MANAGEMENT AGREEMENT
between
Xxxxx & Xxxxxx, Inc.
and
J&B Funds
(on behalf of the J&B Small-Cap International Fund)
THIS AGREEMENT, made and entered into as of the 19th day of December,
2000, by and between J&B Funds, a Delaware business trust (the "Trust") on
behalf of its J&B Small-Cap International Fund series (the "Fund"), and Xxxxx &
Babson, Inc. (the "Manager"), and which Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute but one instrument.
WHEREAS the Trust was founded for the purpose of engaging in the business
of investing and reinvesting its property and assets and to operate as an
open-end, management investment company, as defined in the Investment Company
Act of 1940, as amended (the "Act"), under which it is registered with the
Securities and Exchange Commission, and
WHEREAS the Manager is engaged in the business of supplying investment
advice and management services to registered investment companies, as an
independent contractor, and
WHEREAS the Trust and the Manager desire to enter into a contractual
arrangement whereby the Manager provides investment advice and management
services to the Trust, on behalf of the Fund, for a fee,
NOW THEREFORE, in consideration of the mutual promises herein contained,
and other good and valuable consideration, receipt of which is hereby
acknowledged, it is mutually agreed and contracted by and between the parties
hereto that:
1. The Trust hereby employs the Manager, for the period set forth in
Paragraph 6 hereof, and on the terms set forth herein, to render investment
advice and management service to the Fund, subject to the supervision and
direction of the Board of Trustees of the Trust. The Manager hereby accepts
such employment and agrees, during such period, to render the services and
assume the obligations herein set forth, for the compensation herein
provided. The Manager shall, for all purposes herein, be deemed to be an
independent contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the Trust in any way,
or in any other way be deemed an agent of the Trust.
The Manager shall furnish the Fund investment management and administrative
services. Investment management shall include analysis, research and portfolio
recommendations consistent with the Fund's objectives and policies.
Administrative services shall include the services and compensation of such
members of the Manager's organization as shall be duly elected officers and/or
Trustees of the Trust and such other personnel as shall be necessary to carry
out its normal operations; rent; the cost of a transfer and dividend disbursing
agent or similar in-house services; bookkeeping; accounting; and all other
clerical and administrative functions as may be reasonable and necessary to
maintain the Trust's records and for it to operate as an open-end management
investment company. Exclusive of the management fee, the Trust shall bear the
cost of meetings of the Board of Trustees and committees thereof, including the
fees of the independent Trustees, the custodian, the independent public
accountant and legal counsel; the costs of printing and mailing shareholder
reports and Fund disclosure documents to shareholders; all expenses incidental
to holding shareholder meetings, including the preparation, printing and mailing
of notices and proxy materials, and proxy solicitation; the cost of all fidelity
bond and liability insurance approved for the Trust or the Board; any trade
association fees and the costs of any extraordinary expenses such as those
resulting from litigation to which the Trust is a party; any interest, taxes,
dues, fees and other charges of governments and their agencies, including the
cost of qualifying its shares for sale in any jurisdiction, brokerage
commissions or any other expenses incurred by it which are not assumed herein by
the Manager.
All property, equipment and information used by the Manager in the
management and administration of the Trust shall belong to the Manager. Should
the management and administrative relationship between the Trust and the Manager
terminate, the Trust shall be entitled to, and the Manager shall provide the
Trust, a copy of all information and records in the Manager's file necessary for
the Trust to continue its functions, which shall include computer systems and
programs in use as of the date of such termination; but nothing herein shall
prohibit thereafter the use of such information, systems or programs by the
Manager, so long as such does not unfairly interfere with the continued
operation of the Trust.
Subject to compliance with the requirements of the Act, the Manager may
retain as a sub-adviser to the Fund, at the Manager's own expense, any
investment adviser registered under the Investment Advisers Act of 1940.
2. a. The Manager (or its delegate) shall place and execute Fund
orders for the purchase and sale of portfolio securities with
broker-dealers. Subject to the obtaining the best available prices and
execution, the Manager is authorized to place orders for the purchase and
sale of portfolio securities for the Fund with such broker-dealers as it
may select from time to time. Subject to subparagraph (b) below, the
Manager is also authorized to place transactions with brokers who provide
research or statistical information or analyses to the Fund, to the
Manager, or to any other client for which the Manager provides investment
advisory services. Subject to obtaining the best available prices and
execution, the Manager may also place brokerage transactions with
broker-dealers who sell shares of the Fund. Broker-dealers who sell shares
of the Fund shall only receive orders for the purchase or sale of portfolio
securities to the extent that the placing of such orders is in compliance
with the Rules of the U.S. Securities and Exchange Commission and the
National Association of Securities Dealers, Inc. The Manager also agrees
that it will cooperate with the Trust to execute instructions that
brokerage transactions be allocated to brokers or dealers who provide
benefits directly to the Trust or the Fund.
b. Notwithstanding the provisions of subparagraph (a) above and
subject to such policies and procedures as may be adopted by the Board of
Trustees and officers of the Trust, the Manager (or its delegate) is
authorized to pay a member of an exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount
of commission another member of an exchange, broker or dealer would have
charged for effecting that transaction, in such instances where the Manager
has determined in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research services provided by
such member, broker or dealer, viewed in terms of either that particular
transaction or the Manager's overall responsibilities with respect to the
Fund and to other clients or funds for which the Manager exercises
investment discretion.
c. The Manager (or its delegate) is authorized to direct portfolio
transactions to a broker which is an affiliated person of the Manager or
the Trust in accordance with such standards and procedures as may be
approved by the Board in accordance with Rule 17e-1 under the Act, or other
rules promulgated by the Securities and Exchange Commission. Any
transaction placed with an affiliated broker must (i) be placed at best
price and execution, and (ii) may not be a principal transaction.
3. As compensation for the services to be rendered to the Trust and Fund by
the Manager under the provisions of this Agreement, the Trust agrees to pay from
the assets of the Fund semimonthly to the Manager an annual fee based on the
average total net assets of the Fund computed daily in accordance with its
Agreement and Declaration of Trust and By-laws as follows:
a. 1.55% of the average total net assets of the Fund.
b. The Manager may voluntarily or contractually agree to reduce any
portion of the compensation or reimbursement of expenses due to it pursuant
to this Agreement and may similarly agree to make payments to limit
expenses which are the responsibility of the Fund under this Agreement. Any
voluntary reduction or payment shall be applicable only to such specific
reduction or payment and shall not constitute an agreement to reduce any
future compensation or reimbursement due to the Manager hereunder or to
continue future payments. Any such reduction will be agreed upon prior to
accrual of the related expense or fee and will be estimated daily. Any fee
withheld shall be voluntarily reduced and any Fund expense paid by the
Manager voluntarily or pursuant to an agreed expense limitation shall be
reimbursed by the Fund to the Manager in the first, second, or third (or
any combination thereof) fiscal year next succeeding the fiscal year of the
withholding, reduction, or payment to the extent permitted by applicable
law if the aggregate expenses for the next succeeding fiscal year, second
fiscal year or third succeeding fiscal year do not exceed any limitation to
which the Manager has agreed. Such reimbursement may be paid prior to the
Fund's payment of current expenses if so requested by the Manager even if
such payment may require the Manager to waive or reduce its fees hereunder
or to pay current Fund expenses.
4. It is understood and agreed that the services to be rendered by the
Manager to the Trust under the provisions of the Agreement are not to be deemed
exclusive, and the Manager shall be free to render similar or different services
to others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.
5. It is understood and agreed that the Trustees, officers, agents,
employees and shareholders of the Trust may be interested in the Manager as
owners, employees, agents or otherwise, and that owners, employees and agents of
the Manager may be interested in the Trust as shareholders or otherwise. It is
understood and agreed that shareholders, officers, Trustees and other personnel
of the Manager are and may continue to be officers and Trustees of the Trust,
but that they receive no remuneration from the Trust solely for acting in those
capacities.
6. This Agreement shall become effective pursuant to its approval by the
Board of Trustees of the Trust and by the vote of a majority of the outstanding
shares of the Fund as prescribed by the Act. It shall remain in force for an
initial period of two years ending on October 31, 2002, and thereafter may be
renewed for successive annual periods beginning November 1 each year only so
long as such renewal and continuance is specifically approved at least annually
by the Board of Trustees or by vote of a majority of the outstanding shares of
the Fund as prescribed by the Act, and only if the terms and the renewal of this
Agreement have been approved by a vote of a majority of the Trustees of the
Trust including a majority of the Trustees who are not parties to the Agreement
or interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval. No amendment to this Agreement shall be
effective unless the terms thereof have been approved by the vote of a majority
of outstanding shares of the Fund as prescribed by the Act (unless shareholder
approval of the amendment would not be required to be consistent with SEC
interpretations of Section 15 of the 1940 Act), and by vote of a majority of the
Trustees of the Trust who are not parties to the Agreement or interested persons
of any such party, cast in person at a meeting called for the purpose of voting
on such approval. It shall be the duty of the Board of Trustees of the Trust to
request and evaluate, and the duty of the Manager to furnish, such information
as may reasonably be necessary to evaluate the terms of this Agreement and any
amendment thereto.
7. This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Trustees of the Trust, or by the vote of a majority of
the outstanding voting shares of the Fund as prescribed by the Act on not more
than sixty (60) days written notice to the Manager, and it may be terminated by
the Manager upon not less than sixty (60) days written notice to the Trust. It
shall terminate automatically in the event of its assignment by either party
unless the parties hereby, by agreement, obtain an exemption from the Securities
and Exchange Commission from the provisions of the Act pertaining to the subject
matter of this paragraph. Any notice, request or instruction provided for
herein, or for the giving of which, the occasion may arise hereunder, shall be
deemed duly given, if in writing and mailed by registered mail, postage prepaid,
addressed to the regular executive office of the Trust or the Manager, as the
case may be. As used in this Agreement, the terms "assignment," "a majority of
the outstanding voting shares" and "interested persons" shall have the same
meaning as similar terms contained in the Act.
8. The Manager shall not be liable for any error in judgment or mistake at
law for any loss suffered by the Trust or Fund in connection with any matters to
which this Agreement relates, except that nothing herein contained shall be
construed to protect the Manager against any liability by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reckless disregard of its obligations or duties under this Agreement.
9. This Agreement may not be amended, transferred, assigned, sold or in any
manner hypothecated or pledged nor may any new agreement become effective
without the affirmative vote or written consent of the holders of a majority of
the shares of the Fund.
J&B Funds
By:/s/ Xxxxxxx X. Xxxxx
----------------------------------------------
Xxxxxxx X. Xxxxx
President
ATTEST:
/s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
Vice President and Secretary
[SEAL]
Xxxxx & Xxxxxx, Inc.
By:/s/Xxxxxxx X. Xxxxx
----------------------------------------------
Xxxxxxx X. Xxxxx
President
ATTEST:
/s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
Vice President and Secretary
[SEAL]
