EXHIBIT 10.33
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this ___ day of ______________, 199_ by and between
TARGET/UNITED FUNDS, INC. (hereinafter called "United", and XXXXXXX & XXXX,
INC.
WITNESSETH:
In consideration of the mutual promises and agreements herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and between the parties hereto as
follows:
I. IN GENERAL.
Xxxxxxx & Xxxx, Inc., agrees to act as investment
adviser to United with respect to the investment of its assets and in general
to supervise the investments of United, subject at all times to the direction
and control of the Board of Directors of United, all as more fully set forth
herein.
II. DUTIES OF XXXXXXX & XXXX, INC., WITH RESPECT TO INVESTMENT OF ASSETS OF
UNITED.
X. Xxxxxxx & Xxxx Inc., shall regularly
provide investment advice to United and shall, subject to the succeeding
provisions of this section, continuously supervise the investment and
reinvestment of cash, securities or other property comprising the assets of
the investment portfolios of United; and in furtherance thereof, Xxxxxxx &
Xxxx, Inc., shall:
1. obtain and evaluate pertinent information
about significant developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy generally or
one or more of the portfolios of United, and whether concerning the
individual companies whose securities are included in United's portfolios or
the industries in which they engage, or with respect to securities which
Xxxxxxx & Xxxx, Inc., considers desirable for inclusion in United's
portfolios;
2. furnish continuously an investment
program for each of the portfolios of United;
3. determine what securities shall be
purchased or sold by United;
4. take, on behalf of United, all actions
which appear to Xxxxxxx & Xxxx, Inc., necessary to carry into effect such
investment programs and supervisory functions as aforesaid, including the
placing of purchase and sale orders.
X. Xxxxxxx & Xxxx, Inc., shall make
appropriate and regular reports to the Board of Directors of United on the
actions it takes pursuant to Section II.A. above. Any investment programs
furnished by Xxxxxxx & Xxxx, Inc., under this section, or any supervisory
function taken hereunder by Xxxxxxx & Xxxx, Inc., shall at all times conform
to and be in accordance with any requirements imposed by:
1. the provisions of the Investment Company
Act of 1940 and any rules or regulations in force thereunder;
2. any other applicable provision of law;
3. the provisions of the Articles of
Incorporation of United as amended from time to time;
4. the provisions of the Bylaws of United as
amended from time to time;
5. the terms of the registration statements
of United, as amended from time to time, under the Securities Act of 1933 and
the Investment Company Act of 1940.
C. Any investment programs furnished by
Xxxxxxx & Xxxx, Inc., under this section or any supervisory functions taken
hereunder by Xxxxxxx & Xxxx, Inc., shall at all times be subject to any
directions of the Board of Directors of United, its Executive Committee, or
any committee or officer of United acting pursuant to authority given by the
Board of Directors.
III. ALLOCATION OF EXPENSES.
The expenses of United and the expenses of Xxxxxxx
& Xxxx, Inc., in performing its functions under this Agreement shall be
divided into two classes, to wit: (i) those expenses which will be paid in
full by Xxxxxxx & Xxxx, Inc., as set forth in subparagraph "A" hereof, and
(ii) those expenses which will be paid in full by United, as set forth in
subparagraph "B" hereof.
A. With respect to the duties of Xxxxxxx &
Xxxx, Inc., under Section II above, it shall pay in full, except as to the
brokerage and research services acquired through the allocation of
commissions as provided in Section IV hereinafter, for (a) the salaries and
employment benefits of all employees of Xxxxxxx & Xxxx, Inc. who are engaged
in providing these advisory services; (b) adequate office space and suitable
office equipment for such employees; and (c) all telephone and communications
costs relating to such functions. In addition, Xxxxxxx & Xxxx, Inc., shall
pay the fees and expenses of all directors of United who are employees of
Xxxxxxx & Xxxx, Inc., or an affiliated corporation and the salaries and
employment benefits of all officers of United who are affiliated persons of
Xxxxxxx & Xxxx, Inc.
B. United shall pay in full for all of its
expenses which are not listed above (other than those assumed by Xxxxxxx &
Xxxx, Inc., or its affiliates in its capacity as Accounting Services Agent
for United), including (a) the costs of preparing and printing prospectuses
and reports to shareholders of United including mailing costs; (b) the costs
of printing all proxy statements and all other costs and expenses of meetings
of shareholders of United; (c) interest, taxes, brokerage commission and
premiums on fidelity and other insurance; (d) audit fees and expenses of
independent accountants and legal fees and expenses of attorneys, but not of
attorneys who are employees of Xxxxxxx & Xxxx, Inc.; (e) fees and expenses of
its directors; (f) custodian fees and expenses; (g) fees payable by United
under the Securities Act of 1933, the Investment Company Act of 1940, and the
securities or "Blue-Sky" laws of any jurisdiction; (h) fees and assessments
of the Investment Company Institute or any successor organization; (i) such
nonrecurring or extraordinary expenses as may arise, including litigation
affecting United and any indemnification by United of its officers,
directors, employees and agents with respect thereto; (j) the costs and
expenses of maintaining shareholder records and processing transactions for
the issuance and redemption of its shares; and (k) the costs and expenses
provided for in any Accounting Services Agreement, including amendments
thereto, contemplated by subsection C of this section III.
X. Xxxxxxx & Xxxx, Inc., or an affiliate of
Xxxxxxx & Xxxx, Inc., may also act as accounting services agent of United if
at the time in question there is a separate agreement, "Accounting Services
Agreement," covering such functions between United and Xxxxxxx & Xxxx, Inc.,
or such affiliate. The corporation, whether Xxxxxxx & Xxxx, Inc., or its
affiliate, which is the party to such Agreement with United is referred to as
the "Agent." Any such Agreement shall provide in substance that it shall not
go into effect, or may be amended, or a new agreement covering the same
topics between United and the Agent may be entered into only if the terms of
such Agreement, such amendment or such new agreement have been approved by
the Board of Directors of United, including the vote of a majority of the
directors who are not "interested persons" as defined in the Investment
Company Act of 1940, of either party to the Agreement, such amendment or such
new agreement (considering Xxxxxxx & Xxxx, Inc., to be such a party even if
at the time in question the Agent is an affiliate of Xxxxxxx & Xxxx, Inc.),
cast in person at a meeting called for the purpose of voting on such
approval. Such a vote is referrer to as a "disinterested director" vote. Any
such Agreement shall also provide in substance for its continuance, unless
terminated, for a specified period which shall not exceed two years from the
date of its execution and from year to year thereafter only if such
continuance is specifically approved at least annually by a disinterested
director vote, and that any disinterested director vote shall include a
determination that (i) the Agreement, amendment, new agreement or continuance
in question is in the best interests of United and its shareholders; (ii) the
services to be performed under the Agreement, the Agreement as amended, new
agreement or agreement to be continued are services required for the
operation of United; (iii) the Agent can provide services the nature and
quality of which are at least equal to those provided by others offering the
same or similar services; and (iv) the fees for such services are fair and
reasonable in light of the usual and customary charges made by others for
services of the same nature and quality. Any such Agreement may also provide
in substance that any disinterested director vote may be conditioned on the
favorable vote of the holders of a majority (as defined in or under the
Investment Company Act of 1940) of the outstanding shares of each class of
United. Any such Agreement shall also provide in substance that it may be
terminated by the Agent at any time without penalty upon giving United one
hundred twenty (120) days' written notice (which notice may be waived by
United) and may be terminated by United at any time without penalty upon
giving the Agent sixty (60) days' written notice (which notice may be waived
by the Agent), provided that such termination by United shall be directed or
approved by the vote of a majority of the Board of Directors of United in
office at the time or by the vote of the holders of a majority (as defined in
or under the Investment Company Act of 1940) of the outstanding shares of
each class of United.
IV. BROKERAGE.
(a) Xxxxxxx & Xxxx, Inc., may select brokers
to effect the portfolio transactions of United on the basis of its estimate
of their ability to obtain, for reasonable and competitive commissions, the
best execution of particular and related portfolio transactions. For this
purpose, "best execution" means prompt and reliable execution at the most
favorable price obtainable. Such brokers may be selected on the basis of all
relevant factors including the execution capabilities required by the
transaction or transactions, the importance of speed, efficiency, or
confidentiality, and the willingness of the broker to provide useful or
desirable investment research and/or special execution services. Xxxxxxx &
Xxxx, Inc., shall have no duty to seek advance competitive commission bids
and may select brokers based solely on its current knowledge of prevailing
commission rates.
(b) Subject to the foregoing, Xxxxxxx & Xxxx,
Inc., shall have discretion, in the interest of United, to direct the
execution of its portfolio transactions to brokers who provide brokerage
and/or research services (as such services are defined in Section 28(e) of
the Securities Exchange Act of 1934) for United and/or other accounts for
which Xxxxxxx & Xxxx, Inc., and its affiliates exercise "investment
discretion" (as that term is defined in Section 3(a)(35) of the Securities
Act of 1934); and in connection with such transactions, to pay commission in
excess of the amount another adequately qualified broker would have charged
if Xxxxxxx & Xxxx, Inc., determines, in good faith, that such commission is
reasonable in relation to the value of the brokerage and/or research services
provided by such broker, viewed in terms of either that particular
transaction or the overall responsibilities of Xxxxxxx & Xxxx, Inc., and its
investment advisory affiliates with respect to the accounts for which they
exercise investment discretion. In reaching such determination, Xxxxxxx &
Xxxx, Inc., will not be required to attempt to place a specified dollar
amount on the brokerage and/or research services provided by such broker;
provided that Xxxxxxx & Xxxx, Inc., shall be prepared to demonstrate that
such determinations were made in good faith, and that all commissions paid by
United over a representative period selected by its Board of Directors were
reasonable in relation to the benefits to United.
(c) Subject to the foregoing provisions of
this Paragraph "IV," Xxxxxxx & Xxxx, Inc., may also consider sales of
insurance policies funded by United's shares and sales of shares of
investment companies distributed by Xxxxxxx & Xxxx, Inc., or its affiliates,
and portfolio valuation or pricing services as a factor in the selection of
brokers to execute brokerage and principal portfolio transactions.
V. COMPENSATION OF XXXXXXX & XXXX, INC.
As compensation in full for services rendered and
for the facilities and personnel furnished under sections I, II, and IV of
this Agreement, United will pay to Xxxxxxx & Xxxx, Inc., for each day the
fees specified in Exhibit A hereto.
The amounts payable to Xxxxxxx & Xxxx, Inc., shall
be determined as of the close of business each day; shall, except as set
forth below, be based upon the value of net assets computed in accordance
with the Articles of Incorporation of United; and shall be paid in arrears
whenever requested by Xxxxxxx & Xxxx, Inc.
Notwithstanding the foregoing, if the laws,
regulations or policies of any state in which shares of United are qualified
for sale limit the operation and management expenses of United, Xxxxxxx &
Xxxx, Inc., will refund to United the amount by which such expenses exceed
the lowest of such state limitations.
VI. UNDERTAKINGS OF XXXXXXX & XXXX, INC.; LIABILITIES.
Xxxxxxx & Xxxx, Inc., shall give to United the
benefit of its best judgment, efforts and facilities in rendering advisory
services hereunder.
Xxxxxxx & Xxxx, Inc., shall at all times be guided
by and be subject to United's investment policies, the provisions of its
Articles of Incorporation and Bylaws as each shall from time to time be
amended, and to the decision and determination of United's Board of Directors.
This Agreement shall be performed in accordance
with the requirements of the Investment Company Act of 1940, the Investment
Advisors Act of 1940, the Securities Act of 1933, and the Securities Exchange
Act of 1934, to the extent that the subject matter of this Agreement is
within the purview of such Acts. Insofar as applicable to Xxxxxxx & Xxxx,
Inc., as an investment adviser and affiliated person of United, Xxxxxxx &
Xxxx, Inc., shall comply with the provisions of the Investment Company Act of
1940, the Investment Advisers Act of 1940 and the respective rules and
regulations of the Securities and Exchange Commission thereunder.
In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder on
the part of Xxxxxxx & Xxxx, Inc., it shall not be subject to liability to
United or to any stockholder of United (direct of beneficial) for any act or
omission in the course of or connected with rendering services thereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.
VII. DURATION OF THIS AGREEMENT.
This Agreement shall become effective at the start
of business on the date hereof and shall continue in effect, unless
terminated as hereinafter provided, for a period of one year and from
year-to-year thereafter only if such continuance is specifically approved at
least annually by the Board of Directors, including the vote of a majority of
the directors who are not parties to this Agreement or "interested persons"
(as defined in the Investment Company Act of 1940) of any such party, cast in
person at a meeting called for the purpose of voting on such approval, or by
the vote of the holders of a majority (as so defined) of the outstanding
voting securities of each class of United and by the vote of a majority of
the directors who are not parties to this Agreement or "interested persons"
(as so defined) of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
VIII. TERMINATION.
This Agreement may be terminated by Xxxxxxx &
Xxxx, Inc., at any time without penalty upon giving United one hundred twenty
(120) days' written notice (which notice may be waived by United) and may be
terminated by United at any time without penalty upon giving Xxxxxxx & Xxxx,
Inc. sixty (60) days' written notice (which notice may be waived by Xxxxxxx &
Xxxx, Inc.), provided that such termination by United shall be directed or
approved by the vote of a majority of the Board of Directors of United in
office at the time or by the vote of a majority (as defined in the Investment
Company Act of 1940) of the outstanding voting securities of United. This
Agreement shall automatically terminate in the event of its assignment, the
term "assignment" for this purpose having the meaning defined in Section
2(a)(4) of the Investment Company Act of 1940 and the rules and regulations
thereunder.
IN WITNESS WHEREROF, the parties hereto have caused the foregoing instrument
to be executed by their duly authorized officers and their corporate seal to
be hereunto affixed, all as of the day and year first above written.
TMK/UNITED FUNDS, INC.
By:_______________________
-----------------------
XXXXXXX & XXXX, INC.
By:_______________________
-----------------------
EXHIBIT A TO INVESTMENT MANAGEMENT AGREEMENT
TARGET/UNITED FUNDS, INC.
FEE SCHEDULE
1. A "specific" fee computed each day on net asset value at the annual
rates listed below:
CLASS OF SHARES
---------------
Money Market Portfolio
Bond Portfolio
High Income Portfolio
Growth Portfolio
Income Portfolio
International Portfolio
Small Cap Portfolio
Balanced Portfolio
Limited-Term Bond Portfolio
Asset Strategy Portfolio
Science and Technology Portfolio
2. A "base" fee computed each day on the combined net asset values of
all the portfolios of TMK/United Funds, Inc. and allocated among the eleven
classes of shares based on their relative net asset size at the annual rates
shown in the following table:
Base Fee Rate
Combined Net Asset Level Annual Base
(all dollars in millions) Fee Rate for Each Level
-------------------------- -----------------------
From $ 0 to $ 750
From $ 750 to $1,500
From $1,500 to $2,250
Over $2,250
