MANAGEMENT AGREEMENT
TO: MIDWEST GROUP FINANCIAL SERVICES, INC.
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Dear Sirs:
Midwest Group Tax Free Trust (hereinafter referred to as the
"Trust") herewith confirms its agreement with you.
The Trust has been organized to engage in the business of an
investment company. The Government Housing Tax-Exempt Fund (the
"Fund") has been established as a series of the Trust. You have
been selected to act as the investment adviser of the Fund and to
provide certain other services, as more fully set forth below,
and you are willing to act as such investment adviser and to
perform such services under the terms and conditions hereinafter
set forth. Accordingly, the Trust agrees with you as follows
upon the date of the execution of this Agreement.
1. ADVISORY SERVICES
-----------------
You will regularly provide the Fund with such investment
advice as you in your discretion deem advisable and will furnish
a continuous investment program for the Fund consistent with its
investment objectives and policies. You will determine what
securities shall be purchased for the Fund, what portfolio
securities shall be held or sold by the Fund, and what portion of
the Fund's assets shall be held uninvested, subject always to the
Fund's investment objectives, policies and restrictions, as each
of the same shall be from time to time in effect, and subject
further, to such policies and instructions as the Board of
Trustees (the "Board") of the Trust may from time to time
establish and supply to you copies thereof. You will advise and
assist the officers of the Trust in taking such steps as are
necessary or appropriate to carry out the decisions of the Board
and the appropriate committees of the Board regarding the conduct
of the business of the Trust.
2. ALLOCATION OF CHARGES AND EXPENSES
----------------------------------
You will pay the compensation and expenses of any persons
rendering any services to the Fund who are officers, directors,
stockholders or employees of your corporation and will make
available, without expense to the Fund, the services of such of
your employees as may duly be elected officers or trustees of the
Trust, subject to their individual consent to serve and to any
limitations imposed by law.
Notwithstanding the foregoing, the Fund will pay the compensation
and expenses of the Chief Financial Officer of the Trust. The
compensation and expenses of any officers, trustees and employees
of the Trust who are not officers, directors, employees or
stockholders of your corporation will be paid by the Fund.
You will pay all advertising and promotion expenses incurred
in connection with the sale or distribution of the Fund's shares
to the extent such expenses are not assumed by the Fund under the
Trust's Distribution Expense Plans.
The Fund will also be responsible for the payment of all
other operating expenses of the Fund, including fees and expenses
incurred by the Fund in connection with membership in investment
company organizations, brokerage fees and commissions, legal,
auditing and accounting expenses, expenses of registering shares
under federal and state securities laws, insurance expenses,
taxes or governmental fees, fees and expenses of the custodian,
transfer, shareholder service and dividend disbursing agent and
accounting and pricing agent of the Fund, expenses including
clerical expenses of issue, sale, redemption or repurchase of
shares of the Fund, the fees and expenses of trustees of the
Trust who are not affiliated with you, the cost of preparing and
distributing reports and notices to shareholders, the cost of
printing or preparing prospectuses for delivery to the Fund's
shareholders, the cost of printing or preparing stock
certificates or any other documents, statements or reports to
shareholders, expenses of shareholders' meetings and proxy
solicitations, such extraordinary or non-recurring expenses as
may arise, including litigation to which the Fund may be a party
and indemnification of the Trust's officers and trustees with
respect thereto, or any other expense not specifically described
above incurred in the performance of the Fund's obligations. All
other expenses not assumed by you herein incurred by the Fund in
connection with the organization, registration of shares and
operations of the Fund will be borne by the Fund.
3. COMPENSATION OF THE ADVISER
---------------------------
For all of the services to be rendered and payments made as
provided in this Agreement, the Fund will pay you as of the last
day of each month, a fee equal to the annual rate of:
50/100 of 1% of the average value of the daily net
assets of the Fund up to $500,000,000; 45/100 of 1% of
such assets from $500,000,000 to $1,000,000,000; and
40/100 of 1% of such assets in excess of
$1,000,000,000.
The total fees payable during each of the first and second
halves of each fiscal year of the Trust shall not exceed the
semiannual total of the daily fee accruals requested by you
during the applicable six month period. The average value of net
assets shall be determined pursuant to the applicable provisions
of the Declaration of Trust of the Trust or a resolution of the
Board, if required. If, pursuant to such provisions, the
determination of net asset value of the Fund is suspended for any
particular business day, then for the purposes of this paragraph,
the value of the net assets of the Fund as last determined shall
be deemed to be the value of the net assets as of the close of
the business day, or as of such other time as the value of the
Fund's net assets may lawfully be determined, on that day. If
the determination of the net asset value of the Fund's shares has
been suspended for a period including such month, your
compensation payable at the end of such month shall be computed
on the basis of the value of the net assets of the Fund as last
determined (whether during or prior to such month).
You agree that your compensation during any fiscal year
shall be reduced by an amount, if any, which the expenses of the
Fund for such fiscal year exceed the lowest applicable expenses
limitation applicable to the Fund imposed by state securities
administrators in states where the Fund's shares are qualified
for sale, as such limitations may be lowered or raised from time
to time. The payment of your compensation at the end of any
month will be reduced or postponed or, if necessary, a refund
will be made to the Fund at the end of such month, so that at no
time will there be any accrued but unpaid liability in excess of
the above expense limitation. You shall refund to the Fund at
the close of each year, the amount of any additional reduction of
your compensation pursuant to this paragraph, provided, however,
that you will not be required to pay the Fund an amount greater
than the fee paid to you by the Fund in respect of such year
pursuant to this Agreement. As used in this paragraph "expenses"
shall mean those expenses included in the applicable expense
limitation and "expense limitation" means a limit on the maximum
annual expenses which may be incurred by an investment company or
a series of an investment company determined by multiplying a
fixed percentage by the average or multiplying more than one such
percentage by different specified amounts of the average of the
values of the daily net assets of the investment company or the
series for a fiscal year. The words "lowest expense limitation"
shall be construed to result in the largest reduction of your
compensation for any fiscal year of the Trust.
Your compensation with respect to each additional series of
the Trust effectively registered for sale in a public offering
after the date of this Agreement shall be determined by the
Board, including a majority of the Trustees who are not
"interested persons" (as defined in the Investment Company Act of
1940) of you or of the Trust, and approved pursuant to the
provisions of Section 15 of the Investment Company Act of 1940.
4. EXECUTION OF PURCHASE AND SALE ORDERS
-------------------------------------
In connection with purchases or sales of portfolio
securities for the account of the Fund, it is understood that you
will arrange for the placing of all orders for the purchase and
sale of portfolio securities for the Fund's accounts with brokers
or dealers selected by you, subject to review of this selection
by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and
portfolio brokerage. In the selection of such brokers or dealers
and the placing of such orders, you are directed at all times to
seek for the Fund the best qualitative execution, taking into
account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial
responsibility and responsiveness of the broker or dealer and the
brokerage and research services provided by the broker or dealer.
You should generally seek favorable prices and commission
rates that are reasonable in relation to the benefits received.
In seeking best qualitative execution, you are authorized to
select brokers or dealers who also provide brokerage and research
services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Fund and/or other
accounts over which you exercise investment discretion. You are
authorized to pay a broker or dealer who provides such brokerage
and research services a commission for executing a portfolio
transaction which is in excess of the amount of commission
another broker or dealer would have charged for effecting that
transaction if you determine in good faith that the amount of the
commission is reasonable in relation to the value of the
brokerage and research services provided by the executing broker
or dealer. The determination may be viewed in terms of either a
particular transaction or your overall responsibilities with
respect to the Fund and to accounts over which you exercise
investment discretion. The Trust and you understand that,
although the information may be useful to the Trust and you, it
is not possible to place a dollar value on such information. The
Board shall periodically review the commissions paid by the Fund
to determine if the commissions paid over representative periods
of time were reasonable in relation to the benefits to the Fund.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking
best qualitative execution, you may give consideration to sales
of shares of the Fund as a factor in the selection of brokers and
dealers to execute portfolio transactions of the Fund.
If any occasion should arise in which you give any advice to
clients of yours concerning the shares of the Fund, you will act
solely as investment counsel for such client and not in any way
on behalf of the Trust. Your services to the Fund pursuant to
this Agreement are not to be deemed to be exclusive and it is
understood that you may render investment advice, management and
other services to others.
5. LIMITATION OF LIABILITY OF ADVISER
----------------------------------
You (including your directors, officers, shareholders,
employees, control persons and affiliates of any thereof) shall
not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with the matters to
which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on your part
in the performance of your duties or from the reckless disregard
by you of your obligations and duties under this Agreement
("disabling conduct"). However, you will not be indemnified for
any liability unless (1) a final decision is made on the merits
by a court or other body before whom the proceeding was brought
that you were not liable by reason of disabling conduct, or (2)
in the absence of such a decision, a reasonable determination is
made, based upon a review of the facts, that you were not liable
by reason of disabling conduct, by (a) the vote of a majority of
a quorum of trustees who are neither "interested persons" of the
Trust as defined in the Investment Company Act of 1940 nor
parties to the proceeding ("disinterested, non-party trustees"),
or (b) an independent legal counsel in a written opinion. The
Fund will advance attorneys' fees or other expenses incurred by
you in defending a proceeding, upon the undertaking by or on
behalf of you to repay the advance unless it is ultimately
determined that you are entitled to indemnification, so long as
you meet at least one of the following as a condition to the
advance: (1) you shall provide a security for your undertaking,
(2) the Fund shall be insured against losses arising by reason of
any lawful advances, or (3) a majority of a quorum of the
disinterested, non-party trustees of the Trust, or an independent
legal counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full trial-
type inquiry), that there is reason to believe that you
ultimately will be found entitled to indemnification. Any person
employed by you who may also be or become an employee of the
Trust shall be deemed, when acting within the scope of his
employment by the Trust, to be acting in such employment solely
for the Trust and not as your employee or agent.
6. DURATION AND TERMINATION OF THIS AGREEMENT
------------------------------------------
This Agreement shall remain in force until January 30, 1998
and from year to year thereafter, subject to annual approval by
(i) the Board of the Trust or (ii) a vote of a majority (as
defined in the Investment Company Act of 1940) of the outstanding
voting securities of the Fund, provided that in either event
continuance is also approved by a majority of the trustees who
are not interested persons of you or of the Trust, by a vote cast
in person at a meeting called for the purpose of voting such
approval.
If the shareholders of the Fund fail to approve the
Agreement in the manner set forth above, upon approval of the
Board, you may continue to serve or act in such capacity for the
Fund for the period of time (not exceeding one hundred and twenty
days after the termination of the Agreement) pending required
approval of the Agreement, of a new agreement with you or a
different adviser or other definitive action; provided that the
compensation to be paid by the Fund to you will be equal to the
lesser of your actual costs incurred in furnishing investment
advisory services to the Fund or the amount you would have
received under this Agreement.
This Agreement may, on sixty days' written notice, be
terminated at any time without the payment of any penalty, by the
Board, by a vote of a majority of the outstanding voting
securities of the Fund or by you. This Agreement shall
automatically terminate in the event of its assignment.
7. USE OF NAME
-----------
It is expressly understood that you may use the name
"Midwest..." and "Midwest Group" or any derivation thereof in
connection with another business enterprise, including any
registered investment company with which you are, or may become
associated, so long as such use is permitted under the Investment
Company Act of 1940 and other applicable law.
8. AMENDMENT OF THIS AGREEMENT
---------------------------
No provision of this Agreement may be changed, waived,
discharged or terminated orally, and no amendment of this
Agreement shall be effective until approved by vote of the
holders of a majority of the outstanding voting securities of the
Fund and by the Board, including a majority of the trustees who
are not interested persons of you or of the Trust, cast in person
at a meeting called for the purpose of voting on such approval.
9. LIMITATION OF LIABILITY
-----------------------
The term "Midwest Group Tax Free Trust" means and refers to
the trustees from time to time serving under the Trust's
Declaration of Trust as the same may subsequently thereto have
been, or subsequently hereto be, amended. It is expressly agreed
that the obligations of the Fund hereunder shall not be binding
upon any of the trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the
trust property of the Fund, as provided in the Declaration of
Trust of the Trust. The execution and delivery of this Agreement
have been authorized by the trustees of the Trust and the
shareholders of the Fund and signed by the officers of the Trust,
acting as such, and neither such authorization by such trustees
and shareholders nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind
only the trust property of the Fund as provided in the Trust's
Declaration of Trust.
10. MISCELLANEOUS
-------------
The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
Agreement.
If you are in agreement with the foregoing, please sign the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract upon the date thereof.
Yours very truly,
ATTEST: MIDWEST GROUP TAX FREE TRUST
-------------------------- By:-------------------------
Dated: February 1, 1996
ACCEPTANCE
-----------
The foregoing Agreement is hereby accepted.
ATTEST: MIDWEST GROUP FINANCIAL
SERVICES, INC.
------------------------- By:-------------------------
Dated: February 1, 1996
