MANAGEMENT AGREEMENT
between
XXXXX & XXXXXX, INC.
AND
BUFFALO SMALL CAP FUND, INC.
THIS AGREEMENT, made and entered into this ____ day of ____________,
1997, by and between BUFFALO SMALL CAP FUND, INC., (a Maryland corporation,
hereinafter referred to as the "Fund") and XXXXX & BABSON, INC., a corporation
organized under the laws of the State of Maryland (hereinafter referred to as
the "Manager"), and which Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one instrument.
WHEREAS, the Fund was founded and incorporated by the Manager for the
purpose of engaging in the business of investing and reinvesting its property
and assets and to operate as an open-end, diversified, management investment
company, as defined in the Investment Company Act of 1940 as amended (the
"Act"), under which it is registered with the Securities and Exchange
Commission, and
WHEREAS, the Manager was formed for and is engaged in the business of
supplying investment advice and management service to the Fund, as an
independent contractor, and
WHEREAS, the Fund Manager desires to enter into a contractual
arrangement whereby the Manager provides investment advice and management
service to the Fund for a fee,
NOW THEREFORE, in consideration of the mutual promises herein
contained, and other good and valuable consideration, receipt of which is hereby
acknowledged, it is mutually agreed and contracted by and between the parties
hereto that:
1. The Fund hereby employs the Manager, for the period set forth in
Paragraph 5 hereof, and on the terms set forth herein, to render investment
advice and management service to the Fund, subject to the supervision and
direction of the Board of Directors of the Fund. The Manager hereby accepts such
employment and agrees, during such period, to render the services and assume the
obligations herein set forth, for the compensation herein provided. The
Management shall, for all purposes herein, be deemed to be an independent
contractor, and shall, unless otherwise expressly provided and authorized, have
no authority to act for or represent the Fund in any way, or in any other way be
deemed an agent of the Fund.
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The Manager shall furnish the Fund investment management and
administrative services. Investment management shall include analysis, research
and portfolio recommendations consistent with the Fund's objectives and
policies. Administrative services shall include the services and compensation of
such members of the Manager's organization as shall be duly elected officers
and/or Directors of the Fund and such other personnel as shall be necessary to
carry out its normal operations; fees of the independent Directors, the
custodian, the independent public accountant and legal counsel (but not legal
and audit fees and other costs in contemplation of or arising out of litigation
or administrative actions to which the Fund, its officers or Directors are a
party or incurred in anticipation of becoming a party); rent; the cost of a
transfer and dividend disbursing agent or similar in-house services;
bookkeeping; accounting; and all other clerical and administrative functions as
may be reasonable and necessary to maintain the Fund's records and for it to
operate as an open-end management investment company. Exclusive of the
management fee, the Fund shall bear the cost of any interest, taxes, dues, fees
and other charges of governments and their agencies including the cost of
qualifying the Fund's shares for sale in any jurisdiction, brokerage
commissions, or any other expenses incurred by it which are not assumed herein
by the Manager.
All property, equipment and information used by the Manager in the
management and administration of the Fund shall belong to the Manager. Should
the management and administrative relationship between the Fund and the Manager
terminate, the Fund shall be entitled to, and the Manager shall provide the
Fund, a copy of all information and records in the Manager's file necessary for
the Fund to continue its functions, which shall include computer systems and
programs in use as of the date of such termination; but nothing herein shall
prohibit thereafter the use of such information, systems or programs by the
manager, so long as such does not unfairly interfere with the continued
operation of the Fund.
2. As compensation for the services to be rendered to the Fund by the
Manager under the provisions of this agreement, the Fund agrees to pay
semimonthly to the Manager an annual fee based on the average total net assets
of the Fund computed daily in accordance with its Certificate of Incorporation
and By-Laws as follows:
a. one percent (1%) of the average total net assets of the Fund.
b. Should the Fund's normal operating expenses exclusive of taxes,
interest, brokerage commission and extraordinary costs exceed limits established
by any law, rule or regulation of any jurisdiction in which the Fund's shares
are
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registered for sale, the Manager shall reimburse the Fund in the
amount of the excess.
3. It is understood and agreed that the services to be rendered by the
Manager to the Fund under the provisions of the Agreement are not to be deemed
exclusive, and the Manager shall be free to render similar or different services
to others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.
4. It is understood and agreed that the Directors, officers, agents,
employees, and shareholders of the Fund may be interested in the Manager as
owners, employees, agents or otherwise, and that owners, employees and agents of
the Manager may be interested in the Fund as shareholders or otherwise. It is
understood and agreed that shareholders, officers, Directors, and other
personnel of the Manager are and may continue to be officers and Directors of
the Fund, but that they receive no remuneration from the Fund solely for acting
in those capacities.
5. This Agreement shall become effective pursuant to its approval by
the Fund's Board of Directors and by the vote of a majority of the outstanding
shares of the Fund as prescribed by the Act. It shall remain in force through
the 31st day of October, 1999, and thereafter may be renewed for successive
periods not exceeding one year only so long as such renewal and continuance is
specifically approved at least annually by the Board of Directors or by vote of
a majority of the outstanding shares of the Fund as prescribed by the Act, and
only if the terms and the renewal of this Agreement have been approved by a vote
of a majority of the Directors of the Fund including a majority of the Directors
who are not parties to the Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
No amendment to this Agreement shall be effective unless the terms thereof have
been approved by the vote of a majority of outstanding shares of the Fund as
prescribed by the Act and by vote of a majority of the Directors of the Fund who
are not parties to the Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval. It
shall be the duty of the Directors of the Fund to request and evaluate, and the
duty of the Manager to furnish, such information as may reasonably be necessary
to evaluate the terms of this Agreement and any amendment thereto. This
Agreement may be terminated at any time, without the payment of any penalty, by
the Directors of the Fund, or by the vote of a majority of the outstanding
voting shares of the Fund as prescribed by the Act on not more than sixty days
written notice to the Manager, and it may be terminated by the Manager upon not
less than sixty days written notice to the Fund. It shall terminate
automatically in the event of its assignment by either party unless the parties
hereby, by agreement, obtain an exemption from the Securities and Exchange
Commission from the provisions of the Act pertaining to the subject
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matter of this paragraph. Any notice, request or instruction provided for
herein, or for the giving of which, the occasion may arise hereunder, shall be
deemed duly given, if in writing and mailed by registered mail, postage prepaid,
addressed to the regular executive office of the Fund or the Manager as the case
may be. As used in this Agreement, the terms "assignment", "a majority of the
outstanding voting shares", and "interested persons" shall have the same meaning
as similar terms contained in the Act.
6. It is specifically provided in this Agreement that the Manager is to
secure the services of XXXXXXXXX CAPITAL MANAGEMENT, INC. of Shawnee Mission,
Kansas (at the sole expense of the Manager), as its Investment Counsel to
furnish advice and recommendations with respect to the purchase and sale of
securities and the making of portfolio commitments; to place at the disposal of
the Manager such statistical information as may reasonably be required and in
general to superintend the investments of the Fund, subject to the control and
approval of the Board of Directors of the Manager and the Board of Directors of
the Fund.
It is also specifically provided in this Agreement that the
Manager is to provide all clerical and administrative functions (at its own
expense) as may be reasonable and necessary to maintain the Fund's records and
for it to operate as an open-end management investment company, including
serving as transfer and dividend disbursing agent.
7. As a condition of this agreement, the Fund shall have the right to
use the name "BUFFALO" as part of its name, so long as the Manager, or any
successor in interest, continues as a manager to the Fund. However, nothing
herein shall prohibit the right of the Manager from granting to another
investment company with the Manager as its manager, and which has investment
objectives and policies different from those of the Fund, to use in its name the
name "BUFFALO". Should the Fund terminate the Manager, or its successor, as its
investment manager, either XXXXXXXXX CAPITAL MANAGEMENT, INC., or its respective
successors in interest, may elect to notify the Fund in writing that permission
to use the name "BUFFALO" has been withdrawn, whereupon the Fund, its officers,
directors and shareholders, expressly agree to take all necessary corporate
action and to proceed expeditiously to change the name of the Fund and not use
any other name or take any other action which would indicate the Fund's
continued association with the Manager. If the use of the name "BUFFALO" is so
withdrawn as aforesaid, the Fund, its officers, directors and shareholders,
understand and agree that there shall be no limitation with respect to the
future use of the name "BUFFALO" by the Manager, or its successor in interest,
or with the permission of the Manager, or its successor.
8. It is further agreed that the provisions of Paragraph 7 shall inure
to the benefit of the Manager and may be imposed by it
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or any successor in interest as if it or such successor in interest
were parties to this Agreement.
10. The Manager shall not be liable for any error in judgment or
mistake at law for any loss suffered by the Fund in connection with any matters
to which this Agreement relates, except that nothing herein contained shall be
construed to protect the Investment Manager against any liability by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
or by reckless disregard of its obligations or duties under this Agreement.
11. This Agreement may not be amended, transferred, assigned, sold or
in any manner hypothecated or pledged nor may any new Agreement become effective
without affirmative vote or written consent of the holders of a majority of the
shares of the Fund.
BUFFALO SMALL CAP FUND, INC.
By
ATTEST:
XXXXX & XXXXXX, INC.
By
ATTEST:
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