INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 1st day of May 2005, by and between XXXXXXX MULTIFUND
TRUST, an unincorporated business trust organized under the laws of The
Commonwealth of Massachusetts (the "Trust"), and XXXXXXX CAPITAL MANAGEMENT,
INC., a corporation organized under the laws of the State of Minnesota, (the
"Adviser").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, shares of beneficial interest in the Trust currently consist of
one separate series portfolio - the Xxxxxxx Total Return Core Fund, and the
Trustees have the power to create additional series (each a "Fund" and together,
the "Funds"); and
WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services and is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust desires to retain the Adviser to furnish investment
management services to the Trust and the Adviser is willing to furnish such to
the Trust;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Adviser. The Trust hereby appoints the Adviser to act as
investment manager of the Trust for the period and on the terms herein set
forth. The Adviser accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
2. Investment Management Services. The Adviser shall supervise the
investments of the Funds contemplated as of the date hereof, and such subsequent
series of shares of the Trust as the Trustees of the Trust shall select the
Adviser to manage. In such capacity, the Adviser shall maintain a continuous
investment program for each such Fund, determine what securities shall be
purchased or sold by each Fund, secure and evaluate such information as it deems
proper and take whatever action is necessary or convenient to perform its
functions, including the placing of purchase and sale orders.
In executing portfolio transactions and selecting brokers or dealers, the
Adviser will use its best efforts to seek on behalf of the Funds the best
overall terms available. In assessing the best overall terms available for any
transaction, the Adviser shall consider all factors it deems relevant, including
the breadth of the market in the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, (as those terms are defined in Section 28(e) of the Securities Exchange Act
of 1934, as amended)
provided by such broker or dealer to the Funds or other accounts over which the
Adviser or any affiliate of the Adviser exercises investment discretion. The
Adviser is authorized to pay to a broker or dealer who provides such brokerage
and research services a commission for executing a portfolio transaction for the
Fund which is in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction, if, but only if, the Adviser
determines in good faith that such commission is reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or in terms of all of the
accounts over which the Adviser or any affiliate of the Adviser exercises
investment discretion.
3. Compliance with Laws. All functions undertaken by the Adviser hereunder
shall at all times conform to, and be in accordance with, any requirements
imposed by: (1) the 1940 Act, and any rules and regulations promulgated
thereunder; (2) any other applicable provisions of law; (3) the Declaration of
Trust of the Trust as amended from time to time; (4) the By-laws of the Trust as
amended from time to time; and (5) the registration statements of the Trust as
amended from time to time, filed under the Securities Act of 1933, as amended
and the 1940 Act.
4. Board Supervision. All of the functions undertaken by the Adviser
hereunder shall at all times be subject to the direction of the Board of
Trustees of the Trust, or any committee or officers of the Trust acting under
the authority of the Board of Trustees.
5. Payment of Expenses.
(a) The Adviser shall employ or provide and compensate the
executive, administrative, secretarial and clerical personnel necessary to
provide the services set forth herein, and shall bear the expense thereof.
Adviser shall compensate all Trustees, officers and employees of the Trust who
are also partners or employees of the Adviser.
(b) The Funds will be responsible for the payment of all operating
expenses of the Trust, including fees and expenses incurred by the Trust in
connection with membership in investment company organizations, brokerage fees
and commissions, legal, auditing and accounting expenses, expenses of
registering shares under federal and state securities laws, insurance expenses,
taxes or governmental fees, fees and expenses of the custodian, the transfer,
shareholder service and dividend disbursing agent and the accounting and pricing
agent of the Funds, expenses including clerical expenses of issue, sale,
redemption or repurchase of shares of the Funds, the fees and expenses of
Trustees of the Trust who are not interested persons of the Trust, the cost of
preparing, printing and distributing prospectuses, statements, reports and other
documents to shareholders, expenses of shareholders' meetings and proxy
solicitations, and such extraordinary or non-recurring expenses as may arise,
including litigation to which the Trust may be a party and indemnification of
the Trust's officers and Trustees with respect thereto, or any other expense not
specifically described above incurred in the performance of the Trust's
obligations. All other expenses not expressly assumed by Adviser herein incurred
in connection with the organization, registration of shares and operations of
the Funds will be borne by the Funds
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6. Account Fees. The Trust, by resolution of the Board of Trustees,
including a majority of the Independent Trustees, may from time to time
authorize the imposition of a fee as a direct charge against shareholder
accounts of the Funds, such fee to be retained by the Trust or to be paid to the
Adviser to defray expenses which would otherwise be paid by the Adviser in
accordance with the provisions of paragraph 5 of this Agreement. At least sixty
(60) days' prior written notice of the intent to impose such fee must be given
to the shareholders of the affected Fund.
7. Compensation of Adviser.
(a) As full compensation for the services and such facilities as may
from time to time be furnished by the Adviser under this Agreement, the Funds
agree to pay to the Adviser a fee at the annual rate listed in Appendix A of the
Fund's average daily net asset value. Such fee shall be accrued daily and
payable monthly. For purposes of calculating such fee, such net asset value
shall be determined by taking the average of all determinations of net asset
value made in the manner provided in the Funds' current Prospectus and Statement
of Additional Information.
(b) For any period less than a full month during which this
Agreement is in effect the compensation payable to the Adviser hereunder shall
be prorated according to the proportion which such period bears to a full month.
(c) Each Fund is responsible for its own operating expenses. Any
fees withheld or voluntarily reduced and any Fund expenses absorbed by the
Adviser voluntarily or pursuant to an agreed upon expense cap which are a Fund's
obligation are subject to reimbursement by the Fund to the Adviser, if so
requested by the Adviser, in subsequent fiscal years if the aggregate amount
actually paid by a Fund toward the operating expenses for such fiscal year
(taking into account the reimbursement) does not exceed the applicable
limitation on the Fund's expenses. The Adviser is permitted to be reimbursed
only for fee reductions and expense payments made in the previous three fiscal
years. Any such reimbursement is also contingent upon the Board of Trustees'
review and approval all reimbursements. Such reimbursement may not be paid prior
to a Fund's payment of current ordinary operating expenses.
8. Limitation of Liability of Adviser. The Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by a Fund in
connection with any investment policy or the purchase, sale, or retention of any
investment on the recommendation of the Adviser; provided, however, that nothing
herein contained shall be construed to protect the Adviser against any liability
to the Fund by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of reckless disregard of its
obligations and duties under this Agreement.
9. Term and Termination.
(a) This Agreement shall become effective on the date hereof. Unless
terminated as herein provided, this Agreement shall remain in full force and
effect for an initial
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period of two years from the date hereof and shall continue in full force and
effect for successive periods of one year thereafter, but only so long as each
such continuance is approved (i) by either the Trustees of the Trust or by vote
of a majority of the outstanding voting securities (as defined in the 0000 Xxx)
of the Funds, and, in either event, (ii) by vote of a majority of the Trustees
of the Trust who are not parties to this Agreement or interested persons (as
defined in the 0000 Xxx) of any such party, cast in person at a meeting called
for the purpose of voting on such approval.
(b) This Agreement may be terminated at any time as to the Trust or
a particular series of the Trust without the payment of any penalty by vote of
the Trustees of the Trust or by vote of the holders of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of a Fund or by the
Adviser, on sixty days' written notice to the other party.
(c) This Agreement shall automatically and immediately terminate in
the event of its assignment (as defined in the 1940 Act).
10. Separate Agreement. The parties hereto acknowledge that certain
provisions of the 1940 Act, in effect, treat each series of shares of an
investment company as a separate investment company. Accordingly, the parties
hereto hereby acknowledge and agree that, to the extent deemed appropriate and
consistent with the 1940 Act, this Agreement shall be deemed to constitute a
separate agreement between the Adviser and each Fund.
11. Limitation of Liability of Trustees and Shareholders. A copy of the
Declaration of Trust of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that this Agreement is
executed on behalf of the Trustees of the Trust as trustees are not binding upon
the Trustees or holders of shares of the Trust individually but are binding only
upon the assets and property of the Trust.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
XXXXXXX MULTIFUND TRUST
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
Xxxxxx X. Xxxxxxx
Chairman of the Board of
Trustees and President
XXXXXXX CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
Xxxxxx X. Xxxxxxx
President
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APPENDIX A
Compensation of the Adviser. The Xxxxxxx Total Return Core Fund (the
"Fund") will pay to the Adviser, for all of the services to be rendered and
payments made as provided in this Agreement, a base fee, computed and accrued
daily and paid monthly, at an annual rate of 0.85% of its average daily net
assets (the "Base Fee"), which fee is subject to adjustment based on the
investment performance of the Fund in relation to the investment performance of
the Fund's benchmark index, which is the S&P 500 Index.
The Base Fee will be decreased in a series of breakpoints as the total
assets under management for the Fund increase. The breakpoints, and the
corresponding Base Fee are:
$0- $200 million 0.85%
Next $150 million 0.80% (on assets from $200 - $350 million)
Next $150 million 0.75% (on assets from $350 - $500 million)
Next $150 million 0.70% (on assets from $500 - $650 million)
Next $150 million 0.65% (on assets from $650 - $800 million)
All additional dollars 0.60% (on assets over $800 million)
Adjustments to the Base Fee will be made by comparison of the Fund's
investment performance for the applicable performance period to the investment
performance of the Fund's benchmark index for the same period (the "Performance
Fee Adjustment"). The applicable Performance Period is a rolling twelve (12)
month period whereby the most recent calendar month is substituted for the
earliest month as time passes. The Performance Fee Adjustment will be calculated
based on the Fund's average net assets during each Performance Period, and the
Performance Fee Adjustment will be applied to the Fund's Base Fee during the
current month. The Performance Fee Adjustment calculation will be done in
accordance with Rule 205-2 or any other applicable rules under the Investment
Advisers Act of 1940 (the "Investment Advisers Act"), as the same from time to
time may be amended.
Using the S&P 500 as the benchmark, a "band" ranging from 5.00% below the
benchmark to 5% above the benchmark would be established. Within that band, the
Performance Fee Adjustment will be calculated on a rolling 12-month basis with a
2 basis point adjustment for every one percent differential in comparative
performance. For example, if the Fund outperformed the S&P 500 by 1% more, but
less than 2%, the performance fee would be adjusted positively two basis points
(0.02%). If the Fund underperformed the S&P 500 by 2% or more, but less than 3%,
the Performance Fee Adjustment would be negative four basis points (0.04%).
Using this formula, the maximum yearly performance adjustment would be 10 basis
points, up or down.
Initial Period. The Performance Fee Adjustment will not be applied until
this Agreement has been in effect for 12 months (the "Initial Period"). For the
first 12 months of the Initial Period, the Adviser will receive the Base Fee.
Subsequent Periods. For each month following the Initial Period, the
Adviser will receive the Base Fee, subject to the Performance Fee Adjustment
calculated as described above.
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The Fund's investment performance will be measured by comparing (i) the
opening net asset value of one share of the Fund on the first business day of
the performance period with (ii) the closing net asset value of one share of the
Fund as of the last business day of such period. In computing the investment
performance of the Fund and the investment record of the Fund's benchmark index,
distributions of realized capital gains, the value of capital gains taxes per
share paid or payable on undistributed realized long-term capital gains
accumulated to the end of such period and dividends paid out of investment
income on the part of the Fund, and all cash distributions of the securities
included in the Fund's benchmark index, will be treated as reinvested in
accordance with Rule 205-1 or any other applicable rules under the Investment
Advisers Act, as the same from time to time may be amended.
Any calculations of the investment performance of the Fund and the
investment performance of the Fund's benchmark index shall be in accordance with
any then applicable rules of the Securities and Exchange Commission.
In the event of any termination of this Agreement, the fee provided for in
this Appendix A shall be calculated on the basis of a period ending on the last
day on which this Agreement is in effect, subject to a pro rata adjustment based
on the number of days elapsed in the current period as a percentage of the total
number of days in such period.
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