INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 31st day of May, 1997 by and between Xxxx
Xxxxxx Dividend Growth Securities Inc., a Maryland corporation (hereinafter
called the "Fund"), and Xxxx Xxxxxx InterCapital Inc., a Delaware
corporation (hereinafter called the "Investment Manager"):
WHEREAS, The Fund is engaged in business as an open-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act"); and
WHEREAS, The Investment Manager is registered as an investment adviser
under the Investment Advisers Act of 1940, and engages in the business of
acting as investment adviser; and
WHEREAS, The Fund desires to retain the Investment Manager to
render management and investment advisory services in the manner and on the
terms and conditions hereinafter set forth; and
WHEREAS, The Investment Manager desires to be retained to perform
services on said terms and conditions:
Now, Therefore, this Agreement
W I T N E S S E T H:
that in consideration of the premises and the mutual covenants hereinafter
contained, the Fund and the Investment Manager agree as follows:
1. The Fund hereby retains the Investment Manager to act as
investment manager of the Fund and, subject to the supervision of the
Directors, to supervise the investment activities of the Fund as
hereinafter set forth. Without limiting the generality of the foregoing,
the Investment Manager shall obtain and evaluate such information and
advice relating to the economy, securities and commodities markets and
securities and commodities as it deems necessary or useful to discharge its
duties hereunder; shall continuously manage the assets of the Fund in a
manner consistent with the investment objectives and policies of the Fund;
shall determine the securities and commodities to be purchased, sold or
otherwise disposed of by the Fund and the timing of such purchases, sales
and dispositions; and shall take such further action, including the placing
of purchase and sale orders on behalf of the Fund, as the Investment Manager
shall deem necessary or appropriate. The Investment Manager shall also
furnish to or place at the disposal of the Fund such of the
information, evaluations, analyses and opinions formulated or obtained by
the Investment Manager in the discharge of its duties as the Fund may,
from time to time, reasonably request.
2. The Investment Manager shall, at its own expense, maintain such
staff and employ or retain such personnel and consult with such other persons
as it shall from time to time determine to be necessary or useful to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Investment
Manager shall be deemed to include persons employed or otherwise retained
by the Investment Manager to furnish statistical and other factual data,
advice regarding economic factors and trends, information with respect to
technical and scientific developments, and such other information, advice and
assistance as the Investment Manager may desire. The Investment Manager
shall, as agent for the Fund, maintain the Fund's records and books of
account (other than those maintained by the Fund's transfer agent,
registrar, custodian and other agencies). All such books and records so
maintained shall be the property of the Fund and, upon request therefor,
the Investment Manager shall surrender to the Fund such of the books and
records so requested.
3. The Fund will, from time to time, furnish or otherwise make available
to the Investment Manager such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as the
Investment Manager may reasonably require in order to discharge its duties
and obligations hereunder.
4. The Investment Manager shall bear the cost of rendering the
investment management and supervisory services to be performed by it
under this Agreement, and shall, at its own expense, pay the compensation
of the officers and employees, if any, of the Fund, and provide such office
space, facilities and equipment
and such clerical help and bookkeeping services as the Fund shall
reasonably require in the conduct of its business. The Investment Manager
shall also bear the cost of telephone service, heat, light, power and
other utilities provided to the Fund.
5. The Fund assumes and shall pay or cause to be paid all other
expenses of the Fund, including without limitation: fees pursuant to any
plan of distribution that the Fund may adopt; the charges and expenses of
any registrar, any custodian or depository appointed by the Fund for the
safekeeping of its cash, portfolio securities or commodities and other
property, and any stock transfer or dividend agent or agents appointed by
the Fund; brokers' commissions chargeable to the Fund in connection with
portfolio transactions to which the Fund is a party; all taxes,
including securities or commodities issuance and transfer taxes, and fees
payable by the Fund to federal, state or other governmental agencies;
the cost and expense of engraving or printing certificates
representing shares of the Fund; all costs and expenses in
connection with the registration and maintenance of registration of the Fund
and its shares with the Securities and Exchange Commission and various
states and other jurisdictions (including filing fees and legal fees and
disbursements of counsel); the cost and expense of printing,
including typesetting, and distributing prospectuses and statements of
additional information of the Fund and supplements thereto to the
Fund's shareholders; all expenses of shareholders' and Directors'
meetings and of preparing, printing and mailing proxy statements and
reports to shareholders; fees and travel expenses of Directors or members
of any advisory board or committee who are not employees of the Investment
Manager or any corporate affiliate of the Investment Manager; all expenses
incident to the payment of any dividend, distribution, withdrawal or
redemption, whether in shares or in cash; charges and expenses of any
outside service used for pricing of the Fund's shares; charges and
expenses of legal counsel, including counsel to the Directors of the Fund
who are not interested persons (as defined in the Act) of the Fund or the
Investment Manager, and of independent accountants, in connection with any
matter relating to the Fund; membership dues of industry associations;
interest payable on Fund borrowings; postage; insurance premiums on
property or personnel (including officers and Directors) of the Fund
which inure to its benefit; extraordinary expenses (including but not
limited to legal claims and liabilities and litigation costs and any
indemnification related thereto); and all other charges and costs of the
Fund's operation unless otherwise explicitly provided herein.
6. For the services to be rendered, the facilities furnished, and
the expenses assumed by the Investment Manager, the Fund shall pay to
the Investment Manager monthly compensation determined by applying the
following annual rates to the Fund's daily net assets: 0.625% of daily net
assets up to $250 million; 0.50% of the next $750 million; 0.475% of the
next $1 billion; 0.45% of the next $1 billion; 0.425% of the next $1
billion; 0.40% of the next $1 billion; 0.375% of the next $1 billion; 0.35%
of the next $2 billion; 0.325% of the next $2 billion; 0.30% of the next
$5 billion; and 0.275% of daily net assets over $15 billion. Except as
hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily and the amounts of the daily accruals shall
be paid monthly. Such calculations shall be made by applying 1/365ths
of the annual rates to the Fund's net assets each day determined as of
the close of business on that day or the last previous business day. If this
Agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that part of the
month this Agreement is in effect shall be prorated in a manner consistent
with the calculation of the fees as set forth above.
Subject to the provisions of paragraph 7 hereof, payment of the
Investment Manager's compensation for the preceding month shall be made
as promptly as possible after completion of the computations contemplated
by paragraph 7 hereof.
7. In the event the operating expenses of the Fund, including
amounts payable to the Investment Manager pursuant to paragraph 6 hereof, for
any fiscal year ending on a date on which this Agreement is in effect,
exceed the expense limitations applicable to the Fund imposed by state
securities laws or regulations thereunder, as such limitations may be raised
or lowered from time to time, the Investment Manager shall reduce its
management fee to the extent of such excess and, if required, pursuant to
any such laws or regulations, will reimburse the Fund for annual
operating expenses in excess of any expense limitation that may be
applicable; provided, however, there shall be excluded from such expenses
the amount of any interest, taxes, brokerage commissions, distribution
fees and extraordinary expenses (including but not
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limited to legal claims and liabilities and litigation costs and
any indemnification related thereto) paid or payable by the Fund. Such
reduction, if any, shall be computed and accrued daily, shall be settled on
a monthly basis, and shall be based upon the expense limitation applicable to
the Fund as at the end of the last business day of the month. Should
two or more such expense limitations be applicable as at the end of the
last business day of the month, that expense limitation which results in the
largest reduction in the Investment Manager's fee shall be applicable.
For purposes of this provision, should any applicable expense limitation
be based upon the gross income of the Fund, such gross income shall
include, but not be limited to, interest on debt securities in the Fund's
portfolio accrued to and including the last day of the Fund's fiscal year,
and dividends declared on equity securities in the Fund's portfolio, the
record dates for which fall on or prior to the last day of such fiscal
year, but shall not include gains from the sale of securities.
8. The Investment Manager will use its best efforts in the supervision
and management of the investment activities of the Fund, but in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations hereunder, the Investment Manager shall not be
liable to the Fund or any of its investors for any error of judgment or
mistake of law or for any act or omission by the Investment Manager or for
any losses sustained by the Fund or its investors.
9. Nothing contained in this Agreement shall prevent the Investment
Manager or any affiliated person of the Investment Manager from acting
as investment adviser or manager for any other person, firm or
corporation and shall not in any way bind or restrict the Investment
Manager or any such affiliated person from buying, selling or trading any
securities or commodities for their own accounts or for the account of others
for whom they may be acting. Nothing in this Agreement shall limit or
restrict the right of any Director, officer or employee of the Investment
Manager to engage in any other business or to devote his or her time and
attention in part to the management or other aspects of any other business
whether of a similar or dissimilar nature.
10. This Agreement shall remain in effect until April 30, 1999 and from
year to year thereafter provided such continuance is approved at
least annually by the vote of holders of a majority, as defined in the
Investment Company Act (the "Act"), of the outstanding voting securities of
the Fund or by the Directors of the Fund; provided that in either event
such continuance is also approved annually by the vote of a majority of
the Directors of the Fund who are not parties to this Agreement or
"interested persons" (as defined in the Act) of any such party, which vote
must be cast in person at a meeting called for the purpose of voting on
such approval; provided, however, that (a) the Fund may, at any time and
without the payment of any penalty, terminate this Agreement upon thirty
days' written notice to the Investment Manager, either by majority vote of
the Directors of the Fund or by the vote of a majority of the outstanding
voting securities of the Fund; (b) this Agreement shall immediately
terminate in the event of its assignment (to the extent required by the Act
and the rules thereunder) unless such automatic terminations shall be
prevented by an exemptive order of the Securities and Exchange
Commission; and (c) the Investment Manager may terminate this Agreement
without payment of penalty on thirty days' written notice to the Fund.
Any notice under this Agreement shall be given in writing, addressed and
delivered, or mailed post-paid, to the other party at the principal office
of such party.
11. This Agreement may be amended by the parties without the vote or
consent of the shareholders of the Fund to supply any omission, to cure,
correct or supplement any ambiguous, defective or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal laws or regulations, but neither the
Fund nor the Investment Manager shall be liable for failing to do so.
12. This Agreement shall be construed in accordance with the laws
of the State of New York and the applicable provisions of the Act. To the
extent the applicable law of the State of New York, or any of the
provisions herein, conflicts with the applicable provisions of the Act, the
latter shall control.
13. The Investment Manager and the Fund each agree that the name
"Xxxx Xxxxxx," which comprises a component of the Fund's name, is a
property right of Xxxx Xxxxxx Xxxxxxxx Inc. The Fund agrees and
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consents that (i) it will only use the name "Xxxx Xxxxxx" as a component of
its name and for no other purpose, (ii) it will not purport to grant to any
third party the right to use the name "Xxxx Xxxxxx" for any purpose,
(iii) the Investment Manager or its parent, Xxxxxx Xxxxxxx, Xxxx Xxxxxx,
Discover & Co., or any corporate affiliate of the Investment Manager's
parent, may use or grant to others the right to use the name "Xxxx
Xxxxxx," or any combination or abbreviation thereof, as all or a portion
of a corporate or business name or for any commercial purpose, including a
grant of such right to any other investment company, (iv) at the request of
the Investment Manager or its parent, the Fund will take such action as
may be required to provide its consent to the use of the name "Xxxx
Xxxxxx," or any combination or abbreviation thereof, by the Investment
Manager or its parent or any corporate affiliate of the Investment
Manager's parent, or by any person to whom the Investment Manager or its
parent or any corporate affiliate of the Investment Manager's parent shall
have granted the right to such use, and (v) upon the termination of any
investment advisory agreement into which the Investment Manager and the
Fund may enter, or upon termination of affiliation of the Investment
Manager with its parent, the Fund shall, upon request by the Investment
Manager or its parent, cease to use the name "Xxxx Xxxxxx" as a component
of its name, and shall not use the name, or any combination or abbreviation
thereof, as a part of its name or for any other commercial purpose, and
shall cause its officers, Directors and shareholders to take any and all
actions which the Investment Manager or its parent may request to effect
the foregoing and to reconvey to the Investment Manager or its parent any and
all rights to such name.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in New York, New York.
XXXX XXXXXX DIVIDEND GROWTH
SECURITIES INC.
By:
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Attest:
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XXXX XXXXXX INTERCAPITAL INC.
By:
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Attest:
/s/ Xxxxxxx X. Xxxxxxx
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