XXXXXX OTC EMERGING GROWTH FUND
MANAGEMENT CONTRACT
Management Contract dated as of November 20, 1996 between
XXXXXX OTC EMERGING GROWTH FUND, a Massachusetts business trust
(the "Fund"), and XXXXXX INVESTMENT MANAGEMENT, INC., a
Massachusetts corporation (the "Manager").
WITNESSETH:
That in consideration of the mutual covenants herein
contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO FUND.
(a) The Manager, at its expense, will furnish continuously
an investment program for the Fund, will determine what
securities shall be purchased, held, sold or exchanged by the
Fund and what portion, if any, of the assets of the Fund shall be
held uninvested and shall, on behalf of the Fund, make changes in
the Fund's investments. Subject always to the control of the
Trustees of the Fund and except for the functions carried out by
the officers and personnel referred to in Section 1(d), the
Manager will also manage, supervise and conduct the other affairs
and business of the Fund and matters incidental thereto. In the
performance of its duties, the Manager will comply with the
provisions of the Agreement and Declaration of Trust and Bylaws
of the Fund and its stated investment objectives, policies and
restrictions, and will use its best efforts to safeguard and
promote the welfare of the Fund and to comply with other policies
which the Trustees may from time to time determine, and shall
exercise the same care and diligence expected of the Trustees.
(b) The Manager, at its expense, except as such expense is
paid by the Fund as provided in Section 1(d), will furnish (1)
all necessary investment and management facilities, including
salaries of personnel, required for it to execute its duties
faithfully; (2) suitable office space for the Fund; and (3)
administrative facilities, including bookkeeping, clerical
personnel and equipment necessary for the efficient conduct of
the affairs of the Fund, including determination of the Fund's
net asset value, but excluding shareholder accounting services.
Except as otherwise provided in Section 1(d), the Manager will
pay the compensation, if any, of the officers of the Fund.
(c) The Manager, at its expense, shall place all orders for
the purchase and sale of portfolio investments for the Fund's
account with brokers or dealers selected by the Manager. In the
selection of such brokers or dealers and the placing of such
orders, the Manager shall use its best efforts to obtain for the
Fund the most favorable price and execution available, except to
the extent it may be permitted to pay higher brokerage
commissions for brokerage and research services as described
below. In using its best efforts to obtain for the Fund the most
favorable price and execution available, the Manager, bearing in
mind the Fund's best interests at all times, shall consider all
factors it deems relevant, including by way of illustration,
price, the size of the transaction, the nature of the market for
the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker or
dealer involved and the quality of service rendered by the broker
or dealer in other transactions. Subject to such policies as the
Trustees may determine, the Manager shall not be deemed to have
acted unlawfully or to have breached any duty created by this
Contract or otherwise solely by reason of its having caused the
Fund to pay a broker or dealer that provides brokerage and
research services to the Manager 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, if the Manager determines in good
faith that such amount of commission was reasonable in relation
to the value of the brokerage and research services provided by
such broker or dealer, viewed in terms of either that particular
transaction or the Manager's overall responsibilities with
respect to the Fund and to other clients of the Manager as to
which the Manager exercises investment discretion. The Manager
agrees that in connection with purchases or sales of portfolio
investments for the Fund's account, neither the Manager or any
officer, director, employee or agent of the Manager shall act as
a principal or receive any commission other than as provided in
Section 3.
(d) The Fund will pay or reimburse the Manager for (i) the
compensation of the Executive Vice President and Treasurer of the
Fund and of persons assisting him in these offices, as determined
from time to time by the Trustees of the Fund, (ii) the
compensation in whole or in part of such other officers of the
Fund and persons assisting them as may be determined from time to
time by the Trustees of the Fund, and (iii) the cost of suitable
office space, utilities, support services and equipment of the
Executive Vice President and Treasurer and persons assisting him
and, as determined from time to time by the Trustees of the Fund,
all or a part of such costs attributable to the other officers
and persons assisting them whose compensation is paid in whole or
in part by the Fund. The Fund will pay the fees, if any, of the
Trustees of the Fund.
(e) The Manager shall not be obligate to pay any expenses
of or for the Fund not expressly assumed by the Manager pursuant
to this Section 1 other than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that 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 controlled by or under common
control with the Manager, and that the Manager and any person
controlled by or under common control with the Manager may have
an interest in the Fund. It is also understood that the Manager
and persons controlled by or under common control with the
Manager have and may have advisory, management service or other
contracts with other organizations and persons, and may have
other interests and business.
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
The Fund will pay to the Manager as compensation for the
Manager's services rendered, for the facilities furnished and for
the expenses borne by the Manager pursuant to paragraphs (a),
(b), (c) and (e) of Section 1, a fee, computed and paid monthly
at the following annual rates:
(a) 0.70% of the first $500 million of the average net
asset value of the Fund;
(b) 0.60% of the next $500 million of such average net
asset value;
(c) 0.55% of the next $500 million of such average net
asset value;
(d) 0.50% of the next $5 billion of such average net asset
value;
(e) 0.475% of the next $5 billion of such average net asset
value;
(f) 0.455% of the next $5 billion of such average net asset
value;
(g) 0.44% of the next $5 billion of such average net asset
value; and
(h) 0.43% of any amount over $21.5 billion of such average
net asset value.
Such fee computed with respect to the net asset value of each of
the Series shall be paid from the assets of such Series. Such
average net asset value of each Series of the Fund shall be
determined by taking an average of all of the determinations of
such net asset value during such month at the close of business
on each business day during such month while this Contract is in
effect. Such fee shall be payable for each month within 30 days
after the end of such month.
The fees payable by the Fund to the Manager pursuant to
this Section 3 shall be reduced by any commissions, fees,
brokerage or similar payments received by the Manager of any
affiliate of the Manager in connection with the purchase and sale
of portfolio investments of the Fund, less any direct expenses
approved by the Trustees incurred by the Manager or any
affiliated person of the Manager in connection with obtaining
such payments.
In the event that expenses of any Series of the Fund for any
fiscal year should exceed the expense limitation on investment
company expenses imposed by any statute or regulatory authority
of any jurisdiction in which shares of that Series are qualified
for offer and sale, the compensation due the Manager for such
fiscal year shall be reduced by the amount of excess by a
reduction or refund thereof. In the event that the expenses of
any Series of the Fund exceed any expense limitation which the
Manager may, by written notice to the Fund, voluntarily declare
to be effective subject to such terms and conditions as the
Manager may prescribe in such notice, the compensation due the
Manager shall be reduced, and, if necessary, the Manager shall
assume expenses of the Series, to the extent required by such
expense limitation.
If the Manager shall serve for less than the whole of a
month, the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT.
This Contract shall automatically terminate, without the
payment of any penalty, in the event of its assignment; and this
Contract shall not be amended as to any Series of shares of the
Fund unless such amendment be approved at a meeting by the
affirmative vote of a majority of the outstanding shares of the
Series, and by the vote, cast in person at a meeting called for
the purpose of voting on such approval, of a majority of the
Trustees of the Fund who are not interested persons of the Fund
or of the Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and
shall remain in full force and effect as to each Series
continuously thereafter (unless terminated automatically as set
forth in Section 4) until terminated as follows:
(a) Either party hereto may at any time terminate this
Contract as to any Series or as to the Fund as a whole by not
more than sixty days' nor less than thirty days' written notice
delivered or mailed by registered mail, postage prepaid, to the
other party, or
(b) If (i) the Trustees of the Fund or the shareholders by
the affirmative vote of a majority of the outstanding shares of
the Series, and (ii) a majority of the Trustees of the Fund who
are not interested persons of the Fund or of the Manager, by vote
cast in person at a meeting called for the purpose of voting on
such approval, do not specifically approve at least annually the
continuance of this Contract, then this Contract shall
automatically terminate as to such Series at the close of
business on the second anniversary of its execution, or upon the
expiration of one year from the effective date of the last such
continuance, whichever is later.
Action by the Fund under (a) above may be taken either (i)
by vote of a majority of its Trustees, or (ii) by the affirmative
vote of a majority of the outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5
shall be without the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of
a majority of the outstanding shares" means the affirmative vote,
at a duly called and held meeting of shareholders, (a) of the
holders of 67% or more of the shares of the Fund or the Series,
as the case may be, present (in person or by proxy) and entitled
to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Fund or the Series, as the case may
be, entitled to vote at such meeting are present in person or by
proxy, or (b) of the holders of more than 50% of the outstanding
shares of the Fund entitled to vote at such meeting, whichever is
less.
For the purposes of this Contract, the terms "affiliated
person", "control", "interested person" and "assignment" shall
have their respective meanings defined in the Investment Company
Act of 1940 (the "1940 Act") and the Rules and Regulations
thereunder, subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission under said Act;
the term "specifically approve at least annually" shall be
construed in a manner consistent with the Investment Company Act
of 1940 and the Rules and Regulations thereunder; and the term
"brokerage and research services" shall have the meaning given in
the Securities Exchange Act of 1934 and the Rules and Regulations
thereunder.
7. NONLIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Manager, or reckless disregard of
its obligations and duties hereunder, the Manager shall not be
subject to any liability to the Fund or to any shareholder of the
Fund, for any act or omission in the course of, or connected
with, rendering services hereunder.
8. TERMINATION OF PRIOR CONTRACT.
This Contract shall become effective as of its date, and
supersedes the Management Contract dated July 8, 1993.
9. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and 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 or shareholders individually
but are binding only upon the assets and property of the Fund.
IN WITNESS WHEREOF, XXXXXX OTC EMERGING GROWTH FUND and
XXXXXX INVESTMENT MANAGEMENT, INC. have each caused this
instrument to be signed in duplicate in its behalf of its
President or A Vice President thereunto duly authorized, all as
of the day and year first above written.
XXXXXX OTC EMERGING GROWTH FUND
/s/Xxxxxxx X. Xxxxxx
By -------------------------------------
Xxxxxxx X. Xxxxxx
Executive Vice President
XXXXXX INVESTMENT MANAGEMENT, INC.
/s/Xxxxxx X. Silver
By -------------------------------------
Xxxxxx X. Silver
Senior Managing Director
