MASTER BUSINESS MANAGEMENT AGREEMENT
AGREEMENT made this 3rd day of December, 1994, by Ivy Fund
(the "Company") and Ivy Management, Inc. (the "Manager").
WHEREAS, the Company is an open-end investment company
organized as a Massachusetts business trust and consists of one or more separate
investment portfolios (the "Funds") as may be established and designated from
time to time;
WHEREAS, the Company desires the services of the Manager as
business manager with respect to such Funds as shall be designated in
supplements to this Agreement as further agreed between the Company and the
Manager; and
WHEREAS, the Company engages in the business of investing and
reinvesting the assets of the Funds in the manner and in accordance with the
investment objective and restrictions specified in the currently effective
prospectus and statement of additional information (the "Prospectus") relating
to the Funds included in the Company's Registration Statement, as amended from
time to time, filed by the Company under the Investment Company Act of 1940 (the
"1940 Act") and the Securities Act of 1933;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:
1. Appointment. The Company hereby appoints the Manager to
provide the business management services specified in this Agreement with regard
to such Funds as shall be designated in supplements to this Agreement, and the
Manager hereby accepts such appointment.
2. Business Management Services. (a) The Manager shall
supervise the Funds' business and affairs and shall provide such services
reasonably necessary for the operation of the Funds as are not provided by
employees or other agents engaged by the Funds; provided, that the Manager shall
not have any obligation to provide under this Agreement any direct or indirect
services to the Funds' shareholders, any services related to the distribution of
the Funds' shares, or any other services which are the subject of a separate
agreement or arrangement between the Funds and the Manager. Subject to the
foregoing, in providing business management services hereunder, the Manager
shall, at its expense, (1) review the activities of each Fund's investment
adviser to ensure that each Fund is operated in compliance with the Fund's
investment objective and policies and with the 1940 Act; (2) coordinate with the
Funds' Custodian and
Transfer Agent and monitor the services they provide to the
Funds; (3) coordinate with and monitor any other third parties furnishing
services to the Funds; (4) provide the Fund with the necessary office space,
telephones and other communications facilities as are adequate for the Funds'
needs; (5) provide the services of individuals competent to perform
administrative and clerical functions which are not performed by employees or
other agents engaged by the Funds or by the Manager acting in some other
capacity pursuant to a separate agreement or arrangement with the Funds; (6)
maintain or supervise the maintenance by third parties of such books and records
of the Company as may be required by applicable Federal or state law; (7)
authorize and permit the Manager's directors, officers and employees who may be
elected or appointed as directors or officers of the Company to serve in such
capacities; and (8) take such other action with respect to the Company, after
approval by the Company, as may be required by applicable law, including without
limitation the rules and regulations of the SEC and of state securities
commissions and other regulatory agencies.
(b) The Manager may retain third parties to
provide these services to the Company, at the Manager's own cost and
expense. The Manager shall make periodic reports to the Company's Board of
Directors on the performance of its obligations under this Agreement, other than
services provided to the Company by third parties retained in accordance with
the previous sentence.
3. Expenses of the Company. Except as provided in paragraph 2
or as provided in any separate agreement between the Funds and the Manager, the
Company shall be responsible for all of its expenses and liabilities, including:
(1) the fees and expenses of the Company's Directors who are not parties to this
Agreement or "interested persons" (as defined in the 0000 Xxx) of any such party
("Independent Directors"); (2) the salaries and expenses of any of the Company's
officers or employees who are not affiliated with the Manager; (3) interest
expenses; (4) taxes and governmental fees, including any original issue taxes or
transfer taxes applicable to the sale or delivery of shares or certificates
therefor; (5) brokerage commissions and other expenses incurred in acquiring or
disposing of portfolio securities; (6) the expenses of registering and
qualifying shares for sale with the SEC and with various state securities
commissions; (7) accounting and legal costs; (8) insurance premiums; (9) fees
and expenses of the Company's Custodian and Transfer Agent and any related
services; (10) expenses of obtaining quotations of portfolio securities and of
pricing shares; (11) expenses of maintaining the Company's legal existence and
of shareholders' meetings; (12) expenses of preparation and distribution to
existing shareholders of periodic reports, proxy materials and prospectuses; and
(13) fees and expenses of membership in industry organizations.
4. Standard of Care. The Manager shall give the Company the
benefit of the Manager's best judgment and efforts in rendering business
management services pursuant to paragraph 2 of this Agreement. As an inducement
to the Manager's undertaking to render these services, the Company agrees that
the Manager shall not be liable under this Agreement for any mistake in judgment
or in any other event whatsoever except for lack of good faith, provided that
nothing in this Agreement shall be deemed to protect or purport to protect the
Manager against any liability to the Company or its shareholders to which the
Manager would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of the Manager's duties under this
Agreement or by reason of the Manager's reckless disregard of its obligations
and duties hereunder.
5. Fees. In consideration of the services to be rendered by
the Manager pursuant to paragraph 2 of this Agreement, each Fund shall pay the
Manager a monthly fee on the first business day of each month, based on the
average daily value (as determined on each business day at the time set forth in
the Prospectus of the Fund for determining net asset value per share) of the net
assets of the Fund during the preceding month at the annual rates set forth in a
supplement to this Agreement with respect to each Fund. If the fees payable to
the Manager pursuant to this paragraph 5 begin to accrue before the end of any
month or if this Agreement terminates before the end of any month, the fees for
the period from that date to the end of that month or from the beginning of that
month to the date of termination, as the case may be, shall be prorated
according to the proportion which the period bears to the full month in which
the effectiveness or termination occurs. For purposes of calculating the monthly
fees, the value of the net assets of a Fund shall be computed in the manner
specified in the Fund's Prospectus for the computation of net asset value. For
purposes of this Agreement, a "business day" is any day on which the New York
Stock Exchange is open for trading.
6. Expense Limitation. If the aggregate expenses of every
character incurred by, or allocated to, a Fund in any fiscal year, other than
interest, taxes, distribution expenses, brokerage commissions and other
portfolio transaction expenses, other expenditures which are capitalized in
accordance with generally accepted accounting principles and any extraordinary
expense (including, without limitation, litigation and indemnification
expenses), but including the fees provided for in paragraph 5 of this Agreement
and in any separate advisory agreement between the Fund and the Manager or any
affiliate of the Manager ("includable expenses"), shall exceed the expense
limitations applicable to the Fund imposed by state securities laws or
regulations thereunder, as these limitations may be raised or lowered from time
to time, the Manager shall pay to the
Fund an amount equal to that excess. With respect to portions
of a fiscal year in which this Agreement shall be in effect, the foregoing
limitations shall be prorated according to the proportion which that portion of
the fiscal year bears to the full fiscal year. At the end of each month of the
Company's fiscal year, the Manager will review the includable expenses accrued
during that fiscal year to the end of the period and shall estimate the
contemplated includable expenses for the balance of that fiscal year. If, as a
result of that review and estimation, it appears likely that the includable
expenses will exceed the limitations referred to in this paragraph 6 for a
fiscal year with respect to a Fund, the Manager shall pay the Fund, subject to a
later reimbursement to reflect actual expenses, an amount equal to a pro rata
portion (prorated on the basis of remaining months of the fiscal year, including
the month just ended) of the amount by which the includable expenses for the
fiscal year (less an amount equal to the aggregate of actual reductions made
pursuant to this provision with respect to prior months of the fiscal year) are
expected to exceed the limitations provided in this paragraph 6. For the
purposes of the foregoing, the value of the net assets of the Fund shall be
computed in the manner specified in paragraph 5, and any payments required to be
made by the Manager shall be made once a year promptly after the end of the
Company's fiscal year.
7. Ownership of Records. All records required to be maintained
and preserved by the Funds pursuant to the provisions or rules or regulations of
the SEC under Section 31(a) of the 1940 Act and maintained and preserved by the
Manager on behalf of the Funds are the property of the Funds and shall be
surrendered by the Manager promptly on request by the Funds; provided, that the
Manager may at its own expense make and retain copies of any such records.
8. Duration and Termination. (a) This Agreement shall become
effective on the date of its execution, subject to prior shareholder approval
thereof as required under the 1940 Act, and shall continue in effect for a
period of two years from the date of its execution, provided, that the Agreement
will continue in effect with respect to a Fund for more than two years only so
long as the continuance is specifically approved at least annually (i) by the
vote of a majority of the outstanding voting securities of that Fund (as defined
in the 0000 Xxx) or by the Company's entire Board of Directors, and (ii) by the
vote, cast in person at a meeting called for that purpose, of a majority of the
Trust's Independent Directors.
(b) This Agreement may be terminated with respect to
a Fund at any time, without the payment of any penalty, by a vote of a
majority of the outstanding voting securities of that Fund (as defined in the
0000 Xxx) or by a vote of majority of the Company's entire Board of Directors on
60 days' written notice to
the Manager or by the Manager on 60 days' written notice to
the Company. This Agreement shall terminate automatically in the event of its
assignment (as defined in the 1940 Act).
9. Services to Other Clients. Nothing herein contained shall
limit the freedom of the Manager or any affiliated person of the Manager to
render investment supervisory and administrative services to other investment
companies, to act as investment adviser or investment counselor to other
persons, firms or corporations, or to engage in other business activities.
10. Miscellaneous. (a) This Agreement shall be construed in
accordance with the laws of the State of Florida, provided that nothing herein
shall be construed in a manner inconsistent with the 1940 Act.
(b) The captions in this Agreement are included
for convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
IVY FUND
By: /s/ XXXXXXX X. XXXXXX
TITLE: President
IVY MANAGEMENT, INC.
By: /s/ XXXXXXX X. XXXXXX
TITLE: President
