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INVESTMENT MANAGEMENT AGREEMENT
Between
X. XXXX PRICE SPECTRUM FUND, INC.
and
XXXX XXXXX-XXXXXXX INTERNATIONAL, INC.
INVESTMENT MANAGEMENT AGREEMENT, made as of the 12th
day of November, 1996, by and between X. XXXX PRICE SPECTRUM
FUND, INC., a Maryland corporation (hereinafter called the
"Corporation"), and XXXX XXXXX-XXXXXXX INTERNATIONAL, INC., a
corporation organized and existing under the laws of the State of
Maryland (hereinafter called the "Manager").
W I T N E S S E T H:
WHEREAS, the Corporation is engaged in business as an
open-end management investment company and is registered as such
under the federal Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, the Corporation is authorized to issue shares
of capital stock ("Shares") in the Spectrum International Fund
(the "Fund"), a separate series of the Corporation whose Shares
represent interests in a separate portfolio of securities and
other assets ("Fund Shares"); and
WHEREAS, the Manager is engaged principally in the
business of rendering investment supervisory services and is
registered as an investment adviser under the federal Investment
Advisers Act of 1940, as amended; and
WHEREAS, the Fund desires the Manager to render
investment supervisory services to the Fund in the manner and on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
the mutual promises hereinafter set forth, the parties hereto
agree as follows:
1. Duties and Responsibilities of Manager.
A. Investment Management Services. The Manager
shall act as investment manager and shall supervise and direct
the
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investments of the Fund in accordance with the Fund's investment
objectives, program and restrictions as provided in the
Corporation's prospectus, on behalf of the Fund, as amended from
time to time, and such other limitations as the Fund may impose
by notice in writing to the Manager. The Manager shall obtain
and evaluate such information relating to the economy,
industries, businesses, securities markets and securities as it
may deem necessary or useful in the discharge of its obligations
hereunder and shall formulate and implement a continuing program
for the management of the assets and resources of the Fund in a
manner consistent with its investment objectives. In furtherance
of this duty, the Manager, as agent and attorney-in-fact with
respect to the Corporation, is authorized, in its discretion and
without prior consultation with the Corporation, to:
(i) buy, sell, exchange, convert, and otherwise
trade in any stocks, bonds, and other
securities or assets; and
(ii) place orders and negotiate the commissions (if
any) for the execution of transactions in
securities with or through such brokers,
dealers, underwriters or issuers as the Manager
may select.
B. Financial, Accounting, and Administrative
Services. The Manager shall maintain the existence and records
of the Corporation; maintain the registrations and qualifications
of Fund shares under federal and state law; monitor the
financial, accounting, and administrative functions of the Fund;
maintain liaison with the various agents employed for the benefit
of the Fund by the Corporation (including the Corporation's
transfer agent, custodian, independent accountants and legal
counsel) and assist in the coordination of their activities on
behalf of the Fund.
C. Reports to Fund. The Manager shall furnish to or
place at the disposal of the Corporation or Fund, as appropriate,
such information, reports, evaluations, analyses and opinions as
the Fund may, at any time or from time to time, reasonably
request or as the Manager may deem helpful.
D. Reports and Other Communications to Fund
Shareholders. The Manager shall assist in developing all general
shareholder communications, including regular shareholder
reports.
E. Fund Personnel. The Manager agrees to permit
individuals who are officers or employees of the Manager to serve
(if duly elected or appointed) as officers, directors, members of
any committee of directors, members of any advisory board, or
members of any other committee of the Corporation or Fund,
without remuneration from or other cost to the Fund or the
Corporation.
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F. Personnel, Office Space, and Facilities of
Manager. The Manager at its own expense shall furnish or provide
and pay the cost of such office space, office equipment, office
personnel, and office services as the Manager requires in the
performance of its investment advisory and other obligations
under this Agreement.
2. Allocation of Expenses.
A. Expenses Paid by Manager.
(1) Salaries and Fees of Officers. The Manager
shall pay all salaries, expenses, and fees of the
officers and directors of the Corporation or Fund who
are affiliated with the Manager.
(2) Assumption of Expenses by Manager. The
payment or assumption by the Manager of any expense
of the Corporation or Fund, as appropriate, that the
Manager is not required by this Agreement to pay or
assume shall not obligate the Manager to pay or
assume the same or any similar expense on any
subsequent occasion.
B. Expenses of Fund. All expenses of the
organization, operations, and business of the Corporation or
Fund, as appropriate, not specifically assumed or agreed to be
paid by the Manager as provided in paragraph 2.A. above, will be
paid in accordance with paragraph 2.D. of this Agreement. Such
expenses include the following:
(1) Custody and Accounting Services. All
expenses of the transfer, receipt, safekeeping,
servicing and accounting for the cash, securities,
and other property of the Fund, including all charges
of depositories, custodians, and other agents, if
any;
(2) Shareholder Servicing. All expenses of
maintaining and servicing shareholder accounts,
including all charges of the Fund's transfer,
shareholder recordkeeping, dividend disbursing,
redemption, and other agents, if any;
(3) Shareholder Communications. All expenses of
preparing, setting in type, printing, and
distributing reports and other communications to
shareholders;
(4) Shareholder Meetings. All expenses
incidental to holding meetings of shareholders,
including the printing of notices and proxy material,
and proxy solicitation therefor;
(5) Prospectuses. All expenses of preparing,
setting in type, and printing of annual or more
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frequent revisions of the prospectus and of mailing
them to shareholders;
(6) Pricing. All expenses of computing the
Fund's net asset value per share, including the cost
of any equipment or services used for obtaining price
quotations;
(7) Communication Equipment. All charges for
equipment or services used for communication between
the Manager or the Corporation or the Fund and the
custodian, transfer agent or any other agent selected
by the Corporation or Fund;
(8) Legal and Accounting Fees and Expenses. All
charges for services and expenses of the
Corporation's legal counsel and independent auditors,
for the benefit of the Fund;
(9) Directors' Fees and Expenses. All
compensation of directors, other than those
affiliated with the Manager, and all expenses
incurred in connection with their service;
(10) Federal Registration Fees. All fees and
expenses of registering and maintaining the
registration of the Corporation under the Act and the
registration of Fund Shares under the Securities Act
of 1933, as amended (the "'33 Act"), including all
fees and expenses incurred in connection with the
preparation, setting in type, printing, and filing of
any registration statement and prospectus under the
'33 Act or the Act, and any amendments or supplements
that may be made from time to time;
(11) State Registration Fees. All fees and
expenses of qualifying and maintaining qualification
of the Corporation or Fund, as appropriate, and of
Fund Shares for sale under securities laws of various
states or jurisdictions, and of registration and
qualification of the Corporation or Fund, as
appropriate, under all other laws applicable to the
Corporation or Fund, as appropriate, or its business
activities (including registering the Corporation as
a broker-dealer, or any officer of the Corporation or
any person as agent or salesman of the Corporation in
any state);
(12) Issue and Redemption of Fund Shares. All
expenses incurred in connection with the issue,
redemption, and transfer of Fund Shares, including
the expense of confirming all Fund Share
transactions, and of preparing and transmitting the
Fund's stock certificates;
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(13) Bonding and Insurance. All expenses of
bond, liability, and other insurance coverage
required by law or deemed advisable by the board of
directors;
(14) Brokerage Commissions. All brokers'
commissions and other charges incident to the
purchase, sale, or lending of the Fund's portfolio
securities;
(15) Taxes. All taxes or governmental fees
payable by or with respect of the Corporation or
Fund, as appropriate, to federal, state, or other
governmental agencies, domestic or foreign, including
stamp or other transfer taxes;
(16) Trade Association Fees. All fees, dues, and
other expenses incurred in connection with the
Corporation's or Fund's, as appropriate, membership
in any trade association or other investment
organization; and
(17) Nonrecurring and Extraordinary Expenses.
Such nonrecurring expenses as may arise, including
the costs of actions, suits, or proceedings to which
the Corporation or Fund, as appropriate, is a party
and the expenses the Corporation or Fund, as
appropriate, may incur as a result of its legal
obligation to provide indemnification to its
officers, directors, and agents.
C. Expense Limitation. To the extent that the
aggregate expenses of every character incurred by the Fund in any
fiscal year, excluding interest, taxes, brokerage, and other
expenditures which are capitalized in accordance with generally
accepted accounting principles and extraordinary expenses, shall
exceed the limit ("State Expense Limit") prescribed by any state
in which the Fund's shares are qualified for sale, such excess
amount shall be the liability of the Manager to pay in the manner
specified below. To determine the Manager's liability for the
Fund's expenses, the expenses of the Fund shall be annualized
monthly as of the last day of the month. If the annualized
expenses for any month exceed the State Expense Limit, the
Manager shall remit to the Fund the amount in excess of such
Limit; provided, however, that an adjustment shall be made on or
before the last day of the first month of the next succeeding
fiscal year if the aggregate expenses for the fiscal year do not
exceed the State Expense Limit.
D. Payment of Spectrum Fund Expenses. The parties
hereto acknowledge that, pursuant to a Special Servicing
Agreement entered into between and among the Corporation, the
Manager, various funds in which the Corporation may invest (the
"Underlying Price Funds") and X. Xxxx Price Services, Inc., if
the Board of
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Directors/Trustees of any Underlying Price Fund determines that
the aggregate expenses of the Corporation are less than the
estimated savings to the Underlying Price Fund from the operation
of the Corporation, the Underlying Price Fund will bear those
expenses in proportion to the average daily value of its shares
owned by the Corporation, provided further that no Underlying
Price Fund will bear such expenses in excess of the estimated
savings to it ("Excess Expenses"). However, as part of the
consideration for the Fund entering into this Agreement, the
Manager hereby agrees that it will bear any such Excess Expense.
3. Management Fee. The Fund shall not pay the
Manager a fee for the services rendered hereunder.
4. Brokerage. Subject to the approval of the board
of directors, the Manager, in carrying out its duties under
Paragraph 1.A., may cause the Corporation, with respect to the
Fund, to pay a broker-dealer which furnishes brokerage or
research services [as such services are defined under Section
28(e) of the Securities Exchange Act of 1934, as amended (the
"'34 Act")], a higher commission than that which might be charged
by another broker-dealer which does not furnish brokerage or
research services or which furnishes brokerage or research
services deemed to be of lesser value, if such commission is
deemed reasonable in relation to the brokerage and research
services provided by the broker-dealer, viewed in terms of either
that particular transaction or the overall responsibilities of
the Manager with respect to the accounts as to which it exercises
investment discretion (as such term is defined under Section
3(a)(35) of the '34 Act).
5. Manager's Use of the Services of Others. The
Manager may (at its cost except as contemplated by Paragraph 4 of
this Agreement) employ, retain or otherwise avail itself of the
services or facilities of other persons or organizations for the
purpose of providing the Manager or the Corporation or Fund, as
appropriate, with such statistical and other factual information,
such advice regarding economic factors and trends, such advice as
to occasional transactions in specific securities or such other
information, advice or assistance as the Manager may deem
necessary, appropriate or convenient for the discharge of its
obligations hereunder or otherwise helpful to the Corporation or
Fund, as appropriate, or in the discharge of Manager's overall
responsibilities with respect to the other accounts which it
serves as investment manager.
6. Ownership of Records. All records required to be
maintained and preserved by the Corporation or Fund pursuant to
the provisions of rules or regulations of the Securities and
Exchange Commission under Section 31(a) of the Act and maintained
and preserved by the Manager on behalf of the Corporation or
Fund, as appropriate, are the property of the Corporation or
Fund, as appropriate, and will be surrendered by the Manager
promptly on request by the Corporation or Fund, as appropriate.
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7. Reports to Manager. The Corporation or Fund, as
appropriate, shall furnish or otherwise make available to the
Manager such prospectuses, financial statements, proxy
statements, reports, and other information relating to the
business and affairs of the Corporation or Fund, as appropriate,
as the Manager may, at any time or from time to time, reasonably
require in order to discharge its obligations under this
Agreement.
8. Services to Other Clients. Nothing herein
contained shall limit the freedom of the Manager or any
affiliated person of the Manager to render investment supervisory
and corporate administrative services to other investment
companies, to act as investment manager or investment counselor
to other persons, firms or corporations, or to engage in other
business activities; but so long as this Agreement or any
extension, renewal or amendment hereof shall remain in effect or
until the Manager shall otherwise consent, the Manager shall be
the only investment manager to the Fund.
9. Limitation of Liability of Manager. Neither the
Manager nor any of its officers, directors, or employees, nor any
person performing executive, administrative, trading, or other
functions for the Corporation or Fund (at the direction or
request of the Manager) or the Manager in connection with the
Manager's discharge of its obligations undertaken or reasonably
assumed with respect to this Agreement, shall be liable for any
error of judgment or mistake of law or for any loss suffered by
the Corporation or Fund in connection with the matters to which
this Agreement relates, except for loss resulting from willful
misfeasance, bad faith, or gross negligence in the performance of
its or his duties on behalf of the Corporation or Fund or from
reckless disregard by the Manager or any such person of the
duties of the Manager under this Agreement.
10. Use of Manager's Name. The Corporation or Fund
may use the name "X. Xxxx Price Spectrum Fund, Inc." or any other
name derived from the name "X. Xxxx Price" only for so long as
this Agreement or any extension, renewal or amendment hereof
remains in effect, including any similar agreement with any
organization which shall have succeeded to the business of the
Manager as investment manager. At such time as this Agreement or
any extension, renewal or amendment hereof, or such other similar
agreement shall no longer be in effect, the Corporation or Fund
will (by corporate action, if necessary) cease to use any name
derived from the name "X. Xxxx Price," any name similar thereto
or any other name indicating that it is advised by or otherwise
connected with the Manager, or with any organization which shall
have succeeded to the Manager's business as investment manager.
11. Term of Agreement. The term of this Agreement
shall begin on the date first above written, and unless sooner
terminated as hereinafter provided, this Agreement shall remain
in effect
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through April 30, 1998. Thereafter, this Agreement shall continue
in effect from year to year, with respect to the Fund, subject to
the termination provisions and all other terms and conditions
hereof, so long as: (a) such continuation shall be specifically
approved at least annually by the board of directors of the
Corporation or by vote of a majority of the outstanding voting
securities of the Fund and, concurrently with such approval by
the board of directors or prior to such approval by the holders
of the outstanding voting securities of the Fund, as the case may
be, by the vote, cast in person at a meeting called for the
purpose of voting on such approval, of a majority of the
directors of the Corporation, with respect to the Fund, who are
not parties to this Agreement or interested persons of any such
party; and (b) the Manager shall not have notified the
Corporation, in writing, at least 60 days prior to April 30, 1998
or prior to April 30th of any year thereafter, that it does not
desire such continuation. The Manager shall furnish to the
Corporation, promptly upon its request, such information as may
reasonably be necessary to evaluate the terms of this Agreement
or any extension, renewal or amendment hereof.
12. Amendment and Assignment of Agreement. This
Agreement may not be amended or assigned without the affirmative
vote of a majority of the outstanding voting securities of the
Fund, and this Agreement shall automatically and immediately
terminate in the event of its assignment.
13. Termination of Agreement. This Agreement may be
terminated by either party hereto, without the payment of any
penalty, upon 60 days' prior notice in writing to the other
party; provided, that in the case of termination by the
Corporation, with respect to the Fund, such action shall have
been authorized by resolution of a majority of the directors who
are not parties to this Agreement or interested persons of any
such party, or by vote of a majority of the outstanding voting
securities of the Fund.
14. Miscellaneous.
A. Captions. The captions in this Agreement are
included for convenience of reference only and in no way define
or delineate any of the provisions hereof or otherwise affect
their construction or effect.
B. Interpretation. Nothing herein contained shall
be deemed to require the Corporation to take any action contrary
to its Articles of Incorporation or By-Laws, or any applicable
statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the board of
directors of the Corporation of its responsibility for and
control of the conduct of the affairs of the Fund.
C. Definitions. Any question of interpretation of
any term or provision of this Agreement having a counterpart in
or
PAGE 9
otherwise derived from a term or provision of the Act shall be
resolved by reference to such term or provision of the Act and to
interpretations thereof, if any, by the United States courts or,
in the absence of any controlling decision of any such court, by
rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the Act. Specifically, the
terms "vote of a majority of the outstanding voting securities,"
"interested person," "assignment," and "affiliated person," as
used in Paragraphs 2, 7, 10, 11, and 12 hereof, shall have the
meanings assigned to them by Section 2(a) of the Act. In
addition, where the effect of a requirement of the Act reflected
in any provision of this Agreement is relaxed by a rule,
regulation or order of the Securities and Exchange Commission,
whether of special or of general application, such provision
shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto
duly authorized and their respective seals to be hereunto
affixed, as of the day and year first above written.
Attest: X. XXXX PRICE SPECTRUM FUND, INC.
/S/XXXXXXXX X. XXXXXXX By: /S/XXXXX X. XXXXX
Xxxxxxxx X. Xxxxxxx Xxxxx X. Xxxxx
Assistant Secretary Chairman of the Board
Attest: XXXX XXXXX-XXXXXXX INTERNATIONAL,
INC.
/S/XXXXXXX X. XXX XXXX By: /S/M. XXXXX XXXXX
Xxxxxxx X. Xxx Xxxx M. Xxxxx Xxxxx
Assistant Secretary Chairman of the Board