EXHIBIT (d).2
INVESTMENT ADVISORY
AND
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement is made and entered into as of August 18, 1993 by and
between Investment Advisers, Inc., a Delaware corporation ("IAI"), and IAI
Investment Funds I, Inc., a Minnesota corporation (the "Company"), on behalf of
IAI Institutional Bond Fund, the portfolio represented by the Company's Series B
Common Shares (the "Fund").
1. ENGAGEMENT OF IAI; SERVICES.
(a) INVESTMENT ADVISORY SERVICES. The Company hereby engages IAI on
behalf of the Fund, and IAI hereby agrees, pursuant to the terms and conditions
hereinafter set forth, to furnish the Fund continuously with investment
planning, to provide investment advice with regard to the Fund's portfolio, to
prepare and make available to the Fund necessary research and statistical data
in connection therewith, to supervise the acquisition and disposition of
specific securities by the Fund and to perform such other services as are
reasonably incidental to the foregoing duties as investment adviser for, and to
manage the investment of the assets of, the Fund. IAI covenants and agrees that,
in effecting acquisitions and dispositions of specific investments on behalf of
the Fund, IAI shall at all times be governed by the Fund's investment
objectives, restrictions and policies as delineated and limited by the
disclosures contained in the various documents filed with the Securities and
Exchange Commission on behalf of the Fund, as such documents may from time to
time be amended or supplemented. The Company agrees to supply IAI with copies of
all applicable documents filed with the Securities and Exchange Commission,
together with all amendments and supplements thereto. IAI shall report to the
Company's Board of Directors regularly at such times and in such detail as the
Board may from time to time determine appropriate, in order to permit the Board
to determine the adherence of IAI to the Fund's investment objectives, policies
and limitations.
(b) DIVIDEND DISBURSING, ACCOUNTING, ADMINISTRATIVE AND TRANSFER AGENCY
SERVICES. The Company on behalf of the Fund hereby engages IAI, and IAI hereby
agrees, to provide to the Fund with all dividend disbursing, accounting,
administrative and transfer agency services required by the Fund, including,
without limitation, the following services:
(1) The calculation of net asset value per share at such times
and in such manner as specified in the Fund's current Prospectus and
Statement of Additional Information and at such other times upon which
the parties hereto may from time to time agree. The pricing services or
other sources from which daily price quotations on portfolio securities
are to be obtained for purposes of calculating the Fund's daily net
asset value shall be paid for by IAI and approved by the Company;
(2) Upon the receipt of funds for the purchase of Fund shares or
the receipt of redemption requests with respect to Fund shares
outstanding, the calculation of the
number of shares to be purchased or redeemed, respectively;
(3) Upon the Fund's distribution of dividends, (i) the
calculation of the amount of such dividends to be received per Fund
share, (ii) the calculation of the number of additional Fund shares to
be received by each Fund shareholder, other than any shareholder who has
elected to receive such dividends in cash, and (iii) the mailing of
payments with respect to such dividends to shareholders who have elected
to receive such dividends in cash;
(4) The provision of transfer agency services as described
below:
(i) IAI shall make original issues of shares of the Fund
in accordance with the Fund's current Prospectus and Statement
of Additional Information and with instructions from the
Company;
(ii) Prior to the daily determination of net asset value
of the Fund, IAI shall process all purchase orders received
since the last determination of the Fund's net asset value;
(iii) Transfers of shares shall be registered and new
Fund share certificates shall be issued by IAI upon surrender of
properly endorsed outstanding Fund share certificates with all
necessary signature guarantees and satisfactory evidence of
compliance with all applicable laws relating to the payment or
collection of taxes;
(iv) IAI may issue new Fund share certificates in place
of Fund share certificates represented to have been lost,
destroyed or stolen, upon receiving indemnity satisfactory to
IAI and may issue new Fund share certificates in exchange for,
and upon surrender of, mutilated Fund share certificates;
(v) IAI will maintain stock registry records in the
usual form in which it will note the issuance, transfer and
redemption of Fund shares and the issuance and transfer of Fund
share certificates, and is also authorized to maintain an
account in which it will record the Fund shares and fractions
issued and outstanding from time to time for which issuance of
Fund share certificates is deferred; and
(vi) IAI will, in addition to the aforementioned duties
and functions, perform the usual duties and functions of a stock
transfer agent for a registered investment company;
(5) The creation and maintenance of such records relating to the
business of the Fund as the Company may from time to time reasonably
request;
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(6) The preparation of tax forms, reports, notices, proxy
statements, proxies and other Fund shareholder communications, and the
mailing thereof to Fund shareholders; and
(7) The provision of such other dividend disbursing, accounting,
administrative, accounting and transfer agency services upon which the
parties hereto may from time to time agree.
(c) OFFICE FACILITIES, EQUIPMENT AND PERSONNEL. IAI shall, at its own
expense, furnish the Company and the Fund with all office facilities, equipment
and personnel necessary to discharge its responsibilities and duties hereunder.
IAI shall arrange, if requested by the Company, for officers or employees of IAI
to serve without compensation from the Company as directors, officers, or
employees of the Company if duly elected to such positions by the shareholders
or directors of the Company.
(d) BOOKS AND RECORDS. IAI hereby acknowledges that all records
pertaining to the services rendered hereunder are the sole and exclusive
property of the Company, and in the event that a transfer of any of the services
currently rendered hereunder to someone other than IAI should ever occur, IAI
will promptly, and at its own cost, take all steps necessary to segregate such
records and deliver them to the Company.
(e) NO SEPARATE CHARGES TO SHAREHOLDERS. IAI hereby covenants and agrees
that it will make no separate charge to any Fund shareholder or his individual
account for any services rendered to said shareholder, the Fund or the Company
unless such charge for special services is specifically approved by the Board
including a majority of the directors who are not "interested persons" (as such
term is defined in the Investment Company Act of 1940, as amended, which act, as
amended and together with all rules and regulations promulgated thereunder, is
hereinafter referred to as the "1940 Act") of IAI. No special charge will be
levied retroactively or without appropriate notice to affected shareholders.
(f) LIMITATION OF LIABILITY. IAI, in carrying out and performing the
terms and conditions of this Agreement, shall incur no liability for its status
hereunder or for any actions taken or omitted in good faith and without gross
negligence, and the Company does hereby agree to indemnify and hold IAI harmless
from any and all loss, liability and expense, including any legal expenses,
arising out of IAI's performance or status or any act or omission of IAI under
this Agreement other than that incurred by IAI's willful misfeasance, bad faith
or gross negligence. Without limitation of the foregoing:
(1) IAI may rely upon, and shall not be liable to any person or
party for any actions taken or omitted to be taken in good faith in
reliance upon, the advice of the Company, or of counsel, who may be
counsel for the Company or counsel for IAI, and upon statements of
accountants, brokers and other persons believed by IAI in good faith to
be expert in the matters upon which they are consulted; and
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(2) IAI may rely upon, and shall not be liable to any person or
party for any actions taken or omitted to be taken in good faith in
reliance upon, any signature, instruction, request, letter of
transmittal, certificate, opinion of counsel, statement, instrument,
report, notice, consent, order or other paper or document that IAI in
good faith believes to be genuine and to have been signed, presented or
authorized by the purchaser, Company or other proper party or parties.
2. COMPENSATION FOR SERVICES; ALLOCATION OF EXPENSES.
(a) In payment for the services to be rendered by IAI hereunder, the
Company (on behalf of the Fund) shall pay to IAI a fee at an annual rate of .50%
of the Fund's average daily net assets (as determined in accordance with the
Company's Bylaws and with the Fund's Prospectus and Statement of Additional
Information, as the same may from time to time be amended or supplemented). This
fee shall be paid to IAI on a monthly basis not later than the tenth business
day of the month following the month in which the services were rendered and
shall be prorated for any fraction of a month at the commencement or termination
of this Agreement.
(b) Except for brokerage commissions and other expenditures in
connection with the purchase and sale of portfolio securities, interest expense
and, subject to the specific approval of a majority of the directors of the
Company who are not "interested persons" (as defined in the 0000 Xxx) of IAI or
the Company, taxes and extraordinary expenses, IAI shall bear all of the Fund's
expenses.
3. FREEDOM TO DEAL WITH THIRD PARTIES.
IAI shall be free to render services to others similar to those rendered
under this Agreement or of a different nature except as such services may
conflict with the services to be rendered or the duties to be assumed hereunder.
4. EFFECTIVE DATE, DURATION, AMENDMENT AND TERMINATION AGREEMENT.
(a) The effective date of this Agreement is August 18, 1993.
(b) Unless sooner terminated as hereinafter provided, this Agreement
shall continue in effect for a period more than two years from the date of its
execution but only as long as such continuance is specifically approved at least
annually by (i) the Board of Directors of the Company or by the vote of a
majority of the outstanding voting securities of the Fund, and 60 by the vote of
a majority of the directors of the Company who are not parties to this Agreement
or "interested persons" (as defined in the 0000 Xxx) of IAI or of the Company
cast in person at a meeting called for the purpose of voting on such approval.
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(c) This Agreement may be terminated at any time, without the payment of
any penalty, by the Board of Directors of the Company or by the vote of a
majority of the outstanding voting securities of the Fund, or by IAI, upon 60
days' written notice to the other party.
(d) This Agreement shall automatically terminate in the event of its
"assignment" (as defined in the Investment Company Act of 1940, as amended).
(e) No amendment to this Agreement shall be effective until approved by
the vote of: (i) a majority of the directors of the Company who are not parties
to this Agreement or "interested persons" (as defined in the 0000 Xxx) of IAI or
of the Company cast in person at a meeting called for the purpose of voting on
such approval; and (ii) a majority of the outstanding voting securities of the
Fund.
(f) Wherever referred to in this Agreement, the vote or approval of the
holders of a majority of the outstanding voting securities or shares of the Fund
shall mean the lesser of (i) the vote of 67% or more of the voting securities of
the Fund present at a regular or special meeting of shareholders duly called, if
more than 50% of the Fund's outstanding voting securities are present or
represented by proxy, or (ii) the vote of more than 50% of the outstanding
voting securities of the Fund.
5. NOTICES.
Any notice under this Agreement shall be in writing, addressed,
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate in writing for receipt of such notice.
6. INTERPRETATION; GOVERNING LAW.
This Agreement shall be subject to and interpreted in accordance with
all applicable provisions of law including, but not limited to, the 1940 Act. To
the extent that the provisions herein contained conflict with any such
applicable provisions of law, the latter shall control. The laws of the State of
Minnesota shall otherwise govern the construction, validity and effect of this
Agreement.
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IN WITNESS WHEREOF, the Company and IAI have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
IAI INVESTMENT FUNDS I, INC.
By /s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx, President
INVESTMENT ADVISERS, INC.
By /s/ Xxxx X. Xxxx
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Xxxx X. Xxxx, Chief Executive Officer
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