FORM OF
INVESTMENT MANAGEMENT AGREEMENT
October [ ], 1997
Xxxxx Xxxxxx Mutual Funds Management Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
This Investment Management Agreement (the "Agreement") is made
on this [ ] day of October, 1997, by and between Xxxxx Xxxxxx Investment
Funds Inc. , a corporation organized under the laws of the State of
Maryland (the "Corporation"), in respect of its new series, Xxxxx Xxxxxx
Xxxxxxxxxx Global Small Cap Value Fund (the "Fund"), and Xxxxx
Xxxxxx Mutual Funds Management Inc. ("SBMFM") as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and
reinvesting in investments of the kind and in accordance with the
limitations specified in: (i) the Corporation's Charter as amended
from time to time (the "Charter of the Corporation"); (ii) the Fund's
Prospectus (the "Prospectus"); and (iii) the Fund's Statement of\
Additional Information (the "Statement") filed with the Securities
and Exchange Commission (the
"SEC") as part of the Fund's Registration Statement on Form N-1A, as
amended from time to time, and in such manner and to such extent as
may from time to time be approved by the Board of Directors of the
Corporation (the "Board"). Copies of the Fund's Prospectus and the
Statement and the Charter of the Corporation have been or will be
submitted to SBMFM. The Corporation desires to employ and hereby
appoints SBMFM to act as investment manager for the Fund. SBMFM
accepts the appointment and agrees to furnish the services for the
compensation set forth below. SBMFM is hereby authorized to retain third
parties and is hereby authorized to delegate some or all of its duties and
obligations hereunder to such persons, provided such persons shall remain
under the general supervision of SBMFM.
2. Services as Investment Manager
Subject to the supervision and direction of the Board, SBMFM will: (a)
assist in supervising all aspects of the Fund's operations; (b) supply the
Fund with office facilities (which may be in SBMFM's own offices),
statistical and research data, data processing services, clerical, accounting
and bookkeeping services, including, but not limited to, the calculation of
(i) the net asset value of shares of the Fund, (ii) applicable contingent
deferred sales charges and similar fees and charges and (iii) distribution
fees, internal auditing and legal services, internal executive and
administrative services, and stationery and office supplies; and (c) prepare
reports to shareholders of the Fund, tax returns and reports to and filings
with the SEC and state blue sky authorities.
3. Compensation
In consideration of the services rendered pursuant to this Agreement, the
Corporation will pay SBMFM, on the first business day of each month, a
fee for the previous month at an annual rate of 1.05% of the Fund's
average daily net assets. The fee for the period from the date the Fund
commences its investment operations to the end of the month during
which the Fund commences its investment operations shall be pro-rated
according to the proportion that such period bears to the full monthly
period. Upon any termination of this Agreement before the end of any
month, the fee for such part of that month shall be pro-rated according to
the proportion that such period bears to the full monthly period and shall
be payable upon the date of termination of this Agreement. For the
purpose of determining fees payable to SBMFM, the value of the Fund's
net assets shall be computed at the times and in the manner specified in
the Fund's Prospectus and/or the Statement, as from time to time in effect.
4. Expenses
SBMFM will bear all expenses in connection with the performance of its
services under this Agreement. The Fund will bear certain other expenses
to be incurred in its operation, including: investment advisory and
administration fees; charges of custodians and transfer and dividend
disbursing agents; fees for necessary professional services, such as the
Fund's and Board members' proportionate share of insurance premiums,
professional associations, dues and/or assessments; and brokerage
services, including taxes, interest and commissions; costs attributable to
investor services, including without limitation, telephone and personnel
expenses; costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to
existing shareholders; the costs of regulatory compliance, such as SEC
fees and state blue sky qualifications fees; outside auditing and legal
expenses and costs associated with maintaining the Fund's legal existence;
costs of shareholders' reports and meetings of the officers or Board; fees of
the members of the Board who are not officers, directors or employees of
Xxxxx Xxxxxx, Inc. or its affiliates or any person who is an affiliate of any
person to whom duties may be delegated hereunder and any extraordinary
expenses. In addition, the Fund will pay all service and distribution fees
pursuant to a Services and Distribution Plan adopted under Rule 12b-1 of
the Investment Company Act of 1940, as amended (the "1940 Act").
5. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund (including fees
pursuant to this Agreement, but excluding distribution fees, interest,
taxes, brokerage and, if permitted by state securities commissions,
extraordinary expenses) exceed the expense limitations of any state having
jurisdiction over the Fund, SBMFM will reimburse the Fund for that
excess expense to the extent required by state law in the same proportion
as its respective fees bear to the combined fees for investment advice and
administration. The expense reimbursement obligation of SBMFM will be
limited to the amount of its fees hereunder. Such expense reimbursement,
if any, will be estimated, reconciled and paid on a monthly basis.
6. Brokerage
In selecting brokers or dealers to execute transactions on behalf of the
Fund, SBMFM will seek the best overall terms available. In assessing the
best overall terms available for any transaction, SBMFM will consider
factors it deems relevant, including, but not limited to, the breadth of the
market in the security, the price of the security, the financial condition
and execution capability of the broker or dealer and the reasonableness of
the commission, if any, for the specific transaction and on a continuing
basis. In selecting brokers or dealers to execute a particular transaction,
and in evaluating the best overall terms available, SBMFM is authorized
to consider the brokerage and research services (as those terms are defined
in Section 28(e) of the Securities Exchange Act of 1934, as amended)
provided to the Fund and/or other accounts over which SBMFM or its
affiliates exercise investment discretion.
7. Information Provided to the Fund
SBMFM will keep the Corporation informed of developments materially
affecting the Fund's portfolio, and will, on its own initiative, furnish the
Corporation from time to time with whatever information SBMFM
believes is appropriate for this purpose.
8. Standard of Care
SBMFM shall exercise its best judgment in rendering the services listed in
paragraph 2 above. SBMFM shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Fund in connection with
the matters to which this Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect SBMFM
against any liability to the Corporation or to the Fund's shareholders to
which SBMFM would otherwise be subject by reason of willful
malfeasance, bad faith or gross negligence on its part in the performance
of its duties or by reason of SBMFM 's reckless disregard of its obligations
and duties under this Agreement.
9. Services to Other Companies or Accounts
The Corporation understands that SBMFM now acts, will continue to act
and may act in the future as: investment adviser to fiduciary and other
managed accounts, as well as to other investment companies; and the
Corporation has no objection to SBMFM's so acting, provided that
whenever the Fund and one or more other investment companies advised
by SBMFM have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a formula
believed to be equitable to each company. The Corporation recognizes
that in some cases this procedure may adversely affect the size of the
position obtainable for the Fund. In addition, the Corporation
understands that the persons employed by SBMFM to assist in the
performance of SBMFM's duties under this Agreement will not devote
their full time to such service and nothing contained in this Agreement
shall be deemed to limit or restrict the right of SBMFM or any affiliate of
SBMFM to engage in and devote time and attention to other businesses or
to render services of whatever kind or nature.
l0. Term of Agreement
This Agreement shall become effective as of the date the Fund commences
its investment operations and continue for an initial two-year term and
shall continue thereafter so long as such continuance is specifically
approved at least annually by (i) the Board or (ii) a vote of a "majority" (as
defined in the 0000 Xxx) of the Fund's outstanding voting securities,
provided that in either event the continuance is also approved by a
majority of the Board members who are not "interested persons" (as
defined in the 0000 Xxx) of any party to this Agreement, by vote cast in
person or by proxy at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, on 60 days'
written notice, by the Board or by vote of holders of a majority of the
Fund's shares, or upon 90 days' written notice, by SBMFM. This
Agreement will also terminate automatically in the event of its assignment
(as defined in the 1940 Act).
11. Representation by the Corporation
The Corporation represents that a copy of the Charter of Corporation is
on file with the State of Maryland Department of Assessments and
Taxation.
12. Limitation of Liability
The Corporation and SBMFM agree that the obligations of the
Corporation under this Agreement shall not be binding upon any of the
Board members, shareholders, nominees, officers, employees or agents,
whether past, present or future, of the Corporation individually, but are
binding only upon the assets and property of the Fund, as provided in the
Charter of the Corporation. The execution and delivery of this Agreement
have been duly authorized by the Corporation and SBMFM, and signed by
an authorized officer of each, acting as such. Neither the authorization by
the Board members of the Corporation, nor the Corporation's execution
and delivery by the officer of the Corporation 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 assets and property of the Fund as
provided in the Charter of the Corporation .
If the foregoing is in accordance with your understanding, kindly indicate
your acceptance hereof by signing and returning the enclosed copy of this
Agreement to us.
Very truly yours,
Xxxxx Xxxxxx Investment Funds Inc.,
on behalf of
Xxxxx Xxxxxx Xxxxxxxxxx Global SmallCap Value Fund
By:
Title:
Accepted:
Xxxxx Xxxxxx Mutual Funds Management Inc.
By:
Title:
