1
EXHIBIT 99.B5(a).
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this ______ day of _______________, 19___, by and between
XXXXXX AGGRESSIVE GROWTH FUND, a Massachusetts business trust (the "Fund"), and
ZURICH XXXXXX INVESTMENTS, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund is an open-end management investment company registered
under the Investment Company Act of 1940, the shares of beneficial interest
("Shares") of which are registered under the Securities Act of 1933;
WHEREAS, the Fund is authorized to issue Shares in separate series or
portfolios with each representing the interests in a separate portfolio of
securities and other assets;
WHEREAS, the Fund currently offers or intends to offer Shares in one
portfolio, the Initial Portfolio, together with any other Fund portfolios which
may be established later and served by the Adviser hereunder, being herein
referred to collectively as the "Portfolios" and individually referred to as a
"Portfolio"; and
WHEREAS, the Fund desires at this time to retain the Adviser to render
investment advisory and management services to the Initial Portfolio, and the
Adviser is willing to render such services;
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. The Fund hereby employs the Adviser to act as the investment adviser for
the Initial Portfolio and other Portfolios hereunder and to manage the
investment and reinvestment of the assets of each such Portfolio in accordance
with the applicable investment objectives and policies and limitations, and to
administer the affairs of each such Portfolio to the extent requested by and
subject to the supervision of the Board of Trustees of the Fund for the period
and upon the terms herein set forth, and to place orders for the purchase or
sale of portfolio securities for the Fund's account with brokers or dealers
selected by it; and, in connection therewith, the Adviser is authorized as the
agent of the Fund to give instructions to the Custodian of the Fund as to the
deliveries of securities and payments of cash for the account of the Fund. In
connection with the selection of such brokers or dealers and the placing of
such orders, the Adviser is directed to seek for the Fund best execution of
orders. Subject to such policies as the Board of Trustees of the Fund
determines, the Adviser shall not be deemed to have acted unlawfully or to have
2
breached any duty, created by this Agreement or otherwise, solely by reason of
its having caused the Fund to pay a broker or dealer an amount of commission
for effecting a securities transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction, if
the Adviser determined in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the Adviser's overall responsibilities with respect to the
clients of the Adviser as to which the Adviser exercises investment discretion.
The Fund recognizes that all research services and research that the Adviser
receives or generates are available for all clients, and that the Fund and
other clients may benefit thereby. The investment of funds shall be subject to
all applicable restrictions of the Agreement and Declaration of Trust and By-
Laws of the Fund as may from time to time be in force.
The Adviser accepts such employment and agrees during such period to
render such services, to furnish office facilities and equipment and clerical,
bookkeeping and administrative services for the Fund, to permit any of its
officers or employees to serve without compensation as trustees or officers of
the Fund if elected to such positions and to assume the obligations herein set
forth for the compensation herein provided. The Adviser shall for all purposes
herein provided be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund. It
is understood and agreed that the Adviser, by separate agreements with the
Fund, may also serve the Fund in other capacities.
2. In the event that the Fund establishes one or more portfolios other than
the Initial Portfolio with respect to which it desires to retain the Adviser to
render investment advisory and management services hereunder, it shall notify
the Adviser in writing. If the Adviser is willing to render such services, it
shall notify the Fund in writing whereupon such portfolio or portfolios shall
become a Portfolio or Portfolios hereunder.
3. For the services and facilities described in Section 1, the Fund will
pay to the Adviser at the end of each calendar month, an investment management
fee for each Portfolio computed by applying a base fee, at an annual rate of
.65 of 1%, to the average daily net assets of the Portfolio, subject to upward
or downward adjustment, as provided below, on the basis of the investment
performance of the Portfolio's Class A Shares in relation to the investment
record of the Standard & Poor's Composite Stock Price Index of 500 Stocks (the
"Index").
2
3
The base fee will be subject to upward or downward adjustment at the close
of each month on the basis of the investment performance of the Portfolio's
Class A Shares in relation to the investment record of the Index over the
twelve month period then ended. The Fund will pay as an additional monthly fee
for each Portfolio 1/12 of .02% of the Portfolio's average daily net assets for
the preceding twelve months for each percentage point (fractions to be
prorated) by which the investment performance of the Portfolio's Class A Shares
exceeds that of the Index for the same period, provided that such additional
monthly fee shall not exceed 1/12 of .20% of such average daily net assets.
Conversely, the base monthly fee payable by the Fund shall be reduced by 1/12
of .02% of such average daily net assets of such Portfolio for each percentage
point (fractions to be prorated) by which the investment performance falls
below that of the Index over the twelve month period then ended, provided that
such reduction in the monthly fee shall not exceed 1/12 of .20% of such average
daily net assets.
The investment performance of the Class A Shares of a Portfolio during any
period will be measured by the percentage difference between (i) the opening
net asset value of one Class A Share of the Portfolio and (ii) the sum of the
closing net asset value of one Class A Share of the Portfolio plus the amount
of any capital gains distributions or dividends on such Class A Share made
during the period treated as if reinvested in Class A Shares of the Portfolio
at net asset value at the time of the distribution. The investment performance
of the Index during any period will be measured by the percentage change in the
Index between the beginning and the close of the period. Cash distributions on
the securities which comprise the Index shall be treated as reinvested in the
Index at the end of each month following the payment of the dividend.
As provided above, the base fee and the adjustment applicable to a
Portfolio shall be applicable to such Portfolio individually and shall be based
upon the average daily net assets and investment performance of the Class A
Shares of such Portfolio. For the month and year in which this Agreement
becomes effective or terminates, there shall be an appropriate proration on the
basis of the number of days that the Agreement is in effect during the month
and year, respectively.
During the first year that this Agreement shall be effective for a
Portfolio, the Fund will pay to the Adviser an annual management fee computed
by applying the annual base fee described above to the average daily net assets
of the Portfolio for the year subject to upward or downward adjustment on the
basis of the investment performance of the Portfolio's Class A Shares in
relation to the investment record of the Index for such year. The adjustment
to the base fee for such year shall be equal to twelve times the adjustment to
the monthly fee described above. During the first such year, the Fund will pay
to the Adviser on a monthly basis 1/12 of the minimum annual fee that would be
payable hereunder with any balance due for such year to be payable at the end
of such year.
4. The services of the Adviser to the Fund under this Agreement are not to be
deemed exclusive, and the Adviser shall be free to render similar services or
other services to others so long as its services hereunder are not impaired
thereby.
5. In addition to the fee of the Adviser, the Fund shall assume and pay any
expenses for services rendered by a custodian for the safekeeping of the Fund's
securities or other property, for
3
4
keeping its books of account, for any other charges of the custodian, and for
calculating the net asset value of the Fund as provided in the prospectus of
the Fund. The Adviser shall not be required to pay and the Fund shall assume
and pay the charges and expenses of its operations, including compensation of
the trustees (other than those affiliated with the Adviser), charges and
expenses of independent auditors, of legal counsel, of any transfer or dividend
disbursing agent, and of any registrar of the Fund, costs of acquiring and
disposing of portfolio securities, interest, if any, on obligations incurred by
the Fund, costs of share certificates and of reports, membership dues in the
Investment Company Institute or any similar organization, costs of reports and
notices to shareholders, other like miscellaneous expenses and all taxes and
fees payable to federal, state or other governmental agencies on account of the
registration of securities issued by the Fund, filing of trust documents or
otherwise. The Fund shall not pay or incur any obligation for any expenses for
which the Fund intends to seek reimbursement from the Adviser as herein
provided without first obtaining the written approval of the Adviser. The
Adviser shall arrange, if desired by the Fund, for officers or employees of the
Adviser to serve, without compensation from the Fund, as trustees, officers or
agents of the Fund if duly elected or appointed to such positions and subject
to their individual consent and to any limitations imposed by law.
The base fee shall be accrued daily on the basis of the number of business
days in each year, and the additional fee per month, or payment by the Adviser
as the case may be, shall be accrued at the close of each month.
The net asset value for each Portfolio shall be calculated in accordance
with the provisions of the Fund's prospectus or as the trustees may determine
in accordance with the provisions of the Investment Company Act of 1940. On
each day when net asset value is not calculated, the net asset value of a
Portfolio shall be deemed to be the net asset value of such Portfolio as of the
close of business on the last day on which such calculation was made for the
purpose of the foregoing computations.
6. Subject to applicable statutes and regulations, it is understood that
trustees, officers or agents of the Fund are or may be interested in the
Adviser as officers, directors, agents, shareholders or otherwise, and that the
officers, directors, shareholders and agents of the Adviser may be interested
in the Fund otherwise than as a trustee, officer or agent.
7. The Adviser shall not be liable for any error of judgment or of law or for
any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except loss resulting from willful misfeasance, bad faith or
gross negligence
4
5
on the part of the Adviser in the performance of its obligations and duties or
by reason of its reckless disregard of its obligations and duties under this
Agreement.
8. This Agreement shall become effective with respect to the Initial
Portfolio on the date hereof and shall remain in full force until
_________________, unless sooner terminated as hereinafter provided. This
Agreement shall continue in force from year to year thereafter with respect to
each Portfolio, but only as long as such continuance is specifically approved
for each Portfolio at least annually in the manner required by the Investment
Company Act of 1940 and the rules and regulations thereunder; provided,
however, that if the continuation of this Agreement is not approved for a
Portfolio, the Adviser may continue to serve in such capacity for such
Portfolio in the manner and to the extent permitted by the Investment Company
Act of 1940 and the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Fund or by the Adviser on sixty (60) days written notice to the other
party. The Fund may effect termination with respect to any Portfolio by action
of the Board of Trustees or by vote of a majority of the outstanding voting
securities of such Portfolio.
This Agreement may be terminated with respect to any Portfolio at any time
without the payment of any penalty by the Board of Trustees or by vote of a
majority of the outstanding voting securities of such Portfolio in the event
that it shall have been established by a court of competent jurisdiction that
the Adviser or any officer or director of the Adviser has taken any action
which results in a breach of the covenants of the Adviser set forth herein.
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Investment Company Act of
1940 and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation described in Section
3 earned prior to such termination.
9. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
10. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other
5
6
party at such address as such other party may designate for the receipt of such
notice.
11. All parties hereto are expressly put on notice of the Fund's Agreement and
Declaration of Trust and all amendments thereto, all of which are on file with
the Secretary of The Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the Fund hereunder
are not binding upon any of the trustees, officers, or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund.
With respect to any claim by the Adviser for recovery of that portion of the
investment management fee (or any other liability of the Fund arising
hereunder) allocated to a particular Portfolio, whether in accordance with the
express terms hereof or otherwise, the Adviser shall have recourse solely
against the assets of that Portfolio to satisfy such claim and shall have no
recourse against the assets of any other Portfolio for such purpose.
12. This Agreement shall be construed in accordance with applicable federal
law and (except as to Section 11 hereof which shall be construed in accordance
with the laws of The Commonwealth of Massachusetts) the laws of the State of
Illinois.
13. This Agreement is the entire contract between the parties relating to the
subject matter hereof and supersedes all prior agreements between the parties
relating to the subject matter hereof.
6
7
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to
be executed as of the day and year first above written.
XXXXXX AGGRESSIVE GROWTH FUND
By:___________________________
Title:________________________
ATTEST:
_____________________________
Title:_______________________
ZURICH XXXXXX INVESTMENTS, INC.
By:___________________________
Title:________________________
ATTEST:
_____________________________
Title:_______________________
7
