ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement ("Agreement") is made as of December
12, 2002 by and among each of the investment companies in the Lord Xxxxxx Family
of Funds, as set forth on Exhibit 1 hereto, and each new Lord Xxxxxx Fund added
as a party to this Agreement pursuant to section 9, (each, a "Fund" or
collectively, the "Funds") and Lord, Xxxxxx & Co. LLC, a Delaware limited
liability company ("Lord Xxxxxx").
RECITALS
A. WHEREAS, Lord Xxxxxx has entered into a Management Agreement with each
Fund whereby Lord Xxxxxx provides investment management services to each Fund.
B. WHEREAS, each Fund desires to retain Lord Xxxxxx to provide certain
administrative services and Lord Xxxxxx is willing to provide, or arrange to
have provided, such services upon the terms and conditions as 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. AGREEMENT TO PERFORM ADMINISTRATIVE SERVICES. Each Fund hereby
employs Lord Xxxxxx under the terms and conditions of this Agreement, and
Lord Xxxxxx hereby accepts such employment and agrees to perform the
administrative services described below. It is understood that the persons
employed by Lord Xxxxxx to assist in the performance of its duties hereunder
will not devote their full time to such services, and may in fact devote a
substantial portion of their time to the performance of duties relating to
Lord Xxxxxx'x provision of services to other clients, and nothing herein
shall be deemed to limit or restrict the right of Lord Xxxxxx, its
affiliates, and their respective employees, to engage in and devote time and
attention to other business or to render services of whatever kind or nature
to Lord Xxxxxx'x other clients.
2. LORD XXXXXX SERVICES AND DUTIES. Lord Xxxxxx will provide, or arrange
to have provided in accordance with section 3 below, for each Fund those
facilities, equipment, and personnel to carry out the administrative services
which are described in Exhibit 2 hereto ("Administrative Services"). Lord Xxxxxx
represents that it has sufficient personnel and experience to perform the
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Administrative Services, and agrees to perform such Administrative Services in
accordance with industry standards for mutual fund administrators.
In performing its duties under this Agreement, Lord Xxxxxx agrees that it
shall observe and be bound by all of the provisions of (1) each Fund's Articles
of Incorporation/Declaration and Agreement of Trust and By-laws (including any
amendments thereto) which in any way limit or restrict or prohibit or otherwise
regulate any action by Lord Xxxxxx, (2) each Fund's registration statement, and
(3) the instructions and directions of the Boards of Directors/Trustees of each
Fund. In addition, Lord Xxxxxx agrees and warrants that it will use its best
efforts to conform to and comply with the requirements of the Investment Company
Act of 1940, as amended ("1940 Act") and all other applicable federal and state
laws and regulations.
3. LORD XXXXXX SUBCONTRACTORS. It is understood that Lord Xxxxxx may from
time to time employ or associate with such person or persons ("Subcontractors")
as Lord Xxxxxx may believe to be particularly fitted to assist in its
performance of this Agreement; provided, however, that the compensation of such
Subcontractors shall be paid by Lord Xxxxxx and that Lord Xxxxxx shall be as
fully responsible to each Fund for the acts and omissions of any Subcontractor
as it is for its own acts and omissions. Lord Xxxxxx shall use its best efforts
to ensure that any Subcontractor complies with the provisions of section 2
above.
4. EXPENSES ASSUMED. Except as otherwise set forth in this section 4 or as
otherwise approved by the Funds' Boards of Directors/Trustees, Lord Xxxxxx shall
pay all expenses incurred by it in performing the Administrative Services,
including the cost of providing office facilities, equipment and personnel
related to such services. Each Fund will pay its own fees, costs, expenses or
charges relating to its assets and operations, including without limitation:
fees and expenses under the Management Agreement; fees and expenses of
Directors/Trustees not affiliated with Lord Xxxxxx; governmental fees; interest
charges; taxes; 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); 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
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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 Lord Xxxxxx under this Agreement or the
Management Agreement.
5. COMPENSATION. For the services rendered, facilities furnished and
expenses assumed by Lord Xxxxxx under this Agreement, each Fund will pay to Lord
Xxxxxx an annual administrative services fee, computed and payable monthly, at
the annual rate of .04% of the value of the Fund's average daily net assets.
Such value shall be calculated in the same manner as provided in each Fund's
Management Agreement. It is specifically understood and agreed that any fees for
fund accounting services payable by the Funds to State Street Bank and Trust
Company pursuant to that separate Custodian and Investment Accounting Agreement
dated November 1, 2001 shall be paid directly by Lord Xxxxxx on behalf of the
Funds. It is further understood and agreed that should the Funds' regulatory
environment change so that the costs to Lord Xxxxxx of providing Administrative
Services increase or decrease significantly, then Lord Xxxxxx and the Funds'
Boards of Directors/Trustees will consider whether it would be appropriate to
adjust the compensation under this Agreement.
6. STANDARD OF CARE. Other than to abide by the provisions hereof and
render the services called for hereunder in good faith, Lord Xxxxxx assumes no
responsibility under this Agreement and, having so acted, Lord Xxxxxx shall not
be held liable or accountable for any mistakes of law or fact, or for any error
or omission of its officers, directors, members or employees, or for any loss or
damage arising or resulting therefrom suffered by a Fund or any of its
shareholders, creditors, Directors/Trustees or officers; provided however, that
nothing herein shall be deemed to protect Lord Xxxxxx against any liability to
the Fund 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.
7. CONFLICTS OF INTEREST. 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 of the Directors/Trustees, officers,
shareholders, or other representatives of a Fund are or may be an interested
person of Lord Xxxxxx, or any successor or assignee thereof, or that any or all
of the officers, members, or other representatives of Lord Xxxxxx are or may be
an interested person of the Fund, except as otherwise may be provided in the
1940 Act. Lord Xxxxxx in acting hereunder shall be an independent contractor and
not an agent of the Funds.
8. EFFECTIVE DATE AND TERMINATION. This Agreement shall become effective
with respect to a Fund on January 1, 2003, or at such other date as may be set
by the Fund's Board of Directors/Trustees by resolution, and shall
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continue in force for two years from the date hereof, and is renewable annually
thereafter by specific approval of the Directors/Trustees of the Fund or by vote
of a majority of the outstanding voting securities of the Fund; any such renewal
shall be approved by the vote of a majority of the Directors/Trustees who are
not parties to this Agreement or interested persons of Lord Xxxxxx or of the
Fund, 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
Directors/Trustees of a Fund or by Lord Xxxxxx 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 1940 Act.
9. ADDITION OF NEW FUNDS TO AGREEMENT. In the event that a new fund is
created in the Lord Xxxxxx Family of Funds and such fund wishes to engage Lord
Xxxxxx to perform Administrative Services under this Ageement, such fund shall
be entitled to do so by executing and delivering to Lord Xxxxxx a document
accepting this Agreement. The employment of Lord Xxxxxx on behalf of any new
fund shall become effective upon Lord Xxxxxx'x receipt of such counterpart
executed by such new fund.
10. INDIVIDUAL LIABILITY. The obligations of each Company/Trust, including
those imposed hereby, are not personally binding upon, nor shall resort be had
to the private property of, any of the Directors/Trustees, shareholders,
officers, employees or agents of the Company/Trust individually, but are binding
only upon the assets and property of the Company/Trust. Any and all personal
liability, either at common law or in equity, or by statute or constitution, of
every such Director/Trustee, shareholder, officer, employee or agent for any
breach by the Company/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 Company/Trust.
11. LIABILITY OF FUNDS SEVERAL AND NOT JOINT. The obligations of a Fund
under this Agreement are enforceable solely against that Fund and its assets.
12. DELAWARE LAW. This Agreement shall be construed and the provisions
interpreted under and in accordance with the laws of the State of Delaware.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and on its behalf by its duly authorized representative.
On Behalf of each of the Lord Xxxxxx
Funds listed on Exhibit 1 Attached hereto
By:
/s/Xxxx X. Xxxxxxxx
------------------------
Xxxx X. Xxxxxxxx
Chief Financial Officer
Attested:
/s/Xxxxxxxxx X. Xxxxxxx
-----------------------
Xxxxxxxxx X. Xxxxxxx
Assistant Secretary
LORD, XXXXXX & CO. LLC
By:
/s/Xxxxxx X. Xxx
------------------------
Xxxxxx X. Xxx
Managing Member
Attested:
/s/Xxxx X. Xxxxxxx
-----------------------
Xxxx X. Xxxxxxx
Member, General Counsel
EXHIBIT 1
TO
ADMINISTRATIVE SERVICES AGREEMENT
The following funds comprise the Lord Xxxxxx Family of Funds:
Lord Xxxxxx Affiliated Fund, Inc.
Lord Xxxxxx Blend Trust
Lord Xxxxxx Small-Cap Blend Fund
Lord Xxxxxx Bond-Debenture Fund, Inc.
Lord Xxxxxx Developing Growth Fund, Inc.
Lord Xxxxxx Global Fund, Inc.
Equity Series
Income Series
Lord Xxxxxx Investment Trust
Balanced Series
Core Fixed Income Fund
Lord Xxxxxx High Yield Fund
Limited Duration U.S. Government Securities Series
Lord Xxxxxx Total Return Fund
U.S. Government Securities Series
Lord Xxxxxx Large-Cap Growth Fund
Lord Xxxxxx Mid-Cap Value Fund, Inc.
Lord Xxxxxx Research Fund, Inc.
Lord Xxxxxx Growth Opportunities Fund
Large-Cap Series
Small-Cap Value Series
Lord Xxxxxx Securities Trust
Alpha Series
Lord Xxxxxx All Value Fund
International Series
Lord Xxxxxx Micro-Cap Growth Fund
Lord Xxxxxx Micro-Cap Value Fund
Lord Xxxxxx Series Fund, Inc.
Bond-Debenture Portfolio
Growth and Income Portfolio
International Portfolio
Mid-Cap Value Portfolio
Lord Xxxxxx Tax-Free Income Fund, Inc.
Lord Xxxxxx Tax-Free Income Trust
Lord Xxxxxx U.S. Government Securities Money Market Fund, Inc.
EXHIBIT 2
TO
ADMINISTRATIVE SERVICES AGREEMENT
In accordance with section 2 of the Agreement, Lord Xxxxxx will provide, or
arrange to have provided, the following Administrative Services for each Fund:
(a) FUND ACCOUNTING, FINANCIAL REPORTING, SHAREHOLDER SERVICING AND
TECHNOLOGY
(1) Perform Fund accounting services which include, but are not
limited to, daily NAV calculation and dissemination, and
maintenance of books and records as required by Rule 31(a) of
the 0000 Xxx.
(2) Perform the functions of a mutual fund's chief financial officer
and treasurer.
(3) Perform Fund budgeting and accounts payable functions.
(4) Perform Financial Reporting, including reports to the Board of
Directors/Trustees, and preparation of financial statements,
NSARs and registration statements.
(5) Coordinate regulatory examinations.
(6) Calculate and facilitate payment of dividends.
(7) Oversee the preparation and ensure the filing of all
Federal/State Tax Returns.
(8) Monitor the Fund's compliance with IRS regulations.
(9) Monitor compliance with Fund policies on valuing (pricing) all
Fund assets.
(10) Monitor Transfer Agent to ensure shareholder accounts are being
processed in compliance with the appropriate regulations and are
reflected appropriately in the Fund's records. Ensure 12b-1
payments being paid by the Fund are accurate and in accordance
with the 12b-1 plans.
(11) Maintain the technology platforms and market data feeds necessary
for the daily accounting and reporting functions set forth in
this Agreement.
(b) LEGAL, COMPLIANCE AND BLUE SKY FUNCTIONS
(1) Prepare and maintain files of all Board and shareholder meeting
materials, including minutes.
(2) Monitor compliance by each Fund with various conditions imposed
by exemptive orders and/or regulatory requirements relating to
multiple classes of shares, and fund of funds.
(3) Prepare and review periodic Prospectus/Statement of Additional
Information compliance reports.
(4) Prepare, update and file with the SEC the Funds' registration
statements, including pre-effective and post-effective
amendments, Prospectuses, SAIs, and supplements.
(5) Prepare and/or review and file proxy materials with the SEC.
(6) Review annual and semi-annual reports of the Funds.
(7) Negotiate D&O/E&O insurance matters and annual renewals on behalf
of the Funds.
(8) Monitor fidelity bond coverage for the Funds.
(9) Review Rule 24f-2 notices relating to registration fees and file
with the SEC.
(10) Coordinate regulatory examinations of the Funds.
(11) Assist in preparation of Board members' questionnaires.
(12) Register Fund shares with appropriate state blue sky authorities.
(13) Obtain and renew all sales permits required by relevant state
authorities in order to permit the sale of shares in the state.
(14) Monitor the sale of shares in individual states.
(15) Respond to all blue sky audit and examination issues.
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