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EXHIBIT 5a
MANAGEMENT AGREEMENT
AGREEMENT made as of this ____ day of ____________ 1996, by and
between XXXXXXX XXXXX MUTUAL FUNDS, INC., a Maryland corporation (the "Fund"),
and XXXXXXX XXXXX & COMPANY, L.L.C., an Illinois limited liability company (the
"Manager").
WHEREAS, the Fund is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, the shares of
common stock, $.001 par value per share ("Shares"), of which are registered or
are to be registered under the Securities Act of 1933; and
WHEREAS, the Fund is authorized to issue Shares in separate series
with each such series representing the interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund currently offers Shares in four portfolios,
designated the Growth Fund, the International Growth Fund, the Income Fund and
the Ready Reserves Fund; and
WHEREAS, the Fund wants at this time to retain the Manager to render
investment advisory and management services to a newly established portfolio,
designated the Value Discovery Fund (the "Portfolio") and the Manager wants to
render such services;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. Employment; Services. The Fund hereby employs the Manager to
act as the adviser for the Value Discovery Fund and to manage the investment
and reinvestment of the assets of such Portfolio in accordance with applicable
investment objectives, policies and restrictions, and to administer its affairs
to the extent requested by and subject to the supervision
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of the Board of Directors of the Fund for the period and upon the terms herein
set forth. The investment of funds shall be subject to all applicable
restrictions of the Articles of Incorporation and By-Laws of the Fund as may
from time to time be in force.
The Manager accepts such employment and agrees during such period to
render such services, to furnish office facilities and equipment and clerical,
bookkeeping and administrative services for the Fund, to permit any of its
principals or employees to serve without compensation as directors or officers
of the Fund if elected to such positions, and to assume the obligations herein
set forth for the compensation herein provided. The Manager shall for all
purposes herein provided be deemed to be an independent contractor and, unless
otherwise expressly provided or authorized, shall have no authority to act for
or represent the Fund in any way or otherwise be deemed an agent of the Fund.
It is understood and agreed that the Manager, by separate agreements with the
Fund, may also serve other Fund portfolios and serve the Fund in other
capacities.
2. Management Fee. For the services and facilities described in
Section 1, the Fund will pay to the Manager an annual management fee of 1.25%
of the average daily net assets of the Portfolio.
The fee payable under this Agreement shall be calculated and accrued for each
business day by applying the appropriate annual rates to the net assets of the
Portfolio as of the close of the preceding business day, and dividing the sum
so computed by the number of business days in the fiscal year. The fee for a
given month shall be paid on the first business day of the following month.
For the month and year in which this Agreement becomes effective or terminates,
there shall be an appropriate proration on the basis of the number of days that
the
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Agreement is in effect during the month and year, respectively. The services
of the Manager to the Fund under this Agreement are not to be deemed exclusive,
and the Manager shall be free to render similar services or other services to
others so long as its services hereunder are not impaired thereby.
3. Expenses. In addition to the fee of the Manager, the Fund
shall assume and pay expenses for services rendered by a custodian for the
safekeeping of the Fund's securities or other property, for keeping its books
for account, for any other charges of the custodian, and for calculating the
net asset value of the Fund as provided in the prospectus of the Fund. The
Manager shall not be required to pay and the Fund shall assume and pay the
charges and expenses of its operations, including but not limited to
compensation of the directors (other than those affiliated with the Manager),
charges and expenses of independent auditors, of legal counsel, of any transfer
or dividend disbursement agent, any registrar of the Fund, costs of acquiring
and disposing of portfolio securities, interest, if any, on obligations
incurred by the Fund, costs of share certificates and of reports, membership
dues in the Investment Company Institute or any similar organization, reports
and notices to shareholders, stationery, printing, postage, other like
miscellaneous expenses and all taxes and fees payable to federal, state or
other government agencies on account of the registration of securities issued
by the Fund, filing of corporate documents or otherwise. The Fund shall not
pay or incur any obligation for any expenses for which the Fund intends to seek
reimbursement from the Manager as herein provided without first obtaining the
written approval of the Manager. The Manager shall arrange, if desired by the
Fund, for principals or employees of the Manager to serve, without compensation
from the Fund, as directors, officers or agents of the Fund if duly elected or
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appointed to such positions and subject to their individual consent and
to any limitations imposed by law.
The net asset value for the Portfolio shall be calculated in accordance
with the provisions of the Fund's prospectus or at such other time or times as
the directors may determine in accordance with the provisions of the Investment
Company Act of 1940. On each day when the net asset value is not calculated,
the net asset value of a share of the Portfolio shall be deemed to be the net
asset value of such a share as of the close of business on the last day on
which such calculation was made for the purpose of the foregoing computations.
4. Affiliations. Subject to applicable statutes and regulation,
it is understood that directors, officers or agents of the Fund are or may be
interested in the Manager as principals, agents or otherwise, and that the
principals and agents of the Manager may be interested in the Fund otherwise
than as a director, officer or agent.
5. Limitation of Liability of Manager. The Manager shall not be
liable for any error of judgment or of law or for any loss suffered by the Fund
in connection with the matters to which this Agreement relates, except loss
resulting from willful misfeasance, bad faith or gross negligence on the part
of the Manager in the performance of its obligations and duties or by reason of
its reckless disregard of its obligations and duties under this Agreement.
6. Term; Termination; Amendment. This Agreement shall become
effective on the date hereof and shall remain in full force until April 30,
1998, unless sooner terminated as hereinafter provided. This Agreement shall
continue in force from year to year thereafter but only so long as such
continuance is specifically approved for the Portfolio at least annually in the
manner required by the Investment Company Act of 1940 and the rules and
regulations
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thereunder; provided, however, that if the continuation of this Agreement is
not approved for the Portfolio, the Manager may continue to serve in such
capacity for the Portfolio in the manner and to the extent permitted by the
Investment Company Act of 1940 and the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Fund or by the Manager on sixty (60) days written notice to the other
party. The Fund may effect termination by action of the Board of Directors or
by vote of a majority of the outstanding voting securities of the Portfolio.
This Agreement may also be terminated at any time, without the payment
of any penalty, by the Board of Directors or by vote of a majority of the
outstanding voting securities of the Portfolio, in the event that it shall have
been established by a court of competent jurisdiction that the Manager or any
officer or principal of the Manager has taken any action which results in a
breach of the covenants of the Manager set forth herein.
The terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the Investment Company
Act of 1940 and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the
Manager to receive payments on any unpaid balance of the compensation described
in Section 3 earned prior to such termination.
This Agreement may be amended only by an instrument in writing signed
by the party against which enforcement of the amendment is sought. An
amendment of this Agreement shall
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not be effective until approved by (i) vote of the holders of a majority of the
outstanding voting securities of the Portfolio; and (ii) a majority of those
Directors of the Fund who are not parties to this Agreement or "interested
persons" (as defined in the Investment Company Act of 1940) of any party to
this Agreement, cast in person at a meeting called for the purpose of voting on
such approval.
7. Severability. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
8. Notice. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notice.
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9. Applicable Law. This Agreement shall be construed in
accordance with applicable federal law and the laws of the State of Illinois.
IN WITNESS WHEREOF, the Fund and the Manager have caused this
Agreement to be executed as of the day and year first above written.
XXXXXXX XXXXX MUTUAL FUNDS, INC.
VALUE DISCOVERY FUND
By:
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ATTEST:
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XXXXXXX XXXXX & COMPANY, L.L.C.
By:
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ATTEST:
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