EXHIBIT D(3)
FORM OF MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of ____________ ___, ______, by and between
Xxxxx Xxxxxx Trust II, a Massachusetts business trust (the "Trust"), and Xxxxx
Xxxxxx Fund Management LLC, a Delaware corporation ("SBFM" or the "Manager").
W I T N E S S E T H:
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (collectively with the rules and regulations promulgated
thereunder and any exemptive orders thereunder, the "1940 Act"), and
WHEREAS, the Trust wishes to engage SBFM to provide certain management
services for the series of the Trust designated in Schedule A annexed hereto
(the "Funds"), and SBFM is willing to provide such management services for the
Funds on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of Manager. (a) SBFM shall act as the Manager for each Fund and
as such shall furnish continuously an investment program and shall determine
from time to time what securities shall be purchased, sold or exchanged and what
portion of the assets of each Fund shall be held uninvested, subject always to
the restrictions of the Trust's Declaration of Trust, dated as of April 13,
1984, and By-Laws, as each may be amended and restated from time to time
(respectively, the "Declaration" and the "By-Laws"), the provisions of the 1940
Act, and the then-current Registration Statement of the Trust with respect to
each Fund. The Manager shall also make recommendations as to the manner in which
voting rights, rights to consent to corporate action and any other rights
pertaining to each Fund's portfolio securities shall be exercised. Should the
Board of Trustees of the Trust at any time, however, make any definite
determination as to investment policy applicable to a Fund and notify the
Manager thereof in writing, the Manager shall be bound by such determination for
the period, if any, specified in such notice or until similarly notified that
such determination has been revoked. The Manager shall take, on behalf of each
Fund, all actions which it deems necessary to implement the investment policies
determined as provided above, and in particular to place all orders for the
purchase or sale of securities for the Fund's account with the brokers or
dealers selected by it, and to that end the Manager is authorized as the agent
of the Trust to give instructions to the custodian or any subcustodian of the
Fund as to deliveries of securities and payments of cash for the account of the
Fund. In connection with the selection of such brokers or dealers and the
placing of such orders, 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. In making
purchases or sales of securities or other property for the account of a Fund,
the Manager may deal with itself or with the Trustees of the Trust or the
Trust's underwriter or distributor or with its or their respective affiliates,
or affiliates of affiliates, to the extent such actions are permitted by the
1940 Act. In providing the services and assuming the obligations set forth
herein, the Manager may employ, at its own expense, or may request that the
Trust employ at each Fund's expense, one or more subadvisers; provided that in
each case the Manager shall supervise the activities of each subadviser. Any
agreement between the Manager and a subadviser shall be subject to the renewal,
termination and amendment provisions applicable to this Agreement. Any agreement
between the Trust on behalf of a Fund and a subadviser may be terminated by the
Manager at any time on not more than 60 days' nor less than 30 days' written
notice to the Trust and the subadviser. To the extent authorized by the Board of
Trustees and subject to applicable provisions of the 1940 Act, the investment
program to be provided hereunder may entail the investment of all or a portion
of the assets of a Fund in one or more investment companies.
(b) Subject to the direction and control of the Board of Trustees of the
Trust, SBFM shall perform such administrative and management services as may
from time to time be reasonably requested by the Trust with respect to each
Fund, which shall include without limitation: (i) providing office space,
equipment and clerical personnel necessary for maintaining the organization of
the Trust and each Fund and for performing the administrative and management
functions herein set forth; (ii) supervising the overall administration of each
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; and (iii)
arranging for maintenance of books and records of the Trust with respect to each
Fund. Notwithstanding the foregoing, SBFM shall not be deemed to have assumed
any duties with respect to, and shall not be responsible for, the distribution
of shares of beneficial interest in 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 or shareholder
servicing agent of the Trust or any Fund. In providing administrative and
management services as set forth herein, the Manager may, at its own expense,
employ one or more subadministrators; provided that the Manager shall remain
fully responsible for the performance of all administrative and management
duties set forth herein and shall supervise the activities of each
subadministrator.
2. Allocation of Charges and Expenses. SBFM shall furnish at its own
expense all necessary services, facilities and personnel in connection with its
responsibilities under Section 1 above. Except as provided in the foregoing
sentence, it is understood that the Trust will pay from the assets of each Fund
all of its own expenses allocable to that Fund including, without limitation,
organization costs of the Fund; compensation of Trustees who are not "affiliated
persons" of SBFM; governmental fees; interest charges; brokerage fees and
commissions; loan commitment fees; taxes; membership dues in industry
associations allocable to the Trust; fees and expenses of independent auditors,
legal counsel and any transfer agent, distributor, shareholder servicing agent,
service agent, registrar or dividend disbursing agent of the Trust; expenses of
issuing and redeeming shares of beneficial interest and servicing shareholder
accounts; expenses of preparing, typesetting, printing and mailing prospectuses,
statements of additional information, shareholder reports, notices, proxy
statements and reports to governmental officers and commissions and to existing
shareholders of the Fund; expenses connected with the execution, recording and
settlement of security transactions; insurance premiums; fees and expenses of
the custodian for all services to the Fund, including safekeeping of funds and
securities and maintaining required books and accounts; expenses of calculating
the net asset value of the Fund (including but not limited to the fees of
independent pricing services); expenses of meetings of the Fund's Trustees and
of the Fund's shareholders; expenses relating to the registration and
qualification of shares of the Fund; and such non-recurring or extraordinary
expenses as may arise, including those relating to actions, suits or proceedings
to which the Trust on behalf of the Fund may be a party and the legal obligation
which the Trust may have to indemnify its Trustees and officers with respect
thereto.
3. Compensation of Manager. For the services to be rendered and the
facilities to be provided by the Manager hereunder, the Trust shall pay to the
Manager from the assets of each Fund a management fee computed daily and paid
monthly at an annual rate equal to the lesser of (i) that percentage of that
Fund's average daily net assets for the Fund's then-current fiscal year set
forth opposite the Fund's name on Schedule A annexed hereto (the "Aggregate
Management Fee"), minus that Fund's Aggregate Subadviser Fee (as defined below),
if any, and (ii) the difference between that Fund's Aggregate Management Fee for
the Fund's then-current fiscal year and the aggregate management fees allocated
to that Fund for the Fund's then-current fiscal year from the registered
investment company portfolios in which it invests (for which the Manager or an
affiliate serves as investment adviser). To the extent that any Fund's Aggregate
Subadviser Fee exceeds that Fund's Aggregate Management Fee, the Manager shall
pay such amount to the applicable subadvisers on the Fund's behalf. A Fund's
Aggregate Subadviser Fee is the aggregate amount payable by that Fund to
subadvisers pursuant to agreements between the Trust on behalf of the Fund and
the subadvisers. If the Manager provides services hereunder for less than the
whole of any period specified in this Section 3, the compensation to the Manager
shall be accordingly adjusted and prorated.
4. Covenants of Manager. The Manager agrees that it will not deal with
itself, or with the Trustees of the Trust or the Trust's principal underwriter
or distributor, as principals in making purchases or sales of securities or
other property for the account of a Fund, except as permitted by the 1940 Act,
and will comply with all other provisions of the Declaration and By-Laws and the
then-current Registration Statement applicable to each Fund relative to the
Manager and its directors and officers.
5. Limitation of Liability of Manager. SBFM 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, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder. As used in this Section 5, the term
"SBFM" shall include directors, officers and employees of the Manager as well as
the Manager itself.
6. Activities of Manager. The services of the Manager to the Funds are not
to be deemed to be exclusive, the Manager being free to render investment
advisory, administrative and/or other services to others. It is understood that
Trustees, officers, and shareholders of the Trust are or may be or may become
interested in the Manager, as directors, officers, employees, or otherwise and
that directors, officers and employees of the Manager are or may become
similarly interested in the Trust and that the Manager may be or may become
interested in the Trust as a shareholder or otherwise.
7. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written, shall govern
the relations between the parties hereto thereafter and shall remain in force
for a period of two years from its effectiveness, on which date it will
terminate unless its continuance with respect to a Fund after that date is
"specifically approved at least annually" (a) by the vote of a majority of the
Trustees of the Trust who are not "interested persons" of the Trust or of SBFM
at a meeting specifically called for the purpose of voting on such approval, and
(b) by the Board of Trustees of the Trust or by "vote of a majority of the
outstanding voting securities" of the Fund.
This Agreement may be terminated at any time with respect to a Fund
without the payment of any penalty by the Trustees or by the "vote of a majority
of the outstanding voting securities" of the Fund, or by the Manager, in each
case on not more than 60 days' nor less than 30 days' written notice to the
other party. This Agreement shall automatically terminate in the event of its
"assignment."
This Agreement may be amended with respect to a Fund only if such
amendment is approved by the "vote of a majority of the outstanding voting
securities" of the Fund (except for any such amendment as may be effected in the
absence of such approval without violating the 1940 Act).
The terms "specifically approved at least annually," "vote of a majority
of the outstanding voting securities," "assignment," "affiliated person," and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
8. Licenses. The Trust hereby agrees, on behalf of each Fund, to reimburse
the Manager for any and all reasonable costs incurred by the Manager relating to
the acquisition and retention of licenses to be used in connection with the
management of that Fund.
9. Governing Law. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
10. Use of Name. The Trust hereby acknowledges that any and all rights in
or to the name "Xxxxx Xxxxxx" which exist on the date of this Agreement or which
may arise hereafter are, and under any and all circumstances shall continue to
be, the sole property of the Manager; that the Manager may assign any or all of
such rights to another party or parties without the consent of the Trust; and
that the Manager may permit other parties, including other investment companies,
to use the word "Xxxxx Xxxxxx" in their names. If the Manager, or its assignee
as the case may be, ceases to serve as the manager of the Trust, the Trust
hereby agrees to take promptly any and all actions which are necessary or
desirable to change its name and those of each of its series or classes so as to
delete the word "Xxxxx Xxxxxx."
Each party acknowledges and agrees that all obligations of the Trust under
this Agreement are binding only with respect to the applicable Fund; that any
liability of the Trust under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
that Fund; and that no other series of the Trust shall be liable with respect to
this Agreement or in connection with the transactions contemplated herein.
The undersigned officer of the Trust has executed this Agreement not
individually, but as an officer under the Declaration and the obligations of
this Agreement are not binding upon any of the Trustees, officers or
shareholders of the Trust individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
XXXXX XXXXXX TRUST II XXXXX XXXXXX FUND
on behalf of the series listed MANAGEMENT LLC
on Schedule A
By: By:
-------------------------------- ---------------------------
Title: Title:
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Schedule A
Aggregate Management Fee (expressed
as a percentage of
the Fund's aggregate net assets
Fund for its then-current fiscal year)
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Xxxxx Xxxxxx Investors Value Fund 0.65%
