MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made between the Huntington Funds, a
Massachusetts business trust, hereinafter called the "Trust," on behalf of its
various separate series, and FRANKLIN ADVISERS, INC., a California corporation,
hereinafter called the "Manager."
WHEREAS, the Trust has been organized and intends to operate as an
investment company registered under the Investment Company Act of 1940 (the
"1940 Act") for the purpose of investing and reinvesting its assets in
securities, as set forth in its Agreement and Declaration of Trust, its By-Laws
and its Registration Statements under the 1940 Act and the Securities Act of
1933, all as heretofore and hereafter amended and supplemented;
WHEREAS, the Trust desires to avail itself of the services, information,
advice, assistance and facilities of an investment manager and to have an
investment manager perform various management, statistical, research, investment
advisory and other services for each of the funds currently or hereafter
organized as separate series of the Trust (the "Fund" or together, the "Funds");
and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, is engaged in the business of rendering
management, investment advisory, counselling and supervisory services to
investment companies and other investment counselling clients, and desires to
provide these services to the Funds.
NOW THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is mutually agreed as follows:
l. Employment of the Manager. The Trust hereby employs the Manager to
manage the investment and reinvestment of each Fund's assets and to administer
its affairs, subject to the direction of the Board of Trustees and the officers
of the Trust, for the period and on t9he terms hereinafter set forth. The
Manager hereby accepts such employment and agrees during such period to render
the services and to assume the obligations herein set forth for the compensation
herein provided. The Manager shall for all purposes herein be deemed to be an
independent contractor and shall, except as expressly provided or authorized
(whether herein or otherwise), have no authority to act for or represent the
Funds in any way or otherwise be deemed an agent of the Funds or the Trust.
2. Obligations of and Services to be Provided by the Manager. The Manager
undertakes to provide the services hereinafter set forth and to assume the
following obligations:
A. Administrative Services. The Manager shall furnish each Fund
adequate (i) office space, which may be space within the offices of the
Manager or in such other place as may be agreed upon from time to time,
(ii) office furnishings, facilities and equipment as may be reasonably
required for managing the affairs and conducting the business of the Funds,
including conducting correspondence and other communications with the
shareholders of the Funds, maintaining all internal bookkeeping, accounting
and auditing services and records in connection with the Funds' investment
and business activities. The Manager shall employ or provide and compensate
the executive, secretarial and clerical personnel necessary to provide such
services. The Manager shall also compensate all officers and employees of
the Trust who are officers or employees of the Manager or its affiliates.
B. Investment Management Services.
(a) The Manager shall manage each Fund's assets subject to and in
accordance with the respective investment objectives and policies of each
Fund and any directions which the Trust's Board of Trustees may issue from
time to time. In pursuance of the foregoing, the Manager shall make all
determinations with respect to the investment of each Fund's assets and the
purchase and sale of its investment securities, and shall take such steps
as may be necessary to implement the same. Such determinations and services
shall include determining the manner in which any voting rights, rights to
consent to corporate action and any other rights pertaining to each Fund's
investment securities shall be exercised. The Manager shall render or cause
to be rendered regular reports to the Trust, at regular meetings of its
Board of Trustees and at such other times as may be reasonably requested by
the Trust's Board of Trustees, of (i) the decisions made with respect to
the investment of each Fund's assets and the purchase and sale of their
investment securities, (ii) the reasons for such decisions, and (iii) the
extent to which those decisions have been implemented.
(b) The Manager, subject to and in accordance with any directions
which the Trust's Board of Trustees may issue from time to time, shall
place, in the name of each Fund, orders for the execution of the Fund's
securities transactions. When placing such orders the Manager shall seek to
obtain the best net price and execution for the Funds, but this requirement
shall not be deemed to obligate the Manager to place any order solely on
the basis of obtaining the lowest commission rate if the other standards
set forth in this section have been satisfied. The parties recognize that
there are likely to be many cases in which different brokers or dealers are
equally able to provide such best price and execution and that, in
selecting among such brokers or dealers with respect to particular trades,
it is desirable to choose those brokers or dealers who furnish research,
statistical quotations and other information to the Funds and the Manager
in accord with the standards set forth below. Moreover, to the extent that
it continues to be lawful to do so and so long as the Board of Trustees
determines that the Funds will benefit, directly or indirectly, by doing
so, the Manager may place orders with a broker who charges a commission for
that transaction which is in excess of the amount of commission that
another broker would have charged for effecting that transaction, provided
that the excess commission is reasonable in relation to the value of
"brokerage and research services" (as defined in Section 28(e) (3) of the
Securities Exchange Act of 1934) provided by that broker.
Accordingly, the Trust and the Manager agree that the Manager shall select
brokers for the execution of each Fund's transactions from among:
(i) those brokers and dealers who provide quotations and other
services to the Funds, specifically including the quotations necessary to
determine the Funds' net assets, in such amount of total brokerage as may
reasonably be required in light of such services; and
(ii) those brokers and dealers who supply research, statistical and
other data to the Manager or its affiliates which the Manager or its
affiliates may lawfully and appropriately use in their investment advisory
capacities, which relate directly to securities, actual or potential, of
the Funds, or which place the Manager in a better position to make
decisions in connection with the management of each Fund's assets and
securities, whether or not such data may also be useful to the Manager and
its affiliates in managing other portfolios or advising other clients, in
such amount of total brokerage as may reasonably be required. Provided that
the Trust's officers are satisfied that the best execution is obtained, the
sale of shares of the Funds may also be considered as a factor in the
selection of broker-dealers to execute the Funds" portfolio transactions.
(c) It is acknowledged that the Manager may contract with one or more
firms to undertake some or all of the manager's investment management
services as set forth herein pursuant to an agreement which is subject to
substantially the same provisions as contained in paragraphs 6, 7 and 10
herein
(d) When the Manager has determined that any of the Funds should
tender securities pursuant to a "tender offer solicitation,
"Franklin/Xxxxxxxxx Distributors, Inc. ("Distributors") shall be designated
as the "tendering dealer" so long as it is legally permitted to act in such
capacity under the federal securities laws and rules thereunder and the
rules of any securities exchange or association of which Distributors may
be a member. Neither the Manager nor Distributors shall be obligated to
make any additional commitments of capital, expense or personnel beyond
that already committed (other than normal periodic fees or payments
necessary to maintain its corporate existence and membership in the
National Association of Securities Dealers, Inc.) as of the date of this
Agreement. This Agreement shall not obligate the Manager or Distributors
(i) to act pursuant to the foregoing requirement under any circumstances in
which they might reasonably believe that liability might be imposed upon
them as a result of so acting, or (ii) to institute legal or other
proceedings to collect fees which may be considered to be due from others
to it as a result of such a tender, unless the applicable Fund shall enter
into an agreement with the Manager and/or Distributors to reimburse them
for all such expenses connected with attempting to collect such fees,
including legal fees and expenses and that portion of the compensation due
to their employees which is attributable to the time involved in attempting
to collect such fees.
(e) The Manager shall render regular reports to the Trust, not more
frequently than quarterly, of how much total brokerage business has been
placed by the Manager with brokers falling into each of the categories
referred to above and the manner in which the allocation has been
accomplished.
(f) The Manager agrees that no investment decision will be made or
influenced by a desire to provide brokerage for allocation in accordance
with the foregoing, and that the right to make such allocation of brokerage
shall not interfere with the Manager's paramount duty to obtain the best
net price and execution for each Fund.
C. Provision of Information Necessary for Preparation of Securities
Registration Statements - Amendments and Other Materials. The Manager, its
officers and employees will make available and provide accounting and
statistical information required by the Funds in the preparation of
registration statements, reports and other documents required by federal
and state securities laws and with such information as the Funds may
reasonably request for use in the preparation of such documents or of other
materials necessary or helpful for the underwriting and distribution of the
Funds' shares.
D. Other Obligations and Services. The Manager shall make its officers
and employees available to the Board of Trustees and officers of the Trust
for consultation and discussions regarding the administration and
management of the Funds and their investment activities.
3. Expenses of the Funds. It is understood that each Fund will pay all of
its own expenses other than those expressly assumed by the Manager herein, which
expenses payable by the Funds shall include:
A. Fees and expenses paid to the Manager as provided herein;
B. Expenses of all audits by independent public accountants;
C. Expenses of transfer agent, registrar, custodian, dividend
disbursing agent and shareholder record-keeping services, including the
expenses of issue, repurchase or redemption of their shares;
D. Expenses of obtaining quotations for calculating the value of each
Fund's net assets;
E. Salaries and other compensations of executive officers of the Trust
who are not officers, directors, stockholders or employees of the Manager
or its affiliates;
F. Taxes levied against the Fund;
G. Brokerage fees and commissions in connection with the purchase and
sale of securities for each Fund;
H. Costs, including the interest expense, of borrowing money;
I. Costs incident to meetings of Board of Trustees and shareholders of
each Fund, reports to each Fund's shareholders, the filing of reports with
regulatory bodies and the maintenance of each Fund's and the Trust's legal
existence;
J. Legal fees, including the legal fees related to the registration
and continued qualification of each Fund's shares for sale;
K. Trustees' fees and expenses to trustees who are not directors,
officers, employees or stockholders of the Manager or any of its
affiliates;
L. Costs and expense of registering and maintaining the registration
of the Funds and their shares under federal and any applicable state laws;
including the printing and mailing of prospectuses to their shareholders;
M. Trade association dues; and
N. Each Fund's pro rata portion of fidelity bond, errors and
omissions, and trustees and officer liability insurance premiums.
4. Compensation of the Manager. Each Fund shall pay a monthly management
fee in cash to the Manager based upon a percentage of the value of the
respective Fund's net assets, calculated as set forth below, as compensation for
the services rendered and obligations assumed by the Manager, during the
preceding month, on the first business day of the month in each year. The
initial management fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this Agreement,
and shall be reduced by the amount of any advance payments made by the Funds
relating to the previous month.
A. For purposes of calculating such fee, the value of the net assets
of each Fund shall be the average daily net assets of each Fund during each
month, determined in the same manner as each Fund uses to compute the value
of its net assets in connection with the determination of the net asset
value of its shares, all as set forth more fully in the Trust's current
prospectus and statement of additional information. The rate of the monthly
fee payable to the Manager by each of the Funds shall be based upon the
following annual rates:
0.65%of the value of the average daily net assets of each of the
Franklin/Xxxxxxxxx Global Currency Fund, the Franklin/Xxxxxxxxx High Income
Currency Fund, and the Franklin/Xxxxxxxxx Hard Currency Fund;
0.50% of the value of the average daily net assets of the U.S. Cash
Portfolio; and
0.55% of the value of the average daily net assets of the
Franklin/Xxxxxxxxx German Government Bond Fund.
B. The management fee payable by each Fund shall be reduced or
eliminated to the extent that Distributors has actually received cash
payments of tender offer solicitation fees less certain costs and expenses
incurred in connection therewith as set forth in paragraph 2. B. (c) of
this Agreement and to the extent necessary to comply with the limitations
on expenses which may be borne by the Fund as set forth in the laws,
regulations and administrative interpretations of those states in which the
Fund's shares are registered. The Manager may, from time to time,
voluntarily reduce or waive any management fee due to it hereunder.
C. If this Agreement is terminated prior to the end of any month, the
management fee shall be paid to the date of termination.
5. Activities of the Manager. The services of the Manager to the Funds
hereunder are not to be deemed exclusive, and the Manager and any of its
affiliates shall be free to render similar services to others. Subject to and in
accordance with the Agreement and Declaration of Trust and By-Laws of the Trust
and Section 10(a) of the 1940 Act, it is understood that trustees, officers,
agents and shareholders of the Trust are or may be interested in the Manager or
its affiliates as directors, officers, agents or stockholders; that directors,
officers, agents or stockholders of the Manager or its affiliates are or may be
interested in the Trust as trustees, officers, agents, shareholders or
otherwise; that the Manager or its affiliates may be interested in the Funds as
shareholders or otherwise; and that the effect of any such interests shall be
governed by said Agreement and Declaration of Trust, By-Laws and the 0000 Xxx.
6. Liabilities of the Manager.
A. In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of obligations or duties hereunder on the part of the
Manager, the Manager shall not be subject to liability to the Trust or any
of the Funds or to any shareholder of the Funds for any act or omission in
the course of, or connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale of any
security by any of the Funds.
B. Notwithstanding the foregoing the Manager agrees to reimburse the
Trust for any and all costs, expenses, and counsel and trustees' fees
reasonably incurred by the Trust in the preparation, printing and
distribution of proxy statements, amendments to its Registration Statement,
holdings of meetings of its shareholders or trustees, the conduct of
factual investigations, any legal or administrative proceedings (including
any applications for exemptions or determinations by the Securities and
Exchange Commission) which the Trust incurs as the result of action or
inaction of the Manager or any of its affiliates or any of their officers,
directors, employees or stockholders where the action or inaction
necessitating such expenditures (i) is directly or indirectly related to
any transactions or proposed transaction in the stock or control of the
Manager or its affiliates (or litigation related to any pending or proposed
or future transaction in such shares or control) which shall have been
undertaken without the prior, express approval of the Trust's Board of
Trustees; or, (ii) is within the control of the Manager or any of its
affiliates or any of their officers, directors, employees or stockholders.
The Manager shall not be obligated, pursuant to the provisions of this
Subparagraph 6 B., to reimburse the Trust for any expenditures related to
the institution of an administrative proceeding or civil litigation by the
Trust or a shareholder seeking to recover all or a portion of the proceeds
derived by any stockholder of the Manager or any of its affiliates from the
sale of his shares of the Manager, or similar matters. So long as this
Agreement is in effect, the Manager shall pay to the Trust the amount due
for expenses subject to this Subparagraph 6 B. within 30 days after a xxxx
or statement has been received by the Manager therefor. This provision
shall not be deemed to be a waiver of any claim the Trust may have or may
assert against the Manager or others for costs, expenses or damages
heretofore incurred by the Trust or for costs, expenses or damages the
Trust may hereafter incur which are not reimbursable to it hereunder.
C. No provision of this Agreement shall be construed to protect any
trustee or officer of the Trust, or director or officer of the Manager,
from liability in violation of Sections 17(h) and (i) of the 1940 Act.
7. Renewal and Termination.
A. This Agreement shall become effective on the date written below and
shall continue in effect for two (2) years thereafter, unless sooner
terminated as hereinafter provided and shall continue in effect thereafter
as to each Fund for periods not exceeding one (1) year so long as such
continuation is approved at least annually (i) by a vote of a majority of
the outstanding voting securities of each Fund or by a vote of the Board of
Trustees of the Trust, and (ii) by a vote of a majority of the Trustees of
the Trust who are not parties to the Agreement or interested persons of any
parties to the Agreement (other than as Trustees of the Trust), cast in
person at a meeting called for the purpose of voting on the Agreement.
B. This Agreement:
(i) may at any time be terminated with respect to any of the Funds
without the payment of any penalty either by vote of the Board of Trustees
of the Trust or by vote of a majority of the outstanding voting securities
of the Fund, on 60 days' written notice to the Manager;
(ii) shall immediately terminate with respect to all of the Funds in
the event of its assignment; and
(iii) may be terminated by the Manager with respect to any of the
Funds on 60 days' written notice to the applicable Fund.
C. As used in this Paragraph the terms "assignment," "interested
person" and "vote of a majority of the outstanding voting securities" shall
have the meanings set forth for any such terms in the 1940 Act.
D. Any notice under this Agreement shall be given in writing addressed
and delivered, or mailed post-paid, to the other party at any office of
such party.
8. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
10. Limitation of Liability. The Manager acknowledges that it has received
notice of and accepts the limitations of each Fund's liability as set forth in
its Agreement and Declaration of Trust. The Manager agrees that each Fund's
obligations hereunder shall be limited to the assets of the Fund, and that the
Manager shall not seek satisfaction of any such obligation from any
shareholders, of the Fund nor from any trustee, officer, employee or agent of
the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and effective on the 12th day of November, 1993.
HUNTINGTON FUNDS
By: /s/ Xxxxxx X. Xxxxx
Title: President
FRANKLIN ADVISERS, INC.
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title:
