EXHIBIT 5
AGREEMENT
AGREEMENT, made as of the 1st day of June, 1982 by and between
THE RAINBOW FUND, INC., a corporation organized under the laws of the State of
Delaware (hereinafter called the "Fund") and XXXXXX X. XXXXXX (hereinafter
called "RMF").
WHEREAS, the Fund is engaged in business as an open-end
management investment company and is registered under the Investment Company Act
of 1940; and
WHEREAS, RMF operates a brokerage business and is a registered
investment adviser; and
WHEREAS, the Fund has retained RMF to render such services to
the Fund pursuant to an Investment Advisory Agreement effective as of September
6, 1974; and
WHEREAS, the Fund desires to continue to retain RMF to render
such services to the Fund in the manner and on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. The Fund hereby employs RMF to advise it with respect to
the investment and reinvestment of the assets of the Fund and the administration
of the Fund's affairs, subject to the supervision of the Board of Directors of
the Fund and RMF hereby accepts such employment upon the terms and conditions
hereinafter set forth. The Investment Advisory Agreement effective as of
September 6, 1974 by and between Mates Investment Fund and RMF (the "Agreement")
annexed hereto as Exhibit A is hereby readopted in its entirety, as the
Investment Advisory Agreement
between the Fund and RMF effective as of the date hereof which Agreement sets
forth all of the terms and conditions of the Investment Advisory Agreement being
entered into herein as if set forth herein with such modifications as are
hereinafter provided.
2. Notwithstanding the provisions of Paragraph 7 of the
Agreement, and independent of the provisions of Paragraph 8 thereof, the
compensation to be paid to RMF pursuant to Paragraph 7 shall be further reduced,
but not below zero, by 50% of the amount by which portfolio brokerage
commissions received by RMF exceed 2% of the Fund's average annual net assets.
3. Any notices required to be given hereunder shall be given
in writing by certified or registered mail addressed, if to RMF at 00 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and if to the fund at 00 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or to such other address as any party may give to the
other party, provided such request for a change of address shall be forwarded by
certified or registered mail, as aforesaid.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers, thereunder duly authorized
and their respective corporate seals to be hereunto affixed, as of the day and
year first above written.
THE RAINBOW FUND, INC.
By: ___________________________
President
---------------------------
Xxxxxx X. Xxxxxx
Investment Adviser
Exhibit A
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 6th day of September, 1974 by and between
MATES INVESTMENT FUND., a corporation organized and existing under the laws of
the State of Delaware (hereinafter called the "Fund") and XXXXXX X. XXXXXX
(hereinafter called "RMF").
WHEREAS, the Fund is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940;
and
WHEREAS, RMF operates a brokerage business and is a registered
investment adviser;
WHEREAS, Fund desires to retain RMF to render such services to the Fund
in the manner and on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. The Fund hereby employs RMF to advise it with respect to the
investment and reinvestment of the assets of the Fund and the administration of
its affairs, subject to the supervision of the Board of Directors of the Fund,
for the period and on the terms in this Agreement set forth, RMF 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.
RMF shall for all purposes herein be deemed to be and independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
2. RMF shall furnish the Fund with such research, statistical analysis
and studies on companies and industries, as shall be required in order to
formulate a continuous investment program for the Fund, and shall regularly
review the Fund's portfolio in order to assure that it remains consistent with
the stated objectives of the Fund as set forth in its most recent Prospectus. In
connection with the foregoing, RMF shall furnish continuous advice with respect
to the purchase and sale of portfolio securities or the retention of a portion
of the Fund's assets uninvested or in interest bearing obligations.
3. (a) MF shall furnish, without expense to the Fund, the services of
members of his organization) including persons who are officers or employees of
the Fund) to extent such persons are engaged in rendering the services
undertaken pursuant to paragraph 2 hereof. In addition, all sales and
promotional expenses such as "tombstone" advertising in newspapers, financial
publications or periodicals, in connection with distribution of shares of the
Fund (excluding expenses incurred in complying with federal and state laws
regulating the sale of securities) shall be paid by RMF.
(b) In addition to the services set forth in paragraph 3(a), RMF
shall supply and pay for suitable office space and such secretarial and
administrative personnel as shall be necessary to (i) maintain Fund books and
records not maintained, and to process general Fund administrative requirements
not processed, pursuant to any administrative agreement as described in
paragraph 4;
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and (ii) carry out appropriate stockholder relations programs and administer
stockholder correspondence related thereto.
4. RMF shall not be obligated to provide any services to the Fund,
other than those specified in paragraphs 2 and 3 above. Except as provided in
paragraphs 2 and 3, all of the costs of administering the Fund and carrying on
its day-to-day operations shall be borne by the Fund. Without limiting the
foregoing, the Fund shall be responsible and pay directly for the charges of any
firm or corporation which by administrative agreement with the Fund keeps and
maintains the Fund's books and accounts and receives and processes Fund share
orders and redemptions; the charges of the transfer agent and custodian;
auditors' fees; brokerage commissions; taxes and corporate fees; office
administration expense such as telephone and postage charges, equipment rental
and stationary costs; the cost of stock certificates; the costs of issue, sale,
repurchase and redemption of the Fund's shares; the costs and expenses of
compliance with federal and state statutes regulating the issue and sale of its
securities; expenses of shareholders' and directors' meetings and of preparing,
printing and mailing proxy statements, notices and reports to shareholders; fees
and travel expenses of independent and unaffiliated directors; legal fees,
including, without limitation, services rendered in connection with the Fund's
corporate structure, relations with its shareholders, and litigation to which
the Fund is a party; and interest payable on the Fund's borrowings.
5. RMF shall only be obligated to use its best efforts in the
furnishing of investment supervisory services to be rendered hereunder, RMF may,
at its expense, employ other persons to furnish to RMF statistical and other
factual information, advise regarding economic factors and trends, information
with regard to technical and scientific developments, and such other information
and assistance as RMF may desire.
6. Each of the parties agree that in all matters relating to the
performance of this Agreement, it will conform to and comply with the
requirements of the Investment Company Act of 1940, the Investment Advisers Act
of 1940 and all other applicable federal or state laws and regulations. Nothing
herein contained shall be deemed to require the Fund to take any action contrary
to its certificate of incorporation or by-laws or to any applicable statute or
regulation, or to relieve or deprive the board of directors of the Fund of its
responsibility for and control of the conduct of the affairs of the Fund. RMF
agrees that in all matters relating to the administration of the Fund and the
supervision of its investments it will act in conformity with the investment
policies and objectives contained in the Registration Statement and Prospectuses
of the Fund.
7. As full compensation for all services rendered and expenses assumed
by RMF hereunder and subject to paragraph 8 below, the Fund agrees to pay to RMF
and RMF agrees to accept, a yearly fee at the rate of (i) five-eighths of one
percent (5/8 of 1%) of the average annual net asset value of the Fund with
respect to that portion of net assets not exceeding $2,000,000; and (ii)
one-half of one percent (1/2 of 1%) of the average annual-net asset value with
respect to that portion of net assets and three-eights of one percent (3/8 of
1%) of the average annual net value in excess of $5,000,000. Net asset value
shall be determined in accordance with the provisions of the Investment Company
Act of 1940 and Rule 2(a)(4) thereunder.
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Such amounts shall be accrued daily on the basis of the number of
market days in each year, by computing the net asset value of the Fund, in the
manner provided by its certificate of incorporation, as at the close of the New
York Stock Exchange on each day on which said Exchange is open.
The amounts thus accrued during each calendar month shall be paid to
RMF on the fifteenth business day succeeding the date upon which the annual
financial statement of the Fund is certified by its independent public
accountants, less appropriate accrued credits to the Fund arising by virtue of
the provisions of paragraph 8 hereof.
8. Notwithstanding the provisions of paragraph 7 above, the
compensation to be paid to RMF pursuant to paragraph 7 shall be reduced by
making the calculations set forth below:
The said compensation shall be reduced, but not below zero, by the
amount, if any, b y which the expenses of the Fund (exclusive of such
compensation, interest, brokerage commissions, taxes, dividends on short sales
and legal fees incurred in connection with litigation in which the Fund is a
plaintiff) exceed the following percentages of the indicated portions of the
average annual net assets of the Fund:
Portion of Average Management Fee Reduced By
Annual Net Assets: Amount Expenses Exceed:
Below $10,000,000 3%
From $10,000,000 to $30,000,000 1/2%
Above $30,000,000 1/4%
9. The services of RMF to the Fund are not to be deemed to be
exclusive, and RMF shall be free to render investment advisory and corporate
administrative or other services to the other investment companies and to engage
in other activities. Employees or agents of RMF, to the extent permitted by law
and any other applicable regulations, are not prohibited from engaging in any
other business activity or from rendering services to any other person, or from
serving as partners, officers or directors of any other firm or corporations,
including other investment companies.
10. RMF agrees that neither it nor any of its officers or directors
will take any long or short position in the capital stock of the Fund, except
that it or they may purchase shares of such capital stock for investment at the
price at which such shares are available to the public at the time of purchase.
11. In the absence of wilful misfeasance, bad faith or gross negligence
or reckless disregard for its obligations under this contract, RMF shall not be
liable for any act or omission in the course of or in connection with the
rendition of services hereunder.
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12. In the purchase and sale of the Fund's portfolio securities RMF
shall employ such brokers, including RMF, as may, in the best judgment of RMF,
implement the policy of the Fund to obtain the best execution of the Fund's
portfolio transactions. Consistent with the policy, RMF is authorized to direct
the execution of the Fund's portfolio transactions to brokers furnishing
investment information or research deemed by RMF to be useful or valuable to the
performance of its investment advisory functions for the Fund. Transactions in
portfolio securities on a securities exchange of a size such that there is no
fixed commission as to a portion thereof ("negotiated transactions"), may be
directed for execution to any broker, which, in the good faith judgment of RMF,
(i) is qualified to obtain the best price and execution of the particular
transaction; and (ii) may be expected to charge a commission in respect of such
transaction at least as favorable to the Fund as other brokers similarly
qualified to execute that transaction. As to brokers other than RMF, RMF shall
have discretion in assigning an execution or negotiating a commission to be paid
therefor, to consider the full range and quality of a broker's services which
benefit the Fund, including bona fide investment research or other services
which RMF believes are valuable to the Fund's interest. RMF shall have
discretion to pay a commission rate that will assure reliability and quality of
service provided that it is reasonable. Where the commission rate reflects
services furnished to the Fund in addition to the cost of execution. RMF shall
maintain such records as shall permit it to demonstrate upon request of the Fund
that such expenditures were bona fide. It is understood and agreed that all such
expenditures must be rendered in the b est interest of the Fund.
In the selection of a broker for the execution of any negotiated
transaction, RMF shall not have an obligation to seek advance competitive
bidding for the most favorable negotiated commission rate to be applicable to
such transaction, or to select any broker solely on the basis of its purported
or "posted" commission rate applicable to negotiated transaction. However, RMF
shall be required to consider such "posted" commission rates, if any, as may be
applicable to the transaction as well as any other information available at the
time, as to the level of commission known to be charged on comparable
transactions by other qualified brokerage firm. In reaching a judgment relative
to the qualifications of a broker to obtain the best execution of any particular
negotiated transaction, RMF may take into account all relevant factors and
circumstances, including the size of any contemporaneous market in such
securities; the importance of the Fund of speed, efficiency and confidentiality
of execution; the execution capabilities required by the circumstances of the
particular transactions; and the broker's apparent knowledge or familiarity with
sources from or to whom such securities may be purchased or sold.
The Fund recognizes and intends that RMF will act as the Fund's regular
broker and may be the major recipient of brokerage fees paid by the Fund. RMF
may execute portfolio transactions of the Fund except when better price or
execution has been determined to be obtainable through another broker. Brokerage
charges on negotiated transactions executed by RMF for the Fund may not be less
favorable to the Fund than his contemporaneous charge for the execution of
similar transactions to its most favored unaffiliated customers. Such brokerage
commissions may not reflect anything other than payment for the execution
services performed on such transactions. Research services will not be a
consideration in the allocation of brokerage to RMF, nor will RMF nor any
affiliate receive or seek to receive reciprocal brokerage business related to or
generated through the executions of the Fund portfolio transactions.
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13. The term of this Agreement shall begin on the date first above
written and this Agreement shall remain in effect for a period of (1) year from
that date, unless sooner terminated as hereinafter provided. This Agreement
shall continue in effect from years to year thereafter, subject to the
provisions for termination and all of the other terms and conditions hereof, if
such continuation shall be specifically approved at least annually (a) by the
board of directors, including the vote of a majority of the directors who are
not parties to this agreement or "interested persons" of any such party (as that
term is defined in the Investment Company Act of 1940, as amended) cast in
person at a meeting called for that purpose; or (b) by such vote of such
directors of the Fund and by a vote of a majority of the outstanding voting
securities of the Fund. Anything in this paragraph to the contrary
notwithstanding, this Agreement shall terminate without penalty:
(i) in the event of its assignment (withing the meaning of the
Investment Company Act of 1940) by RMF or the Fund, or
(ii) at any time upon sixty (60) days notice in writing by RMF
or the Fund, provided that in the case of the Fund, such termination is
approved by a vote of the board of directors of the Fund or by vote of
a majority of the outstanding voting securities of the Fund.
14. Any notices required to be given hereunder shall be given in the
writing by certified or registered mail addressed, if to RMF at 0000 Xxxxxxxx,
Xxx Xxxx, XX., and if to the Fund at 0000 Xxxxx Xxxxxx, Xxx Xxxx, N.Y., or to
such other address as any party may give to the other party, provided such
request for a change of address shall be forwarded by certified or registered
mail, as aforesaid.
15. This Agreement contains the entire agreement between the parties,
shall be governed by the laws of the State of New York and may not be altered or
changed, except as otherwise provided herein, except by an agreement in writing
signed by all of the parties hereto.
16. This Agreement shall inure to the benefit and be binding upon the
parties hereto and their respective successors and assigns (to the extent
permitted by law).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers, thereunto duly authorized and their
respective corporate seals to be hereunto affixed, as of the day and year first
above written.
MATES INVESTMENT FUND, INC.
ATTEST
By __________________________
_________________________ President
Secretary
__________________________
Xxxxxx X. Xxxxxx
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