MANAGEMENT AGREEMENT
AGREEMENT made this 29th day of August, 1988 by and between LORD XXXXXX
GLOBAL 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 issues its capital stock in various Series and
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 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 portfolios 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.
Without limiting the obligation of the Investment Manager under this
paragraph 1 to perform the supervisory functions mentioned herein with respect
to all the Corporation's property and assets, the Investment Manager may employ
a sub-adviser for advice and management of the foreign securities in the
portfolios and with respect to foreign currency exchange pursuant to a written
contract that is subject to and satisfies all applicable requirements of the
Investment Company Act of 1940, as amended. Notwithstanding the provisions of
this paragraph 1 providing that recommendations with respect to the investment
portfolios be made to the Corporation's trading department, such sub-adviser may
place orders directly for the purchase, sale or exchange of foreign portfolio
securities for the Corporation's account in a manner set forth in such a
sub-investment management agreement.
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 supervision and control 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, (i) with respect to the Equity Series, at the annual rate of
three quarters (.75) of one
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percent (1%) of the value of the average daily net assets of such Series and
(ii) with respect to the Income Series, at the annual rate of one half (.50) of
one percent (1%) of the value of the average daily net assets of such Series.
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. Payments to the
sub-adviser referred to in paragraph 1 for its services and expenses assumed
shall be made by the Investment Manager, and the Corporation shall have no
responsibility for such payments whatsoever.
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 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
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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 companies and other clients (whether or not
their investment objectives and 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
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investment portfolio and shares of its capital stock.
5. The Investment Manager shall be under no obligation to pay any fees,
costs, expenses or other charges of the Corporation, except for the compensation
of its officers, the compensation, if any, of its directors who are affiliated
with the Investment Manager, the rental for its office space, and its ordinary
and necessary office and clerical expenses relating to research, statistical
work and supervision of the Corporation's investment portfolios to be performed
by the Investment Manager under paragraph 1 of this Agreement. 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 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); cost and expense of repurchase and redemption of its
shares; cost and expense of preparing, printing and mailing stock certificates
and reports, notices and proxy statements 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,
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expense or charge of any kind not expressly assumed by the Investment Manager
under this Agreement.
Notwithstanding the above, the Investment Manager will pay expenses of the
Corporation until the commencement of operations of the Corporation; thereafter,
to encourage sales of capital stock of the Corporation, the Investment Manager
may, but is not required to, pay all or any portion of expenses of the
Corporation not expressly assumed by the Investment Manager under this
Agreement. Any such expenses paid by the Investment Manager, which are not
required to be paid by the Investment Manager pursuant to state expense
limitations described below, shall be paid back to the Investment Manager by the
Corporation without interest to the extent provided below. Such repayment shall
be made as follows: In the event that the average daily net assets of a Series
are $50 million or more throughout a calendar month and during such month the
ratio of operating expenses to average net assets on an annualized basis
("expense ratio") does not exceed 1.30%, in the case of the Income Series, or
1.50%, in the case of the Equity Series, then such repayment shall be made
immediately after the end of such month by the Corporation. In the event that
the average daily net assets of a Series are less than $50 million throughout a
calendar month after the commencement of operations and during such month the
expense ratio does not exceed 1.30%, in the case of the Income Series, or 1.50%,
in the case of the Equity Series, the Corporation shall repay the Investment
Manager immediately after the end of such month an amount (not to exceed the
unpaid expenses belonging to that Series) equal in dollars to the difference in
dollars between the expenses at the actual expense ratio and those at an expense
ratio of 1.30%, in the case of the Income Series, and 1.50%, in the case
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of the Equity Series. Expenses that represent liabilities belonging to the
Income Series shall be paid solely from assets belonging to the Equity Series.
Any expenses not repaid pursuant to this paragraph prior to termination of this
Agreement, or October 31, 1998, whichever first occurs, shall not be reimbursed
to the Investment Manager.
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 the Corporation with services the cost of which is to be borne by the
Corporation under this Agreement, the Investment Manager shall not be deemed to
have waived its right under this Agreement to have the Corporation pay for such
expenses or provide 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
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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 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 continue in force for two years from the date
hereof, 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
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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 Board
of Directors of the Corporation or by vote of a majority of the outstanding
voting securities of 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 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.
LORD XXXXXX GLOBAL FUND, INC.
By: /s/ Xxxxxx X. Xxxxx
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Chairman of the Board
/s/ Xxxxxx Xxxxx
------------------
Assistant Secretary
LORD, XXXXXX & CO.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
A Partner
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