Exhibit (d)(1)
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MANAGEMENT AGREEMENT
AGREEMENT made effective as of the 28th day of August, 1998 between GENERAL
SECURITIES, INCORPORATED, a Minnesota corporation (hereinafter called the
"Fund") and XXXXXXXX CAPITAL MANAGEMENT, INC., a Minnesota corporation
(hereinafter called "Xxxxxxxx").
WHEREAS, the Fund is an open-end, diversified management investment company
registered under the Investment Company Act of 1940 (the "1940 Act"), the shares
of common stock (the "Shares") of which are registered under the Securities Act
of 1933; and
WHEREAS, the Fund desires at this time to retain Xxxxxxxx to provide the
Fund with certain non-investment advisory management and administrative services
(the "Services"), and Xxxxxxxx is willing to render such services, all subject
to approval of this Agreement by the shareholders of the Fund within 120 days of
the date hereof;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. INITIAL APPOINTMENT OF XXXXXXXX. The Fund hereby appoints Xxxxxxxx as
its Manager to provide it with the Services. It is understood that the persons
employed by Xxxxxxxx to assist in the performance of its services and duties
hereunder will not devote their full time to such services and nothing herein
contained shall be deemed to limit or restrict the right of Xxxxxxxx to engage
in and devote time and attention to other businesses or to render services of
whichever kind or nature as long as the Services provided hereunder are not
impaired thereby.
2. DELIVERY OF DOCUMENTS. The Fund has delivered (or will deliver as
soon as is possible) to Xxxxxxxx copies of each of the following documents and
will deliver to Xxxxxxxx all future amendments and supplements:
(a) Articles of Incorporation of the Fund, together with all
amendments thereto (such Articles, as presently in effect and as amended from
time to time, is herein called the "Articles of Incorporation"), a copy of which
also is on file with the Minnesota Secretary of State.
(b) By-Laws of the Fund (such By-Laws, as presently in effect and as
amended from time to time, are herein called the "ByLaws").
(c) Certified resolutions of the Board of Directors and Shareholders
of the Fund authorizing the appointment of Xxxxxxxx as its Manager and approving
this Agreement.
(d) Registration Statement under the 1933 Act and under the 1940 Act
on Form N-1A (the "Registration Statement") as filed with the Securities and
Exchange Commission and all amendments thereto.
(e) Current prospectus and statement of additional information of the
Fund (such prospectus and statement of additional information as then in effect
and as amended, supplemented and/or superseded from time to time, are herein
collectively called the "Prospectus").
3. ACCEPTANCE OF APPOINTMENT. Xxxxxxxx hereby accepts such appointment
and agrees to perform the services and duties as set forth in paragraph 4
immediately below.
4. SERVICES AND DUTIES OF XXXXXXXX. As Manager, subject to the
supervision and control of the Fund's Board of Directors, Xxxxxxxx will provide
the Fund with office space and facilities; accounting and bookkeeping,
recordkeeping and data processing facilities and services; internal compliance
services relating to accounting and legal matters; and personnel to carry out
certain administrative services required for operation of the business and
affairs of the Fund other than those investment advisory functions that are to
be performed by the Fund's investment advisor pursuant to its agreement with the
Fund, the services of the underwriter/distributor, those services to be
performed by the Fund's custodian and transfer agent, and those fund accounting
services to be performed by one or more service providers under a fund
accounting or similar agreement. Xxxxxxxx'x responsibilities include without
limitation the following services:
(a) Preparing and updating the Fund's state registration statements
and filings, reports to shareholders, and other documents;
(b) Paying the compensation of all officers and personnel of the Fund
for their services to the Fund and the directors of the Fund who are interested
persons of the Fund;
(c) Overseeing the performance of the Fund's custodian, transfer
agent and accounting agent;
(d) Providing information and certain administrative services to
shareholders of the Fund, including but not limited to, transmitting redemption
requests to the Fund's Transfer Agent and transmitting the proceeds of
redemption of shares of the Fund pursuant to a shareholder's instructions when
such redemption is effected through Xxxxxxxx, providing telephone and written
communications with respect to its shareholders account inquiries, assisting its
shareholders in altering privileges and ownership of their accounts and serving
as a source of information for its existing shareholders in answering questions
concerning the Fund and their transactions with the Fund.
(e) Xxxxxxxx shall oversee the maintenance by the Fund's custodian
and transfer agent of the books and records of the Fund required under the 1940
Act, in connection with the performance of the Fund's agreement with such
entities.
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(f) In providing the Services, Xxxxxxxx will act in conformity with
the Articles of Incorporation, By-laws and Prospectus and with the instructions
and directions of the Board of Directors of the Fund and will conform to and
comply with the requirements of the 1940 Act and all other applicable federal or
state laws and regulations.
5. BOOKS AND RECORDS. Xxxxxxxx agrees that all records that it maintains
for the Fund are the property of the Fund and it will surrender promptly to the
Fund any of such records upon the Fund's request.
6. SUBCONTRACTORS. It is understood that Xxxxxxxx may from time to time
employ or associate with itself such person or persons as Xxxxxxxx may believe
to be particularly fitted to assist in the performance of this Agreement;
provided, however, that the compensation of such person or persons shall be paid
by Xxxxxxxx and that Xxxxxxxx shall be as fully responsible to the Fund for the
acts and omissions of any subcontractor as it is for its own acts and omissions.
7. COMPENSATION. For the services provided pursuant to this Agreement,
the Fund will pay Xxxxxxxx at the end of each calendar month during the term of
this Agreement, a fee equal to an annualized rate of four-tenths of one percent
(.40%) of the average daily net assets of the Fund plus out-of-pocket expenses
in connection with its shareholder servicing activities, such as postage, data
entry, stationery, tax forms and other printed material. For the month and year
in which this Agreement becomes effective or terminates, there shall be an
appropriate proration on the basis of the number of days that the Agreement is
in effect during the month and year, respectively.
8. EXPENSES. Except as otherwise stated in paragraph 7 and this
paragraph 8, Xxxxxxxx shall pay all expenses incurred by it in providing the
Services. All other expenses incurred in the operation of the Fund will be
borne by the Fund, except to the extent specifically assumed by others. In
addition to the management fee of Xxxxxxxx, the Fund shall assume and pay any
fees and expenses incurred under an investment advisory agreement, any
distribution fees incurred under a distribution agreement, any expenses for
services rendered by a custodian for the safekeeping of the Fund's securities or
other property, for keeping its books of account and for any other charges of
the custodian of the Fund, as provided in the Prospectus of the Fund. Xxxxxxxx
shall not be required to pay and the Fund shall assume and pay the charges and
expenses of its operations, including compensation of the directors (other than
those affiliated with Xxxxxxxx), charges and expenses of independent auditors,
of legal counsel, of any transfer or dividend disbursing agent, and of any
registrar of the Fund, costs of Fund accounting services, costs of acquiring and
disposing of Fund securities, interest, if any, on obligations incurred by the
Fund, costs of share certificates and of reports, membership dues in the
Investment Company Institute or any similar organization, costs of reports and
notices to shareholders, stationery, printing, postage, other like miscellaneous
expenses and all taxes and fees payable to federal, state or other governmental
agencies on account of the registration of securities issued by the Fund, filing
of trust documents or otherwise. The Fund shall not pay or incur any obligation
for any expenses for which the Fund intends to seek reimbursement from Xxxxxxxx
as herein provided without first obtaining the written approval of Xxxxxxxx.
Xxxxxxxx shall arrange, if desired by the Fund, for officers and employees of
Xxxxxxxx
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to serve, without compensation from the Fund, as directors, officers or agents
of the Fund if duly elected or appointed to such positions and subject to their
consent and to any limitations imposed by law.
If expenses borne by the Fund in any fiscal year (including Xxxxxxxx'x fee
and all other fees and expenses referred to or contemplated in this paragraph 8,
but excluding interest, taxes, and fees incurred in acquiring and disposing of
portfolio securities) exceed 1-1/2% of the Fund's average daily net assets on
the first $100 million of average daily net assets, 1-1/4% of the Fund's average
daily net assets on the next $150 million average daily net assets and 1% of the
Fund's average daily net assets on average daily net assets in excess of $250
million, Xxxxxxxx will reduce its fee or reimburse the Fund for fifty percent
(50%) of any such excess. If for any month the expenses of the Fund properly
chargeable to the income account shall exceed 1/12 of the percentage of average
daily net assets allowable as expenses, the payment to Xxxxxxxx for that month
shall be reduced and if necessary Xxxxxxxx shall make a refund payment to the
Fund by half the amount necessary to cause the total net expense not to exceed
such percentage. As of the end of the Fund's fiscal year, however, the
foregoing computations and payments shall be readjusted so that the aggregate
compensation payable to Xxxxxxxx for the year is equal to the percentage set
forth in paragraph 7 hereof of the average daily net asset value as determined
as described herein throughout the fiscal year, diminished by half the amount
necessary so that the total of the aforementioned expense items of the Fund
shall not exceed the expense limitation. The aggregate of repayments, if any,
by Xxxxxxxx to the Fund for the year shall be the amount necessary to limit the
said net expense to said percentage.
Notwithstanding anything in the foregoing to the contrary, Xxxxxxxx shall
not be obligated to reimburse the Fund in an amount exceeding its fee for the
period, except to the extent required by applicable law.
The net asset value for the Fund shall be calculated in accordance with the
provisions of the Fund's Prospectus or at such other time or times as the Board
of Directors may determine in accordance with the provisions of the 1940 Act.
On each day when net asset value is not calculated, the net asset value of a
share of the Fund shall be deemed to be the net asset value of such a share as
of the close of business on the last day on which such calculation was made for
the purpose of the foregoing computations.
9. LIMITATION OF LIABILITY. Neither Xxxxxxxx nor any of its agents or
employees shall 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, except liability to the Fund or its Shareholders to which Xxxxxxxx
would otherwise be subject by reason of Xxxxxxxx'x willful misfeasance, bad
faith or gross negligence in the performance of its duties or by reasons of its
reckless disregard of its obligations and duties under this Agreement. Any
person, even though also an officer, employee or agent of Xxxxxxxx who may be or
become an officer, director, employee or agent of the Fund, shall be deemed,
when rendering services to the Fund, or acting on any business of the Fund
(other than services or business in connection with Xxxxxxxx'x duties
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hereunder) to be rendering such services to or acting solely for the Fund and
not as an officer, director, employee or agent or one under the control or
direction of Xxxxxxxx even though paid by Xxxxxxxx.
10. DURATION AND TERMINATION. This Agreement shall become effective as of
the date hereof, provided that this Agreement shall be approved by the
shareholders of the Fund within 120 days of the date hereof in accordance with
the requirements of the 1940 Act and the rules and regulations thereunder and
unless sooner terminated as provided herein shall continue in effect until
December 1, 1999. This Agreement shall continue in force from year to year
thereafter, but only as long as such continuance is specifically approved at
least annually in the manner required by the 1940 Act and the rules and
regulations thereunder; provided however, that if the continuation of this
Agreement is not approved, Xxxxxxxx may continue to serve in such capacity in
the manner and to the extent permitted by the 1940 Act and the rules and
regulations thereunder. This Agreement may be terminated by the Fund at any
time, without the payment of any penalty, by vote of a majority of the directors
of the Fund or by vote of a majority of the outstanding Shares on sixty (60)
days written notice to Xxxxxxxx, or by Xxxxxxxx at any time without the payment
of any penalty on sixty (60) days written notice to the Fund. This Agreement
may be terminated at any time without the payment of any penalty by the Board of
Directors or by vote of a majority of the outstanding Shares in the event that
it shall have been established by a court of competent jurisdiction that
Xxxxxxxx or any officer or director of Xxxxxxxx has taken any action which
results in a breach of the covenants of Xxxxxxxx set forth herein.
11. ASSIGNMENT. This Agreement will automatically and immediately
terminate in the event of its "assignment" (as defined in Section 2(a)(4) of the
1940 Act). Xxxxxxxx shall notify the Fund in writing sufficiently in advance of
any proposed change of control, as defined in Section 2(a)(9) of the 1940 Act,
as will enable the Fund to consider whether an "assignment" will occur, and to
take the steps necessary to enter into a new contract with Xxxxxxxx.
12. STATUS OF XXXXXXXX AS INDEPENDENT CONTRACTOR. Xxxxxxxx shall for all
purposes herein be deemed to be an independent contractor, and shall, unless
otherwise expressly provided herein or authorized by the directors of the Fund
from time to time, have no authority to act for or represent the Fund in any way
or otherwise be deemed an agent of the Fund.
13. AFFILIATIONS. Subject to applicable statutes and regulations, it is
understood that directors, officers or agents of the Fund are or may be
interested in Xxxxxxxx as officers, directors, agents, shareholders or
otherwise, and that the officers, directors, shareholders and agents of Xxxxxxxx
may be interested in the Fund otherwise than as a directors, officer or agent.
14. AMENDMENT OF AGREEMENT. This Agreement may be amended by mutual
consent, but the consent of the Fund must be (a) by vote of a majority of those
directors of the Fund who are not parties to this Agreement or interested
persons (as defined in the 0000 Xxx) of any such party at a meeting called for
the purpose of voting on such amendment, and (b) by vote of a majority of the
outstanding Shares.
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15. ARBITRATION. Any disputes or controversies between the parties to
this Agreement involving the construction or application of any of the terms,
provisions, or conditions of this Agreement shall be submitted to arbitration.
The arbitration shall be conducted in Minneapolis, Minnesota in accordance with
the Rules of the American Arbitration Association. The parties shall each
appoint one person to hear and determine the dispute and, if they are unable to
agree, then the two persons so chosen shall select a third impartial arbitrator
whose decision shall be final and conclusive upon both parties. The decision
rendered in arbitration shall be borne by the losing party or in such
proportions as the arbitrator shall decide.
16. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provisions 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. This Agreement shall be construed in accordance with
applicable federal law and the laws of the State of Minnesota, and shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors, subject to paragraph 10 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
GENERAL SECURITIES, INCORPORATED
Xxxxx X. Xxxxxxxx
By: /s/ Xxxxx X. Xxxxxxxx
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Its: President
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Attest:
Xxxxx Xxxxxxxxx
/s/ Xxxxx Xxxxxxxxx
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Its: Assistant Treasurer
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XXXXXXXX CAPITAL MANAGEMENT, INC.
Xxxx Xxxxxxxxxx
By: /s/ Xxxx Xxxxxxxxxx
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Its: CIO, Portfolio Manager
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Attest:
Xxxx X. Xxxxxxx
/s/ Xxxx X. Xxxxxxx
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Its: Secretary
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