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 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; 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 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 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]
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:_______________________________
Name: R. Xxx Xxxxxx
Title: Chairman
XXXXX XXXXXX FUND
MANAGEMENT LLC
By:_______________________________
Name: Xxxxxx Xxxxxxx
Title: Director
Schedule A
Income Portfolio
Fee:
The following percentage of the Fund's average daily net assets:
0.20
