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INVESTMENT MANAGEMENT AGREEMENT, POWER OF ATTORNEY,
AND SERVICE AGREEMENT
THIS AGREEMENT is entered into this 1st day of
November 2000, by and between Aster Investment Management, Inc. (the "Investment
Manager") and Meridian Fund, Inc. a series investment company (the "Company").
1. APPOINTMENT AND ACCEPTANCE OF APPOINTMENT OF THE INVESTMENT
MANAGER
Subject to the express provision and limitations set
forth in the Company's Articles of Incorporation, Bylaws, Form N-1A
Registration Statement under the Investment Company Act of 1940, as
amended (the "1940 Act") under the Securities Act of 1933, as amended
(the "1933 Act"), and prospectus as in use from time to time, as well
as to the factors affecting the Company's status as a "regulated
investment company" under the Internal Revenue Code of 1954, as
amended, the Company hereby grants to the Investment Manager and the
Investment Manager hereby accepts full discretionary authority to
manage the investment and reinvestment of the cash and securities in
the accounts of the Company comprised of the Meridian Fund series and
the Meridian Value Fund series (the "Funds"). For all purposes
hereunder, unless the context shall otherwise require, the references
to "Portfolio" in the Agreement shall refer, individually and
collectively, to the Meridian Fund series and to the Meridian Value
Fund series presently held by the Bank of New York (the "Custodian"),
the proceeds thereof, and any additions thereto, in the Investment
Manager's discretion. In its duties hereunder, the Investment Manager
shall further be bound by any and all determinations by the Board of
Directors of the Company relating to investment policy, which
determinations shall in writing be communicated to the Investment
Manager. The Investment Manager shall, for all purposes herein, be
deemed an independent contractor of the Company.
2. POWERS OF THE INVESTMENT MANAGER
The Investment Manager is empowered, through any of
its officers or employees:
(a) to invest and reinvest in equity securities, debt
securities and other obligations of every description issued
or incurred by governmental bodies, corporations, mutual
funds, trusts, associations or firms, in money market
instruments, and in loans and deposits at interest on call or
on time, whether or not secured by collateral;
(b) to buy, sell, and exercise warrants and other
rights to subscribe for or sell stock or other securities; and
(c) to take such other action, or direct the
Custodian to take such other action, as may be necessary or
desirable to carry out the purpose and intent of the
foregoing.
The Investment Manager is not empowered to have
custody or possession of, or have authority to obtain custody or
possession of securities or funds of the Company.
3. EXECUTION OF PORTFOLIO TRANSACTIONS
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(a) The Investment Manager shall provide adequate
facilities and qualified personnel for the placement of, and shall
place, orders for the purchase, or other acquisition, and sale, or
other disposition, of portfolio securities and other assets for the
Company;
(b) Unless otherwise specified in writing to the
Investment Manager by the Company, all orders for the purchase and
sale of securities for the Portfolio shall be placed in such markets
and through such brokers as in the Investment Manager's best judgment
shall offer the most favorable price and market for the execution of
each transaction; provided, however, that, subject to the above, the
Investment Manager may place orders with brokerage firms which have
sold shares of the Company or which furnish statistical and other
information to the Investment Manager, taking into account the value
and quality of the brokerage services of such firms, including the
availability and quality of such statistical and other information.
Receipt by the Investment Manager of any such statistical and other
information and service shall not be deemed to give rise to any
requirement for abatement of the advisory fee payable to the
Investment Manager pursuant to Section 5 hereof and Appendix A and
Appendix B hereto;
(c) The Company understands and agrees that the
Investment Manager may effect securities transactions which cause the
Company to pay an amount of commission in excess of the amount of
commission another broker or dealer would have charged; provided,
however, that the Investment Manager determines in good faith that
such amount of commission is reasonable in relation to the value of
the Company share sales, statistical, brokerage and other services
provided by such broker or dealer, viewed in terms of either the
specific transaction of the Investment Manager's overall
responsibilities to the Company and other non-investment company
clients for which the Investment Manager exercises investment
discretion. The Company also understands that the receipt and use of
such services will not reduce the Investment Manager's customary and
normal research activities;
(d) The Company understands and agrees:
(i) that the Investment Manager performs
investment management services for various clients
and the Investment Manager may take action with
respect to any of its other clients which may differ
from action taken or from the timing or nature of
action taken with respect to the Portfolio, so long
as it is the Investment Manager's policy, to the
extent practical, to allocate investment
opportunities to the Portfolio over a period of time
on a fair and equitable basis relative to other
clients;
(ii) that the Investment Manager shall have
no obligation to purchase or sell for the Portfolio
any security or other assets which the Investment
Manager or its officers or employees, may purchase or
sell for its or their own accounts or the account of
any other client, if in the opinion of the Investment
Manager such transaction or investment appears
unsuitable, impractical or undesirable for the
Portfolio; and
(iii) that on occasions when the Investment
Manager deems the purchase or sale of a security or
other asset to be in the best interests of the
Company as well as other clients of the Investment
Manager, the Investment Manager, to the extent
permitted by applicable laws and regulations, may
aggregate the securities to be sold or purchased when
the Investment Manager believes that to do so will be
in the best interests of the Company. Allocation, in
such event, of the securities or other assets so
purchased or sold, as well as the
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expenses incurred in the transaction, shall be made
by the Investment Manager in the manner the
Investment Manager considers to be the most equitable
and consistent with its fiduciary obligations to the
Company and to such other clients.
4. ALLOCATION OF EXPENSES OF THE COMPANY
(a) The Company is responsible for payment of the
following ordinary operating expenses: (i) brokerage and commission
expenses; (ii) Federal, state or local taxes, incurred by, or levied
on, the Company; (iii) interest charges on borrowings, (iv) charges
and expenses of the Company's custodian, stock transfer and dividend
disbursing agents; (v) cost of the designing, printing and mailing of
reports, proxy statements and notices to stockholders; (vi) cost of
the printing and distributing of the prospectuses of the Company and
supplements thereto to the Company's stockholders; (vii) expenses of
the issuance and redemption of the shares of the Company (including
stock certificates, securities registration and qualification fees and
expenses); (viii) legal and auditing expenses; (ix) compensation, fees
and expenses paid to Company directors unaffiliated with the
Investment Manager; (x) association dues; (xi) cost of stationery and
forms prepared exclusively for the Company; and (xii) payment of all
investment management or advisory fees, including fees and expenses
payable under Section 5 hereof and Appendix A and Appendix B hereto.
(b) The Investment Manager shall pay for all costs of
organizing the Company, shall provide persons to perform all
executive, administrative, clerical and bookkeeping functions of the
Company and shall assume all ordinary operating expenses not assumed
by the Company under 4(a) hereof.
(c) The Company is responsible for payment of any
extraordinary expenses incurred. A good faith determination of what
constitutes an extraordinary expense shall be made by the Board of
Directors of the Company, which good faith determination shall include
the affirmative vote of all non-interested directors of the Company.
5. COMPENSATION OF THE INVESTMENT MANAGER
(a) In consideration of the services performed by the
Investment Manager hereunder, the Company will pay or cause to be paid
to the Investment Manager, as they become due and payable, management
fees determined in accordance with the attached schedules of fees
(Appendix A) for Meridian Fund and (Appendix B) for the Meridian Value
Fund. In the event of termination any management fees paid in advance
pursuant to such fee schedule will be prorated as of the date of
termination and the unearned portion thereof will be returned to the
Company.
(b) The net asset value of the Company used in fee
calculations shall be determined in the manner set forth in the
Articles of Incorporation, By-laws and Prospectus of the Company after
the close of the New York Stock Exchange on each business day on which
the New York Stock Exchange is open.
(c) The Company hereby authorizes the Investment
Manager to charge the Portfolio, subject to the provisions in Section
6 hereof, for the full amount of fees as they become due and payable
pursuant to the attached schedules of fees; provided, however, that a
copy of a fee statement covering said payment shall be sent to the
Custodian and to the Company.
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6. EXPENSE LIMITATION
The Manager agrees to reduce the fee payable to it under this
Agreement by the amount by which the ordinary operating expenses of
the Company for any fiscal year of the Company, excluding interest,
taxes and extraordinary expenses, shall exceed the amount, if any, by
which ordinary operating expenses of the Company for the preceding
fiscal year (except interest, taxes and extraordinary expenses) exceed
the most stringent limits prescribed by any state in which the Company
shares are offered for sale (the "Expense Limit"). Such Expense Limit
as provided herein shall be calculated and administered separately
with respect to each separate series of the Company (the "Funds"), as
opposed to the Company in aggregate, if and to the extent so required
by state securities authorities. Costs incurred in connection with
brokerage fees and commissions, which are capitalized in accordance
with generally accepted accounting principles applicable to investment
companies, shall be accounted for as capital items and not as
expenses. Proper accruals shall be made by the Funds for any projected
reduction hereunder and corresponding amounts shall be withheld from
the fees paid by the Funds to the Manager. Any additional reduction
computed at the end of the fiscal year shall be deducted from the fee
for the last month of such fiscal year, and any excess shall be paid
to the Funds immediately after the Funds fiscal year end, and in any
event prior to publication of the Funds annual report, as a reduction
of the fees previously paid during the fiscal year.
7. SERVICE TO OTHER CLIENTS
Nothing contained in this Agreement shall be
construed to prohibit the Investment Manager from performing
investment advisory, management, distribution or other services for
other investment companies and other persons, trusts or companies, or
to prohibit affiliates of the Investment Manager from engaging in such
business or in other related or unrelated businesses.
8. INDEMNIFICATION
The Investment Manager shall have no liability to the
Company, or its stockholders, for any error of judgment, mistake of
law, or for any loss arising out of its obligations to the Company not
involving willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties hereunder.
9. DURATION OF AGREEMENT
This Agreement shall be effective on November 1,
2000, and shall, unless terminated as hereinafter provided, continue
in effect until the close of business on October 31, 2001. This
Agreement may be renewed thereafter from year to year by mutual
consent, provided that such renewal shall be specifically approved at
least annually by (i) the Board of Directors of the Company, or by the
vote of a majority (as defined in the 1940 Act) of the outstanding
voting securities of the Company, and (ii) a majority of those
directors who are not parties to this Agreement or interested persons
(as defined in the 1940 Act) of any such approval. Such mutual consent
to renewal shall not be deemed to have been given unless evidenced by
a writing signed by both parties hereto.
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10. TERMINATION
This Agreement may be terminated at any time, without
payment of any penalty, by the Board of Directors of the Company or by
the vote of a majority (as defined in the 1940 Act) of the outstanding
voting securities of the Company on sixty (60) day's written notice to
the Investment Manager, or by the Investment Manager on like notice to
the Company. This Agreement shall terminate automatically in the event
of its assignment (as defined in the 1940 Act).
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate originals by their officers thereunto duly
authorized as of the date first above written.
ASTER INVESTMENT MANAGEMENT, INC. MERIDIAN FUND, INC.
BY: BY:
_____________________ _____________________
Richard F. Aster, Jr. Richard F. Aster, Jr.
President President
ATTEST: ATTEST:
_____________________ _____________________
Gregg B. Keeling Gregg B. Keeling
Vice President of Operations Treasurer/Secretary
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APPENDIX A
INVESTMENT MANAGEMENT AGREEMENT, POWER OF ATTORNEY,
AND SERVICE AGREEMENT
BETWEEN ASTER INVESTMENT MANAGEMENT, INC. AND MERIDIAN FUND, INC.
SCHEDULE OF FEES
MERIDIAN FUND
Effective Date: November 1, 2000
The fee for each one-month period from the effective date
referred to above shall be the amount obtained by computing the Net Asset Value
of the Portfolio as of the close of business on each business day, computing the
total of such figures on the last day of each month and multiplying the
resultant total Net Asset Value by 1/365 of the applicable annual fee rate
indicated below. This fee shall be payable upon receipt of the Fee Statement.
On all sums from $0 through $50 million: 1% per Annum
On all sums in excess of $50 million: 3/4 of 1% per Annum
Dated: November 1, 2000
ASTER INVESTMENT MANAGEMENT, INC. MERIDIAN FUND, INC.
BY: BY:
_____________________ _____________________
Richard F. Aster, Jr. Richard F. Aster, Jr.
President President
ATTEST: ATTEST:
_____________________ _____________________
Gregg B. Keeling Gregg B. Keeling
Vice President of Operations Treasurer/Secretary
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APPENDIX B
INVESTMENT MANAGEMENT AGREEMENT, POWER OF ATTORNEY,
AND SERVICE AGREEMENT
BETWEEN ASTER INVESTMENT MANAGEMENT, INC. AND MERIDIAN FUND, INC.
SCHEDULE OF FEES
MERIDIAN VALUE FUND
Effective Date: November 1, 2000
With respect to the Meridian Value Fund series, the fee for
each one-month period from the effective date referred to above shall be the
amount obtained by computing the Net Asset Value of the Portfolio as of the
close of business on each business day, computing the total of such figures on
the last day of each month and multiplying the resultant total Net Asset Value
by 1/365 of the applicable annual fee rate indicated below. This fee shall be
payable upon receipt of the Fee Statement.
On all sums: 1% per Annum
Dated: November 1, 2000
ASTER INVESTMENT MANAGEMENT, INC. MERIDIAN FUND, INC.
BY: BY:
_____________________ _____________________
Richard F. Aster, Jr. Richard F. Aster, Jr.
President President
ATTEST: ATTEST:
_____________________ _____________________
Gregg B. Keeling Gregg B. Keeling
Vice President of Operations Treasurer/Secretary
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