EX-99.D 2 dex99d.htm INVESTMENT MANAGEMENT AGREEMENT
Exhibit (d)
MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT ("Agreement") is made this 1st day of
December, 2005, by and between Xxxxx Xxxxxx Fundamental Value Fund
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 (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 1940Act and, unless sooner terminated as provided herein,
will continue in effectfor two years from the above written date.
Thereafter, if not terminated, this Agreement shall continue in
effect withrespect to the Fund, so long as such continuance is
specifically approved at leastannually (i) by the Board or (ii) by
a vote of a majority of the outstanding votingsecurities of the Fund,
provided that in either event the continuance is alsoapproved 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 forthe purpose of voting on such approval.
12. This Agreement is terminable with respect to the Fund withou
penalty bythe Board or by vote of a majority of the outstanding
voting securities ofthe 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 90days' written notice to the Fund,
and will be terminated upon the mutualwritten 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 FUNDAMENTAL VALUE FUND INC.
By:
Name: R. Xxx Xxxxxx
Title: Chairman
XXXXX XXXXXX FUND MANAGEMENT LLC
By:
Name: Xxxxxx Xxxxxxx
Title: Director
Schedule A
Fee:
The following percentage of the Fund's average daily net assets:
First $1.5 billion 0.75; Next $500 million 0.70;
Next $500 million 0.65; Next $1 billion 0.60; Over $3.5 billion 0.50
