Exhibit 5(b)
AARP/XXXXXXX FINANCIAL MANAGEMENT COMPANY
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
December 16, 1985
XXXXXXX, XXXXXXX & XXXXX LTD.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Subadvisory Agreement
Dear Sirs:
We have entered into separate Investment Management and Advisory
Agreements (collectively, the "Management Agreements") each dated as of December
16, 1985 with each of the AARP Insured Tax Free Income Trust, the AARP Growth
Trust and the AARP Income Trust (collectively the "Funds"), pursuant to which we
act as investment adviser to and manager of the Funds. The shares of beneficial
interests of each Fund may be issued in separate series of such Fund (the
"Series"). Copies of the Management Agreements have been previously furnished to
you. In furtherance of such duties to the Funds, and with the approval of the
Funds, we wish to avail ourselves of your investment management and advisory
services. Accordingly, with the acceptance of the Funds, we hereby agree with
you as follows for the duration of this Agreement:
1. You agree to perform on our behalf the services required by the
Management Agreements, and to furnish to us such other information, investment
recommendations, advice and management services, as we shall from time to time
reasonably request.
2. We agree to pay you, as compensation for the services to be rendered by
you hereunder, a monthly fee equal to the Monthly Subadvisory Fee for that
month less one-half of she Account Manager Monthly Budget for the same month.
The Monthly Subadvisory Fee shall mean the gross fees payable to us in a given
month by the Funds (excluding any Fund which has terminated its rights and
obligations pursuant to Section 6 of this Agreement) under the Management
Agreements less the Monthly Member Services Fees (as defined in the Member
Services Agree-
ment (the "Member Services Agreement"), dated November 30, 1984, between you and
AARP Subsidiary) for that month. If no Monthly Member Services Fees are payable
to AARP Financial Services Corp. and AARP Financial Services Corp. does not
contribute one-half of the Account Manager Monthly Budget, you will receive such
gross fees less the Account Manager's Monthly Budget. The Account Manager
Monthly Budget shall mean, with respect to a given month, the greater of (a) the
costs and expenses of the Account manager (other than fees paid by the Account
Manager pursuant to this Agreement and the Member Services Agreement) actually
incurred in that month; and (b) one-twelfth of our annual budget (other than
for amounts to be paid by us pursuant to this Agreement and the Member Services
Agreement) most recently adopted by our Management Committee.
3. Your services to us are not to be deemed exclusive and you are free to
render similar services to others.
4. Nothing herein shall be construed as constituting you as agent of us or
of the Funds.
5. You shall not be liable for any error of judgment or mistake of law or
for any loss suffered by the Funds in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on your part in the performance of your duties or from
reckless disregard by you of your obligations and duties under this Agreement.
Any person, even though also employed by you, who may be or become an employee
of and paid by the Funds shall be deemed, when acting within the scope of his
employment by the Funds, to be acting in such employment solely for the Funds
and not as your employee or agent.
6. This Agreement shall become effective as of the date hereof and shall
remain in effect until August 31, 1986 and shall continue in effect thereafter
so long as such continuance is specifically approved at least annually by the
affirmative vote of (i) a majority of the members of the Trustees or Board of
Directors, as the case may be, of each Fund who are not interested persons of
such Fund, you or us, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) Trustees or Board of Directors, as the case
may be, of each Fund or, with respect to each Series of such
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Fund, the holders of a majority of the outstanding voting securities of such
Series of such Fund. In the event that the Boards of Directors or security
holders of fewer than all of the Funds, or all of the Series of a Fund, fail to
approve this Agreement in the manner described, in the preceding sentence, this
Agreement shall remain in, effect, but you shall not provide any services for
the account or receive any fees on account of such Funds, or Series, as the case
may be, as fail so to approve this, Agreement. Our rights and obligations and
any rights and obligations of a given Fund under this Agreement may nevertheless
be terminated at any time, without penalty, by us or, as to a particular Fund,
by the Trustees or Board of Directors, as the case may be, of such Fund or by
vote of holders of a majority of the outstanding voting securities of such Fund,
or Series, with respect only to that Series, upon sixty days' written notice
delivered or sent by registered mail, postage prepaid, to you, at your address
given above or at any other address of which you shall have notified us in
writing or by you upon six months' such written notice to us and to the Funds,
and shall automatically be terminated in the event of its assignment or the
assignment of the Management Agreement to which such Fund is a party provided
that an assignment to a corporate successor to all or substantially all of your
business or to a wholly-owned subsidiary of such corporate successor which does
not result in a change of actual control or management of your business shall
not be deemed to be an assignment for the purposes of this Agreement. Any such
notice shall be deemed given when received by the addressee.
7. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by either party hereto. It may be amended by mutual
agreement, but only after authorization of such amendment by the affirmative
vote of (i) the holders of a majority of the outstanding voting securities of
each series of the Funds; and (ii) the Trustees or Board of Directors, as the
case may be, of each Fund, including a majority of the Trustees or directors of
such Fund who are not interested persons of such Fund, you or us, cast in person
at a meeting called for the purpose of voting on such approval.
8. This Agreement shall be construed in accordance with the laws of the
State of New York, provided, however, that nothing herein shall be construed as
being
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inconsistent with the Investment Company Act of 1940, as amended. As used herein
the terms "interested persons", "assignment" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the
Investment Company Act of 1940, as amended.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart hereof and return the same to us.
Very truly yours,
AARP/XXXXXXX FINANCIAL
MANAGEMENT COMPANY
By: XXXXXXX, XXXXXXX & XXXXX LTD.
A General Partner
By /s/ [illegible]
-------------------------
Title: Managing Director
The foregoing Agreement is
hereby accepted as of the
date first above written
XXXXXXX, XXXXXXX & XXXXX LTD.
By /s/ [illegible]
-------------------------
Title: Managing Director
Accepted:
AARP INSURED TAX FREE TRUST
By: /s/ [illegible]
------------------------
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AARP GROWTH TRUST
By: /s/ [illegible]
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AARP INCOME TRUST
By: /s/ [illegible]
-----------------
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