MANAGEMENT AGREEMENT
Xxxx Xxxxx Partners Fund Advisor, LLC
This MANAGEMENT AGREEMENT ("Agreement") is made this 24th
day of January, 2012, by and between Permal Hedge Strategies
Fund (the "Fund") and Xxxx Xxxxx Partners Fund Advisor, LLC, a
Delaware limited liability company (the "Manager").
WHEREAS, the Fund is registered as a management investment
company under the Investment Company Act of 1940, as amended
(the "1940 Act");
WHEREAS, the Manager is engaged primarily in rendering
investment advisory, management and administrative services
and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended;
WHEREAS, the Fund 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 Fund hereby appoints the Manager to
act as investment adviser and administrator 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 Fund's Board of Trustees (the "Board"), 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 and other investments consistent with the Fund's
investment objectives, policies and restrictions, as stated in
the Fund's Prospectus and Statement of Additional
Information. The Manager shall determine from time to time
what securities and other investments will be purchased,
retained, sold or exchanged by the Fund and what portion of
the assets of the Fund's portfolio will be held in the various
securities and other investments in which the Fund invests,
and shall implement those decisions, all subject to the
provisions of the Fund's Declaration of Trust and By-Laws
(collectively, the "Governing Documents"), the 1940 Act, and
the applicable rules and regulations promulgated thereunder by
the Securities and Exchange Commission (the "SEC") and
interpretive guidance issued thereunder by the SEC staff and
any other applicable federal and state law, as well as the
investment objectives, policies and restrictions of the Fund
referred to above, and any other specific policies adopted by
the Board and disclosed to the Manager. The Manager is
authorized as the agent of the Fund to give instructions to
the custodian of the Fund as to deliveries of securities and
other investments and payments of cash for the account of the
Fund. Subject to applicable provisions of the 1940 Act and
direction from the Board, the investment program to be
provided hereunder may entail the investment of all or
substantially all of the assets of the Fund in one or more
investment companies. The Manager will place orders pursuant
to its investment determinations for the Fund either directly
with the issuer or with any broker or dealer, foreign currency
dealer, futures commission merchant or others selected by it.
In connection with the selection of such brokers or dealers
and the placing of such orders, subject to applicable law,
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, as
amended (the "Exchange Act")) to the Fund and/or the other
accounts over which the Manager or its affiliates exercise
investment discretion. The Manager is authorized to pay a
broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction
for the Fund which is in excess of the amount of commission
another broker or dealer would have charged for effecting that
transaction if the Manager 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. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities
which the Manager and its affiliates have with respect to
accounts over which they exercise investment discretion. The
Board may adopt policies and procedures that modify and
restrict the Manager's authority regarding the execution of
the Fund's portfolio transactions provided herein. The
Manager shall also provide advice and recommendations with
respect to other aspects of the business and affairs of the
Fund, shall exercise voting rights, rights to consent to
corporate action and any other rights pertaining to the Fund's
portfolio securities subject to such direction as the Board
may provide, and shall perform such other functions of
investment management and supervision as may be directed by
the Board.
(b) Subject to the direction and control of the
Board, the Manager shall perform such administrative and
management services as may from time to time be reasonably
requested by the Fund as necessary for the operation of the
Fund, such as (i) supervising the overall administration of
the Fund, including negotiation of contracts and fees with and
the monitoring of performance and xxxxxxxx of the Fund's
transfer agent, shareholder servicing agents, custodian and
other independent contractors or agents, (ii) providing
certain compliance, fund accounting, regulatory reporting, and
tax reporting services, (iii) preparing or participating in
the preparation of Board materials, registration statements,
proxy statements and reports and other communications to
shareholders, (iv) maintaining the Fund's existence, and
(v) during such times as shares are publicly offered,
maintaining the registration and qualification of the Fund's
shares under federal and state laws. Notwithstanding the
foregoing, the Manager shall not be deemed to have assumed any
duties with respect to, and shall not be responsible for, the
distribution of the shares of the Fund, nor shall the Manager
be deemed to have assumed or have any responsibility with
respect to functions specifically assumed by any transfer
agent, fund accounting agent, custodian, shareholder servicing
agent or other agent, in each case employed by the Fund to
perform such functions.
(c) The Fund hereby authorizes any entity or
person associated with the Manager which is a member of a
national securities exchange to effect any transaction on the
exchange for the account of the Fund which is permitted by
Section 11(a) of the Exchange Act of 1934 and Rule 11a2-
2(T) thereunder, and the Fund hereby consents to the retention
of compensation for such transactions in accordance with
Rule 11a2-2(T)(a)(2)(iv). Notwithstanding the foregoing, the
Manager agrees that it will not deal with itself, or with
members of the Board or any principal underwriter of the Fund,
as principals or agents in making purchases or sales of
securities or other property for the account of the Fund, nor
will it purchase any securities from an underwriting or
selling group in which the Manager or its affiliates is
participating, or arrange for purchases and sales of
securities between the Fund and another account advised by the
Manager or its affiliates, except in each case as permitted by
the 1940 Act and in accordance with such policies and
procedures as may be adopted by the Fund from time to time,
and will comply with all other provisions of the Governing
Documents and the Fund's Prospectus and Statement of
Additional Information relative to the Manager and its
directors and officers.
4. Subject to the Board's approval, the Manager
or the Fund may enter into contracts with one or more
investment subadvisers or subadministrators, including without
limitation, affiliates of the Manager, in which the Manager
delegates to such investment subadvisers or subadministrators
any or all its duties specified hereunder, on such terms as
the Manager will determine to be necessary, desirable or
appropriate, provided that in each case the Manager shall
supervise the activities of each such subadviser or
subadministrator and further provided that such contracts
impose on any investment subadviser or subadministrator bound
thereby all the conditions to which the Manager is subject
hereunder and that such contracts are entered into in
accordance with and meet all applicable requirements of the
1940 Act.
5. (a) The Manager, at its expense, shall
supply the Board and officers of the Fund with all 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 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 that 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 Board members or
officers of the Fund, to serve in the capacities in which they
are elected.
(b) The Manager shall bear all expenses, and
shall furnish all necessary services, facilities and
personnel, in connection with its responsibilities under this
Agreement. Other than as herein specifically indicated, the
Manager shall not be responsible for the Fund's expenses,
including, without limitation, advisory fees; distribution
fees; interest; taxes; governmental fees; voluntary
assessments and other expenses incurred in connection with
membership in investment company organizations; organization
costs of the Fund; the cost (including brokerage commissions,
transaction fees or charges, if any) in connection with the
purchase or sale of the Fund's securities and other
investments and any losses in connection therewith; fees and
expenses of custodians, transfer agents, registrars,
independent pricing vendors, tax reporting services or other
agents; legal expenses; loan commitment fees; expenses
relating to share certificates; expenses relating to the
issuing and redemption or repurchase of the Fund's shares and
servicing shareholder accounts; 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 and statements of
additional information and any supplements thereto, reports,
proxy statements, notices and dividends to the Fund's
shareholders; costs of stationery; website costs; costs of
meetings of the Board or any committee thereof, meetings of
shareholders and other meetings of the Fund; Board fees; audit
fees; travel expenses of officers, members of the Board and
employees of the Fund, if any; and the Fund's pro rata portion
of premiums on any fidelity bond and other insurance covering
the Fund and its officers, Board members and employees;
litigation expenses and any non-recurring or extraordinary
expenses as may arise, including, without limitation, those
relating to actions, suits or proceedings to which the Fund is
a party and the legal obligation which the Fund may have to
indemnify the Fund's Board members and officers with respect
thereto.
6. No member of the Board, officer or employee
of the Fund shall receive from the Fund any salary or other
compensation as such member of the Board, 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,
except as the Board may decide. This paragraph shall not
apply to Board members, 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
monthly at an annual rate set forth on Schedule A annexed
hereto, provided however, that if the Fund invests all or
substantially all of its assets in another registered
investment company for which the Manager or an affiliate of
the Manager serves as investment adviser or investment
manager, the annual fee computed as set forth on such Schedule
A shall be reduced by the aggregate management fees allocated
to that Fund for the Fund's then-current fiscal year from such
other registered investment company. 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, and
shall constitute a full payment of the fee due the Manager for
all services prior to that date. 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 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 net assets
as the number of business days in such period bears to the
number of business days in such month. The 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.
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 liable for any
error of judgment or mistake of law, or for any loss arising
out of any investment or for any act or omission in the
execution of securities transactions for the Fund, provided
that nothing in this Agreement shall protect the Manager
against any liability to the Fund to which the Manager would
otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and
duties hereunder. As used in this Section 8, the term
"Manager" shall include any affiliates of the Manager
performing services for the Fund contemplated hereby and the
partners, shareholders, directors, officers and employees of
the Manager and such affiliates.
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 Board member, officer, or
employee of 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 fund, firm, individual or
association. If the purchase or sale of securities consistent
with the investment policies of the Fund or one or more other
accounts of the Manager is considered at or about the same
time, transactions in such securities will be allocated among
the accounts in a manner deemed equitable by the Manager.
Such transactions may be combined, in accordance with
applicable laws and regulations, and consistent with the
Manager's policies and procedures as presented to the Board
from time to time.
10. For the purposes of this Agreement, the Fund's
"net assets" shall be its total assets minus its liabilities
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 SEC by any rule,
regulation or order.
11. This Agreement will become effective with
respect to the Fund on the date set forth on Schedule A
annexed hereto, provided that it shall have been approved by
the Fund's Board 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
until December 31, 2013. Thereafter, if not terminated, this
Agreement shall continue in effect with respect to the Fund,
so long as such continuance is specifically approved at least
annually (i) by the Board or (ii) by a vote of a majority of
the outstanding voting securities of the Fund, provided that
in either event the continuance is also approved by a majority
of the Board members who are not interested persons 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 Board or by vote of a majority
of the outstanding voting securities of the Fund, in each case
on not more than 60 days' nor less than 30 days' written
notice to the Manager, or by the Manager upon not less than 90
days' written notice to the Fund, and will be terminated upon
the mutual written consent of the Manager and the Fund. This
Agreement shall terminate automatically in the event of its
assignment.
13. 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 material amendment of the Agreement shall be
effective until approved, if so required by the 1940 Act, by
vote of the holders of a majority of the Fund's outstanding
voting securities.
14. 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.
15. This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with
the laws of the State of New York.
[signature page to follow]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers thereunto duly
authorized.
PERMAL HEDGE STRATEGIES FUND
By:
Name:
Title
:
XXXX XXXXX PARTNERS FUND ADVISOR, LLC
By:
Name:
Title
Schedule A
Permal Hedge Strategies Fund
Date:
January 24 , 2012
Fee:
The following percentage of the Fund's managed assets: 1.10%
