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EXHIBIT 99.B5a
MANAGEMENT AGREEMENT
AGREEMENT made as of this first day of May, 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 per 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, herein referred to as the "Existing Portfolios", together with
any other Fund portfolios which may be established later and served by the
Manager hereunder, being herein referred to collectively as the "Portfolios"
and individually referred to as a "Portfolio"; and
WHEREAS, the Fund desires at this time to retain the Manager to render
investment advisory and management services to the Existing Portfolios, and the
Manager is willing 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 Existing Portfolios and other Portfolios hereunder
and to manage the investment
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and reinvestment of the assets of such Portfolios in accordance with applicable
investment objectives, policies and restrictions, and to administer its affairs
to the extent requested by and subject to the supervision 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 the Fund in other capacities.
2. Additional Portfolios. In the event that the Fund establishes
one or more portfolios other than the Existing Portfolios with respect to which
it desires to engage the Manager to render investment advisory and management
services hereunder, it shall notify the Manager in writing. If the Manager is
willing to render such services and the Fund and the Manager agree upon the
management fee rates (including breakpoints) to be payable by such portfolio or
portfolios, the Manager shall notify the Fund in writing, whereupon such
portfolio or portfolios shall become a Portfolio or Portfolios hereunder.
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3. Management Fee. For the services and facilities described in
Section 1, the Fund will pay to the Manager a management fee based upon an
annual percentage of the average daily net assets of each Portfolio, as
follows:
a. For the Growth Fund:
.75% of average daily net assets.
b. For the International Growth Fund:
1.10% of the first $250 million of average daily net assets;
plus
1.00% of average daily net assets over $250 million.
c. For the Income Fund:
.25% of the first $250 million of average daily net assets;
plus
.20% of average daily net assets over $250 million; plus
5.0% of the gross income earned by the Portfolio.
d. For the Ready Reserves Fund:
.625% of the first $250 million of average daily net assets;
plus
.600% of the next $250 million of average daily net assets;
plus
.575% of the next $2,000 million of average daily net assets;
plus
.550% of average daily net assets over $2,500 million.
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
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terminates, there shall be an appropriate proration on the basis of the number
of days that the 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.
4. 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
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compensation from the Fund, as directors, officers or agents of the Fund if
duly elected or appointed to such positions and subject to their individual
consent and to any limitations imposed by law.
If expenses borne by the Fund for any Portfolio which the Manager manages
in any fiscal year (including the Manager's fee, but excluding interest, taxes,
fees incurred in acquiring and disposing of portfolio securities and, to the
extent permitted, extraordinary expenses) exceed 1.5% of the first $30,000,000
of average daily net assets of such Portfolio and 1% of average daily net
assets of the Portfolio over $30,000,000, the Manager will reduce its fee or
reimburse the Portfolio for any excess. If for any month the expenses of a
Portfolio properly chargeable to the income account shall exceed 1/12 of the
percentage of average net assets allowable as expenses, the payment to the
Manager with respect to such Portfolio for that month shall be reduced so that
the total net expense will not exceed such percentage. As of the end of the
Fund's fiscal year, however, the foregoing computations and payments shall be
readjusted so that the aggregate compensation payable to the Manager for the
year is equal to the percentage set forth in Section 3 hereof of the average
net asset values as determined as described herein throughout the fiscal year,
diminished to the extent necessary so that the total of the aforementioned
expense items shall not exceed the expense limitation. The aggregate of
repayments, if any, by the Manager to the Portfolio for the year shall be the
amount necessary to limit the said net expense to said percentage.
Notwithstanding anything in the foregoing to the contrary, the Manager shall
not be obligated to reimburse the Portfolio in an amount exceeding its advisory
fee for the period received from such Portfolio.
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The net asset value for each 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 a 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.
5. 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.
6. 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.
7. Term; Termination; Amendment. This Agreement shall become
effective with respect to the Existing Portfolios on the date hereof and shall
remain in full force until April 30, 1997, unless sooner terminated as
hereinafter provided. This Agreement shall continue in force from year to year
thereafter with respect to the Existing Portfolios and each other Portfolio to
which the Agreement shall have become applicable, but only so long as such
continuance is specifically approved for each Portfolio at least annually in
the manner required by the Investment Company Act of 1940 and the rules and
regulations thereunder; provided,
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however, that if the continuation of this Agreement is not approved for a
Portfolio, the Manager may continue to serve in such capacity for such
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 with respect to any Portfolio by action
of the Board of Directors or by vote of a majority of the outstanding voting
securities of such Portfolio.
This Agreement may also be terminated with respect to any Portfolio 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 such 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.
As to each Portfolio of the Fund, 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 affecting a Portfolio
hereunder shall not be effective until
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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.
8. 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.
9. 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.
10. Applicable Law. This Agreement shall be construed in
accordance with applicable federal law and the laws of the State of Illinois.
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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.
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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