EXHIBIT 10.32
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT, made this ___ day of ____________, 199_, by and between XXXXXXX
& XXXX FUNDS, INC. (hereinafter called "Fund"), and XXXXXXX & XXXX INVESTMENT
MANAGEMENT COMPANY,
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 Investment Management Company agrees to act as
investment adviser to Fund with respect to the investment of its assets and in
general to supervise the investments of Fund, subject at all times to the
direction and control of the Board of Directors of Fund, all as more fully set
forth herein.
II. DUTIES OF XXXXXXX & XXXX INVESTMENT MANAGEMENT COMPANY WITH
RESPECT TO INVESTMENT OF ASSETS OF FUND
X. Xxxxxxx & Xxxx Investment Management Company shall regularly provide
investment advice to Fund 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 Fund; and in furtherance thereof, Xxxxxxx & Xxxx Investment Management
Company 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 Fund, and whether concerning the individual
companies whose securities are included in one or more of Fund's
portfolios or the industries in which they engage, or with respect to
securities which Xxxxxxx & Xxxx Investment Management Company considers
desirable for inclusion in one or more of Fund's portfolios;
2. furnish continuously an investment program for each of the
portfolios of Fund;
3. determine what securities shall be purchased or sold by
Fund;
4. take, on behalf of Fund, all actions which appear to
Xxxxxxx & Xxxx Investment Management Company necessary to carry into
effect such investment programs and supervisory functions as aforesaid,
including the placing of purchase and sale orders.
X. Xxxxxxx & Xxxx Investment Management Company shall make appropriate
and regular reports to the Board of Directors of Fund on the actions it takes
pursuant to Section II.A. above. Any investment programs furnished by Xxxxxxx &
Xxxx Investment Management Company under this section, or any supervisory
function taken hereunder by Xxxxxxx & Xxxx Investment Management Company 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 Fund as
amended from time to time;
4. the provisions of the Bylaws of Fund as amended from time
to time;
5. the terms of the registration statement of Fund, 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 Investment
Management Company under this section or any supervisory functions taken
hereunder by Xxxxxxx & Xxxx Investment Management Company shall at all times be
subject to any directions of the Board of Directors of Fund, its Executive
Committee, or any committee or officer of Fund acting pursuant to authority
given by the Board of Directors.
III. ALLOCATION OF EXPENSES
The expenses of Fund and the expenses of Xxxxxxx & Xxxx Investment
Management Company 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 Investment Management Company as set forth in subparagraph "A"
hereof, and (ii) those expenses which will be paid in full by Fund, as set forth
in subparagraph "B" hereof.
A. With respect to the duties of Xxxxxxx & Xxxx Investment Management
Company 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 Investment Management Company 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 Investment Management
Company shall pay the fees and expenses of all directors of Fund who are
employees of Xxxxxxx & Xxxx Investment Management Company or an affiliated
corporation and the salaries and employment benefits of all officers of Fund who
are affiliated persons of Xxxxxxx & Xxxx Investment Management Company.
B. Fund shall pay in full for all of its expenses which are not listed
above (other than those assumed by Xxxxxxx & Xxxx Investment Management Company
or one of its affiliates in its capacity as principal underwriter of the shares
of Fund, as Shareholder Servicing Agent or as Accounting Services Agent for
Fund), including (a) the costs of preparing and printing prospectuses and
reports to shareholders of Fund, including mailing costs; (b) the costs of
printing all proxy statements and all other costs and expenses of meetings of
shareholders of Fund (unless Fund and Xxxxxxx & Xxxx Investment Management
Company shall otherwise agree); (c) interest, taxes, brokerage commissions 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 Investment Management Company or
an affiliated company; (e) fees and expenses of its directors not affiliated
with Xxxxxxx & Xxxx, Inc.; (f) custodian fees and expenses; (g) fees payable by
Fund 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
nonrecurring or extraordinary expenses as may arise, including litigation
affecting Fund, and any indemnification by Fund 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 Investment Management Company, Fund shall pay the same to Xxxxxxx
& Xxxx Investment Management Company on presentation of a statement with respect
thereto.
X. Xxxxxxx & Xxxx Investment Management Company or an affiliate of
Xxxxxxx & Xxxx Investment Management Company, may also act as (i) transfer agent
or shareholder servicing agent of Fund and/or as (ii) accounting services agent
of Fund if at the time in question there is a separate agreement, "Shareholder
Servicing Agreement" and/or "Accounting Services Agreement," covering such
functions between Fund and Xxxxxxx & Xxxx Investment Management Company, or such
affiliate. The corporation, whether Xxxxxxx & Xxxx
2
Investment Management Company, or its affiliate, which is the party to either
such Agreement with Fund is referred to as the "Agent." Each such Agreement
shall provide in substance that it shall go into effect, or be amended, or a
new agreement covering the same topics between Fund 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 Fund, 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
Investment Management Company to be such a party even if at the time in
question the Agent is an affiliate of Xxxxxxx & Xxxx Investment Management
Company), 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 Fund 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 Fund; (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 or
series of Fund. Any such Agreement shall also provide in substance that it
may be terminated by the Agent at any time without penalty upon giving Fund
one hundred twenty (120) days' written notice (which notice may be waived by
Fund) and may be terminated by Fund 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 Fund shall be directed or approved
by the vote of a majority of the Board of Directors of Fund 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 or
series of Fund.
IV. BROKERAGE
(a) Xxxxxxx & Xxxx Investment Management Company may select brokers to
effect the portfolio transactions of Fund 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 Investment Management Company
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 Investment Management
Company shall have discretion, in the interest of Fund, 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 Fund and/or other accounts for which Xxxxxxx & Xxxx
Investment Management Company or one or more of its affiliates exercise
"investment discretion" (as that term is defined in Section 3(a)(35) of the
Securities Exchange 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 Investment Management Company 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 Investment Management Company and its investment advisory affiliates with
respect to the accounts for which they exercise investment discretion. In
reaching such determination, Xxxxxxx & Xxxx Investment Management Company 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
Investment Management Company shall be prepared to demonstrate that such
determinations were made in good faith, and that all commissions paid by
3
Fund over a representative period selected by its Board of Directors were
reasonable in relation to the benefits to Fund.
(c) Subject to the foregoing provisions of this Paragraph "IV," Xxxxxxx
& Xxxx Investment Management Company may also consider sales of Fund's shares
and shares of investment companies distributed by Xxxxxxx & Xxxx, Inc. or one of
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 INVESTMENT MANAGEMENT COMPANY
As compensation in full for services rendered and for the facilities
and personnel furnished under sections I, II, and IV of this Agreement, Fund
will pay to Xxxxxxx & Xxxx Investment Management Company for each day the fees
specified in Exhibit A hereto.
The amounts payable to Xxxxxxx & Xxxx Investment Management Company
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 Fund; and shall be paid in arrears whenever
requested by Xxxxxxx & Xxxx Investment Management Company. In computing the
value of the net assets of Fund, there shall be excluded the amount owed to Fund
with respect to shares which have been sold but not yet paid to Fund by Xxxxxxx
& Xxxx, Inc.
Notwithstanding the foregoing, if the laws, regulations or policies of
any state in which shares of Fund are qualified for sale limit the operation and
management expenses of Fund, Xxxxxxx & Xxxx Investment Management Company will
refund to Fund the amount by which such expenses exceed the lowest of such state
limitations.
VI. UNDERTAKINGS OF XXXXXXX & XXXX INVESTMENT MANAGEMENT COMPANY;
LIABILITIES
Xxxxxxx & Xxxx Investment Management Company shall give to Fund the
benefit of its best judgment, efforts and facilities in rendering advisory
services hereunder.
Xxxxxxx & Xxxx Investment Management Company shall at all times be
guided by and be subject to Fund'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 Fund'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 Investment Management Company, as an
investment adviser and affiliated person of Fund, Xxxxxxx & Xxxx Investment
Management Company 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 Investment Management Company, it shall not be subject to liability to Fund
or to any stockholder of Fund 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
4
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
or series of Fund 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 Investment
Management Company at any time without penalty upon giving Fund one hundred
twenty (120) days' written notice (which notice may be waived by Fund) and may
be terminated by Fund at any time without penalty upon giving Xxxxxxx & Xxxx
Investment Management Company sixty (60) days' written notice (which notice may
be waived by Xxxxxxx & Xxxx Investment Management Company), provided that such
termination by Fund shall be directed or approved by the vote of a majority of
the Board of Directors of Fund 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 Fund. 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.
XXXXXXX & XXXX FUNDS, INC.
By:
-----------------------------
-----------------------------
XXXXXXX & XXXX INVESTMENT
MANAGEMENT COMPANY
By:
---------------------------
---------------------------
