EXHIBIT 5(a)
INVESTMENT MANAGEMENT AGREEMENT
THE XXXXX AMERICAN FUND
ALGER AMERICAN BALANCED PORTFOLIO
July 1, 1992
Xxxx Xxxxx Management, Inc.
00 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Dear Sirs:
The Xxxxx American Fund (the "Fund"), an unincorporated business
trust organized under the laws of the Commonwealth of Massachusetts, hereby
confirms its agreement with Xxxx Xxxxx Management, Inc. ("Alger Management") as
follows:
1. Investment Description; Appointment
The Fund desires to employ the capital of the Xxxxx American
Balanced Portfolio (the "Portfolio") by investing and reinvesting in investments
of the kind and in accordance with the limitations specified in its Agreement
and Declaration of Trust and in its Prospectus and Statement of Additional
Information, as from time to time in effect, and in such manner and to such
extent as may from time to time be approved by the Board of Trustees of the
Fund. Copies of the Fund's Prospectus, Statement of Additional Information and
Agreement and Declaration of Trust, as each may from time to time be amended,
have been or will be submitted to Xxxxx Management. The Fund desires to employ
and hereby appoints Xxxxx Management to act as the investment manager for the
Portfolio. Xxxxx Management accepts the appointment and agrees to furnish the
services for the compensation set forth below.
2. Services as Investment Manager
Subject to the supervision and direction of the Board of Trustees of
the Fund, Xxxxx Management will (a) act in strict conformity with the Fund's
Agreement and Declaration of Trust, the Investment Company Act of 1940 (the
"Act") and the Investment Advisers Act of 1940, as the same may from time to
time be amended; (b) manage the Portfolio in accordance with the Portfolio's
investment objective and policies as stated in the Fund's Prospectus and
Statement of Additional Information as from time to time in effect; (c) make
general investment decisions for the Portfolio involving decisions concerning
(i) the specific types of securities to be held by the Portfolio and the
proportion of the Portfolio's assets that should be allocated to such
investments during particular market cycles and (ii) the specific issuers whose
securities will be purchased or sold by the Portfolio; and (d) supply office
facilities (which may be in Xxxxx Management's own offices); statistical and
research data; data processing services; clerical, accounting and bookkeeping
services; internal auditing services; internal executive and administrative
services; stationery and office supplies; preparation of reports to shareholders
of the Portfolio; preparation of tax returns, reports to and filings with the
Securities and Exchange Commission (the "SEC") and state Blue Sky authorities;
calculation of the net asset value of shares of the Portfolio; maintenance of
the Portfolio's financial accounts and records; and general assistance in all
aspects of the Fund's operations with respect to the Portfolio. In providing
those services, Xxxxx Management will supervise the Portfolio's investments
generally and conduct a continual program of evaluation of the Portfolio's
assets.
In connection with the performance of its duties under this
Agreement, it is understood that Xxxxx Management may from time to time employ
or associate with itself such person or persons as Xxxxx Management may believe
to be particularly fitted to assist it in the performance of this Agreement, it
being understood that the compensation of such person or persons shall be paid
by Xxxxx Management and that no obligation may be incurred on the Fund's behalf
in any such respect.
3. Brokerage
In executing transactions for the Portfolio and selecting brokers or
dealers, Xxxxx Management will use its best efforts to seek the best overall
terms available. In assessing the best overall terms available for any Portfolio
transactions, Xxxxx Management will consider all factors it deems relevant
including, but not limited to, breadth of the market in the security, the price
of the security, the financial condition and execution capability of the broker
or dealer and the reasonableness of any commission for the specific transaction
and on a continuing basis. In selecting brokers or dealers to execute a
particular transaction and in evaluating the best overall terms available,
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Xxxxx Management may consider the brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of 1934)
provided to the Portfolio and/or other accounts over which Xxxxx Management or
an affiliate exercises investment discretion.
4. Information Provided to the Fund
Xxxxx Management will keep the Fund informed of developments
materially affecting the Portfolio, and will, on its own initiative, furnish the
Fund from time to time with whatever information Xxxxx Management believes is
appropriate for this purpose.
In compliance with the requirements of Rule 31a-3 under the Act,
Xxxxx Management hereby agrees that all records that it maintains for the Fund
in respect of the Portfolio are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request.
5. Standard of Care
Xxxxx Management shall exercise its best judgment in rendering the
services listed in paragraph 2 above. Xxxxx Management shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the
Portfolio in connection with the matters to which this Agreement relates,
provided that nothing herein shall be deemed to protect or purport to protect
Xxxxx Management against any liability to the Portfolio or to its shareholders
to which Xxxxx Management would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or by reason of Xxxxx Management's reckless disregard of its obligations
and duties under this Agreement.
6. Compensation
In consideration of the services rendered pursuant to this
Agreement, the Portfolio will pay Xxxxx Management on the first business day of
each month a fee for the previous month at the annual rate of .75 of 1.00% of
the Portfolio's average daily net assets. The fee for the period from the date
the Fund's registration statement is declared effective by the SEC to the end of
the month during which its registration statement is declared effective shall be
prorated according to the proportion that such
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period bears to the full monthly period. Upon any termination if this Agreement
before the end of a month, the fee for such part of that month shall be prorated
according to the proportion that such period bears to the full monthly period
and shall be payable upon the date of termination of this Agreement. For the
purpose of determining fees payable to Xxxxx Management, the value of the
Portfolio's net assets shall be computed at the times and in the manner
specified in the Fund's Prospectus and Statement of Additional Information as
from time to time in effect.
7. Expenses
Xxxxx Management will bear all expenses in connection with the
performance of its services under this Agreement. The Portfolio will bear
certain other expenses to be incurred in its operation, including: taxes,
interest, brokerage fees and commissions, if any; fees of Trustees of the Fund
who are not officers, directors or employees of Xxxxx Management or any of its
affiliates; SEC fees and state Blue Sky qualification fees; charges of
custodians and transfer and dividend disbursing agents; charges of any
independent pricing service retained to assist in valuing the assets of the
Portfolio; the Fund's proportionate share of insurance premiums; outside
auditing and legal expenses; costs of maintenance of the Fund's existence; costs
attributable to shareholder services, including, without limitation, telephone
and personnel expenses; costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders; costs of shareholders' reports and
meetings of the shareholders of the Fund and of the officers or Board of
Trustees of the Fund; and any extraordinary expenses. Fund-wide expenses not
specifically identifiable to the Portfolio or any other portfolio of the Fund
will be allocated to all portfolios pro rata on the basis of their relative net
assets.
8. Reimbursement to the Portfolio
If in any fiscal year the aggregate operating expenses of the
Portfolio (including fees pursuant to this Agreement, but excluding interest,
taxes, fees for brokerage expenses and extraordinary expenses) exceed 1.25%,
Xxxxx Management will reimburse the Portfolio for such excess expense. Such
expense reimbursement, if any, will be estimated, reconciled and paid on a
monthly basis.
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9. Services to Other Companies or Accounts
The Fund understands that Xxxxx Management now acts, will continue
to act and may act in the future as investment adviser to fiduciary and other
managed accounts and as investment manager to one or more other investment
companies (including other portfolios of the Fund), and the Fund has no
objection to Xxxxx Management so acting, provided that whenever the Portfolio
and one or more other accounts or investment companies advised by Xxxxx
Management have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a formula believed to
be equitable to each entity. The Fund recognizes that in some cases this
procedure may adversely affect the size of the position obtainable for the
Portfolio. In addition, the Fund understands that the persons employed by Xxxxx
Management to assist in the performance of Xxxxx Management's duties hereunder
will not devote their full time to such service and nothing contained herein
shall be deemed to limit or restrict the right of Xxxxx Management or any
affiliate of Alger Management to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature.
10. Term of Agreement
This Agreement shall become effective as of the date the Portfolio
commences its investment operations and shall continue until October 1, 1994 and
thereafter shall continue automatically for successive annual periods, provided
such continuance is specifically approved at least annually by (i) the Board of
Trustees of the Fund or (ii) a vote of a "majority" (as defined in the Act) of
the Portfolio's outstanding voting securities, provided that in either event the
continuance is also approved by a majority of the Board of Trustees who are not
"interested persons" (as defined in the Act) of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, on sixty (60) days'
written notice, by the Board of Trustees of the Fund or by vote of holders of a
majority of the Portfolio's outstanding voting securities, or upon sixty (60)
days' written notice, by Xxxxx Management. This Agreement will also terminate
automatically in the event of its assignment (as defined in the Act and the
rules thereunder).
11. Representation by the Fund
The Fund represents that a copy of its Agreement and Declaration of
Trust, dated April 6, 1988, together with all amend-
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ments thereto, is on file in the office of the Secretary of the Commonwealth of
Massachusetts.
12. Limitation of Liability
This Agreement has been executed on behalf of the Fund in respect of
the Portfolio by the undersigned officer of the Fund in his capacity as an
officer of the Fund. The obligations of this Agreement shall be binding on the
assets and property of the Portfolio only and shall not be binding on any other
portfolio of the Fund or any Trustee, officer or shareholder of the Fund
individually.
13. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws (except the conflict of law rules) of the State of New York.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning the enclosed copy
hereof.
Very truly yours,
THE XXXXX AMERICAN FUND
By: /s/ Xxxxxxx X. Xxxx
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Authorized Officer
Accepted and Agreed:
XXXX XXXXX MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxx
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Authorized Officer
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