MANAGEMENT AGREEMENT
BETWEEN
XXXXX XXX FLOATING RATE LIMITED LIABILITY
COMPANY AND
XXXXX XXX & FARNHAM INCORPORATED
XXXXX XXX FLOATING RATE LIMITED LIABILITY COMPANY, a Delaware
limited liability company under the Investment Company Act of 1940
("1940 Act") as a closed-end non-diversified management investment
company ("LLC"), hereby appoints XXXXX XXX & FARNHAM INCORPORATED,
a Delaware corporation registered under the Investment Advisers
Act of 1940 as an investment adviser, of Chicago, Illinois
("Manager"), to furnish investment advisory and portfolio
management services with respect to its assets represented by the
shares of beneficial interest. LLC and Manager hereby agree that:
1. Investment Management Services. Manager shall manage the
investment operations of LLC, subject to the terms of this
Agreement and to the supervision and control of LLC's Board of
Managers ("Board"). Manager agrees to perform, or arrange for the
performance of, the following services for LLC:
(a) to obtain and evaluate such information relating to economies,
industries, businesses, securities and commodities markets,
and individual securities, commodities and indices as it may
deem necessary or useful in discharging its responsibilities
hereunder;
(b) to formulate and maintain a continuing investment program in a
manner consistent with and subject to (i) LLC's operating
agreement; (ii) LLC's investment objectives, policies, and
restrictions as set forth in written documents furnished by
the LLC to Manager; (iii) all securities, commodities, and tax
laws and regulations applicable to LLC; and (iv) any other
written limits or directions furnished by the Board to
Manager;
(c) unless otherwise directed by the Board, to determine from time
to time securities, commodities, interests or other
investments to be purchased, sold, retained or lent by LLC,
and to implement those decisions, including the selection of
entities with or through which such purchases, sales or loans
are to be effected;
(d) to use reasonable efforts to manage LLC so that it will
qualify as a regulated investment company under subchapter M
of the Internal Revenue Code of 1986, as amended;
(e) to make recommendations as to the manner in which voting
rights, rights to consent to LLC action, and any other rights
pertaining to LLC shall be exercised;
(f) to make available to LLC promptly upon request all of LLC's
records and ledgers and any reports or information reasonably
requested by LLC; and
(g) to the extent required by law, to furnish to regulatory
authorities any information or reports relating to the
services provided pursuant to this Agreement.
Except as otherwise instructed from time to time by the
Board, with respect to execution of transactions for LLC, Manager
shall place, or arrange for the placement of, all orders for
purchases, sales, or loans with issuers, brokers, dealers or other
counterparties or agents selected by Manager. In connection with
the selection of all such parties for the placement of all such
orders, Manager shall attempt to obtain most favorable execution
and price, but may nevertheless in its sole discretion as a
secondary factor, purchase and sell portfolio securities from and
to brokers and dealers who provide Manager with statistical,
research and other information, analysis, advice, and similar
services. In recognition of such services or brokerage services
provided by a broker or dealer, Manager is hereby authorized to
pay such broker or dealer a commission or spread in excess of that
which might be charged by another broker or dealer for the same
transaction if the Manager determines in good faith that the
commission or spread is reasonable in relation to the value of the
services so provided.
LLC hereby authorizes any entity or person associated with
Manager that is a member of a national securities exchange to
effect any transaction on the exchange for its account to the
extent permitted by and in accordance with Section 11(a) of the
Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder.
LLC hereby consents to the retention by such entity or person of
compensation for such transactions in accordance with Rule 11a-2-
2(T)(a)(iv).
Manager may, where it deems to be advisable, aggregate orders
for its other customers together with any securities of the same
type to be sold or purchased for LLC in order to obtain best
execution or lower brokerage commissions. In such event, Manager
shall allocate the shares so purchased or sold, as well as the
expenses incurred in the transaction, in a manner it considers to
be equitable and fair and consistent with its fiduciary
obligations to LLC and Manager's other customers.
Manager shall for all purposes be deemed to be an independent
contractor and not an agent of LLC and shall, unless otherwise
expressly provided or authorized, have no authority to act for or
represent LLC in any way.
2. Administrative Services. Manager shall supervise the
business and affairs of LLC and shall provide such services and
facilities as may be required for effective administration of LLC
as are not provided by employees or other agents engaged by LLC;
provided that Manager shall not have any obligation to provide
under this Agreement any such services which are the subject of a
separate agreement or arrangement between LLC and Manager, any
affiliate of Manager, or any third party administrator
("Administrative Agreements").
3. Use of Affiliated Companies and Subcontractors. In
connection with the services to be provided by Manager under this
Agreement, Manager may, to the extent it deems appropriate, and
subject to compliance with the requirements of applicable laws and
regulations and upon receipt of written approval of the Board,
make use of (i) its affiliated companies and their directors,
managers, trustees, officers, and employees and (ii)
subcontractors selected by Manager, provided that Manager shall
supervise and remain fully responsible for the services of all
such third parties in accordance with and to the extent provided
by this Agreement. All costs and expenses associated with
services provided by any such third parties shall be borne by
Manager or such parties.
4. Expenses Borne by LLC. Except to the extent expressly
assumed by Manager herein or under a separate agreement between
LLC and Manager and except to the extent required by law to be
paid by Manager, Manager shall not be obligated to pay any costs
or expenses incidental to the organization, operations or business
of LLC. Without limitation, such costs and expenses shall include
but not be limited to:
(a) all charges of depositories, custodians and other agencies for
the safekeeping and servicing of its cash, securities, and
other property;
(b) all charges for equipment or services used for obtaining price
quotations or for communication between Manager or LLC and the
custodian, transfer agent or any other agent selected by LLC;
(c) all charges for administrative and accounting services
provided to LLC by Manager, or any other provider of such
services;
(d) all charges for services of LLC's independent auditors and for
services to LLC by legal counsel;
(e) all compensation of Board, other than those affiliated with
Manager, all expenses incurred in connection with their
services to LLC, and all expenses of meetings of the Board or
committees thereof;
(f) all expenses incidental to holding meetings of holders of
units of interest in the LLC ("Unitholders"), including
printing and of supplying each record-date Unitholder with
notice and proxy solicitation material, and all other proxy
solicitation expense;
(g) all expenses of printing of annual or more frequent revisions
of LLC prospectus(es) and of supplying each then-existing
Unitholder with a copy of a revised prospectus;
(h) all expenses related to preparing and transmitting
certificates representing LLC shares;
(i) all expenses of bond and insurance coverage required by law or
deemed advisable by the Board;
(j) all brokers' commissions and other normal charges incident to
the purchase, sale, or lending of portfolio securities;
(k) all taxes and governmental fees payable to federal, state or
other governmental agencies, domestic or foreign, including
all stamp or other transfer taxes;
(l) all expenses of registering and maintaining the registration
of LLC under the 1940 Act and, to the extent no exemption is
available, expenses of registering LLC's shares under the 1933
Act, of qualifying and maintaining qualification of LLC and
its shares for sale under securities laws of various states or
other jurisdictions and of registration and qualification of
LLC under all other laws applicable to LLC or its business
activities;
(m) all interest on indebtedness, if any, incurred by LLC; and
(n) all fees, dues and other expenses incurred by LLC in
connection with membership of LLC in any trade association or
other investment company organization.
5. Allocation of Expenses Borne by LLC. Any expenses borne
by LLC that are attributable solely to the organization, operation
or business of LLC shall be paid solely out LLC's assets.
6. Expenses Borne by Manager. Manager at its own expense
shall furnish all executive and other personnel, office space, and
office facilities required to render the investment management and
administrative services set forth in this Agreement. Manager
shall pay all expenses of establishing, maintaining, and servicing
the accounts of Unitholders However, Manager shall not be
required to pay or provide any credit for services provided by
LLC's custodian or other agents without additional cost to LLC.
In the event that Manager pays or assumes any expenses of LLC
not required to be paid or assumed by Manager under this
Agreement, Manager shall not be obligated hereby to pay or assume
the same or similar expense in the future; provided that nothing
contained herein shall be deemed to relieve Manager of any
obligation to LLC under any separate agreement or arrangement
between the parties.
7. Management Fee. For the services rendered, facilities
provided, and charges assumed and paid by Manager hereunder, LLC
shall pay to Manager an annual fee of 0.85% of the average net
assets of LLC. The management 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 accrual shall be
computed by multiplying the fraction of one divided by the number
of days in the calendar year by the applicable annual rate of fee,
and multiplying this product by the net assets of LLC, determined
in the manner established by the Board, as of the close of
business on the last preceding business day on which LLC's net
asset value was determined.
8. Retention of Sub-Adviser. Subject to obtaining the
initial and periodic approvals required under Section 15 of the
1940 Act, Manager may retain one or more sub-advisers at Manager's
own cost and expense for the purpose of furnishing one or more of
the services described in Section 1 hereof with respect to LLC.
Retention of a sub-adviser shall in no way reduce the
responsibilities or obligations of Manager under this Agreement,
and Manager shall be responsible to LLC for all acts or omissions
of any sub-adviser in connection with the performance of Manager's
duties hereunder.
9. Non-Exclusivity. The services of Manager to LLC
hereunder are not to be deemed exclusive and Manager shall be free
to render similar services to others.
10. Standard of Care. Neither Manager, nor any of its
directors, officers, stockholders, agents or employees shall be
liable to LLC or its Unitholders for any error of judgment,
mistake of law, loss arising out of any investment, or any other
act or omission in the performance by Manager of its duties under
this Agreement, except for loss or liability resulting from
willful misfeasance, bad faith or gross negligence on Manager's
part or from reckless disregard by Manager of its obligations and
duties under this Agreement.
11. Amendment. This Agreement may not be amended as to LLC
without the affirmative votes (a) of a majority of the Board,
including a majority of those Managers who are not "interested
persons" of LLC or of Manager, voting in person at a meeting
called for the purpose of voting on such approval, and (b) of a
"majority of the outstanding shares" of LLC. The terms
"interested persons" and "vote of a majority of the outstanding
shares" shall be construed in accordance with their respective
definitions in the 1940 Act and, with respect to the latter term,
in accordance with Rule 18f-2 under the 1940 Act.
12. Effective Date and Termination. This Agreement shall
become effective as of the date hereof. This Agreement may be
terminated at any time, without payment of any penalty, by the
Board of LLC, or by a vote of a majority of the outstanding
shares, upon at least sixty (60) days' written notice to Manager.
This Agreement may be terminated by Manager at any time upon at
least sixty (60) days' written notice to LLC. This Agreement
shall terminate automatically in the event of its "assignment" (as
defined in the 1940 Act). Unless terminated as hereinbefore
provided, this Agreement shall continue in effect until June 30,
2000, and thereafter from year to year only so long as such
continuance is specifically approved at least annually (a) by a
majority of those Managers who are not interested persons of Board
or of Manager, voting in person at a meeting called for the
purpose of voting on such approval, and (b) by either the Board of
LLC or by a "vote of a majority of the outstanding shares" of LLC.
13. Ownership of Records; Interparty Reporting. All records
required to be maintained and preserved by LLC pursuant to the
provisions of rules or regulations of the Securities and Exchange
Commission under Section 31(a) of the 1940 Act or other applicable
laws or regulations which are maintained and preserved by Manager
on behalf of LLC and any other records the parties mutually agree
shall be maintained by Manager on behalf of LLC are the property
of LLC and shall be surrendered by Manager promptly on request by
LLC; provided that Manager may at its own expense make and retain
copies of any such records.
LLC shall furnish or otherwise make available to Manager such
copies of the financial statements, proxy statements, reports, and
other information relating to the business and affairs of each
Unitholder in LLC as Manager may, at any time or from time to
time, reasonably require in order to discharge its obligations
under this Agreement.
Manager shall prepare and furnish to LLC statistical data and
other information in such form and at such intervals as LLC may
reasonably request.
14. Non-Liability of Board and Unitholders. Any obligation
of LLC hereunder shall be binding only upon the assets of LLC and
shall not be binding upon any Manager, officer, employee, agent or
Unitholder of LLC. Neither the authorization of any action by the
Board or Unitholders of LLC nor the execution of this Agreement on
behalf of LLC shall impose any liability upon any Manager or any
Xxxxxxxxxx.
00. Use of Manager's Name. LLC may use the name "Xxxxx Xxx
_______ LLC" or any other name derived from the name "Xxxxx Xxx &
Farnham" only for so long as this Agreement or any extension,
renewal, or amendment hereof remains in effect, including any
similar agreement with any organization which shall have succeeded
to the business of Manager as investment adviser. At such time as
this Agreement or any extension, renewal or amendment hereof, or
such other similar agreement shall no longer be in effect, LLC
will cease to use any name derived from the name "Xxxxx Xxx &
Xxxxxxx" or otherwise connected with Manager, or with any
organization which shall have succeeded to Manager's business as
investment adviser.
16. References and Headings. In this Agreement and in any
such amendment, references to this Agreement and all expressions
such as "herein," "hereof," and "hereunder" shall be deemed to
refer to this Agreement as amended or affected by any such
amendments. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control
or affect the meaning, construction or effect of this Agreement.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
Dated: November 20, 1998
XXXXX XXX FLOATING RATE LIMITED
LIABILITY COMPANY
Attest: By: XXXXXX X. XXXXX
Xxxxxx W. Xxxxx
XXXXXXXXX X. XXXXXXX President
Xxxxxxxxx X. Xxxxxxx
Assistant Secretary
XXXXX XXX & XXXXXXX INCORPORATED
Attest: By: XXXXXX X. XXXXX
Xxxxxx X. Xxxxx
President, Mutual Funds
XXXXXXXXX X. XXXXXXX division
Xxxxxxxxx X. Xxxxxxx
Assistant Secretary
AMENDMENT TO MANAGEMENT AGREEMENT BETWEEN
XXXXX XXX FLOATING RATE LIMITED LIABILITY COMPANY AND
XXXXX XXX & XXXXXXX INCORPORATED
This Amendment dated as of August 3, 1999, amends the
Management Agreement dated November 20, 1998 (the "Agreement")
between Xxxxx Xxx Floating Rate Limited Liability Company and
Xxxxx Xxx & Xxxxxxx Incorporated. Paragraph 7 ("Management Fee")
of the Agreement is hereby amended to read as follows:
7. Management Fee. For the services rendered, facilities
provided, and charges assumed and paid by Manager hereunder, LLC
shall pay to Manager an annual fee of 0.45% of the average net
assets of LLC. The management 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 accrual shall be
computed by multiplying the fraction of one divided by the number
of days in the calendar year by the applicable annual rate of fee,
and multiplying this product by the net assets of LLC, determined
in the manner established by the Board, as of the close of
business on the last preceding business day on which LLC's net
asset value was determined.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first written above.
XXXXX XXX FLOATING RATE LIMITED
LIABILITY COMPANY
Attest: By: XXXXXX X. XXXXX
Xxxxxx W. Xxxxx
XXXXXXXXX X. XXXXXXX President
Xxxxxxxxx X. Xxxxxxx
Assistant Secretary
XXXXX XXX & XXXXXXX INCORPORATED
By: XXXXXX X. XXXXX
Attest: Xxxxxx X. Xxxxx
President, Mutual Funds
XXXXXXXXX X. XXXXXXX Division
Xxxxxxxxx X. Xxxxxxx
Assistant Secretary
