XXXXX XXXXXX SMALL CAP VALUE FUND
FORM OF
INVESTMENT MANAGEMENT AGREEMENT
July 23, 1998
Mutual Management Corp.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
This Investment Management Agreement (the "Agreement") is made on
this 23rd day of July, 1998, 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 Small Cap
Value Fund (the "Fund"), and Mutual Management Corp. ("MMC") 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 MMC. The Corporation
desires to employ and hereby appoints MMC to act as investment
manager for the Fund. MMC accepts the appointment and agrees to
furnish the services for the compensation set forth below. MMC 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 MMC.
2. Services as Investment Manager
Subject to the supervision and direction of the Board, MMC will:
(a) assist in supervising all aspects of the Fund's operations;
(b) supply the Fund with office facilities (which may be in MMC'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 MMC, on the first business day
of each month, a fee for the previous month at an annual rate of [
]% 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 MMC, 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
MMC 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, MMC 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 MMC 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, MMC will seek the best overall terms available. In
assessing the best overall terms available for any transaction, MMC
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, MMC 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 MMC or its affiliates exercise investment discretion.
7. Information Provided to the Fund
MMC 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
MMC believes is appropriate for this purpose.
8. Standard of Care
MMC shall exercise its best judgment in rendering the services
listed in paragraph 2 above. MMC 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 MMC against any liability to the Corporation
or to the Fund's shareholders to which MMC 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 MMC 's reckless disregard of its obligations and duties
under this Agreement.
9. Services to Other Companies or Accounts
The Corporation understands that MMC 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 MMC's so acting, provided
that whenever the Fund and one or more other investment companies
advised by MMC 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 MMC to assist in the performance of MMC'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 MMC or any affiliate of MMC 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
MMC. 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 the
Corporation is on file with the State of Maryland Department of
Assessments and Taxation.
12. Limitation of Liability
The Corporation and MMC 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 MMC, 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 Small Cap Value Fund
By:_________________________________
Name: Xxxxx X. XxXxxxxx
Title: Chairman, President and Chief
Executive Officer
Accepted:
Mutual Management Corp.
By:___________________________________
Name: Xxxxxxxxx X. Xxxxx
Title: Secretary
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