Exhibit 10.1
MANAGEMENT AGREEMENT
AGREEMENT made this 30th day of June, 2000 by and between XXXXXXXX MUTUAL
FUNDS, INC., a Maryland corporation (hereinafter referred to as the
"Corporation"), on behalf of each of its investment series set forth on Schedule
A hereto as it may be amended from time to time (hereinafter referred to each as
a "Fund" and together, as the "Funds"), and XXXXXX X. XXXXXXXX, INCORPORATED, a
California corporation (hereinafter referred to as the "Manager").
W I T N E S S E T H:
WHEREAS, the Corporation is engaged in business as a diversified open-end
management investment company registered under the Investment Company Act of
1940, as amended (hereinafter referred to as the "Investment Company Act"); and
WHEREAS, the Manager is engaged principally in rendering management and
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940; and
WHEREAS, the Corporation on behalf of the Funds desires to retain the
Manager to provide management and investment advisory services to the Funds in
the manner and on the terms hereinafter set forth; and
WHEREAS, the Manager is willing to provide management and investment
advisory services to the Funds on the terms and conditions hereafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Corporation, on behalf of the Funds, and the Manager
hereby agree as follows:
ARTICLE I
DUTIES OF THE MANAGER
The Corporation hereby employs the Manager to act as a manager and
investment adviser of the Funds and to furnish the management and investment
advisory services described below, subject to the policies of the Funds and the
review by and overall consent of the Board of Directors of the Corporation, for
the period and on the terms and conditions set forth in this Agreement. The
Manager hereby accepts such employment and agrees during such period, at its own
expense, to render, or arrange for the rendering of, such services and to assume
the obligations herein set forth for the compensation provided for herein. The
Manager shall for all purposes herein be deemed to be an independent contractor
and shall, unless otherwise expressly provided or authorized, have no authority
to act for or
represent the Corporation or the Funds in any way or otherwise be
deemed agents of the Corporation or the Funds. Additional investment series may
from time to time be added to those covered by this Agreement by the parties by
executing a new Schedule A which shall become effective upon its execution and
shall supersede any Schedule A having an earlier date.
(a) MANAGEMENT SERVICES. The Manager shall perform the management services
necessary for the operation of the Funds as hereinafter provided. The Manager
shall generally monitor each Fund's compliance with investment policies and
restrictions as set forth in its currently effective Prospectus and Statement of
Additional Information relating to the shares of the Fund under the Securities
Act of 1933, as amended (each a "Prospectus" and "Statement of Additional
Information", respectively). The Manager shall provide the Corporation with such
other services as the Manager, subject to review by the Directors, shall from
time to time determine to be necessary or useful to perform its obligations
under this Agreement. The Manager shall make reports to the Directors of its
performance of obligations hereunder and furnish advice and recommendations with
respect to such other aspects of the business and affairs of the Corporation as
it shall determine to be desirable.
(b) INVESTMENT ADVISORY SERVICES. With respect to each Fund:
(i) The Manager shall provide such investment research, advice and
supervision as the Fund may from time to time consider necessary for the proper
supervision of the assets of the Fund, shall furnish continuously an investment
program for the Fund and shall determine from time to time which securities
shall be purchased, sold or exchanged and what portion of the assets of the Fund
shall be held in the various securities in which the Fund invests, options,
futures, options on futures or cash, subject always to the restrictions of the
Articles of Incorporation and By-Laws of the Corporation, as amended from time
to time, the provisions of the Investment Company Act and the statements
relating to the Fund's investment objectives, investment policies and investment
restrictions as the same are set forth in the Fund's currently effective
Prospectus and Statement of Additional Information. Should the Directors at any
time, however, make any definite determination as to investment policy and
notify the Manager thereof in writing, the Manager shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked.
(ii) To the extent applicable, the Manager shall also make decisions for
the Fund as to foreign currency matters and make determinations as to foreign
exchange contracts.
(iii) The Manager shall make decisions for the Fund as to the manner in
which voting rights, rights to consent to corporate action and any other rights
pertaining to the Fund's portfolio securities shall be exercised.
(iv) The Manager shall take, on behalf of the Fund, all actions which it
deems necessary to implement the Fund's investment policies, and in particular
to place all orders for the purchase or sale of portfolio securities for the
Fund's account with brokers or dealers selected by it, and to that end, the
Manager is authorized as the agent of the Fund to
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give instructions to the custodian of the Fund as to deliveries of securities
and payments of cash for the account of the Fund.
(v) In connection with the selection of such brokers or dealers and the
placing of such orders with respect to assets of the Fund, the Manager is
directed at all times to seek to obtain execution and prices within the policy
guidelines determined by the Directors and set forth in the Fund's Prospectus
and Statement of Additional Information. Subject to this requirement and the
provisions of the Investment Company Act, the Securities Exchange Act of 1934,
as amended, and other applicable provisions of law, the Manager may select
brokers or dealers with which it or the Corporation is affiliated (if any).
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
(a) THE MANAGER. The Manager assumes and shall pay for maintaining the
staff and personnel necessary to perform its obligations under this Agreement,
shall pay all compensation relating to service to the Corporation of Officers
and Directors of the Corporation who are affiliated persons of the Manager, and
shall pay the expenses of the Funds incurred in connection with the continuous
offering of Fund shares.
(b) THE CORPORATION. Except as described in paragraph (a) hereof, the
Corporation, on behalf of each Fund, assumes and shall pay all other Fund
expenses, including, without limitation: taxes, expenses for legal and auditing
services, costs of printing proxies, stock certificates, shareholder reports,
Prospectuses and Statements of Additional Information, charges of the custodian,
any sub-custodian and transfer agent, expenses of portfolio transactions,
expenses of redemption of shares, Securities and Exchange Commission fees,
expenses of registering the shares under federal, state and foreign laws, fees
and actual out-of-pocket expenses of Directors who are not affiliated persons of
the Manager, accounting and pricing costs (including the daily calculation of
the net asset value), insurance, interest, brokerage costs, litigation and other
extraordinary or non-recurring expenses, and other expenses properly payable by
each Fund.
ARTICLE III
COMPENSATION OF THE MANAGER
(a) MANAGEMENT AND INVESTMENT ADVISORY FEE. For the services rendered, the
facilities furnished and expenses assumed by the Manager, each Fund shall pay to
the Manager at the end of each calendar month a fee, commencing on the day
following effectiveness hereof, based upon the average daily value of the net
assets of such Fund, as determined and computed in accordance with the
description of the determination of net asset value contained in the relevant
Prospectus and Statement of Additional Information. The fee payable by each Fund
is set forth on Schedule A hereto.
If this Agreement becomes effective subsequent to the first day of a month
or shall terminate before the last day of a month, compensation for that part of
the month that this
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Agreement is in effect shall be prorated in a manner consistent with the
calculation of the fee as set forth above. Subject to the provisions of
subsection (b) hereof, payment of the Manager's compensation for the preceding
month shall be made as promptly as possible after completion of the computations
contemplated by subsection (b) hereof. During any period when the determination
of net asset value is suspended by the Directors, the net asset value of a share
as of the last business day prior to such suspension shall for this purpose be
deemed to be the net asset value at the close of each succeeding business day
until it is again determined.
(b) EXPENSE LIMITATION. In the event the operating expenses of a Fund,
including amounts payable to the Manager pursuant to subsection (a) hereof, for
any fiscal year ending on a date on which this Agreement is in effect exceed the
expense limitations applicable to the Fund imposed by applicable state
securities laws or regulations thereunder, as such limitations may be raised or
lowered from time to time, the Manager shall reduce its management fee with
respect to such Fund by the extent of such excess and, if required pursuant to
any such laws or regulations, will reimburse such Fund in the amount of such
excess; provided, however, to the extent permitted by law, there shall be
excluded from such expenses the amount of any interest, taxes, brokerage fees
and commissions, distribution fees and extraordinary expenses (including but not
limited to legal claims and liabilities and litigation costs and any
indemnification related thereto) paid or payable by such Fund. Whenever the
expenses of a Fund exceed a pro rata portion of the applicable annual expense
limitations, the estimated amount of reimbursement under such limitations shall
be applicable as an offset against the monthly payment of the fee due to the
Manager with respect to such Fund. Should two or more such expense limitations
be applicable at the end of the last business day of the month, that expense
limitation which results in the largest reduction in the Manager's fee shall be
applicable.
ARTICLE IV
LIMITATION OF LIABILITY OF THE MANAGER
The Manager shall not be liable for any error of judgment or mistake of law
or for any loss arising out of any investment or for any act or omission in the
management of a Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder. As used in this Article IV, the term
"Manager" shall include any directors, officers and employees of the Manager.
ARTICLE V
ACTIVITIES OF THE MANAGER
The services of the Manager to the Funds are not to be deemed exclusive,
and the Manager is free to render services to other investment advisory clients.
It is understood that Directors, officers, employees and shareholders of the
Corporation are or may become interested in the Manager, as directors, officers,
employees and shareholders or otherwise, and that directors, officers, employees
and shareholders of the Manager are or may become similarly interested in the
Corporation.
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ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date first above written
and shall remain in force with respect to each Fund until June 30, 2002, and
thereafter, but only so long as such continuance is specifically approved with
respect to each Fund at least annually by: (i) the Directors, or by the vote of
a majority of the outstanding voting securities of the Fund, and (ii) a majority
of those Directors who are not parties to this Agreement or interested persons
of any such party cast in person at a meeting called for the purpose of voting
on such approval.
This Agreement my be terminated at any time with respect to a Fund, without
the payment of any penalty, by the Directors or by the vote of a majority of the
outstanding voting securities of such Fund, or by the Manager, on sixty days'
written notice to the other party. This Agreement shall automatically terminate
in the event of its assignment.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
With respect to a Fund, this Agreement may be amended by the parties only
if such amendment is specifically approved by: (i) the vote of a majority of
outstanding voting securities of such Fund, and (ii) a majority of those
Directors who are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of voting on such
approval.
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
The term "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person" and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act and the rules thereunder, subject, however, to such exemptions as
may be granted by the Securities and Exchange Commission under said Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with laws of the State of
New York and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
XXXXXXXX MUTUAL FUNDS, INC.
By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: President
XXXXXX X. XXXXXXXX, INCORPORATED
By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: President
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Schedule A
Name of Fund Compensation
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(as a % of average daily net assets)
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Xxxxxxxx Cornerstone Value Fund 0.74%
Xxxxxxxx Cornerstone Growth Fund 0.74%
