Exhibit (5)(A)
AMERICA'S UTILITY FUND, INC.
MANAGEMENT CONTRACT
This Management Contract dated as of September 9, 1995 between
AMERICA'S UTILITY FUND, INC., a Maryland corporation (the "Fund"), and
COMMONWEALTH INVESTMENT COUNSEL, INC., a Virginia corporation (the "Manager")
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY THE MANAGER TO THE FUND.
(a) The Manager, at its expense, will furnish continuously an
investment program for the Fund, will determine what investments shall be
purchased, held, sold, or exchanged by the Fund and what portion, if any, of the
assets of the Fund shall be held uninvested and shall, on behalf of the Fund,
make changes in the Fund's investments. In the performance of its duties, the
Manager will comply with the provisions of the Articles of Incorporation and
By-Laws of the Fund and the Fund's stated investment objectives, policies, and
restrictions, and will use its best efforts to safeguard and promote the welfare
of the Fund and to comply with other policies which the Board of Directors may
from time to time determine.
(b) The Manager, at its expense, will furnish (i) all necessary
investment and related management facilities, including, salaries of personnel,
required for it to execute its duties faithfully, (ii) suitable office space for
the Fund, and (iii) such facilities, including bookkeeping, clerical personnel,
and equipment as may be necessary for the efficient performance by the Manager
of its obligations. The Manager will pay the compensation of such of its
directors, officers, and employees as may duly be elected Directors or officers
of the Fund.
(c) The Manager, at its expense, shall place all orders for the
purchase and sale of portfolio investments for the Fund's account with brokers
or dealers selected by the Manager. In the selection of such brokers or dealers
and the placing of such orders, the Manager shall give primary consideration to
securing for the Fund the most favorable price and execution available, except
to the extent it may be permitted to pay higher brokerage commissions for
brokerage and research services as described below. In doing so, the Manager,
bearing in mind the Fund's best interests at all times, shall consider all
factors it deems relevant, including, by way of illustration, price, the size of
the transaction, the nature of the market for the security, the amount of the
commission, the timing of the transaction taking into account market prices and
trends, the reputation, experience, and financial stability of the broker or
dealer involved, and the quality of service rendered by the broker or dealer in
other transactions. Subject to such policies as the Board of Directors of the
Fund may determine, the Manager shall not be deemed to have acted unlawfully or
to have breached any duty created by this Contract or otherwise solely by reason
of its having caused the Fund to pay a broker or dealer that provides brokerage
and research services to the Manager an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission that
another broker or dealer would have charged for effecting that transaction, if
the Manager determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the Manager's overall responsibilities with respect to the Fund
and to other clients of the Manager as to which the Manager exercises investment
discretion.
(d) The Fund hereby authorizes any entity or person associated with the
Manager which is a member of a national securities exchange to effect any
transaction on the exchange for the account of the Fund which is permitted by
Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder, and the Fund hereby consents to the retention of compensation for
such transactions in accordance with Rule 11a2-2(T)(2)(iv).
(e) The Manager shall not be obligated to pay any expenses of or for
the Fund not expressly assumed by the Manager pursuant to this Section 1.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Directors, officers, and
employees of the Fund may be a shareholder, director, officer, or employee of,
or be otherwise interested in, the Manager, and in any person controlled by or
under common control with the Manager, and that the Manager and any person
controlled by or under common control with the Manager may have an interest in
the Fund. It is also understood that the Manager and any person controlled by or
under common control with the Manager have and may have advisory, management,
service, or other contracts with other organizations and persons, and may have
other interests and business.
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
As compensation for the services performed and the facilities furnished
and expenses assumed by the Manager, including the services of any consultants
retained by the Manager, the Fund shall pay the Manager, promptly (but in any
event within three business days) after the last day of each calendar month, a
fee, calculated daily, at an annual rate as follows: for the first $5 million of
assets under management, 0.75% of the average daily net assets in the Fund; for
the next $5 million under management, .50% of the average daily net assets in
the Fund; for the next $90 million under management, .25% of the average daily
net assets in the Fund; for the next $100 million under management, .20% of the
average daily net assets in the
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Fund; for the next $100 million under management, .15% of the average daily net
assets in the Fund; and for any amounts over $300 million under management, .10%
of the average daily net assets in the Fund.
If this Agreement is terminated as of any date not the last day of a
calendar month, the fee payable to the Manager shall be paid promptly (but in
any event within three business days) after such date of termination.
The average daily net assets of the Fund shall in all cases be based
only on business days and be computed as of the time of the regular close of
business of the New York Stock Exchange, or such other time as may be determined
by the Board of Directors. Each such payment shall be accompanied by a report of
the Fund prepared either by the Fund or by a reputable firm of independent
accountants which shall show the amount properly payable to the Manager under
this Agreement and the detailed computation thereof.
3. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment; and this Contract shall not be amended
unless such amendment be approved at a meeting by the affirmative vote of a
majority of the outstanding shares of the Fund, and by the vote, cast in person
at a meeting called for the purpose of voting on such approval, of a majority of
the Directors of the Fund who are not interested persons of the Fund or of the
Manager.
4. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution and shall
remain in full force and effect for two years from the date hereof, and is
renewable annually thereafter by specific approval of the Board of Directors or
by vote of a majority of the outstanding voting securities of the Fund. Any such
renewal shall be approved by the vote of a majority of the Directors who are not
interested persons under the Investment Company Act of 1940, as amended, cast in
person at a meeting called for the purpose of voting on such renewal. This
Contract may be terminated without penalty at any time by the Fund or the
Manager upon 60 days written notice. The termination of this Contract shall not
affect any obligation or liability on the Fund's part for any transaction
entered into or obligation incurred on the Fund's behalf prior to such
termination.
Termination of this Contract pursuant to this Section 4 will be without
the payment of any penalty.
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5. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "vote of a majority of the
outstanding shares" of the Fund means the affirmative vote, at a duly called and
held meeting of such shareholders, (a) of the holders of 67% or more of the
shares of the Fund present (in person or by proxy) and entitled to vote at such
meeting, if the holders of more than 50% of the outstanding shares of the Fund
entitled to vote at such meeting are present in person or by proxy, or (b) of
the holders of more than 50% of the outstanding shares of the Fund entitled to
vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "interested person" and
"assignment" shall have their respective meanings defined in the Investment
Company Act of 1940, as amended, and the Rules and Regulations thereunder,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under said Act; the term "approval by a majority of the
outstanding voting securities of the Fund" shall be construed in a manner
consistent with the Investment Company Act of 1940, as amended, and the Rules
and Regulations thereunder; and the term "brokerage and research services" shall
have the meaning given in the Securities Exchange Act of 1934, as amended, and
the Rules and Regulations thereunder.
6. NON-LIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith, or gross negligence
on the part of the Manager, or reckless disregard of its obligations and duties
hereunder, the Manager shall not be subject to any liability to the Fund or to
any shareholder of the Fund for any act or omission in the course of, or
connected with, rendering services hereunder.
IN WITNESS WHEREOF, AMERICA'S UTILITY FUND, INC. and COMMONWEALTH
INVESTMENT COUNSEL, INC., have each caused this instrument to be signed in
duplicate in its behalf by its President or Vice President thereunto duly
authorized, all as of the day and year first above written. This document is
executed by each of the parties hereto under seal. This Agreement shall be
governed and construed in accordance with the laws (other than conflict of laws
rules) of The Commonwealth of Virginia.
AMERICA'S UTILITY FUND, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
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COMMONWEALTH INVESTMENT COUNSEL, INC.
By: /s/ Xxxx X. Xxxxxxxxx
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