XXXX XXXXXXX TAX-ADVANTAGED DIVIDEND INCOME FUND
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
February 27, 2004
Xxxx Xxxxxxx Advisers, LLC
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Investment Management Contract
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Ladies and Gentlemen:
Xxxx Xxxxxxx Tax-Advantaged Dividend Income Fund (the "Fund") has been
organized as a business trust under the laws of The Commonwealth of
Massachusetts to engage in the business of an investment company.
The Board of Trustees of the Fund (the "Trustees") has selected Xxxx
Xxxxxxx Advisers, LLC (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and the Adviser is willing to provide such advice, management
and services under the terms and conditions hereinafter set forth.
Accordingly, the Adviser and the Fund agree as follows:
1. DELIVERY OF DOCUMENTS. The Fund has furnished the Adviser with copies,
properly certified or otherwise authenticated, of each of the following:
(a) Agreement and Declaration of Trust, dated August 7, 2003, as
amended from time to time (the "Declaration of Trust");
(b) By-Laws of the Fund as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Adviser as investment
adviser for the Fund and approving the form of this Agreement;
(d) The Fund's Code of Ethics.
The Fund will furnish to the Adviser from time to time copies, properly
certified or otherwise authenticated, of all amendments of or supplements to the
foregoing, if any.
2. INVESTMENT AND MANAGEMENT SERVICES. The Adviser will use its best
efforts to provide to the Fund continuing and suitable investment programs with
respect to investments, consistent with the investment objective, policies and
restrictions of the Fund. In the performance of the Adviser's duties hereunder,
subject always (x) to the provisions contained in the documents delivered to the
Adviser pursuant to Section 1, as each of the same may from time to time be
amended or supplemented, and (y) to the limitations set forth in the Fund's
then-current Prospectus and Statement of Additional Information included in the
registration statement of the Fund as in effect from time to time under the
Securities Act of 1933, as amended (the "1933 Act"), and the Investment Company
Act of 1940, as amended (the "1940 Act"), the Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent
with the investment objective, policies and restrictions of the
Fund, with respect to the purchase, holding and disposition of
portfolio securities, alone or in consultation with any
subadviser or subadvisers appointed pursuant to this Agreement
and subject to the provisions of any sub-investment management
contract respecting the responsibilities of such subadviser or
subadvisers;
(b) advise the Fund in connection with policy decisions to be made
by the Trustees or any committee thereof with respect to the
Fund's investments and, as requested, furnish the Fund with
research, economic and statistical data in connection with the
Fund's investments and investment policies;
(c) submit such reports relating to the valuation of the Fund's
securities as the Trustees may reasonably request;
(d) assist the Fund in any negotiations relating to the Fund's
investments with issuers, investment banking firms, securities
brokers or dealers and other institutions or investors;
(e) consistent with the provisions of Section 7 of this Agreement,
place orders for the purchase, sale or exchange of portfolio
securities with brokers or dealers selected by the Adviser,
PROVIDED that in connection with the placing of such orders and
the selection of such brokers or dealers, the Adviser shall seek
to obtain execution and pricing within the policy guidelines
determined by the Trustees;
(f) from time to time or at any time requested by the Trustees, make
reports to the Fund of the Adviser's performance of the
foregoing services and furnish advice and recommendations with
respect to other aspects of the business and affairs of the
Fund;
(g) obtain and evaluate such information relating to economies,
industries, businesses, securities markets and securities as the
Adviser may deem necessary or useful in the discharge of the
Adviser's duties hereunder;
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(h) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment of
cash for the account of the Fund; and
(i) appoint and employ one or more sub-advisers satisfactory to the
Fund under sub-investment management agreements.
Subject to the general supervision of the Board of Trustees of the Fund, the
Adviser will provide certain administrative services to the Fund. The Adviser
will, to the extent such services are not required to be performed by others
pursuant to this Agreement, the custodian agreement or the transfer agency
agreement, (i) provide supervision of all aspects of the Fund's operations; (ii)
provide the Fund with personnel to perform such executive, administrative and
clerical services as are reasonably necessary to provide effective
administration of the Fund; (iii) arrange for, at the Fund's expense, (a) the
preparation for the Fund of all required tax returns, (b) the preparation and
submission of reports to existing shareholders and (c) the preparation of
reports filed with the Securities and Exchange Commission and other regulatory
authorities; (iv) maintain all of the Fund's records; and (v) provide the Fund
with adequate office space and all necessary office equipment and services
including telephone service, heat, utilities, stationery supplies and similar
items. The Adviser will also provide to the Fund's Board of Trustees such
periodic and special reports as the Board may reasonably request.
3. EXPENSES PAID BY THE ADVISER. The Adviser will pay:
(a) the compensation and expenses of all officers and employees of the
Fund; and
(b) any other expenses incurred by the Adviser in connection with the
performance of its duties hereunder.
4. EXPENSES OF THE FUND NOT PAID BY THE ADVISER. The Adviser will not
be required to pay any expenses which this Agreement does not expressly make
payable by it. In particular, and without limiting the generality of the
foregoing but subject to the provisions of Section 3, the Adviser will not be
required to pay under this Agreement:
(a) any and all expenses, taxes and governmental fees incurred by
the Fund prior to the effective date of this Agreement;
(b) without limiting the generality of the foregoing clause (a), the
expenses of organizing the Fund (including without limitation,
legal, accounting and auditing fees and expenses incurred in
connection with the matters referred to in this clause (b)), of
initially registering shares of the Fund under the 1933 Act, and
of qualifying the shares for sale under state securities laws
for the initial offering and sale of shares;
(c) the compensation and expenses of Trustees who are not interested
persons (as used in this Agreement, such term shall have the
meaning specified in the 1940 Act) of the Adviser and of
independent advisers, independent contractors, consultants,
managers or other unaffiliated agents employed by the Fund other
than through the Adviser;
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(d) legal, accounting, financial management, tax and auditing fees
and expenses of the Fund (including an allocable portion of the
cost of its employees rendering such services to the Fund);
(e) the fees and disbursements of custodians and depositories of the
Fund's assets, transfer agents, disbursing agents, plan agents
and registrars;
(f) taxes and governmental fees assessed against the Fund's assets
and payable by the Fund;
(g) the cost of preparing and mailing dividends, distributions,
reports, notices and proxy materials to shareholders of the
Fund;
(h) brokers' commissions and underwriting fees;
(i) the expense of periodic calculations of the net asset value of
the shares of the Fund; and
(j) insurance premiums on fidelity, errors and omissions and other
coverages.
5. COMPENSATION OF THE ADVISER. For all services to be rendered and
expenses paid or assumed by the Adviser as herein provided, the Adviser shall be
entitled to a fee, paid daily, at an annual rate equal to 0.75% of the average
daily managed asset value of the Fund.
"Managed assets" means the total assets of the Fund (including any
assets attributable to any leverage that may be outstanding) minus the sum of
accrued liabilities (other than liabilities representing financial leverage).
The liquidation preference of any preferred shares is not a liability. The
"average daily managed assets" of the Fund shall be determined on the basis set
forth in the Fund's Prospectus or otherwise consistent with the 1940 Act and the
rules and regulations promulgated thereunder.
Notwithstanding the foregoing, the Adviser agrees that for the
following calendar years, the Adviser will limit its fees under this Agreement
to the following percentages of the Fund's average daily managed assets:
Year Effective Advisory Fee After Waiver
Until February 26, 2009 0.55%
February 27, 2009 until February 26, 2010 0.60%
February 27, 2010 until February 26, 2011 0.65%
February 27, 2011 until February 26, 2012 0.70%
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In addition, the Adviser may agree not to impose all or a portion of
its fee (in advance of the time its fee would otherwise accrue) and/or undertake
to make any other payments or arrangements necessary to limit the Fund's
expenses to any level the Adviser may specify. Any fee reduction or undertaking
shall constitute a binding modification of this Agreement while it is in effect
but may be discontinued or modified prospectively by the Adviser at any time.
6. OTHER ACTIVITIES OF THE ADVISER AND ITS AFFILIATES. Nothing herein
contained shall prevent the Adviser or any affiliate or associate of the Adviser
from engaging in any other business or from acting as investment adviser or
investment manager for any other person or entity, whether or not having
investment policies or portfolios similar to the Fund's; and it is specifically
understood that officers, directors and employees of the Adviser and those of
its parent company, Xxxx Xxxxxxx Financial Services, Inc., any successor parent
company or other affiliates may continue to engage in providing portfolio
management services and advice to other investment companies, whether or not
registered, to other investment advisory clients of the Adviser or of its
affiliates and to said affiliates themselves.
The Adviser shall have no obligation to acquire with respect to the
Fund a position in any investment which the Adviser, its officers, affiliates or
employees may acquire for its or their own accounts or for the account of
another client, if, in the sole discretion of the Adviser, it is not feasible or
desirable to acquire a position in such investment on behalf of the Fund.
Nothing herein contained shall prevent the Adviser from purchasing or
recommending the purchase of a particular security for one or more funds or
clients while other funds or clients may be selling the same security.
7. AVOIDANCE OF INCONSISTENT POSITION. In connection with purchases or
sales of portfolio securities for the account of the Fund, neither the Adviser
nor any of its investment management subsidiaries, nor any of the Adviser's or
such investment management subsidiaries' directors, officers or employees will
act as principal or agent or receive any commission, except as may be permitted
by the 1940 Act and rules and regulations promulgated thereunder. If any
occasions shall arise in which the Adviser advises persons concerning the shares
of the Fund, the Adviser will act solely on its own behalf and not in any way on
behalf of the Fund. Nothing herein contained shall limit or restrict the Adviser
or any of its officers, affiliates or employees from buying, selling or trading
in any securities for its or their own account or accounts.
8. NO PARTNERSHIP OR JOINT VENTURE. Neither the Fund nor the Adviser
are partners of or joint venturers with each other and nothing herein shall be
construed so as to make them such partners or joint venturers or impose any
liability as such on any of them.
9. NAME OF THE FUND. The Fund may use the name "Xxxx Xxxxxxx" or any
name or names derived from or similar to the names "Xxxx Xxxxxxx Advisers,
Inc.", "Xxxx Xxxxxxx Life Insurance Company", or "Xxxx Xxxxxxx Financial
Services, Inc." only for so long as this Agreement remains in effect. At such
time as this Agreement shall no longer be in effect, the Fund will (to the
extent that they lawfully can) cease to use such a name or any other name
indicating that the Fund is advised by or otherwise connected with the Adviser.
The Fund acknowledges that it has adopted its name through permission of Xxxx
Xxxxxxx Life Insurance Company, a Massachusetts insurance company, and agrees
that Xxxx Xxxxxxx Life Insurance Company reserves to itself and any successor to
its business the right to grant the nonexclusive right to use the name "Xxxx
Xxxxxxx" or any similar name or names to any other corporation or entity,
including but not limited to any investment company of which Xxxx Xxxxxxx Life
Insurance Company or any subsidiary or affiliate thereof shall be the investment
adviser.
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10. LIMITATION OF LIABILITY OF THE ADVISER. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the matters to which this Agreement relates, except
a loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Adviser in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement. Any person, even
though also employed by the Adviser, who may be or become an employee of and
paid by the Fund shall be deemed, when acting within the scope of his employment
by the Fund, to be acting in such employment solely for the Fund and not as the
Adviser's employee or agent.
11. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
remain in force until February 26, 2006, and from year to year thereafter, but
only so long as such continuance is specifically approved at least annually by
(a) a majority of the Trustees who are not interested persons of the Adviser or
(other than as Board members) of the Fund, cast in person at a meeting called
for the purpose of voting on such approval, and (b) either (i) the Trustees or
(ii) a majority of the outstanding voting securities of the Fund. This Agreement
may, on 60 days' written notice, be terminated at any time without the payment
of any penalty by the vote of a majority of the outstanding voting securities of
the Fund, by the Trustees or by the Adviser. Termination of this Agreement shall
not be deemed to terminate or otherwise invalidate any provisions of any
contract between the Adviser and any other series of the Fund. This Agreement
shall automatically terminate in the event of its assignment. In interpreting
the provisions of this Section 11, the definitions contained in Section 2(a) of
the 1940 Act (particularly the definitions of "assignment," "interested person"
and "voting security") shall be applied.
12. AMENDMENT OF THIS AGREEMENT. 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,
discharge or termination is sought, and no amendment, transfer, assignment,
sale, hypothecation or pledge of this Agreement shall be effective until
approved by (a) the Trustees, including a majority of the Trustees who are not
interested persons of the Adviser or (other than as Trustees) of the Fund, cast
in person at a meeting called for the purpose of voting on such approval, and
(b) a majority of the outstanding voting securities of the Fund, as defined in
the 1940 Act.
13. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of The Commonwealth of Massachusetts.
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14. SEVERABILITY. The provisions of this Agreement are independent of
and separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be deemed invalid or unenforceable in whole or in part.
15. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. The Declaration of Trust has been filed with the
Secretary of The Commonwealth of Massachusetts. The obligations of the Fund are
not personally binding upon, nor shall resort be had to the private property of,
any of the Trustees, shareholders, officers, employees or agents of the Fund,
but only upon the Fund and its property. The Fund shall not be liable for the
obligations of any other series of the Fund and no other series shall be liable
for the Fund's obligations hereunder.
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Yours very truly,
XXXX XXXXXXX TAX-ADVANTAGED DIVIDEND INCOME FUND
By: _________________________________________
Xxxxxxx Xxxx Xxxxxxxx
Chairman, President and Chief Executive Officer
The foregoing contract
is hereby agreed to as
of the date hereof.
XXXX XXXXXXX ADVISERS, LLC
By: ___________________________
Xxxxx X. Xxxxxx
Vice President and Secretary
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