MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT ("Agreement") is
made this 1st day of December, 2005, by and between Xxxxx
Xxxxxx Income Funds, a Massachusetts Business Trust (the
"Trust") and Xxxxx Xxxxxx Fund Management LLC, a Delaware
limited liability company (the "Manager").
WHEREAS, the Trust 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 Trust wishes to retain the Manager to provide
investment advisory, management, and administrative services to
the Trust with respect to the series of the Trust designated in
Schedule A annexed hereto (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 Trust 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 Trust's Board of
Trustees (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
Trust's Declaration of Trust 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 Trust 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 Trust 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 Trust
or Fund shall receive from the Trust 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
Trust 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 Trust 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
Trust's Board and by the shareholders of the Fund in accordance
with the requirements of the 1940 Act and, unless sooner
terminated as provided herein, will continue in effect for two years
from the above written date. Thereafter, if not terminated, this
Agreement shall continue in effect with respect to the Fund, so
long as such continuance is specifically approved at least annually
(i) by the Board or (ii) by a vote of a majority of the outstanding
voting securities of the Fund, provided that in either event the
continuance is also approved 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 for the purpose of voting on
such approval.
12. This Agreement is terminable with respect to the Fund
without penalty by the Board or by vote of a majority of the
outstanding voting securities of the 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 90 days' written notice to the
Fund, and will be terminated upon the mutual written consent of
the Manager and the Trust. This Agreement shall terminate
automatically in the event of its assignment by the Manager and
shall not be assignable by the Trust 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 Trust. The undersigned officer of the Trust has executed
this Agreement not individually, but as an officer under the Trust's
Declaration of Trust and the obligations of this Agreement are not
binding upon any of the Trustees, officers or shareholders of the
Trust individually
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 INCOME
FUNDS
By:_______________________________
Name: R. Xxx Xxxxxx
Title: Chairman
XXXXX XXXXXX FUND
MANAGEMENT LLC
By:_______________________________
Name: Xxxxxx Xxxxxxx
Title: Director
Schedule A
Xxxxx Xxxxxx Municipal High Income Fund
Fee:
The following percentage of the Fund's average daily net assets:
0.60
