INVESTMENT MANAGEMENT CONTRACT
SHORT TERM INCOME FUND, INC.
the "Fund"
Money Market Portfolio
U.S. Government Portfolio
the "Portfolios"
New York, New York
___________, 1996
Xxxxx & Xxxx Asset Management L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
We herewith confirm our agreement with you as follows:
1. We propose to engage in the business of investing and reinvesting our
assets in securities of the type, and in accordance with the limitations,
specified in our Articles of Incorporation, By-Laws and Registration
Statement filed with the Securities and Exchange Commission under the
Investment Company Act of 1940 (the "1940 Act") and the Securities Act of
1933, including the Prospectus forming a part thereof (the "Registration
Statement"), all as from time to time in effect, and in such manner and to
such extent as may from time to time be authorized by our Board of
Directors. We enclose copies of the documents listed above and will furnish
you such amendments thereto as may be made from time to time.
2. (a) We hereby employ you to manage the investment and reinvestment of our
assets of our Portfolios as above specified, and, without limiting the
generality of the foregoing, to provide the investment management services
specified below.
(b) Subject to the general control of our Board of Directors, you will make
decisions with respect to all purchases and sales of the portfolio
securities of the Portfolios. To carry out such decisions, you are hereby
authorized, as our agent and attorney-in-fact for our account and at our
risk and in our name, to place orders for the investment and reinvestment
of our assets. In all purchases, sales and other transactions in our
portfolio securities you are authorized to exercise full discretion and act
for us in the same manner and with the same force and effect as our
corporation itself might or
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could do with respect to such purchases, sales or other transactions, as
well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
(c) You will report to our Board of Directors at each meeting thereof all
changes in our portfolios since your prior report, and will also keep us in
touch with important developments affecting our portfolios and, on your
initiative, will furnish us from time to time with such information as you
may believe appropriate for this purpose, whether concerning the individual
entities whose securities are included in our portfolios, the activities in
which such entities engage, Federal income tax policies applicable to our
investments, or the conditions prevailing in the money market or the
economy generally. You will also furnish us with such statistical and
analytical information with respect to our portfolio securities as you may
believe appropriate or as we may reasonably request. In making such
purchases and sales of our portfolio securities, you will comply with the
policies set from time to time by our Board of Directors as well as the
limitations imposed by our Articles of Incorporation and by the provisions
of the Internal Revenue Code and the 1940 Act relating to regulated
investment companies and the limitations contained in the Registration
Statement.
(d) It is understood that you will from time to time employ, subcontract
with or otherwise associate with yourself, entirely at your expense, such
persons as you believe to be particularly fitted to assist you in the
execution of your duties hereunder.
(e) You or your affiliates will also furnish us, at your own expense, such
investment advisory supervision and assistance as you may believe
appropriate or as we may reasonably request subject to the requirements of
any regulatory authority to which you may be subject. You and your
affiliates will also pay the expenses of promoting the sale of our shares
(other than the costs of preparing, printing and filing our registration
statement, printing copies of the prospectus contained therein and
complying with other applicable regulatory requirements), except to the
extent that we are permitted to bear such expenses under a plan adopted
pursuant to Rule 12b-1 under the 1940 Act or a similar rule.
3. We agree, subject to the limitations described below, to be responsible
for, and hereby assume the obligation for payment of, all our expenses,
including: (a) brokerage and commission expenses, (b) Federal, state or
local taxes, including issue and transfer taxes incurred by or levied on
us, (c) commitment fees and certain insurance premiums, (d) interest
charges on borrowings, (e) charges and expenses of our custodian,
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(f) charges, expenses and payments relating to the issuance, redemption,
transfer and dividend disbursing functions for us, (g) recurring and
nonrecurring legal and accounting expenses, including those of the
bookkeeping agent, (h) telecommunications expenses, (i) the costs of
organizing and maintaining our existence as a corporation, (j)
compensation, including directors' fees, of any of our directors, officers
or employees who are not your officers or officers of your affiliates, and
costs of other personnel providing clerical, accounting supervision and
other office services to us as we may request, (k) costs of stockholder
services including, charges and expenses of persons providing confirmations
of transactions in our shares, periodic statements to stockholders, and
recordkeeping and stockholders' services, (l) costs of stockholders'
reports, proxy solicitations, and corporate meetings, (m) fees and expenses
of registering our shares under the appropriate Federal securities laws and
of qualifying such shares under applicable state securities laws, including
expenses attendant upon the initial registration and qualification of such
shares and attendant upon renewals of, or amendments to, those
registrations and qualifications, (n) expenses of preparing, printing and
delivering our prospectus to existing shareholders and of printing
shareholder application forms for shareholder accounts, (o) payment of the
fees and expenses provided for herein, under the Administrative Services
Agreement and, with respect to the Class A Shares of each Portfolio only,
pursuant to the Shareholder Servicing Agreement and Distribution Agreement,
and (p) any other distribution or promotional expenses contemplated by an
effective plan adopted by us pursuant to Rule 12b-1 under the Act. Our
obligation for the foregoing expenses is limited by your agreement to be
responsible, while this Agreement is in effect, for any amount by which the
annual operating expenses for each Portfolio (excluding taxes, brokerage,
interest and extraordinary expenses) exceed the limits on investment
company expenses prescribed by any state in which the shares for such
Portfolio are qualified for sale.
4. We will expect of you, and you will give us the benefit of, your best
judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our
security holders by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties hereunder, or by reason of
your reckless disregard of your obligations and duties hereunder.
5. In consideration of the foregoing the Portfolios will pay you a fee at the
annual rate of (i) .30% of the Money Market Portfolio's average daily net
assets not in excess of $750 million, plus .29% of such assets in excess of
$750 million
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but not in excess of $1 billion, plus .28% of such assets in excess of $1
billion but not in excess of $1.5 billion, plus .27% of such assets in
excess of $1.5 billion and (ii) .275% of the U.S. Government Portfolio's
average daily net assets not in excess of $250 million, plus .25% of such
assets in excess of $250 million. Your fee will be accrued by us daily, and
will be payable on the last day of each calendar month for services
performed hereunder during that month or on such other schedule as you
shall request of us in writing. You may use any portion of this fee for
distribution of our shares, or for making servicing payments to
organizations whose customers or clients are our shareholders. You may
waive your right to any fee to which you are entitled hereunder, provided
such waiver is delivered to us in writing. Any reimbursement of our
expenses, to which we may become entitled pursuant to paragraph 3 hereof,
will be paid to us at the same time as we pay you.
6. This Agreement will become effective on the date hereof and shall continue
in effect until and thereafter for successive twelve-month periods
(computed from each ____________), provided that such continuation is
specifically approved at least annually by our Board of Directors or by a
majority vote of the holders of the outstanding voting securities of each
respective Portfolio voting separately, as defined in the 1940 Act and the
rules thereunder, and, in either case, by a majority of those of our
directors who are neither party to this Agreement nor, other than by their
service as directors of the corporation, interested persons, as defined in
the 1940 Act, of any such person who is party to this Agreement. Upon the
effectiveness of this Agreement, it shall supersede all previous Agreements
between us covering the subject matter hereof. With respect to each
Portfolio, this Agreement may be terminated at any time, without the
payment of any penalty, (i) by vote of a majority of the outstanding voting
securities of each respective Portfolio voting separately, as defined in
the 1940 Act and the rules thereunder, or (ii) by a vote of a majority of
our entire Board of Directors, on sixty days' written notice to you, or by
you on sixty days' written notice to us.
7. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by you and this agreement shall terminate
automatically in the event of any such transfer, assignment, sale,
hypothecation or pledge by you. The terms "transfer", "assignment" and
"sale" as used in this paragraph shall have the meanings ascribed thereto
by governing law and in applicable rules or regulations of the Securities
and Exchange Commission.
8. Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, or the
right of any of your employees or the officers and directors of Xxxxx &
Tang Asset Management, Inc.,
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your general partner, who may also be a director, officer or employee of
ours, or of a person affiliated with us, as defined in the 1940 Act, to
engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
SHORT TERM INCOME FUND, INC.
Money Market Portfolio
U.S. Government Portfolio
By:
ACCEPTED: _______________, 1996
XXXXX & XXXX ASSET MANAGEMENT L.P.
By: XXXXX & XXXX ASSET MANAGEMENT,
INC., General Partner
By: ___________________________
