1
EXHIBIT 99.B5(r)
ADVISORY CONTRACT
OREGON TAX-FREE FUND
a portfolio of
STAGECOACH FUNDS, INC.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
September 6, 1996
Xxxxx Fargo Bank, N.A.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
This will confirm the agreement between the undersigned (the
"Company"), on behalf of the Oregon Tax-Free Fund (the "Fund"), and Xxxxx Fargo
Bank, N.A. (the "Adviser") as follows:
1. The Company is a registered open-end management investment
company currently consisting of a number of investment portfolios, but which
may from time to time consist of a greater or lesser number of investment
portfolios (the "Funds"). The Company proposes to engage in the business of
investing and reinvesting the assets of the Fund in the manner and in
accordance with the investment objective and restrictions specified in the
Company's currently effective prospectus and the currently effective statement
of additional information incorporated by reference therein relating to the
Fund and the Company (such prospectus and such statement of additional
information being collectively referred to as the "Prospectus") included in the
Company's Registration Statement, as amended from time to time (the
"Registration Statement"), filed by the Company under the Investment Company
Act of 1940 (the "Act") and the Securities Act of 1933. Copies of the
documents referred to in the preceding sentence have been furnished to the
Adviser. Any amendments to those documents shall be furnished to the Adviser
promptly.
2. The Company is engaging the Adviser to manage the investing
and reinvesting of the assets of the Fund and to provide the advisory services
specified elsewhere in this contract, subject to the overall supervision of the
Board of Directors of the Company. Pursuant to an administration agreement
between the Company and Xxxxxxxx Inc. (the "Administrator") on behalf of the
Fund, the Company has engaged the Administrator to provide the administrative
services specified therein.
3. (a) The Adviser shall make investments for the account of the
Fund in accordance with the Adviser's best judgment and consistent with the
investment objective and restrictions set forth in the Company's Prospectus,
the Act and the provisions of the Internal Revenue Code relating to regulated
investment companies, subject to policy decisions adopted by the Company's
Board of Directors. The Adviser shall advise the Company's officers and Board
of Directors, at such times as the Company's Board of Directors may specify, of
investments made for the Fund and shall, when requested by the Company's
officers or Board of Directors, supply the reasons for making particular
investments.
(b) The Adviser shall provide to the Company investment
guidance and policy direction in connection with its daily management of the
Fund's portfolio, including oral and written research, analysis, advice,
statistical and economic data and information and judgments, and shall furnish
to the Company's Board of Directors periodic reports on the investment strategy
and performance of the Fund and such additional reports and information as the
Company's Board of Directors and officers shall reasonably request.
2
(c) The Adviser shall pay the costs of printing and
distributing all materials relating to the Fund prepared by it, or prepared at
its request, other than such costs relating to proxy statements, prospectuses,
shareholder reports and other materials distributed to existing or prospective
shareholders on behalf of the Fund.
(d) The Adviser shall, at its expense, employ or associate
with itself such persons as the Adviser believes appropriate to assist it in
performing its obligations under this contract.
4. The Company understands that the Adviser, in rendering its
services to the Fund hereunder, may engage a sub-adviser to provide certain
sub-advisory services pursuant to a separate sub-advisory contract. The
Adviser will not seek to amend any sub-advisory contract to materially alter
the obligations of the parties unless the Adviser gives the Company at least 60
days' prior written notice thereof.
5. Except as provided in each of the advisory contracts and
administration agreements on behalf of the Company's Funds, each Fund of the
Company shall bear all costs of its operations, except to the extent that such
costs are identified as attributable to a specific class of a Fund ("Class
Expenses"), including the Fund's pro-rata portion of the compensation of the
Company's directors who are not affiliated with the Adviser, the Administrator
or any of their affiliates; advisory and administration fees; governmental
fees; interest charges; taxes; fees and expenses of its independent auditors,
legal counsel, transfer agent and dividend disbursing agent; expenses of
redeeming shares; expenses of preparing and printing any stock certificates,
prospectuses (except the expense of printing and mailing prospectuses used for
promotional purposes, unless otherwise payable pursuant to a Rule 12b-1 Plan),
shareholders' reports, notices, proxy statements and reports to regulatory
agencies; travel expenses of directors, officers and employees; office
supplies; insurance premiums and certain expenses relating to insurance
coverage; trade association membership dues; brokerage and other expenses
connected with the execution of portfolio securities transactions; fees and
expenses of any custodian, including those for keeping books and accounts and
calculating the net asset value per share of the Fund; expenses of
shareholders' meetings; expenses relating to the issuance, registration and
qualification of shares of the Fund; expenses relating to any pricing services;
organizational expenses; and any extraordinary expenses; except that Class
Expenses, such as payments related to a servicing plan or distribution-related
expenses pursuant to a Rule 12b-1 Plan, i.e., a plan of distribution of the
Company adopted on behalf of a class of shares of the Fund pursuant to Rule
12b-1 under the Act, or other such expenses as determined in accordance with
the Company's Rule 18f-3 Plan, shall be borne by the applicable class of the
Fund. Expenses attributable to one or more, but not all, of the Company's
Funds are charged against the assets of the relevant Funds. General expenses
of the Company are allocated among the Funds in a manner proportionate to the
net assets of each Fund, on a transactional basis, or on such other basis as
the Board of Directors deems equitable.
6. The Adviser shall give the Company the benefit of the
Adviser's best judgment and efforts in rendering services under this contract.
As an inducement to the Adviser's undertaking to render these services, the
Company agrees that the Adviser shall not be liable under this contract for any
mistake in judgment or in any other event whatsoever except for lack of good
faith, provided that nothing in this contract shall be deemed to protect or
purport to protect the Adviser against any liability to the Company or its
shareholders to which the Adviser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of the
Adviser's duties under this contract or by reason of reckless disregard of its
obligations and duties hereunder.
7. In consideration of the services to be rendered by the Adviser
under this contract, the Company shall pay the Adviser a monthly fee on the
first business day of each month, at the annual rate of 0.50% of the average
daily value (as determined on each day that such value is determined for the
Fund at the time set forth in the Prospectus for determining net asset value
per share) of the Fund's net assets during the preceding month. If the fee
payable to the Adviser pursuant to this paragraph 7 begins to accrue before the
end of any month or if this contract terminates before the end of any month,
the fee for the period from the effective date to the end of that month or from
the beginning of that month to the termination date, respectively, shall be
prorated according to the proportion that the period bears to the full month in
which the effectiveness or termination occurs. For purposes of calculating
each such monthly fee, the value of the Fund's net assets shall be computed in
the manner specified in the Prospectus and the Company's Articles of
Incorporation for the computation of the value of the Fund's net assets in
connection with the determination of the net asset value of Fund shares.
2
3
8. If in any fiscal year the total expenses of the Fund incurred
by, or allocated to, the Fund excluding taxes, interest, brokerage commissions
and other portfolio transaction expenses, other expenditures that are
capitalized in accordance with generally accepted accounting principles,
extraordinary expenses and amounts accrued or paid under a Rule 12b-1 Plan of
the Fund, but including the fees provided for in paragraph 7 and those provided
for pursuant to the Fund's Administration Agreement ("includible expenses"),
exceed the most restrictive expense limitation applicable to the Fund imposed
by state securities laws or regulations thereunder, as these limitations may be
raised or lowered from time to time, the Adviser shall waive or reimburse that
portion of the excess derived by multiplying the excess by a fraction, the
numerator of which shall be the percentage at which the excess portion
attributable to the fee payable pursuant to this agreement is calculated under
paragraph 7 hereof, and the denominator of which shall be the sum of such
percentage plus the percentage at which the excess portion attributable to the
fee payable pursuant to the Fund's Administration Agreement is calculated (the
"Applicable Ratio"), but only to the extent of the fee hereunder for the fiscal
year. If the fees payable under this agreement and/or the Fund's
Administration Agreement contributing to such excess portion are calculated at
more than one percentage rate, the Applicable Ratio shall be calculated
separately on the basis of, and applied separately to, the portions of the fees
calculated at the different rates. At the end of each month of the Company's
fiscal year, the Company shall review the includible expenses accrued during
that fiscal year to the end of the period and shall estimate the contemplated
includible expenses for the balance of that fiscal year. If as a result of
that review and estimation it appears likely that the includible expenses will
exceed the limitations referred to in this paragraph 8 for a fiscal year with
respect to the Fund, the monthly fee set forth in paragraph 7 payable to the
Adviser for such month shall be reduced, subject to a later adjustment, by an
amount equal to the Applicable Ratio times the pro rata portion (prorated on
the basis of the remaining months of the fiscal year, including the month just
ended) of the amount by which the includible expenses for the fiscal year are
expected to exceed the limitations provided for in this paragraph 8. For
purposes of computing the excess, if any, over the most restrictive applicable
expense limitation, the value of the Fund's net assets shall be computed in the
manner specified in the last sentence of paragraph 7, and any reimbursements
required to be made by the Adviser shall be made once a year promptly after the
end of the Company's fiscal year.
9. This contract shall become effective on its execution date and
shall thereafter continue in effect, provided that this contract shall continue
in effect for a period of more than two years from the date hereof only so long
as the continuance is specifically approved at least annually (a) by the vote
of a majority of the Fund's outstanding voting securities (as defined in the
Act) or by the Company's Board of Directors and (b) by the vote, cast in person
at a meeting called for the purpose, of a majority of the Company's directors
who are not parties to this contract or "interested persons" (as defined in the
Act) of any such party. This contract may be terminated at any time by the
Company, without the payment of any penalty, by a vote of a majority of the
Fund's outstanding voting securities (as defined in the Act) or by a vote of a
majority of the Company's entire Board of Directors on 60 days' written notice
to the Adviser or by the Adviser, at any time after the second anniversary of
the effective date of this contract, on 60 days' written notice to the Company.
This contract shall terminate automatically in the event of its assignment (as
defined in the Act).
10. Except to the extent necessary to perform the Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Adviser, or any affiliate of the Adviser, or any
employee of the Adviser, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of
a similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
11. The Adviser and the Company each agree that the words
"Stagecoach," which comprise a component of the Company's name, is a property
right of the parent of the Adviser. The Company agrees and consents that: (i)
it will use the words "Stagecoach" as a component of its corporate name, the
name of any class, or both and for no other purpose; (ii) it will not grant to
any third party the right to use the words "Stagecoach" for any purpose; (iii)
the Adviser or any corporate affiliate of the Adviser may use or grant to
others the right to use the words "Stagecoach," or any combination or
abbreviation thereof, as all or a portion of a corporate or business name or
for any commercial purpose, other than a grant of such right to another
registered investment company not advised by the Adviser or one of its
affiliates; and (iv) in the event that the Adviser or an affiliate thereof is
no longer acting as investment adviser to any class, the Company shall, upon
request by the Adviser, promptly take such action as may be necessary to change
its corporate name to one not containing the words "Stagecoach" and following
such
3
4
change, shall not use the words "Stagecoach," or any combination thereof, as a
part of its corporate name or for any other commercial purpose, and shall use
its best efforts to cause its directors, officers, and shareholders to take any
and all actions that the Adviser may request to effect the foregoing and to
reconvey to the Adviser any and all rights to such words.
12. This contract shall be governed by and construed in accordance
with the laws of the State of California without giving effort to the choice of
law provisions thereof.
If the foregoing correctly sets forth the agreement between the
Company and the Adviser, please so indicate by signing and returning to the
Company the enclosed copy hereof.
Very truly yours,
STAGECOACH FUNDS, INC.,
on behalf of the Oregon Tax-Free Fund
By: /s/Xxxxxxx X. Xxxxx, Xx.
-----------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
-----------------------------------
Title: Chief Operating Officer
-----------------------------------
ACCEPTED as of the date
set forth above:
XXXXX FARGO BANK, N.A.
By: /s/Xxxxxxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
-----------------------------------
Title: Vice President, Fund Administration
-----------------------------------
By: /s/Xxxxxx Xxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxx
-----------------------------------
Title: Senior Vice President
-----------------------------------
4
