MANAGEMENT AGREEMENT
SR&F BASE TRUST, a Massachusetts common law trust registered under the
Investment Company Act of 1940 ("1940 Act") as an open-end diversified
management investment company ("Trust"), hereby appoints NEWPORT FUND
MANAGEMENT, INC., a Virginia corporation registered under the Investment
Advisers Act of 1940 as an investment adviser, of San Francisco, California
("Manager"), to furnish investment advisory and portfolio management services
with respect to the portion of its assets represented by the shares of
beneficial interest issued in SR&F International Portfolio (the "Portfolio").
Trust and Manager hereby agree that:
1. Investment Management Services. Manager shall manage the investment
operations of Trust and Portfolio, subject to the terms of this Agreement and to
the supervision and control of Trust's Board of Trustees ("Trustees"). Manager
agrees to perform, or arrange for the performance of, the following services
with respect to the Portfolio:
(a) to obtain and evaluate such information relating to economies,
industries, businesses, securities and commodities markets, and
individual securities, commodities and indices as it may deem necessary
or useful in discharging its responsibilities hereunder;
(b) to formulate and maintain a continuing investment program in a
manner consistent with and subject to (i) Trust's agreement and
declaration of trust and by-laws; (ii) the Portfolio's investment
objectives, policies, and restrictions as set forth in written
documents furnished by the Trust to Manager; (iii) all securities,
commodities, and tax laws and regulations applicable to the Portfolio
and Trust; and (iv) any other written limits or directions furnished by
the Trustees to Manager;
(c) unless otherwise directed by the Trustees, to determine from time
to time securities, commodities, interests or other investments to be
purchased, sold, retained or lent by the Portfolio, and to implement
those decisions, including the selection of entities with or through
which such purchases, sales or loans are to be effected;
(d) to use reasonable efforts to manage the Portfolio so that it will
qualify as a regulated investment company under subchapter M of the
Internal Revenue Code of 1986, as amended;
(e) to make recommendations as to the manner in which voting rights,
rights to consent to Trust or Portfolio action, and any other rights
pertaining to Trust or the Portfolio shall be exercised;
(f) to make available to Trust promptly upon request all of the
Portfolio's records and ledgers and any reports or information
reasonably requested by the Trust; and
(g) to the extent required by law, to furnish to regulatory authorities
any information or reports relating to the services provided pursuant
to this Agreement. Except as otherwise instructed from time to time by
the Trustees, with respect to execution of transactions for Trust on
behalf of the Portfolio, Manager shall place, or arrange for the
placement of, all orders for purchases, sales, or loans with issuers,
brokers, dealers or other counterparties or agents selected by Manager.
In connection with the selection of all such parties for the placement
of all such orders, Manager shall attempt to obtain most favorable
execution and price, but may nevertheless in its sole discretion as a
secondary factor, purchase and sell Portfolio securities from and to
brokers and dealers who provide Manager with statistical, research and
other information, analysis, advice, and similar services. In
recognition of such services or brokerage services provided by a broker
or dealer, Manager is hereby authorized to pay such broker or dealer a
commission or spread in excess of that which might be charged by
another broker or dealer for the same transaction if the Manager
determines in good faith that the commission or spread is reasonable in
relation to the value of the services so provided.
Trust hereby authorizes any entity or person associated with Manager that
is a member of a national securities exchange to effect any transaction on the
exchange for the account of the Portfolio to the extent permitted by and in
accordance with Section 11(a) of the Securities Exchange Act of 1934 and Rule
11a2-2(T) thereunder. Trust hereby consents to the retention by such entity or
person of compensation for such transactions in accordance with Rule
11a-2-2(T)(a)(iv).
Manager may, where it deems to be advisable, aggregate orders for its other
customers together with any securities of the same type to be sold or purchased
for Trust or Portfolio in order to obtain best execution or lower brokerage
commissions. In such event, Manager shall allocate the shares so purchased or
sold, as well as the expenses incurred in the transaction, in a manner it
considers to be equitable and fair and consistent with its fiduciary obligations
to Trust, the Portfolio, and Manager's other customers.
Manager shall for all purposes be deemed to be an independent contractor
and not an agent of Trust and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent Trust in any way.
2. Administrative Services. Manager shall supervise the business and
affairs of Trust and Portfolio and shall provide such services and facilities as
may be required for effective administration of Trust and Portfolio as are not
provided by employees or other agents engaged by Trust; provided that Manager
shall not have any obligation to provide under this Agreement any such services
which are the subject of a separate agreement or arrangement between Trust and
Manager, any affiliate of Manager, or any third party administrator
("Administrative Agreements").
3. Use of Affiliated Companies and Subcontractors. In connection with the
services to be provided by Manager under this Agreement, Manager may, to the
extent it deems appropriate, and subject to compliance with the requirements of
applicable laws and regulations and upon receipt of written approval of the
Trustees, make use of (i) its affiliated companies and their directors,
trustees, officers, and employees and (ii) subcontractors selected by Manager,
provided that Manager shall supervise and remain fully responsible for the
services of all such third parties in accordance with and to the extent provided
by this Agreement. All costs and expenses associated with services provided by
any such third parties shall be borne by Manager or such parties.
4. Expenses Borne by Trust. Except to the extent expressly assumed by
Manager herein or under a separate agreement between Trust and Manager and
except to the extent required by law to be paid by Manager, Manager shall not be
obligated to pay any costs or expenses incidental to the organization,
operations or business of the Trust. Without limitation, such costs and expenses
shall include but not be limited to:
(a) all charges of depositories, custodians and other agencies for the
safekeeping and servicing of its cash, securities, and other property;
(b) all charges for equipment or services used for obtaining price
quotations or for communication between Manager or Trust and the
custodian, transfer agent or any other agent selected by Trust;
(c) all charges for administrative and accounting services provided to
Trust by Manager, or any other provider of such services;
(d) all charges for services of Trust's independent auditors and for
services to Trust by legal counsel;
(e) all compensation of Trustees, other than those affiliated with
Manager, all expenses incurred in connection with their services to
Trust, and all expenses of meetings of the Trustees or committees
thereof;
(f) all expenses incidental to holding meetings of holders of units of
interest in the Trust ("Unitholders"), including printing and of
supplying each record-date Unitholder with notice and proxy
solicitation material, and all other proxy solicitation expense;
(g) all expenses of printing of annual or more frequent revisions of Trust
prospectus(es) and of supplying each then-existing Unitholder with a
copy of a revised prospectus;
(h) all expenses related to preparing and transmitting certificates
representing Trust shares;
(i) all expenses of bond and insurance coverage required by law or deemed
advisable by the Board of Trustees;
(j) all brokers' commissions and other normal charges incident to the
purchase, sale, or lending of portfolio securities;
(k) all taxes and governmental fees payable to Federal, state or other
governmental agencies, domestic or foreign, including all stamp or
other transfer taxes;
(l) all expenses of registering and maintaining the registration of Trust
under the 1940 Act and, to the extent no exemption is available,
expenses of registering Trust's shares under the 1933 Act, of
qualifying and maintaining qualification of Trust and of Trust's
shares for sale under securities laws of various states or other
jurisdictions and of registration and qualification of Trust under all
other laws applicable to Trust or its business activities;
(m) all interest on indebtedness, if any, incurred by Trust or Portfolio;
and
(n) all fees, dues and other expenses incurred by Trust in connection with
membership of Trust in any trade association or other investment
company organization.
5. Allocation of Expenses Borne by Trust. Any expenses borne by Trust that
are attributable solely to the organization, operation or business of Portfolio
shall be paid solely out of Portfolio assets. Any expense borne by Trust which
is not solely attributable to Portfolio, nor solely to any other series of
shares of Trust, shall be apportioned in such manner as Manager determines is
fair and appropriate, or as otherwise specified by the Board of Trustees.
6. Expenses Borne by Manager. Manager at its own expense shall furnish all
executive and other personnel, office space, and office facilities required to
render the investment management and administrative services set forth in this
Agreement. Manager shall pay all expenses of establishing, maintaining, and
servicing the accounts of Unitholders in the Portfolio. However, Manager shall
not be required to pay or provide any credit for services provided by Trust's
custodian or other agents without additional cost to Trust.
In the event that Manager pays or assumes any expenses of Trust or
Portfolio not required to be paid or assumed by Manager under this Agreement,
Manager shall not be obligated hereby to pay or assume the same or similar
expense in the future; provided that nothing contained herein shall be deemed to
relieve Manager of any obligation to Trust or Portfolio under any separate
agreement or arrangement between the parties.
7. Management Fee. For the services rendered, facilities provided, and
charges assumed and paid by Manager hereunder, Trust shall pay to Manager out of
the assets of Portfolio fees at the annual rate of 0.85% of the average net
assets of the Portfolio. For the Portfolio, the management fee shall accrue on
each calendar day, and shall be payable monthly on the first business day of the
next succeeding calendar month. The daily fee accrual shall be computed by
multiplying the fraction of one divided by the number of days in the calendar
year by the applicable annual rate of fee, and multiplying this product by the
net assets of the Portfolio, determined in the manner established by the Board
of Trustees, as of the close of business on the last preceding business day on
which the Portfolio's net asset value was determined.
8. Retention of Sub-Adviser. Subject to obtaining the initial and periodic
approvals required under Section 15 of the 1940 Act, Manager may retain one or
more sub-advisers at Manager's own cost and expense for the purpose of
furnishing one or more of the services described in Section 1 hereof with
respect to Trust or Portfolio. Retention of a sub-adviser shall in no way reduce
the responsibilities or obligations of Manager under this Agreement, and Manager
shall be responsible to Trust and Portfolio for all acts or omissions of any
sub-adviser in connection with the performance of Manager's duties hereunder.
9. Non-Exclusivity. The services of Manager to Trust hereunder are not to
be deemed exclusive and Manager shall be free to render similar services to
others.
10. Standard of Care. Neither Manager, nor any of its directors, officers,
stockholders, agents or employees shall be liable to Trust or its Unitholders
for any error of judgment, mistake of law, loss arising out of any investment,
or any other act or omission in the performance by Manager of its duties under
this Agreement, except for loss or liability resulting from willful misfeasance,
bad faith or gross negligence on Manager's part or from reckless disregard by
Manager of its obligations and duties under this Agreement.
11. Amendment. This Agreement may not be amended as to Trust or Portfolio
without the affirmative votes (a) of a majority of the Board of Trustees,
including a majority of those Trustees who are not "interested persons" of Trust
or of Manager, voting in person at a meeting called for the purpose of voting on
such approval, and (b) of a "majority of the outstanding shares" of Trust or,
with respect to an amendment affecting the Portfolio, a "majority of the
outstanding shares" of the Portfolio. The terms "interested persons" and "vote
of a majority of the outstanding shares" shall be construed in accordance with
their respective definitions in the 1940 Act and, with respect to the latter
term, in accordance with Rule 18f-2 under the 1940 Act.
12. Effective Date and Termination. This Agreement shall become effective
as to the Portfolio as of January 26, 2001. This Agreement may be terminated at
any time, without payment of any penalty, as to the Portfolio by the Board of
Trustees of Trust, or by a vote of a majority of the outstanding shares of the
Portfolio, upon at least sixty (60) days' written notice to Manager. This
Agreement may be terminated by Manager at any time upon at least sixty (60)
days' written notice to Trust. This Agreement shall terminate automatically in
the event of its "assignment" (as defined in the 1940 Act). Unless terminated as
hereinbefore provided, this Agreement shall continuee Portfolio specified in
Schedule A and thereafter from year to year only so long as such continuance is
specifically approved with respect to that Portfolio at least annually (a) by a
majority of those Trustees who are not interested persons of Trust or of
Manager, voting in person at a meeting called for the purpose of voting on such
approval, and (b) by either the Board of Trustees of Trust or by a "vote of a
majority of the outstanding shares" of the Portfolio.
13. Ownership of Records; Interparty Reporting. All records required to be
maintained and preserved by Trust pursuant to the provisions of rules or
regulations of the Securities and Exchange Commission under Section 31(a) of the
1940 Act or other applicable laws or regulations which are maintained and
preserved by Manager on behalf of Trust and any other records the parties
mutually agree shall be maintained by Manager on behalf of Trust are the
property of Trust and shall be surrendered by Manager promptly on request by
Trust; provided that Manager may at its own expense make and retain copies of
any such records.
Trust shall furnish or otherwise make available to Manager such copies of
the financial statements, proxy statements, reports, and other information
relating to the business and affairs of each Unitholder in the Portfolio as
Manager may, at any time or from time to time, reasonably require in order to
discharge its obligations under this Agreement.
Manager shall prepare and furnish to Trust as to the Portfolio statistical
data and other information in such form and at such intervals as Trust may
reasonably request.
14. Non-Liability of Trustees and Unitholders. Any obligation of Trust
hereunder shall be binding only upon the assets of Trust (or the applicable
Portfolio thereof) and shall not be binding upon any Trustee, officer, employee,
agent or Unitholder of Trust. Neither the authorization of any action by the
Trustees or Unitholders of Trust nor the execution of this Agreement on behalf
of Trust shall impose any liability upon any Trustee or any Xxxxxxxxxx.
00. Use of Manager's Name. Trust may use the name "SR&F Base Trust" and the
Portfolio name or any other name derived from the name "Xxxxx Xxx & Xxxxxxx"
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 Manager as investment adviser. At
such time as this Agreement or any extension, renewal or amendment hereof, or
such other similar agreement shall no longer be in effect, Trust will cease to
use any name derived from the name "Xxxxx Xxx & Farnham" or otherwise connected
with Manager, or with any organization which shall have succeeded to Manager's
business as investment adviser.
16. References and Headings. In this Agreement and in any such amendment,
references to this Agreement and all expressions such as "herein," "hereof," and
"hereunder" shall be deemed to refer to this Agreement as amended or affected by
any such amendments. Headings are placed herein for convenience of reference
only and shall not be taken as a part hereof or control or affect the meaning,
construction or effect of this Agreement. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original.
Dated: January 26, 2001
SR&F BASE TRUST
By: /s/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: President
NEWPORT FUND MANAGEMENT, INC.
By: /s/ R. XXXXX XXXXXXX
Name: R. Xxxxx Xxxxxxx
Title: Chief Financial Office
