Exhibit (5)(a)(3) Investment Management Agreement
Registrant, on behalf of Short Duration California Municipal, Short Duration
Diversified Municipal and Short Duration New York Municipal Portfolios
and Xxxxxxxxx
XXXXXXX X. XXXXXXXXX FUND, INC.
XXXXXXXXX SHORT DURATION MUNICIPAL PORTFOLIOS
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT, dated as of May 2, 1994, between XXXXXXX X.
XXXXXXXXX FUND, INC., a Maryland Corporation, (the "Fund"), on behalf of the
Xxxxxxxxx Short Duration California Municipal Portfolio, the Xxxxxxxxx Short
Duration Diversified Municipal Portfolio and the Xxxxxxxxx Short Duration New
York Municipal Portfolio (individually a "Portfolio" and collectively the
"Portfolios") and XXXXXXX X. XXXXXXXXX & CO., INC., a New York Corporation
(the "Adviser" or "Xxxxxxxxx").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
1. Duties of the Adviser. The Adviser shall manage the investment operations
of the Portfolios and the Fund including, but not limited to, continuously
providing the Portfolios with investment management, including investment
research, advice and supervision, determining which securities or other
investments including, but not limited to, debt and equity securities,
futures, options and options on futures, shall be purchased or sold by the
Portfolios, making purchases and sales of securities and such other
investments on behalf of the Portfolios and determining how voting and other
rights with respect to securities and other investments owned by the Fund on
behalf of the Portfolios shall be exercised, subject in each case to oversight
by the Board of Directors of the Fund (the "Board") and in accordance with the
investment objectives and policies of the Fund and of the Portfolios set forth
in the Registration Statement and the current Prospectus and Statement of
Additional Information relating to the Fund and the Portfolios, as amended
from time to time, the requirements of the Investment Company Act of 1940, as
amended (the "Act") and other applicable law. The Fund understands that the
Adviser may also act as the investment manager to other Portfolios of the Fund
and to other persons or entities, including other investment companies.
2. Limitation of Liability. Subject to Section 36 of the Act, the Adviser, and
the directors, officers and employees of the Adviser, shall not be liable to
the Fund or the Portfolios for any error of judgment or mistake of law or for
any loss arising out of any investment or the performance or non-performance
of duties under this Agreement, except for willful misfeasance, bad faith or
gross negligence in the performance of, or by reason of reckless disregard of,
obligations and duties under this Agreement.
3. Indemnification.
(a) The Fund, on behalf of the Portfolios, shall indemnify and hold harmless
the Adviser, and the directors, officers, and employees of the Adviser,
against any loss, liability, claim, damage or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the performance or non-performance of any duties
under this Agreement, provided, however, that nothing herein shall be deemed
to protect the Adviser or any director, officer or employee thereof against
any liability to the Fund or its stockholders, to which the Adviser or any
director, officer or employee thereof would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement.
4. Expenses. The Adviser shall pay all of its expenses arising from the
performance of its obligations under Section 1 of this Agreement and shall pay
any salaries, fees and expenses of the Directors who are employees of the
Adviser. In addition, during the first two years of operation of each
Portfolio, the Adviser
will pay any Portfolio operating expenses (excluding interest, taxes, brokerage
commissions and extraordinary expenses) which, together with fees payable to
Xxxxxxxxx pursuant to the Shareholder Servicing and Administrative Agreement
entered into by the Fund on behalf of the Portfolios and Adviser, exceed the
rate of .79% per annum of the Portfolio's average daily net assets. For the
purposes of this Agreement, the term "the first two years of operation" means
the 24-month period commencing with the first day of the first month after
shares of the applicable Portfolio are first issued to the public. Except as
provided above, the Adviser shall not be required to pay any other expenses of
the Fund or the Portfolios, including (a) the fees payable to Xxxxxxxxx under
this Agreement and the Shareholder Servicing and Administrative Agreement; (b)
the fees and expenses of Directors who are not affiliated with Xxxxxxxxx; (c)
the fees and expenses of the Custodian and Transfer Agent including but not
limited to fees and expenses relating to Fund accounting, pricing of Portfolio
shares, and computation of net asset value; (d) the fees and expenses of
calculating yield and/or performance of the Portfolios; (e) the charges and
expenses of legal counsel and independent accountants; (f) all taxes and
corporate fees payable to governmental agencies; (g) the fees of any trade
association of which the Fund is a member; (h) reimbursement of the organization
expenses of the Portfolios or the Fund; (i) the fees and expenses involved in
registering and maintaining registration of the Fund and the Portfolios' shares
with the Securities and Exchange Commission, registering the Fund as a broker or
dealer and qualifying the shares of the Portfolios under state securities laws,
including the preparation and printing of the registration statements and
prospectuses for such purposes, allocable communications expenses with respect
to investor services, all expenses of shareholders' and Board of Directors'
meetings and preparing, printing and mailing proxies, prospectuses and reports
to shareholders; (j) brokers' commissions, dealers' xxxx-ups and any issue or
transfer taxes chargeable in connection with the Portfolios' transactions; (k)
the cost of stock certificates representing shares of the Portfolios; (l)
insurance expenses, including, but not limited to, the cost of a fidelity bond,
directors and officers insurance and errors and omissions insurance; and (m)
litigation and indemnification expenses, expenses incurred in connection with
mergers, and other extraordinary expenses not incurred in the ordinary course of
the Portfolios' business.
5. Compensation. As compensation for the services performed and the facilities
and personnel provided by the Adviser pursuant to Section 1 of this Agreement,
the Fund, on behalf of the Portfolios, will pay to the Adviser, promptly after
the end of each month, a fee assessed at an annual rate of .50 of 1% of the
average daily net assets of each Portfolio during the month, provided that,
during the first two years of operation of each Portfolio, the Fund will not
pay any portion of the fee that, together with the other operating expenses of
each Portfolio (excluding interest, taxes, brokerage commission and
extraordinary expenses but including fees payable to Xxxxxxxxx under the
Shareholder Servicing and Administrative Agreement described in section 4
above), exceeds the rate of .79% per annum of the respective Portfolio's
average daily net assets. If the Adviser shall serve hereunder for less than
the whole of any month, the fee hereunder shall be prorated.
6. Purchase and Sale of Securities. The Adviser shall purchase securities from
or through and sell securities to or through such persons, brokers, or dealers
as the Adviser shall deem appropriate in order to carry out the policy with
respect to portfolio transactions as set forth in the Registration Statement
of the Fund and the current Prospectus or Statement of Additional Information
of the Portfolios, as amended from time to time, or as the Directors may
direct from time to time. Nothing herein shall prohibit the Directors from
approving the payment by the Fund on behalf of the Portfolios of additional
compensation to others for consulting services, supplemental research and
security and economic analysis.
7. Term of Agreement. This Agreement shall continue in effect for a period of
more than two years from the date hereof only so long as such continuance is
specifically approved at least annually in conformity with the requirements of
the Act with regard to investment advisory contracts; provided, however, that
this Agreement may be terminated at any time without the payment of any
penalty, on behalf of any Portfolio, by the Fund, by the Board or by vote of a
majority of the outstanding voting securities (as defined in the Act) of any
Portfolio, or by the Adviser on not more than 60 days' nor less than 30 days'
written notice to the other party. This Agreement shall terminate
automatically in the event of its assignment (as defined in the Act).
8. Miscellaneous. The Fund hereby agrees that if at any time the Adviser shall
cease to act as investment adviser to the Portfolios or to the Fund, or if at
any time during the continuation of this Agreement the Adviser shall change
its name to delete the reference to Xxxxxxx X. Xxxxxxxxx, the Fund shall take
all steps necessary under law to change its corporate name to delete the
reference to Xxxxxxx X. Xxxxxxxxx or to delete the reference to Xxxxxxxxx from
the name of the Portfolios, and shall thereafter refrain from using such name
with reference to the Portfolios and, if applicable, the Fund.
This Agreement contains the entire agreement between the parties hereto and
supersedes all prior agreements, understandings and arrangements with respect
to the subject matter hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Anything
herein to the contrary notwithstanding, this Agreement shall not be construed
to require, or to impose any duty upon, either of the parties to do anything
in violation of any applicable laws or regulations.
IN WITNESS WHEREOF, the Fund, on behalf of the Portfolios, and the Adviser
have caused this Agreement to be executed by their duly authorized officers as
of the date first above written.
XXXXXXX X. XXXXXXXXX & CO., INC.
By: Xxxxx X. Xxxxxxx, Chairman
XXXXXXX X. XXXXXXXXX FUND, INC.
By: Xxxxxx X. Xxxxxx, Senior Vice President
