File No. 811-4537
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-2
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 10 /X/
(check appropriate box or boxes)
Liberty All-Star Growth Fund, Inc.
(formerly The Charles Allmon Trust, Inc.)
-----------------------------------------
(Exact Name of Registrant as Specified in Charter)
600 Atlantic Avenue, Boston, MA 02210
(address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including
Area Code: (617) 722-6000
Richard R. Christensen
Chairman of the Board of Directors
Liberty All-Star Growth Fund, Inc.
600 Atlantic Avenue
Boston, MA 02210-2214
-------------------------------------
(Name and Address of Agent for Service)
with copy to:
Jeremiah J. Bresnahan John L. Davenport
Bingham, Dana & Gould Vice President and Associate
150 Federal Street General Counsel
Boston, MA Liberty Financial Companies, Inc.
600 Atlantic Avenue
Boston, MA 02210-2214
<PAGE>
Part I
REGISTRATION STATEMENT
The information contained in the Registration Statement on Form N-2, as
heretofore amended, of Liberty All-Star Growth Fund, Inc. (formerly The Charles
Allmon Trust, Inc.)(the "Fund") relating to (i) the Fund's name and investment
objective, (ii) the Fund's non-fundamental investment policies, (iii) the Fund's
directors and officers, and (iv) the Fund's investment advisory and
administrative arrangements is amended as follows:
Name and Investment Objective
- -----------------------------
Incident to the assumption on November 6, 1995 by Liberty Asset Management
Company ("LAMCO") of full management responsibilities for the Fund as described
under "Management" below, the name of the Fund was changed to "Liberty All-Star
Growth Fund, Inc." and its investment objective was changed to long-term capital
appreciation. The Fund's prior investment objective was long-term capital
appreciation, with the secondary investment objective of current income, in each
case with emphasis upon the preservation of capital.
Non-Fundamental Investment Policies; Change in Portfolio Management
- -------------------------------------------------------------------
(a) Principal non-fundamental investment policies
---------------------------------------------
The Fund will attempt to achieve its objective under normal market
conditions by investing at least 65% of the value of its total assets in a
diversified portfolio of equity securities. Up to 35% of the value of its total
assets may be invested in obligations of the United States government, its
agencies or instrumentalities ("U.S. Government Securities"), repurchase
agreements with respect to U.S. Government Securities (as described in the next
paragraph), and, to an extent not greater than 10% of the market value of the
Fund's total assets, money market mutual funds that invest primarily in U.S.
Government Securities. The Fund may temporarily reduce its investments in equity
securities and invest without limit in U.S. Government Securities, repurchase
agreements with respect to U.S. Government Securities and in money market funds
that invest primarily in U.S. Government Securities for defensive purposes when
LAMCO or the Portfolio Managers deem that market conditions are such that a more
conservative approach to investment is desirable.
Repurchase agreements are agreements between the Fund and banks or
broker-dealer firms (including the Fund's custodian bank acting as seller)
whereby such institutions sell U.S. Government Securities to the Fund and agree
at the time of sale to repurchase them at a mutually agreed upon time and price.
The resale price is
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greater than the purchase price, reflecting an agreed-upon interest rate which
is effective during the time between the purchase and resale and is not related
to the stated interest rate on the purchased securities. The Fund requires the
seller of the securities to maintain on deposit with the Fund's custodian bank
securities in an amount at all times equal to or in excess of the value of the
repurchase agreement. In the event that the seller of the securities defaults on
its repurchase obligation or becomes bankrupt, the Fund could receive less than
the repurchase price on the sale of the securities to another party or could be
subjected to delays in selling the securities.
Money market mutual funds are investment companies and the Fund's
investments in those companies are subject to certain other limitations. As a
shareholder in any such mutual fund, the Fund will bear its ratable share of
such mutual fund's expenses, including management fees. The U.S. Government
Securities held by the Fund will be Treasury obligations, generally with
remaining maturities of one year or less, as to which there will be little to no
capital appreciation potential.
(b) Other non-fundamental policies
------------------------------
The following policies of the Fund, as well as those set forth under (a)
above, are deemed not fundamental and, accordingly, may be changed by the Board
of Directors without shareholder approval:
1. The Fund may invest up to 25 percent of its net assets in
securities of foreign issuers, provided that the Fund will not purchase
the securities of a foreign issuer, if, as a result of the purchase, more
than 50% of its equity investments would consist of securities of foreign
issuers. The Fund's investment in foreign securities involves
considerations not typically associated with investing in securities of
domestic companies. Investing in securities of foreign issuers and the
attendant holding of foreign currencies, for example, could cause the Fund
to be affected favorably or unfavorably by changes in currency rates and
exchange control regulations. In addition, less information may be
available about foreign companies than about domestic companies and
foreign companies may not be subject to reporting or accounting standards
and requirements comparable to those applicable to domestic companies.
Foreign securities and their markets may not be as liquid as domestic
securities and their markets. Securities of some foreign companies may
involve greater market risk than securities of domestic companies and
foreign brokerage commissions and custody fees are generally higher than
those in the United States. Investment in foreign securities may also be
subject to local economic or political risks, including instability of
some foreign governments, the possibility of currency blockage or
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the imposition of withholding taxes on dividend or interest payments and
the potential for expropriation of the assets of the companies issuing the
securities.
2. The Fund may, to an extent not greater than 5% of its net assets,
effect short sales of securities "against the box" (i.e. short sales of
securities where the Fund holds or has the right to obtain at no
additional cost securities identical to those sold short).
The Fund is intended for long term investors who understand and can accept
the risks entailed in seeking long term growth in earnings and revenues. The
Fund is not meant to provide a vehicle for those who wish to play short term
swings in the stock market. Accordingly, an investment in shares of the Fund
should not be considered a complete investment program. Each prospective
purchaser should take into account his investment objectives as well as his
other investments when considering the purchase of shares of the Fund.
(b) Change in portfolio management
------------------------------
From June 1, 1994 to November 6, 1995, approximately 20% of the Fund's
assets were assigned to investment management by LAMCO in accordance with its
multi-management methodology and were allocated in substantially equal
proportions to three independent portfolio management firms recommended by
LAMCO, namely Cooke & Bieler, Inc., Oppenheimer Capital and Provident Investment
Counsel, Inc. (such portfolio management firms, as they may be changed from time
to time based on LAMCO's recommendations, being herein referred to as the
"Portfolio Managers"). The remainder of the Fund's assets were managed by the
Fund's original investment adviser, Growth Stock Outlook, Inc. ("GSO"). On
November 6, 1995, LAMCO assumed supervision of 100% of the Fund's assets, and
the assets of the Fund previously under management by GSO were allocated by
LAMCO in substantially equal proportions to such three portfolio management
firms in accordance with LAMCO's multi-management methodology. (See "Management"
below.)
Prior to November 6, 1995, a substantial portion of the assets of the Fund
under management by GSO had been invested in U.S. Government Securities and in
shares of money market mutual funds that invest primarily in U.S. Government
Securities. It is expected that, under normal market conditions, the three
portfolio management firms referred to above will invest the assets of the Fund
allocated to them from GSO (including the proceeds of the anticipated sale of a
substantial portion of the Fund's equity security holdings previously managed by
GSO), so that within three to six months from November 6, 1995 at least 65% of
the Fund's assets will be invested in equity securities in accordance with the
respective investment styles of such portfolio management firms.
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Directors and Officers
- ----------------------
Effective November 6, 1995 the Directors and Officers of the Fund are as
follows:
Name, Position with Principal Occupations
The Fund and Address during Past 5 Years
- -------------------- -------------------
Richard R. Christensen,* President of Liberty Asset
Chairman of the Board of Management Company (January
Directors and Chief Executive 1995 to present); President
Officer of Liberty Investment Services,
600 Atlantic Avenue Inc. (from April 1987 to
Boston, MA 02210 June 1995).
Robert J. Birnbaum, Director Trustee, Liberty All-Star
313 Bedford Road Equity Fund and the Colonial
Ridgewood, NJ 07405 Mutual Funds. Retired since
January 1994. Special Counsel
to Dechert Price & Rhoads, law
firm (September 1988 to December
1993); President of the New York
Stock Exchange, Inc.
(May 1985 to June 1988);
President of the American Stock
Exchange, Inc. (1977 to May 1985).
James E. Grinnell, Director Private investor (since
22 Harbor Avenue November 1988); Trustee,
Marblehead, MA 01845 Liberty All-Star Equity Fund
and the Colonial Mutual Funds;
formerly Senior Vice President-
Operations, The Rockport Company
(importer and distributor of shoes)
(May 1986 to November 1988).
* Director who is an interested person of the Fund by virtue of his
affiliation with LAMCO.
5
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Richard W. Lowry, Director Private investor (since August
10710 Charleston Drive 1987); Trustee, Liberty
Vero Beach, FL 32963 All-Star Equity Fund and the
Colonial Mutual Funds; formerly
Chairman and Chief Executive Officer,
U.S. Plywood Corporation (manufacturer
and distributor of wood products)
(August 1985 to August 1987).
William R. Parmentier, President Chief Investment Officer and
600 Atlantic Avenue Senior Vice President, LAMCO
Boston, MA 02210-2214 (since May 1995); consultant
(October 1994 to April 1995);
President GQ Asset
Management Co., subsidiary of
Grumman Corporation (July 1993
to September 1994); Assistant
Treasurer, Grumman Corporation
(December 1974 to September
1994).
Peter L. Lydecker,
Treasurer and Controller Vice President (since June,
One Financial Center 1993) and Assistant Treasurer
Boston, MA 02111 (since May 1994), Colonial
Management Associates, Inc.;
Controller and Chief Accounting
Officer (since June 1993),
Assistant Controller (March,
1985 to June 1993), the
Colonial Mutual Funds.
Gail Knudsen, Assistant Controller Assistant Vice President (since
One Financial Center July 1994), Assistant Manager
Boston, MA 02111 (October 1992 to July 1994),
Supervisor of Financial
Reporting (March 1987 to
October, 1992), Colonial
Management Associates, Inc.
John L. Davenport, Secretary Vice President and Associate
600 Atlantic Ave. General Counsel of Liberty
Boston, MA 02210-2214 Financial Companies, Inc. and
predecessor (since January
1984).
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Management
- ----------
On November 6, 1995, the Fund's Investment Advisory Agreement dated May
27, 1994 with GSO was terminated, and simultaneously therewith the Fund entered
into a new Fund Management Agreement with LAMCO under which (i) LAMCO continues
to provide corporate management and administrative services to the Fund,
primarily through its affiliate, Colonial Management Associates, Inc., and (ii)
LAMCO provides its multi-management services with respect to 100% of the Fund's
assets. See "The Multi-Manager Concept", hereby incorporated by reference, on
pages 5 and 6 of the proxy statement dated February 27, 1995 for the Fund's 1995
annual meeting of shareholders (the "Proxy Statement") for information regarding
LAMCO's multi-management methodology.
On November 6, 1995, the Fund also entered into new agreements with LAMCO
and each of Cooke & Bieler, Inc., Oppenheimer Capital and Provident Investment
Counsel, Inc. providing for the investment management by such Portfolio Managers
of the respective portions of the Fund's assets which LAMCO directs to such
Portfolio Managers from time to time. The assets of the Fund previously under
management by GSO have been reallocated on a substantially equal basis among the
three Portfolio Managers.
The quarterly fees payable by the Fund to LAMCO for administrative
services and the quarterly fees payable by the Fund to LAMCO for investment
advisory services under the new LAMCO Fund Management Agreement, expressed as an
annual rate based upon a percentage of the Fund's average weekly net assets, are
summarized in the table below.
<TABLE>
<CAPTION>
Administrative Investment
Fee Advisory Fees Total
-------------- ------------- -----
<S> <C> <C> <C>
Net Assets up to .25% per annum .75% per annum 1.00% per annum
$125 million
Net Assets .1875% per annum .5625% per annum .75% per annum
Exceeding $125
Million up to $250
Million
Net Assets .125% per annum .375% per annum .50% per annum
Exceeding $250
Million
</TABLE>
From the investment advisory fees paid by the Trust to LAMCO, LAMCO pays
to each Portfolio Manager a quarterly fee of:
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.10% (.40% annually) of the Portfolio Manager's Percentage (as defined
below) of the average weekly net assets of the Fund up to and including
$125 million;
.075% (.30% annually) of the Portfolio Manager's Percentage of the average
weekly net assets of the Fund exceeding $125 million and up to and
including $250 million; and
.05% (.20% annually) of the Portfolio Manager's Percentage of the average
weekly net assets of the Trust exceeding $250 million.
The "Portfolio Manager's Percentage" of a Portfolio Manager means the
percentage obtained by dividing the average weekly net assets of the portion of
the Fund's assets assigned to that Portfolio Manager by the total of the Fund's
average weekly net assets.
Reference is made to "Information About LAMCO", "Description of New LAMCO
Fund Management Agreement", "Description of Portfolio Management Agreements with
Portfolio Managers", "Information Regarding Portfolio Transactions and
Brokerage" and Exhibit C (information about the Portfolio Managers), hereby
incorporated herein by reference, in the Proxy Statement.
Exhibits
- --------
Filed herewith are the following exhibits.
1(b) Articles of Amendment to Charter of The Charles Allmon Trust, Inc.
changing its name to Liberty All-Star Growth Fund, Inc., effective November
6, 1995.
6(a) Fund Management Agreement dated November 6, 1995 between the Fund
and Liberty Asset Management Company ("LAMCO").
6(b) Portfolio Management Agreement dated November 6, 1995 among the Fund,
LAMCO and Cooke & Bieler, Inc.
6(c) Portfolio Management Agreement dated November 6, 1995 among the
Fund, LAMCO and Provident Investment Counsel, Inc.
6(d) Portfolio Management Agreement November 6, 1995 among the Fund, LAMCO
and Oppenheimer & Co.
8
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SIGNATURE
---------
Pursuant to the requirements of the Investment Company Act of 1940, as
amended, the Fund has duly caused this Amendment to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Boston and the
Commonwealth of Massachusetts on the 15th day of November, 1995.
LIBERTY ALL-STAR GROWTH FUND, INC.
(formerly The Charles Allmon Trust, Inc.)
By:/s/ Richard R. Christensen
--------------------------
Richard R. Christensen
Chairman of the Board
and Chief Executive Officer
9
Exhibit 1(b)
THE CHARLES ALLMON TRUST, INC.
ARTICLES OF AMENDMENT
THE CHARLES ALLMON TRUST, INC., a Maryland corporation having its
principal office in Montgomery County, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland, that:
FIRST: The charter of the Corporation is hereby amended by striking
out Article II of the Articles of Incorporation, as amended,
and inserting in lieu thereof the following:
"Name: The name of the Corporation (hereinafter called the
"Corporation") is "Liberty ALL-STAR Growth Fund, Inc."
SECOND: The amendment of the charter of the Corporation as hereinabove
set forth has been duly advised by the Board of Directors
and approved by the stockholders of the Corporation.
IN WITNESS WHEREOF, The Charles Allmon Trust, Inc. has caused this
instrument to be signed in its name and on its behalf by its President,
William R. Parmentier, and attested by its Secretary, John L. Davenport, on
the 6th day of November, 1995.
THE CHARLES ALLMON TRUST, INC.
By: /s/ William R. Parmentier
-------------------------
William R. Parmentier
President
ATTEST:
By: /s/ John L. Davenport
---------------------
John L. Davenport, Secretary
THE UNDERSIGNED, President of The Charles Allmon Trust, Inc., who executed
on behalf of said corporation the foregoing Articles of Amendment, of which this
certificate is made a part, hereby acknowledges, in the name and on behalf of
said corporation, the foregoing Articles of Amendment to be the corporate act of
said corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects, under the penalties of
perjury.
/s/ William R. Parmentier
-------------------------
William R. Parmentier, President
Exhibit 6(a)
FUND MANAGEMENT AGREEMENT
FUND MANAGEMENT AGREEMENT dated November 6, 1995 between Liberty ALL-STAR
Growth Fund, Inc., a corporation organized under the laws of the State of
Maryland (the "Company"), and Liberty Asset Management Company, a corporation
organized under the laws of the State of Delaware (the "Manager").
WHEREAS, the Company desires to employ the Manager (i) to provide certain
administrative services as described herein to the Company, and (ii) to provide
investment management services as described herein in accordance with the
Company's investment objective and policies as stated in the Company's
Registration Statement, as from time to time in effect, under the Investment
Company Act of 1940 (the "Investment Company Act") and in conformity with the
Company's Articles of Incorporation and the Investment Company Act, as the same
may from time to time be amended.
WHEREAS the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and desires to provide services to
the Company in consideration of and on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, the Company and the Manager agree as follows:
1. Employment of the Manager. The Company hereby employs the Manager to
administer its business and administrative operations as set forth in Section
2(A) of this Agreement, and to manage the investment and reinvestment of the
Company's assets as set forth in Section 2(B) below, all subject to the
direction of the Board of Directors of the Company, for the period, in the
manner, and on the terms hereinafter set forth. The Manager hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth. The Manager shall for all purposes herein be
deemed to be an independent contractor and shall, except as expressly provided
or authorized (whether herein or otherwise), have no authority to act for or
represent the Company in any way or otherwise be deemed an agent of the Company.
2. Obligation of and Services to be Provided by the Manager. The
Manager undertakes to provide the services hereinafter set forth and to
assume the following obligations:
A. Administrative Services
-----------------------
(1) The Manager shall provide, either directly or through an affiliate,
general administrative services and oversee the operations of the Company
("Administrative Services"). The Administrative Services shall not include
custodial, transfer agency, or pricing and bookkeeping services, but shall
include, without limitation:
(i) the maintenance of the Company's offices within the Manager's
offices in Boston, Massachusetts and the maintenance of the
corporate books and records of the Company, other than the books
and records maintained by the transfer agent, the custodian or the
fund accountant of the Company, and making arrangements for the
meetings of the Directors of the Company, including the preparation
of agendas and supporting materials therefor;
(ii) the preparation of such financial information as is reasonably
necessary for reports to shareholders of the Company, reports to the
Board of Directors and the officers of the Company, and reports of
the Company to the Securities and Exchange Commission, the Internal
Revenue Service and other Federal and state regulatory agencies;
(iii) the provision of such advice that may be reasonably
necessary properly to account for the Company's financial
transactions and to maintain the Company's accounting procedures and
records so as to insure compliance with generally accepted
accounting and tax practices and rules;
(iv) the monitoring of the preparation and maintenance by the
Company's custodian or other agents of all records that may be
reasonably required in connection with the audit performed by the
Company's independent auditors, the Securities and Exchange
Commission, the Internal Revenue Service or other Federal or state
regulatory agencies;
(v) the preparation of communications and reports to shareholders
of the Company and making arrangements for meetings
of such shareholders;
(vi) the preparation and filing of all reports and all
updating and other amendments to the Company's registration
statements necessary to maintain the registration of the Company
under the 1940 Act and the listing of its common stock on the New
York Stock Exchange;
(vii) the preparation of the Company's tax returns;
(viii) the periodic computation, and reporting as necessary to
the Directors of the Company, of the Company's compliance with its
investment objective, policies and restrictions and the portfolio
diversification and other portfolio requirements of the Investment
Company Act and the Internal Revenue Code of 1986, as amended (the
"Code"); and
(ix) the negotiation of agreements or other arrangements with,
and general oversight and coordination of, agents and others
retained by the Company to provide custodial, transfer agency, net
asset value computation, portfolio accounting, legal, tax and
accounting services.
2. The Manager will 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 the Board of Directors, members of any advisory
board, or members of any other committee of the Company, without remuneration or
other cost to the Company.
B. Investment Management Services.
-------------------------------
(1)The Manager shall have overall supervisory responsibility
for the general management and investment of the Company's assets,
subject to and in accordance with the investment objectives and
policies of the Company, and any directions which the Board of
Directors of the Company may issue to the Manager from time to time.
2
<PAGE>
(2)The Manager shall provide overall investment programs and
strategies with respect to the Company's assets, shall revise such
programs as necessary and shall monitor and report periodically to
the Board of Directors of the Company concerning the implementation
of the programs.
(3)The Company intends to appoint one or more persons or
companies ("Portfolio Managers"), each such Portfolio Manager to
have full investment discretion and to make all determinations with
respect to the investment and reinvestment of the portion of the
Company's assets assigned to that Portfolio Manager by the Manager
and the purchase and sale of portfolio securities with those assets,
all within the Company's investment objectives, policies and
restrictions, and the Company will take such steps as may be
necessary to implement such appointments. The Manager shall not be
responsible or liable for the investment merits of any decision by a
Portfolio Manager to purchase, hold or sell a security for the
portfolio of the Company. The Manager shall advise the Board of
Directors of the Company which Portfolio Managers the Manager
believes are best suited to invest the Company's assets; shall
monitor and evaluate the investment performance of each Portfolio
Manager employed by the Company; shall allocate and reallocate from
time to time, in its discretion, the portion of the Company's assets
to be managed by each Portfolio Manager; shall recommend changes of
or additional Portfolio Managers when appropriate; and shall
coordinate the investment activities of the Portfolio Managers to
ensure compliance with the Company's investment policies and
restrictions and applicable laws, including the Investment Company
Act and the Code.
(4)The Manager shall render regular reports to the Company, at
regular meetings of the Board of Directors, of, among other things,
the decisions which it has made with respect to the allocation of
the Company's assets among Portfolio Managers.
3. Allocation of Expenses
----------------------
(1) Expenses paid by the Manager. The Manager shall at its own expense
furnish or provide and pay the cost of such office space, office equipment,
personnel and office services as the Manager requires for the performance of its
administrative and investment management services hereunder. The Manager shall
not be obligated to bear any other expenses incidental to the operations or
business of the Company, and the payment or assumption by the Manager of any
expense of the Company 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 on any subsequent occasion.
(2) Expenses paid by the Company. The Company shall pay all expenses
incurred in the operation of the Company including, among other things, expenses
for legal and auditing services, costs of printing proxies, stock certificates
and shareholder reports, charges of the custodian, any sub-custodian and
transfer agent, Securities and Exchange Commission fees, fees and expenses of
Directors of the Company who are not "affiliated persons" (as defined in the
Investment Company Act) of the Manager, any other investment adviser of the
Company, or any of their affiliated persons, accounting and pricing costs,
membership fees in trade associations, insurance, interest, brokerage costs,
taxes, stock exchange listing fees and
3
<PAGE>
expenses, expenses of qualifying the Company's shares for sale in various
states, litigation and other extraordinary or nonrecurring expenses, and other
expenses properly payable by the Company.
4. Activities and Affiliates of the Manager.
-----------------------------------------
A. The services of the Manager to the Company hereunder are not to be
deemed exclusive, and the Manager and any of its affiliates shall be free
to render similar services to others. The Manager shall use the same skill
and care in the management of the Company's assets as it uses in the
administration of other accounts to which it provides asset management,
consulting and portfolio manager selection services, but shall not be
obligated to give the Company more favorable or preferential treatment
vis-a-vis its other clients.
B. Subject to and in accordance with the Articles of Incorporation and
By-Laws of the Company and to Section 10(a) of the Investment Company Act,
it is understood that Directors, officers, agents and shareholders of the
Company may be interested in the Manager or its affiliates as directors,
officers, agents or stockholders of the Manager or its affiliates; that
directors, officers, agents and stockholders of the Manager or its
affiliates are or may be interested in the Company as Directors, officers,
agents, shareholders or otherwise; that the Manager or its affiliates may
be interested in the Company as shareholders or otherwise; and that the
effect of any such interests shall be governed by the Investment Company
Act.
5. Fees for Services: Compensation of Portfolio Managers. The
compensation of the Manager for its services under this Agreement shall be
calculated and paid by the Fund in accordance with the Exhibit I attached
hereto. The Manager will compensate the Portfolio Managers as provided in
Exhibit I.
6. Liabilities of the Manager.
---------------------------
A. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of obligations or duties hereunder on the part of the
Manager, the Manager shall not be subject to liability to the Company or to any
shareholder of the Company for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
B. No provision of this Agreement shall be construed to protect any
Director or officer of the Company, or the Manager, from liability in violation
of Sections 17(h) and (i) of the Investment Company Act.
7. Renewal and Termination.
------------------------
A. This Agreement shall continue in effect until November 6, 1997, and
shall continue in effect thereafter provided such continuance is specifically
approved at least annually by (i) the Company's Board of Directors or (ii) a
vote of a "majority" (as defined in the Investment Company Act) of the Company's
outstanding voting securities, provided that in either event such continuance is
also approved by a majority of the Board of Directors who are not "interested
persons" (as defined in the Investment Company Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. The aforesaid requirement that continuance
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<PAGE>
of this Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the Investment Company Act and the Rules
and Regulations thereunder.
B. This Agreement:
(a) may at any time be terminated without the payment of any penalty
either by vote of the Board of Directors of the Company or by vote of a
majority of the outstanding voting securities of the Company, on sixty
(60) days' written notice to the Manager;
(b)shall immediately terminate in the event of its assignment (as that
term is defined in the Investment Company Act); and
(c)may be terminated by the Manager on sixty (60) days' written notice
to the Company.
C. Any notice under this Agreement shall be given in writing addressed and
delivered or mailed postpaid to the other party to this Agreement at its
principal place of business.
8. Use of Name. The Company may use the name "Liberty ALL-STAR" only so
long as this Agreement remains in effect. If this Agreement is no longer in
effect, the Company (to the extent it lawfully can) shall cease using such name
or any other name indicating that it is advised by or otherwise connected with
the Manager. The Manager may grant the non-exclusive right to use the name
"Liberty ALL-STAR" to any other entity, including any other investment company
of which the Manager or any of its affiliates is the investment adviser or
distributor.
9. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
10. Governing Law. To the extent that state law has not been preempted by
the provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the Commonwealth
of Massachusetts.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
LIBERTY ALL-STAR GROWTH FUND, INC.
By: /s/ William R. Parmentier
-------------------------
Title: President
---------
LIBERTY ASSET MANAGEMENT COMPANY
By: /s/ Richard R. Christensen
--------------------------
Title: President
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EXHIBIT I
MANAGER FEE
(A) For the Administrative Services provided to the Company pursuant to
Section 2(A) of this Agreement, the Company will pay to the Manager, on the
first business day of each calendar quarter, a fee for the previous calendar
quarter at the rate of:
.0625% (.25% annually) of the average weekly net assets of
the Company up to and including $125 million;
.046875% (.1875% annually) of the average weekly net assets
of the Company exceeding $125 million and up to and including
$250 million;
.03125% (.125% annually) of the average weekly net assets of
the Company exceeding $250 million.
(B) For the investment management services provided to the Company
pursuant to Section 2(B) of this Agreement, the Company will pay to the Manager,
on the first business day of each calendar quarter, a fee for the previous
calendar quarter at the rate of:
.1875% (.75% annually) of the average weekly net assets of
the Company up to and including $125 million;
.140625% (.5625% annually) of the average weekly net assets
of the Company exceeding $125 million and up to and including
$250 million; and
.09375% (.375% annually) of the average weekly net assets of
the Company exceeding $250 million.
(C) Pursuant to Section 5 of this Agreement, the Manager will pay to each
Portfolio Manager, on or before the fifth business day of each calendar quarter,
a fee for the previous calendar quarter at the rate of:
.10% (.40% annually) of the Portfolio Manager's Percentage (as
defined below) of the average weekly net assets of the Company up to
and including $125 million;
.075% (.30% annually) of the Portfolio Manager's Percentage of
the average weekly net assets of the Company exceeding $125 million
and up to and including $250 million; and
.05% (.20% annually) of the Portfolio Manager's Percentage of
the average weekly net assets of the Company exceeding $250 million.
Each quarterly payment set forth above shall be based on the average
weekly net assets of the Company during such previous calendar quarter. The fee
for the period from the date this Agreement becomes effective to the end of the
calendar quarter will be prorated according to the proportion that such period
bears to the full quarterly period. Upon any termination of this Agreement
before the end of a calendar quarter, the fee for the part of that calendar
quarter during which this Agreement was in effect shall be prorated according to
the proportion that such period bears to the full quarterly period and will be
payable upon the date of termination of this Agreement. For
7
<PAGE>
the purpose of determining fees payable to the Manager, the value of the
Company's net assets will be computed at the times and in the manner specified
in the Company's Registration Statement under the Investment Company Act as
from time to time in effect.
"Portfolio Manager's Percentage" means the percentage obtained by dividing
the average weekly net assets of that portion of the Company's assets assigned
to that Portfolio Manager by the total of the Company's average weekly net
assets.
8
Exhibit 6(b)
PORTFOLIO MANAGEMENT AGREEMENT
November 6, 1995
Cooke & Bieler, Inc.
1700 Market Street, Suite 3222
Philadelphia, PA 19103
Re: Portfolio Management Agreement
------------------------------
Gentlemen:
Liberty ALL-STAR Growth Fund, Inc. (the "Fund") is a diversified
closed-end investment company registered under the Investment Company Act of
1940 (the "Act"), and is subject to the rules and regulations promulgated
thereunder.
Liberty Asset Management Company (the "Fund Manager") evaluates and
recommends portfolio managers for the assets of the Fund, and is responsible for
the day-to-day administration of the Fund.
1. Employment as a Portfolio Manager. The Fund being duly authorized
hereby employs Cooke & Bieler, Inc. (the "Portfolio Manager") as a discretionary
portfolio manager, on the terms and conditions set forth herein, of that portion
of the Fund's assets which the Fund Manager determines to assign to the
Portfolio Manager (those assets being referred to as the "Portfolio Manager
Account"). The Fund Manager may, from time to time, allocate and reallocate the
Fund's assets among the Portfolio Manager and the other portfolio managers of
the Fund's assets.
2. Acceptance of Employment; Standard of Performance. The Portfolio
Manager accepts its employment as a discretionary portfolio manager and agrees
to use its best professional judgment to make timely investment decisions for
the Portfolio Manager Account in accordance with the provisions of this
Agreement.
3. Portfolio Management Services of Portfolio Manager. In providing
portfolio management services to the Portfolio Manager Account, the Portfolio
Manager shall be subject to the investment objectives, policies and restrictions
of the Fund as set forth in its current Registration Statement under the Act, as
the same may be modified from time to time (the "Registration Statement"), and
the investment restrictions set forth in the Act and the Rules thereunder (as
and to the extent set forth in the Registration Statement or in other
documentation furnished to the Portfolio Manager by the Fund or the Fund
Manager), to the supervision and
<PAGE>
control of the Board of Directors of the Fund, and to instructions from the Fund
Manager. The Portfolio Manager shall not, without the prior approval of the Fund
or the Fund Manager, effect any transactions which would cause the Portfolio
Manager Account, treated as a separate fund, to be out of compliance with any of
such restrictions or policies.
4. Transaction Procedures. All portfolio transactions for the Portfolio
Manager Account will be consummated by payment to or delivery by the custodian
of the Fund (the "Custodian"), or such depositories or agents as may be
designated by the Custodian in writing, as custodian for the Fund, of all cash
and/or securities due to or from the Portfolio Manager Account, and the
Portfolio Manager shall not have possession or custody thereof or any
responsibility or liability with respect to such custody. The Portfolio Manager
shall advise and confirm in writing to the Custodian all investment orders for
the Portfolio Manager Account placed by it with brokers and dealers at the time
and in the manner set forth in Schedule A hereto (as amended from time to time
by the Fund Manager). The Fund shall issue to the Custodian such instructions as
may be appropriate in connection with the settlement of any transaction
initiated by the Portfolio Manager. The Fund shall be responsible for all
custodial arrangements and the payment of all custodial charges and fees, and,
upon giving proper instructions to the Custodian, the Portfolio Manager shall
have no responsibility or liability with respect to custodial arrangements or
the acts, omissions or other conduct of the Custodian.
5. Allocation of Brokerage. The Portfolio Manager shall have authority
and discretion to select brokers and dealers to execute portfolio transactions
initiated by the Portfolio Manager for the Portfolio Manager Account, and to
select the markets on or in which the transaction will be executed.
A. In doing so, the Portfolio Manager's primary responsibility shall
be to seek to obtain best net price and execution for the Fund. However,
this responsibility shall not obligate the Portfolio Manager to solicit
competitive bids for each transaction or to seek the lowest available
commission cost to the Fund, so long as the Portfolio Manager reasonably
believes that the broker or dealer selected by it can be expected to
obtain a "best execution" market price on the particular transaction and
determines in good faith that the commission cost is reasonable in
relation to the value of the brokerage and research services (as defined
in Section 28(e)(3) of the Securities Exchange Act of 1934) provided by
such broker or dealer to the Portfolio Manager viewed in terms of either
that particular transaction or of the Portfolio Manager's overall
responsibilities with respect to its clients, including the Fund, as to
which the Portfolio Manager exercises investment discretion,
notwithstanding that the Fund may not be the direct or exclusive
beneficiary of any such services or that another broker may be willing to
charge the Fund a lower commission on the particular transaction.
B. Subject to the requirements of paragraph A above, the Fund
Manager shall have the right to request that transactions giving rise to
brokerage commissions, in an amount to be agreed upon by the Fund Manager
and the Portfolio Manager, shall be executed by brokers and dealers that
provide brokerage or research services to the Fund Manager, or as to which
an on-going relationship will be of value to the Fund in the management of
its
2
<PAGE>
assets, which services and relationship may, but need not, be of
direct benefit to the Portfolio Manager Account.
C. The Portfolio Manager shall not execute any portfolio
transactions for the Portfolio Manager Account with a broker or dealer
which is an "affiliated person" (as defined in the Act) of the Fund, the
Portfolio Manager or any other Portfolio Manager of the Fund without the
prior written approval of the Fund. The Fund Manager will provide the
Portfolio Manager with a list of brokers and dealers which are "affiliated
persons" of the Fund or its Portfolio Managers.
6. Proxies. The Fund will vote or direct the voting of all proxies
solicited by or with respect to the issuers of securities in which assets of the
Portfolio Manager Account may be invested from time to time. At the request of
the Fund, the Portfolio Manager shall provide the Fund with its recommendations
as to the voting of such proxies.
7. Fees for Services. The compensation of the Portfolio Manager for its
services under this Agreement shall be calculated and paid by the Fund Manager
in accordance with the attached Schedule C. Pursuant to the Fund Management
Agreement between the Fund and the Fund Manager, the Fund Manager is solely
responsible for the payment of fees to the Portfolio Manager from the fund
management fees paid to it by the Fund, and the Portfolio Manager agrees to seek
payment of its fees solely from the Fund Manager.
8. Other Investment Activities of Portfolio Manager. The Fund acknowledges
that the Portfolio Manager or one or more of its affiliates has investment
responsibilities, renders investment advice to and performs other investment
advisory services for other individuals or entities ("Client Accounts"), and
that the Portfolio Manager, its affiliates or any of its or their directors,
officers, agents or employees may buy, sell or trade in any securities for its
or their respective accounts ("Affiliated Accounts"). Subject to the provisions
of paragraph 2 hereof, the Fund agrees that the Portfolio Manager or its
affiliates may give advice or exercise investment responsibility and take such
other action with respect to other Client Accounts and Affiliated Accounts which
may differ from the advice given or the timing or nature of action taken with
respect to the Portfolio Manager Account, provided that the Portfolio Manager
acts in good faith, and provided further, that it is the Portfolio Manager's
policy to allocate, within its reasonable discretion, investment opportunities
to the Portfolio Manager Account over a period of time on a fair and equitable
basis relative to the Client Accounts and the Affiliated Accounts, taking into
account the cash position and the investment objectives and policies of the Fund
and any specific investment restrictions applicable thereto. The Fund
acknowledges that one or more Client Accounts and Affiliated Accounts may at any
time hold, acquire, increase, decrease, dispose of or otherwise deal with
positions in investments in which the Portfolio Manager Account may have an
interest from time to time, whether in transactions which involve the Portfolio
Manager Account or otherwise. The Portfolio Manager shall have no obligation to
acquire for the Portfolio Manager Account a position in any investment which any
Client Account or Affiliated Account may acquire, and the Fund shall have no
first refusal, coinvestment or other rights in respect of any such investment,
either for the Fund Account or otherwise.
3
<PAGE>
9. Limitation of Liability. The Portfolio Manager shall not be liable for
any action taken, omitted or suffered to be taken by it in its reasonable
judgment, in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement, or in
accordance with (or in the absence of) specific directions or instructions from
the Fund, provided, however, that such acts or omissions shall not have resulted
from the Portfolio Manager's willful misfeasance, bad faith or gross negligence,
a violation of the standard of care established by and applicable to the
Portfolio Manager in its actions under this Agreement or breach of its duty or
of its obligations hereunder (provided, however, that the foregoing shall not be
construed to protect the Portfolio Manager from liability in violation of
Section 17(i) of the Act).
10. Confidentiality. Subject to the duty of the Portfolio Manager and the
Fund to comply with applicable law, including any demand of any regulatory or
taxing authority having jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Portfolio Manager Account and the
actions of the Portfolio Manager and the Fund in respect thereof.
11. Assignment. This Agreement shall terminate automatically in the event
of its assignment, as that term is defined in Section 2(a)(4) of the Act. The
Portfolio Manager shall notify the Fund in writing sufficiently in advance of
any proposed change of control, as defined in Section 2(a)(9) of the Act, as
will enable the Fund to consider whether an assignment as defined in Section
2(a)(4) of the Act will occur, and whether to take the steps necessary to enter
into a new contract with the Portfolio Manager.
12. Representations, Warranties and Agreements of the Fund. The Fund
represents, warrants and agrees that:
A. The Portfolio Manager has been duly appointed to provide
investment services to the Portfolio Manager Account as contemplated
hereby.
B. The Fund will deliver to the Portfolio Manager a true and
complete copy of the Registration Statement as effective from time to time
and such other documents governing the investment of the Portfolio Manager
Account and such other information as is necessary for the Portfolio
Manager to carry out its obligations under this Agreement.
13. Representations, Warranties and Agreements of the Portfolio
Manager. The Portfolio Manager represents, warrants and agrees that:
A. It is registered as an "Investment Adviser" under the
Investment Advisers Act of 1940 ("Advisers Act").
B. It will maintain, keep current and preserve on behalf of the
Fund, in the manner required or permitted by the Act and the Rules
thereunder, the records identified in Schedule B (as Schedule B may be
amended from time to time by the Fund Manager). The Portfolio Manager
agrees that such records are the property of the Fund, and will be
surrendered to the Fund promptly upon request.
4
<PAGE>
C. It will adopt a written code of ethics complying with the
requirements of Rule l7j-l under the Act and will provide the Fund with a
copy of the code of ethics and evidence of its adoption. Within 45 days of
the end of each year while this Agreement is in effect, an officer or
general partner of the Portfolio Manager shall certify to the Fund that
the Portfolio Manager has complied with the requirements of Rule l7j-l
during the previous year and that there has been no violation of its code
of ethics or, if such a violation has occurred, that appropriate action
was taken in response to such violation. Upon the written request of the
Fund, the Portfolio Manager shall permit the Fund to examine the reports
required to be made by the Portfolio Manager under Rule l7j-l(c)(l).
D. Upon request, the Portfolio Manager will promptly supply the Fund
with any information concerning the Portfolio Manager and its
stockholders, employees and affiliates which the Fund may reasonably
require in connection with the preparation of its Registration Statement
or amendments thereto, proxy material, reports and other documents
required to be filed under the Act, the Securities Act of 1933, or other
applicable securities laws.
14. Amendment. This Agreement may be amended at any time, but (except for
Schedules A and B which may be amended by the Fund Manager acting alone) only by
written agreement among the Portfolio Manager, the Fund Manager and the Fund,
which amendment, other than amendments to Schedules A and B, is subject to the
approval of the Board of Directors and the Shareholders of the Fund as and to
the extent required by the Act.
15. Effective Date; Term. This Agreement shall continue in effect until
November 6, 1997 and shall continue in effect thereafter provided such
continuance is specifically approved at least annually by (i) the Fund's Board
of Directors or (ii) a vote of a "majority" (as defined in the Act) of the
Fund's outstanding voting securities, provided that in either event such
continuance is also approved by a majority of the Board of Trustees who are not
"interested persons" (as defined in the Act) of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. The aforesaid requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a manner
consistent with the Act and the Rules and Regulations thereunder.
16. Termination. This Agreement may be terminated by any party, without
penalty, immediately upon written notice to the other parties in the event of a
breach of any provision thereof by a party so notified, or otherwise upon not
less than thirty (30) days' written notice to the Portfolio Manager in the case
of termination by the Fund or the Fund Manager, or ninety (90) days' written
notice to the Fund and the Fund Manager in the case of termination by the
Portfolio Manager, but any such termination shall not affect the status,
obligations or liabilities of any party hereto to the other parties.
17. Applicable Law. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter enacted, as
the same may be amended from
5
<PAGE>
time to time, this Agreement shall be administered, construed and enforced
according to the laws of the Commonwealth of Massachusetts.
18. Severability. If any term or condition of this Agreement shall be
invalid or unenforceable to any extent or in any application, then the remainder
of this Agreement, and such term or condition except to such extent or in such
application, shall not be affected thereby, and each and every term and
condition of this Agreement shall be valid and enforced to the fullest extent
and in the broadest application permitted by law.
LIBERTY ALL-STAR GROWTH FUND, INC.
By: William R. Parmentier
----------------------
Title: President
-----------------------
LIBERTY ASSET MANAGEMENT COMPANY
By: Richard R. Christensen
-----------------------
Title: President
-----------------------
ACCEPTED:
COOKE & BIELER, INC.
By: /s/ James C.A. McClennen
---------------------------
Title: Sr. Partner
------------------------
SCHEDULES: A. Operational Procedures For Portfolio Transactions
B. Record Keeping Requirements
C. Fee Schedule
6
<PAGE>
SCHEDULE C
PORTFOLIO MANAGER FEE
For services provided to the Portfolio Manager Account, the Fund Manager
will pay to the Portfolio Manager, on or before the fifth business day of each
calendar quarter, a fee for the previous calendar quarter at the rate of:
.10% (.40% annually) of the Portfolio Manager's Percentage (as defined
below) of the average weekly net assets of the Fund up to and including
$125 million;
75% (.30% annually) of the Portfolio Manager's Percentage of the average
weekly net assets of the Fund exceeding $125 million and up to and
including $250 million; and
05% (.20% annually) of the Portfolio Manager's Percentage of the average
weekly net assets of the Company exceeding $250 million.
Each quarterly payment set forth above shall be based on the average
weekly net assets during such previous calendar quarter. The fee for the period
from the date this Agreement becomes effective to the end of the calendar
quarter will be prorated according to the proportion that such period bears to
the full quarterly period. Upon any termination of this Agreement before the end
of a calendar quarter, the fee for the part of that calendar quarter during
which this Agreement was in effect shall be prorated according to the proportion
that such period bears to the full quarterly period and will be payable upon the
date of termination of this Agreement. For the purpose of determining fees
payable to the Portfolio Manager, the value of the Fund's net assets will be
computed at the times and in the manner specified in the Registration Statement
as from time to time in effect.
"Portfolio Manager's Percentage" means the percentage obtained by dividing
the average weekly net assets in the Portfolio Manager Account by the Fund's
average weekly net assets.
Exhibit 6(c)
------------
PORTFOLIO MANAGEMENT AGREEMENT
November 6, 1995
Provident Investmnet Counsel, Inc.
3000 North Lake Avenue, Suite 1001
Pasadena, CA 91101
Re: Portfolio Management Agreement
------------------------------
Gentlemen:
Liberty ALL-STAR Growth Fund, Inc. (the "Fund") is a diversified
closed-end investment company registered under the Investment Company Act of
1940 (the "Act"), and is subject to the rules and regulations promulgated
thereunder.
Liberty Asset Management Company (the "Fund Manager") evaluates and
recommends portfolio managers for the assets of the Fund, and is responsible for
the day-to-day administration of the Fund.
1. Employment as a Portfolio Manager. The Fund being duly authorized
hereby employs Provident Investment Counsel, Inc. (the "Portfolio Manager") as a
discretionary portfolio manager, on the terms and conditions set forth herein,
of that portion of the Fund's assets which the Fund Manager determines to assign
to the Portfolio Manager (those assets being referred to as the "Portfolio
Manager Account"). The Fund Manager may, from time to time, allocate and
reallocate the Fund's assets among the Portfolio Manager and the other portfolio
managers of the Fund's assets.
2. Acceptance of Employment; Standard of Performance. The Portfolio
Manager accepts its employment as a discretionary portfolio manager and agrees
to use its best professional judgment to make timely investment decisions for
the Portfolio Manager Account in accordance with the provisions of this
Agreement.
3. Portfolio Management Services of Portfolio Manager. In providing
portfolio management services to the Portfolio Manager Account, the Portfolio
Manager shall be subject to the investment objectives, policies and restrictions
of the Fund as set forth in its current Registration Statement under the Act, as
the same may be modified from time to time (the "Registration Statement"), and
the investment restrictions set forth in the Act and the Rules thereunder (as
and to the extent set forth in the Registration Statement or in other
documentation
<PAGE>
furnished to the Portfolio Manager by the Fund or the Fund Manager), to the
supervision and control of the Board of Directors of the Fund, and to
instructions from the Fund Manager. The Portfolio Manager shall not, without the
prior approval of the Fund or the Fund Manager, effect any transactions which
would cause the Portfolio Manager Account, treated as a separate fund, to be out
of compliance with any of such restrictions or policies.
4. Transaction Procedures. All portfolio transactions for the Portfolio
Manager Account will be consummated by payment to or delivery by the custodian
of the Fund (the "Custodian"), or such depositories or agents as may be
designated by the Custodian in writing, as custodian for the Fund, of all cash
and/or securities due to or from the Portfolio Manager Account, and the
Portfolio Manager shall not have possession or custody thereof or any
responsibility or liability with respect to such custody. The Portfolio Manager
shall advise and confirm in writing to the Custodian all investment orders for
the Portfolio Manager Account placed by it with brokers and dealers at the time
and in the manner set forth in Schedule A hereto (as amended from time to time
by the Fund Manager). The Fund shall issue to the Custodian such instructions as
may be appropriate in connection with the settlement of any transaction
initiated by the Portfolio Manager. The Fund shall be responsible for all
custodial arrangements and the payment of all custodial charges and fees, and,
upon giving proper instructions to the Custodian, the Portfolio Manager shall
have no responsibility or liability with respect to custodial arrangements or
the acts, omissions or other conduct of the Custodian.
5. Allocation of Brokerage. The Portfolio Manager shall have authority
and discretion to select brokers and dealers to execute portfolio transactions
initiated by the Portfolio Manager for the Portfolio Manager Account, and to
select the markets on or in which the transaction will be executed.
A. In doing so, the Portfolio Manager's primary responsibility shall
be to seek to obtain best net price and execution for the Fund. However,
this responsibility shall not obligate the Portfolio Manager to solicit
competitive bids for each transaction or to seek the lowest available
commission cost to the Fund, so long as the Portfolio Manager reasonably
believes that the broker or dealer selected by it can be expected to
obtain a "best execution" market price on the particular transaction and
determines in good faith that the commission cost is reasonable in
relation to the value of the brokerage and research services (as defined
in Section 28(e)(3) of the Securities Exchange Act of 1934) provided by
such broker or dealer to the Portfolio Manager viewed in terms of either
that particular transaction or of the Portfolio Manager's overall
responsibilities with respect to its clients, including the Fund, as to
which the Portfolio Manager exercises investment discretion,
notwithstanding that the Fund may not be the direct or exclusive
beneficiary of any such services or that another broker may be willing to
charge the Fund a lower commission on the particular transaction.
B. Subject to the requirements of paragraph A above, the Fund
Manager shall have the right to request that transactions giving rise to
brokerage commissions, in an amount to be agreed upon by the Fund Manager
and the Portfolio Manager, shall be executed by brokers and dealers that
provide brokerage or research services to the Fund Manager, or
2
<PAGE>
as to which an on-going relationship will be of value to the Fund in the
management of its assets, which services and relationship may, but need
not, be of direct benefit to the Portfolio Manager Account.
C. The Portfolio Manager shall not execute any portfolio
transactions for the Portfolio Manager Account with a broker or dealer
which is an "affiliated person" (as defined in the Act) of the Fund, the
Portfolio Manager or any other Portfolio Manager of the Fund without the
prior written approval of the Fund. The Fund Manager will provide the
Portfolio Manager with a list of brokers and dealers which are "affiliated
persons" of the Fund or its Portfolio Managers.
6. Proxies. The Fund will vote or direct the voting of all proxies
solicited by or with respect to the issuers of securities in which assets of the
Portfolio Manager Account may be invested from time to time. At the request of
the Fund, the Portfolio Manager shall provide the Fund with its recommendations
as to the voting of such proxies.
7. Fees for Services. The compensation of the Portfolio Manager for its
services under this Agreement shall be calculated and paid by the Fund Manager
in accordance with the attached Schedule C. Pursuant to the Fund Management
Agreement between the Fund and the Fund Manager, the Fund Manager is solely
responsible for the payment of fees to the Portfolio Manager from the fund
management fees paid to it by the Fund, and the Portfolio Manager agrees to seek
payment of its fees solely from the Fund Manager.
8. Other Investment Activities of Portfolio Manager. The Fund acknowledges
that the Portfolio Manager or one or more of its affiliates has investment
responsibilities, renders investment advice to and performs other investment
advisory services for other individuals or entities ("Client Accounts"), and
that the Portfolio Manager, its affiliates or any of its or their directors,
officers, agents or employees may buy, sell or trade in any securities for its
or their respective accounts ("Affiliated Accounts"). Subject to the provisions
of paragraph 2 hereof, the Fund agrees that the Portfolio Manager or its
affiliates may give advice or exercise investment responsibility and take such
other action with respect to other Client Accounts and Affiliated Accounts which
may differ from the advice given or the timing or nature of action taken with
respect to the Portfolio Manager Account, provided that the Portfolio Manager
acts in good faith, and provided further, that it is the Portfolio Manager's
policy to allocate, within its reasonable discretion, investment opportunities
to the Portfolio Manager Account over a period of time on a fair and equitable
basis relative to the Client Accounts and the Affiliated Accounts, taking into
account the cash position and the investment objectives and policies of the Fund
and any specific investment restrictions applicable thereto. The Fund
acknowledges that one or more Client Accounts and Affiliated Accounts may at any
time hold, acquire, increase, decrease, dispose of or otherwise deal with
positions in investments in which the Portfolio Manager Account may have an
interest from time to time, whether in transactions which involve the Portfolio
Manager Account or otherwise. The Portfolio Manager shall have no obligation to
acquire for the Portfolio Manager Account a position in any investment which any
Client Account or Affiliated Account may acquire, and the Fund shall have no
first refusal, coinvestment or other rights in respect of any such investment,
either for the Fund Account or otherwise.
3
<PAGE>
9. Limitation of Liability. The Portfolio Manager shall not be liable for
any action taken, omitted or suffered to be taken by it in its reasonable
judgment, in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement, or in
accordance with (or in the absence of) specific directions or instructions from
the Fund, provided, however, that such acts or omissions shall not have resulted
from the Portfolio Manager's willful misfeasance, bad faith or gross negligence,
a violation of the standard of care established by and applicable to the
Portfolio Manager in its actions under this Agreement or breach of its duty or
of its obligations hereunder (provided, however, that the foregoing shall not be
construed to protect the Portfolio Manager from liability in violation of
Section 17(i) of the Act).
10. Confidentiality. Subject to the duty of the Portfolio Manager and the
Fund to comply with applicable law, including any demand of any regulatory or
taxing authority having jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Portfolio Manager Account and the
actions of the Portfolio Manager and the Fund in respect thereof.
11. Assignment. This Agreement shall terminate automatically in the event
of its assignment, as that term is defined in Section 2(a)(4) of the Act. The
Portfolio Manager shall notify the Fund in writing sufficiently in advance of
any proposed change of control, as defined in Section 2(a)(9) of the Act, as
will enable the Fund to consider whether an assignment as defined in Section
2(a)(4) of the Act will occur, and whether to take the steps necessary to enter
into a new contract with the Portfolio Manager.
12. Representations, Warranties and Agreements of the Fund. The Fund
represents, warrants and agrees that:
A. The Portfolio Manager has been duly appointed to provide
investment services to the Portfolio Manager Account as contemplated
hereby.
B. The Fund will deliver to the Portfolio Manager a true and
complete copy of the Registration Statement as effective from time to time
and such other documents governing the investment of the Portfolio Manager
Account and such other information as is necessary for the Portfolio
Manager to carry out its obligations under this Agreement.
13. Representations, Warranties and Agreements of the Portfolio
Manager. The Portfolio Manager represents, warrants and agrees that:
A. It is registered as an "Investment Adviser" under the
Investment Advisers Act of 1940 ("Advisers Act").
B. It will maintain, keep current and preserve on behalf of the
Fund, in the manner required or permitted by the Act and the Rules
thereunder, the records identified in Schedule B (as Schedule B may be
amended from time to time by the Fund Manager). The
4
<PAGE>
Portfolio Manager agrees that such records are the property of the Fund,
and will be surrendered to the Fund promptly upon request.
C. It will adopt a written code of ethics complying with the
requirements of Rule l7j-l under the Act and will provide the Fund with a
copy of the code of ethics and evidence of its adoption. Within 45 days of
the end of each year while this Agreement is in effect, an officer or
general partner of the Portfolio Manager shall certify to the Fund that
the Portfolio Manager has complied with the requirements of Rule l7j-l
during the previous year and that there has been no violation of its code
of ethics or, if such a violation has occurred, that appropriate action
was taken in response to such violation. Upon the written request of the
Fund, the Portfolio Manager shall permit the Fund to examine the reports
required to be made by the Portfolio Manager under Rule l7j-l(c)(l).
D. Upon request, the Portfolio Manager will promptly supply the Fund
with any information concerning the Portfolio Manager and its
stockholders, employees and affiliates which the Fund may reasonably
require in connection with the preparation of its Registration Statement
or amendments thereto, proxy material, reports and other documents
required to be filed under the Act, the Securities Act of 1933, or other
applicable securities laws.
14. Amendment. This Agreement may be amended at any time, but (except for
Schedules A and B which may be amended by the Fund Manager acting alone) only by
written agreement among the Portfolio Manager, the Fund Manager and the Fund,
which amendment, other than amendments to Schedules A and B, is subject to the
approval of the Board of Directors and the Shareholders of the Fund as and to
the extent required by the Act.
15. Effective Date; Term. This Agreement shall continue in effect until
November 6, 1997 and shall continue in effect thereafter provided such
continuance is specifically approved at least annually by (i) the Fund's Board
of Directors or (ii) a vote of a "majority" (as defined in the Act) of the
Fund's outstanding voting securities, provided that in either event such
continuance is also approved by a majority of the Board of Trustees who are not
"interested persons" (as defined in the Act) of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. The aforesaid requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a manner
consistent with the Act and the Rules and Regulations thereunder.
16. Termination. This Agreement may be terminated by any party, without
penalty, immediately upon written notice to the other parties in the event of a
breach of any provision thereof by a party so notified, or otherwise upon not
less than thirty (30) days' written notice to the Portfolio Manager in the case
of termination by the Fund or the Fund Manager, or ninety (90) days' written
notice to the Fund and the Fund Manager in the case of termination by the
Portfolio Manager, but any such termination shall not affect the status,
obligations or liabilities of any party hereto to the other parties.
5
<PAGE>
17. Applicable Law. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter enacted, as
the same may be amended from time to time, this Agreement shall be administered,
construed and enforced according to the laws of the Commonwealth of
Massachusetts.
18. Severability. If any term or condition of this Agreement shall be
invalid or unenforceable to any extent or in any application, then the remainder
of this Agreement, and such term or condition except to such extent or in such
application, shall not be affected thereby, and each and every term and
condition of this Agreement shall be valid and enforced to the fullest extent
and in the broadest application permitted by law.
LIBERTY ALL-STAR GROWTH FUND, INC.
By: /s/ William R. Parmentier
--------------------------------------
Title: President
-------------------------------------
LIBERTY ASSET MANAGEMENT COMPANY
By: /s/ Richard R. Christensen
---------------------------------------
Title: President
-------------------------------------
ACCEPTED:
PROVIDENT INVESTMENT COUNSEL, INC.
By: /s/ Jeffrey J. Miller
-----------------------------------
Title: Managing Director
-------------------------------
SCHEDULES: A. Operational Procedures For Portfolio Transactions
B. Record Keeping Requirements
C. Fee Schedule
<PAGE>
SCHEDULE C
PORTFOLIO MANAGER FEE
For services provided to the Portfolio Manager Account, the Fund Manager
will pay to the Portfolio Manager, on or before the fifth business day of each
calendar quarter, a fee for the previous calendar quarter at the rate of:
.10% (.40% annually) of the Portfolio Manager's Percentage (as defined
below) of the average weekly net assets of the Fund up to and including
$125 million;
75% (.30% annually) of the Portfolio Manager's Percentage of the average
weekly net assets of the Fund exceeding $125 million and up to and
including $250 million; and
05% (.20% annually) of the Portfolio Manager's Percentage of the average
weekly net assets of the Company exceeding $250 million.
Each quarterly payment set forth above shall be based on the average
weekly net assets during such previous calendar quarter. The fee for the period
from the date this Agreement becomes effective to the end of the calendar
quarter will be prorated according to the proportion that such period bears to
the full quarterly period. Upon any termination of this Agreement before the end
of a calendar quarter, the fee for the part of that calendar quarter during
which this Agreement was in effect shall be prorated according to the proportion
that such period bears to the full quarterly period and will be payable upon the
date of termination of this Agreement. For the purpose of determining fees
payable to the Portfolio Manager, the value of the Fund's net assets will be
computed at the times and in the manner specified in the Registration Statement
as from time to time in effect.
"Portfolio Manager's Percentage" means the percentage obtained by dividing
the average weekly net assets in the Portfolio Manager Account by the Fund's
average weekly net assets.
7
Exhibit 6(d)
PORTFOLIO MANAGEMENT AGREEMENT
November 6, 1995
Oppenheimer Capital
Oppenheimer Tower
World Financial Center
New York, NY 10281
Re: Portfolio Management Agreement
------------------------------
Gentlemen:
Liberty ALL-STAR Growth Fund, Inc. (the "Fund") is a diversified
closed-end investment company registered under the Investment Company Act of
1940 (the "Act"), and is subject to the rules and regulations promulgated
thereunder.
Liberty Asset Management Company (the "Fund Manager") evaluates and
recommends portfolio managers for the assets of the Fund, and is responsible for
the day-to-day administration of the Fund.
1. Employment as a Portfolio Manager. The Fund being duly authorized
hereby employs Oppenheimer Capital (the "Portfolio Manager") as a discretionary
portfolio manager, on the terms and conditions set forth herein, of that portion
of the Fund's assets which the Fund Manager determines to assign to the
Portfolio Manager (those assets being referred to as the "Portfolio Manager
Account"). The Fund Manager may, from time to time, allocate and reallocate the
Fund's assets among the Portfolio Manager and the other portfolio managers of
the Fund's assets.
2. Acceptance of Employment; Standard of Performance. The Portfolio
Manager accepts its employment as a discretionary portfolio manager and agrees
to use its best professional judgment to make timely investment decisions for
the Portfolio Manager Account in accordance with the provisions of this
Agreement.
3. Portfolio Management Services of Portfolio Manager. In providing
portfolio management services to the Portfolio Manager Account, the Portfolio
Manager shall be subject to the investment objectives, policies and restrictions
of the Fund as set forth in its current Registration Statement under the Act, as
the same may be modified from time to time (the "Registration Statement"), and
the investment restrictions set forth in the Act and the Rules thereunder (as
and to the extent set forth in the Registration Statement or in other
documentation furnished to the Portfolio Manager by the Fund or the Fund
Manager), to the supervision and
<PAGE>
control of the Board of Directors of the Fund, and to instructions from the Fund
Manager. The Portfolio Manager shall not, without the prior approval of the Fund
or the Fund Manager, effect any transactions which would cause the Portfolio
Manager Account, treated as a separate fund, to be out of compliance with any of
such restrictions or policies.
4. Transaction Procedures. All portfolio transactions for the Portfolio
Manager Account will be consummated by payment to or delivery by the custodian
of the Fund (the "Custodian"), or such depositories or agents as may be
designated by the Custodian in writing, as custodian for the Fund, of all cash
and/or securities due to or from the Portfolio Manager Account, and the
Portfolio Manager shall not have possession or custody thereof or any
responsibility or liability with respect to such custody. The Portfolio Manager
shall advise and confirm in writing to the Custodian all investment orders for
the Portfolio Manager Account placed by it with brokers and dealers at the time
and in the manner set forth in Schedule A hereto (as amended from time to time
by the Fund Manager). The Fund shall issue to the Custodian such instructions as
may be appropriate in connection with the settlement of any transaction
initiated by the Portfolio Manager. The Fund shall be responsible for all
custodial arrangements and the payment of all custodial charges and fees, and,
upon giving proper instructions to the Custodian, the Portfolio Manager shall
have no responsibility or liability with respect to custodial arrangements or
the acts, omissions or other conduct of the Custodian.
5. Allocation of Brokerage. The Portfolio Manager shall have authority
and discretion to select brokers and dealers to execute portfolio transactions
initiated by the Portfolio Manager for the Portfolio Manager Account, and to
select the markets on or in which the transaction will be executed.
A. In doing so, the Portfolio Manager's primary responsibility shall
be to seek to obtain best net price and execution for the Fund. However,
this responsibility shall not obligate the Portfolio Manager to solicit
competitive bids for each transaction or to seek the lowest available
commission cost to the Fund, so long as the Portfolio Manager reasonably
believes that the broker or dealer selected by it can be expected to
obtain a "best execution" market price on the particular transaction and
determines in good faith that the commission cost is reasonable in
relation to the value of the brokerage and research services (as defined
in Section 28(e)(3) of the Securities Exchange Act of 1934) provided by
such broker or dealer to the Portfolio Manager viewed in terms of either
that particular transaction or of the Portfolio Manager's overall
responsibilities with respect to its clients, including the Fund, as to
which the Portfolio Manager exercises investment discretion,
notwithstanding that the Fund may not be the direct or exclusive
beneficiary of any such services or that another broker may be willing to
charge the Fund a lower commission on the particular transaction.
B. Subject to the requirements of paragraph A above, the Fund
Manager shall have the right to request that transactions giving rise to
brokerage commissions, in an amount to be agreed upon by the Fund Manager
and the Portfolio Manager, shall be executed by brokers and dealers that
provide brokerage or research services to the Fund Manager, or as to which
an on-going relationship will be of value to the Fund in the management of
its
2
<PAGE>
assets, which services and relationship may, but need not, be of direct
benefit to the Portfolio Manager Account.
C. The Portfolio Manager shall not execute any portfolio
transactions for the Portfolio Manager Account with a broker or dealer
which is an "affiliated person" (as defined in the Act) of the Fund, the
Portfolio Manager or any other Portfolio Manager of the Fund without the
prior written approval of the Fund. The Fund Manager will provide the
Portfolio Manager with a list of brokers and dealers which are "affiliated
persons" of the Fund or its Portfolio Managers.
6. Proxies. The Fund will vote or direct the voting of all proxies
solicited by or with respect to the issuers of securities in which assets of the
Portfolio Manager Account may be invested from time to time. At the request of
the Fund, the Portfolio Manager shall provide the Fund with its recommendations
as to the voting of such proxies.
7. Fees for Services. The compensation of the Portfolio Manager for its
services under this Agreement shall be calculated and paid by the Fund Manager
in accordance with the attached Schedule C. Pursuant to the Fund Management
Agreement between the Fund and the Fund Manager, the Fund Manager is solely
responsible for the payment of fees to the Portfolio Manager from the fund
management fees paid to it by the Fund, and the Portfolio Manager agrees to seek
payment of its fees solely from the Fund Manager.
8. Other Investment Activities of Portfolio Manager. The Fund acknowledges
that the Portfolio Manager or one or more of its affiliates has investment
responsibilities, renders investment advice to and performs other investment
advisory services for other individuals or entities ("Client Accounts"), and
that the Portfolio Manager, its affiliates or any of its or their directors,
officers, agents or employees may buy, sell or trade in any securities for its
or their respective accounts ("Affiliated Accounts"). Subject to the provisions
of paragraph 2 hereof, the Fund agrees that the Portfolio Manager or its
affiliates may give advice or exercise investment responsibility and take such
other action with respect to other Client Accounts and Affiliated Accounts which
may differ from the advice given or the timing or nature of action taken with
respect to the Portfolio Manager Account, provided that the Portfolio Manager
acts in good faith, and provided further, that it is the Portfolio Manager's
policy to allocate, within its reasonable discretion, investment opportunities
to the Portfolio Manager Account over a period of time on a fair and equitable
basis relative to the Client Accounts and the Affiliated Accounts, taking into
account the cash position and the investment objectives and policies of the Fund
and any specific investment restrictions applicable thereto. The Fund
acknowledges that one or more Client Accounts and Affiliated Accounts may at any
time hold, acquire, increase, decrease, dispose of or otherwise deal with
positions in investments in which the Portfolio Manager Account may have an
interest from time to time, whether in transactions which involve the Portfolio
Manager Account or otherwise. The Portfolio Manager shall have no obligation to
acquire for the Portfolio Manager Account a position in any investment which any
Client Account or Affiliated Account may acquire, and the Fund shall have no
first refusal, coinvestment or other rights in respect of any such investment,
either for the Fund Account or otherwise.
3
<PAGE>
9. Limitation of Liability. The Portfolio Manager shall not be liable for
any action taken, omitted or suffered to be taken by it in its reasonable
judgment, in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement, or in
accordance with (or in the absence of) specific directions or instructions from
the Fund, provided, however, that such acts or omissions shall not have resulted
from the Portfolio Manager's willful misfeasance, bad faith or gross negligence,
a violation of the standard of care established by and applicable to the
Portfolio Manager in its actions under this Agreement or breach of its duty or
of its obligations hereunder (provided, however, that the foregoing shall not be
construed to protect the Portfolio Manager from liability in violation of
Section 17(i) of the Act).
10. Confidentiality. Subject to the duty of the Portfolio Manager and the
Fund to comply with applicable law, including any demand of any regulatory or
taxing authority having jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Portfolio Manager Account and the
actions of the Portfolio Manager and the Fund in respect thereof.
11. Assignment. This Agreement shall terminate automatically in the event
of its assignment, as that term is defined in Section 2(a)(4) of the Act. The
Portfolio Manager shall notify the Fund in writing sufficiently in advance of
any proposed change of control, as defined in Section 2(a)(9) of the Act, as
will enable the Fund to consider whether an assignment as defined in Section
2(a)(4) of the Act will occur, and whether to take the steps necessary to enter
into a new contract with the Portfolio Manager.
12. Representations, Warranties and Agreements of the Fund. The Fund
represents, warrants and agrees that:
A. The Portfolio Manager has been duly appointed to provide
investment services to the Portfolio Manager Account as contemplated
hereby.
B. The Fund will deliver to the Portfolio Manager a true and
complete copy of the Registration Statement as effective from time to time
and such other documents governing the investment of the Portfolio Manager
Account and such other information as is necessary for the Portfolio
Manager to carry out its obligations under this Agreement.
13. Representations, Warranties and Agreements of the Portfolio
Manager. The Portfolio Manager represents, warrants and agrees that:
A. It is registered as an "Investment Adviser" under the
Investment Advisers Act of 1940 ("Advisers Act").
B. It will maintain, keep current and preserve on behalf of the
Fund, in the manner required or permitted by the Act and the Rules
thereunder, the records identified in Schedule B (as Schedule B may be
amended from time to time by the Fund Manager). The Portfolio Manager
agrees that such records are the property of the Fund, and will be
surrendered to the Fund promptly upon request.
4
<PAGE>
C. It will adopt a written code of ethics complying with the
requirements of Rule l7j-l under the Act and will provide the Fund with a
copy of the code of ethics and evidence of its adoption. Within 45 days of
the end of each year while this Agreement is in effect, an officer or
general partner of the Portfolio Manager shall certify to the Fund that
the Portfolio Manager has complied with the requirements of Rule l7j-l
during the previous year and that there has been no violation of its code
of ethics or, if such a violation has occurred, that appropriate action
was taken in response to such violation. Upon the written request of the
Fund, the Portfolio Manager shall permit the Fund to examine the reports
required to be made by the Portfolio Manager under Rule l7j-l(c)(l).
D. Upon request, the Portfolio Manager will promptly supply the Fund
with any information concerning the Portfolio Manager and its
stockholders, employees and affiliates which the Fund may reasonably
require in connection with the preparation of its Registration Statement
or amendments thereto, proxy material, reports and other documents
required to be filed under the Act, the Securities Act of 1933, or other
applicable securities laws.
14. Amendment. This Agreement may be amended at any time, but (except for
Schedules A and B which may be amended by the Fund Manager acting alone) only by
written agreement among the Portfolio Manager, the Fund Manager and the Fund,
which amendment, other than amendments to Schedules A and B, is subject to the
approval of the Board of Directors and the Shareholders of the Fund as and to
the extent required by the Act.
15. Effective Date; Term. This Agreement shall continue in effect until
November 6, 1997 and shall continue in effect thereafter provided such
continuance is specifically approved at least annually by (i) the Fund's Board
of Directors or (ii) a vote of a "majority" (as defined in the Act) of the
Fund's outstanding voting securities, provided that in either event such
continuance is also approved by a majority of the Board of Trustees who are not
"interested persons" (as defined in the Act) of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. The aforesaid requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a manner
consistent with the Act and the Rules and Regulations thereunder.
16. Termination. This Agreement may be terminated by any party, without
penalty, immediately upon written notice to the other parties in the event of a
breach of any provision thereof by a party so notified, or otherwise upon not
less than thirty (30) days' written notice to the Portfolio Manager in the case
of termination by the Fund or the Fund Manager, or ninety (90) days' written
notice to the Fund and the Fund Manager in the case of termination by the
Portfolio Manager, but any such termination shall not affect the status,
obligations or liabilities of any party hereto to the other parties.
17. Applicable Law. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter enacted, as
the same may be amended from
5
<PAGE>
time to time, this Agreement shall be administered, construed and enforced
according to the laws of the Commonwealth of Massachusetts.
18. Severability. If any term or condition of this Agreement shall be
invalid or unenforceable to any extent or in any application, then the remainder
of this Agreement, and such term or condition except to such extent or in such
application, shall not be affected thereby, and each and every term and
condition of this Agreement shall be valid and enforced to the fullest extent
and in the broadest application permitted by law.
LIBERTY ALL-STAR GROWTH FUND, INC.
By: /s/ William R. Parmentier
-----------------------------
Title: President
--------------------------
LIBERTY ASSET MANAGEMENT COMPANY
By: /s/ Richard R. Christensen
---------------------------
Title: President
-------------------------
ACCEPTED:
OPPENHEIMER CAPITAL
By: /s/ Thomas E. Duggan
--------------------------
Title: Secretary
----------------------
SCHEDULES: A. Operational Procedures For Portfolio Transactions
B. Record Keeping Requirements
C. Fee Schedule
6
<PAGE>
SCHEDULE C
PORTFOLIO MANAGER FEE
For services provided to the Portfolio Manager Account, the Fund Manager
will pay to the Portfolio Manager, on or before the fifth business day of each
calendar quarter, a fee for the previous calendar quarter at the rate of:
.10% (.40% annually) of the Portfolio Manager's Percentage (as defined
below) of the average weekly net assets of the Fund up to and including
$125 million;
75% (.30% annually) of the Portfolio Manager's Percentage of the average
weekly net assets of the Fund exceeding $125 million and up to and
including $250 million; and
05% (.20% annually) of the Portfolio Manager's Percentage of the average
weekly net assets of the Company exceeding $250 million.
Each quarterly payment set forth above shall be based on the average
weekly net assets during such previous calendar quarter. The fee for the period
from the date this Agreement becomes effective to the end of the calendar
quarter will be prorated according to the proportion that such period bears to
the full quarterly period. Upon any termination of this Agreement before the end
of a calendar quarter, the fee for the part of that calendar quarter during
which this Agreement was in effect shall be prorated according to the proportion
that such period bears to the full quarterly period and will be payable upon the
date of termination of this Agreement. For the purpose of determining fees
payable to the Portfolio Manager, the value of the Fund's net assets will be
computed at the times and in the manner specified in the Registration Statement
as from time to time in effect.
"Portfolio Manager's Percentage" means the percentage obtained by dividing
the average weekly net assets in the Portfolio Manager Account by the Fund's
average weekly net assets.
7
