MANAGEMENT AGREEMENT
XXXXXXXXX XXXXXX INCOME FUNDS
This Agreement is made as of February 9, 2001, between
Xxxxxxxxx Xxxxxx Income Funds, a Delaware business trust ("Trust"), and
Xxxxxxxxx Xxxxxx Management Inc., a New York corporation ("Manager").
W I T N E S S E T H:
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WHEREAS, Trust is registered under the Investment Company
Act of 1940, as amended ("1940 Act"), as an open-end, diversified management
investment company and has established several separate series of shares
("Series") with each Series having one or more classes and with each Series
having its own assets and investment policies; and
WHEREAS, Trust desires to retain the Manager as investment
adviser to furnish investment advisory and portfolio management services to each
Series listed in Schedule A attached hereto, to such other Series of Trust
hereinafter established as agreed to from time to time by the parties, evidenced
by an addendum to Schedule A (hereinafter "Series" shall refer to each Series
which is subject to this Agreement and all agreements and actions described
herein to be made or taken by Trust on behalf of the Series), and the Manager is
willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. SERVICES OF THE MANAGER.
1.1 INVESTMENT MANAGEMENT SERVICES. The Manager shall
act as the investment adviser to the Series and, as such, shall (1) obtain and
evaluate such information relating to the economy, industries, businesses,
securities markets and securities as it may deem necessary or useful in
discharging its responsibilities hereunder, (ii) formulate a continuing program
for the investment of the assets of the Series in a manner consistent with its
investment objectives, policies and restrictions, and (iii) determine from time
to time securities to be purchased, sold, retained or lent by the Series, and
implement those decisions, including the selection of entities with or through
which such purchases, sales or loans are to be effected; provided, that the
Manager will place orders pursuant to its investment determinations either
directly with the issuer or with a broker or dealer, and if with a broker or
dealer, (a) will attempt to obtain the best net price and most favorable
execution of its orders, and (b) may nevertheless in its discretion purchase and
sell portfolio securities from and to brokers and dealers who provide the
Manager with research, analysis, advice and similar services and pay such
brokers and dealers in return a higher commission or spread than may be charged
by other brokers or dealers.
The Series 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
Series which is permitted by Section 11(a) of the Securities Exchange Act of
1934 and Rule 11a2-2(T) thereunder, and the Series hereby consents to the
retention of compensation for such transactions in accordance with Rule
11a-2(T)(a)(iv).
The Manager shall carry out its duties with
respect to the Series' investments in accordance with applicable law and the
investment objectives, policies and restrictions of the Series adopted by the
trustees of Trust ("Trustees"), and subject to such further limitations as the
Series may from time to time impose by written notice to the Manager.
1.2 ADMINISTRATIVE SERVICES. The Manager shall
supervise the Series' business and affairs and shall provide such services
required for effective administration of the Series as are not provided by
employees or other agents engaged by the Series; provided, that the Manager
shall not have any obligation to provide under this Agreement any direct or
indirect services to the holders of interests in the Series ("Interestholders"),
any services related to the sale of interests in the Series, or any other
services which are the subject of a separate agreement or arrangement between
the Series and the Manager. Subject to the foregoing, in providing
administrative services hereunder, the Manager shall:
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1.2.1 OFFICE SPACE, EQUIPMENT AND
FACILITIES. Furnish without cost to the Series, or pay the cost of, such office
space, office equipment and office facilities as are adequate for the Series'
needs.
1.2.2 PERSONNEL. Provide, without
remuneration from or other cost to Trust or the Series, the services of
individuals competent to perform all of the Series' executive, administrative
and clerical functions which are not performed by employees or other agents
engaged by the Series or by the Manager acting in some other capacity pursuant
to a separate agreement or arrangement with the Series.
1.2.3 AGENTS. Assist the Series in selecting
and coordinating the activities of the other agents engaged by the Series,
including the Series' custodian, independent auditors and legal counsel.
1.2.4 TRUSTEES AND OFFICERS. Authorize and
permit the Manager's directors, officers and employees who may be elected or
appointed as trustees or officers of Trust to serve in such capacities, without
remuneration from or other cost to Trust or the Series.
1.2.5 BOOKS AND RECORDS. Assure that all
financial, accounting and other records required to be maintained and preserved
by Trust and/or the Series are maintained and preserved by it or on its behalf
in accordance with applicable laws and regulations.
1.2.6 REPORTS AND FILINGS. Assist in the
preparation of (but not pay for) all periodic reports by Trust or the Series to
Interestholders of the Series and all reports and filings required to maintain
the registration and qualification of the Series, or to meet other regulatory or
tax requirements applicable to the Series, under federal and state securities
and tax laws.
1.3 The Manager can use any of the officers and
employees of Xxxxxxxxx Xxxxxx, LLC to provide any of the non-investment advisory
services described herein, and can subcontract to third parties, provided the
Manager remains as fully responsible to the Trust or Series, as applicable,
under this contract as if the Manager had provided services directly.
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2. EXPENSES OF THE SERIES.
2.1 EXPENSES TO BE PAID BY THE MANAGER. The Manager
shall pay all salaries, expenses and fees of the officers, trustees and
employees of the Trust who are officers, directors or employees of the Manager.
In the event that the Manager pays or assumes any
expenses of Trust or a Series not required to be paid or assumed by the Manager
under this Agreement, the Manager shall not be obligated hereby to pay or assume
the same or any similar expense in the future; PROVIDED, that nothing herein
contained shall be deemed to relieve the Manager of any obligation to Trust or
to a Series under any separate agreement or arrangement between the parties.
2.2 EXPENSES TO BE PAID BY THE SERIES. Each Series
shall bear the expenses of its operation, except those specifically allocated to
the Manager under this Agreement or under any separate agreement between a
Series and the Manager. Expenses to be borne by a Series shall include both
expenses directly attributable to the operation of the Series and the placement
of interests therein, as well as the portion of any expenses of Trust that is
properly allocable to the Series in a manner approved by the trustees of Trust.
Subject to any separate agreement or arrangement between Trust or a Series and
the Manager, the expenses hereby allocated to each Series, and not to the
Manager, include, but are not limited to:
2.2.1 CUSTODY. All charges of depositories,
custodians, and other agents for the transfer, receipt, safekeeping, and
servicing of its cash, securities, and other property.
2.2.2 INTERESTHOLDER SERVICING. All expenses
of maintaining and servicing Interestholder accounts, including but not limited
to the charges of any Interestholder servicing agent, dividend disbursing agent
or other agent engaged by a Series to service Interestholder accounts.
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2.2.3 INTERESTHOLDER REPORTS. All expenses
of preparing, setting in type, printing and distributing reports and other
communications to Interestholders of a Series.
2.2.4 PRICING AND PORTFOLIO VALUATION. All
expenses of computing a Series' net asset value per share, including any
equipment or services obtained for the purpose of pricing shares or valuing the
Series' investment portfolio.
2.2.5 COMMUNICATIONS. All charges for
equipment or services used for communications between the Manager or the Series
and any custodian, Interestholder servicing agent, portfolio accounting services
agent, or other agent engaged by a Series.
2.2.6 LEGAL AND ACCOUNTING FEES. All charges
for services and expenses of a Series' legal counsel and independent auditors.
2.2.7 TRUSTEES' FEES AND EXPENSES. With
respect to each Series, all compensation of Trustees other than those affiliated
with the Manager, all expenses incurred in connection with such unaffiliated
Trustees' services as Trustees, and all other expenses of meetings of the
Trustees or committees thereof.
2.2.8 INTERESTHOLDER MEETINGS. All expenses
incidental to holding meetings of Interestholders, including the printing of
notices and proxy materials, and proxy solicitation therefor.
2.2.9 BONDING AND INSURANCE. All expenses of
bond, liability, and other insurance coverage required by law or regulation or
deemed advisable by the Trustees, including, without limitation, such bond,
liability and other insurance expense that may from time to time be allocated to
the Series in a manner approved by the Trustees.
2.2.10 BROKERAGE COMMISSIONS. All brokers'
commissions and other charges incident to the purchase, sale or lending of a
Series' portfolio securities.
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2.2.11 TAXES. All taxes or governmental fees
payable by or with respect to a Series to federal, state or other governmental
agencies, domestic or foreign, including stamp or other transfer taxes.
2.2.12 TRADE ASSOCIATION FEES. All fees, dues
and other expenses incurred in connection with a Series' membership in any trade
association or other investment organization.
2.2.13 NONRECURRING AND EXTRAORDINARY
EXPENSES. Such nonrecurring and extraordinary expenses as may arise, including
the costs of actions, suits, or proceedings to which the Series is a party and
the expenses a Series may incur as a result of its legal obligation to provide
indemnification to Trust's officers, Trustees and agents.
2.2.14 ORGANIZATIONAL EXPENSES. Any and all
organizational expenses of a Series paid by the Manager shall be reimbursed by
such Series at such time or times agreed by such Series and the Manager.
3. ADVISORY FEE.
3.1 FEE. As compensation for all services rendered,
facilities provided and expenses paid or assumed by the Manager under this
Agreement, each Series shall pay the Manager an annual fee as set out in
Schedule B to this Agreement.
3.2 COMPUTATION AND PAYMENT OF FEE. The advisory fee
shall accrue on each calendar day, and shall be payable monthly on the first
business day of the next succeeding calendar month. The daily fee accruals shall
be computed by multiplying the fraction of one divided by the number of days in
the calendar year by the applicable annual advisory fee rate (as set forth in
Schedule B hereto), and multiplying this product by the net assets of the
Series, determined in the manner established by the Trustees, as of the close of
business on the last preceding business day on which the Series' net asset value
was determined.
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3.3 STATE EXPENSE LIMITATION. If in any fiscal year
the operating expenses of any Series plus such Series' operating expenses in
such fiscal year ("Aggregate Operating Expenses," which includes any fees or
expense reimbursements payable to the Manager pursuant to this Agreement and any
compensation payable to the Manager pursuant to (1) the Administration Agreement
between such Series and the Manager or (ii) any other Agreement or arrangement
with Trust with respect to that Series, but excludes interest, taxes, brokerage
commissions, litigation and indemnification expenses, and other extraordinary
expenses not incurred in the ordinary course of business) exceed the lowest
applicable percentage expense limitation imposed under the securities law and
regulations of any state in which such Series's shares are qualified for sale
(the "State Expense Limitation"), then the Manager shall pay such Series the
amount of such excess, less the amount of any reduction of the administration
fee referred to below; provided, that the Manager shall have no obligation
hereunder to pay such Series for any such expenses which exceed the pro rata
portion of such advisory fee attributable to such Series.
No payment shall be made to such Series hereunder
unless and until the administration fee payable by such Series under a similar
State Expense Limitation of its Administration Agreement with the Manager has
been reduced to zero. Any payment to an interestholder hereunder shall be made
monthly, by annualizing the Aggregate Operating Expenses for each month as of
the last day of such month. An adjustment shall be made on or before the last
day of the first month of the next succeeding fiscal year if Aggregate Operating
Expenses for such fiscal year do not exceed the State Expense Limitation or if
for such fiscal year there is no applicable State Expense Limitation.
4. OWNERSHIP OF RECORDS.
All records required to be maintained and
preserved by the Series pursuant to the provisions or rules or regulations of
the Securities and Exchange Commission under Section 31 (a) of the 1940 Act and
maintained and preserved by the Manager on behalf of the Series are the property
of the Series and shall be surrendered by the Manager promptly on request by the
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Series; provided, that the Manager may at its own expense make and retain copies
of any such records.
5. REPORTS TO MANAGER.
The Series shall furnish or otherwise make available to the
Manager such copies of that Series' financial statements, proxy statements,
reports, and other information relating to its business and affairs as the
Manager may, at any time or from time to time, reasonably require in order to
discharge its obligations under this Agreement.
6. REPORTS TO THE SERIES.
The Manager shall prepare and furnish to the Series such
reports, statistical data and other information in such form and at such
intervals as the Series may reasonably request.
7. RETENTION OF SUB-ADVISER.
Subject to a Series obtaining the initial and periodic
approvals required under Section 15 of the 1940 Act, the Manager may retain a
sub-adviser, at the Manager's own cost and expense, for the purpose of making
investment recommendations and research information available to the Manager.
Retention of a sub-adviser shall in no way reduce the responsibilities or
obligations of the Manager under this Agreement and the Manager shall be
responsible to Trust and the Series for all acts or omissions of the sub-adviser
in connection with the performance of the Manager's duties hereunder.
8. SERVICES TO OTHER CLIENTS.
Nothing herein contained shall limit the freedom of the
Manager or any affiliated person of the Manager to render investment management
and administrative services to other investment companies, to act as investment
adviser or investment counselor to other persons, firms or corporations, or to
engage in other business activities.
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9. LIMITATION OF LIABILITY OF MANAGER AND ITS
PERSONNEL.
Neither the Manager nor any director, officer or employee
of the Manager performing services for the Series at the direction or request of
the Manager in connection with the Manager's discharge of its obligations
hereunder shall be liable for any error of judgment or mistake of law or for any
loss suffered by a Series in connection with any matter to which this Agreement
relates; provided, that nothing herein contained shall be construed (i) to
protect the Manager against any liability to Trust or a Series or its
Interestholders to which the Manager would otherwise be subject by reason of the
Manager's misfeasance, bad faith, or gross negligence in the performance of the
Manager's duties, or by reason of the Manager's reckless disregard of its
obligations and duties under this Agreement, or (ii) to protect any director,
officer or employee of the Manager who is or was a Trustee or officer of Trust
against any liability to Trust or a Series or its Interestholders to which such
person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
such person's office with Trust.
10. NO LIABILITY OF OTHER SERIES.
This Agreement is made by each Series pursuant to authority
granted by the Trustees, and the obligations created hereby are not binding on
any of the Trustees or Interestholders of the Series individually, but bind only
the property of that Series and no other.
11. EFFECT OF AGREEMENT.
Nothing herein contained shall be deemed to require the
Series to take any action contrary to the Declaration of Trust or By-Laws of
Trust, any actions of the Trustees binding upon the Series, or any applicable
law, regulation or order to which the Series is subject or by which it is bound,
or to relieve or deprive the Trustees of their responsibility for and control of
the conduct of the business and affairs of the Series or Trust.
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12. TERM OF AGREEMENT.
The term of this Agreement shall begin on the date first
above written with respect to each Series listed in Schedule A on the date
hereof and, unless sooner terminated as hereinafter provided, this Agreement
shall remain in effect through June 30, 2001. With respect to each Series added
by execution of an Addendum to Schedule A, the term of this Agreement shall
begin on the date of such execution and, unless sooner terminated as hereinafter
provided, this Agreement shall remain in effect to June 30 of the year following
the year of execution. Thereafter, in each case, this Agreement shall continue
in effect with respect to each Series from year to year, subject to the
termination provisions and all other terms and conditions hereof, provided, such
continuance with respect to a Series is approved at least annually by vote of
the holders of a majority of the outstanding voting securities of the Series or
by the Trustees, provided, that in either event such continuance is also
approved annually by the vote, cast in person at a meeting called for the
purpose of voting on such approval, of a majority of the Trustees who are not
parties to this Agreement or interested persons of either party hereto; and
provided further that the Manager shall not have notified a Series in writing at
least sixty (60) days prior to the first expiration date hereof or at least
sixty (60) days prior to any expiration date hereof of any year thereafter that
it does not desire such continuation. The Manager shall furnish to Trust and the
Series, promptly upon their request, such information as may reasonably be
necessary to evaluate the terms of this Agreement or any extension, renewal or
amendment thereof.
13. AMENDMENT OR ASSIGNMENT OF AGREEMENT.
Any amendment to this Agreement shall be in writing signed
by the parties hereto; provided, that no such amendment shall be effective
unless authorized on behalf of any Series (i) by resolution of the Trustees,
including the vote or written consent of a majority of the Trustees who are not
parties to this Agreement or interested persons of either party hereto, and (ii)
by vote of a majority of the outstanding voting securities of the Series. This
Agreement shall terminate automatically and immediately in the event of its
assignment.
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14. TERMINATION OF AGREEMENT.
This Agreement may be terminated at any time by either
party hereto, without the payment of any penalty, upon sixty (60) days' prior
written notice to the other party; provided, that in the case of termination by
any Series, such action shall have been authorized (i) by resolution of the
Trustees, including the vote or written consent of a majority of Trustees who
are not parties to this Agreement or interested persons' of either party hereto,
or (ii) by vote of a majority of the outstanding voting securities of the
Series.
15. NAME OF THE SERIES.
Each Series hereby agrees that if the Manager shall at any
time for any reason cease to serve as investment adviser to a Series, the Series
shall, if and when requested by the Manager, eliminate from the Series' name the
name "Xxxxxxxxx Xxxxxx" and thereafter refrain from using the name "Xxxxxxxxx
Xxxxxx" or the initials "NB" in connection with its business or activities, and
the foregoing agreement of a Series shall survive any termination of this
Agreement and any extension or renewal thereof.
16. INTERPRETATION AND DEFINITION OF TERMS.
Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations or orders of the Securities and Exchange Commission
validly issued pursuant to the 1940Act. Specifically, the terms "vote of a
majority of the outstanding voting securities," "interested person,"
"assignment" and "affiliated person," as used in this Agreement shall have the
meanings assigned to them by Section 2(a) of the 1940 Act. In addition, when the
effect of a requirement of the 1940 Act reflected in any provision of this
Agreement is modified, interpreted or relaxed by a rule, regulation or order of
the Securities and Exchange Commission, whether of special or of general
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application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
17. CHOICE OF LAW
This Agreement is made and to be principally performed in
the State of New York and except insofar as the 1940 Act or other federal laws
and regulations may be controlling, this Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of New
York.
18. CAPTIONS.
The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
19. EXECUTION IN COUNTERPARTS.
This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers
thereunto duly authorized and their respective seals to be hereunto affixed, as
of the day and year first above written.
XXXXXXXXX XXXXXX INCOME FUNDS
By: /s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
Title: Chief Financial Officer
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XXXXXXXXX XXXXXX MANAGEMENT INC.
By: /s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
Title: Senior Vice President
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