INVESTMENT MANAGEMENT AGREEMENT
XX XXXXX INCOME + GROWTH FUND, INC.
July 1, 1998
XX Xxxxx Securities Corporation
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
XX Xxxxx Income + Growth Fund, Inc. (the "Fund"), a corporation
organized under the laws of the State of Maryland, herewith confirms its
agreement with XX Xxxxx Securities Corporation ("XX Xxxxx"), as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in
its Articles of Incorporation, as amended, and in its Prospectuses and
Statements of Additional Information as from time to time in effect, and in
such manner and to such extent as may from time to time be approved by the
Board of Directors of the Fund. Copies of the Fund's Prospectuses,
Statements of Additional Information and Articles of Incorporation, as
amended, have been or will be submitted to XX Xxxxx. The Fund desires to
employ and hereby appoints XX Xxxxx to act as investment manager to its
portfolio (the "Portfolio"). XX Xxxxx accepts the appointment and agrees to
furnish the services set forth below for the compensation set forth below.
2. SERVICES AS INVESTMENT MANAGER
Subject to the supervision and direction of the Board of Directors of
the Fund, XX Xxxxx will (a) act in strict conformity with the Fund's Articles
of Incorporation and By-laws, the Investment Company Act of 1940 (the "Act")
and the Investment Advisers Act of 1940, as the same may from time to time be
amended, (b) manage the Portfolio in accordance with the Fund's investment
objective and policies as stated in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect, (c) make general
investment decisions for the Fund including decisions concerning (i) the
specific types of securities to be held by the Fund and the proportion of the
Fund's assets that should be allocated to such investments during particular
market cycles and (ii) the specific issuers whose securities will be
purchased of sold by the Fund, and (d) supply office facilities (which may be
in XX Xxxxx'x own offices); statistical and research data; data processing
services; clerical, accounting and bookkeeping services; internal auditing
and legal services; internal executive and administrative services;
stationery and office supplies; preparation of reports to shareholders of the
Fund; preparation of tax returns, reports to and filings with the Securities
and Exchange Commission and state Blue Sky authorities; calculation of the
net asset value of shares of the Fund; and general assistance in all aspects
of the Fund's operations. In providing those services, XX Xxxxx will
supervise the Fund's investments generally and conduct a continual program of
evaluation of the Fund's assets.
In connection with the performance of its duties under this Agreement,
it is understood that XX Xxxxx will from time to time employ or associate
with itself such person or persons as XX Xxxxx
may believe to be particularly fitted to assist it in the performance of this
Agreement, it being understood that the compensation of such person or
persons shall be paid by XX Xxxxx and that no obligation may be incurred on
the Fund's behalf in any such respect.
3. INFORMATION PROVIDED TO THE FUND; BOOKS AND RECORDS
(a) XX Xxxxx will keep the Fund informed of developments materially
affecting the Fund, and will, on its own initiative, furnish the Fund from
time to time with whatever information XX Xxxxx believes is appropriate for
this purpose.
(b) In compliance with the requirements of Rule 31a-3 under the Act, XX
Xxxxx hereby agrees that all records which 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.
4. STANDARD OF CARE
XX Xxxxx shall exercise its best judgment in rendering the services
listed in paragraph 2 above. XX Xxxxx shall not be liable 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
herein shall be deemed to protect or purport to protect XX Xxxxx against any
liability to the Fund or to its shareholders to which XX Xxxxx could
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or by reason of XX
Xxxxx'x reckless disregard of its obligations and duties under this Agreement.
Any person, even though also a partner, officer, employee, or agent of
XX Xxxxx, who may be or become a Director, officer, employee or agent of the
Fund, shall be deemed, when rendering services to the Fund or acting on any
business of the Fund, to be rendering such services to or acting solely for
the Fund and not as a Director, officer, employee, or agent or one under the
control or direction of XX Xxxxx even though paid by it.
5. COMPENSATION
In consideration of the services rendered pursuant to this Agreement,
the Fund will pay XX Xxxxx on the first business day of each month a fee for
the previous month, calculated daily, at the annual rate of .75 of 1.00% of
the Fund's average daily net assets. The fee for the period from the date
the Fund commences investment operations to the end of the month during which
the Fund commences investment operations shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of a month, the fee for such
part of that month shall be prorated according to the proportion that such
period bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable
to XX Xxxxx, the value of the Fund's net assets shall be computed at the
times and in the manner specified in the Fund's Prospectus and the Statement
of Additional Information as from time to time in effect.
6. EXPENSES
XX Xxxxx will bear all expenses in connection with the performance of
its services under this Agreement. The Fund will bear certain other expenses
to be incurred in its operation, including: taxes, interest, brokerage fees
and commissions, if any; fees of directors of the Fund who are not officers
or employees of XX Xxxxx; Securities and Exchange Commission fees and state
Blue Sky
-2-
qualification fees; management, advisory and administration fees; charges of
custodians and transfer and dividend disbursing agents; certain insurance
premiums; outside auditing and legal expenses; costs of maintenance of
corporate existence; costs attributable to investor services, including,
without limitation, telephone and personnel expenses; costs of preparing and
printing prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders; costs of
shareholders' reports and meetings of the shareholders, officers or Board of
Directors of the Fund; and any extraordinary expenses.
7. REIMBURSEMENT TO THE FUND
If in any fiscal year the aggregate expenses of the Fund (including fees
pursuant to this Agreement, but excluding interest, taxes, brokerage
expenses, an applicable portion of distribution expenses and, with the prior
written consent of the appropriate state securities commissions,
extraordinary expenses) exceed the applicable expense limitation of any state
having jurisdiction over the Fund, XX Xxxxx will reimburse the excess
expense. XX Xxxxx'x expense reimbursement obligation will be limited to the
amount of its fees received pursuant to this Agreement, however, XX Xxxxx
shall reimburse the Fund for such excess expenses regardless of the amount of
fees paid to it during such fiscal year to the extent that the securities
regulations of any state in which Fund shares are registered and qualified
for sale so require. This expense reimbursement, if any, will be estimated,
reconciled and paid on a monthly basis. From time to time XX Xxxxx, in its
sole discretion and as it deems appropriate, may assume certain expenses of
the Fund while retaining the ability to be reimbursed by the Fund for such
amounts prior to the end of the fiscal year.
8. SERVICES TO OTHER COMPANIES OR ACCOUNTS
The Fund understands that XX Xxxxx now acts and will continue to act as
investment adviser to fiduciary and other managed accounts and now acts and
will continue to act as investment manager, investment adviser,
sub-investment adviser and/or administrator to one or more other investment
companies, and the Fund has no objection to XX Xxxxx'x so acting, provided
that whenever the Fund and one or more other accounts or investment companies
advised by XX Xxxxx have available funds for investment, investments suitable
and appropriate for each will be allocated in a manner believed to be
equitable to each entity. The Fund recognizes that in some cases this
procedure may adversely affect the size of the position obtainable for the
Fund. In addition, the Fund understands that the persons employed by XX
Xxxxx to assist in the performance of XX Xxxxx'x duties hereunder will not
devote their full time to such services and nothing contained herein shall be
deemed to limit or restrict the right of XX Xxxxx or any affiliate of XX
Xxxxx to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
9. TERM OF AGREEMENT
This Agreement shall become effective on the date first written above
and shall continue for an initial two year term and thereafter shall continue
automatically, provided such continuance is specifically approved at least
annually by (a) the Board of Directors of the Fund or (b) a vote of a
"majority" (as defined in the Act) of the the Fund's outstanding voting
securities, provided that in either event the continuance is also approved by
a majority of the Board of Directors who are not "interested persons" (as
defined in that Act) of any party to this Agreement, by vote cast in person
at a meeting called for the purpose of voting on such approval. This
Agreement is terminable, without penalty, on 60 days' written notice, by the
Board of Directors of the Fund or by vote of holders of a majority of the
Fund's shares, or upon 90 days' written notice, by XX Xxxxx. This Agreement
will also terminate automatically in the event of its assignment (as defined
in the Act and the Rules thereunder).
-3-
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 which enforcement of the change, waiver, discharge or termination is
sought, and no material amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the Fund.
11. MISCELLANEOUS
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be invalidated or
rendered unenforceable thereby. This Agreement shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by
New York law without giving effect to the conflict of law provisions thereof.
If the foregoing is in accordance with your understanding indicate your
acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
XX XXXXX INCOME + GROWTH FUND, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
Title: President
Accepted and Agreed:
XX XXXXX SECURITIES CORPORATION
By: /s/ Xxxxxxx X. Xxxx
--------------------------------
Name: Xxxxxxx X. Xxxx
Title: Managing Director
-4-
