FORM OF
XXXXX XXXXX SENIOR INCOME TRUST
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this day of October, 1998, between Xxxxx Xxxxx Senior
Income Trust, a Massachusetts business trust (the "Trust"), and Xxxxx Xxxxx
Management, a Massachusetts business trust (the "Adviser").
1. DUTIES OF THE ADVISER. The Trust hereby employs the Adviser to act as
investment adviser for and to manage the investment and reinvestment of the
assets of the Trust and to administer its affairs, subject to the supervision of
the Trustees of the Trust, for the period and on the terms set forth in this
Agreement.
The Adviser hereby accepts such employment, and undertakes to afford to
the Trust the advice and assistance of the Adviser's organization in the choice
of investments and in the purchase and sale of interests in Senior Loans (as
defined in the Trust's registration statement) and other permitted investments
for the Trust and to furnish for the use of the Trust office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Trust and to pay the salaries and fees of all officers and
Trustees of the Trust who are members of the Adviser's organization and all
personnel of the Adviser performing services relating to research and investment
activities. The Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, except as otherwise expressly provided or
authorized, have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
The Adviser shall provide the Trust with such investment management and
supervision as the Trust may from time to time consider necessary for the proper
supervision of the Trust. As investment adviser to the Trust, the Adviser shall
furnish continuously an investment program and shall determine from time to time
what interests in Senior Loans and other securities shall be acquired, disposed
of or exchanged and what portion of the Trust's assets shall be held uninvested,
subject always to the applicable restrictions of the Declaration of Trust,
By-Laws and registration statement of the Trust. The Adviser is authorized, in
its discretion and without prior consultation with the Trust, to buy, sell, lend
and otherwise trade in any Senior Loans, stocks, bonds, debt instruments,
options and other securities and investment instruments on behalf of the Trust,
to purchase, write or sell derivative instruments on behalf of the Trust, and to
execute any and all agreements and instruments and to do any and all things
incidental thereto in connection with the investment management of the Trust.
Should the Trustees of the Trust at any time, however, make any specific
determination as to investment policy for the Trust and notify the Adviser
thereof in writing, the Adviser shall be bound by such determination for the
period, if any, specified in such notice or until similarly notified that such
determination has been revoked. The Adviser shall take, on behalf of the Trust,
all actions which it deems necessary or desirable to implement the investment
policies of the Trust.
The Adviser shall place all orders for the purchase or sale of portfolio
securities for the account of the Trust either directly with the issuer or with
brokers or dealers or banks selected by the Adviser, or directly with a
co-lender or other participant in Senior Loans (as defined in the Trust's
registration statement), and to that end the Adviser is authorized as the agent
of the Trust to give instructions to the custodian of the Trust as to deliveries
of securities and payments of cash for the account of the Trust. In connection
with the selection of such brokers or dealers or banks and the placing of such
orders, the Adviser shall use its best efforts to seek to execute portfolio
security transactions at prices which are advantageous to the Trust and (when a
disclosed commission is being charged) at reasonably competitive commission
rates. In selecting brokers or dealers qualified to execute a particular
transaction, 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 Adviser and the Adviser is expressly authorized to
cause the Trust to pay any broker or dealer who provides such brokerage and
research services a commission for executing a security transaction which is in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction if the Adviser 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, viewed in terms of either
that particular transaction or the overall responsibilities which the Adviser
and its affiliates have with respect to accounts over which they exercise
investment discretion. Subject to the requirement set forth in the second
sentence of this paragraph, the Adviser is authorized to consider, as a factor
in the selection of any broker or dealer with whom purchase or sale orders may
be placed, the fact that such broker or dealer has sold or is selling shares of
any one or more investment companies sponsored by the Adviser or its affiliates.
The Adviser shall not be responsible for providing certain special
administrative services to the Trust under this Agreement. Xxxxx Xxxxx
Management, in its capacity as Administrator of the Trust, shall be responsible
for providing such services to the Trust under the Trust's separate
Administration Agreement.
2. COMPENSATION OF THE ADVISER. For the services, payments and facilities
to be furnished hereunder by the Adviser, the Adviser shall be entitled to
receive from the Trust compensation in an amount equal to 17/240 of 1%
(equivalent to .85% annually) of average daily gross assets of the Trust
throughout each month. (Gross assets shall be calculated by deducting all
liabilities of the Trust except the principal amount of any indebtedness for
money borrowed, including debt securities issued by the Trust.)
Such daily compensation shall be paid monthly in arrears on the last
business day of each month. The Trust's daily net assets shall be computed in
accordance with the Declaration of Trust of the Trust and any applicable votes
and determinations of the Trustees of the Trust.
In case of initiation or termination of the Agreement during any month,
the fee for that month shall be reduced proportionately on the basis of the
number of calendar days during which the Agreement is in effect and the fee
shall be computed upon the basis of the average gross assets for the business
days the Agreement is so in effect for that month.
The Adviser may, from time to time, waive all or a part of the above
compensation.
3. ALLOCATION OF CHARGES AND EXPENSES. It is understood that the Trust
will pay all expenses other than those expressly stated to be payable by the
Adviser hereunder, which expenses payable by the Trust shall include, without
implied limitation, (i) expenses of maintaining the Trust and continuing its
existence, (ii) registration of the Trust under the Investment Company Act of
1940, (iii) commissions, spreads, fees and other expenses connected with the
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acquisition, holding and disposition of securities and other investments, (iv)
auditing, accounting and legal expenses, (v) taxes and interest, (vi)
governmental fees, (vii) expenses of listing shares of the Trust with a stock
exchange, and expenses of issue, sale, repurchase and redemption (if any) of
interests in the Trust, including expenses of conducting tender offers for the
purpose of repurchasing Trust interests, (viii) expenses of registering and
qualifying the Trust and its shares under federal and state securities laws and
of preparing and filing registration statements and amendments for such purposes
(ix) expenses of reports and notices to shareholders and of meetings of
shareholders and proxy solicitations therefor, (x) expenses of reports to
governmental officers and commissions, (xi) insurance expenses, (xii)
association membership dues, (xiii) fees, expenses and disbursements of
custodians and subcustodians for all services to the Trust (including without
limitation safekeeping of funds, securities and other investments, keeping of
books, accounts and records, and determination of net asset values), (xiv) fees,
expenses and disbursements of transfer agents, dividend disbursing agents,
shareholder servicing agents and registrars for all services to the Trust, (xv)
expenses for servicing shareholder accounts, (xvi) any direct charges to
shareholders approved by the Trustees of the Trust, (xvii) compensation and
expenses of Trustees of the Trust who are not members of the Adviser's
organization, (xviii) pricing and valuation services employed by the Trust, and
(xix) such non-recurring items as may arise, including expenses incurred in
connection with litigation, proceedings and claims and the obligation of the
Trust to indemnify its Trustees, officers and shareholders with respect thereto.
4. OTHER INTERESTS. It is understood that Trustees and officers of the
Trust and shareholders of the Trust are or may be or become interested in the
Adviser as trustees, officers, employees, shareholders or otherwise and that
trustees, officers and shareholders of the Adviser are or may be or become
similarly interested in the Trust, and that the Adviser may be or become
interested in the Trust as Holder or otherwise. It is also understood that
trustees, officers, employees and shareholders of the Adviser may be or become
interested (as directors, trustees, officers, employees, shareholders or
otherwise) in other companies or entities (including, without limitation, other
investment companies) which the Adviser may organize, sponsor or acquire, or
with which it may merge or consolidate, and which may include the words "Xxxxx
Xxxxx" or any combination thereof as part of their name, and that the Adviser or
its subsidiaries or affiliates may enter into advisory or management agreements
or other contracts or relationships with such other companies or entities.
5. LIMITATION OF LIABILITY OF THE ADVISER. The services of the Adviser to
the Trust are not to be deemed to be exclusive, the Adviser being free to render
services to others and engage in other business activities. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Adviser, the Adviser shall
not be subject to liability to the Trust or to any shareholder the Trust for any
act or omission in the course of, or connected with, rendering services
hereunder or for any losses which may be sustained in the acquisition, holding
or disposition of any interest in a Loan or of any security, investment or other
asset.
6. SUB-INVESTMENT ADVISERS. The Adviser may employ one or more
sub-investment advisers from time to time to perform such of the acts and
services of the Adviser, including the selection of brokers or dealers to
execute the Trust's portfolio security transactions, and upon such terms and
conditions as may be agreed upon between the Adviser and such sub-investment
adviser and approved by the Trustees of the Trust, all as permitted by the
Investment Company Act of 1940.
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7. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall become
effective upon the date of its execution, and, unless terminated as herein
provided, shall remain in full force and effect through and including February
28, 2000 and shall continue in full force and effect indefinitely thereafter,
but only so long as such continuance after February 28, 2000 is specifically
approved at least annually (i) by the Board of Trustees of the Trust or by vote
of a majority of the outstanding voting securities of the Trust and (ii) by the
vote of a majority of those Trustees of the Trust who are not interested persons
of the Adviser or the Trust cast in person at a meeting called for the purpose
of voting on such approval.
Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Agreement without the payment of any
penalty, by action of Trustees of the Trust or the trustees of the Adviser, as
the case may be, and the Trust may, at any time upon such written notice to the
Adviser, terminate this Agreement by vote of a majority of the outstanding
voting securities of the Trust. This Agreement shall terminate automatically in
the event of its assignment.
8. AMENDMENTS OF THE AGREEMENT. This Agreement may be amended by a writing
signed by both parties hereto, provided that no amendment to this Agreement
shall be effective until approved (i) by the vote of a majority of those
Trustees of the Trust who are not interested persons of the Adviser or the Trust
cast in person at a meeting called for the purpose of voting on such approval,
and (ii) by vote of a majority of the outstanding voting securities of the
Trust.
9. LIMITATION OF LIABILITY. The Adviser expressly acknowledges the
provision in the Declaration of Trust of the Trust limiting the personal
liability of the Trustees, officers and shareholders of the Trust, and the
Adviser hereby agrees that it shall have recourse to the Trust for payment of
claims or obligations as between the Trust and the Adviser arising out of this
Agreement and shall not seek satisfaction from any Trustee, officer or
shareholders of the Trust.
10. USE OF THE NAME "XXXXX XXXXX". The Adviser hereby consents to the use
by the Trust of the name "Xxxxx Xxxxx" as part of the Trust's name; provided,
however, that such consent shall be conditioned upon the employment of the
Adviser or one of its affiliates as the investment adviser of the Trust. The
name "Xxxxx Xxxxx" or any variation thereof may be used from time to time in
other connections and for other purposes by the Adviser and its affiliates and
other investment companies that have obtained consent to the use of the name
"Xxxxx Xxxxx". The Adviser shall have the right to require the Trust to cease
using the name "Xxxxx Xxxxx" as part of the Trust's name if the Trust ceases,
for any reason, to employ the Adviser or one of its affiliates as the Trust's
investment adviser. Future names adopted by the Trust for itself, insofar as
such names include identifying words requiring the consent of the Adviser, shall
be the property of the Adviser and shall be subject to the same terms and
conditions.
11. CERTAIN DEFINITIONS. The terms "assignment" and "interested persons"
when used herein shall have the respective meanings specified in the Investment
Company Act of 1940 as now in effect or as hereafter amended subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
by any rule, regulation or order. The term "vote of a majority of the
outstanding voting securities" shall mean the vote, at a meeting of
shareholders, of the lesser of (a) 67 per centum or more of the shares of the
Trust present or represented by proxy at the meeting if the Holders of more than
50 per centum of the shares of the Trust are present or represented by proxy at
the meeting, or (b) more than 50 per centum of the shares of the Trust.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
XXXXX XXXXX SENIOR INCOME TRUST
By: ____________________________________
President, and not Individually
XXXXX XXXXX MANAGEMENT
By:_________________________________________
Vice President, and not Individually
