EXHIBIT (g)(i)
MANAGEMENT AGREEMENT
AGREEMENT made as of this 7th day of October, 1996, by and between The
Principled Equity Market Fund, a Massachusetts business trust (the "Fund"), and
F. L. Xxxxxx Investment Management Company, a Maine corporation (the "Manager").
W I T N E S S E T H :
WHEREAS, the Fund is engaged in business as a closed-end management
investment company and is so registered under the Investment Company Act of
1940, as amended; and
WHEREAS, the Manager is engaged in the business of rendering investment
advisory services and is registered under the Investment Advisers Act of 1940,
as amended; and
WHEREAS, the Fund desires to retain the Manager to furnish management
services and the Manager is willing to furnish such services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
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(a) Services Rendered and Expenses Paid by the Manager.
The Manager, subject to the control, direction and supervision of the
Board of Trustees of the Fund and in conformity with applicable laws, third
Agreement, the Fund's Declaration of Trust, By-Laws, registration statements and
amendments thereto, prospectuses and statements of additional information as in
effect from time to time, and stated investment objectives, policies and
restrictions, shall, with its own expense:
(i) manage the investment and reinvestment of the Fund's assets,
and formulate and implement investment programs;
(ii) place all orders for the purchase and sale of portfolio
investments for the Fund's account with brokers or dealers selected by
the Manager;
(iii) supervise the overall conduct of the administration of the
Fund's business and operations, except to the extent that actual
administration is conducted by others with whom the Fund may contract
therefor; and
(iv) furnish to the Fund office space, facilities, equipment and
personnel adequate to provide the services described in sub-paragraphs
(i), (ii) and (iii), above, and pay the compensation of each Trustee
and officer of the Fund who is an affiliated person of the Manager.
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(b) In performing the services described in sub-paragraph (ii)
above, the Manager shall seek to obtain for the Fund the most favorable
price and execution available. The Manager may, to the extent
authorized by law, cause the Fund to pay a broker or dealer that
provides brokerage or research services to the Manager or its
affiliates an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction. The Manager
shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with any investment policy
or the purchase, sale, or retention of any investment on the
recommendation of the Manager; provided, however, that nothing herein
contained shall be construed to protect the Manager against any
liability to the Fund by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties under this Agreement.
(c) Except as otherwise agreed, or as otherwise provided
herein, the Fund shall pay, or arrange for others to pay, all its
expenses other than those expressly stated to be payable by the Manager
hereunder, which expenses payable by the Fund shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and
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other costs in connection with the purchase and sale of portfolio
investments; (iii) compensation of its Trustees and officers other than
those who are affiliated persons of the Manager and of any other
employees or agents of the Fund; (iv) fees of outside counsel to and of
independent accountants of the Fund selected by the Board of Trustees;
(v) custodian, transfer agent, dividend disbursing agent and
administration agent fees and expenses; (vi) bookkeeping expenses and
expenses of ascertaining the net asset value of shares of the Fund;
(vii) expenses related to the repurchase or redemption of its shares;
(viii) expenses related to the issuance of its shares; (ix) fees and
related expenses of registering and qualifying the Fund and its shares
under state and federal securities laws; (x) expenses of preparing,
printing and mailing registration statements, prospectuses, reports,
notices and proxy solicitation materials of the Fund; (xi) all other
expenses incidental to holding meetings of the Fund's shareholders,
such as proxy solicitations therefor; (xii) expenses for servicing
accounts, such as the provision of accounting and tax information to
shareholders; (xiii) insurance premiums for fidelity coverage and
errors and omissions insurance; (xiv) dues for the Fund's membership in
trade associations and (xv) such other expenses as may arise,
including, without limitation, those associated with actions, suits, or
proceedings to which the Fund is a party or arising from any legal
obligation which the Fund may have to indemnify its officers, Trustees,
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employees and agents with respect thereto. To the extent that any of
the foregoing expenses are allocated between the Fund and any other
party, such allocations shall be pursuant to methods approved by the
Board of Trustees.
(d) Role of the Manager. Delegation of Duties.
(i) The Manager, and any person controlling, controlled by or
under common control with the Manager, shall be free to render similar
services to others and to engage in other activities, so long as the
services rendered to the Fund are not impaired.
(ii) Except as otherwise required by the Investment Company
Act of 1940, as amended, any of the shareholders, Trustees, officers
and employees of the Fund may be a shareholder, director, officer or
employee of, or be otherwise interested in, the Manager, and in any
person controlling, controlled by or under common control with the
Manager, and the Manager, and any person controlling, controlled by or
under common control with the Manager, may have an interest in the
Fund.
(iii) Except as otherwise agreed, in the absence of willful
misfeasance, bad faith, gross negligence, or reckless disregard of its
obligations or duties hereunder, the Manager shall not be subject to
liability to the Fund for any act or omission in the course of, or
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connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security.
(iv) With the approval of the Fund, the Manager may delegate
any or all of its duties to one or more subadvisers.
(e) Compensation of the Manager.
(i) As full compensation for the services rendered, facilities
furnished and expenses paid by the Manager under this Agreement, the
Fund agrees to pay to the Manager a fee at the annual rate of .25% of
the Fund's average monthly net assets. Such fee shall be accrued and
paid at such intervals, not more than monthly, as soon as practicable
after the end of each month or shorter period. For purposes of
calculating such fee, the Fund's average monthly net assets shall be
determined in the manner provided in the Fund's prospectus and
statement of additional information.
(ii) If the Manager shall serve for less than the whole of any
period, the foregoing compensation shall be prorated.
(f) Term and Termination.
(i) This Agreement shall become effective on the date hereof,
shall remain in full force and effect for two years from the date
hereof and shall continue in full force and effect for successive
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periods of one year thereafter, but only so long as each such
continuance is approved at least annually (i) by either the Board of
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Fund and in either event and (ii) by vote of a
majority of the Board of Trustees of the Fund who are not parties to
this Agreement or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval.
(ii) This Agreement may be terminated at any time without the
payment of any penalty by vote of the Board of Trustees of the Fund or
by vote of a majority of the outstanding voting securities of the Fund
or by the Manager, on not more than sixty (60) days, nor less than
thirty (30) days, written notice to the other party, or upon such
shorter notice as may be mutually agreed upon.
(iii) This Agreement shall automatically terminate in the
event of its assignment.
(g) Miscellaneous. For the purposes of this Agreement, the
terms "affiliated person," "assignment," "interested person," and
"majority of the outstanding voting securities" shall have their
respective meanings defined in the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder, subject, however, to
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such exemptions as may be granted to either the Manager or the Fund by
the Securities and Exchange Commission, and the term "brokerage and
research services" shall have the meaning given in the Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
(h) Limitation of Liability of the Trustees and Shareholders.
A copy of the Declaration of Trust of the Fund is on file with
the Secretary of The Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees
of the Fund as Trustees and not individually and that the obligations
of this instrument are not binding upon any of the Trustees, officers
or shareholders of the Fund but are binding only upon the assets and
property of the Fund.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
THE PRINCIPLED EQUITY MARKET FUND
By: /s/Xxxxx X.X. Xxxxxx
Xxxxx X.X. Xxxxxx, President
F. L. XXXXXX INVESTMENT MANAGEMENT
COMPANY
By: /s/Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx, Authorized Officer
