Fee") and an Individual Fund Fee ("Fund Fee"). The Fee
shall be paid monthly to the Manager on the first business day of
the next succeeding calendar month and shall be calculated as
follows:
A. Group Fee. The monthly Group Fee ("Monthly Group Fee")
shall be the sum of the daily Group Fee accruals ("Daily Group Fee
Accruals") for each month. The Daily Group Fee Accrual for any
particular day will be computed by multiplying the Price Funds'
group fee accrual as determined below ("Daily Price Funds' Group
Fee Accrual") by the ratio of the Fund's net assets for that day to
the sum of the aggregate net assets of the Price Funds for that
day. The Daily Price Funds' Group Fee Accrual for any particular
day shall be calculated by multiplying the fraction of one (1) over
the number of calendar days in the year by the annualized Daily
Price Funds' Group Fee Accrual for that day as determined in
accordance with the following schedule:
Price Funds' Annual Group
Base Fee Rate for Each Level of Assets
_____________________________________
0.480% First $1 billion
0.450% Next $1 billion
0.420% Next $1 billion
0.390% Next $1 billion
0.370% Next $1 billion
0.360% Next $2 billion
0.350% Next $2 billion
0.340% Next $5 billion
0.330% Next $10 billion
0.320% Next $10 billion
0.310% Next $16 billion
0.305% Next $30 billion
0.300% Thereafter
The Price Funds shall include all the mutual funds
distributed by X. Xxxx Price Investment Services, Inc., excluding
institutional or private label mutual funds. For the purpose of
calculating the Daily Price Funds' Group Fee Accrual for any
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particular day, the net assets of each Price Fund shall be
determined in accordance with the Fund's prospectus as of the close
of business on the previous business day on which the Fund was open
for business.
B. Fund Fee. The monthly Fund Fee ("Monthly Fund Fee")
shall be the sum of the daily Fund Fee accruals ("Daily Fund Fee
Accruals") for each month. The Daily Fund Fee Accrual for any
particular day will be computed by multiplying the fraction of one
(1) over the number of calendar days in the year by the Fund Fee
Rate of 0.35% and multiplying this product by the net assets of the
Fund for that day, as determined in accordance with the Fund's
prospectus as of the close of business on the previous business day
on which the Fund was open for business.
C. Expense Limitation. As part of the consideration for
the Fund entering into this Agreement, the Manager hereby agrees to
limit the aggregate expenses of every character incurred by the
Fund, including but not limited to Fees of the Manager computed as
hereinabove set forth, but excluding interest, taxes, brokerage,
and other expenditures which are capitalized in accordance with
generally accepted accounting principles and extraordinary
expenses, ("Manager Limitation"). Under the Manager Limitation,
the Manager agrees that through December 31, 1998, such expenses
shall not exceed 1.25% of the average daily net assets of the Fund
("1.25% Expense Limitation"). To determine the Manager's liability
for the Fund's expenses over the 1.25% Expense Limitation, the
amount of allowable year-to-date expenses shall be computed daily
by pro rating the 1.25% Expense Limitation based on the number of
days elapsed within the fiscal year of the Fund, or limitation
period, if shorter ("Pro Rated Limitation"). The Pro Rated
Limitation shall be compared to the expenses of the Fund recorded
through the prior day in order to produce the allowable expenses to
be recorded for the current day ("Allowable Expenses"). If the
Fund's Management Fee and other expenses for the current day exceed
the Allowable Expenses, the Management Fee for the current day
shall be reduced by such excess ("Unaccrued Fees"). In the event
the excess exceeds the amount due as the Management Fee, the
Manager shall be responsible to the Fund for the additional excess
("Other Expenses Exceeding Limit"). If at any time up through and
including December 31, 1998, the Fund's Management Fee and other
expenses for the current day are less than the Allowable Expenses,
the differential shall be due to the Manager as payment of
cumulative Unaccrued Fees (if any) or as payment for cumulative
Other Expenses Exceeding Limit (if any). If cumulative Unaccrued
Fees or cumulative Other Expenses Exceeding Limit remain at
December 31, 1998, these amounts shall be paid to the Manager in
the future provided that: (1) no such payment shall be made to the
Manager after December 31, 2000; and (2) such payment shall only be
made to the extent that it does not result in the Fund's aggregate
expenses exceeding an expense
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limit of 1.25% of average daily net assets. The Manager may
voluntarily agree to an additional expense limitation (any such
additional expense limitation hereinafter referred to as an
"Additional Expense Limitation"), at the same or a different level
and for the same or a different period of time beyond December 31,
1998 (any such additional period being hereinafter referred to an
as "Additional Period") provided, however, that: (1) the
calculations and methods of payment shall be as described above;
(2) no payment for cumulative Unaccrued Fees or cumulative Other
Expenses Exceeding Limit shall be made to the Manager more than two
years after the end of an Additional Period; and (3) payment for
cumulative Unaccrued Fees or cumulative Other Expenses Exceeding
Limit after the expiration of the Additional Period shall only be
made to the extent it does not result in the Fund's aggregate
expenses exceeding the Additional Expense Limitation to which the
unpaid amounts relate.
D. Proration of Fee. If this Agreement becomes effective
or terminates before the end of any month, the Fee for the period
from the effective 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.
4. Brokerage. Subject to the approval of the board of
directors of the Fund, the Manager, in carrying out its duties
under Paragraph 1.A., may cause the Fund to pay a broker-dealer
which furnishes brokerage or research services [as such services
are defined under Section 28(e) of the Securities Exchange Act of
1934, as amended (the "'34 Act")], a higher commission than that
which might be 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, if such
commission is deemed reasonable in relation to the brokerage and
research services provided by the broker-dealer, viewed in terms of
either that particular transaction or the overall responsibilities
of the Manager with respect to the accounts as to which it
exercises investment discretion (as such term is defined under
Section 3(a)(35) of the '34 Act).
5. Manager's Use of the Services of Others. The Manager
may (at its cost except as contemplated by Paragraph 4 of this
Agreement) employ, retain or otherwise avail itself of the services
or facilities of other persons or organizations for the purpose of
providing the Manager or the Fund with such statistical and other
factual information, such advice regarding economic factors and
trends, such advice as to occasional transactions in specific
securities or such other information, advice or assistance as the
Manager may deem necessary, appropriate or convenient for the
discharge of its obligations hereunder or otherwise helpful to the
Fund, or in the discharge
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of Manager's overall responsibilities with respect to the other
accounts which it serves as investment manager.
6. Ownership of Records. All records required to be
maintained and preserved by the Fund pursuant to the provisions of
rules or regulations of the Securities and Exchange Commission
under Section 31(a) of the Act and maintained and preserved by the
Manager on behalf of the Fund are the property of the Fund and will
be surrendered by the Manager promptly on request by the Fund.
7. Reports to Manager. The Fund shall furnish or otherwise
make available to the Manager such prospectuses, financial
statements, proxy statements, reports, and other information
relating to the business and affairs of the Fund as the Manager
may, at any time or from time to time, reasonably require in order
to discharge its obligations under this Agreement.
8. Services to Other Clients. Nothing herein contained
shall limit the freedom of the Manager or any affiliated person of
the Manager to render investment supervisory and corporate
administrative services to other investment companies, to act as
investment manager or investment counselor to other persons, firms
or corporations, or to engage in other business activities; but so
long as this Agreement or any extension, renewal or amendment
hereof shall remain in effect or until the Manager shall otherwise
consent, the Manager shall be the only investment manager to the
Fund.
9. Limitation of Liability of Manager. Neither the Manager
nor any of its officers, directors, or employees, nor any person
performing executive, administrative, trading, or other functions
for the Fund (at the direction or request of the Manager) or the
Manager in connection with the Manager's discharge of its
obligations undertaken or reasonably assumed with respect to this
Agreement, shall be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, except for loss resulting
from willful misfeasance, bad faith, or gross negligence in the
performance of its or his duties on behalf of the Fund or from
reckless disregard by the Manager or any such person of the duties
of the Manager under this Agreement.
10. Use of Manager's Name. The Fund may use the name "X.
Xxxx Price Diversified Small-Cap Growth Fund, Inc." or any other
name derived from the name "X. Xxxx Price" only for so long as this
Agreement or any extension, renewal or amendment hereof remains in
effect, including any similar agreement with any organization which
shall have succeeded to the business of the Manager as investment
manager. At such time as this Agreement or
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any extension, renewal or amendment hereof, or such other similar
agreement shall no longer be in effect, the Fund will (by corporate
action, if necessary) cease to use any name derived from the name
"X. Xxxx Price," any name similar thereto or any other name
indicating that it is advised by or otherwise connected with the
Manager, or with any organization which shall have succeeded to the
Manager's business as investment manager.
11. Term of Agreement. The term of this Agreement shall
begin on the date first above written, and unless sooner terminated
as hereinafter provided, this Agreement shall remain in effect
through April 30, 1998. Thereafter, this Agreement shall continue
in effect from year to year, subject to the termination provisions
and all other terms and conditions hereof, so long as: (a) such
continuation shall be specifically approved at least annually by
the board of directors of the Fund or by vote of a majority of the
outstanding voting securities of the Fund and, concurrently with
such approval by the board of directors or prior to such approval
by the holders of the outstanding voting securities of the Fund, as
the case may be, by the vote, cast in person at a meeting called
for the purpose of voting on such approval, of a majority of the
directors of the Fund who are not parties to this Agreement or
interested persons of any such party; and (b) the Manager shall not
have notified the Fund, in writing, at least 60 days prior to April
30, 1998 or prior to April 30th of any year thereafter, that it
does not desire such continuation. The Manager shall furnish to
the Fund, promptly upon its request, such information as may
reasonably be necessary to evaluate the terms of this Agreement or
any extension, renewal or amendment hereof.
12. Amendment and Assignment of Agreement. This Agreement
may not be amended or assigned without the affirmative vote of a
majority of the outstanding voting securities of the Fund, and this
Agreement shall automatically and immediately terminate in the
event of its assignment.
13. Termination of Agreement. This Agreement may be
terminated by either party hereto, without the payment of any
penalty, upon 60 days' prior notice in writing to the other party;
provided, that in the case of termination by the Fund such action
shall have been authorized by resolution of a majority of the
directors of the Fund who are not parties to this Agreement or
interested persons of any such party, or by vote of a majority of
the outstanding voting securities of the Fund.
14. Miscellaneous.
A. Captions. The captions in this Agreement are included
for convenience of reference only and in no way define or delineate
any of the provisions hereof or otherwise affect their construction
or effect.
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B. Interpretation. Nothing herein contained shall be
deemed to require the Fund to take any action contrary to its
Articles of Incorporation or By-Laws, or any applicable statutory
or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the board of directors of the Fund
of its responsibility for and control of the conduct of the affairs
of the Fund.
C. Definitions. Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the Act shall be resolved by
reference to such term or provision of the Act and to
interpretations thereof, if any, by the United States courts or, in
the absence of any controlling decision of any such court, by
rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the Act. Specifically, the
terms "vote of a majority of the outstanding voting securities,"
"interested person," "assignment," and "affiliated person," as used
in Paragraphs 2, 8, 10, 11, and 12 hereof, shall have the meanings
assigned to them by Section 2(a) of the Act. In addition, where
the effect of a requirement of the Act reflected in any provision
of this Agreement is relaxed by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or of
general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly
authorized and their respective seals to be hereunto affixed, as of
the day and year first above written.
Attest: X. XXXX PRICE DIVERSIFIED SMALL-CAP
GROWTH FUND, INC.
/s/Xxxxxxxx X. Xxxxxxx By:/s/Xxxxxxx X. Xxxxxxx
Xxxxxxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxx
Assistant Secretary President
Attest: X. XXXX PRICE ASSOCIATES, INC.
/s/Xxxxxxx X. Xxx Xxxx By:/s/Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxx Xxxx Xxxxx X. Xxxxxxx
Assistant Secretary Managing Director
