7
FORM OF
INVESTMENT MANAGEMENT AGREEMENT
Investment Management Agreement dated ________________, by
and between COLONIAL TRUST II, a Massachusetts business trust
(the "Trust"), and NEWPORT FUND MANAGEMENT, INC., a Virginia
corporation (the "Investment Manager"), a registered investment
corporation (the "Investment Manager"), a registered investment
adviser under the Investment Advisers Act of 1940, as amended.
WHEREAS, the Trust is registered as a diversified, open-end,
management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Investment Manager
to furnish investment advisory and a management services to a
certain portfolio of the Trust, and the Investment Manager is
willing to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, and intending to be bound, it is
agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints the
Investment Manager to act as investment manager to the
Colonial ______________ Fund series of the Trust (the
"Portfolio") for the period and on the terms set forth in
this Agreement. The Investment Manager accepts such
appointment and agrees to furnish the services herein set
forth, for the compensation herein provided.
2. Delivery of Documents. The Trust has furnished
(or will furnish when available) the Investment Manager with
copies properly certified or authenticated of each of the
following:
(a) The Trust's Declaration of Trust dated
_____________, as amended to date;
(b) The Trust's By-Laws, as amended to date;
(c) Resolutions of the Trust's Board of Trustees
approving this Agreement;
(d) The Trust's Registration Statement on Form N-
1A (or any successor form adopted by the Securities and
Exchange Commission (the "SEC") under the 1940 Act and
under the Securities Act of 1933 as amended (the "1933
Act"), relating to shares of beneficial interest in the
Portfolio (herein called the "Shares") as filed with
the SEC, and all amendments thereto;
(e) The Trust's Prospectus and Statement of
Additional Information for the Portfolio, as currently
in effect (such Prospectus and Statement of Additional
Information as presently in effect and all amendments
and supplements thereto are herein called the
"Prospectus" and "Statement of Additional Information",
respectively").
The Trust will furnish the Investment Manager from time to
time with copies, properly certified or authenticated, of all
amendments of or supplements to the foregoing.
3. Management. Subject to the supervision of the
Trust's Board of Trustees, the Investment Manager will
provide a continuous investment program for the Portfolio,
including investment research and management with respect to
all securities and investments and cash and cash equivalents
in the Portfolio. The Investment Manager will determine
from item to time what securities and other investments will
be purchased, retained or sold by the Portfolio. The
Investment Manager will provide the services under this
Agreement in accordance with the Portfolio's investment
objective, policies and restrictions as stated in the
Prospectus and Statement of Additional Information. The
Investment Manager further agrees that it:
(a) will conform with all applicable Rules and
Regulations of the SEC and will, in addition, conduct
its activities under this Agreement in accordance with
regulations of an any other Federal and State agencies
which may now or in the future have jurisdiction over
its activities;
(b) will place orders pursuant to its investment
determinations for the Portfolio either directly with
the issuer or with any broker or dealer. In placing
orders with brokers or dealers, the Investment Manager
will attempt to obtain the bet net price and the most
favorable execution of its orders. Consistent with
this obligation, when the execution and price offered
by two or more brokers or dealers are comparable, the
Investment Manager, may, in its description, purchase
and sell portfolio securities to and from brokers and
dealers who provide the Investment Manager or the
Portfolio with research advice and other services, or
who sell Portfolio shares, as permitted by law,
including but not limited to Section 28(e) of the
Securities Exchange Act of 1934, as amended. In no
instance will portfolio securities be purchased from or
sold to the Investment Manager or any affiliated person
of the Investment Manager as principal;
(c) will provide, or cause its affiliates to
provide, all necessary executive personnel for the
Fund, the salaries and expenses of such personnel to be
borne by the Investment Managers or its affiliates;
(d) will provide, or cause its affiliates to
provide, at its or their own cost, all office space and
facilities necessary for the activities of the Trust.
Notwithstanding the foregoing, the Investment Manager may
obtain the services of one or more investment counsel to act as a
sub-advisor to the Portfolio. The cost of employing such
counselor or sub-advisor will be paid by the Investment Manager
and not by the Portfolio.
4. Services Not Exclusive. The investment management
services furnished by the Investment Manager hereunder are
not to be deemed exclusive, and the Investment Manager shall
be free to furnish similar services to others so long as its
services under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the
requirements of the 1940 Act, the Investment Manager hereby
agrees that all records which it maintains for the Trust are
the property of the Trust, and further agrees to surrender
promptly to the Trust any of such records upon the Trust's
request. The Investment Manager further agrees to preserve
for the periods prescribed by the 1940 Act the records
required to be maintained by the 1940 Act.
6. Expenses. During the term of this Agreement, the
Investment Manager will pay all expenses incurred by it in
connection with its investment management of the Portfolio.
The Trust or the Portfolio as appropriate, shall bear all
expenses of its operations and business not specifically assumed
or agreed to be paid by the Investment Manager, its affiliates,
or other third parties. In particular, but without limiting the
generality of the foregoing, the Trust or the Portfolio, as
appropriate, shall pay:
(1) Taxes;
(2) Brokerage fees and commissions with regard to
portfolio transactions of the Portfolio;
(3) Interest charges, fees and expenses of the custodian of
the Portfolio's securities;
(4) Fees and expenses of the Trust's transfer agent and
administrator relating to the Portfolio;
(5) Auditing and legal expenses;
(6) Cost of maintenance of the Trust's existence;
(7) The proportionate share of compensation of directors of the
Trust who are not interested persons of the Investment
Manager of that term is defined by law;
(8) Costs of shareholder and trustees meeting of the Trust;
(9) Federal and State registration fees expenses;
(10) Costs of printing and mailing Prospectuses and Statements
of Additional Information for the Portfolio's shares, reports
and notices to existing shareholders;
(11) The Investment Management fee payable to the
Investment Manager, as provided in paragraph 7 herein;
(12) Costs of recordkeeping and daily pricing, and;
(13) Distribution expenses in accordance with any Distribution
Plan as and if approved by the shareholders of the
Portfolio.
At the request of the Trust, the Investment Manager may
arrange for any such services on behalf of the Trust. If the
Investment Manager makes any payment therefor, or incurs any cost
in connection therewith, the Trust shall promptly reimburse such
amounts to the Investment Manager.
If the expenses project to be borne by the Portfolio
(exclusive of interest, brokerage commissions, taxes and
extraordinary items, but inclusive of investment management fee)
in any fiscal year are expected to exceed any applicable state
expense limitation provision to which the Portfolio is subject,
the Investment Management fee payable by the Portfolio to the
Investment Manager shall be reduced on each day such fee is
accrued to the extent of that day's portion of such excess
expenses. The amount of such reduction shall no exceed the
actual amount of the Investment Management fee otherwise payable
in such year. Any excess reduction accrued shall be payable to
the Investment Manager by the Trust on behalf of the Portfolio
within five (5) business days after the amount of such excess is
determined.
7. Compensation. For the services provided and the
expenses assumed by the Investment Manager pursuant to this
Agreement, the Portfolio will pay the Investment Manager and
the Investment Manager will accept as full compensation of
management fee, accrued daily and payable within five (5)
business days after the last business day of each month, at
an annual rate of ___________________________.
8. Limitation of Liability. The Investment Manager
shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Trust or the Portfolio
in connection with the performance of this Agreement, except
a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or a
loss resulting form willful misfeasance, bad faith or gross
negligence on the part of the Investment Manager in the
performance of its duties or from reckless disregard by it
of its obligations and duties under this Agreement.
9. Duration and Termination. This Agreement shall
become effective on the date first above written and, unless
sooner terminated as a provided herein, shall continue in
effect until _________________. Thereafter, this Agreement
shall be renewable for successive periods of one year each,
provided such continuance is specifically approved annually
(a) by the vote a majority of those members of the Trust's
Board of Trustees who are not parties to this Agreement or
interested persons of any such party (as that term is
defined in the 1940 Act), cast in person at a meeting called
for the purpose of voting on such approval, and (b) by vote
of either the Board of Trustees of the Trust or of a
majority of the outstanding voting securities (as that term
is defined in the 0000 Xxx) of the Portfolio.
Notwithstanding the foregoing, this Agreement may be
terminated by the Trust on behalf of the Portfolio or by the
Investment Manager at any time on sixty (60) days written
notice, without the payment of any penalty, provided that
termination by the Portfolio must be authorized either by
vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the
Portfolio. This Agreement will automatically terminate in
the event of its assignment (as that term is defined in the
1940 Act).
10. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the
party against which enforcement of the change, waiver,
discharge or termination is ought. Except as permitted by
the 1940 Act or any rule thereunder or any exemptive order
or no-action letter issued by the SEC thereunder, no
material amendment of this Agreement shall be effective
until provided by vote of the holders of a majority of the
Portfolio's outstanding voting securities (as defined in the
1940 Act).
11. Limitation of Liability of Trust. The term
"Colonial Trust II" means and refers to the trustees from
time to item serving under the Declaration of Trust dated
_______________ as the same may subsequently thereto have
been, or subsequently hereto be, amended. It is expressly
agreed that he obligations of the Trust hereunder shall not
be binding upon any of the trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but
shall bind only the trust property to the Trust, as provided
in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the
trustees of the Trust and this Agreement has been signed by
an authorized officer of the Trust acting as such, and
neither such authorization by such trustees nor such
execution and delivery by such officer shall be deemed to
have been made by any of them but shall bind only the trust
property of the Trust as provided in its Declaration of
Trust.
12. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way
define or limit any of the provisions hereof or otherwise
effect their construction or effect. 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. This Agreement
shall be binding and shall inure to the benefit of the
parties hereto and their respective successors.
13. Use of Name. The Trust and the Portfolio may use
the names "Colonial" or "Newport" only for so long as this
Agreement or any extension, renewal or amendment hereof
remains in effect, including any similar agreement with any
organization which shall have succeeded to the business of
the Investment Manager as investment adviser.
14. Notice. Any notice to be given as required herein
may be given by personal notification or by first class
mail, postage prepaid, to the party specified at the address
stated below:
(a) To the Trust or the Portfolio at:
Colonial Trust II
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
(b) To the Investment Manager at:
Newport Pacific Management, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
15. Applicable Law. This Agreement shall be construed
in accordance with, and governed by, the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as
of the day and year first above written.
NEWPORT FUND MANAGEMENT, INC.
By:_________________________________
COLONIAL _________________ FUND
By: COLONIAL TRUST II
By:_________________________________
