INVESTMENT MANAGEMENT CONTRACT
XXXXX & XXXX EQUITY FUND, INC.
the "Fund"
New York, New York
___________, 1998
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 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.
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 the Fund itself might or 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 portfolio since your prior report, and will also keep us in touch
with important developments affecting our portfolio 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 portfolio, 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. In addition to the foregoing, we hereby employ you, pursuant to the
Distribution Plan dated December 19, 1984, as amended, adopted by us in
accordance with Rule 12b-1 under the Act, as the same may be amended from time
to time, to provide the services listed below.
(a) You will perform, or arrange for others to perform, including
organizations whose customers or clients are stockholders of our corporation
("Intermediaries"), all stockholder servicing and related administrative
functions which we do not perform or arrange for others to perform and which are
not required to be performed by our transfer agent. You may make payments from
time to time from your own resources, which may include the fee received under
this agreement, the Administrative Services Agreement advisory or other fees
received from other investment companies, and past profits, for the following
purposes:
(i) to defray the costs of, and to compensate others, including
Intermediaries, for performing stockholder servicing and related administrative
functions on our behalf;
(ii) for so long as you remain our Manager and Xxxxx & Xxxx Distributors
L.P. remains a distributor of our shares pursuant to a distribution agreement,
to compensate Intermediaries for providing assistance in distributing our
shares; and
(iii) for so long as you remain our Manager and Xxxxx & Xxxx Distributors
L.P. remains a distributor of our shares pursuant to a distribution agreement,
to defray the cost of the preparation and printing of brochures and other
promotional materials, mailings to prospective stockholders, advertising, and
other promotional activities, including the salaries of sales personnel, in
connection with the distribution of our shares.
You will in your sole discretion determine the amount of any payments made by
you pursuant to this agreement, and you may from time to time in your sole
discretion increase or decrease the amount of those payments; provided, however,
that no such payment will increase the amount which we are required to pay to
you for any fiscal year under either this agreement or the Administrative
Services Agreement in effect for that year or an investment management contract
between you and us in effect for that year, or otherwise.
4. 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, (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 stockholders' 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 stockholders and of printing stockholder application
forms for stockholder accounts, (o) payment of the fees and expenses provided
for herein, under the Administrative Services 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 our
annual operating expenses (excluding taxes, brokerage, interest and
extraordinary expenses) exceed the limits on investment company expenses
prescribed by any state in which our shares are qualified for sale.
5. 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.
6. In consideration of the foregoing we will pay you a fee at the annual
rate of .80 of 1% of the Fund's average daily net assets. 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 4 hereof, will be paid to us at the same time as we pay
you.
7. 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 our outstanding voting
securities, 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 and the rules thereunder, 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. This Agreement may be terminated at any time, without the
payment of any penalty, by vote of a majority of our outstanding voting
securities, as defined in the 1940 Act and the rules thereunder, or 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.
8. 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.
9. 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 & Xxxx Asset
Management, Inc., 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,
XXXXX & XXXX EQUITY FUND, INC.
By: _____________________________
ACCEPTED: ___________, 1998
XXXXX & XXXX ASSET MANAGEMENT L.P.
By: XXXXX & XXXX ASSET MANAGEMENT, INC., General Partner
By: __________________________________
