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INVESTMENT MANAGEMENT AGREEMENT
Between
X. XXXX PRICE INDEX TRUST, INC.
and
X. XXXX PRICE ASSOCIATES, INC.
INVESTMENT MANAGEMENT AGREEMENT, made as of the ____ day of
January, 1998, by and between X. XXXX PRICE INDEX TRUST, INC., a
Maryland corporation (hereinafter called the "Corporation"), and
X. XXXX PRICE ASSOCIATES, INC., a corporation organized and
existing under the laws of the State of Maryland (hereinafter
called the "Manager").
W I T N E S S E T H:
WHEREAS, the Corporation is engaged in business as an open-
end management investment company and is registered as such under
the federal Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, the Corporation is authorized to issue shares of
capital stock ("Shares") in the X. Xxxx Price Total Equity Market
Index Fund (the "Fund"), a separate series of the Corporation
whose Shares represent interests in a separate portfolio of
securities and other assets ("Fund Shares"); and
WHEREAS, the Manager is engaged principally in the business
of rendering investment supervisory services and is registered as
an investment adviser under the federal Investment Advisers Act
of 1940, as amended; and
WHEREAS, the Fund desires the Manager to render investment
supervisory services to the Fund in the manner and on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual promises hereinafter set forth, the parties hereto agree
as follows:
1. Duties and Responsibilities of Manager.
A. Investment Management Services. The Manager
shall act as investment manager and shall supervise and direct
the investments of the Fund in accordance with the Fund's
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investment objective, program and restrictions as provided in the
Corporation's prospectus, on behalf of the Fund, as amended from
time to time, and such other limitations as the Corporation may
impose by notice in writing to the Manager. The Manager shall
obtain and evaluate such information relating to the economy,
industries, businesses, securities markets and securities as it
may deem necessary or useful in the discharge of its obligations
hereunder and shall formulate and implement a continuing program
for the management of the assets and resources of the Fund in a
manner consistent with its investment objective. In furtherance
of this duty, the Manager, as agent and attorney-in-fact with
respect to the Corporation, is authorized, in its discretion and
without prior consultation with the Corporation, to:
(i) buy, sell, exchange, convert, lend, and
otherwise trade in any stocks, bonds, and other
securities or assets; and
(ii) place orders and negotiate the commissions (if
any) for the execution of transactions in securities
with or through such brokers, dealers, underwriters
or issuers as the Manager may select.
B. Financial, Accounting, and Administrative
Services. The Manager shall maintain the existence and records
of the Corporation; maintain the registrations and qualifications
of Fund Shares under federal and state law; monitor the
financial, accounting, and administrative functions of the Fund;
maintain liaison with the various agents employed for the benefit
of the Fund by the Corporation (including the Fund's transfer
agent, custodian, independent accountants and legal counsel) and
assist in the coordination of their activities on behalf of the
Fund.
C. Reports to Fund. The Manager shall furnish to or
place at the disposal of the Corporation or Fund, as appropriate,
such information, reports, evaluations, analyses and opinions as
the Fund may, at any time or from time to time, reasonably
request or as the Manager may deem helpful.
D. Reports and Other Communications to Shareholders.
The Manager shall assist in developing all general shareholder
communications, including regular shareholder reports.
E. Fund Personnel. The Manager agrees to permit
individuals who are officers or employees of the Manager to serve
(if duly elected or appointed) as officers, directors, members of
any committee of directors, members of any advisory board, or
members of any other committee of the Corporation, without
remuneration or other cost to the Fund or the Corporation.
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F. Personnel, Office Space, and Facilities of
Manager. The Manager at its own expense shall furnish or provide
and pay the cost of such office space, office equipment, office
personnel, and office services as the Manager requires in the
performance of its investment advisory and other obligations
under this Agreement.
2. Allocation of Expenses.
A. Expenses Paid by Manager.
(1) Salaries and Fees of Officers. The Manager
shall pay all salaries, expenses, and fees of the
officers and directors of the Corporation who are
affiliated with the Manager.
(2) Assumption of Expenses by Manager. The
payment or assumption by the Manager of any expense
of the Corporation or Fund, as appropriate, that the
Manager is not required by this Agreement to pay or
assume shall not obligate the Manager to pay or
assume the same or any similar expense on any
subsequent occasion.
B. Expenses Paid by Fund. The Corporation or Fund,
as appropriate, shall bear all expenses of its organization,
operations, and business not specifically assumed or agreed to be
paid by the Manager as provided in this Agreement. In
particular, but without limiting the generality of the foregoing,
the Corporation or Fund, as appropriate, shall pay:
(1) Custody and Accounting Services. All
expenses of the transfer, receipt, safekeeping,
servicing and accounting for the cash, securities,
and other property of the Corporation, for the
benefit of the Fund, including all charges of
depositories, custodians, and other agents, if any;
(2) Shareholder Servicing. All expenses of
maintaining and servicing shareholder accounts,
including all charges of the Fund's transfer,
shareholder recordkeeping, dividend disbursing,
redemption, and other agents for the benefit of the
Fund, if any;
(3) Shareholder Communications. All expenses of
preparing, setting in type, printing, and
distributing reports and other communications to
shareholders;
(4) Shareholder Meetings. All expenses
incidental to holding meetings of shareholders,
including the printing of notices and proxy material,
and proxy solicitation therefor;
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(5) Prospectuses. All expenses of preparing,
setting in type, and printing of annual or more
frequent revisions of the prospectus and of mailing
them to shareholders;
(6) Pricing. All expenses of computing the
Fund's net asset value per share, including the cost
of any equipment or services used for obtaining price
quotations;
(7) Communication Equipment. All charges for
equipment or services used for communication between
the Manager or the Corporation or the Fund and the
custodian, transfer agent or any other agent selected
by the Corporation;
(8) Legal and Accounting Fees and Expenses. All
charges for services and expenses of the
Corporation's legal counsel and independent auditors
for the benefit of the Fund;
(9) Directors' Fees and Expenses. All
compensation of directors, other than those
affiliated with the Manager, and all expenses
incurred in connection with their service;
(10) Federal Registration Fees. All fees and
expenses of registering and maintaining the
registration of the Corporation under the Act and the
registration of the Fund Shares under the Securities
Act of 1933, as amended (the "'33 Act"), including
all fees and expenses incurred in connection with the
preparation, setting in type, printing, and filing of
any registration statement and prospectus under the
'33 Act or the Act, and any amendments or supplements
that may be made from time to time;
(11) State Filing Fees. All fees and expenses
imposed on the Corporation or Fund, as appropriate,
with respect to the sale of the Fund's shares under
securities laws of various states or jurisdictions,
and under all other laws applicable to the
Corporation or Fund, as appropriate, or its business
activities (including registering the Corporation as
a broker-dealer, or any officer of the Corporation or
any person as agent or salesman of the Corporation in
any state);
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(12) Issue and Redemption of Fund Shares. All
expenses incurred in connection with the issue,
redemption, and transfer of Fund Shares, including
the expense of confirming all Fund Share
transactions, and of preparing and transmitting the
Fund's stock certificates;
(13) Bonding and Insurance. All expenses of
bond, liability, and other insurance coverage
required by law or deemed advisable by the board of
directors;
(14) Brokerage Commissions. All brokers'
commissions and other charges incident to the
purchase, sale, or lending of the Fund's portfolio
securities;
(15) Taxes. All taxes or governmental fees
payable by or with respect of the Corporation or
Fund, as appropriate to federal, state, or other
governmental agencies, domestic or foreign, including
stamp or other transfer taxes;
(16) Trade Association Fees. All fees, dues, and
other expenses incurred in connection with the
Corporation's or Fund's, as appropriate, membership
in any trade association or other investment
organization;
(17) Licensing Fees. All fees and other expenses
incurred in connection with any licensing or similar
agreement entered into by the Corporation in
connection with the use of any trademark, service
xxxx or similar device, sign, symbol or name; and
(18) Nonrecurring and Extraordinary Expenses.
Such nonrecurring expenses as may arise, including
the costs of actions, suits, or proceedings to which
the Corporation or Fund, as appropriate, is a party
and the expenses the Corporation or Fund, as
appropriate, may incur as a result of its legal
obligation to provide indemnification to its
officers, directors, and agents.
3. Management Fee. The Fund shall pay the Manager a fee
computed as follows, based on the value of the net assets of the
Fund:
A. Fee Rate. The fee shall be at the annual rate of
_____% of the average daily net assets of the Fund.
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B. Method of Computation. The fee shall be accrued
for each calendar day and the sum of the daily fee accruals shall
be paid monthly to the Manager on the first business day of the
next succeeding calendar month. The daily fee accruals will be
computed by multiplying the fraction of one over the number of
calendar days in the year by the applicable annual rate described
in subparagraph (a) of this Paragraph 3, and multiplying this
product by the net assets of the Fund as determined in accordance
with the Fund's prospectus as of the close of business on the
previous business day on which the Fund was open for business.
C. Expense Limitation. As part of the consideration
for the Fund entering into this Agreement, the Manager hereby
agrees to limit the aggregate expenses of every character
incurred by the Fund, including but not limited to Fees of the
Manager computed as hereinabove set forth, but excluding
interest, taxes, brokerage, and other expenditures which are
capitalized in accordance with generally accepted accounting
principles and extraordinary expenses, ( Manager Limitation ).
Under the Manager Limitation, the Manager agrees that through
December 31, 1999, such expenses shall not exceed ___% of the
average daily net assets of the Fund ( ____% Expense
Limitation ). To determine the Manager s liability for the Fund s
expenses over the ____% Expense Limitation, the amount of
allowable year-to-date expenses shall be computed daily by
prorating the ____% Expense Limitation based on the number of
days elapsed within the fiscal year of the Fund, or limitation
period, if shorter ( Prorated Limitation ). The Prorated
Limitation shall be compared to the expenses of the Fund recorded
through the prior day in order to produce the allowable expenses
to be recorded for the current day ( Allowable Expenses ). If the
Fund s Management Fee and other expenses for the current day
exceed the Allowable Expenses, the Management Fee for the current
day shall be reduced by such excess ( Unaccrued Fees ). In the
event the excess exceeds the amount due as the Management Fee,
the Manager shall be responsible to the Fund for the additional
excess ( Other Expenses Exceeding Limit ). If at any time up
through and including December 31, 1999, the Fund s Management
Fee and other expenses for the current day are less than the
Allowable Expenses, the differential shall be due to the Manager
as payment of cumulative Unaccrued Fees (if any) or as payment
for cumulative Other Expenses Exceeding Limit (if any). If
cumulative Unaccrued Fees or cumulative Other Expenses Exceeding
Limit remain at December 31, 1999, these amounts shall be paid to
the Manager in the future provided that: (1) no such payment
shall be made to the Manager after December 31, 2001; and (2)
such payment shall only be made to the extent that it does not
result in the Fund s aggregate expenses exceeding an expense
limit of ____% of average daily net assets. The Manager may
voluntarily agree to an additional expense limitation (any such
additional expense limitation hereinafter referred to as an
Additional Expense Limitation ), at the same or a different
level and for the same or a different period of time beyond
December 31, 1999 (any such additional period being hereinafter
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referred to an as Additional Period ) provided, however, that:
(1) the calculations and methods of payment shall be as described
above; (2) no payment for cumulative Unaccrued Fees or cumulative
Other Expenses Exceeding Limit shall be made to the Manager more
than two years after the end of an Additional Period; and (3)
payment for cumulative Unaccrued Fees or cumulative Other
Expenses Exceeding Limit after the expiration of the Additional
Period shall only be made to the extent it does not result in the
Fund s aggregate expenses exceeding the Additional Expense
Limitation to which the unpaid amounts relate.
D. Proration of Fee. If this Agreement becomes
effective or terminates before the end of any month, the Fee for
the period from the effective date to the end of such month or
from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion
which such period bears to the full month in which such
effectiveness or termination occurs.
4. Brokerage. Subject to the approval of the board of
directors of the Fund, the Manager, in carrying out its duties
under Paragraph 1.A., may cause the Corporation, with respect to
the Fund, to pay a broker-dealer which furnishes brokerage or
research services [as such services are defined under Section
28(e) of the Securities Exchange Act of 1934, as amended (the
"'34 Act")] a higher commission than that which might be charged
by another broker-dealer which does not furnish brokerage or
research services or which furnishes brokerage or research
services deemed to be of lesser value, if such commission is
deemed reasonable in relation to the brokerage and research
services provided by the broker-dealer, viewed in terms of either
that particular transaction or the overall responsibilities of
the Manager with respect to the accounts as to which it exercises
investment discretion (as such term is defined under Section
3(a)(35) of the '34 Act).
5. Manager's Use of the Services of Others. The Manager
may (at its cost except as contemplated by Paragraph 4 of this
Agreement) employ, retain or otherwise avail itself of the
services or facilities of other persons or organizations for the
purpose of providing the Manager or the Corporation or Fund, as
appropriate, with such statistical and other factual information,
such advice regarding economic factors and trends, such advice as
to occasional transactions in specific securities or such other
information, advice or assistance as the Manager may deem
necessary, appropriate or convenient for the discharge of its
obligations hereunder or otherwise helpful to the Corporation or
Fund, as appropriate, or in the discharge of Manager's overall
responsibilities with respect to the other accounts which it
serves as investment manager.
6. Ownership of Records. All records required to be
maintained and preserved by the Corporation or Fund pursuant to
the provisions of rules or regulations of the Securities and
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Exchange Commission under Section 31(a) of the Act and maintained
and preserved by the Manager on behalf of the Corporation or
Fund, as appropriate, are the property of the Corporation or
Fund, as appropriate, and will be surrendered by the Manager
promptly on request by the Corporation or Fund, as appropriate.
7. Reports to Manager. The Corporation or Fund, as
appropriate, shall furnish or otherwise make available to the
Manager such prospectuses, financial statements, proxy
statements, reports, and other information relating to the
business and affairs of the Corporation or Fund, as appropriate,
as the Manager may, at any time or from time to time, reasonably
require in order to discharge its obligations under this
Agreement.
8. Services to Other Clients. Nothing herein contained
shall limit the freedom of the Manager or any affiliated person
of the Manager to render investment supervisory and corporate
administrative services to other investment companies, to act as
investment manager or investment counselor to other persons,
firms or corporations, or to engage in other business activities;
but so long as this Agreement or any extension, renewal or
amendment hereof shall remain in effect or until the Manager
shall otherwise consent, the Manager shall be the only investment
manager to the Fund.
9. Limitation of Liability of Manager. Neither the
Manager nor any of its officers, directors, or employees, nor any
person performing executive, administrative, trading, or other
functions for the Corporation or Fund (at the direction or
request of the Manager) or the Manager in connection with the
Manager's discharge of its obligations undertaken or reasonably
assumed with respect to this Agreement, shall be liable for any
error of judgment or mistake of law or for any loss suffered by
the Corporation or Fund in connection with the matters to which
this Agreement relates, except for loss resulting from willful
misfeasance, bad faith, or gross negligence in the performance of
its or his duties on behalf of the Corporation or Fund or from
reckless disregard by the Manager or any such person of the
duties of the Manager under this Agreement.
10. Use of Manager's Name. The Corporation or Fund may
use the name "X. Xxxx Price Index Trust, Inc.," "X. Xxxx Price
Total Equity Market Index Fund," or any other name derived from
the name of "X. Xxxx Price" only for so long as this Agreement or
any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization which shall
have succeeded to the business of the Manager as investment
manager. At such time as this Agreement or any extension,
renewal or amendment hereof, or such other similar agreement
shall no longer be in effect, the Corporation or Fund will (by
corporate action, if necessary) cease to use any name derived
from the name "X. Xxxx Price," any name similar thereto or any
other name indicating that it is advised by or otherwise
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connected with the Manager, or with any organization which shall
have succeeded to the Manager's business as investment manager.
11. Term of Agreement. The term of this Agreement shall
begin on the date first above written, and unless sooner
terminated as hereinafter provided, this Agreement shall remain
in effect through April 30, 1998. Thereafter, this Agreement
shall continue in effect from year to year, with respect to the
Fund, subject to the termination provisions and all other terms
and conditions hereof, so long as: (a) such continuation shall be
specifically approved at least annually by the board of directors
of the Corporation, or by vote of a majority of the outstanding
voting securities of the Fund and, concurrently with such
approval by the board of directors or prior to such approval by
the holders of the outstanding voting securities of the Fund, as
the case may be, by the vote, cast in person at a meeting called
for the purpose of voting on such approval, of a majority of the
directors of the Corporation, with respect to the Fund, who are
not parties to this Agreement or interested persons of any such
party; and (b) the Manager shall not have notified the
Corporation, in writing, at least 60 days prior to April 30, 1998
or prior to April 30th of any year thereafter, that it does not
desire such continuation. The Manager shall furnish to the
Corporation, promptly upon its request, such information as may
reasonably be necessary to evaluate the terms of this Agreement
or any extension, renewal or amendment hereof.
12. Amendment and Assignment of Agreement. This
Agreement may not be amended or assigned without the affirmative
vote of a majority of the outstanding voting securities of the
Fund, and this Agreement shall automatically and immediately
terminate in the event of its assignment.
13. Termination of Agreement. This Agreement may be
terminated by either party hereto, without the payment of any
penalty, upon 60 days' prior notice in writing to the other
party; provided, that in the case of termination by the
Corporation, with respect to the Fund, such action shall have
been authorized by resolution of a majority of the directors who
are not parties to this Agreement or interested persons of any
such party, or by vote of a majority of the outstanding voting
securities of the Fund.
14. Miscellaneous.
A. Captions. The captions in this Agreement are
included for convenience of reference only and in no way define
or delineate any of the provisions hereof or otherwise affect
their construction or effect.
B. Interpretation. Nothing herein contained shall
be deemed to require the Corporation to take any action contrary
to its Articles of Incorporation or By-Laws, or any applicable
statutory or regulatory requirement to which it is subject or by
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which it is bound, or to relieve or deprive the board of
directors of the Corporation of its responsibility for and
control of the conduct of the affairs of the Fund.
C. Definitions. Any question of interpretation of
any term or provision of this Agreement having a counterpart in
or otherwise derived from a term or provision of the Act shall be
resolved by reference to such term or provision of the Act and to
interpretations thereof, if any, by the United States courts or,
in the absence of any controlling decision of any such court, by
rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the Act. Specifically, the
terms "vote of a majority of the outstanding voting securities,"
"interested person," "assignment," and "affiliated person," as
used in Paragraphs 2, 8, 11, 12, and 13 hereof, shall have the
meanings assigned to them by Section 2(a) of the Act. In
addition, where the effect of a requirement of the Act reflected
in any provision of this Agreement is relaxed by a rule,
regulation or order of the Securities and Exchange Commission,
whether of special or of general application, such provision
shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto
duly authorized and their respective seals to be hereunto
affixed, as of the day and year first above written.
Attest: X. XXXX PRICE INDEX TRUST, INC.
/s/Xxxxxxxx X. Xxxxxxx /s/Xxxxxxx X. Xxxxxxx
__________________________ By: _____________________________
Xxxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx
Assistant Secretary President
Attest: X. XXXX PRICE ASSOCIATES, INC.
/s/Xxxxxxx X. XxxXxxx /s/Xxxxx X. Xxxxxxx
__________________________ By: _____________________________
Xxxxxxx X. XxxXxxx, Xxxxx X. Xxxxxxx
Assistant Secretary Managing Director
