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EXHIBIT 99.B5(b)
ADVISORY CONTRACT
U.S. Government Income Fund
(formerly, the "Special Income Fund")
a portfolio of
OVERLAND EXPRESS FUNDS, INC.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
April 1, 1988
Xxxxx Fargo Bank, N.A.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
This will confirm the agreement between the undersigned (the "Company") on
behalf of the U.S. Government Income Fund (formerly, the "Special Income Fund")
(the "Fund") and Xxxxx Fargo Bank, N.A. (the "Adviser") as follows:
1. The Company is an open-end investment company currently
consisting of three investment portfolios, but which may from time to time
consist of a greater or less number of investment portfolios (the "Funds").
The Company proposes to engage in the business of investing and reinvesting the
assets of the Fund in the manner and in accordance with the investment
objective and restrictions specified in the Company's currently effective
prospectus and the currently effective statement of additional information
incorporated by reference therein relating to the Fund and the Company (such
prospectus and such statement of additional information being collectively
referred to as the "Prospectus") included in the Company's Registration
Statement, as amended from time to time (the "Registration Statement"), filed
by the Company under the Investment Company Act of 1940 (the "Act") and the
Securities Act of 1933. Copies of the documents referred to in the preceding
sentence have been furnished to the Adviser. Any amendments to those documents
shall be furnished to the Adviser promptly.
2. The Company is engaging the Adviser to manage the investing
and reinvesting of the assets of the Fund and to provide the advisory services
specified elsewhere in this contract, subject to the overall supervision of the
Board of Directors of the Company. Pursuant to an administration agreement
between the Company and Xxxxxxxx Inc. (the "Administrator") on behalf of the
Fund, the Company has engaged the Administrator to provide the administrative
services specified therein.
3. (a) The Adviser shall make investments for the account of
the Fund in accordance with the Adviser's best judgment and consistent with the
investment objective and restrictions set forth in the Company's Prospectus,
the Act and the provisions of the Internal Revenue Code relating to regulated
investment companies, subject to policy decisions adopted by the Company's
Board of Directors. The Adviser shall advise the Company's officers and Board
of Directors, at such times as the Company's Board of Directors may specify, of
investments made for the Fund and shall, when requested by the Company's
officers or Board of Directors, supply the reasons for making particular
investments.
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(b) The Adviser shall provide to the Company investment
guidance and policy direction in connection with its daily management of the
Fund's portfolio, including oral, written research, analysis, advice,
statistical and economic data and information and judgments, and shall furnish
to the Company's Board of Directors periodic reports on the investment strategy
and performance of the Fund and such additional reports and information as the
Company's Board of Directors and officers shall reasonably request.
(c) The Adviser shall pay the costs of printing and
distributing all materials relating to the Fund prepared by it, or prepared at
its request, other than such costs relating to proxy statements, prospectuses,
shareholder reports and other materials distributed to existing or prospective
shareholders on behalf of the Fund.
(d) The Adviser shall, at its expense, employ or associate
with itself such persons as the Adviser believes appropriate to assist it in
performing its obligations under this contract.
4. Except as provided in each of the Company's advisory contracts
and administration agreements, the Company shall bear all costs of its
operations, including the compensation of its directors who are not affiliated
with the Adviser, the Administrator or any of their affiliates; advisory and
administration fees; payments of distribution-related expenses pursuant to any
Rule 12b-l Plan, i.e. a plan of distribution of the Company adopted on behalf
of any of the Funds pursuant to Rule 12b-1 under the Act; governmental fees;
interest charges; taxes; fees and expenses of its independent accountants,
legal counsel, transfer agent and dividend disbursing agent; expenses of
redeeming shares; expenses of preparing and printing stock certificates,
prospectuses (except the expense of printing and mailing prospectuses used for
promotional purposes, unless otherwise payable pursuant to a Rule 12b-1 Plan),
shareholders' reports, notices, proxy statements and reports to regulatory
agencies; travel expenses of directors, officers and employees; office
supplies; insurance premiums and certain expenses relating to insurance
coverage; trade association membership dues; brokerage and other expenses
connected with the execution of portfolio securities transactions; fees and
expenses of any custodian, including those for keeping books and accounts and
calculating the net asset value per share of the Fund; expenses of
shareholders' meeting; expenses relating to the issuance, registration and
qualification of shares of the Fund; pricing services, if any; organizational
expenses; and any extraordinary expenses. Expenses attributable to one or
more, but not all, of the Funds are charged against the assets of the relevant
Funds. General expenses of the Funds are allocated among the Funds in a manner
proportionate to the net assets of each Fund, on a transactional basis or on
such other basis as the Board of Directors deems equitable.
5. The Adviser shall give the Company the benefit of the
Adviser's best judgment and efforts in rendering services under this contract.
As an inducement to the Adviser's undertaking to render these services, the
Company agrees that the Adviser shall not be liable under this contract for any
mistake in judgment or in any other event whatsoever except for lack of good
faith, provided that nothing in this contract shall be deemed to protect or
purport to protect the Adviser against any liability to the Company or its
shareholders to which the Adviser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of the
Adviser's duties under this contract or by reason of reckless disregard of its
obligations and duties hereunder.
6. In consideration of the services to be rendered by the Adviser
under this contract, the Company shall pay the Adviser a monthly fee on the
first business day of each month, at the annual rate of 0.50% of the average
daily value (as determined on each day that such value is determined for the
Fund at the time set forth in the Prospectus for determining net asset value
per share) of the Fund's net assets during the preceding month. If the fee
payable to the Adviser pursuant to this paragraph 6 begins to accrue
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before the end of any month or if this contract terminates before the end of
any month, the fee for the period from the effective date to the end of that
month or from the beginning of that month to the termination date,
respectively, shall be prorated according to the proportion that the period
bears to the full month in which the effectiveness or termination occurs. For
purposes of calculating each such monthly fee, the value of the Fund's net
assets shall be computed in the manner specified in the Prospectus and the
Company's Articles of Incorporation for the computation of the value of the
Fund's net assets in connection with the determination of the net asset value
of Fund shares.
7. If in any fiscal year the total expenses of the Fund incurred
by, or allocated to, the Fund excluding taxes, interest, brokerage commissions
and other portfolio transaction expenses, other expenditures that are
capitalized in accordance with generally accepted accounting principles,
extraordinary expenses and amounts accrued or paid under a Rule 12b-1 Plan of
the Fund, but including the fees provided for in paragraph 6 and those provided
for pursuant to the Fund's Administration Agreement ("includible expenses"),
exceed the most restrictive expense limitation 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 Adviser shall waive or reimburse that
portion of the excess derived by multiplying the excess by a fraction, the
numerator of which shall be the percentage at which the excess portion
attributable to the fee payable pursuant to this agreement is calculated under
paragraph 6 hereof, and the denominator of which shall be the sum of such
percentage plus the percentage at which the excess portion attributable to the
fee payable pursuant to the Fund's Administration Agreement is calculated (the
"Applicable Ratio"), but only to the extent of the fee hereunder for the fiscal
year. If the fees payable under this agreement and/or the Fund's Advisory
Agreement contributing to such excess portion are calculated at more than one
percentage rate, the Applicable Ratio shall be calculated separately on the
basis of, and applied separately to, the portions of the fees calculated at the
different rates. At the end of each month of the Company' fiscal year, the
Company shall review the includible expenses accrued during that fiscal year to
the end of the period and shall estimate the contemplated includible expenses
for the balance of that fiscal year. If as a result of that review and
estimation it appears likely that the includible expenses will exceed the
limitations referred to in this paragraph 7 for a fiscal year with respect to
the Fund, the monthly fee set forth in paragraph 6 payable to the Adviser for
such month shall be reduced, subject to a later adjustment, by an amount equal
to the Applicable Ratio times the pro rata portion (prorated on the basis of
the remaining months of the fiscal year, including the month just ended) of the
amount by which the includible expenses for the fiscal year are expected to
exceed the limitations provided for in this paragraph 7. For purposes of
computing the excess, if any, over the most restrictive applicable expense
limitation, the value of the Fund's net assets shall be computed in the manner
specified in the last sentence of paragraph 6, and any reimbursements required
to be made by the Adviser shall be made once a year promptly after the end of
the Company's fiscal year.
8. This contract shall become effective on its execution date and
shall thereafter continue in effect, provided that this contract shall continue
in effect for a period of more than two years from the date hereof only so long
as the continuance is specifically approved at least annually (a) by the vote
of a majority of the Fund's outstanding voting securities (as defined in the
Act) or by the Company's Board of Directors and (b) by the vote, cast in person
at a meeting called for the purpose, of a majority of the Company's directors
who are not parties to this contract or "interested persons" (as defined in the
Act) of any such party. This contract may be terminated at any time by the
Company, without the payment of any penalty, by a vote of a majority of the
Fund's outstanding voting securities (as defined in the Act) or by a vote of a
majority of the Company's entire Board of Directors on 60 days' written notice
to the Adviser or by the Adviser, at any time after the second anniversary of
the effective date of this contract, on 60 days' written notice to the Company.
This contract shall terminate automatically in the event of its assignment (as
defined in the Act).
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9. Except to the extent necessary to perform the Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Adviser, or any affiliate of the Adviser, or any
employee of the Adviser, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of
a similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
10. The Adviser and the Company each agree that the words
"Overland Express," which comprise a component of the Company's name , is a
property right of the parent of the Adviser. The Company agrees and consents
that: (i) it will use the words "Overland Express" as a component of its
corporate name, the name of any class, or both and for no other purpose; (ii)
it will not grant to any third party the right to use the words "Overland
Express" for any purpose; (iii) the Adviser or any corporate affiliate of the
Adviser may use or grant to others the right to use the words "Overland
Express," or any combination or abbreviation thereof, as all or a portion of a
corporate or business name or for any commercial purpose, other than a grant of
such right to another registered investment company not advised by the Adviser
or one of its affiliates; and (iv) in the event that the Adviser or an
affiliate thereof is no longer acting as investment adviser to any class, the
Company shall, upon request by the Adviser, promptly take such action as may be
necessary to change its corporate name to one not containing the words
"Overland Express" and following such change, shall not use the words "Overland
Express," or any combination thereof, as a part of its corporate name or for
any other commercial purpose, and shall use its best efforts to cause its
directors, officers, and shareholders to take any and all actions that the
Adviser may request to effect the foregoing and to reconvey to the Adviser any
and all rights to such words.
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11. This contract shall be governed by and construed in accordance
with the laws of the State of California.
If the foregoing correctly sets forth the agreement between the Company
and the Adviser, please so indicate by signing and returning to the Company the
enclosed copy hereof.
Very truly yours,
OVERLAND EXPRESS FUNDS, INC.,
on behalf of the U.S. Government Income Fund
By: /s/ X. Xxxx Xxxxxx
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Title: X. Xxxx Xxxxxx
ACCEPTED as of the date
set forth above:
XXXXX FARGO BANK, N.A.
By: /s/ Xxxxx Xxxxxxxx
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Title: Vice President
By: /s/Xxxxxxx X. Xxxxxxxx
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Title: Executive Vice President.
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