Xxxxxxx Municipal Trust
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
December 31, 1997
Xxxxxxx Xxxxxx Investments, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Investment Management Agreement
Xxxxxxx High Yield Tax Free Fund
Ladies and Gentlemen:
Xxxxxxx Municipal Trust (the "Trust") has been established
as a Massachusetts business trust to engage in the business of an
investment company. Pursuant to the Trust's Declaration of Trust,
as amended from time-to-time (the "Declaration"), the Board of
Trustees has divided the Trust's shares of beneficial interest,
par value $0.01 per share, (the "Shares") into separate series,
or funds, including Xxxxxxx High Yield Tax Free Fund (the
"Fund"). Series may be abolished and dissolved, and additional
series established, from time to time by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as
the sole investment manager of the Fund and to provide certain
other services, as more fully set forth below, and you have
indicated that you are willing to act as such investment manager
and to perform such services under the terms and conditions
hereinafter set forth. Accordingly, the Trust on behalf of the
Fund agrees with you as follows:
1. Delivery of Documents. The Trust engages in the
business of investing and reinvesting the assets of the Fund in
the manner and in accordance with the investment objectives,
policies and restrictions specified in the currently effective
Prospectus (the "Prospectus") and Statement of Additional
Information (the "SAI") relating to the Fund included in the
Trust's Registration Statement on Form N-1A, as amended from time
to time, (the "Registration Statement") filed by the Trust under
the Investment Company Act of 1940, as amended, (the "1940 Act")
and the Securities Act of 1933, as amended. Copies of the
documents referred to in the preceding sentence have been
furnished to you by the Trust. The Trust has also furnished you
with copies properly certified or authenticated of each of the
following additional documents related to the Trust and the Fund:
(a) The Declaration dated December 8, 1987, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the "By-
Laws").
(c) Resolutions of the Trustees of the Trust and the shareholders
of the Fund selecting you as investment manager and approving
the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest dated November 3, 1987 relating to the
Fund.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Sublicense to Use the Xxxxxxx Trademarks. As exclusive
licensee of the rights to use and sublicense the use of the
"Xxxxxxx," "Xxxxxxx Xxxxxx Investments, Inc." and "Xxxxxxx,
Xxxxxxx & Xxxxx, Inc." trademarks (together, the "Xxxxxxx
Marks"), you hereby grant the Trust a nonexclusive right and
sublicense to use (i) the "Xxxxxxx" name and xxxx as part of the
Trust's name (the "Fund Name"), and (ii) the Xxxxxxx Marks in
connection with the Trust's investment products and services, in
each case only for so long as this Agreement, any other
investment management agreement between you and the Trust, or any
extension, renewal or amendment hereof or thereof remains in
effect, and only for so long as you are a licensee of the Xxxxxxx
Marks, provided however, that you agree to use your best efforts
to maintain your license to use and sublicense the Xxxxxxx Marks.
The Trust agrees that it shall have no right to sublicense or
assign rights to use the Xxxxxxx Marks, shall acquire no interest
in the Xxxxxxx Marks other than the rights granted herein, that
all of the Trust's uses of the Xxxxxxx Marks shall inure to the
benefit of Xxxxxxx Trust Company as owner and licensor of the
Xxxxxxx Marks (the "Trademark Owner"), and that the Trust shall
not challenge the validity of the Xxxxxxx Marks or the Trademark
Owner's ownership thereof. The Trust further agrees that all
services and products it offers in connection with the Xxxxxxx
Marks shall meet commercially reasonable standards of quality, as
may be determined by you or the Trademark Owner from time to
time, provided that you acknowledge that the services and
products the Trust rendered during the one-year period preceding
the date of this Agreement are acceptable. At your reasonable
request, the Trust shall cooperate with you and the Trademark
Owner and shall execute and deliver any and all documents
necessary to maintain and protect (including but not limited to
in connection with any trademark infringement action) the Xxxxxxx
Marks and/or enter the Trust as a registered user thereof. At
such time as this Agreement or any other investment management
agreement shall no longer be in effect between you (or your
successor) and the Trust, or you no longer are a licensee of the
Xxxxxxx Marks, the Trust shall (to the extent that, and as soon
as, it lawfully can) cease to use the Fund Name or any other name
indicating that it is advised by, managed by or otherwise
connected with you (or any organization which shall have
succeeded to your business as investment manager) or the
Trademark Owner. In no event shall the Trust use the Xxxxxxx
Marks or any other name or xxxx confusingly similar thereto
(including, but not limited to, any name or xxxx that includes
the name "Xxxxxxx") if this Agreement or any other investment
advisory agreement between you (or your successor) and the Fund
is terminated.
3. Portfolio Management Services. As manager of the assets
of the Fund, you shall provide continuing investment management
of the assets of the Fund in accordance with the investment
objectives, policies and restrictions set forth in the Prospectus
and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating
to regulated investment companies and all rules and regulations
thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to
policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable
efforts to manage the Fund so that it will qualify as a regulated
investment company under Subchapter M of the Code and regulations
issued thereunder. The Fund shall have the benefit of the
investment analysis and research, the review of current economic
conditions and trends and the consideration of long-range
investment policy generally available to your investment advisory
clients. In managing the Fund in accordance with the requirements
set forth in this section 3, you shall be entitled to receive and
act upon advice of counsel to the Trust or counsel to you. You
shall also make available to the Trust promptly upon request all
of the Fund's investment records and ledgers as are necessary to
assist the Trust in complying with the requirements of the 1940
Act and other applicable laws. To the extent required by law, you
shall furnish to regulatory authorities having the requisite
authority any information or reports in connection with the
services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
You shall determine the securities, instruments,
investments, currencies, repurchase agreements, futures, options
and other contracts relating to investments to be purchased, sold
or entered into by the Fund and place orders with broker-dealers,
foreign currency dealers, futures commission merchants or others
pursuant to your determinations and all in accordance with Fund
policies as expressed in the Registration Statement. You shall
determine what portion of the Fund's portfolio shall be invested
in securities and other assets and what portion, if any, should
be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic
reports on the investment performance of the Fund and on the
performance of your obligations pursuant to this Agreement, and
you shall supply such additional reports and information as the
Trust's officers or Board of Trustees shall reasonably request.
4. Administrative Services. In addition to the portfolio
management services specified above in section 3, you shall
furnish at your expense for the use of the Fund such office space
and facilities in the United States as the Fund may require for
its reasonable needs, and you (or one or more of your affiliates
designated by you) shall render to the Trust administrative
services on behalf of the Fund necessary for operating as an open-
end investment company and not provided by persons not parties to
this Agreement including, but not limited to, preparing reports
to and meeting materials for the Trust's Board of Trustees and
reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent
appropriate, and monitoring the performance of, accounting
agents, custodians, depositories, transfer agents and pricing
agents, accountants, attorneys, printers, underwriters, brokers
and dealers, insurers and other persons in any capacity deemed to
be necessary or desirable to Fund operations; preparing and
making filings with the Securities and Exchange Commission (the
"SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy
materials, post-effective amendments to the Registration
Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by the Fund's transfer agent; assisting in the
preparation and filing of the Fund's federal, state and local tax
returns; preparing and filing the Fund's federal excise tax
return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the
valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of the Fund
under applicable federal and state securities laws; maintaining
or causing to be maintained for the Fund all books, records and
reports and any other information required under the 1940 Act, to
the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other
agents of the Fund; assisting in establishing the accounting
policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith;
establishing and monitoring the Fund's operating expense budgets;
reviewing the Fund's bills; processing the payment of bills that
have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available
to be paid by the Fund to its shareholders, preparing and
arranging for the printing of dividend notices to shareholders,
and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and
distributions; and otherwise assisting the Trust as it may
reasonably request in the conduct of the Fund's business, subject
to the direction and control of the Trust's Board of Trustees.
Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Fund or any other
person not a party to this Agreement which is obligated to
provide services to the Fund.
5. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 5, you shall pay the
compensation and expenses of all Trustees, officers and executive
employees of the Trust (including the Fund's share of payroll
taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of
your directors, officers and employees as may duly be elected
officers of the Trust, subject to their individual consent to
serve and to any limitations imposed by law. You shall provide at
your expense the portfolio management services described in
section 3 hereof and the administrative services described in
section 4 hereof.
You shall not be required to pay any expenses of the Fund
other than those specifically allocated to you in this section 5.
In particular, but without limiting the generality of the
foregoing, you shall not be responsible, except to the extent of
the reasonable compensation of such of the Fund's Trustees and
officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund:
organization expenses of the Fund (including out-of-pocket
expenses, but not including your overhead or employee costs);
fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses;
maintenance of books and records which are required to be
maintained by the Fund's custodian or other agents of the Trust;
telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment
company trade organizations; fees and expenses of the Fund's
accounting agent, custodians, subcustodians, transfer agents,
dividend disbursing agents and registrars; payment for portfolio
pricing or valuation services to pricing agents, accountants,
bankers and other specialists, if any; expenses of preparing
share certificates and, except as provided below in this section
5, other expenses in connection with the issuance, offering,
distribution, sale, redemption or repurchase of securities issued
by the Fund; expenses relating to investor and public relations;
expenses and fees of registering or qualifying Shares of the Fund
for sale; interest charges, bond premiums and other insurance
expense; freight, insurance and other charges in connection with
the shipment of the Fund's portfolio securities; the compensation
and all expenses (specifically including travel expenses relating
to Trust business) of Trustees, officers and employees of the
Trust who are not affiliated persons of you; brokerage
commissions or other costs of acquiring or disposing of any
portfolio securities of the Fund; expenses of printing and
distributing reports, notices and dividends to shareholders;
expenses of printing and mailing Prospectuses and SAIs of the
Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Trustees and officers of the Trust;
costs of shareholders' and other meetings; and travel expenses
(or an appropriate portion thereof) of Trustees and officers of
the Trust who are directors, officers or employees of you to the
extent that such expenses relate to attendance at meetings of the
Board of Trustees of the Trust or any committees thereof or
advisors thereto held outside of Boston, Massachusetts or New
York, New York.
You shall not be required to pay expenses of any activity
which is primarily intended to result in sales of Shares of the
Fund if and to the extent that (i) such expenses are required to
be borne by a principal underwriter which acts as the distributor
of the Fund's Shares pursuant to an underwriting agreement which
provides that the underwriter shall assume some or all of such
expenses, or (ii) the Trust on behalf of the Fund shall have
adopted a plan in conformity with Rule 12b-1 under the 1940 Act
providing that the Fund (or some other party) shall assume some
or all of such expenses. You shall be required to pay such of the
foregoing sales expenses as are not required to be paid by the
principal underwriter pursuant to the underwriting agreement or
are not permitted to be paid by the Fund (or some other party)
pursuant to such a plan.
6. Management Fee. For all services to be rendered,
payments to be made and costs to be assumed by you as provided in
sections 3, 4 and 5 hereof, the Trust on behalf of the Fund shall
pay you in United States Dollars on the last day of each month
the unpaid balance of a fee equal to the excess of 1/12 of 0.65
of 1 percent of the average daily net assets as defined below of
the Fund for such month; provided that, for any calendar month
during which the average of such values exceeds $300 million, the
fee payable for that month based on the portion of the average of
such values in excess of $300 million shall be 1/12 of 0.60 of 1
percent of such portion over any compensation waived by you from
time to time (as more fully described below). You shall be
entitled to receive during any month such interim payments of
your fee hereunder as you shall request, provided that no such
payment shall exceed 75 percent of the amount of your fee then
accrued on the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the
average of the values placed on the Fund's net assets as of 4:00
p.m. (New York time) on each day on which the net asset value of
the Fund is determined consistent with the provisions of Rule 22c-
1 under the 1940 Act or, if the Fund lawfully determines the
value of its net assets as of some other time on each business
day, as of such time. The value of the net assets of the Fund
shall always be determined pursuant to the applicable provisions
of the Declaration and the Registration Statement. If the
determination of net asset value does not take place for any
particular day, then for the purposes of this section 6, the
value of the net assets of the Fund as last determined shall be
deemed to be the value of its net assets as of 4:00 p.m. (New
York time), or as of such other time as the value of the net
assets of the Fund's portfolio may be lawfully determined on that
day. If the Fund determines the value of the net assets of its
portfolio more than once on any day, then the last such
determination thereof on that day shall be deemed to be the sole
determination thereof on that day for the purposes of this
section 6.
You may waive all or a portion of your fees provided for
hereunder and such waiver shall be treated as a reduction in
purchase price of your services. You shall be contractually bound
hereunder by the terms of any publicly announced waiver of your
fee, or any limitation of the Fund's expenses, as if such waiver
or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not
Exclusive. In connection with purchases or sales of portfolio
securities and other investments for the account of the Fund,
neither you nor any of your directors, officers or employees
shall act as a principal or agent or receive any commission. You
or your agent shall arrange for the placing of all orders for the
purchase and sale of portfolio securities and other investments
for the Fund's account with brokers or dealers selected by you in
accordance with Fund policies as expressed in the Registration
Statement. If any occasion should arise in which you give any
advice to clients of yours concerning the Shares of the Fund, you
shall act solely as investment counsel for such clients and not
in any way on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not
to be deemed to be exclusive and it is understood that you may
render investment advice, management and services to others. In
acting under this Agreement, you shall be an independent
contractor and not an agent of the Trust. Whenever the Fund and
one or more other accounts or investment companies advised by the
Manager have available funds for investment, investments suitable
and appropriate for each shall be allocated in accordance with
procedures believed by the Manager to be equitable to each
entity. Similarly, opportunities to sell securities shall be
allocated in a manner believed by the Manager to be equitable.
The Fund recognizes that in some cases this procedure may
adversely affect the size of the position that may be acquired or
disposed of for the Fund.
8. Limitation of Liability of Manager. As an inducement to
your undertaking to render services pursuant to this Agreement,
the Trust agrees that you shall not be liable under this
Agreement for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect you against any
liability to the Trust, the Fund or its shareholders to which you
would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and
duties hereunder. Any person, even though also employed by you,
who may be or become an employee of and paid by the Fund shall be
deemed, when acting within the scope of his or her employment by
the Fund, to be acting in such employment solely for the Fund and
not as your employee or agent.
9. Duration and Termination of This Agreement. This
Agreement shall remain in force until September 30, 1998, and
continue in force from year to year thereafter, but only so long
as such continuance is specifically approved at least annually
(a) by the vote of a majority of the Trustees who are not parties
to this Agreement or interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Trustees of the Trust, or
by the vote of a majority of the outstanding voting securities of
the Fund. The aforesaid requirement that continuance of this
Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act and the rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
This Agreement may be terminated with respect to the Fund at
any time, without the payment of any penalty, by the vote of a
majority of the outstanding voting securities of the Fund or by
the Trust's Board of Trustees on 60 days' written notice to you,
or by you on 60 days' written notice to the Trust. This Agreement
shall terminate automatically in the event of its assignment.
10. Amendment of this Agreement. 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 whom enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall
be effective until approved in a manner consistent with the 1940
Act and rules and regulations thereunder and any applicable SEC
exemptive order therefrom.
11. Limitation of Liability for Claims. The Declaration, a
copy of which, together with all amendments thereto, is on file
in the Office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "Xxxxxxx Municipal Trust"
refers to the Trustees under the Declaration collectively as
Trustees and not as individuals or personally, and that no
shareholder of the Fund, or Trustee, officer, employee or agent
of the Trust, shall be subject to claims against or obligations
of the Trust or of the Fund to any extent whatsoever, but that
the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and you agree that the
obligations assumed by the Trust on behalf of the Fund pursuant
to this Agreement shall be limited in all cases to the Fund and
its assets, and you shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Fund
or any other series of the Trust, or from any Trustee, officer,
employee or agent of the Trust. You understand that the rights
and obligations of each Fund, or series, under the Declaration
are separate and distinct from those of any and all other series.
12. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define
or limit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the
definitions contained in Section 2(a) of the 1940 Act
(particularly the definitions of "affiliated person,"
"assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied,
subject, however, to such exemptions as may be granted by the SEC
by any rule, regulation or order.
This Agreement shall be construed in accordance with the
laws of the Commonwealth of Massachusetts, provided that nothing
herein shall be construed in a manner inconsistent with the 1940
Act, or in a manner which would cause the Fund to fail to comply
with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory
or management agreements entered into between you and the Trust
on behalf of the Fund.
If you are in agreement with the foregoing, please execute
the form of acceptance on the accompanying counterpart of this
letter and return such counterpart to the Trust, whereupon this
letter shall become a binding contract effective as of the date
of this Agreement.
Yours very truly,
XXXXXXX MUNICIPAL TRUST, on
behalf of
Xxxxxxx High Yield Tax Free
Fund
By:
______________________________
President
The foregoing Agreement is hereby accepted as of the date
hereof.
XXXXXXX XXXXXX INVESTMENTS,
INC.
By:
______________________________
Managing Director
