MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT ("Agreement") is made this 28th day of
December, 1998, by and between Xxxx Xxxxx Light Street Trust, Inc., a Maryland
corporation (the "Corporation"), on behalf of Xxxx Xxxxx Market Neutral Trust (
"Fund"), and Xxxx Xxxxx Fund Adviser, Inc., a Maryland corporation (the
"Manager").
WHEREAS, the Corporation is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), currently consisting of one portfolio; and
WHEREAS, the Corporation wishes to retain the Manager to provide
investment advisory, management, and administrative services to 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 Corporation hereby appoints the Manager as manager 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 Corporation's Board of
Directors, 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 consistent with the
Fund's investment goals and policies. The Manager shall determine from time to
time what securities will be purchased, retained or sold by the Fund, and shall
implement those decisions, all subject to the provisions of the Corporation's
Articles of Incorporation and By-Laws, the 1940 Act, the applicable rules and
regulations of the Securities and Exchange Commission, and other applicable
federal and state law, as well as the investment goals and policies of the Fund.
The Manager will place orders pursuant to its investment determinations for the
Fund either directly with the issuer or with any broker or dealer. In placing
orders with brokers and dealers the Manager will attempt to obtain the best net
price and the most favorable execution of its orders; however, the Manager may,
in its discretion, purchase and sell portfolio securities from and to brokers
and dealers who provide the Fund with research, analysis, advice and similar
services, and the Manager may pay to these brokers, in return for research and
analysis, a higher commission or spread than may be charged by other brokers.
The Manager shall also provide advice and recommendations with respect to other
aspects of the business and affairs of the Fund, and shall perform such other
functions of management and supervision as may be directed by the Board of
Directors of the Corporation
(b) The Fund hereby authorizes any entity or person associated with the
Manager which is a member of a national securities exchange to effect or execute
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 or Rule 11a2-2(T) thereunder, and the Fund hereby consents
to the retention by such person associated with the Manager of compensation for
such transactions, including compensation in accordance with Rule
11a2-2(T)(a)(2)(iv).
4. The Manager may enter into a contract ("Investment Advisory
Agreement") with an investment adviser in which the Manager delegates to such
investment adviser any or all of its duties specified in Paragraph 3 above,
provided that such Investment Advisory Agreement imposes on the investment
adviser bound thereby all duties and conditions to which the Manager is subject
hereunder, and further provided that such Investment Advisory Agreement meets
all requirements of the 1940 Act and rules thereunder.
5. (a) The Manager, at its expense, shall supply the Board of Directors
and officers of the Corporation with all statistical 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 maintain or 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 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. 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 directors or officers of the Fund, to serve in
the capacities in which they are elected.
(b) Other than as herein specifically indicated, the Manager shall not
be responsible for the Fund's expenses. Specifically, the Manager will not be
responsible, except to the extent of the reasonable compensation of employees of
the Fund whose services may be used by the Manager hereunder, for any of the
following expenses of the Fund, which expenses shall be borne by the Fund:
organizational expenses of the Fund; advisory fees; distribution fees; interest;
taxes; governmental fees; fees, voluntary assessments and other expenses
incurred in connection with membership in investment company organizations; the
cost (including brokerage commissions or charges, if any) of securities
purchased or sold by the Fund and any losses in connection therewith; fees of
custodians, transfer agents, registrars or other agents; legal expenses;
expenses relating to the redemption or repurchase of the Fund's shares; 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, reports, notices and dividends to the Fund's
shareholders; costs of stationery; costs of stockholders and other meetings of
the Fund; directors' fees; audit fees; travel expenses of officers, directors
and employees of the Corporation, if any; and the Corporation's pro rata portion
of premiums on any fidelity bond and other insurance covering the Corporation
and its officers and directors. For the period ending July 31, 1999, the Manager
shall pay any of the Fund's expenses, including organizational expenses but
excluding interest, taxes, brokerage commissions and extraordinary expenses of
the Fund which exceed, in the aggregate, an annual rate of 3.00% of the Fund's
average daily net assets attributable to the Primary Class of shares and an
annual rate of 2.00% of the Fund's average daily net assets attributable to the
Navigator Class of shares ("Expense Limit"); provided, however, that in order to
determine the Manager's liability for the Fund's expenses over the Expense
Limit, the amount of allowable year-to-date expenses shall be computed daily by
pro-rating the Expense Limit based on the number of days elapsed within the
fiscal year of the Fund ("Pro Rated Limitation"). The Pro Rated Limitation shall
be compared to the expenses of the Fund recorded through the prior day in order
to produce the allowable expenses to be recorded for the current day ("Allowable
Expenses"). If the Fund's management fee and other expenses for the current day
exceed the Allowable Expenses, the management fee for the current day shall be
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reduced by such excess ("Unaccrued Fees"). In the event the excess exceeds the
amount due as the management fee, the Manager shall be responsible to the Fund
for the additional excess ("Other Expenses Exceeding Limit"). If at any time up
through and including July 31, 1999, the Fund's management fee and other
expenses for the current day are less than the Allowable Expenses, the
differential shall be due to the Manager as payment of cumulative Unaccrued Fees
(if any) or as payment for cumulative Other Expenses Exceeding Limit (if any).
If cumulative Unaccrued Fees or cumulative Other Expenses Exceeding Limit remain
at July 31, 1999, these amounts shall be paid to the Manager in the future
provided that: (1) such payment shall be made to the Manager neither later than
the end of the third fiscal year after the Unaccrued Fees or Other Expenses
Exceeding Limit was incurred nor, in any event, after July 31, 2002; and (2)
such payment shall only be made to the extent that it does not result in the
Fund's aggregate expenses exceeding an expense limit of 3.00% of its average
daily net assets attributable to the Primary Class of shares or an expense limit
of 2.00% of its average daily net assets attributable to the Navigator Class of
shares.
(c) The Manager may voluntarily agree to an additional expense
limitation (any such additional expense limitation hereinafter referred to as an
"Additional Expense Limitation"), at the same or a different level and for the
same or a different period of time beyond July 31, 1999 (any such additional
period being hereinafter referred to as an "Additional Period") provided,
however, that: (1) the calculations and methods of payment shall be as described
above; (2) no payment for cumulative Unaccrued Fees or cumulative Other Expenses
Exceeding Limit shall be made to the Manager more than three years after the end
of an Additional Period; and (3) payment for cumulative Unaccrued Fees or
cumulative Other Expenses Exceeding Limit after the expiration of the Additional
Period shall only be made to the extent it does not result in the Fund's
aggregate expenses exceeding the Additional Expense Limitation to which the
unpaid amounts relate.
6. No director, officer or employee of the Corporation or Fund shall
receive from the Corporation any salary or other compensation as such director,
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. This paragraph
shall not apply to directors, 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 of 1.90% of the average daily net assets of the Fund. 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. 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 of Directors of the Corporation. Each such payment shall
be accompanied by a report prepared either by the Fund or by a reputable firm of
independent accountants which shall show the amount properly payable to the
Manager under this Agreement and the detailed computation thereof.
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
responsible for any action of the Board of Directors of the Corporation in
following or declining to follow any advice or recommendations of the Manager;
provided, that nothing in this Agreement shall protect the Manager against any
liability to the Fund or its shareholders to which it would otherwise be subject
by reason of willful misfeasance, bad faith,
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or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties hereunder.
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 director,
officer, or employee of the Corporation 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 corporation, firm, individual or association.
10. As used in this Agreement, the term "net assets" shall have the
meaning ascribed to it in the Articles of Incorporation of the Corporation 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 Securities and
Exchange Commission by any rule, regulation or order.
11. This Agreement will become effective with respect to the Fund on the
date first written above, provided that it shall have been approved by the
Corporation's Board of Directors 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 for successive annual periods ending on the same date
of each year, provided that such continuance is specifically approved at least
annually (i) by the Corporation's Board of Directors or (ii) by a vote of a
majority of the outstanding voting securities of the Fund (as defined in the
1940 Act), provided that in either event the continuance is also approved by a
majority of the Corporation's Directors who are not interested persons (as
defined in the 0000 Xxx) 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 Corporation's Board of Directors, by vote of a majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act), or by
the Manager, on not less than sixty (60) days' notice to the other party and
will be terminated upon the mutual written consent of the Manager and the
Corporation. This Agreement shall terminate automatically in the event of its
assignment by the Manager and shall not be assignable by the Corporation without
the consent of the Manager.
13. In the event this Agreement is terminated by either party or upon
written notice from the Manager at any time, the Corporation hereby agrees that
it will eliminate from its corporate name any reference to the name of "Xxxx
Xxxxx." The Corporation shall have the non-exclusive use of the name "Xxxx
Xxxxx" in whole or in part so long as this Agreement is effective or until such
notice is given.
14. The Manager agrees that for services rendered to the Fund, or
indemnity due in connection with service 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 Fund.
15. Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
16. 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,
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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
Fund's outstanding voting securities.
17. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
Attest: XXXX XXXXX LIGHT STREET TRUST, INC.
By: /s/ Xxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxxxxx
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Attest: XXXX XXXXX FUND ADVISER, INC.
By: /s/ Xxxxx X. Xxxx By: /s/ Xxxxxxxx X. Xxxxxx
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