IMG MUTUAL FUNDS, INC.
EXHIBIT # 5(b)(2)
TO
POST-EFFECTIVE AMENDMENT NO. 7
FORM N-1A REGISTRATION STATEMENT
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made as of December ___, 1997, between the IMG Mutual
Funds, Inc., a Maryland Corporation (herein called the "Company"), and Investors
Management Group, a federally registered investment advisor having its principal
place of business in Des Moines, Iowa (herein called the "Investment Advisor").
WHEREAS, the Company is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Company desires to retain the Investment Advisor to
furnish investment advisory and administrative services to the ten existing
investment portfolios of the Company and may retain the Investment Advisor to
serve in such capacity to certain additional investment portfolios of the
Company, all as now or hereafter may be identified in Schedule A hereto (such
initial investment portfolio and any such additional investment portfolios
together called the "Funds") and the Investment Advisor represents that it is
willing and possess legal authority to so furnish such services without
violation of applicable laws (including the Xxxxx-Xxxxxxxx Act) and regulations:
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints the Investment Advisor to act
as investment adviser to the Funds for the period and on the terms set
forth in this Agreement. The Investment Advisor accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided. Additional investment portfolios may from
time to time be added to those covered by this Agreement by the parties
executing a new Schedule A which shall become effective upon its
execution and shall supersede any Schedule A having an earlier date.
2. Delivery of Documents. The Company has furnished the Investment Advisor
with copies properly certified or authenticated of each of the
following:
(a) The Company's Articles of Incorporation, dated November 15,
1994, and filed with the Secretary of State of Maryland on
November 16, 1994, and any and all amendments thereto or
restatements thereof (such Articles, as presently in effect
and as it shall from time to time be amended or restates, is
herein called the "Articles of Incorporation");
(b) The Company's By Laws and any amendments thereto:
(c) Resolutions of the Company's Board of Directors authorizing
the appointment of the Investment Advisor and approving this
Agreement;
(d) The Company's Notification of Registration on Form N-8A under
the 1940 Act as filed with the Securities and Exchange
Commission on December 13, 1994, and all amendments thereto;
(e) The Company's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act"), and under
the 1940 Act as filed with the Securities and Exchange
Commission and all amendment thereto; and
(f) The most recent Prospectus and Statement of Additional
Information of each of the Funds (such Prospectus and
Statement of Additional Information, as presently in effect,
and all amendments and supplements thereto, are herein
collectively called the "Prospectus").
The Company will furnish the Investment Advisor from time to time with
copies of all amendments of or supplements to the foregoing.
3. Management. Subject to the supervision of the Company's Board of
Directors, the Investment Advisor will provide a continuous investment
program for the Funds, including investment research and management
with respect to all securities and investments and cash equivalents in
the Funds. The Investment Advisor will determine from time to time what
securities and other investments will be purchased, retained or sold by
the Company with respect to the funds. The Investment Advisor will
provide the services under this Agreement in accordance with each of
the Fund's investment objectives, policies, and restrictions as stated
in the Prospectus and resolutions of the Company's Board of Directors.
The Investment Advisor further agrees that it:
(a) Will use the same skill and care in providing such services as
it uses in providing services to fiduciary accounts for which
it has investment responsibilities;
(b) Will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission under the 1940 Act and in
addition will conduct its activities under this Agreement in
accordance with any applicable regulations of any governmental
authority pertaining to the investment advisory activities of
the Investment Advisor;
(c) Will not make loans to any person to purchase or carry units
of beneficial interest ("shares") in the Company or make loans
to the Company;
(d) Will place or cause to be placed orders for the funds either
directly with the issuer or with any broker or dealer. In
placing orders with brokers and dealers, the Investment
Advisor will attempt to obtain prompt execution of orders in
an effective manner at the most favorable price. The
Investment Advisor may cause a Fund to pay a broker which
provides brokerage and research services to the Investment
Advisor a commission for effecting a securities transaction in
excess of the amount another broker might have charged. Such
higher commissions may not be paid unless the Investment
Advisor determines in good faith that the amount paid is
reasonable in relation to the services received in terms of
the particular transaction or the Investment Advisor's overall
responsibilities to the Company and any other of the
Investment Advisor's clients. In no instance will portfolio
securities by purchase from or sold to the Investment Advisor,
or any affiliated person of the Company or the Investment
Advisor;
(e) Will maintain all books and records with respect to the
securities transactions of the Funds and will furnish the
Company's Board of Directors with such periodic and special
reports as the Board may request;
(f) Will treat confidentially and as proprietary information of
the Company all records and other information relative to the
Company and the funds and prior, present, or potential
shareholders, and will not use such records and information
for any purpose other than performance of its responsibilities
and duties hereunder, except after prior notification to and
approval in writing by the Company, which approval shall not
be unreasonably withheld and may not be withheld where the
Investment Advisor may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or
when so requested by the Company, and;
(g) Will maintain its policy and practice of conducting its
fiduciary functions independently. In making investment
recommendations for the Funds, the Investment Advisor's
personnel will not inquire or take into consideration whether
the issuers of securities proposed for purchase or sale for
the Company's account are customers of the Investment Advisor
or of its parent or its subsidiaries or affiliates. In dealing
with such customers, the Investment Advisor and its parent,
subsidiaries, and affiliates will not inquire or take into
consideration whether securities of those customers are held
by the Company.
4. Services Not Exclusive. The investment management services furnished by
the Investment Advisor hereunder are not to be deemed exclusive, and
the Investment Advisor shall be free to furnish similar services to
others so long as its services under this Agreement are not impaired
thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Advisor hereby agrees that all
records which it maintains for the funds are the property of the
Company and further agrees to surrender promptly to the Company any of
such records upon the Company's request. The Investment Advisor further
agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
6. Expenses. During the term of this Agreement, the Investment Advisor
will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities (including
brokerage commissions, if any) purchased for the Funds.
7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, each of the funds will pay the Investment
Advisor and the Investment Advisor will accept as full compensation
therefor a fee equal to the fee set forth on Schedule A hereto. The
obligations of the funds to pay the above described fee to the
Investment Advisor will begin as of the respective dates of the initial
public sale of shares in the Funds.
If in any fiscal year the aggregate expenses of any of the Funds (as
defined under the securities regulations of any state having
jurisdiction over the Company) exceed the expense limitations of any
such state, the Investment Advisor will reimburse the Fund for a
portion of such excess expenses equal to such excess times the ratio of
the fees otherwise payable by the Fund to the Investment Advisor
hereunder and to IMG under the Management and Administration Agreement
between IMG and the Company. The obligation of the Investment Advisor
to reimburse the Funds hereunder is limited in any fiscal year to the
amount of its fee hereunder for such fiscal year, provided however,
that notwithstanding the foregoing, the Investment Adviser shall
reimburse the Funds for such proportion of such excess expenses
regardless of the amount paid to it during such fiscal year to the
extent that the securities regulations of any state having jurisdiction
over the Company so require. Such expense reimbursement, if any will be
estimated daily and reconciled and paid on a monthly basis.
8. Limitation of Liability. The Investment Advisor shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the
Funds in connection with the performance of this Agreement, except a
loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith, or gross negligence on the part of the
Investment Advisor in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
9. Duration and Termination. This Agreement will become effective as of
the date first written above (of, if a particular fund is not in
existence on that date, on the date a registration statement relating
to that Fund becomes effective with the Securities and Exchange
Commission), provided that it shall have been approved by vote of a
majority of the outstanding voting securities of such Fund, in
accordance with the requirements under the 1940 Act, and, unless sooner
terminated as provided herein, shall continue in effect until December
__, 1999.
Thereafter, if not terminated, this Agreement shall continue in effect
as to a particular Fund for successive annual periods, provided such
continuance is specifically approved at least annually (a) by the vote
of a majority of those members of the Company's Board of Directors who
are not parties to this Agreement or interested persons of any party to
this Agreement, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the vote of a majority of the
Company's Board of Directors or by vote of a majority of all votes
attributable to the outstanding shares of such Fund. Notwithstanding
the foregoing, this Agreement may be terminated as to a particular Fund
at any time on sixty days' written notice, without the payment of any
penalty, by the Company (by vote of the Company's Board of Directors or
by vote of a majority of the outstanding voting securities of such
Fund) or by the Investment Advisor. This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement,
the terms "majority of the outstanding voting securities", "interested
persons" and "assignment" shall have the same meanings as ascribed to
such terms in the 1940 Act.)
10. Investment Advisor's Representations. The Investment Advisor hereby
represents and warrants that it is willing and possess all requisite
legal authority to provide the services contemplated by this Agreement
without violation of applicable law and regulations, including but not
limited to the Xxxxx-Xxxxxxxx Act and the regulations promulgated
thereunder.
11. Amendment to this Agreement. No provision of this Agreement may be
changed, waived, discharges or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought.
12. Miscellaneous. The names "IMG Mutual Funds, Inc." and Directors of the
IMG Mutual Funds, Inc." refer respectively to the Company created and
the Directors, as directors but not individually or personally. The
obligations of the Company entered into in the name or on behalf
thereof by any of the Directors, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of
the Directors, Shareholders or representatives of the Company
personally, but bind only the assets of the Company, and all persons
dealing with any series of shares of the Company must look solely to
the assets of the Company belonging to such series for the enforcement
of any claims against the Company.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
IMG Mutual Funds, Inc.
By: ____________________________________
Title: ___________________________________
Investors Management Group
By: ____________________________________
Title: ___________________________________
Schedule A to the
Investment Advisory Agreement
Between the IMG Mutual Funds, Inc. and
Investors Management Group
Name of Fund Compensation
Vintage Equity Fund Annual rate of seventy-five
one-hundredths of one percent
(0.75%) of the average daily
net assets of such Fund.
Vintage Aggressive Growth Fund Annual rate of ninety-five
one-hundredths of one percent
(0.95%) of the average daily
net assets of such Fund.
Vintage Balanced Fund Annual rate of seventy-five
one-hundredths of one percent
(0.75%) of the average daily
net assets of such Fund.
Vintage Municipal Bond Fund Annual rate of sixty
one-hundredths of one percent
(0.60%) of the average daily
net assets of such Fund.
Vintage Bond Fund Annual rate of fifty-five
one-hundredths of one percent
(0.55%) of the average daily
net assets of such Fund
Vintage Income Fund Annual rate of sixty
one-hundredths of one percent
(0.60%) of the average daily
net assets of such Fund.
Vintage Limited Term Bond Fund Annual rate of sixty
one-hundredths of one percent
(060%) of the average daily
net assets of such Fund.
Liquid Assets Fund Annual rate of thity-five
one-hundredths of one percent
(0.35%) of the average daily
net assets of such Fund.
Government Assets Fund Annual rate of forty
one-hundredths of one percent
(0.40%) of the average daily
net assets of such Fund.
Municipal Assets Fund Annual rate of thirty-five
one-hundredths of one percent
(0.35%) of the average daily
net assets of such Fund.
* All fees are computed daily and paid monthly.
