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AMENDED AND RESTATED ADVISORY CONTRACT
The FMB Diversified Equity Fund
a portfolio of
FMB FUNDS, INC.
P.O. Box 8526
Boston, MA 02266-8526
April 1, 1996
FMB-Trust
One Financial Plaza
Holland, Michigan 49423
Dear Sirs:
This will confirm the agreement between the undersigned (the "Company")
on behalf of the FMB Diversified Equity Fund (the "Fund") and FMB-Trust (the
"Adviser") as follows:
1. The Company is an open-end investment company currently consisting
of four investment portfolios, but which may from time to time consist of a
greater or lesser number of investment portfolios (the "Funds"). The Company
engages in the business of investing and reinvesting the assets of the Fund in
the manner and in accordance with the investment objective and restrictions
specified in the Company's currently effective prospectus and the currently
effective statement of additional information incorporated by reference therein
relating to the Fund and the Company (such prospectus and such statement of
additional information being collectively referred to as the "Prospectus")
included in the Company's Registration Statement, as amended from time to time
(the "Registration Statement"), filed by the Company under the Investment
Company Act of 1940 (the "Act") and the Securities Act of 1933. Copies of the
documents referred to in the preceding sentence have been furnished to the
Adviser. Any amendments to those documents shall be furnished to the Adviser
promptly.
2. The Company has engaged the Adviser to manage the investing and
reinvesting of the assets of the Fund and to provide the advisory services
specified elsewhere in this contract, subject to the overall supervision of the
Board of Directors of the Company. Pursuant to an administration agreement
between the Company and the Company's administrator (the "Administrator") on
behalf of the Fund, the Company has engaged the Administrator to provide the
administrative services specified therein.
3. (a) The Adviser shall make investments for the account of the Fund
in accordance with the Adviser's best judgment and consistent with the
investment objective and
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restrictions set forth in the Company's Prospectus, the Act and the provisions
of the Internal Revenue Code relating to regulated investment companies,
subject to policy decisions adopted by the Company's Board of Directors. The
Adviser shall advise the Company's officers and Board of Directors, at such
times as the Company's Board of Directors may specify, of investments made for
the Fund and shall, when requested by the Company's officers or Board of
Directors, supply the reasons for making particular investments.
(b) The Adviser shall provide to the Company investment guidance and
policy direction in connection with its daily management of the Fund's
portfolio, including oral and written research, analysis, advice, statistical
and economic data and information and judgments, and shall furnish to the
Company's Board of Directors periodic reports on the investment strategy and
performance of the Fund and such additional reports and information as the
Company's Board of Directors and officers shall reasonably request.
(c) The Adviser shall pay the costs of printing and distributing all
materials relating to the Fund prepared by it, or prepared at its request, other
than such costs relating to proxy statements, prospectuses, shareholder reports
and other materials distributed to existing or prospective shareholders on
behalf of the Fund.
(d) The Adviser shall, at its expense, employ or associate with itself
such persons as the Adviser believes appropriate to assist it in performing its
obligations under this contract.
4. Except as provided in each of the Company's advisory contracts and
administration agreements, the Company shall bear all costs of its operations,
including the compensation of its directors who are not affiliated with the
Adviser, the Administrator or any of their affiliates; advisory and
administration fees; payments of distribution-related expenses pursuant to any
Rule 12b-1 Plan, i.e., a plan of distribution of the Company adopted on behalf
of any of the Funds pursuant to Rule 12b-1 under the Act; governmental fees;
interest charges; taxes; fees and expenses of its independent accountants, legal
counsel, transfer agent and dividend disbursing agent; expenses of redeeming
shares; expenses of preparing and printing stock certificates, prospectuses
(except the expense of printing and mailing prospectuses used for promotional
purposes, unless otherwise payable pursuant to a Rule 12b-1 Plan), shareholders'
reports, notices, proxy statements and reports to regulatory agencies; travel
expenses of directors, officers and employees; office supplies; insurance
premiums and certain expenses relating to insurance coverage; trade association
membership dues; brokerage and other expenses connected with the execution of
portfolio securities transactions; fees and expenses of any custodian, including
those for keeping books and accounts and
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calculating the net asset value per share of the Fund; expenses of shareholders'
meetings; expenses relating to the issuance, registration and qualification of
shares of the Fund; pricing services, if any; organizational expenses; and any
extraordinary expenses. Expenses attributable to one or more, but not all, of
the Funds are charged against the assets of the relevant Funds. General
expenses of the Funds are allocated among the Funds in a manner proportionate to
the net assets of each Fund, on a transactional basis or on such other basis as
the Board of Directors deems equitable.
5. The Adviser shall give the Company the benefit of the Adviser's
best judgment and efforts in rendering services under this contract. As an
inducement to the Adviser's undertaking to render these services, the Company
agrees that the Adviser shall not be liable under this contract for any mistake
in judgment or in any other event whatsoever except for lack of good faith,
provided that nothing in this contract shall be deemed to protect or purport to
protect the Adviser against any liability to the Company or its shareholders to
which the Adviser would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of the Adviser's duties under
this contract or by reason of reckless disregard of its obligations and duties
hereunder.
6. In consideration of the services to be rendered by the Adviser
under this contract, the Company shall pay the Adviser a monthly fee on the
first business day of each month, at the annual rate of 1.00% of the average
daily value (as determined on each day that such value is determined for the
Fund at the time set forth in the Prospectus for determining net asset value per
share) of the Fund's net assets during the preceding month. If the fee payable
to the Adviser pursuant to this paragraph 6 begins to accrue before the end of
any month or if this contract terminates before the end of any month, the fee
for the period from the effective date to the end of that month or from the
beginning of that month to the termination date, respectively, shall be prorated
according to the proportion that the period bears to the full month in which the
effectiveness or termination occurs. For purposes of calculating each such
monthly fee, the value of the Fund's net assets shall be computed in the manner
specified in the Prospectus and the Company's Articles of Incorporation for the
computation of the value of the Fund's net assets in connection with the
determination of the net asset value of Fund shares.
7. If in any fiscal year the total expenses of the Fund incurred by,
or allocated to, the Fund excluding taxes, interest, brokerage commissions and
other portfolio transaction expenses, other expenditures that are capitalized in
accordance with generally accepted accounting principles, extraordinary expenses
and amounts accrued or paid under a Rule 12b-1 Plan of the Fund, but including
the fees provided for in paragraph 6 and those provided for pursuant to the
Fund's Administration
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Agreement ("includible expenses"), exceed the most restrictive expense
limitation applicable to the Fund imposed by state securities laws or
regulations thereunder, as these limitations may be raised or lowered from time
to time, the Adviser shall waive or reimburse that portion of the excess
derived by multiplying the excess by a fraction, the numerator of which shall
be the percentage at which the excess portion attributable to the fee payable
pursuant to this agreement is calculated under paragraph 6 hereof, and the
denominator of which shall be the sum of such percentage plus the percentage at
which the excess portion attributable to the fee payable pursuant to the Fund's
Administration Agreement is calculated (the "Applicable Ratio"), but only to
the extent of the fee hereunder for the fiscal year. If the fees payable under
this contract and/or the Fund's Administration Agreement contributing to such
excess portion are calculated at more than one percentage rate, the Applicable
Ratio shall be calculated separately on the basis of, and applied separately
to, the portions of the fees calculated at the different rates. At the end of
each month of the Company's fiscal year, the Company shall review the
includible expenses accrued during that fiscal year to the end of the period
and shall estimate the contemplated includible expenses for the balance of that
fiscal year. If as a result of that review and estimation it appears likely
that the includible expenses will exceed the limitations referred to in this
paragraph 7 for a fiscal year with respect to the Fund, the monthly fee set
forth in paragraph 6 payable to the Adviser for such month shall be reduced,
subject to a later adjustment, by an amount equal to the Applicable Ratio times
the pro rata portion (prorated on the basis of the remaining months of the
fiscal year, including the month just ended) of the amount by which the
includible expenses for the fiscal year are expected to exceed the limitations
provided for in this paragraph 7. For purposes of computing the excess, if
any, over the most restrictive applicable expense limitation, the value of the
Fund's net assets shall be computed in the manner specified in the last
sentence of paragraph 6, and any reimbursements required to be made by the
Adviser shall be made once a year promptly after the end of the Company's
fiscal year.
8. This contract shall continue in effect only so long as the
continuance is specifically approved at least annually (a) by the vote of a
majority of the Fund's outstanding voting securities (as defined in the Act) or
by the Company's Board of Directors and (b) by the vote, cast in person at a
meeting called for the purpose, of a majority of the Company's directors who are
not parties to this contract or "interested persons" (as defined in the Act) of
any such party. This contract may be terminated at any time by the Company,
without the payment of any penalty, by a vote of a majority of the Fund's
outstanding voting securities (as defined in the Act) or by a vote of a majority
of the Company's entire Board of Directors on 60 days' written notice to the
Adviser or by the Adviser on 60 days' written notice to the Company. This
contract shall terminate
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automatically in the event of its assignment (as defined in the Act).
9. Except to the extent necessary to perform the Adviser's obligations
under this contract, nothing herein shall be deemed to limit or restrict the
right of the Adviser, or any affiliate of the Adviser, or any employee of the
Adviser, to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
10. The Adviser and the Company each agree that the acronym "FMB,"
which comprises a component of the Company's name, is a property right of the
parent of the Adviser. The Company agrees and consents that: (i) it will use
the acronym "FMB" as a component of its corporate name, the name of any class,
or both and for no other purpose; (ii) it will not grant to any third party the
right to use the acronym "FMB" for any purpose; (iii) the Adviser or any
corporate affiliate of the Adviser may use or grant to others the right to use
the acronym "FMB," or any combination, derivative or abbreviation thereof, as
all or a portion of a corporate or business name or for any commercial purpose,
other than a grant of such right to another registered investment company not
advised by the Adviser or one of its affiliates; and (iv) in the event that the
Adviser or an affiliate thereof is no longer acting as investment adviser to any
series or class, the Company shall, upon request by the Adviser, promptly take
such action as may be necessary to change its corporate name to one not
containing the acronym "FMB" and following such change, shall not use the
acronym "FMB," or any combination thereof, as a part of its corporate name or
for any other commercial purpose, and shall use its best efforts to cause its
directors, officers, and shareholders to take any and all actions that the
Adviser may request to effect the foregoing and to reconvey to the Adviser any
and all rights to such words.
11. This contract shall be governed by and construed in accordance
with the laws of the State of Michigan.
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If the foregoing correctly sets forth the agreement between the Company
and the Adviser, please so indicate by signing and returning to the Company the
enclosed copy hereof.
Very truly yours,
FMB FUNDS, INC.
on behalf of the FMB Diversified
Equity Fund
By:______________________________
Title:___________________________
ACCEPTED as of the date
set forth above:
FMB-Trust
By:_____________________________
Title:__________________________
