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EX-99.b5.(b)
INVESTMENT MANAGEMENT AGREEMENT
(TAX-EXEMPT PORTFOLIO)
AGREEMENT made this 4th day of January, 1996, by and between CASH
EQUIVALENT FUND, a Massachusetts business trust (the "Fund"), and XXXXXX
FINANCIAL SERVICES, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, the shares of
beneficial interest ("Shares") of which are registered under the Securities Act
of 1933;
WHEREAS, the Fund is authorized to issue Shares in separate series with
each such series representing the interests in a separate portfolio of
securities and other assets;
WHEREAS, the Fund currently offers or intends to offer Shares in three
portfolios, the Money Market Portfolio, the Government Securities Portfolio and
the Tax-Exempt Portfolio; and
WHEREAS, the Fund desires at this time to retain the Adviser under this
Agreement to render investment advisory and management services to the
Tax-Exempt Portfolio, and the Adviser is willing to render such services.
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. The Fund hereby employs the Adviser to act as the investment adviser for the
Tax-Exempt Portfolio or other Portfolios hereunder and to manage the investment
and reinvestment of the assets of the Fund in accordance with applicable
investment objective and policies and limitations and to administer its affairs
to the extent requested by and subject to the supervision of the Board of
Trustees of the Fund for the period and upon the terms herein set forth. The
investment of funds shall be subject to all applicable restrictions of the
Agreement and Declaration of Trust and By-Laws of the Fund as may from time to
time be in force.
The Adviser accepts such employment and agrees during such period to
render such services, to furnish office facilities and equipment and clerical,
bookkeeping and administrative services for the Fund, to permit any of its
officers or employees to serve without compensation as trustees or officers of
the Fund if elected to such positions and to assume the obligations herein set
forth for the compensation herein provided. The Adviser shall for all purposes
herein provided be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund. It
is understood and agreed that the Adviser, by separate agreements with the
Fund, may
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also serve the Fund in other capacities.
2. In the event that the Fund establishes one or more portfolios other than the
Tax-Exempt Portfolio with respect to which it desires to retain the Adviser to
render investment advisory and management services hereunder, it shall notify
the Adviser in writing. If the Adviser is willing to render such services it
shall notify the Fund in writing whereupon such portfolio or portfolios shall
become subject to this Agreement. The Tax-Exempt Portfolio, together with any
other Fund portfolios which may be established later and served by the Adviser
under this Agreement shall be herein referred to collectively as the
"Portfolios" and individually referred to as a "Portfolio." The Money Market
Portfolio and the Government Securities Portfolio are not subject to this
Agreement and are not considered to be "Portfolios" hereunder.
3. For the services and facilities described in Section 1, the Fund will pay to
the Adviser at the end of each calendar month, an investment management fee
computed at an annual rate of 0.22% of the first $500 million of the combined
average daily net assets of the Portfolios, 0.20% of the next $500 million,
0.175% of the next $1 billion, 0.16% of the next $1 billion and 0.15% of
combined average daily net assets over $3 billion. The fee as computed above
shall be allocated to each Portfolio based upon the relative average daily net
assets of each Portfolio managed by the Adviser. For the month and year in
which this Agreement becomes effective or terminates, there shall be an
appropriate proration on the basis of the number of days that the Agreement is
in effect during the month and year, respectively.
4. The services of the Adviser to the Fund under this Agreement are not to be
deemed exclusive, and the Adviser shall be free to render similar services or
other services to others so long as its services hereunder are not impaired
thereby.
5. In addition to the fee of the Adviser, the Fund shall assume and pay any
expenses for services rendered by a custodian for the safekeeping of the Fund's
securities or other property, for keeping its books of account, for any other
charges of the custodian, and for calculating the net asset value of the Fund
as provided in-the Agreement and Declaration of Trust of the Fund. The Adviser
shall not be required to pay and the Fund shall assume and pay the charges and
expenses of its operations, including compensation of the trustees (other than
those affiliated with the Adviser), charges and expenses of independent
auditors, of legal counsel, of any transfer or dividend disbursing agent, any
registrar of the Fund, costs of acquiring and disposing of portfolio
securities, interest, if any, on obligations incurred by the Fund, cost of
Share certificates and of reports, membership dues in the Investment Company
Institute or any similar organization, reports and notices to shareholders,
other like miscellaneous expenses and all taxes and fees payable to federal,
state or other governmental agencies on account of the registration of
securities issued by the
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Fund, filing of corporate documents or otherwise. The Fund shall not pay or
incur any obligation for any expenses for which the Fund intends to seek
reimbursement from the Adviser as herein provided without first obtaining the
written approval of the Adviser. The Adviser shall arrange, if desired by the
Fund, for officers or employees of the Adviser to serve, without compensation
from the Fund, as trustees, officers or agents of the Fund if duly elected or
appointed to such positions and subject to their individual consent and to any
limitations imposed by law.
If expenses borne by the Portfolios in any fiscal year (including the
Adviser's fee, but excluding interest, taxes, fees incurred in acquiring and
disposing of portfolio securities and, to the extent permitted, extraordinary
expenses) exceed 1 1/2% of average daily net assets up to $30,000,000 and 1% of
average daily net assets over $30,000,000 of the Portfolios, the Adviser will
reduce its fee or reimburse the Fund for any excess. The expense limitation
guarantee shall be allocated to each Portfolio upon a fee reduction or
reimbursement based upon the relative average daily net assets of each
Portfolio. If for any month the expenses of the Fund properly chargeable to
the income account shall exceed 1/12 of the percentage of average net assets
allowable as expenses, the payment to the Adviser for that month shall be
reduced and, if necessary, the Adviser shall make a refund payment to the Fund
so that the total net expense will not exceed such percentage. As of the end
of the Fund's fiscal year, however, the foregoing computations and payments
shall be readjusted so that the aggregate compensation payable to the Adviser
for the year is equal to the percentage set forth in Section 3 hereof of the
average net asset values as determined as described herein throughout the
fiscal year, diminished to the extent necessary so that the total of the
aforementioned expense items shall not exceed the expense limitation. The
aggregate of repayments, if any, by the Adviser to the Fund for the year shall
be the amount necessary to limit the said net expense to said percentage.
The net asset value of each Portfolio shall be calculated as of the close
of the New York Stock Exchange on each day the Exchange is open for trading or
as of such other time or times as the trustees may determine in accordance with
the provisions of the Investment Company Act of 1940. On each day when net
asset value is not calculated, the net asset value of a Share of a Portfolio
shall be deemed to be the net asset value of such a Share as of the close of
business on the last day on which such calculation was made for the purpose of
the foregoing computations.
6. Subject to applicable statutes and regulations, it is understood that
trustees, officers or agents of the Fund are or may be interested in the
Adviser as officers, trustees, agents, shareholders or otherwise, and that the
officers, directors, shareholders and agents of the Adviser may be interested
in the Fund otherwise than as a director, officer or agent.
7. The Adviser shall not be liable for any error of judgment or
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of law or for any loss suffered by the Fund in connection with the matters to
which this Agreement relates, except loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Adviser in the performance of
its obligations and duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
8. This Agreement shall become effective on the date hereof and shall remain in
full force until December 1, 1996, unless sooner terminated as hereinafter
provided. This Agreement shall continue in force from year to year thereafter,
but only as long as such continuance is specifically approved at least annually
for each Portfolio in the manner required by the Investment Company Act of 1940
and the rules and regulations thereunder; provided, however, that if the
continuation of this Agreement is not approved for a Portfolio, the Adviser may
continue to serve in such capacity for such Portfolio in the manner and to the
extent permitted by the Investment Company Act of 1940 and the rules and
regulations thereunder.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
with respect to any Portfolio by the Fund or by the Adviser on sixty (60) days
written notice to the other party. The Fund may effect termination with
respect to any Portfolio by action of the Board of Trustees or by vote of a
majority of the outstanding voting securities of such Portfolio.
This Agreement may be terminated at any time with respect to any Portfolio
without the payment of any penalty by the Board of Trustees or by vote of a
majority of the outstanding voting securities of such Portfolio in the event
that it shall have been established by a court of competent jurisdiction that
the Adviser or any officer or director of the Adviser has taken any action
which results in a breach of the covenants of the Adviser set forth herein.
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Investment Company Act of
1940 and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation described in Section
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9. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
10. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of
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such notice.
11. All parties hereto are expressly put on notice of the Cash Equivalent Fund
Agreement and Declaration of Trust and all amendments thereto, all of which are
on file with the Secretary of The Commonwealth of Massachusetts, and the
limitation of shareholder and trustee liability contained therein. This
Agreement has been executed by and on behalf of the Fund by its representatives
as such representatives and not individually, and the obligations of the Fund
hereunder are not binding upon any of the Trustees, officers or shareholders of
the Fund individually but are binding upon only the assets and property of the
Fund. With respect to any claim by Adviser for recovery of that portion of the
investment management fee (or any other liability of the Fund arising
hereunder) allocated to a particular Portfolio, whether in accordance with the
express terms hereof or otherwise, the Adviser shall have recourse solely
against the assets of that Portfolio to satisfy such claim and shall have no
recourse against the assets of any other portfolio of Fund (whether or not a
Portfolio hereunder) for such purpose.
12. This Agreement shall be construed in accordance with applicable federal law
and (except as to Section 10 hereof which shall be construed in accordance with
the laws of The Commonwealth of Massachusetts) the laws of the State of
Illinois.
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13. This Agreement is the entire contract between the parties relating to the
subject matter hereof and supersedes all prior agreements between the parties
relating to the subject matter hereof.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to be
executed on the day and year first above written.
CASH EQUIVALENT FUND
By: /s/ Xxxx X. Xxxxxx
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Title: Vice President
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ATTEST:
/s/ Xxxxxx X. Xxxxxxx
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Title: Secretary
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XXXXXX FINANCIAL SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Title: Senior Vice President
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ATTEST:
/s/ Xxxxx X. Xxxxxxxxxxx
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Title: Assistant Secretary
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