MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT ("Agreement") is made this 1st day of December,
2005, by and between Xxxxx Xxxxxx Allocation Series Inc., a Maryland Corporation
(the "Corporation") and Xxxxx Xxxxxx Fund Management LLC, a Delaware limited
liability company (the "Manager").
WHEREAS, the Corporation is registered as a management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Manager is engaged primarily in rendering investment
advisory, management and administrative services and is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended;
WHEREAS, the Corporation wishes to retain the Manager to provide
investment advisory, management, and administrative services to the Corporation
with respect to the series of the Corporation designated in Schedule A annexed
hereto (the "Fund"); and
WHEREAS, the Manager is willing to furnish such services on the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. The Corporation hereby appoints the Manager to act as investment
adviser and administrator of the Fund for the period and on the terms set forth
in this Agreement. The Manager accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. The Fund shall at all times keep the Manager fully informed with regard
to the securities owned by it, its funds available, or to become available, for
investment, and generally as to the condition of its affairs. It shall furnish
the Manager with such other documents and information with regard to its affairs
as the Manager may from time to time reasonably request.
3. (a) Subject to the supervision of the Corporation's Board of Directors
(the "Board"), the Manager shall regularly provide the Fund with investment
research, advice, management and supervision and shall furnish a continuous
investment program for the Fund's portfolio of securities and other investments
consistent with the Fund's investment objectives, policies and restrictions, as
stated in the Fund's current Prospectus and Statement of Additional Information.
The Manager shall determine from time to time what securities and other
investments will be purchased, retained, sold or exchanged by the Fund and what
portion of the assets of the Fund's portfolio will be held in the various
securities and other investments in which the Fund invests, and shall implement
those decisions, all subject to the provisions of the Corporation's Articles of
Incorporation and By-Laws (collectively, the "Governing Documents"), the 1940
Act, and the applicable rules and regulations promulgated thereunder by the
Securities and Exchange Commission (the "SEC") and interpretive guidance issued
thereunder by the SEC staff and any other applicable federal and state law, as
well as the investment objectives, policies and restrictions of the Fund
referred to above, and any other
specific policies adopted by the Board and disclosed to the Manager. The Manager
is authorized as the agent of the Corporation to give instructions to the
custodian of the Fund as to deliveries of securities and other investments and
payments of cash for the account of the Fund. Subject to applicable provisions
of the 1940 Act and direction from the Board, the investment program to be
provided hereunder may entail the investment of all or substantially all of the
assets of a Fund in one or more investment companies. The Manager will place
orders pursuant to its investment determinations for the Fund either directly
with the issuer or with any broker or dealer, foreign currency dealer, futures
commission merchant or others selected by it. In connection with the selection
of such brokers or dealers and the placing of such orders, subject to applicable
law, brokers or dealers may be selected who also provide brokerage and research
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934) to the Funds and/or the other accounts over which the Manager or
its affiliates exercise investment discretion. The Manager is authorized to pay
a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for a Fund which is in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction if the Manager determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may be
viewed in terms of either that particular transaction or the overall
responsibilities which the Manager and its affiliates have with respect to
accounts over which they exercise investment discretion. The Board may adopt
policies and procedures that modify and restrict the Manager's authority
regarding the execution of the Fund's portfolio transactions provided herein.
The Manager shall also provide advice and recommendations with respect to other
aspects of the business and affairs of the Fund, shall exercise voting rights,
rights to consent to corporate action and any other rights pertaining to a
Fund's portfolio securities subject to such direction as the Board may provide,
and shall perform such other functions of investment management and supervision
as may be directed by the Board.
(b) Subject to the direction and control of the Board, the Manager shall
perform such administrative and management services as may from time to time be
reasonably requested by the Fund as necessary for the operation of the Fund,
such as (i) supervising the overall administration of the Fund, including
negotiation of contracts and fees with and the monitoring of performance and
xxxxxxxx of the Fund's transfer agent, shareholder servicing agents, custodian
and other independent contractors or agents, (ii) providing certain compliance,
fund accounting, regulatory reporting, and tax reporting services, (iii)
preparing or participating in the preparation of Board materials, registration
statements, proxy statements and reports and other communications to
shareholders, (iv) maintaining the Fund's existence, and (v) during such times
as shares are publicly offered, maintaining the registration and qualification
of the Fund's shares under federal and state laws. Notwithstanding the
foregoing, the Manager shall not be deemed to have assumed any duties with
respect to, and shall not be responsible for, the distribution of the shares of
any Fund, nor shall the Manager be deemed to have assumed or have any
responsibility with respect to functions specifically assumed by any transfer
agent, fund accounting agent, custodian, shareholder servicing agent or other
agent, in each case employed by the Fund to perform such functions.
(c) 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
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1934, as amended, 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)(a)(2)(iv). Notwithstanding the foregoing, the Manager agrees that it
will not deal with itself, or with members of the Board or any principal
underwriter of the Fund, as principals or agents in making purchases or sales of
securities or other property for the account of the Fund, nor will it purchase
any securities from an underwriting or selling group in which the Manager or its
affiliates is participating, or arrange for purchases and sales of securities
between a Fund and another account advised by the Manager or its affiliates,
except in each case as permitted by the 1940 Act and in accordance with such
policies and procedures as may be adopted by a Fund from time to time, and will
comply with all other provisions of the Governing Documents and the Fund's
then-current Prospectus and Statement of Additional Information relative to the
Manager and its directors and officers.
4. Subject to the Board's approval, the Manager or the Fund may enter into
contracts with one or more investment subadvisers or subadministrators,
including without limitation, affiliates of the Manager, in which the Manager
delegates to such investment subadvisers or subadministrators any or all its
duties specified hereunder, on such terms as the Manager will determine to be
necessary, desirable or appropriate, provided that in each case the Manager
shall supervise the activities of each such subadviser or subadministrator and
further provided that such contracts impose on any investment subadviser or
subadministrator bound thereby all the conditions to which the Manager is
subject hereunder and that such contracts are entered into in accordance with
and meet all applicable requirements of the 1940 Act.
5. (a) The Manager, at its expense, shall supply the Board and officers of
the Corporation with all information and reports reasonably required by them and
reasonably available to the Manager and shall furnish the Fund with office
facilities, including space, furniture and equipment and all personnel
reasonably necessary for the operation of the Fund. The Manager shall oversee
the maintenance of all books and records with respect to the Fund's securities
transactions and the keeping of the Fund's books of account in accordance with
all applicable federal and state laws and regulations. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Manager hereby agrees that
any records that it maintains for the Fund are the property of the Fund, and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. The Manager further agrees to arrange for the preservation of
the records required to be maintained by Rule 31a-1 under the 1940 Act for the
periods prescribed by Rule 31a-2 under the 1940 Act. The Manager shall authorize
and permit any of its directors, officers and employees, who may be elected as
Board members or officers of the Fund, to serve in the capacities in which they
are elected.
(b) The Manager shall bear all expenses, and shall furnish all necessary
services, facilities and personnel, in connection with its responsibilities
under this Agreement. Other than as herein specifically indicated, the Manager
shall not be responsible for the Fund's expenses, including, without limitation,
advisory fees; distribution fees; interest; taxes; governmental fees; voluntary
assessments and other expenses incurred in connection with membership in
investment company organizations; organization costs of the Fund; the cost
(including brokerage commissions, transaction fees or charges, if any) in
connection with the purchase or sale of the Fund's securities and other
investments and any losses in connection therewith; fees and expenses of
custodians, transfer agents, registrars, independent pricing vendors or other
agents;
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legal expenses; loan commitment fees; expenses relating to share certificates;
expenses relating to the issuing and redemption or repurchase of the Fund's
shares and servicing shareholder accounts; expenses of registering and
qualifying the Fund's shares for sale under applicable federal and state law;
expenses of preparing, setting in print, printing and distributing prospectuses
and statements of additional information and any supplements thereto, reports,
proxy statements, notices and dividends to the Fund's shareholders; costs of
stationery; website costs; costs of meetings of the Board or any committee
thereof, meetings of shareholders and other meetings of the Fund; Board fees;
audit fees; travel expenses of officers, members of the Board and employees of
the Fund, if any; and the Fund's pro rata portion of premiums on any fidelity
bond and other insurance covering the Fund and its officers, Board members and
employees; litigation expenses and any non-recurring or extraordinary expenses
as may arise, including, without limitation, those relating to actions, suits or
proceedings to which the Fund is a party and the legal obligation which the Fund
may have to indemnify the Fund's Board members and officers with respect
thereto.
6. No member of the Board, officer or employee of the Corporation or Fund
shall receive from the Corporation or Fund any salary or other compensation as
such member of the Board, officer or employee while he is at the same time a
director, officer, or employee of the Manager or any affiliated company of the
Manager, except as the Board may decide. This paragraph shall not apply to Board
members, executive committee members, consultants and other persons who are not
regular members of the Manager's or any affiliated company's staff.
7. 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, as promptly as possible
after the last day of each month, a fee, computed daily at an annual rate set
forth opposite the Fund's name on Schedule A annexed hereto, provided however,
that if the Fund invests all or substantially all of its assets in another
registered investment company for which the Manager or an affiliate of the
Manager serves as investment adviser or investment manager, the annual fee
computed as set forth on such Schedule A shall be reduced by the aggregate
management fees allocated to that Fund for the Fund's then-current fiscal year
from such other registered investment company. The first payment of the fee
shall be made as promptly as possible at the end of the month succeeding the
effective date of this Agreement, and shall constitute a full payment of the fee
due the Manager for all services prior to that date. If this Agreement is
terminated as of any date not the last day of a month, such fee shall be paid as
promptly as possible after such date of termination, shall be based on the
average daily net assets of the Fund in that period from the beginning of such
month to such date of termination, and shall be that proportion of such average
daily net assets as the number of business days in such period bears to the
number of business days in such month. 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.
8. The Manager assumes no responsibility under this Agreement other than
to render the services called for hereunder, in good faith, and shall not be
liable for any error of judgment or mistake of law, or for any loss arising out
of any investment or for any act or omission in the execution of securities
transactions for a Fund, provided that nothing in this Agreement shall protect
the Manager against any liability to the Fund to which the Manager would
otherwise be
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subject by reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties hereunder. As used in this Section 8, the term "Manager"
shall include any affiliates of the Manager performing services for the
Corporation or the Fund contemplated hereby and the partners, shareholders,
directors, officers and employees of the Manager and such affiliates.
9. Nothing in this Agreement shall limit or restrict the right of any
director, officer, or employee of the Manager who may also be a Board member,
officer, or employee of the Corporation or the Fund, to engage in any other
business or to devote his time and attention in part to the management or other
aspects of any other business, whether of a similar nature or a dissimilar
nature, nor to limit or restrict the right of the Manager to engage in any other
business or to render services of any kind, including investment advisory and
management services, to any other fund, firm, individual or association. If the
purchase or sale of securities consistent with the investment policies of a Fund
or one or more other accounts of the Manager is considered at or about the same
time, transactions in such securities will be allocated among the accounts in a
manner deemed equitable by the Manager. Such transactions may be combined, in
accordance with applicable laws and regulations, and consistent with the
Manager's policies and procedures as presented to the Board from time to time.
10. For the purposes of this Agreement, the Fund's "net assets" shall be
determined as provided in the Fund's then-current Prospectus and Statement of
Additional Information and the terms "assignment," "interested person," and
"majority of the outstanding voting securities" shall have the meanings given to
them by Section 2(a) of the 1940 Act, subject to such exemptions as may be
granted by the SEC by any rule, regulation or order.
11. This Agreement will become effective with respect to the Fund on the
date set forth opposite the Fund's name on Schedule A annexed hereto, provided
that it shall have been approved by the Corporation's Board and by the
shareholders of the Fund in accordance with the requirements of the 1940 Act
and, unless sooner terminated as provided herein, will continue in effect for
two years from the above written date. Thereafter, if not terminated, this
Agreement shall continue in effect with respect to the Fund, so long as such
continuance is specifically approved at least annually (i) by the Board or (ii)
by a vote of a majority of the outstanding voting securities of the Fund,
provided that in either event the continuance is also approved by a majority of
the Board members who are not interested persons of any party to this Agreement,
by vote cast in person at a meeting called for the purpose of voting on such
approval.
12. This Agreement is terminable with respect to the Fund without penalty
by the Board or by vote of a majority of the outstanding voting securities of
the Fund, in each case on not more than 60 days' nor less than 30 days' written
notice to the Manager, or by the Manager upon not less than 90 days' written
notice to the Fund, and will be terminated upon the mutual written consent of
the Manager and the Corporation. This Agreement shall terminate automatically in
the event of its assignment by the Manager and shall not be assignable by the
Corporation without the consent of the Manager.
13. The Manager agrees that for services rendered to the Fund, or for any
claim by it in connection with services rendered to the Fund, it shall look only
to assets of the Fund for
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satisfaction and that it shall have no claim against the assets of any other
portfolios of the Corporation.
14. No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no material amendment of the Agreement shall be effective until
approved, if so required by the 1940 Act, by vote of the holders of a majority
of the Fund's outstanding voting securities.
15. This Agreement embodies the entire agreement and understanding between
the parties hereto, and supersedes all prior agreements and understandings
relating to the subject matter hereof. Should any part of this Agreement be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby. This Agreement shall be binding
on and shall inure to the benefit of the parties hereto and their respective
successors.
16. This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of New York.
[signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
XXXXX XXXXXX ALLOCATION SERIES INC.
By: /s/ R. Xxx Xxxxxx
-------------------------------
Name: R. Xxx Xxxxxx
Title: Chairman
XXXXX XXXXXX FUND MANAGEMENT LLC
By: /s/ Xxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxx
Title: Director
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Schedule A
Balanced Portfolio
Fee:
The following percentage of the Fund's average daily net assets:
0.20
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