EXHIBIT 4(A)(1)
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT made this 1st day of January, 1999 between XXXXXXX
INSURANCE FUNDS, a Massachusetts business trust hereinafter called the "Trust")
and XXXXX XXXXXXX INVESTMENT MANAGEMENT COMPANY, a Washington corporation
hereinafter called "FRIMCo."
WHEREAS, the Trust has been organized by and at the expense of a company
affiliated with FRIMCo and operates as an investment company of the "series"
type registered under the Investment Company Act of 1940 ("1940 Act") for the
purpose of investing and reinvesting its assets in portfolios of securities,
each of which has distinct investment objectives and policies (each distinct
portfolio being referred to herein as a "Sub-Trust"), as set forth more fully in
its Master Trust Agreement, its Bylaws and its Registration Statements under the
1940 Act and the Securities Act of 1933, all as heretofore amended and
supplemented; and the Trust desires to avail itself of the services,
information, advice, assistance, and facilities of a manager and to have a
manager perform for its various management, administrative, statistical,
research, money manager selection, investment management, and other services;
and
WHEREAS, FRIMCo is registered as an investment adviser under the Investment
Adviser's Act of 1940 and will engage in the business of rendering investment
advisor, counseling, money manager recommendation, and supervisory services to
investment consulting clients; and FRIMCo and its affiliated corporations have
undertaken the initiative and expense of organizing the Trust in order to have a
means to commingle assets for certain investors to have access to and utilize
the "Multi-Style, Multi-Manager" method of investment and to provide services to
the Trust in consideration of and on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, the trust and FRIMCo agree as follows:
1. Employment of FRIMCo. The Trust hereby employs FRIMCo to manage the
investment and reinvestment of the Trust's assets and to act as a
discretionary Money Manager to certain of the Sub-Trusts in the manner set
forth in Section 2(B) of this Agreement, and to administer its business and
administrative operations, subject to the direction of the Board of
Trustees and the officers of the Trust, for the period, in the manner, and
on the terms hereinafter set forth. FRIMCo hereby accepts such employment
and agrees during such period to render the services and to assume the
obligations herein set forth. FRIMCo shall for all purposes herein be
deemed to be an independent contractor and shall,
except as expressly provided or authorized (whether herein or otherwise),
have no authority to act for or represent the Trust in any way.
2. Obligations of and Services to be provided by FRIMCo. FRIMCo undertakes to
provide the services hereinafter set forth and to assume the following
obligations:
A. Management and Administrative Services.
(1) FRIMCo shall furnish to the Trust adequate (a) office space,
which may be space within the offices of FRIMCo or in such other
place as may be agreed upon from time to time, (b) office
furnishing, facilities, and equipment as may be reasonably
required for managing and administering the business and
operations of the Trust, including (i) complying with the
business trust, securities, and tax reporting requirements of the
United States and the various states in which the Trust does
business, (ii) conducting correspondence and other communications
with the shareholders of the Trust ("Shareholders"), and (iii)
maintaining or supervising the maintenance of all internal
bookkeeping, accounting, and auditing services and records in
connection with the Trust's investment and business activities.
The Trust agrees that its shareholder recordkeeping services, the
computing of net asset value and the preparation of certain of
its records required by Rule 31 under the 1940 Act are maintained
by the Trust's Transfer Agent, Custodian, and Money Managers, and
that with respect to these records FRIMCo's obligations under
this Section 2(A) are supervisory in nature.
(2) FRIMCo shall employ or provide and compensate the executive,
administrative, secretarial, and clerical personnel necessary to
supervise the provision of the services set forth in sub-
paragraph 2(A)(1), and shall bear the expense of providing such
services except as provided in Section 4 of this Agreement.
FRIMCo shall also compensate all officers and employees of the
Trust who are officers or employees of FRIMCo, or its affiliated
companies.
B. Investment Management Services.
(1) The Trust intends to appoint one or more persons or companies
("Money Manager[s]") for each of the Sub-Trusts or segments
thereof, and each Money Manager shall have full investment
discretion and shall make all determinations with respect to the
investment of a Sub-Trust's assets assigned to the Money Manager
and the purchase and sale of portfolio securities with those
assets, and such steps as may be necessary to implement its
decision. FRIMCo shall not be responsible or liable for the
investment merits o any decision by a Money Manager to purchase,
hold, or sell a security for a Sub-Trust portfolio.
(2) FRIMCo shall, subject to and in accordance with the investment
objectives and policies of the Trust and each Sub-Trust and any
directions which the Trust's Board of Trustees may issue to
FRIMCo, have: (i) overall supervisory responsibility for the
general management and investment of the Trust's assets and
securities portfolios; and (ii) full investment discretion to
make all determinations with respect to the investment of Sub-
Trust assets not assigned to a Money Manager.
(3) FRIMCo shall develop overall investment programs and strategies
for each Sub-Trust, or segments thereof, shall revise such
programs as necessary, and shall monitor and report periodically
to the Board of Trustees concerning the implementation of the
Programs.
(4) FRIMCo shall research and evaluate Money Managers and shall
advise the Board of Trustees of the Trust of the Money Managers
which FRIMCo believes are best suited to invest the assets of
each Sub-Trust; shall monitor and evaluate the investment
performance of each Money Manager employed by the Trust; shall
determine the portion of each Sub-Trust's assets to be managed by
each Money Manager; shall recommend changes or additions of Money
Managers when appropriate; shall coordinate the investment
activities of the Money Managers; and acting as a fiduciary for
the Trust shall compensate the Money Managers.
(5) FRIMCo shall render to the Trust's Board of Trustees such
periodic reports concerning the Trust's and Sub-Trust's business
and investments as the Board of Trustees shall reasonably
request.
C. Use of Xxxxx Xxxxxxx Company Research.
FRIMCo is hereby authorized and expected to utilize the research and
other resources of Xxxxx Xxxxxxx Company, its corporate parent, or any
predecessor organization, in providing the Investment Management
Services specified in Subsection "B," above. Neither FRIMCo nor the
Trust shall be obligated to pay any fee to Xxxxx Xxxxxxx Company for
these services.
D. Provision of Information Necessary for Preparation of Securities
Registration Statements, Amendments and Other Materials.
FRIMCo will make available and provide financial, accounting, and
statistical information required by the Trust for the preparation of
registration statements, reports, and other documents required by
federal and state securities laws, and with such information as the
Trust may reasonably request for use in the preparation of such
documents or of other materials necessary or helpful for the
underwriting and distribution of the Trust's shares.
E. Other Obligations and Services.
FRIMCo shall make available its officers and employees to the Board of
Trustees and officers of the Trust for consultation and discussions
regarding the administration and management of the Trust and its
investment activities.
3. Execution and Allocation of Portfolio Brokerage Commissions. FRIMCo or the
Money Managers, subject to and in accordance with any directions which the
Trust's Board of Trustees may issue from time to time, shall place, in the
name of the Trust, orders for the execution of the Sub-Trust's portfolio
transactions. When placing such orders, the primary objective of FRIMCo
and Money Managers shall be to obtain the best net price and execution for
the Trust, but this requirement shall not be deemed to obligate FRIMCo or a
Money Manager to place any order solely on the basis of obtaining the
lowest commission rate if the other standards set forth in this section
have been satisfied. The Trust recognizes that there are likely to be many
cases in which different brokers are equally able to provide such best
price and execution and that, in selecting among such brokers with respect
to particular trades, it is desirable to choose those brokers who furnish
"brokerage and research services" (as defined in Section 28(e)(3) of the
Securities and Exchange Act of 1934) or statistical quotations and other
information to the Trust, FRIMCo and/or the Money Managers in accord with
the standards set forth below. Moreover, to the extent that it continues
to be lawful to do so and so long as the Board determines as a matter of
general policy that the Trust will benefit, directly or indirectly, by
doing so, FRIMCo or a Money Manager may place orders with a broker who
charges a commission for that transaction which is in excess of the amount
of commission that another broker would have charged for effecting that
transaction, provided that the excess commission is reasonable in relation
to the value of brokerage and research services provided by that broker.
Accordingly, the Trust and FRIMCo agree that FRIMCo and the Money Managers
shall select brokers for the execution of the Sub-Trust's portfolio
transactions from among:
A. Those brokers and dealers who provide brokerage and research services,
or statistical quotations and other information to the Trust,
specifically including the quotations necessary to determine the
Trust's net assets, in such amount of total brokerage as may
reasonably be required in light of such services;
B. Those brokers and dealers supply brokerage and research services to
FRIMCo and/or its affiliated corporations, or the Money Managers,
which relate directly to portfolio securities, actual or potential, of
the Trust, or which place FRIMCo or Money Managers in a better
position to make decisions in connection with the management of the
Trust's assets and portfolios, whether or not such data may also be
useful to FRIMCo and its affiliates, or the Money Managers and their
affiliates, in managing other portfolios or advising other clients, in
such amount of total brokerage as may reasonably be required; and
C. Xxxxx Xxxxxxx Securities, Inc., an affiliate of FRIMCo, when FRIMCo or
Money Manager has determined that the Trust will receive competitive
execution, price, and commission. FRIMCo shall render regular reports
to the Trust, not more frequently than quarterly, of how much total
brokerage business has been placed with Xxxxx Xxxxxxx Securities,
Inc., and the manner in which the allocation has been accomplished.
FRIMCo agrees and each Money Manager will be required to agree, that no
investment decision will be made or influenced by a desire to provide
brokerage for allocation in accordance with the foregoing, and that the
right to make such allocation of brokerage shall not interfere with
FRIMCo's or Money Manager's primary duty to obtain the best net price and
execution for the Trust.
4. Expenses of the Trust. It is understood that the Trust will pay all its
expenses other than those expressly assumed by FRIMCo herein, which
expressly assumed by FRIMCo herein, which expenses payable by the Trust
shall include:
A. Fees for the services of the Money Manager;
B. Expenses of all audits by independent public accountants;
C. Expenses of transfer agent, registrar, dividend disbursing agent, and
shareholder recordkeeping services;
D. Expenses of custodial services including recordkeeping services
provided by the Custodian;
E. Expenses of obtaining quotations for calculating the value of the
Trust's net assets;
F. Expenses of obtaining Portfolio Activity Reports and Analyses of
International Management reports for each portfolio of each Sub-Trust;
G. Expenses of maintaining each Sub-Trust's tax records;
H. Salaries and other compensation of any of the Trust's executive
officers and employees, if any, who are not officers, directors,
stockholders, or employees of FRIMCo;
I. Taxes levied against the Trust;
J. Brokerage fees and commissions in connection with the purchase and
sale of portfolio securities for the Trust;
K. Costs, including the interest expense, of borrowing money;
L. Costs and/or fees incident to meetings of the Trust, the preparation
and mailings of prospectuses and reports of the Trust to its
Shareholders, the filing of reports with regulatory bodies, the
maintenance of the Trust's
existence, and the registration of shares
with federal and state securities authorities;
M. Legal fees, including the legal fees related to the registration and
continued qualification of the Trust shares for sale;
N. Costs of printing stock certificates representing shares of the Trust;
O. Trustees' fees and expenses to Trustees who are not officers,
employees, or stockholders of FRIMCo or any of its affiliates;
P. The Trust's pro rata portion of the fidelity bond required by Section
17(g) of the 1940 Act, or other insurance premiums;
Q. Association membership dues; and
R. Extraordinary expenses as may arise including expenses incurred in
connection with litigation, proceedings, other claims, and the legal
obligations of the Trust to indemnify its Trustees, officers,
employees, Shareholders, distributors, and agents with respect
thereto.
5. Activities and Affiliates of FRIMCo.
A. The services of FRIMCo and its affiliated corporations to the Trust
hereunder are not to be deemed exclusive, and FRIMCo and any of its
affiliates shall be free to render similar services to others.
(1) FRIMCo and its affiliated corporations shall use the same skill
and care in the management of the Sub-Trust's portfolios as they
use in the administration of other accounts to which they provide
asset management consulting and manager selection services, but
they shall not be obligated to give the Trust more favorable or
preferential treatment vis-a-vis their other clients.
(2) The Trust expressly recognizes that Xxxxx Xxxxxxx Investment
Company ("FRIC") is a client of FRIMCo and that Xxxxx Xxxxxxx
Trust Company ("Trust Company"), a corporation affiliated with
FRIMCo, is also a client of a corporation affiliated with FRIMCo
and each of FRIC and Trust Company receives substantially the
same portfolio structuring and money manager selection services
from the affiliate as does the Trust; that each of FRIC and Trust
Company has, or may have, commingled investment funds with
substantially the same investment objectives, strategies, and
programs as the Trust; that each of FRIC and the Trust was
organized by and at the expense of FRIMCo or of a corporation
affiliated with FRIMCo for the express purpose of offering the
same type of investment management services to the Trust's
Shareholders, at least some of whom could not obtain these
services through FRIC or Trust Company, as FRIC provides to its
Shareholders and as Trust Company provides to its trust
customers; and that over time FRIC, Trust Company and the Trust
may utilize some of the same money managers and have similar
portfolio securities holders.
B. Subject to and in accordance with the Master Trust Agreement (as
defined below) and Bylaws of the Trust and to Section 10(a) of the
1940 Act, it is understood that Trustees, officers, agents, and
Shareholders of the Trust are or may be interested in FRIMCo or its
affiliates as directors, agents, or stockholders of FRIMCo or its
affiliates are or may be interested in the Trust as Trustees,
officers, agents, Shareholders, or otherwise; that FRIMCo or its
affiliates may be interested in the Trust as Shareholders or
otherwise; and that the effect of any such interests shall be governed
by said Master Trust Agreement, Bylaws, and the 1940 Act.
6. Compensation of FRIMCo.
FRIMCo shall receive from each of the following Sub-Trusts an annual
management fee, accrued daily at the rate of 1/365th of the applicable
management fee and payable following the last day of each month. The
annual management fee, including the fee payable to the Money Managers (for
each respective Sub-Trust), shall be computed based on the following annual
percentage of each Sub-Trust's average daily net assets during the month:
Multi-Style Equity 0.78%
Aggressive Equity 0.95
Non-U.S. 0.95
Core Bond 0.60
Money Market Liquidity 0.25
From this management fee, FRIMCo, acting as a fiduciary of the Trust, shall
compensate the Money Managers.
7. Liabilities of FRIMCo.
A. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of obligations or duties hereunder or on the part
of FRIMCo or its corporate affiliates, FRIMCo and its corporate
affiliates shall not be subject to liability to the Trust or to any
Shareholder of the Trust for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding, or sale of any security.
B. No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or FRIMCo and its corporate
affiliates, from liability in violation of Section 17(h) and (i) of
the 1940 Act.
8. Renewal and Termination.
A. This Agreement shall become effective on and as of January 1, 1999
and shall continue in effect as to each Sub-Trust until April 30,
2000. The Agreement is renewable annually thereafter for successive
one-year periods (a) by a vote of a majority of the Trustees of the
Trust, or (b) as to any Sub-Trust, by a vote of a majority of the
outstanding voting securities of that Sub-Trust, and in either case by
a majority of the Trustees who are not parties to the Agreement or
interested person of any parties to the Agreement (other than as
Trustees of the Trust), cast in person at a meeting called for
purposes of voting on the Agreement; provided, however, that if the
Shareholders of any one or more Sub-Trusts fail to approve the
Agreement as provided herein, FRIMCo may continue to serve in such
capacity in the manner and to the extent permitted by the 1940 Act and
Rules and Regulations thereunder.
B. This Agreement:
(a) May at any time be terminated without the payment of any penalty
either by vote of the Board of Trustees of the Trust or, as to
any Sub-Trust, by vote of a majority of the outstanding voting
securities of the Sub-Trust, on 60 days' written notice to
FRIMCo;
(b) Shall immediately terminate in the event of its assignment; and
(c) May be terminated by FRIMCo on 60 days' written notice to the
Trust.
C. As used in this Section 8, the Terms "assignment," "interested person"
and "vote of a majority of the outstanding voting securities" shall
have the meanings set forth for any such terms in the 1940 Act.
D. Any notice under this Agreement shall be given in writing addressed
and delivered, or mailed postpaid, to the other party at any office of
such party.
9. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule, or otherwise, the remainder of
this Agreement shall not be affected thereby.
10. Reservation of Name. The parties hereto acknowledge that Xxxxx Xxxxxxx
Company has reserved the right to grant the non-exclusive use of the name
"Xxxxxxx," or any derivative thereof, to any other investment company,
investment advisor, distributor or other business enterprise, and to
withdraw from the Trust the use of the name "Xxxxxxx." In the event that
Xxxxx Xxxxxxx Company should elect to withdraw the use of the name
"Xxxxxxx" from the Trust, the Trust will submit the question of continuing
this Agreement to a vote of its Shareholders.
11. Limitation of Liability. The Master Trust Agreement, dated July 11, 1996,
as amended from time to time, establishing the Trust, which is hereby
referred to and a copy of which is on file with the Secretary of The
Commonwealth of Massachusetts, provides that the name Xxxxxxx Insurance
Funds means the Trustees from time to time serving (as Trustees but not
personally) under said Master Trust Agreement. It is expressly
acknowledged and agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Shareholders, Trustees, officers, employees,
or agents of the Trust, personally, but shall bind only the trust property
of the Trust, as provided in its Master Trust Agreement. The execution and
delivery of this Agreement have been authorized by the Trustees of the
Trust and signed by the President of the Trust, acting as such, and neither
such authorization by such Trustees nor such execution and delivery by such
officers shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
trust property of the Trust as provided in its Master Trust Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
Attest: XXXXXXX INSURANCE FUNDS
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxx, Assistant Secretary Xxxx X. Xxxxxxxx, President
Attest: XXXXX XXXXXXX INVESTMENT
MANAGEMENT COMPANY
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxx, Assistant Secretary Xxxx X. Xxxxxxx, President
XXXXX XXXXXXX COMPANY agrees to provide consulting services without charge to
the Trust upon the request of the Board of Trustees or officers of the Trust, or
upon the request of Manager pursuant to Section 2(C).
Attest: XXXXX XXXXXXX COMPANY
By: /s/ J. Xxxxx Xxxxxxxx By: /s/ Xxxxxxx X. X. Xxxxxxxx
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J. Xxxxx Xxxxxxxx, Xxxxxxx X. X. Xxxxxxxx,
Assistant Secretary President
