FUND MANAGEMENT AGREEMENT
FUND MANAGEMENT AGREEMENT dated August 1, 1998 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)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 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 July 31, 1999, 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 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.
11. Prior Agreement Superceded. This Agreement supercedes and replaces the
Fund Management Agreement dated November 6, 1995 between the Company and the
Manager.
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:
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Title:
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LIBERTY ASSET MANAGEMENT COMPANY
By:
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Title:
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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:
.05% (.20% annually) of the average weekly net assets of the Company
up to and including $300 million; and
.045% (.18% annually) of the average weekly net assets of the
Company exceeding $300 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:
.20% (.80% annually) of the average weekly net assets of the Company
up to and including $300 million; and
.18% (.72% annually) of the average weekly net assets of the Company
exceeding $300 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 $300 million; and
.09% (.36% annually) of the Portfolio Manager's Percentage of the
average weekly net assets of the Company exceeding $300 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 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.
