THE ▇▇▇▇▇▇▇ FUNDS
▇▇▇▇▇▇▇ GROWTH FUND
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made effective as of December 18, 1998, by and between THE
▇▇▇▇▇▇▇ FUNDS, a Delaware business trust (the "Trust"), on behalf of the ▇▇▇▇▇▇▇
GROWTH FUND (the "Fund"), and ▇▇▇▇▇▇▇ ASSOCIATES, INC., a New York Corporation
(the "Investment Manager").
W I T N E S S E T H:
WHEREAS, the Trust has been organized and operates as an investment company
registered under the Investment Company Act of 1940, as amended (the "1940 Act")
and engages in the business of investing and reinvesting its assets in
securities; and
WHEREAS, the Investment Manager is a registered investment adviser under
the Investment Advisers Act of 1940, as amended (the "Advisers Act") and engages
in the business of providing investment management services; and
WHEREAS, the Trust has selected the Investment Manager to serve as the
investment manager for the Fund effective as of the date of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Trust on behalf of the Fund hereby employs the Investment Manager
to manage the investment and reinvestment of the Fund's assets and to provide
administration of the Fund not otherwise provided by third party service
providers, subject to the direction of the Board of Trustees and officers of the
Trust, for the period and on the terms hereinafter set forth. The Investment
Manager hereby accepts such employment and agrees during such period to render
the services and assume the obligations herein set forth for the compensation
herein provided. The Investment Manager shall for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized, have no authority to act for or to represent the Trust
or the Fund in any way, or in any way be deemed an agent of the Trust or the
Fund. The Investment Manager shall regularly make decisions as to what
securities and other investments to purchase and sell on behalf of the Fund and
shall effect the purchase and sale of such investments in furtherance of the
Fund's objectives and policies. The Investment Manager shall record and
implement such decisions and shall furnish the Board of Trustees of the Trust
with such information and reports regarding the Fund's investments as the
Investment Manager deems appropriate or as the Trustees of the Trust may
reasonably request. Subject to compliance with the requirements of the 1940
Act, the Investment Manager may retain as a sub-adviser to the Fund, at the
Investment Manager's own expense, any investment adviser registered under the
Advisers Act.
2. (a) The Trust shall conduct its own business and affairs and shall
bear the expenses and salaries necessary and incidental thereto including, but
not in limitation of the foregoing, the costs incurred in: the maintenance of
its corporate existence; the maintenance of its own books, records and
procedures; dealing with its own shareholders; the payment of dividends;
transfer of stock, including issuance, redemption and repurchase of shares;
preparation of share certificates; reports and notices to shareholders; calling
and holding of shareholders' meetings; miscellaneous office expenses; brokerage
commissions; custodian fees; legal and accounting fees; taxes, and state and
federal registration fees. Directors, officers, and employees of the Investment
Manager may be trustees/directors, officers and employees of the funds of which
the Investment Manager serves as Investment Manager. Directors, officers and
employees of the Investment Manager who are trustees, officers and/or employees
of the Trust shall not receive any compensation from the Trust for acting in
such dual capacity.
In the conduct of the respective businesses of the parties hereto and
in the performance of this Agreement, the Trust and the Investment Manager may
share facilities common to each, with appropriate proration of expenses between
them.
(b) To the extent the Investment Manager incurs any costs by assuming
expenses which are an obligation of the Fund as set forth herein, the Fund shall
promptly reimburse the Investment Manager for such costs and expenses, except to
the extent the Investment Manager has otherwise agreed to bear such expenses.
To the extent the services for which the Fund is obligated to pay are performed
by the Investment Manager, the Investment Manager shall be entitled to recover
from the Fund to the extent of the Investment Manager's actual costs for
providing such services.
3. (a) The Investment Manager shall place and execute Fund orders for
the purchase and sale of portfolio securities with broker-dealers. Subject to
obtaining the best available execution, the Investment Manager is authorized to
place orders for the purchase and sale of portfolio securities for the Fund with
such broker-dealers as it may select from time to time. Subject to subparagraph
(b) below, the Investment Manager is also authorized to place transactions with
broker-dealers who provide research or statistical information or analyses to
the Fund, to the Investment Manager, or to any other client for which the
Investment Manager provides investment management services. Subject to
obtaining the best available execution, the Investment Manager may also place
brokerage transactions with broker-dealers who sell shares of the Fund. Broker-
dealers who sell shares of the Fund shall only receive orders for the purchase
or sale of portfolio securities to the extent that the placing of such orders is
in compliance with the rules of the U.S. Securities and Exchange Commission and
the National Association of Securities Dealers, Inc. The Investment Manager
also agrees that it will cooperate with the Trust to execute instructions from
the Trust that brokerage transactions be allocated to broker-dealers who provide
benefits directly to the Fund.
(b) Notwithstanding the provisions of subparagraph (a) above and
subject to such policies and procedures as may be adopted by the Board of
Trustees and officers of the Trust, the Investment Manager is authorized to pay
a member of an exchange, broker or dealer an amount of commission for effecting
a securities transaction in excess of the amount of commission another member of
an exchange, broker or dealer would have charged for effecting that transaction,
in such instances where the Investment Manager has determined in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member, broker or dealer,
viewed in terms of either that particular transaction or the Investment
Manager's overall responsibilities with respect to the Fund and to other clients
for which the Investment Manager exercises investment discretion.
(c) The Investment Manager is authorized to direct portfolio
transactions to a broker-dealer which is an affiliated person of the Investment
Manager or the Fund in accordance with such standards and procedures as may be
approved by the Board in accordance with 1940 Act Rule 17e-1, or other rules
promulgated by the Securities and Exchange Commission. Any transaction placed
with an affiliated broker-dealer must (i) be placed at the best available and
execution, and (ii) may not be a principal transaction.
4. (a) As compensation for the services to be rendered to the Fund by
the Investment Manager under the provisions of this Agreement, the Trust on
behalf of the Fund shall pay to the Investment Manager from the Fund's assets an
annual fee equal to 1.00% of the average daily net assets of the Fund, payable
on a monthly basis.
(b) If this Agreement is terminated prior to the end of any calendar
month, the management fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after the
date of termination.
(c) The Investment Manager may voluntarily reduce any portion of the
compensation or reimbursement of expenses due to it pursuant to this Agreement
and may agree to make payments to limit expenses which are the responsibility of
the Fund under this Agreement. Any such reduction or payment shall be
applicable only to such specific reduction or payment and shall not constitute
an agreement to reduce any future compensation or reimbursement due to the
Investment Manager hereunder or to continue future payments. Any such reduction
will be agreed upon prior to accrual of the related expense or fee and will be
estimated daily. Any fee withheld shall be voluntarily reduced and any Fund
expense paid by the Investment Manager voluntarily or pursuant to an agreed
expense limitation shall be reimbursed by the Fund to the Investment Manager in
the first, second, or third (or any combination thereof) fiscal year next
succeeding the fiscal year of the withholding, reduction, or payment to the
extent permitted by applicable law if the aggregate expenses for the next
succeeding fiscal year, second fiscal year or third succeeding fiscal year do
not exceed any limitation to which the Investment Manager has agreed. Such
reimbursement may be paid prior to the Fund's payment of current expenses if so
requested by the Investment Manager even if such payment may require the
Investment Manager to waive or reduce its fees hereunder or to pay current Fund
expenses.
5. The services to be rendered by the Investment Manager to the Trust on
behalf of the Fund under the provisions of this Agreement are not to be deemed
to be exclusive, and the Investment Manager shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
6. The Investment Manager, its directors, officers, employees, and agents
may engage in other businesses, may render investment management services to
other investment companies, or to any other corporation, association, firm or
individual, and may render underwriting services to the Trust on behalf of the
Fund or to any other investment company, corporation, association, firm or
individual.
7. In the absence of willful misfeasance, bad faith, gross negligence, or
a reckless disregard of the performance of duties of the Investment Manager to
the Fund, the Investment Manager shall not be subject to liabilities to the Fund
or to any shareholder of the Fund for any action or omission in the course of,
or connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security, or otherwise.
8. In accordance with the Agreement and Declaration of Trust of the
Trust, in the event that the Investment Manager ceases to be the Fund's
investment manager for any reason, the Trust will (unless the Investment Manager
otherwise agrees in writing) take all necessary steps to cause the Fund to
change to a name not including the word "▇▇▇▇▇▇▇," within a reasonable period of
time.
9. This Agreement shall be executed and become effective as of the date
written below if approved by the vote of a majority of the outstanding voting
securities of the Fund. It shall continue in effect for a period of two years
and may be renewed thereafter only so long as such renewal and continuance is
specifically approved at least annually by the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Fund and only if the terms
and the renewal hereof have been approved by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval. Notwithstanding the foregoing, this Agreement may be terminated by
the Trust at any time, without the payment of a penalty, on sixty days written
notice to the Investment Manager of the Trust's intention to do so, pursuant to
action by the Board of Trustees of the Trust or pursuant to a vote of a majority
of the outstanding voting securities of the Fund. The Investment Manager may
terminate this Agreement at any time, without the payment of penalty on sixty
days written notice to the Trust of its intention to do so. Upon termination of
this Agreement, the obligations of all the parties hereunder shall cease and
terminate as of the date of such termination, except for any obligation to
respond to a breach of this Agreement committed prior to such termination, and
except for the obligation of the Trust to pay to the Investment Manager the fee
provided in Paragraph 4 hereof, prorated to the date of termination. This
Agreement shall automatically terminate in the event of its assignment.
10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities"; "interested persons"; and "assignment" shall
have the meaning defined in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals to
be affixed and duly attested and their presents to be signed by their duly
authorized officers as of the 18th day of December, 1998.
Attest: THE ▇▇▇▇▇▇▇ FUNDS
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Attest: ▇▇▇▇▇▇▇ ASSOCIATES, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇, Chairman
