[Execution Copy]
SERVICING AGREEMENT
THIS SERVICING AGREEMENT is made and entered into as of this 1st day of
March, 1999 by and among Xxxxx/Xxxxxx Advisers, a New York general partnership,
Xxxxx Total Return Advisors, Inc., a Delaware corporation, and Xxxxx Advisors
Inc., a Delaware corporation (collectively, the "Company"), and Xxxxx Consulting
LLC, a New York limited liability company ("Xxxxx").
WHEREAS Phoenix Investment Partners, Ltd., a Delaware corporation
("Phoenix"), has entered into an Acquisition Agreement (the "Acquisition
Agreement") with Xxxxx/Xxxxxx Advisers, a New York general partnership, Euclid
Advisors LLC, a New York limited liability company, Xxxxx Advisors Inc., a
Delaware corporation, Xxxxx Total Return Advisors, Inc., a Delaware corporation,
and Xxxxx Securities Corp., a New York corporation (collectively, the
"Sellers"), and the Equityholders named therein providing for, among other
things, the acquisition of all of the capital stock and partnership interests of
the Companies by Phoenix and/or one or more wholly-owned subsidiaries of Phoenix
(capitalized terms defined in the Acquisition Agreement and not otherwise
defined herein are used herein with such defined meanings);
WHEREAS Xxxxx has heretofore performed services to the Company and the
Company is desirous of obtaining certain services and Xxxxxx X. Xxxxx, as the
President of Xxxxx (the "President"), has indicated to the Company that he and
his designated research associates (the "Associates") will provide the Company
and its Affiliates with such services as are specified in this Agreement; and
WHEREAS the Company and Xxxxx have provided investment advisory
services to investment, companies registered under the Investment Company Act of
1940 (each, a "Fund" and collectively "Funds") and desire to continue to provide
those investment advisory services;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto, intending to be legally bound, agree as follows:
1. Services
1.1 For this engagement, the President and the Associates will devote
their skill and approximately one-half of their full working time consistent
with the practices of Xxxxx prior to the Closing Date, to the business and
affairs of the Company and its Affiliates and to the promotion of its and their
interests, in particular, performing asset allocation research and analysis and
providing advice thereon at a level and in a manner consistent with the
practices of Xxxxx and the Company prior to the Closing Date (the "Services").
The Services will be performed by the President and the Associates in a manner
and at a level consistent with the practices of Xxxxx and the Company prior to
the Closing Date. This Agreement shall be effective as of the Closing Date for
the term described in Section 2 below.
1.2 The Services will be provided to the Company and its Affiliates
during normal business hours at the offices of the Company in New York City or
at such other times and places mutually agreed upon and reasonably convenient to
both parties, taking into account the nature, exigencies and reasons for the
assistance required.
1.3 Notwithstanding Section 1.2, but subject to all of the other terms
and conditions of this Agreement, including in particular Sections 4 and 13,
Xxxxx may continue to provide consulting services (whether in a managerial,
employee, consultant or other capacity) to the Affiliated Investment Partnership
Management Companies and the related investment partnerships and Watermark
Securities, Inc. and their successor or affiliate entities, as may exist from
time to time; provided, however, that in no event may Xxxxx provide services to
any "Competing Business" as defined in the Noncompetition/Nonsolicitation
Agreement dated the date hereof between the President and Phoenix (the
"Noncompetition/Nonsolicitation Agreement"). The President shall also continue
to be permitted to serve as the President of Xxxxx Series Trust, The Xxxxx Fund,
Inc. and The Xxxxx Total Return Fund, Inc.
2. Term
2.1 This Agreement shall be effective as of the Closing Date and shall
continue until the third anniversary thereof (the "Term") or such earlier date
as provided in Section 2.2; and with respect to any Fund, unless sooner
terminated, this Agreement shall continue in effect for two years, and
thereafter until terminated, provided that the continuation of this Agreement
and the terms thereof are specifically approved annually in accordance with the
requirements of the Investment Company Act of 1940 by a majority of such Fund's
outstanding voting securities or a majority of its board of directors or
trustees, and, in any event, by a majority of the directors or trustees who are
not "interested persons", as defined in the Investment Company Act of 1940, cast
in person at a meeting called for the purpose of voting on such approval.
2.2 The Company may terminate this Agreement immediately for Cause and
in the event of the President's death or Disability, and upon 30 days' notice in
the event of termination without Cause; and with respect to any Fund, this
Agreement may be terminated at any time, without payment of any penalty, by the
board of directors or trustees of that Fund, or by a vote of a majority (as
defined in the Investment Company Act of 1940) of the outstanding voting
securities of the Fund to which this Agreement is applicable, upon not less than
sixty (60) day's written notice. With respect to any Fund, this Agreement shall
automatically terminate in the event of its assignment, within the meaning of
the Investment Company Act of 1940, unless such automatic termination shall be
prevented by an exemptive order of the Securities and Exchange Commission, and
shall automatically terminate upon the termination of the Fund's investment
advisory agreement with the company that serves as its investment adviser.
2.3 Upon termination of this Agreement by the Company for Cause or in
the event of the President's death or Disability, the Company's payment to Xxxxx
of fees earned to the date of such termination shall be in full satisfaction of
all claims against the Company under this Agreement. If Xxxxx'x engagement with
the Company hereunder is terminated by the Company other than for cause or the
President's death or Disability, the Company shall continue to pay to Xxxxx the
Consulting Fees at a rate equal to the average of the monthly Consulting Fees
for the six months immediately preceding the month in which such termination
occurred (or for the
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number of months in the Term that have elapsed as of the date of termination, if
fewer) for the remainder of the Term.
2.4 (i) For purposes of this Agreement, a termination of Xxxxx'x
engagement hereunder is for "Cause" if the termination is evidenced by a
reasonable determination made by the Chief Executive Officer of Phoenix that:
(a) Xxxxx has willfully neglected its assigned duties with the Company, which
neglect has continued for a period of at least thirty (30) days after a written
notice of such neglect was delivered to the President specifying the claimed
neglect, (b) the President has been enjoined (other than temporary suspensions
of not more than ninety-one (91) days) by the Securities and Exchange
Commission, the National Association of Securities Dealers, Inc. or any other
industry regulatory authority from working in the investment advisory or
securities industry, (c) the President has been convicted by a court of
competent jurisdiction of, or has pleaded guilty or nolo contendere to, any
felony or misdemeanor involving an investment or investment-related business,
(d) Xxxxx has engaged in a continuing violation of a material provision of this
Agreement, which violation has continued for a period of at least thirty (30)
days after a written notice of such violation was delivered to the President
specifying the claimed violation, or (e) the President has breached the
Noncompetition/Nonsolicitation Agreement.
(ii) For purposes of this Agreement, "Disability" means the
President's inability to perform the services he is required to perform under
this Agreement by reason of sickness, accident, injury, illness or any similar
event and which condition has existed for at least 180 consecutive days, or for
such shorter periods aggregating 180 days during any twelve month period.
3. Compensation
3.1 During the Term, for the Services to be provided by Xxxxx under
this Agreement, the Company agrees, on a joint and several basis, to pay Xxxxx
an annual consulting fee equal to $2,500,000 (the "Consulting Fees"). The
Consulting Fees shall be payable monthly in arrears on the fifth day of each
month. The Company shall allocate the Consulting Fees among the advisers
comprising the Company based on the assets of each Fund managed by such
advisers.
3.2 The Company shall provide or share with Xxxxx research information,
benefits and services, as defined in Section 28(e) of the Securities Exchange
Act of 1934, that results from brokerage transactions implemented by the Company
for the benefit of its clients.
3.3 The Company shall not have any liability with respect to the
compensation of employees retained by Xxxxx or by any affiliated entities.
3.4 Subject to the provisions of Section 2.3 hereof, upon termination
of this engagement for any reason, the Company shall have no further obligations
under this Agreement, but Xxxxx shall continue to be bound by Section 4 and the
Company shall continue to be bound by Section 5 hereof.
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4. Confidentiality of Xxxxx.
4.1 Xxxxx shall not at any time during the period of its engagement
with the Company hereunder or after the termination thereof directly or
indirectly divulge, furnish, use, publish or make accessible to any person or
entity any Confidential Information (as hereinafter defined) except in
connection with the performance of its duties hereunder. Any records of
Confidential Information prepared by Xxxxx or which come into its possession
during the term of this Agreement are and remain the property of the Company or
its Affiliates, as the case may be, and upon termination of the engagement all
such records and copies thereof shall be either left with or returned to such
entity. Confidential Information may be shared among the President and
Associates or other employees of entities controlled by the President on a need
to know basis for purposes of providing the Services to the Company and its
Affiliates hereunder. Such Associates and any other employees shall be informed
of the confidential nature of such Confidential Information, the President shall
direct such Associates and any other employees to treat such information
confidentially and the President will be responsible for any breach of this
Section 4.1 by himself and by any persons to whom the President provides any
Confidential Information. Notwithstanding anything contained herein to the
contrary, the Company acknowledges that services overlapping or similar to the
Services provided by Xxxxx, the President and the Associates hereunder are also
performed on behalf of the Affiliates of Xxxxx and such Services are often not
exclusively performed by Xxxxx, the President and the Associates for the
Company. Consequently, the work product resulting from the Services is often
generated on behalf of both the Company and its Affiliates and the Affiliates of
Xxxxx and is shared among the employees of these entities (the "Shared Work
Product"). The Company further acknowledges that the Confidential Information
that generates such Shared Work Product may become known to the employees of
Xxxxx'x Affiliates. The Company hereby agrees that the disclosure of
Confidential Information to the employees of the Xxxxx Affiliates who shall be
deemed employees covered by the fourth sentence of this Section 4.1, to the
extent such disclosure is necessary to generate any Shared Work Product, and the
use of Shared Work Product by the employees of the Xxxxx Affiliates, shall in no
event be deemed a breach of this Agreement.
4.2 The term "Confidential Information" includes, but is not limited
to, the following items, whether existing now or created in the future and
whether or not subject to trade secret or other statutory protection: (a) all
knowledge or information concerning the business, operations and assets of the
Company and its Affiliates which is not readily available to the public, such
as: internal operating procedures; investment strategies; sales data and
customer and client lists; financial plans, projections and reports; and
investment company programs, plans and products; (b) all property owned,
licensed and/or developed for the Company and/or its Affiliates or any of their
respective clients and not readily available to the public, such as computer
systems, programs and software devices, including information about the design,
methodology and documentation therefor; (c) information about or personal to the
Company's and/or its Affiliates' clients; (d) information, materials, products
or other tangible or intangible assets in the Company's and/or its Affiliates'
possession or under any of their control which is proprietary to, or
confidential to or about, any other person or entity; and (e) records and
repositories of all of the foregoing, in whatever form maintained.
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The foregoing notwithstanding, the following shall not be
considered Confidential Information: (aa) general skills and experience gained
by providing service to the Company; (bb) information publicly available or
generally known within the Company's trade or industry; (cc) information
independently developed by the President or the Associates other than in the
course of the performance of their duties which are exclusive to the Company
hereunder; and (dd) information which becomes available to the President or the
Associates on a non-confidential basis from sources other than the Company or
its Affiliates, provided the President or the Associates do not know or have
reason to know that such sources are prohibited by contractual, legal or
fiduciary obligation from transmitting the information. Failure to xxxx any
material or information "confidential" shall not affect the confidential nature
thereof. All the terms of this Section 4 shall survive the termination of this
Agreement. The obligations hereunder shall be in addition to, and not in
limitation of, any other obligations of confidentiality the President or the
Associates may have to the Company.
4.3 At any time when so requested, and upon termination of the
engagement under this Agreement for any reason whatsoever and irrespective of
whether such termination is voluntary on Xxxxx'x part or not, Xxxxx will deliver
to the Company all information in its possession (whether or not Confidential
Information) pertaining exclusively to the Company or any of its Affiliates and,
to the extent any such information is Shared Work Product, shall provide copies
to the Company with the understanding that Xxxxx and its Affiliates shall also
retain copies of such information.
5. Confidentiality of the Company
5.1 The Company and its Affiliates and their respective employees shall
not at any time during the period of Xxxxx'x engagement with the Company
hereunder or after the termination thereof directly or indirectly divulge,
furnish, use, publish or make accessible to any person or entity any Xxxxx
Confidential Information (as hereinafter defined). It is expressly understood
that Shared Work Product may be shared among the Company and its Affiliates and
their respective employees. The Company and its Affiliates and their respective
employees shall be informed of the confidential nature of the Xxxxx Confidential
Information, the Company shall direct such employees to treat such information
confidentially and the Company will be responsible for any breach of this
Section 5.1 by its employees.
5.2 The term "Xxxxx Confidential Information" includes, but is not
limited to, the following items, whether existing now or created in the future
and whether or not subject to trade secret or other statutory protection: (a)
all knowledge or information concerning the business, operations and assets of
Xxxxx and its Affiliates which is not readily available to the public, such as:
internal operating procedures; investment strategies; sales data and customer
and client lists; financial plans, projections and reports; and investment
company programs, plans and products; (b) all property owned, licensed and/or
developed for the Xxxxx and/or its Affiliates or any of their respective clients
and not readily available to the public, such as computer systems, programs and
software devices, including information about the design, methodology and
documentation therefor; (c) information about or personal to Xxxxx'x and/or its
Affiliates' clients; (d) information, materials, products or other tangible or
intangible assets in Xxxxx'x and/or its Affiliates' possession or under any of
their control which is proprietary to, or
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confidential to or about, any other person or entity; and (e) records and
repositories of all of the foregoing, in whatever form maintained.
The foregoing notwithstanding, the following shall not be
considered Xxxxx Confidential Information: (aa) general skills and experience
gained by providing service to the Company and its Affiliates; (bb) information
publicly available or generally known within Xxxxx'x trade or industry; (cc)
information independently developed by the Company and its Affiliates and their
respective employees; and (dd) information which becomes available to the
Company and its Affiliates and their respective employees on a non-confidential
basis from sources other than Xxxxx, provided the Company and its Affiliates and
their respective employees do not know or have reason to know that such sources
are prohibited by contractual, legal or fiduciary obligation from transmitting
the information. All the terms of this Section 5 shall survive the termination
of this Agreement.
6. Ownership of Documents
All memoranda, papers, letters, notes, notebooks and all copies thereof
relating exclusively to the business or affairs of the Company that are
generated by Xxxxx or that come into its possession, in each case in connection
with its performance of Services to the Company under this Agreement, shall be
held by Xxxxx as the Company property and shall be delivered by Xxxxx to the
Company as the Company may request. To the extent any such memoranda, papers,
letters, notes and notebooks are the product of Xxxxx Confidential Information
or are Shared Work Product, the Company understands and agrees that Xxxxx and
its Affiliates shall also retain copies of such documentation and information.
7. Prior Negotiations and Agreements
This Agreement contains the complete agreement concerning the servicing
arrangement between the parties. This Agreement may only be altered, amended or
rescinded by a duly executed written agreement.
8. Jurisdiction
This Agreement shall be construed in accordance with and governed by
the laws of the State of New York governing contracts entered into and to be
performed entirely within New York without regard to any conflict of law rules
and both parties consent to the jurisdiction of the courts of New York.
9. Performance Waivers
Waiver of performance of any obligation by either party shall not
constitute a waiver of performance of any other obligations or constitute future
waiver of the same obligation.
10. Severability
If any section, subsection, clause or sentence of this Agreement shall
be deemed illegal, invalid or unenforceable under any applicable law, actually
applied by any court of competent jurisdiction such illegality, invalidity or
unenforceability shall not affect the legality, validity and
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enforceability of this Agreement or any other section, subsection, clause or
sentence thereof. Where, however, the provisions of any applicable law may be
waived, they are hereby waived by the parties to the full extent permitted by
such law to the end that this Agreement shall be a valid and binding agreement
enforceable in accordance with its terms.
11. Assignment
This Agreement shall inure to the benefit of and be binding upon the
Company and its successors (whether direct or indirect, by purchase, merger,
consolidation or otherwise) and assigns, and upon Xxxxx and its successors and
assigns (whether direct or indirect, by purchase, merger, consolidation or
otherwise). Except as provided in Section 2.2, this Agreement shall not be
assignable by Xxxxx other than with the express written consent of the Company
which shall not be unreasonably denied. The reorganization of Xxxxx and its
affiliated entities, such that the Services of the President and the Associates
are provided through an affiliated entity, shall not constitute a breach,
assignment or termination of this Agreement by Xxxxx.
12. Notices
All notices under this Agreement shall be in writing and shall be
deemed to have been given at the time when mailed by registered or certified
mail, addressed to the address below stated of the party to which notice is
given, or to such changed address as such party may have fixed by notice:
To the Company: Xxxxx/Xxxxxx Advisers
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Phoenix Investment Partners, Ltd.
00 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Vice President and General Counsel
To Xxxxx: Xxxxx Consulting LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
provided, however, that any notice of change of address shall be effective only
upon receipt.
13. Miscellaneous
The President hereby represents and warrants that this Agreement (i) is
valid, binding and enforceable in accordance with its terms and (ii) does not
conflict with any other agreement to which he is a party, including any
agreement with the Affiliated Investment Partnership Management Companies and
the related investment partnerships and Watermark Securities, Inc.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Very truly yours,
XXXXX/XXXXXX ADVISERS
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
XXXXX TOTAL RETURN ADVISORS, INC.
By: /s/ Xxxxxxx Xxxxx
-----------------------------
Name: Xxxxxxx Xxxxx
Title: Executive Vice President
XXXXX ADVISORS, INC.
By: /s/ Xxxxxxx Xxxxx
-----------------------------
Name: Xxxxxxx Xxxxx
Title: Executive Vice President
ACCEPTED AND AGREED TO:
XXXXX CONSULTING LLC
By: /s/ Xxxxxx X. Xxxxx
-------------------------
Name: Xxxxxx X. Xxxxx
Title: President
ACCEPTED AND AGREED TO AS
TO SECTIONS 4.1 and 13
/s/ Xxxxxx X. Xxxxx
-------------------------
Xxxxxx X. Xxxxx
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