EXHIBIT d.1
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT made as of the 29th day of
January, 2002, by and between XXXXX XXXXXXXX XXXXXXX MUTUAL FUNDS, a Delaware
business trust (hereinafter called the "Trust"), on behalf of each series of the
Trust listed in Appendix A hereto, as such may be amended from time to time
(hereinafter referred to individually as a "Fund" and collectively as the
"Funds"), and XXXXX XXXXXXXX XXXXXXX INVESTMENT MANAGEMENT, LLC, a California
limited liability company (hereinafter called the "Manager").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company,
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and is engaged in the business of
supplying investment advice, investment management and administrative services,
as an independent contractor; and
WHEREAS, the Trust desires to retain the Manager to render advice and
services to the Funds pursuant to the terms and provisions of this' Agreement,
and the Manager is interested in furnishing said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties hereto, intending to be legally
bound hereby, mutually agree as follows:
1. Appointment of Manager. The Trust hereby employs the Manager and the
Manager hereby accepts such employment, to render investment advice and
management services with respect to the assets of the Funds for the period and
on the terms set forth in this Agreement, subject to the supervision and
direction of the Trust's Board of Trustees.
2. Duties of Manager.
(a) General Duties. The Manager shall act as investment manager to the
Funds and shall supervise investments of the Funds on behalf of the Funds in
accordance with the investment objectives, programs and restrictions of the
Funds as provided in the Trust's governing documents, including, without
limitation, the Trust's Agreement and Declaration of Trust and By-Laws, or
otherwise and such other limitations as the Trustees may impose from time to
time in writing to the Manager. Without limiting the generality of the
foregoing, the Manager shall: (i) furnish the Funds with advice and
recommendations with respect to the investment of each Fund's assets and the
purchase and sale of portfolio securities for the Funds, including the taking of
such other steps as may be necessary to implement such advice and
recommendations; (ii) furnish the Funds with reports. statements and other data
on securities, economic conditions and other pertinent subjects which the
Trust's Board of Trustees may reasonably request; (iii) manage the investments
of the Funds, subject to the ultimate supervision and direction of the Trust's
Board of Trustees; (iv) provide persons satisfactory to the Trust's Board of
Trustees to act as officers and employees of the Trust and the Funds (such
officers and employees, as well as certain trustees, may be trustees, directors,
officers, partners, or employees of the Manager or its affiliates) but not
including personnel to provide limited administrative services to the Fund not
typically provided by the Fund's administrator under separate agreement; and (v)
render to the Trust's Board of Trustees such periodic and special reports with
respect to each Fund's investment activities as the Board may reasonably
request.
(b) Brokerage. The Manager shall place orders for the purchase and sale
of securities either directly with the issuer or with a broker or dealer
selected by the Manager. In placing each Fund's securities trades. it is
recognized that the Manager will give primary consideration to securing the most
favorable price and efficient execution, so that each Fund's total cost or
proceeds in each transaction will be the most favorable under all the
circumstances. Within the framework of this policy, the Manager may consider the
financial responsibility, research and investment information, and other
services provided by brokers or dealers who may effect or be a party to any such
transaction or other transactions to which other clients of the Manager may be a
party.
It is also understood that it is desirable for the Funds that the
Manager have access to investment and market research and securities and
economic analyses provided by brokers and others. It is also understood that
brokers providing such services may execute brokerage transactions at a higher
cost to the Funds than might result from the allocation of brokerage to other
brokers on the basis of seeking the most favorable price and efficient
execution. Therefore, the purchase and sale of securities for the Funds may be
made with brokers who provide such research and analysis, subject to review by
the Trust's Board of Trustees from time to time with
respect to the extent and continuation of this practice to determine whether
each Fund benefits, directly or indirectly, from such practice. It is understood
by both parties that the Manager may select broker-dealers for the execution of
the Funds' portfolio transactions who provide research and analysis as the
Manager may lawfully and appropriately use in its investment management and
advisory capacities, whether or not such research and analysis may also be
useful to the Manager in connection with its services to other clients.
On occasions when the Manager deems the purchase or sale of a security
to be in the best interest of one or more of the Funds as well as of other
clients, the Manager, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be so purchased or sold in order to
obtain the most favorable price or lower brokerage commissions and the most
efficient execution. In such event, allocation of the securities so purchased or
sold. as well as the expenses incurred in the transaction, will be made by the
Manager in the manner it considers to be the most equitable and consistent with
its fiduciary obligations to the Funds and to such other clients.
(c) Administrative Services. The Manager shall oversee the
administration of the Funds' business and affairs, although the provision of
administrative services, to the extent not covered by subparagraphs (a) or (b)
above, is not the obligation of the Manager under this Agreement. Not
with-standing any other provisions of this Agreement, the Manager shall be
entitled to reimbursement from the Funds for all or a portion of the reasonable
costs and expenses, including salary, associated with the provision by Manager
of personnel to render administrative services to the Funds.
3. Best Efforts and Judgment. The Manager shall use its best judgment
and efforts in rendering the advice and services to the Funds as contemplated by
this Agreement.
4. Independent Contractor. The Manager shall, for all purposes herein,
be deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Funds in any way, or in any way be deemed an agent for the Trust or
for the Funds. It is expressly understood and agreed that the services to be
rendered by the Manager to the Funds under the provisions of this 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.
5. Manager's Personnel. The Manager shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Manager shall be
deemed to include persons employed or retained by the Manager to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information. advice and assistance as
the Manager or the Trust's Board of Trustees may desire and reasonably request.
6. Reports by Funds to Manager. Each Fund will from time to time
furnish to the Manager detailed statements of its investments and assets. and
information as to its investment objective and needs, and will make available to
the Manager such financial reports, proxy statements, legal and other
information relating to each Fund's investments as may be in its possession or
available to it, together with such other information as the Manager may
reasonably request.
7. Expenses.
(a) With respect to the operation of each Fund, the Manager is
responsible for (i) the compensation of any of the Trust's trustees. officers.
and employees who are affiliates of the Manager (but not the compensation of
employees performing services in connection with expenses which are the Fund's
responsibility under Subparagraph 7(b) below), (ii) the expenses of printing and
distributing the Funds' prospectuses, statements of additional information, and
sales and advertising materials (but not the legal, auditing or accounting fees
attendant thereto) to prospective investors (but not to existing shareholders),
and (iii) providing office space and equipment reasonably necessary for the
operation of the Funds.
(b) Each Fund is responsible for and has assumed the obligation for
payment of all of its expenses. other than as stated in Subparagraph 7(a) above,
including but not limited to: fees and expenses incurred in connection with the
issuance, registration and transfer of its shares; brokerage and commission
expenses; all expenses of transfer, receipt, safekeeping, servicing and
accounting for the cash, securities and other property of the Trust for the
benefit of the Funds including all fees and expenses of its custodian.
shareholder services agent and accounting services agent; interest charges on
any borrowings; costs and expenses of pricing and calculating its daily net
asset value and of maintaining its books of account required under the 1940 Act;
taxes, if any;
expenditures in connection with meetings of each Fund's shareholders and Board
of Trustees that are properly payable by the Fund; salaries and expenses of
officers and fees and expenses of members of the Trust's Board of Trustees or
members of any advisory board or committee who are not members of, affiliated
with or interested persons of the Manager; insurance premiums on property or
personnel of each Fund which inure to its benefit, including liability and
fidelity bond insurance; the cost of preparing and printing reports, proxy
statements, prospectuses and statements of additional information of the Fund or
other communications for distribution to existing shareholders; legal. auditing
and accounting fees: trade association dues; fees and expenses (including legal
fees) of registering and maintaining registration of its shares for sale under
federal and applicable state and foreign securities laws; all expenses of
maintaining and servicing shareholder accounts. including all charges for
transfer. shareholder recordkeeping, dividend disbursing. redemption, and other
agents for the benefit of the Funds, if any; and all other charges and costs of
its operation plus any extraordinary and non-recurring expenses. except as
herein otherwise prescribed.
(c) To the extent the Manager incurs any costs by assuming expenses
which are an obligation of a Fund as set forth herein, such Fund shall promptly
reimburse the Manager for such costs and expenses. except to the extent the
Manager has otherwise agreed to bear such expenses. To the extent the services
for which a Fund is obligated to pay are performed by the Manager, the Manager
shall be entitled to recover from such Fund to the extent of the Manager's
actual costs for providing such services.
8. Investment Advisory and Management Fee.
(a) Each Fund shall pay to the Manager, and the Manager agrees to
accept, as full compensation for all administrative and investment management
and advisory services furnished or provided to such Fund pursuant to this
Agreement, a management fee at the annual rate set forth in the Fee Schedule
attached hereto as Appendix A, as may be amended in writing from time to time by
the Trust and the Manager.
(b) The management fee shall be accrued daily by each Fund and paid to
the Manager on the first business day of the succeeding month.
(c) The initial fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this Agreement
and shall be prorated as set forth below. If this Agreement is terminated before
the end of any month, the fee to the Manager shall be prorated for the portion
of any month in which this Agreement is in effect which is not a complete month
according to the proportion which the number of calendar days in the month
during which the Agreement is in effect bears to the number of calendar days in
the month, and shall be payable within ten (10) days after the date of
termination.
(d) The Manager may reduce any portion of the compensation or
reimbursement of expenses due to it pursuant to this Agreement and may agree to
make payments to limit the expenses which are the responsibility of a Fund under
this Agreement. Any such reduction or payment shall be applicable only to. such
specific reduction or payment and shall not constitute an agreement to reduce
any future compensation or reimbursement due to the Manager hereunder or to
continue future payments. Any such reduction will be agreed to prior to accrual
of the related expense or fee and will be estimated daily and reconciled and
paid on a monthly basis. Any fee withheld pursuant to this paragraph from the
Manager shall be reimbursed by the appropriate Fund to the Manager in the first,
second or third (or any combination thereof) fiscal year next succeeding the
fiscal year of the withholding if the aggregate expenses for the next succeeding
fiscal year, second succeeding fiscal year or third succeeding fiscal year do
not exceed any more restrictive limitation to which the Manager has agreed. The
Manager may elect to seek reimbursement for the oldest reductions and waivers
before payment by a Fund of fees or expenses for the current year.
(e) The Manager may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement prior to the time such compensation or reimbursement has accrued as a
liability of the Fund. Any such agreement shall be applicable only with respect
to the specific items covered thereby and shall not constitute, agreement not to
require payment of any future compensation or reimbursement due to the Manager
hereunder.
9. Fund Share Activities of Manager's Officers and Employees. The
Manager agrees that neither it nor any of its officers or employees shall take
any short position in the shares of the Funds. This prohibition shall not
prevent the purchase of such shares by any of the officers or bona fide
employees of the Manager or any trust, pension, profit-sharing or other benefit
plan for such persons or affiliates thereof, at a price not less than the net
asset value thereof at the time of purchase, as allowed pursuant to rules
promulgated under the 1940 Act.
10. Conflicts with Trust's Governing Documents and Applicable Laws.
Nothing herein contained shall be deemed to require the Trust or the Funds to
take any action contrary to the Trust's Agreement and Declaration of
Trust, By-Laws, or any applicable statute or regulation, or to relieve or
deprive the Board of Trustees of the Trust of its responsibility for and control
of the conduct of the affairs of the Trust and Funds.
11. Manager's Liabilities.
(a) In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the obligations or duties hereunder on the part of the
Manager, the Manager shall not be subject to liability to the Trust or the Funds
or to any shareholder of the Funds for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security by the Funds;
provided, however, that this provision shall not be construed as a waiver or
limitation of any rights which the Trust or the Funds may have under applicable
federal securities laws.
(b) The Funds shall indemnify and hold harmless the Manager and the
members, officers and employees of the Manager (any such person, an "Indemnified
Party") against any loss, liability, claim, damage or expense (including the
reasonable cost of investigating and defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the Indemnified Party's performance or nonperformance
of any duties under this Agreement; provided, however, that nothing herein shall
be deemed to protect any Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties hereunder or by
reason of reckless disregard of obligations and duties under this Agreement and
provided, further, that this provision shall not be construed as a waiver or
limitation of any rights which the Trust or the Funds may have under applicable
federal securities laws.
(c) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or officer of the Manager (or its managing
members), from liability in violation of Sections 17(h) and (i) of the 1940 Act.
12. Non-Exclusivity. The Trust's employment of the Manager is not an
exclusive arrangement. and the Trust may from time to time employ other
individuals or entities to furnish it with the services provided for herein. If
this Agreement is terminated with respect to any Fund. this Agreement shall
remain in full force and effect with respect to all other Funds listed on
Appendix A hereto. as the same may be amended.
13. Tenn. This Agreement shall become effective on the date on the
first page and shall remain in effect for a period of two (2) years, unless
sooner terminated as hereinafter provided. This Agreement shall continue in
effect thereafter for additional periods not exceeding one (1) year so long as
such continuation is approved for each Fund at least annually by (i) the Board
of Trustees of the Trust or by the vote of a majority of the outstanding voting
securities of each Fund and (ii) the vote of a majority of the Trustees of the
Trust who are not parties to this Agreement nor interested persons thereof, cast
in person at a meeting called for the purpose of voting on such approval.
14. Termination. This Agreement may be terminated by the Trust on
behalf of anyone or more of the Funds at any time without payment of any
penalty. by the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of a Fund. upon sixty (60) days' written notice to
the Manager, and by the Manager upon sixty (60) days' written notice to a Fund.
15. Termination by Assignment. This Agreement shall terminate
automatically in the event of any transfer or assignment thereof. as defined in
the 1940 Act.
16. Transfer, Assignment. This Agreement may not be transferred.
assigned. sold or in any manner hypothecated or pledged without the affirmative
vote or written consent of the holders of a majority of the outstanding voting
securities of each Fund.
17. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
18. Definitions. The terms "majority of the outstanding voting
securities" and "interested persons' shall have the meanings as set forth in the
1940 Act.
19. Notice of Declaration of Trust. The Manager agrees that the Trust's
obligations under this Agreement shall be limited to the Funds and to their
assets. and that the Manager shall not seek satisfaction of any such obligation
from the shareholders of the Funds nor from any trustee. officer. employee or
agent of the Trust or the Funds.
20. Captions. 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 affect their construction or effect.
21. Governing Law. This Agreement shall be governed by. and construed
in accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof: provided that nothing herein shall be
construed to preempt. or to be inconsistent with. any federal law. regulation or
rule, including the 1940 Act and the Investment Advisers Act of 1940, as
amended. and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, all on the day and
year first above written.
XXXXX XXXXXXXX XXXXXXX MUTUAL FUNDS
By: /s/ Xxxxx Xxxxxx
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Title: Treasurer
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XXXXX XXXXXXXX XXXXXXX INVESTMENT MANAGEMENT, LLC
By: /s/ Xxxxx Xxxxxx
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Title: Chief Operating Officer
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APPENDIX A TO
INVESTMENT MANAGEMENT
AGREEMENT
FEE SCHEDULE
NAME OF FUND APPLICABLE FEE EFFECTIVE DATE
------------ -------------- --------------
Xxxxx Xxxxxxxx Xxxxxxx Large Cap Fund 0.75% January 29, 2002
Xxxxx Xxxxxxxx Xxxxxxx Small-Mid Cap Fund 0.85% January 29, 2002
Xxxxx Xxxxxxxx Xxxxxxx International Fund 0.95% January 29, 2002
Xxxxx Xxxxxxxx Xxxxxxx Intermediate Total Return Bond Fund 0.50% January 29, 0000
Xxxxx Xxxxxxxx Xxxxxxx Xxxxxxxxxx Intermediate 0.50% January 29, 2002
Tax-Free Bond Fund
XXXXX XXXXXXXX XXXXXXX MUTUAL FUNDS
By: /s/ Xxxxx Xxxxxx
----------------
Title: Treasurer
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XXXXX XXXXXXXX XXXXXXX INVESTMENT MANAGEMENT, LLC
By: /s/ Xxxxx Xxxxxx
----------------
Title: Chief Operating Officer
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