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EXHIBIT 99.B5
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 28th day of May, 1994, by and
between XXXXXX DIVERSIFIED INCOME FUND, a Massachusetts
business trust (the "Fund"), and XXXXXX FINANCIAL SERVICES,
INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund is an open-end management investment
company registered under the Investment Company Act of 1940,
the shares of beneficial interest ("Shares") of which are
registered under the Securities Act of 1933;
WHEREAS, the Fund is authorized to issue Shares in
separate series or portfolios with each representing the
interests in a separate portfolio of securities and other
assets;
WHEREAS, the Fund currently offers or intends to offer
Shares in one portfolio, the Initial Portfolio, together with
any other Fund portfolios which may be established later and
served by the Adviser hereunder, being herein referred to
collectively as the "Portfolios" and individually referred to
as a "Portfolio"; and
WHEREAS, the Fund desires at this time to retain the
Adviser to render investment advisory and management services
to the Initial Portfolio, and the Adviser is willing to
render such services;
NOW THEREFORE, in consideration of the mutual covenants
hereinafter contained, it is hereby agreed by and between the
parties hereto as follows:
1. The Fund hereby employs the Adviser to act as the
investment adviser for the Initial Portfolio and other
Portfolios hereunder and to manage the investment and
reinvestment of the assets of each such Portfolio in
accordance with the applicable investment objectives and
policies and limitations, and to administer the affairs of
each such Portfolio to the extent requested by and subject to
the supervision of the Board of Trustees of the Fund for the
period and upon the terms herein set forth, and to place
orders for the purchase or sale of portfolio securities for
the Fund's account with brokers or dealers selected by it;
and, in connection therewith, the Adviser is authorized as
the agent of the Fund to give instructions to the Custodian
of the Fund as to the deliveries of securities and payments
of cash for the account of the Fund. In connection with the
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selection of such brokers or dealers and the placing of such
orders, the Adviser is directed to seek for the Fund best
execution of orders. Subject to such policies as the Board
of Trustees of the Fund determines, the Adviser shall not be
deemed to have acted unlawfully or to have breached any duty,
created by this Agreement or otherwise, solely by reason of
its having caused the Fund to pay a broker or dealer an
amount of commission for effecting a securities transaction
in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if
the Adviser determined in good faith that such amount of
commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or
dealer viewed in terms of either that particular transaction
or the Adviser's overall responsibilities with respect to the
clients of the Adviser as to which the Adviser exercises
investment discretion. The Fund recognizes that all research
services and research that the Adviser receives or generates
are available for all clients, and that the Fund and other
clients may benefit thereby. The investment of funds shall
be subject to all applicable restrictions of the Agreement
and Declaration of Trust and By-Laws of the Fund as may from
time to time be in force.
The Adviser accepts such employment and agrees during
such period to render such services, to furnish office
facilities and equipment and clerical, bookkeeping and
administrative services for the Fund, to permit any of its
officers or employees to serve without compensation as
trustees or officers of the Fund if elected to such positions
and to assume the obligations herein set forth for the
compensation herein provided. The Adviser shall for all
purposes herein provided be deemed to be an independent
contractor and, unless otherwise expressly provided or
authorized, shall have no authority to act for or represent
the Fund in any way or otherwise be deemed an agent of the
Fund. It is understood and agreed that the Adviser, by
separate agreements with the Fund, may also serve the Fund in
other capacities.
2. In the event that the Fund establishes one or more
portfolios other than the Initial Portfolio with respect to
which it desires to retain the Adviser to render investment
advisory and management services hereunder, it shall notify
the Adviser in writing. If the Adviser is willing to render
such services, it shall notify the Fund in writing whereupon
such portfolio or portfolios shall become a Portfolio or
Portfolios hereunder.
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3. For the services and facilities described in Section 1,
the Fund will pay to the Adviser at the end of each calendar
month, an investment management fee for each Portfolio
computed by applying the following annual rates to the
applicable average daily net assets of the Portfolio:
Applicable Average
Daily Net Assets
(Thousands) Annual Rate
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$0 - $ 250,000 .58 of 1%
$ 250,000 - $ 1,000,000 .55 of 1%
$ 1,000,000 - $ 2,500,000 .53 of 1%
$ 2,500,000 - $ 5,000,000 .51 of 1%
$ 5,000,000 - $ 7,500,000 .48 of 1%
$ 7,500,000 - $10,000,000 .46 of 1%
$10,000,000 - $12,500,000 .44 of 1%
Over $12,500,000 .42 of 1%
The fee as computed above shall be computed separately
for, and charged as an expense of, each Portfolio based upon
the average daily net assets of such Portfolio. For the
month and year in which this Agreement becomes effective or
terminates, there shall be an appropriate proration on the
basis of the number of days that the Agreement is in effect
during the month and year, respectively.
4. The services of the Adviser to the Fund under this
Agreement are not to be deemed exclusive, and the Adviser
shall be free to render similar services or other services to
others so long as its services hereunder are not impaired
thereby.
5. In addition to the fee of the Adviser, the Fund shall
assume and pay any expenses for services rendered by a
custodian for the safekeeping of the Fund's securities or
other property, for keeping its books of account, for any
other charges of the custodian, and for calculating the net
asset value of the Fund as provided in the prospectus of the
Fund. The Adviser shall not be required to pay and the Fund
shall assume and pay the charges and expenses of its
operations, including compensation of the trustees (other
than those affiliated with the Adviser), charges and expenses
of independent auditors, of legal counsel, of any transfer or
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dividend disbursing agent, and of any registrar of the Fund,
costs of acquiring and disposing of portfolio securities,
interest, if any, on obligations incurred by the Fund, costs
of share certificates and of reports, membership dues in the
Investment Company Institute or any similar organization,
costs of reports and notices to shareholders, other like
miscellaneous expenses and all taxes and fees payable to
federal, state or other governmental agencies on account of
the registration of securities issued by the Fund, filing of
trust documents or otherwise. The Fund shall not pay or
incur any obligation for any expenses for which the Fund
intends to seek reimbursement from the Adviser as herein
provided without first obtaining the written approval of the
Adviser. The Adviser shall arrange, if desired by the Fund,
for officers or employees of the Adviser to serve, without
compensation from the Fund, as trustees, officers or agents
of the Fund if duly elected or appointed to such positions
and subject to their individual consent and to any
limitations imposed by law.
If expenses borne by the Fund for those Portfolios which
the Adviser manages in any fiscal year (including the
Adviser's fee, but excluding interest, taxes, fees incurred
in acquiring and disposing of portfolio securities,
distribution services fees, extraordinary expenses and any
other expenses excludable under state securities law
limitations) exceed any applicable limitation arising under
state securities laws, the Adviser will reduce its fee or
reimburse the Fund for any excess to the extent required by
such state securities laws. If for any month the expenses of
the Fund properly chargeable to the income account shall
exceed 1/12 of the percentage of average net assets allowable
as expenses, the payment to the Adviser for that month shall
be reduced and if necessary the Adviser shall make a refund
payment to the Fund so that the total net expense will not
exceed such percentage. As of the end of the Fund's fiscal
year, however, the foregoing computations and payments shall
be readjusted so that the aggregate compensation payable to
the Adviser for the year is equal to the percentage
calculated in accordance with Section 3 hereof of the average
net asset value as determined as described herein throughout
the fiscal year, diminished to the extent necessary so that
the total of the aforementioned expense items of the Fund
shall not exceed the expense limitation. The aggregate of
repayments, if any, by the Adviser to the Fund for the year
shall be the amount necessary to limit the said net expense
to said percentage in accordance with the foregoing.
The net asset value for each Portfolio shall be
calculated in accordance with the provisions of the Fund's
prospectus or as the trustees may determine in accordance
with the provisions of the Investment Company Act of 1940.
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On each day when net asset value is not calculated, the net
asset value of a Portfolio shall be deemed to be the net
asset value of such Portfolio as of the close of business on
the last day on which such calculation was made for the
purpose of the foregoing computations.
6. Subject to applicable statutes and regulations, it is
understood that trustees, officers or agents of the Fund are
or may be interested in the Adviser as officers, directors,
agents, shareholders or otherwise, and that the officers,
directors, shareholders and agents of the Adviser may be
interested in the Fund otherwise than as a trustee, officer
or agent.
7. The Adviser shall not be liable for any error of
judgment or of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates,
except loss resulting from willful misfeasance, bad faith or
gross negligence on the part of the Adviser in the
performance of its obligations and duties or by reason of its
reckless disregard of its obligations and duties under this
Agreement.
8. This Agreement shall become effective with respect to
the Initial Portfolio on the date hereof and shall remain in
full force until March 1, 1995, unless sooner terminated as
hereinafter provided. This Agreement shall continue in force
from year to year thereafter with respect to each Portfolio,
but only as long as such continuance is specifically approved
for each Portfolio at least annually in the manner required
by the Investment Company Act of 1940 and the rules and
regulations thereunder; provided, however, that if the
continuation of this Agreement is not approved for a
Portfolio, the Adviser may continue to serve in such capacity
for such Portfolio in the manner and to the extent permitted
by the Investment Company Act of 1940 and the rules and
regulations thereunder.
This Agreement shall automatically terminate in the
event of its assignment and may be terminated at any time
without the payment of any penalty by the Fund or by the
Adviser on sixty (60) days written notice to the other party.
The Fund may effect termination with respect to any Portfolio
by action of the Board of Trustees or by vote of a majority
of the outstanding voting securities of such Portfolio.
This Agreement may be terminated with respect to any
Portfolio at any time without the payment of any penalty by
the Board of Trustees or by vote of a majority of the
outstanding voting securities of such Portfolio in the event
that it shall have been established by a court of competent
jurisdiction that the Adviser or any officer or director of
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the Adviser has taken any action which results in a breach of
the covenants of the Adviser set forth herein.
The terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the meanings set
forth in the Investment Company Act of 1940 and the rules and
regulations thereunder.
Termination of this Agreement shall not affect the right
of the Adviser to receive payments on any unpaid balance of
the compensation described in Section 3 earned prior to such
termination.
9. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
10. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the
other party at such address as such other party may designate
for the receipt of such notice.
11. All parties hereto are expressly put on notice of the
Fund's Agreement and Declaration of Trust and all amendments
thereto, all of which are on file with the Secretary of The
Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This
Agreement has been executed by and on behalf of the Fund by
its representatives as such representatives and not
individually, and the obligations of the Fund hereunder are
not binding upon any of the trustees, officers, or
shareholders of the Fund individually but are binding upon
only the assets and property of the Fund. With respect to
any claim by the Adviser for recovery of that portion of the
investment management fee (or any other liability of the Fund
arising hereunder) allocated to a particular Portfolio,
whether in accordance with the express terms hereof or
otherwise, the Adviser shall have recourse solely against the
assets of that Portfolio to satisfy such claim and shall have
no recourse against the assets of any other Portfolio for
such purpose.
12. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 11 hereof
which shall be construed in accordance with the laws of The
Commonwealth of Massachusetts) the laws of the State of
Illinois.
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13. This Agreement is the entire contract between the
parties relating to the subject matter hereof and supersedes
all prior agreements between the parties relating to the
subject matter hereof.
IN WITNESS WHEREOF, the Fund and the Adviser have caused
this Agreement to be executed as of the day and year first
above written.
XXXXXX DIVERSIFIED INCOME FUND
By: /s/ Xxxx X. Xxxxxx
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Title: Vice President
ATTEST:
/s/ Xxxxxx X. Xxxxxxx
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Title: Asst. Secretary
XXXXXX FINANCIAL SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Title: Sr. Vice President
ATTEST:
/s/ Xxxxx X. Xxxxxxxxxxx
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Title: Asst. Secretary
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