EXHIBIT 10.31
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 1st day of August, 1990, by and between____________________
______________ (hereinafter called "United"), and XXXXXXX & XXXX, INC.
WITNESSETH:
In consideration of the mutual promises and agreements herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and between the parties hereto as follows:
I. In General
Xxxxxxx & Xxxx, Inc., agrees to act as investment adviser to United
with respect to the investment of its assets and in general to supervise the
investments of United, subject at all times to the direction and control of the
Board of Directors of United, all as more fully set forth herein.
II. Duties of Xxxxxxx & Xxxx, Inc., with respect to investment of assets
of United
X. Xxxxxxx & Xxxx Inc., shall regularly provide investment
advice to United and shall, subject to the succeeding provisions of this
section, continuously supervise the investment and reinvestment of cash,
securities or other property comprising the assets of the investment portfolios
of United; and in furtherance thereof, Xxxxxxx & Xxxx, Inc., shall:
1. obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or one or more of the
portfolios of United, and whether concerning the individual companies whose
securities are included in United's portfolios or the industries in which they
engage, or with respect to securities which Xxxxxxx & Xxxx, Inc., considers
desirable for inclusion in United's portfolios;
2. furnish continuously an investment program for each of the
portfolios of United;
3. determine what securities shall be purchased or sold by United;
4. take, on behalf of United, all actions which appear to Xxxxxxx &
Xxxx, Inc., necessary to carry into effect such investment programs and
supervisory functions as aforesaid, including the placing of purchase and sale
orders.
X. Xxxxxxx & Xxxx, Inc., shall make appropriate and regular reports to
the Board of Directors of United on the actions it takes pursuant to Section
II.A. above. Any investment programs furnished by Xxxxxxx & Xxxx, Inc., under
this section, or any supervisory function taken hereunder by Xxxxxxx & Xxxx,
Inc., shall at all times conform to and be in accordance with any requirements
imposed by:
1. the provisions of the Investment Company Act of 1940 and any
rules or regulations in force thereunder;
2. any other applicable provision of law;
3. the provisions of the Articles of Incorporation of United as amended
from time to time;
4. the provisions of the Bylaws of United as amended from time to time;
5. the terms of the registration statements of United, as amended from
time to time, under the Securities Act of 1933 and the Investment Company Act of
1940.
C. Any investment programs furnished by Xxxxxxx & Xxxx, Inc., under
this section or any supervisory functions taken hereunder by Xxxxxxx & Xxxx,
Inc., shall at all times be subject to any directions of the Board of Directors
of United, its Executive Committee, or any committee or officer of United acting
pursuant to authority given by the Board of Directors.
III. Allocation of Expenses
The expenses of United and the expenses of Xxxxxxx & Xxxx, Inc., in
performing its functions under this Agreement shall be divided into two classes,
to wit:
(i) those expenses which will be paid in full by Xxxxxxx & Xxxx, Inc.,
as set forth in subparagraph "A" hereof, and (ii) those expenses which will be
paid in full by United, as set forth in subparagraph "B" hereof.
A. With respect to the duties of Xxxxxxx & Xxxx, Inc., under Section II
above, it shall pay in full, except as to the brokerage and research services
acquired through the allocation of commissions as provided in Section IV
hereinafter, for (a) the salaries and employment benefits of all employees of
Xxxxxxx & Xxxx, Inc. who are engaged in providing these advisory services; (b)
adequate office space and suitable office equipment for such employees; and (c)
all telephone and communications costs relating to such functions. In addition,
Xxxxxxx & Xxxx, Inc., shall pay the fees and expenses of all directors of United
who are affiliated with Xxxxxxx & Xxxx, Inc., or an affiliated corporation and
the salaries and employment benefits of all officers of United who are
affiliated persons of Xxxxxxx & Xxxx, Inc.
B. United shall pay in full for all of its expenses which are not
listed above (other than those assumed by Xxxxxxx & Xxxx, Inc., or its
affiliates in its capacity as Accounting Services Agent for United), including
(a) the costs of preparing and printing prospectuses and reports to shareholders
of United including mailing costs; (b) the costs of printing all proxy
statements and all other costs and expenses of meetings of shareholders of
United; (c) interest, taxes, brokerage commission and premiums on fidelity and
other insurance; (d) audit fees and expenses of independent accountants and
legal fees and expenses of attorneys, but not of attorneys who are employees of
Xxxxxxx & Xxxx, Inc.; (e) fees and expenses of its directors not affiliated with
Xxxxxxx & Xxxx, Inc.; (f) custodian fees and expenses; (g) fees payable by
United under the Securities Act of 1933, the Investment Company Act of 1940, and
the securities or "Blue-Sky" laws of any jurisdiction; (h) fees and assessments
of the Investment Company Institute or any successor organization; (i) such non
recurring or extraordinary expenses as may arise, including litigation affecting
United and any indemnification by United of its officers, directors, employees
and agents with respect thereto; (j) the costs and expenses provided for in any
Shareholder Servicing Agreement or Accounting Services Agreement, including
amendments thereto, contemplated by subsection C of this section III. In the
event that any of the foregoing shall, in the first instance, be paid by Xxxxxxx
& Xxxx, Inc., United shall pay the same to Xxxxxxx & Xxxx, Inc., on presentation
of a statement with respect thereto.
X. Xxxxxxx & Xxxx, Inc., or an affiliate of Xxxxxxx & Xxxx, Inc., may
also act as (i) transfer agent or shareholder servicing agent of United and/or
as (ii) accounting services agent of United if at the time in question there is
a separate agreement, "Shareholder Servicing Agreement" and/or "Accounting
Services Agreement," covering such functions between United and Xxxxxxx & Xxxx,
Inc., or such affiliate. The corporation, whether Xxxxxxx & Xxxx, Inc., or its
affiliate, which is the party to such Agreement with United is referred to as
the "Agent." Each such Agreement shall provide in substance that it shall not go
into effect, or may be amended, or a new agreement covering the same topics
between United and the Agent may be entered into only if the terms of such
Agreement, such amendment or such new agreement have been approved by the Board
of Directors of United, including the vote of a majority of the directors who
are not "interested persons" as defined in the Investment Company Act of 1940,
of either party to the Agreement, such amendment or such new agreement
(considering Xxxxxxx & Xxxx, Inc., to be such a party even if at the time in
question the Agent is an affiliate of Xxxxxxx & Xxxx, Inc.), cast in person at a
meeting called for the purpose of voting on such approval. Such a vote is
referred to as a "disinterested director" vote. Each such Agreement shall also
provide in substance for its continuance, unless terminated, for a specified
period which shall not exceed two years from the date of its execution and from
year to year thereafter only if such continuance is specifically approved at
least annually by a disinterested director vote, and that any disinterested
director vote shall include a determination that (i) the Agreement, amendment,
new agreement or continuance in question is in the best interests of United and
its shareholders; (ii) the services to be performed under the Agreement, the
Agreement as amended, new agreement or agreement to be continued are services
required for the operation of United; (iii) the Agent can provide services the
nature and quality of which are at least equal to those provided by others
offering the same or similar services; and (iv) the fees for such services are
fair and reasonable in light of the usual and customary charges made by others
for services of the same nature and quality. Any such Agreement may also provide
in substance that any disinterested director vote may be conditioned on the
favorable vote of the holders of a majority (as defined in or under the
Investment Company Act of 1940) of the outstanding shares of each class of
United. Any such Agreement shall also provide in substance that it may be
terminated by the Agent at any time without penalty upon giving United one
hundred twenty (120) days' written notice (which notice may be waived by United)
and may be terminated by United at any time without penalty upon giving the
Agent sixty (60) days' written notice (which notice may be waived by the Agent),
provided that such termination by United shall be directed or approved by the
vote of a majority of the Board of Directors of United in office at the time or
by the vote of the holders of a majority (as defined in or under the Investment
Company Act of 1940) of the outstanding shares of each class of United.
IV. Brokerage
(a) Xxxxxxx & Xxxx, Inc., may select brokers to effect the portfolio
transactions of United on the basis of its estimate of their ability to obtain,
for reasonable and competitive commissions, the best execution of particular and
related portfolio transactions. For this purpose, "best execution" means prompt
and reliable execution at the most favorable price obtainable. Such brokers may
be selected on the basis of all relevant factors including the execution
capabilities required by the transaction or transactions, the importance of
speed, efficiency, or confidentiality, and the willingness of the broker to
provide useful or desirable investment
research and/or special execution services. Xxxxxxx & Xxxx, Inc., shall have
no duty to seek advance competitive commission bids and may select brokers
based solely on its current knowledge of prevailing commission rates.
(b) Subject to the foregoing, Xxxxxxx & Xxxx, Inc., shall have
discretion, in the interest of United, to direct the execution of its
portfolio transactions to brokers who provide brokerage and/or research
services (as such services are defined in Section 28(e) of the Securities
Exchange Act of 1934) for United and/or other accounts for which Xxxxxxx &
Xxxx, Inc., and its affiliates exercise "investment discretion" (as that term
is defined in Section 3(a)(35) of the Securities Act of 1934); and in
connection with such transactions, to pay commission in excess of the amount
another adequately qualified broker would have charged if Xxxxxxx & Xxxx,
Inc., determines, in good faith, that such commission is reasonable in
relation to the value of the brokerage and/or research services provided by
such broker, viewed in terms of either that particular transaction or the
overall responsibilities of Xxxxxxx & Xxxx, Inc., and its investment advisory
affiliates with respect to the accounts for which they exercise investment
discretion. In reaching such determination, Xxxxxxx & Xxxx, Inc., will not be
required to attempt to place a specified dollar amount on the brokerage
and/or research services provided by such broker; provided that Xxxxxxx &
Xxxx, Inc., shall be prepared to demonstrate that such determinations were
made in good faith, and that all commissions paid by United over a
representative period selected by its Board of Directors were reasonable in
relation to the benefits to United.
(c) Subject to the foregoing provisions of this Paragraph "IV," Xxxxxxx
& Xxxx, Inc., may also consider sales of insurance policies funded by United's
shares and sales of shares of investment companies distributed by Xxxxxxx &
Xxxx, Inc., or its affiliates, and portfolio valuation or pricing services as a
factor in the selection of brokers to execute brokerage and principal portfolio
transactions.
V. Compensation of Xxxxxxx & Xxxx, Inc.
As compensation in full for services rendered and for the facilities
and personnel furnished under sections I, II, and IV of this Agreement, United
will pay to Xxxxxxx & Xxxx, Inc., for each day the fees specified in Exhibit A
hereto.
The amounts payable to Xxxxxxx & Xxxx, Inc., shall be determined as of
the close of business each day; shall, except as set forth below, be based upon
the value of net assets computed in accordance with the Articles of
Incorporation of United; and shall be paid in arrears whenever requested by
Xxxxxxx & Xxxx, Inc.
Notwithstanding the foregoing, if the laws, regulations or policies of
any state in which shares of United are qualified for sale limit the operation
and management expenses of United, Xxxxxxx & Xxxx, Inc., will refund to United
the amount by which such expenses exceed the lowest of such state limitations.
VI. Undertakings of Xxxxxxx & Xxxx, Inc.; Liabilities
Xxxxxxx & Xxxx, Inc., shall give to United the benefit of its best
judgment, efforts and facilities in rendering advisory services hereunder.
Xxxxxxx & Xxxx, Inc., shall at all times be guided by and be subject to
United's investment policies, the provisions of its Articles of Incorporation
and Bylaws as each shall from time to time be amended, and to the decision and
determination of United's Board of Directors.
This Agreement shall be performed in accordance with the requirements
of the Investment Company Act of 1940, the Investment Advisers Act of 1940, the
Securities Act of 1933, and the Securities Exchange Act of 1934, to the extent
that the subject matter of this Agreement is within the purview of such Acts.
Insofar as applicable to Xxxxxxx & Xxxx, Inc., as an investment adviser and
affiliated person of United, Xxxxxxx & Xxxx, Inc., shall comply with the
provisions of the Investment Company Act of 1940, the Investment Advisers Act of
1940 and the respective rules and regulations of the Securities and Exchange
Commission thereunder.
In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of Xxxxxxx &
Xxxx, Inc., it shall not be subject to liability to United or to any stockholder
of United (direct or beneficial) for any act or omission in the course of or
connected with rendering services thereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
VII. Duration of this Agreement
This Agreement shall become effective at the start of business on the
date hereof and shall continue in effect, unless terminated as hereinafter
provided, for a period of one year and from year-to-year thereafter only if such
continuance is specifically approved at least annually by the Board of
Directors, including the vote of a majority of the directors who are not parties
to this Agreement or "interested persons" (as defined in the Investment Company
Act of 1940) of any such party, cast in person at a meeting called for the
purpose of voting on such approval, or by the vote of the holders of a majority
(as so defined) of the outstanding voting securities of each class of United and
by the vote of a majority of the directors who are not parties to this
Agreement or "interested persons" (as so defined) of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
VIII. Termination
This Agreement may be terminated by Xxxxxxx & Xxxx, Inc., at any time
without penalty upon giving United one hundred twenty (120) days' written notice
(which notice may be waived by United) and may be terminated by United at any
time without penalty upon giving Xxxxxxx & Xxxx, Inc. sixty (60) days' written
notice (which notice may be waived by Xxxxxxx & Xxxx, Inc.), provided that such
termination by United shall be directed or approved by the vote of a majority of
the Board of Directors of United in office at the time or by the vote of a
majority (as defined in the Investment Company Act of 1940) of the outstanding
voting securities of United. This Agreement shall automatically terminate in the
event of its assignment, the term "assignment" for this purpose having the
meaning defined in Section 2(a)(4) of the Investment Company Act of 1940 and the
rules and regulations thereunder.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to
be executed by their duly authorized officers and their corporate seal to be
hereunto affixed, all as of the day and year first above written.
______________________________________
By:____________________________
____________________________
XXXXXXX & XXXX, INC.
By:____________________________
____________________________
EXHIBIT A TO INVESTMENT MANAGEMENT AGREEMENT
___________________________________________
FEE SCHEDULE
A cash fee consisting of two elements:
1. A "specific" fee computed each day on net asset value at the
annual rate of .15 of 1% of net assets; and
2. A pro rata participation based on the relative net asset size of
United in a "Group" fee computed each day on the combined net asset values of
all the Funds in the United Group listed hereafter at the annual rates shown in
the following table:
Group Fee Rate
Group Net Asset Level Annual Group Fee
(all dollars in millions) Rate For Each Level
------------------------- -------------------
From $ 0 to $ 750
From $ 750 to $ 1,500
From $ 1,500 to $ 2,250
From $ 2,250 to $ 3,000
From $ 3,000 to $ 3,750
From $ 3,750 to $ 7,500
From $ 7,500 to $12,000
Over $12,000
Determined as of the close of business that day or, if not a business day, as of
the close of business the first business day preceding.
The Funds in the United Group are:
United Funds, Inc.
United High Income Fund
United Income Fund
United Accumulative Fund
United Science & Technology Fund
United Vanguard Fund, Inc.
United Retirement Shares, Inc.
United Continental Income Fund, Inc.
United International Growth Fund, Inc.
United Municipal High Income Fund, Inc.
United Municipal High Income Fund, Inc.
United Cash Management, Inc.
United Government Securities Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United New Concepts Fund, Inc.,
United Gold & Government Fund, Inc.
United Asset Strategy Fund, Inc.
and such other funds for which Xxxxxxx & Xxxx, Inc., may now or hereafter act as
investment adviser, provided that the parties to this Agreement expressly agree
in writing that such fund shall be included in the present United Group for the
purpose of determining the group fee rate.
