PIC MIDCAP PORTFOLIO
MANAGEMENT AGREEMENT
AGREEMENT made this 31st day of December, 1997, by and between PIC
MIDCAP PORTFOLIO (the "Trust"), a trust organized under the laws of the State of
New York, and PROVIDENT INVESTMENT COUNSEL, INC. (the "Advisor"), a California
corporation.
WITNESSETH:
In consideration of the mutual promises and agreements herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is hereby agreed by and between the parties hereto as
follows:
l. In General
The Trust hereby appoints the Advisor to act as investment adviser to
the Trust. The Advisor agrees, all as more fully set forth herein, to provide
professional investment management with respect to the investment of the assets
of the Trust and to supervise and arrange the purchase and sale of securities
held in the portfolio of the Trust.
2. Duties and Obligations of the Advisor
with respect to Management of the Trust
(a) Subject to the succeeding provisions of this section
and subject to the direction and control of the Board of Trustees of
the Trust, the Advisor shall:
(i) Decide what securities shall be purchased or
sold by the Trust and when; and
(ii) Arrange for the purchase and the sale of
securities held in the portfolio of the Trust by placing
purchase and sale orders for the Trust.
(b) Any investment purchases or sales made by the Advisor
shall at all times conform to, and be in accordance with, any
requirements imposed by: (l) the provisions of the Investment Company
Act of 1940 (the "Act") and of any rules or regulations in force
thereunder; (2) any other applicable provisions of law; (3) the
provisions of the Declaration of Trust and By-Laws of the Trust as
amended from time to time; (4) any policies and determinations of the
Board of Trustees of the Trust; and (5) the fundamental policies of
the Trust, as reflected in its registration statement under the Act,
or as amended by the shareholders of the Trust.
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(c) The Advisor shall give the Trust the benefit of its
best judgment and effort in rendering services hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties ("disabling conduct")
hereunder on the part of the Advisor (and its officers, directors,
agents, employees, controlling persons, shareholders and any other
person or entity affiliated with the Advisor) the Advisor shall not
be subject to liability to the Trust or to any shareholder of the
Trust for any act or omission in the course of, or connected with
rendering services hereunder, including without limitation, any error
of judgment or mistake of law or for any loss suffered by any of them
in connection with the matters to which this Agreement related,
except to the extent specified in Section 36(b) of the Act concerning
loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services. Except for such disabling
conduct, the Trust shall indemnify the Advisor (and its officers,
directors, agents, employees, controlling persons, shareholders and
any other person or entity affiliated with the Advisor) from any
liability arising from the Advisor's conduct under this Agreement to
the extent permitted by the Declaration of Trust and applicable law.
(d) Nothing in this Agreement shall prevent the Advisor or
any affiliated person (as defined in the Act) of the Advisor from
acting as investment adviser or manager and/or principal underwriter
for any other person, firm or corporation and shall not in any way
limit or restrict the Advisor or any such affiliated person from
buying, selling or trading any securities for its or their own
accounts or the accounts of others for whom it or they may be acting,
provided, however, that the Advisor expressly represents that it will
undertake no activities which, in its judgment, will adversely affect
the performance of its obligations to the Trust under this Agreement.
(e) It is agreed that the Advisor shall have no
responsibility or liability for the accuracy or completeness of the
Trust's Registration Statement under the Act except for information
supplied by the Advisor for inclusion
therein.
3. Broker-Dealer Relationships
In connection with its duties set forth in Section 2(a)(ii) of this
Agreement to arrange for the purchase and the sale of securities held by the
Trust by placing purchase and sale orders
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for the Trust, the Advisor shall select such broker-dealers ("brokers") as
shall, in the Advisor's judgment, implement the policy of the Trust to achieve
"best execution", i.e., prompt and efficient execution at the most favorable
securities price. In making such selection, the Advisor is authorized to
consider the reliability, integrity and financial condition of the broker. The
Advisor is also authorized to consider whether the broker provides brokerage
and/or research services to the Trust and/or other accounts of the Advisor. The
commissions paid to such brokers may be higher than another broker would have
charged if a good faith determination is made by the Advisor that the commission
is reasonable in relation to the services provided, viewed in terms of either
that particular transaction or the Advisor's overall responsibilities as to the
accounts as to which it exercises investment discretion. The Advisor shall use
its judgment in determining that the amount of commissions paid are reasonable
in relation to the value of brokerage and research services provided and need
not place or attempt to place a specific dollar value on such services or on the
portion of commission rates reflecting such services. To demonstrate that such
determinations were in good faith, and to show the overall reasonableness of
commissions paid, the Advisor shall be prepared to show that commissions paid
(i) were for purposes contemplated by this Agreement; (ii) provide lawful and
appropriate assistance to the Advisor in the performance of its decision-making
responsibilities; and (iii) were within a reasonable range as compared to the
rates charged by qualified brokers to other institutional investors as such
rates may become known from available information. The Trust recognizes that, on
any particular transaction, a higher than usual commission may be paid due to
the difficulty of the transaction in question. The Advisor also is authorized to
consider sales of shares as a factor in the selection of brokers to execute
brokerage and principal transactions, subject to the requirements of "best
execution", as defined above.
4. Allocation of Expenses
The Advisor agrees that it will furnish the Trust, at the Advisor's
expense, with all office space and facilities, and equipment and clerical
personnel necessary for carrying out its duties under this Agreement. The
Advisor will also pay all compensation of all Trustees, officers and employees
of the Trust who are affiliated persons of the Advisor. All costs and expenses
not expressly assumed by the Advisor under this Agreement shall be paid by the
Trust, including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation and expenses of its
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Trustees other than those affiliated with the Advisor or its Administrator; (v)
legal and audit expenses; (vi) fees and expenses of the Trust's custodian,
transfer agent and accounting services agent; (vii) expenses incident to the
issuance of its shares, including stock certificates and issuance of shares on
the payment of, or reinvestment of, dividends; (viii) fees and expenses incident
to the registration under Federal or state securities laws of the Trust or its
shares; (ix) expenses of preparing, printing and mailing reports, notices, proxy
material and prospectuses to shareholders of the Trust; (x) all other expenses
incidental to holding meetings of the Trust's shareholders; (xi) dues or
assessments of or contributions to the Investment Company Institute or any
successor or other industry association; (xii) such non-recurring expenses as
may arise, including litigation affecting the Trust and the legal obligations
which the Trust may have to indemnify its officers and Trustees with respect
thereto; (xiii) fees of the Trust's Administrator and (xiii) the organization
costs of the Trust.
5. Compensation of the Advisor
(a) The Trust agrees to pay the Advisor and the Advisor agrees to
accept as full compensation for all services rendered by the Advisor as such, an
annual management fee, payable monthly and computed on the value of the net
assets of the Trust as of the close of business each business day at the annual
rate of 0.70 of 1% of such net assets of the Trust.
(b) In the event the expenses of the Trust (including the fees of the
Advisor and the Administrator and amortization of organization expenses but
excluding interest, taxes, brokerage commissions, extraordinary expenses and
sales charges and distribution fees) for any fiscal year exceed the limits set
by applicable regulations of state securities commissions in states where the
Trust's shares are registered or qualified for sale, the Advisor will reduce its
fee by the amount of such excess. Any such reductions are subject to
readjustment during the year. The payment of the management fee at the end of
any month will be reduced or postponed or, if necessary, a refund will be made
to the Trust so that at no time will there be any accrued but unpaid liability
under this expense limitation.
6. Duration and Termination
(a) This Agreement shall go into effect on the date set forth above
and shall, unless terminated as hereinafter provided, continue in effect until
the earlier of December 31, 1999 or the first meeting of shareholders of the
Trust and, if approved at
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that meeting, until the next December 30 after that meeting and thereafter from
year to year, but only so long as such continuance is specifically approved at
least annually by the Trust's Board of Trustees, including the vote of a
majority of the Trustees who are not parties to this Agreement or "interested
persons" (as defined in the Act) of any such party cast in person at a meeting
called for the purpose of voting on such approval, or by the vote of the holders
of a "majority" (as so defined) of the outstanding voting securities of the
Trust.
(b) This Agreement may be terminated by the Advisor at any time
without penalty upon giving the Trust sixty (60) days' written notice (which
notice may be waived by the Trust) and may be terminated by the Trust at any
time without penalty upon giving the Advisor sixty (60) days' written notice
(which notice may be waived by the Advisor), provided that such termination by
the Trust shall be directed or approved by the vote of a majority of all of its
Trustees in office at the time or by the vote of the holders of a majority (as
defined in the Act) of the voting securities of the Trust. This Agreement shall
automatically terminate in the event of its assignment (as so defined).
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by duly authorized persons and their seals to be
hereunto affixed, all as of the day and year first above written.
PIC MIDCAP PORTFOLIO
By
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ATTEST:
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PROVIDENT INVESTMENT COUNSEL, INC.
By
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ATTEST:
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