1
EXHIBIT 5
MANAGEMENT AGREEMENT
AGREEMENT made as of April 17, 1993 between NAVIGATOR TAX-FREE MONEY
MARKET FUND, INC., a Maryland corporation (herein called the "Fund"), and
FAIRFIELD GROUP, INC., a Pennsylvania corporation (the "Manager").
WHEREAS, the Fund is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Fund desires to retain the Manager to furnish investment
advisory and administrative services with respect thereto to the Fund, and the
Manager is willing to so furnish such services;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Manager to act as
investment adviser to the Fund for the period and on the terms set forth in this
Agreement. The Manager accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided.
2. Delivery of Documents. The Fund has furnished the Manager with
copies properly certified or authenticated of each of the following:
(a) The Fund's Articles of Incorporation;
(b) The Fund's By-Laws and all amendments thereto;
(c) Resolutions of the Fund's Directors authorizing the appointment
of the Manager and approving this Agreement;
(d) The Fund's Notification of Registration on Form N-8A under the
1940 Act as filed with the Securities and Exchange Commission;
(e) The Fund's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended ("1933 Act") (File No. 33-3082) and
under the 1940 Act as filed with the Securities and Exchange Commission
and all amendments thereto; and
(f) The Fund's most recent prospectus (such prospectus, as presently
in effect, and all amendments and supplements thereto are herein called
the "Prospectus").
2
The Fund will furnish the Manager from time to time with copies of all
amendments of or supplements to the foregoing.
3. Investment Management. Subject to the supervision of the Fund's
Directors, the Manager will provide a continuous investment program for the
Fund, including investment research and management with respect to all
securities and investments and cash equivalents in the Fund. The Manager will
determine from time to time what securities and other investments will be
purchased, retained or sold by the Fund. The Manager will provide the services
under this Agreement in accordance with the Fund's investment objective,
policies and restrictions as stated in the Prospectus and resolutions of the
Fund's Directors. The Manager further agrees that it:
(a) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission;
(b) will not make loans to any person for the purpose of purchasing
Fund Shares or make loans to the Fund;
(c) will place orders pursuant to its investment determination for
the fund either directly with the issuer or with any broker or dealer.
In placing orders with brokers and dealers the Manager will attempt,
under the circumstances, to obtain the execution of orders in an
effective manner at the most favorable price. Consistent with this
obligation, when the execution and price offered by two or more brokers
or dealers are comparable, the Manager may, in its discretion, purchase
and sell portfolio securities to and from brokers and dealers who
provide the Manager with research advice and other services. In no
instance will portfolio securities be purchased from or sold to the
Manager, or any affiliated person of either the Fund or the Manager;
and
(d) will maintain all books and records with respect to the Fund's
securities transactions and will furnish to the Fund's Directors such
periodic and special reports as the Directors may request.
4. Administrative Services. Subject to the direction and control of the
Directors of the Fund, the Manager will assist in supervising all aspects of the
Fund's operations.
The Manager will maintain office facilities (which may be in offices of
the Manager or a corporate affiliate but shall be in such location as the Fund
shall reasonably determine); furnish statistical and research data, clerical,
accounting and bookkeeping services and stationery and office supplies; prepare
the Fund's Annual Report to the Securities and Exchange on Form N-1R and its
Quarterly Reports on Form N-1Q; compile data for, prepare for execution by the
Fund and file all
2
3
the Fund's federal and state tax returns and required tax filings other than
those required to be made by the Fund's custodian and transfer agent; prepare
compliance filings pursuant to state securities laws with the advice of the
Fund's counsel; assist to the extent requested by the Fund with the Fund's
preparation of its Annual and Semi-Annual Reports to shareholders and its
Registration Statements (on Form N-1A or any replacement therefor); compile data
for, prepare and file timely Notices to the Securities and Exchange Commission
required pursuant to Rule 24f-2 under the 1940 Act; verify the daily computation
of the net asset value and the net income of the Fund in accordance with the
Fund's Prospectus and resolutions of the Fund's Directors; keep and maintain the
Fund's financial accounts and records; and generally assist in all aspects of
the Fund's operations. The Manager may delegate in its sole discretion all or
any part of its duties and responsibilities under this Section 4.
5. Fees; Expenses; Expense Reimbursement.
(a) In consideration of investment advisory services rendered
pursuant to this Agreement, the Fund will pay the Manager on the first
business day of each month a fee calculated at an annual rate of .25%
of the first $1 billion of average daily net assets of the Fund; .20%
of the next $1 billion of average daily net assets of the Fund; and
.15% of the average daily net assets of the Fund in excess of $2
billion.
(b) In consideration of administration services rendered pursuant to
this Agreement, the Fund will pay Manager on the first business day of
each month a fee calculated at an annual rate of 0.10% of the average
daily net assets of the Fund.
(c) For purposes of this Agreement, net asset value shall be
computed at least once a day. The fees for the period from the day of
the month this Agreement is entered into until the end of that month
shall be pro-rated according to the proportion which such period bears
to the full monthly period. Upon any termination of this Agreement
before the end of any month, the fees for such part of a month shall be
pro-rated according to the proportion which such period bears to the
full monthly period and shall be payable upon the date of termination
of this Agreement.
For the purpose of determining fees payable to Manager, the value of
the net assets of the Fund shall be computed in the manner described in the
Fund's Prospectus for the computation of the value of such net assets in
connection with the determination of the liquidity value of the Fund's shares.
3
4
The Manager will from time to time employ or associate with itself such
person or persons as the Manager may believe to be particularly fitted to assist
it in the performance of this Agreement. Such person or persons may be officers
and employees who are employed by both the Manager and the Fund. The
compensation of such person or persons shall be paid by the Manager and no
obligation may be incurred on behalf of the Fund in such respect.
The Manager will bear all expenses in connection with the performance
of its services under this Agreement. Other expenses to be incurred in the
operation of the Fund including taxes, interest, brokerage fees and commissions,
if any, fees of employees of the Manager, Securities and Exchange Commission
fees and state Blue Sky qualification fees, investment advisory and
administration fees pursuant to this Agreement, charges of custodians, transfer
and dividend disbursing agents' fees, certain insurance premiums, outside
auditing and legal expenses, costs of maintenance of corporate existence,
typesetting and printing prospectuses for regulatory purposes and for
distribution to current shareholders of the Fund, costs of shareholders' reports
and corporate meetings and any extraordinary expenses will be borne by the Fund,
provided, however, that the Fund will not bear the cost of any activity which is
primarily intended to result in the distribution of shares of the Fund.
(d) If in any fiscal year the aggregate expenses of the Fund (as
defined under the securities regulation in any state having
jurisdiction over the Fund) exceed the expense limitations of any such
state, the Manager will reimburse the fund for a portion of such excess
expenses. The expense reimbursement obligation of the Manager is
limited to the aggregate amount of its fees hereunder for such fiscal
year, provided however, that notwithstanding the foregoing, the Manager
shall reimburse the Fund for such proportions of such excess expenses
regardless of the amount of fees paid to it during such fiscal year to
the extent that the securities regulations of any state having
jurisdiction over the Fund so require. Such expense reimbursement, if
any, will be estimated daily and reconciled and paid on a monthly
basis.
6. Proprietary and Confidential Information. The Manager agrees on
behalf of itself and its employees to treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund
and prior, present or potential shareholders, and not to use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder. Notwithstanding the foregoing, the Manager may, after prior
notification to and
4
5
approval in writing by the Fund, use such records and other information relative
to the Fund and prior, present or potential shareholders if the Manager may be
exposed to civil or criminal contempt proceedings for failure to comply or when
requested to divulge such information by duly constituted authorities. The
Manager may also use such records and other information when so requested by the
Fund.
7. Services Not Exclusive. The services furnished by the Manager
hereunder are not to be deemed exclusive, and the Manager shall be free to
furnish similar services to others whether or not for compensation so long as
its services under this Agreement are not impaired thereby.
8. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Manager hereby agrees that all records which it
maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request. The
Manager further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required by Rule 31a-1 to be maintained under the
1940 Act.
9. Limitation of Liability. The Manager shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund 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 Manager in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
10. Duration and Termination. This Agreement will become effective
April 20, 1993, provided that it shall have been approved by the shareholders of
the Fund, in accordance with the requirements under the 1940 Act, and, unless
sooner terminated as provided herein, shall continue in effect until June 30,
1994. Thereafter, if not terminated, this Agreement shall continue in effect for
successive periods of twelve months each ending on June 30 each year, provided
such continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Fund's 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
Fund's Directors or by vote of a majority of the outstanding voting securities
of the Fund. Notwithstanding the foregoing, this Agreement may be terminated at
any time, without the payment of any penalty, by the Fund (by vote of the Fund's
Directors or by vote of a majority of the outstanding voting securities of the
Fund) or by the Manager on sixty days' written notice. This Agreement will
immediately
5
6
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 meaning of such terms in the 1940 Act.)
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged 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. No amendment of this Agreement shall be
effective until approved by vote of a majority of the outstanding voting
securities of the Fund.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. 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. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Pennsylvania law.
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.
NAVIGATOR TAX-FREE
MONEY MARKET FUND, INC.
(SEAL) By: /s/ Xxxxx X. Xxxxxx
------ -------------------------------
Title:
Attest: /s/ Xxxxx X. Xxxxxxxx
---------------------
FAIRFIELD GROUP, INC.
(SEAL) By: /s/ X.X. Xxxxxx
------ -------------------------------
Title:
Attest:
----------------------
6
