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EXHIBIT 10.11(a)
JOINT INVESTMENT ADVISORY
AND
ADMINISTRATION AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of this 29th day of September,
1995, by and between X.X. Xxxx & Associates, Inc., a Nevada corporation
("Xxxx") and Nuveen Institutional Advisory Corp., a Delaware corporation
("Nuveen"). Collectively, Xxxx and Nuveen are referred to herein as the
"parties" or the "Advisers".
RECITALS
WHEREAS, Xxxx is registered under the Investment Advisers Act of 1940, as
amended (the "Advisers Act"), as an investment adviser and engages in the
business of acting as an investment adviser;
WHEREAS, Xxxx has substantial expertise, research capability and technical
resources in the area of investment advisory and account administration
services related to individual balanced accounts comprised of equity securities
("Equity Securities"), government and corporate fixed income securities and
cash and cash equivalents ("Liquidity Assets");
WHEREAS, Nuveen is registered under the Advisers Act as an investment
adviser and engages in the business of acting as an investment adviser;
WHEREAS, Nuveen has substantial expertise, research capability and
technical resources in the area of investment advisory services related to
municipal securities and tax-free investment products (collectively, "Municipal
Securities") and Liquidity Assets;
WHEREAS, Xxxx and Nuveen intend to enter into Investment Advisory
Agreements (collectively the "Investment Advisory Agreements") jointly with
certain individuals, organizations or institutions (collectively, "Principals")
whereby such Principals will place cash and/or securities (hereafter referred
to with respect to each Principal as the "Portfolio Assets") under Xxxx'x
management with respect to Equity Securities (the "Equity Portion") and
Nuveen's management with respect to Municipal Securities (the "Bond Portion"
and collectively with the Equity Portion and the Liquidity Assets, the
"Tax-Advantaged Balanced Accounts"), and the Tax-Advantaged Balanced Accounts
shall include the Portfolio Investment Strategies specified on EXHIBIT A
hereto, together with any other Portfolio Investment Strategy as may from time
to time be offered by the parties.
WHEREAS, Nuveen intends to enter into Investment Advisory Agreements with
certain Principals whereby such Principals will place Portfolio Assets under
Nuveen's management to invest exclusively in Municipal Securities and Liquidity
Assets (collectively, the "Municipal Accounts"), and the Municipal Accounts
shall include the Portfolio Investment Strategies specified on EXHIBIT A
hereto, together with any other Portfolio Investment Strategy as may be offered
by Nuveen from time to time.
WHEREAS, Xxxx and Nuveen previously entered into an Investment
Sub-Advisory Agreement, dated as of May 24, 1995, and an Administration
Agreement, dated as of May 24, 1995 (the "Prior Agreements"), pursuant to which
Xxxx and Nuveen specified their respective responsibilities with respect to the
establishment, management and administration of certain Tax-Advantaged Balanced
Accounts and Municipal Accounts on a trial basis (the "Trial Accounts"), and
the parties desire that the Prior Agreements
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be terminated and that the Trial Accounts be managed and administered pursuant
to, in accordance with and consistent with the terms of, this Agreement.
WHEREAS, the parties desire to enter into this Agreement in order to
specify the responsibilities of Xxxx and Nuveen with respect to operation of
the Tax-Advantaged Balanced Accounts and the Municipal Accounts (collectively,
the "Business") from and after the date hereof.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Responsibilities of Xxxx. Xxxx'x responsibilities with respect to (i)
the Tax-Advantaged Balanced Accounts shall be as set forth on EXHIBIT B and
(ii) the Municipal Accounts shall be as set forth on EXHIBIT C, both of which
Exhibits are attached hereto and made a part hereof.
2. Responsibilities of Nuveen. Nuveen's responsibilities with respect to
(i) the Tax-Advantaged Balanced Accounts shall be as set forth on EXHIBIT D and
(ii) the Municipal Accounts shall be as set forth on EXHIBIT E, both of which
Exhibits are attached hereto and made a part hereof.
3. Expenses. Except for brokerage commissions and custodial fees (which
are the responsibility of each Principal), if any, and subject to Section 11
hereof, Xxxx and Nuveen shall each be responsible for all expenses incurred by
them in connection with, and incident to, the performance of its obligations
hereunder and under the Investment Advisory Agreements.
4. Compensation. As compensation for the administrative services provided
by Xxxx under this Agreement, Xxxx shall be entitled to an Administrative Fee
Reallowance out of the Investment Management Fees charged pursuant to the
Investment Advisory Agreements entered into with respect to the Tax-Advantaged
Balanced Accounts and the Municipal Accounts, which Administrative Fee
Reallowance shall be in accordance with EXHIBIT F attached hereto and made a
part hereof.
Xxxx and Nuveen shall each receive the portion of the Investment
Management Fees specified on EXHIBIT F attached hereto and made a part hereof;
provided, however, that with respect to an investment advisory client of Xxxx
as of the date of this Agreement who establishes a Tax-Advantaged Balanced
Account prior to October 1, 1997 (an "Existing Xxxx Client"), Xxxx shall
receive, in addition to the portion of the Investment Management Fees specified
on EXHIBIT F, an additional amount equal to one-half the portion of the
Investment Management Fees due to Nuveen as specified on EXHIBIT F with respect
to such Existing Xxxx Client; provided, further, however, that such additional
payment to Xxxx shall (i) be paid only with respect to assets of the Existing
Xxxx Client that were under Xxxx'x investment management as of the date of this
Agreement and (ii) cease as of the earlier to occur of (x) December 31, 1997 or
(y) the date which is 12 months from the date of the establishment of the
Tax-Advantaged Balanced Account, and thereafter Xxxx and Nuveen shall each
receive the portion of the Investment Management Fees specified on EXHIBIT F.
5. Standard of Care. Each party shall perform its duties and
responsibilities hereunder with the standard of care and diligence which one
would expect of a reasonably prudent person who is skilled at the tasks or
responsibilities assigned to it hereunder.
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6. Books and Records. Xxxx and Nuveen each agree to maintain such books
and records with respect to their services as is required by Rule 204 under the
Advisers Act, and by other applicable laws, rules and regulations, and to
preserve such records for the periods and in the manner required by that Rule,
and those laws, rules and regulations; provided, however, that Xxxx shall
maintain on Nuveen's behalf those journals, ledgers, statements, records and
other documents that Nuveen is required to maintain by any state or federal
law, rule or regulation, and which Nuveen requests Xxxx to maintain on its
behalf, in the manner specified in, and pursuant to the terms and conditions
of, such law, rule or regulation. Xxxx and Nuveen further agree to furnish to
the appropriate regulatory authorities any information or reports in connection
with their services hereunder which may be properly requested in order to
confirm that the Equity Portion, the Bond Portion, or the Liquidity Assets as
the case may be, of each Principal's Portfolio Assets are being managed in
accordance with applicable laws, rules and regulations.
7. Good Faith Efforts; Further Assurances.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use good faith efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things reasonably necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement.
(b) Each party agrees to cooperate in good faith to develop and implement
comprehensive marketing and customer service programs in support of the
Business. The customer service program will be designed to provide each
Principal and its financial adviser the necessary information and assistance to
permit the financial adviser to (i) advise the Principal regarding an
appropriate Portfolio Investment Strategy in light of the Principal's financial
and personal circumstances and investment objectives; (ii) through regular and
periodic contact with the Principal and review of the investment performance
of the Principal's account, assess the continued appropriateness of the
Portfolio Investment Strategy chosen by the Principal, based upon the
Principal's current circumstances and objectives, as they may change from time
to time; and (iii) communicate to the Advisers any change in the Principal's
Portfolio Investment Strategy or in the specific investment restrictions
relating to the purchase or sale of securities by the Advisers for the
Principal's account.
(c) Xxxx shall accommodate reasonable requests from Nuveen's management or
its independent auditors to (i) evaluate and test the Municipal Investment
Management Systems Software and review supporting documentation related
thereto, (ii) evaluate and/or test the systems of internal control relating to
the calculation of management fees and the collection and transfer of monies
between the parties with respect to the Business, and (iii) review Xxxx'x books
and records relating to the Business on an as needed basis.
(d) In the event that issues arise after the date hereof with respect to
the conduct of the Business which the parties did not anticipate and which have
not been addressed in this Agreement (or any of the other agreements executed
by the parties relating to the Business), each party agrees to cooperate with
the other to implement procedures which address any such issues in an equitable
manner.
(e) In the event either party's status as an approved investment adviser
is suspended or revoked by a wrap program sponsor, the chief executive officers
(or their designees) of each party shall meet in person within 30 days of such
suspension or revocation and attempt in good faith to agree upon and implement
corrective actions in response to such suspension or revocation.
8. Non-Exclusivity. Except as provided in Sections 9 and 12 hereof, the
services of the parties hereunder are not deemed to be exclusive, and each
party and its respective officers, directors,
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employees and affiliates shall be free to render investment advisory and client
account administration or other services to others (including to other
investment advisers) and to engage in activities other than the Business.
9. Non-Compete.
(a) Each party agrees that (i) during the term of this Agreement and (ii)
for three years following termination of this Agreement, neither party will,
anywhere in the United States, offer, directly or indirectly, Tax-Advantaged
Managed Account services (as defined below), except (x) pursuant to this
Agreement during the term hereof, (y) in the case of Nuveen, pursuant to the
activities of Nuveen/Duff and Xxxxxx Investment Advisors, or any successor
thereto and (z) in the case of Xxxx, with respect to any existing accounts
managed by Xxxx as of the date of this Agreement in which Principals have
requested Municipal Securities to be a part of their fixed income holdings. A
party will be deemed to be offering services indirectly if it or any holder(s)
of five (5) percent or more of such party's equity securities, directly or
through a direct or indirect majority-owned subsidiary of such holder(s),
renders investment advice or provides administrative services to Tax-Advantaged
Managed Accounts or to persons who render investment advice to Tax-Advantaged
Managed Accounts. For purposes of this Agreement, a "Tax-Advantaged Managed
Account" shall be an account of any individual, corporation, partnership, trust
or other entity, other than an investment company registered as such under the
Investment Company Act of 1940, that invests in both Equity Securities and
Municipal Securities and has investment objectives and policies substantially
similar to those of the Tax-Advantaged Balanced Accounts described on EXHIBIT A
hereto.
Notwithstanding the foregoing, in the event this Agreement is terminated
pursuant to Section 13, the restrictions set forth in clause (ii) of this
Section 9(a) shall not apply to the party not causing such termination, in the
case of a termination under paragraphs (b) or (d) of Section 13; to the
non-breaching party, in the case of a termination under paragraph (c) of
Section 13; or to either party, in the case of a termination under
paragraph (a) of Section 13.
(b) Nuveen and Xxxx agree that during the term of this Agreement and
thereafter (i) Nuveen shall not, without written consent of Xxxx and except in
connection with the promotion of the Business, utilize or refer to the
investment results of the Equity Portion (as such term is defined on page 1
hereto) of the Business and (ii) Xxxx shall not, without the written consent of
Nuveen and except in connection with the promotion of the Business, utilize or
refer to the investment results of the Bond Portion (as such term is defined on
page 1 hereof) of the Business.
(c) By way of clarification, in the event either party terminates this
Agreement by providing twelve (12) months advance written notice to the other
party, as permitted by Section 13(a) hereof, it is the intention of the parties
that the non-competition provision set forth in paragraph (a) of this Section 9
shall terminate at the same time as the termination of this Agreement and
either party shall be free thereafter to offer Tax-Advantaged Managed Account
services.
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10. Representations, Warranties and Covenants.
(a) Xxxx represents, warrants and covenants as follows:
(i) Xxxx has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Nevada, with
corporate power and authority to own its properties and conduct its
business as presently conducted and as anticipated to be conducted with
respect to the Business, and Xxxx is duly qualified to transact business
in all jurisdictions in which the conduct of the Business requires such
qualification.
(ii) This Agreement has been duly authorized, executed and delivered
on behalf of Xxxx, and, assuming due authorization, execution and
delivery by Nuveen, is the valid and binding obligation of Xxxx
enforceable in accordance with its terms.
(iii) Xxxx is in full compliance with all applicable provisions of
the Advisers Act and all other applicable state and federal laws.
(iv) There is no action or proceeding pending or, to the knowledge
of Xxxx after due inquiry, threatened against Xxxx before any court or
administrative agency which might result in any material adverse change
in the business, condition or prospects of Xxxx.
(v) During the period commencing January 1, 1995 through and
including the date hereof, there has not been any material adverse change
in or affecting the condition, financial or otherwise, of Xxxx or the
earnings, business affairs, management or business prospects of Xxxx,
whether or not occurring in the ordinary course of business, and there
has not been any material transaction entered into by Xxxx other than
transactions in the ordinary course of business. Xxxx has no material
contingent liabilities.
(vi) Xxxx is not in default under any agreement, lease, contract,
indenture or other instrument or obligation to which it is a party or by
which it or any of its properties are bound and which default is of
material significance in respect of the business or financial condition
of Xxxx. The execution and delivery of this Agreement and the
fulfillment of the terms hereof will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default
under, any material indenture, mortgage, deed of trust or other agreement
or instrument to which Xxxx is a party, or of the Certificate of
Incorporation or By-Laws of Xxxx or any order, rule or regulation
applicable to Xxxx of any court or of any regulatory body or
administrative agency or other governmental body having jurisdiction over
it.
(vii) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the conduct of the
Business and the execution and delivery by Xxxx of this Agreement, and
the fulfillment of the terms hereof by Xxxx has been obtained or made and
is in full force and effect.
(viii) Xxxx is the holder of all material licenses, certificates and
permits from governmental authorities which are necessary to the conduct
of the Business.
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(ix) Xxxx is duly registered with the Securities and Exchange
Commission (the "Commission") under the Advisers Act as an investment
adviser, and there does not exist any proceeding or any facts or
circumstances the existence of which could reasonably be expected to lead
to any proceeding which could adversely affect the registration or good
standing of Xxxx with the Commission.
(x) Xxxx is properly registered as an investment adviser in each
state where the nature of the Business requires such registration.
(xi) Xxxx shall promptly notify Nuveen in the event (x) that Xxxx or
any of its affiliates (i) becomes subject to a statutory disqualification
that prevents Xxxx from serving as an investment adviser pursuant to the
Investment Advisory Agreements, or (ii) becomes the subject of an
administrative proceeding or enforcement action by the Commission or
other regulatory authority, or (y) of the occurrence of any fact or
circumstance which could materially impair the ability of Xxxx to perform
its obligations hereunder or under the Investment Advisory Agreements.
(xii) Xxxx shall conform to the rules and regulations applicable to
an investment adviser under the Advisers Act.
(xiii) Xxxx shall conform to any other applicable provisions of
state or federal law.
(xiv) Xxxx shall maintain "liquid net working capital" (as
hereinafter defined) in an amount not less than $5,000,000 and, if at any
time Xxxx'x liquid net working capital shall fall below $5,000,000, Xxxx
shall (i) notify Nuveen immediately of such fact and (ii) deliver to
Nuveen within 5 business days of such occurrence an irrevocable letter of
credit in an amount not less than $5,000,000. Such letter of credit
shall (i) be renewed annually during the term of this Agreement, (ii) be
maintained for a period of 6 months after this Agreement terminates,
(iii) name Nuveen (and its successors) as the Beneficiary thereunder, and
(iv) permit drawings by Nuveen thereunder of any amounts due Nuveen
pursuant to Section 11(a) hereof if such amounts remain unpaid for 5
business days after demand for payment is made.
For purposes of this Section 10(a)(xiv), "liquid net working
capital" shall mean the difference between (x) the sum of (i) cash and
cash equivalents, (ii) available for sale securities and (iii) accounts
receivable and (y) current liabilities, as each such item is determined
in accordance with Generally Accepted Accounting Principles or, in the
case of "available for sale securities", as determined in accordance with
SFAS Statement No. 115.
(b) Nuveen represents, warrants and covenants as follows:
(i) Nuveen has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own its properties and conduct its
business as presently conducted and, except with respect to certain
states in which Nuveen is currently in the process of registering to
conduct business and/or as an investment adviser, Nuveen is duly
qualified to transact business in all jurisdictions in which the conduct
of the Business requires such qualification.
(ii) This Agreement has been duly authorized, executed and delivered
on behalf of Nuveen, and, assuming due authorization, execution and
delivery on behalf of Xxxx, is the valid and binding obligation of Nuveen
enforceable in accordance with its terms.
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(iii) Nuveen is in full compliance with all applicable provisions of
the Advisers Act and all other applicable state and federal laws.
(iv) There is no action or proceeding pending or, to the knowledge
of Nuveen after due inquiry, threatened against Nuveen before any court
or administrative agency which might result in any material adverse
change in the business, condition or prospects of Nuveen.
(v) Nuveen is not in default under any agreement, lease, contract,
indenture or other instrument or obligation to which it is a party or by
which it or any of its properties is bound and which default is of
material significance in respect of the business or financial condition
of Nuveen. The execution and delivery of this Agreement and the
fulfillment of the terms hereof will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default
under, any material indenture, mortgage, deed of trust or other agreement
or instrument to which Nuveen is a party, or of the Certificate of
Incorporation or By-Laws of Nuveen or any order, rule or regulation
applicable to Nuveen of any court or of any regulatory body or
administrative agency or other governmental body having jurisdiction over
it.
(vi) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery
by Nuveen of this Agreement, and the fulfillment of the terms hereof has
been obtained or made and is in full force and effect; except however,
with respect to certain state filings required in connection with
Nuveen's registration to conduct business and/or as an investment adviser
in certain states.
(vii) Except for registrations described in subsection 10(b)(vi)
above, Nuveen holds all material licenses, certificates and permits from
governmental authorities which are necessary to the conduct of its
business.
(viii) Nuveen is duly registered with the Commission under the
Advisers Act as an investment adviser, and there does not exist any
proceeding or any facts or circumstances the existence of which could
reasonably be expected to lead to any proceeding which could adversely
affect the registration or good standing of Nuveen with the Commission.
(ix) Nuveen is properly registered as an investment adviser in each
state where the nature of its business currently requires such
registration and will promptly so register in each other state in which
the conduct of the Business requires such registration.
(x) Nuveen shall promptly notify Xxxx in the event (x) that Nuveen
or any of its affiliates (i) becomes subject to a statutory
disqualification that prevents Nuveen from serving as an investment
adviser pursuant to the Investment Advisory Agreements, or (ii) becomes
the subject of an administrative proceeding or enforcement action by the
Commission or other regulatory authority, or (y) of the occurrence of any
fact or circumstance which could materially impair the ability of Nuveen
to perform its obligations hereunder or under the Investment Advisory
Agreements.
(xi) Nuveen shall conform to the rules and regulations applicable to
an investment adviser under the Advisers Act.
(xii) Nuveen shall conform to any other applicable provisions of
state or federal law.
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(c) The representations, warranties and covenants contained in this
Section 10 shall survive for a period of six (6) months following the
termination of this Agreement.
11. Indemnification.
(a) Xxxx agrees to indemnify and hold harmless Nuveen, its directors,
officers, employees, agents and affiliates, against any losses, claims,
damages, liabilities or expenses (including reasonable attorney's fees) to
which Nuveen, such director, officer, employee, agent or affiliate may become
subject insofar as such losses, claims, damages, liabilities or expenses (or
actions or proceedings in respect thereof) arise out of or are based upon
(i) the failure of Xxxx to comply with the Advisers Act or any other applicable
federal or state securities laws, rules or regulations, (ii) the breach or
inaccuracy of or non-compliance by Xxxx with the terms and conditions of this
Agreement (including, without limitation, the failure of Xxxx to promptly
perform in accordance with Section 5 hereof the duties assigned to it under
Section 1 hereof), any Investment Advisory Agreement or any representation,
warranty or covenant contained herein or therein by Xxxx or (iii) any suit,
action, proceeding or threatened suit, action or proceeding by any third party
arising out of or relating to acts or omissions of Xxxx in fulfilling its
responsibilities under Section 1 hereof.
(b) Nuveen agrees to indemnify and hold harmless Xxxx, its directors,
officers, employees, agents and affiliates, against any losses, claims,
damages, liabilities or expenses (including reasonable attorney's fees) to
which Xxxx, such director, officer, employee, agent or affiliate may become
subject insofar as such losses, claims, damages, liabilities or expenses (or
actions or proceedings in respect thereof) arise out of or are based upon
(i) the failure of Nuveen to comply with the Advisers Act or any other
applicable federal or state securities laws, rules and regulations, (ii) the
breach or inaccuracy of or non-compliance by Nuveen with the terms and
conditions of this Agreement (including, without limitation, the failure of
Nuveen to promptly perform in accordance with Section 5 hereof the duties
assigned to it under Section 2 hereof), any Investment Advisory Agreement or
any representation, warranty or covenant contained herein or therein by Nuveen
or (iii) any suit, action, proceeding or threatened suit, action or proceeding
by any third party arising out of or relating to acts or omissions of Nuveen in
fulfilling its responsibilities under Section 2 hereof.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 11, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for hereunder
shall be available to any party who shall fail to give notice as provided in
this Section 11 if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced by the
failure to give such notice, but the failure to give such notice shall not
relieve the indemnifying party or parties from any liability which it or they
may have to the indemnified party for contribution or otherwise on account of
the provisions of Section 11(a) or (b). In case any such proceeding shall be
brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party
and shall pay as incurred the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel at its own expense. Notwithstanding the
foregoing, the indemnifying party shall pay as incurred the fees and expenses
of the counsel retained by the indemnified party in the event (i) the
indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is
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understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm for all such indemnified
parties. Such firm shall be designated in writing by Nuveen in the case of
parties indemnified pursuant to Section 11(a) and by Xxxx in the case of parties
indemnified pursuant to Section 11(b). The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment.
(d) If the indemnification provided for in this Section 11 is judicially
determined (or determined in a final and binding arbitration) to be unavailable
to hold harmless an indemnified party under Section 11(a) or 11(b) above in
respect of any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to therein, then the indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to take account of (i) the relative fault
of both parties in causing such loss and (ii) any other equitable
considerations.
12. Confidentiality.
(a) Except as otherwise provided in Section 12(b), Nuveen and Xxxx each
agree to treat as confidential and to use exclusively for purposes directly
related to the Business (i) any confidential information about the other party
which is furnished to it pursuant to the establishment and operation of the
Business and (ii) any information jointly developed for use in the Business,
except in each case such information as is required by law to be disclosed in
connection with offering investment advisory services to Municipal Accounts or
Tax-Advantaged Balanced Accounts and except as may be required to be disclosed
to any regulatory or self-regulatory organization or pursuant to a subpoena.
(b) The parties agree that (i) the rules, procedures and strategies
relating to investments in Municipal Securities (collectively, the "Municipal
Investment Program"), are integral to the business of Nuveen apart from the
joint investment advisory relationship established by this Agreement and are
currently in use by Nuveen in business contexts other than the Business (as
defined on page 2 hereof), (ii) the Municipal Investment Program constitutes
confidential business information of Nuveen which it may use in any business
venture (in addition to the Business) during the term hereof or thereafter so
long as such use does not violate the terms of the non-competition provision
contained in Section 9 hereof and (iii) Xxxx shall not use the Municipal
Investment Program except (x) during the term of this Agreement and
(y) exclusively in connection with the Business.
(c) The parties agree that (i) the rules, procedures and strategies
relating to (w) investments in Equity Securities, including those relating to
the Xxxx tactical asset allocation models and any proprietary software related
thereto (collectively, the "Equity Investment Program") and (x) the proprietary
software and procedures used in the administration of client accounts
("POEMS"), are integral to the business of Xxxx apart from the joint investment
advisory relationship established by this Agreement and are currently in use by
Xxxx in business contexts other than the Business (as defined on page 2
hereof), (ii) the Equity Investment Program and POEMS constitute confidential
business information of Xxxx which it may use in any business venture (in
addition to the Business) during the term hereof or thereafter so long as such
use does not violate the terms of the non-competition provision contained in
Section 9 hereof and (iii) Nuveen shall not use the Equity Investment Program
or POEMS except (y) during the term of this Agreement and (z) exclusively in
connection with the Business.
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13. Termination. This Agreement may be terminated as follows:
(a) at any time, without the payment of any penalty, by Xxxx or Nuveen
upon providing twelve (12) months' written notice to the other party. The
notice provided for herein may be waived by the party entitled to receive such
notice;
(b) automatically in the event of its "assignment" by Xxxx or Nuveen at
the election of the non-assigning party. The term "assignment" for purposes of
this Agreement shall have the meaning set forth in Section 205 of the Advisers
Act and the rules and regulations thereunder;
(c) at any time by a party upon a breach of this Agreement by the other
party, which breach is not cured within 20 days following notice of such breach
by the non-breaching party; and
(d) automatically in the event that either party shall dissolve or file a
petition in bankruptcy or for reorganization under the Federal Bankruptcy Act
or any federal or state law for the relief of debtors or shall be adjudicated a
bankrupt or insolvent or shall make an assignment for the benefit of creditors
or shall suffer the appointment of a receiver or trustee for its business or
properties or shall be named as a debtor in possession or alleged debtor in
possession in proceedings following the filing against it of an involuntary
petition in bankruptcy or for reorganization under the Federal Bankruptcy Act
or any federal or state law for the relief of debtors.
Upon termination of this Agreement (i) each party agrees to cooperate with
the other to facilitate the orderly termination of Investment Advisory
Agreements entered into with Principals and Nuveen and Xxxx and the transfer of
investment management responsibilities with respect to Portfolio Assets to a
third party or to Nuveen or Xxxx, as the case may be, if either or both parties
are permitted under Section 9 hereof to render services to Tax Advantaged
Managed Accounts following termination of this Agreement, (ii) Xxxx agrees to
deliver to Nuveen at Nuveen's request within twenty (20) business days, copies
of all books and records maintained by Xxxx in connection with providing
investment management and administrative services to Principals pursuant to
Investment Advisory Agreements contemplated by this Agreement and any
confidential information provided by Nuveen to Xxxx in connection with the
Business, (iii) Nuveen agrees to deliver to Xxxx at Xxxx'x request within
twenty (20) business days, copies of all books and records maintained by Nuveen
in connection with providing investment management services to Principals
pursuant to Investment Advisory Agreements contemplated by this Agreement and
any confidential information provided by Xxxx to Nuveen in connection with the
Business.
Sections 9, 11, 12 and 19 hereof shall survive termination of this
Agreement.
14. Term. This Agreement shall become effective on the date hereof and
shall continue unless and until terminated by either party as hereinafter
provided.
15. Amendments. 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.
16. Survival. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
11
17. Notices. All notices, consents, requests, reports and other documents
authorized or required to be given pursuant to this Agreement shall be given in
writing and either personally served on an officer of the party to whom it is
given or mailed by registered or certified first class mail, postage prepaid,
or sent by telecopy, and addressed as follows:
If to Xxxx:
Xxxx Investment Associates
Division of X.X. Xxxx & Associates, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000-0000
Telecopier: 000-000-0000
Attention: Xxxx X. Xxxxxx
With a copy to:
Xxxx Investment Associates
Division of X.X. Xxxx & Associates, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000-0000
Telecopier: 000-000-0000
Attention: Xxxxx X. Xxxxx
If to Nuveen:
Nuveen Institutional Advisory Corp.
Suite 3200
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopier: 000-000-0000
Attention: Xxxxx X. Xxxxxxxxxx
With a copy to:
Nuveen Institutional Advisory Corp.
Suite 3300
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopier: 000-000-0000
Attention: Xxxxxx X. Xxxxxx
Notices, consents, requests, reports and other documents shall be deemed
given or served when delivered or, if mailed by registered or certified first
class mail, on the third day after the day of mailing and, if sent by
telecopier, upon confirmation of receipt. A party may change its address for
the receipt of notices, consents, requests, reports and other documents at any
time by giving notice thereof to the other party.
12
18. Questions of Interpretation; Applicable Law. 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 Advisers Act shall be
resolved by reference to such term or provision of the Advisers Act and to
interpretations 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
issued pursuant to said Advisers Act. In addition, where the effect of a
requirement of the Advisers Act reflected in any provision of this Agreement is
revised by a rule, regulation or order of the Commission, such provision shall
be deemed to incorporate the effect of such revision.
Other than as set forth above in this Section 18, this Agreement shall be
governed by the internal laws (as opposed to conflicts of laws principles) of
the State of Delaware, provided that nothing herein shall be construed in a
manner inconsistent with the Advisers Act, or rules, regulations or orders of
the Commission thereunder.
19. Arbitration. Any dispute or difference between the parties arising
out of, or in connection with, this Agreement or as to the construction hereof
or as to the rights or liabilities of any party hereunder shall be referred to
and settled by binding arbitration. Any such arbitration shall only be
commenced after the chief executive officers (or their designees) of each party
shall have met in person and attempted in good faith to resolve any such
dispute or difference. In the event that such persons are unsuccessful in
resolving any such dispute or difference after a reasonable period of time,
either party may commence an arbitration proceeding with respect to any such
dispute or difference by notice in writing to the other party, and each party
shall thereupon or promptly thereafter choose an arbitrator and a third
arbitrator shall be chosen by the two so chosen. If either party fails to
choose an arbitrator within 15 days after notice of commencement of
arbitration, or if the two arbitrators fail to choose a third arbitrator within
15 days after their appointment, the American Arbitration Association ("AAA")
shall, upon the request of either party, appoint the arbitrator or arbitrators
to constitute or complete the board as the case may be. The arbitration shall
be held in Dayton, Ohio or Chicago, Illinois at the election of any such party
bringing such action and shall be under the Securities Arbitration Rules of the
AAA. Unless the arbitrators otherwise determine, (i) the costs of arbitration
shall be borne equally by each party and (ii) each party shall be responsible
for its own legal fees and other expenses incurred in prosecuting or defending
claims in arbitration. The arbitration award shall be final and binding upon
the parties and judgment thereon may be entered in any court having
jurisdiction.
20. Miscellaneous.
(a) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect.
(b) If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby and, to this extent, the
provisions of this Agreement shall be deemed to be severable.
21. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be identical and all of which, when taken
together, will constitute one and the same instrument, and each party may
execute this Agreement by signing any such counterpart.
13
22. Entire Agreement. This Agreement represents the entire agreement
between the parties relating to the subject matter hereof and can be modified
or amended only in writing signed by both parties. The parties acknowledge and
agree that the Prior Agreements are hereby terminated and that the Trial
Accounts, and the respective rights, responsibilities, duties and obligations
of the parties with respect thereto, are governed by and should be construed in
accordance with the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective duly authorized officers as of the
day and year first written above.
NUVEEN INSTITUTIONAL ADVISORY CORP.
By:/c/ Xxxxx X. Xxxxxxxxxx
------------------------------
Title: Vice President
---------------------------
Attest:
/c/ Xxxxx X. Xxxxxx
----------------------------
Title: Vice President
----------------------
X.X. XXXX & ASSOCIATES, INC.
By:/c/ Xxxxxxxx X. Xxxx
------------------------------
Title: Chairman & CEO
---------------------------
Attest:
/c/ Xxxxx X. Xxxxx
----------------------------
Title: Senior Vice President
----------------------------
14
EXHIBIT A
TAX-ADVANTAGED BALANCED ACCOUNTS
1. Tax-Advantaged Balanced: Capital Appreciation
2. Tax-Advantaged Balanced: Capital Appreciation and Income
3. Tax-Advantaged Balanced: Income
MUNICIPAL ACCOUNTS
1. Municipal: Capital Preservation Portfolio
2. Municipal: Laddered Portfolio
3. Municipal: Income Portfolio
Reference shall be made to the following descriptions of the investment
objectives and policies of Xxxx and Nuveen for purposes of determining whether
a managed account constitutes a "Tax-Advantaged Managed Account" for purposes
of Section 9 of the Agreement.
Nuveen
Nuveen employs a value-oriented investment philosophy in structuring and
managing municipal bond portfolios. Nuveen's approach focuses on higher
quality, more liquid securities to achieve a client's specific investment
objectives consistent with a secondary emphasis on capital preservation. The
cornerstone of Nuveen's value-oriented philosophy is a reliance on fundamental
credit research on individual municipal issues coupled with general market
analysis designed to identify technical and structural inefficiencies that
create opportunities to enhance investment returns.
Xxxx
Xxxx employs a value-oriented investment philosophy in structuring balanced
portfolios with an emphasis on balancing superior capital appreciation
potential with an underlying objective of capital preservation. Xxxx'x
approach focuses on mid to large capital equities and relies on analysis of a
security's fundamental, financial and qualitative position relative to the
market's expectations to identify attractive issues for purchase. Xxxx seeks
to enhance portfolio investment returns by gradually adjusting a client's asset
allocation mix over time within an established portfolio-specific range to
emphasize either capital appreciation or capital preservation as appropriate
for current market conditions. Xxxx adjusts asset allocation mixes based upon
proprietary econometric models which forecast the relative expected returns
between equities, fixed-income securities and cash.
15
EXHIBIT B
XXXX RESPONSIBILITIES WITH RESPECT TO TAX-ADVANTAGED BALANCED ACCOUNTS
In connection with the operation of the Tax-Advantaged Balanced Accounts by
Xxxx and Nuveen, Xxxx will be responsible for the provision of (i) asset
allocation services, (ii) investment advisory and trade execution services
relating to Equity Securities, and (iii) account administration and reporting
services (except those specifically allocated to Nuveen in Exhibit D hereto),
although Xxxx may seek the assistance of Nuveen in fulfilling such
responsibilities. Capitalized terms not otherwise defined in this Exhibit
shall have the meaning given to them in this Agreement of which this Exhibit is
a part. Xxxx'x responsibilities with respect to the Tax-Advantaged Balanced
Accounts are as follows:
1. determine the initial allocation of each Principal's Portfolio Assets among
Equity Securities, Municipal Securities and Liquidity Assets based upon the
Principal's Questionnaire and Portfolio Investment Strategy chosen by the
Principal;
2. develop and maintain, in a manner mutually agreed upon by Xxxx and Nuveen,
Xxxx'x investment management and account administration computer systems
supporting the operation of the Tax-Advantaged Balanced Accounts:
(a) to permit the accurate tracking and account reporting of the Bond
Portion, Equity Portion and Liquidity Assets of each Principal's
Portfolio Assets;
(b) to permit Nuveen to access electronically such current and historical
information on each Principal's account as Nuveen may reasonably request;
when such electronic access is not feasible or practicable, Xxxx will
make available such information to Nuveen on electronic media or other
media mutually agreed upon by Nuveen and Xxxx;
(c) to provide Nuveen with such information and in such detail as Nuveen
may reasonably request and as mutually agreed upon by Nuveen and Xxxx
related to activity in or performance of each Principal's account, that
would in Nuveen's view enhance the sales and marketing programs developed
to support the Tax-Advantaged Balanced Accounts or to support the
development of new tax-advantaged products; and
(d) to enhance the operation of the Tax-Advantaged Balanced Accounts upon
the mutual determination by both parties from time to time that such
enhancements are warranted;
3. develop and maintain, in a manner mutually agreed upon by Xxxx and Nuveen,
Xxxx'x investment management computer systems to incorporate the procedures and
guidelines for the purchase and sale of Municipal Securities for each
Principal's account, described in Procedures and Guidelines Relating to the
Purchase and Sale of Municipal Securities, as may be amended from time to time
(the "Procedures"), and take the following actions with respect to the purchase
and sale of Municipal Securities for each Principal's account:
(a) determine each Principal's potential investment needs for Municipal
Securities, based upon the Portfolio Investment Strategy selected by the
Principal and such Principal's Portfolio Management Planning
Questionnaire (the "Questionnaire") and the portion of the Principal's
16
Portfolio Assets to be invested in Municipal Securities in connection
with a contribution of additional capital or a reallocation of Portfolio
Assets;
(b) communicate such potential investment needs for Municipal Securities
to Nuveen, according to the Procedures;
(c) determine each Principal's potential sale needs for Municipal
Securities, based upon the Portfolio Investment Strategy selected by the
Principal and such Principal's Questionnaire and the portion of the
Principal's Portfolio Assets invested in Municipal Securities to be sold
in connection with a withdrawal of capital or a reallocation of Portfolio
Assets;
(d) communicate such potential sale needs for Municipal Securities to
Nuveen, according to the Procedures;
(e) following the purchase or sale of Municipal Securities by Nuveen,
timely communicate to Nuveen sufficient information regarding the
allocation of such purchases or sales to each Principal (including the
identity of each custodian and all necessary account information at such
custodian) to permit Nuveen to generate the necessary trade tickets
relating to such purchases or sales of Municipal Securities for the
Principal's account;
(f) following the purchase or sale of Municipal Securities by Nuveen,
timely communicate to each Principal's brokerage firm or custodian bank
sufficient information regarding the allocation of such purchases or
sales to the Principal's account to permit the custodian to generate the
necessary offsetting trade ticket relating to such purchase or sale of
Municipal Securities by Nuveen;
(g) following the purchase or sale of Municipal Securities by Nuveen,
communicate to Nuveen any remaining investment and/or sale needs for
Municipal Securities, according to the Procedures; and
(h) ensure that in allocating purchases of Municipal Securities to each
Principal's account, all investment restrictions imposed by such
Principal are adhered to;
4. provide systems access via a dedicated data line or network for multiple
Nuveen users in support of the on-line, real-time communication activities
described in item 3 above;
5. manage the Equity Portion in accordance with Xxxx'x established investment
policies with respect to Equity Securities, the Portfolio Investment Strategy
selected by the Principal, as described in Portfolio Investment Strategies for
Tax-Advantaged Balanced Accounts, and any investment restrictions imposed by
the Principal, as described in the Questionnaire;
6. modify Xxxx'x Questionnaire as necessary to reflect the inclusion of
Municipal Securities as the Bond Portion of each Principal's Portfolio Assets;
7. Compare the Questionnaire as completed by the Principal with the Portfolio
Investment Strategy selected by the Principal to confirm that the investment
objectives and risk/return tolerance of each are consistent;
8. establish new client accounts on Xxxx'x account administration computer
systems, based upon account information obtained from the brokerage firm or
custodian bank at which the Principal's Portfolio
17
Assets will be held, as specified by the Principal in the Investment Advisory
Agreement executed by Xxxx, Nuveen and the Principal;
9. evaluate on an on-going basis the allocation of each Principal's Portfolio
Assets in light of current and anticipated financial market conditions and
periodically reallocate such Portfolio Assets among Equity Securities,
Municipal Securities and Liquidity Assets in accordance with the Principal's
investment objectives, as described in the Principal's Questionnaire and the
Investment Advisory Agreement executed by Xxxx, Nuveen and the Principal;
10. if Principal has authorized Nuveen to invest any Liquidity Assets
(including Liquidity Assets that represent uninvested Portfolio Assets to be
allocated to the Equity Portion) in municipal auction rate preferred shares or
similar securities, advise Nuveen of the amount of Liquidity Assets available
for such investment;
11. reconcile periodically, pursuant to Xxxx'x current procedures but no less
frequently than quarterly, each Principal's account records maintained in
Xxxx'x account administration computer systems with the account records
maintained by the Principal's brokerage firm or custodian bank;
12. develop and maintain the form and content of quarterly account performance
reports in a manner mutually agreed upon by Xxxx and Nuveen to reflect
inclusion of Municipal Securities as the Bond Portion of a Principal's
Portfolio Assets;
13. produce and distribute quarterly performance reports to each Principal,
pursuant to Xxxx'x current practices;
14. prepare and distribute year-end realized gain/loss reports to each
Principal, pursuant to Xxxx'x current practices;
15. unless Principal has directed Xxxx to use a specified broker-dealer, assist
Principal to negotiate commissions and/or markups for the purchase and sale of
Equity Securities and select broker-dealers for execution of such purchases and
sales pursuant to Xxxx'x normal policies and procedures, as such may be amended
from time to time, and consistent with the rules, regulations and publicly
available interpretations of the Advisers Act;
16. make available to Nuveen upon its request such information or copies of
Xxxx'x investment records and ledgers with respect to the Equity Portion of
each Principal's Portfolio Assets as may be required to assist Nuveen in
achieving the investment objectives of the Tax-Advantaged Balanced Accounts,
and complying with any applicable laws, rules and regulations;
17. in the event that Xxxx or its affiliates purchases or sells Equity
Securities for their own or affiliated accounts or for the accounts of clients
other than the Principals, and at the same time Xxxx or its affiliates
purchases or sells the same Equity Securities with respect to the Portfolio
Assets, Xxxx will, in the event that all advisory clients of Xxxx and its
affiliates are unable to purchase or sell securities in the desired quantities,
allocate such transactions equitably among all such advisory clients (including
the Principals); and
18. cooperate with Nuveen in implementing the comprehensive marketing and
customer service programs described in Section 7(b) of the Agreement.
18
EXHIBIT C
XXXX RESPONSIBILITIES WITH RESPECT TO MUNICIPAL ACCOUNTS
In connection with the operation of the Municipal Accounts by Xxxx and Nuveen,
Xxxx will be responsible for the provision of account administration and
reporting services, although Xxxx may seek the assistance of Nuveen in
fulfilling such responsibilities. Capitalized terms not otherwise defined in
this Exhibit shall have the meaning given to them in this Agreement of which
this Exhibit is a part. Xxxx'x responsibilities with respect to the Municipal
Accounts are as follows:
1. develop and maintain, in a manner mutually agreed upon by Xxxx and
Nuveen, Xxxx'x investment management and account administration computer
systems supporting the operation of the Business:
(a) to permit the accurate tracking and account reporting of the
Municipal Securities and Liquidity Assets comprising each Principal's
Portfolio Assets;
(b) to permit Nuveen to access electronically such current and historical
information on each Principal's account as Nuveen may reasonably request;
when such electronic access is not feasible or practicable, Xxxx will
make available such information to Nuveen on electronic media or other
media mutually agreed upon by Nuveen and Xxxx;
(c) to provide Nuveen with such information and in such detail as Nuveen
may reasonably request and as mutually agreed upon by Nuveen and Xxxx
related to activity in or performance of each Principal's account, that
would in Nuveen's view enhance the sales and marketing programs developed
to support the Municipal Accounts or to support the development of new
municipal products; and
(d) to enhance the operation of the Municipal Accounts by Nuveen, upon
the determination by Nuveen from time to time that such enhancements are
warranted;
2. develop and maintain, in a manner mutually agreed upon by Xxxx and Nuveen,
Xxxx'x investment management computer systems to incorporate the procedures and
guidelines for the purchase and sale of Municipal Securities for each
Principal's account, described in Procedures and Guidelines Relating to the
Purchase and Sale of Municipal Securities, as may be amended from time to time
(the "Procedures"), and take the following actions with respect to the purchase
and sale of Municipal Securities for each Principal's account:
(a) determine each Principal's potential investment needs for Municipal
Securities, based upon the Portfolio Investment Strategy selected by the
Principal and such Principal's Portfolio Management Planning
Questionnaire (the "Questionnaire") and the portion of the Principal's
Portfolio Assets to be invested in Municipal Securities in connection
with a contribution of additional capital or a reallocation of Portfolio
Assets;
(b) communicate such potential investment needs for Municipal Securities
to Nuveen, according to the Procedures;
(c) determine each Principal's potential sale needs for Municipal
Securities, based upon the Portfolio Investment Strategy selected by the
Principal and such Principal's Questionnaire and the
19
portion of the Principal's Portfolio Assets invested in Municipal
Securities to be sold in connection with a withdrawal of capital or a
reallocation of Portfolio Assets;
(d) communicate such potential sale needs for Municipal Securities to
Nuveen, according to the Procedures;
(e) following the purchase or sale of Municipal Securities by Nuveen,
timely communicate to Nuveen sufficient information regarding the
allocation of such purchases or sales to each Principal (including the
identity of each Principal's custodian and all necessary account
information at such custodian) to permit Nuveen to generate the necessary
trade tickets relating to such purchases or sales of Municipal Securities
for the Principal's account;
(f) following the purchase or sale of Municipal Securities by Nuveen,
timely communicate to each Principal's brokerage firm or custodian bank
sufficient information regarding the allocation of such purchases or
sales to the Principal's account to permit the custodian to generate the
necessary offsetting trade ticket relating to such purchase or sale of
Municipal Securities by Nuveen;
(g) following the purchase or sale of Municipal Securities by Nuveen,
communicate to Nuveen any remaining investment and/or sale needs for
Municipal Securities, according to the Procedures;
(h) ensure that in allocating purchases of Municipal Securities to each
Principal's account, all investment restrictions imposed by such
Principal are adhered to;
3. provide systems access via a dedicated data line or network for multiple
Nuveen users in support of the on-line, real-time communication activities
described in item 2 above;
4. establish new client accounts on Xxxx'x account administration computer
systems, based upon account information obtained from the brokerage firm or
custodian bank at which the Principal's Portfolio Assets will be held, as
specified by the Principal in the Investment Advisory Agreement executed
between Nuveen and the Principal;
5. cooperate with Nuveen in connection with preparation by Nuveen of a
Questionnaire for Municipal Accounts;
6. reconcile periodically, pursuant to Xxxx'x current procedures, each
Principal's account records maintained in Xxxx'x account administration
computer systems with the account records maintained by the Principal's
brokerage firm or custodian bank;
7. develop and maintain the form and content of the quarterly account
performance reports as Nuveen may reasonably request;
8. produce and distribute quarterly performance reports to each Principal,
pursuant to Xxxx'x current practices;
9. prepare and distribute year-end realized gain/loss reports to each
Principal, pursuant to Xxxx'x current practices; and
10. cooperate with Nuveen in implementing the comprehensive marketing and
customer service programs described in Section 7(b) of the Agreement.
20
EXHIBIT D
NUVEEN RESPONSIBILITIES WITH RESPECT TO TAX-ADVANTAGED BALANCED ACCOUNTS
In connection with the operation of the Tax-Advantaged Balanced Accounts by
Xxxx and Nuveen, Nuveen will be responsible for the provision of investment
advisory and trade execution services relating to Municipal Securities. Nuveen
will also provide Xxxx with assistance relating to the fulfillment of Xxxx'x
responsibilities with respect to account administration and reporting services
as outlined in EXHIBIT B of this Agreement. Capitalized terms not otherwise
defined in this Exhibit shall have the meaning given to them in this Agreement
of which this Exhibit is a part. Nuveen's responsibilities with respect to the
Tax-Advantaged Balanced Accounts are as follows:
1. assist Xxxx in connection with the maintenance of Xxxx'x investment
management and account administration systems to accurately track and generate
account statements for the Bond Portion and Liquidity Assets of each
Principal's Portfolio Assets. Such assistance may include, but will not be
limited to, information relating to the following:
(a) the operation of the municipal market, including organizational
structure, participants and general practices;
(b) the general features, characteristics, trading and pricing of
Municipal Securities; and
(c) the applicable regulatory and accounting guidelines affecting issuers
of and investors in Municipal Securities;
2. provide Xxxx with the Procedures and Guidelines for the Purchase and Sale of
Municipal Securities, as may be amended from time to time (the "Procedures"),
describing the procedures and guidelines for the purchase and sale of Municipal
Securities for each Principal's account;
3. assist Xxxx in connection with the incorporation of the Procedures into
Xxxx'x investment management and account administration systems;
4. establish and administer a securities clearance operation to facilitate the
purchase and sale of Municipal Securities for each Principal's account;
5. maintain Nuveen's portfolio management and municipal securities trading
systems as necessary to accommodate the Procedures and to permit Nuveen to
perform on-going analysis, evaluation and surveillance of the Municipal
Securities held in a Principal's account;
6. manage the Bond Portion in accordance with Nuveen's established investment
policies with respect to Municipal Securities and the Portfolio Investment
Strategy selected for a Principal's account, as described in Portfolio
Investment Strategies for Tax-Advantaged Balanced Accounts;
7. assist Xxxx'x modification of its Portfolio Management Planning
Questionnaire (the "Questionnaire") as necessary to reflect the inclusion of
Municipal Securities as the Bond Portion of each Principal's Portfolio Assets;
21
8. assist Xxxx in evaluating each Principal's Questionnaire and in identifying
a Portfolio Investment Strategy for the Principal's account consistent with the
financial objective and risk/return tolerance as indicated by the Principal's
Questionnaire;
9. provide such information, assistance or recommendations as Xxxx may
reasonably request relating to current and anticipated municipal market
conditions so as to permit Xxxx to determine the initial allocation, and any
periodic subsequent reallocation, of each Principal's Portfolio Assets among
Equity Securities, Municipal Securities and Liquidity Assets, in accordance
with the Portfolio Investment Strategy selected by the Principal for its
account;
10. develop a municipal section for the Market and Financial Digest commentary
and a brief current summary to be included in the quarterly account performance
reports produced and distributed by Xxxx to each Principal;
11. report to Xxxx such information at such times and in such detail as Xxxx
may reasonably request, in order to permit Xxxx to confirm that investments
within the Bond Portion are in conformity with the investment objectives
established for the Portfolio Assets in the Investment Advisory Agreement
executed by Xxxx, Nuveen and each Principal;
12. furnish to Xxxx whatever statistical information Xxxx may reasonably
request with respect to investments in, or contemplated for, the Bond Portion
of each Principal's Portfolio Assets; inform Xxxx on a timely basis of
developments materially affecting the Municipal Securities; and furnish to Xxxx
from time to time whatever information Nuveen believes is appropriate or
desirable for such purpose;
13. negotiate commissions and/or markups for the purchase and sale of Municipal
Securities and select broker-dealers for execution of such purchases and sales
pursuant to Nuveen's normal policies and procedures, as such may be amended
from time to time, and consistent with the rules, regulations and publicly
available interpretations of the Advisers Act;
14. if requested by Principals, assist Principals in establishing commission
rates for directed brokerage transactions;
15. arrange for the clearing of purchases and sales of Municipal Securities
through a Clearing Agent (which Clearing Agent may be an affiliate of Nuveen)
in a manner which is consistent with its obligation to obtain on behalf of each
Principal the best execution of each trade;
16. make available to Xxxx upon its request such copies of Nuveen's investment
records and ledgers with respect to the Bond Portion of each Principal's
Portfolio Assets as may be required to assist Xxxx in achieving the investment
objectives of the Tax-Advantaged Balanced Accounts, and complying with any
applicable laws, rules and regulations;
17. in the event that Nuveen purchases or sells Municipal Securities for its
own or affiliated accounts or for the accounts of clients other than the
Principals, and at the same time Nuveen purchases or sells the same Municipal
Securities with respect to the Portfolio Assets, Nuveen will, in the event that
all advisory clients of Nuveen and its affiliates are unable to purchase or
sell securities in the desired quantities, allocate such transactions equitably
among all such advisory clients (including the Principals); and
18. cooperate with Xxxx in implementing the comprehensive marketing and
customer service programs described in Section 7(b) of the Agreement.
D-2
22
EXHIBIT E
NUVEEN RESPONSIBILITIES WITH RESPECT TO MUNICIPAL ACCOUNTS
In connection with the operation of the Municipal Accounts by Xxxx and Nuveen,
Nuveen will be responsible for the provision of investment advisory and trade
execution services relating to Municipal Securities. Nuveen will also provide
Xxxx with assistance relating to the fulfillment of Xxxx'x responsibilities
with respect to account administration and reporting services as outlined in
EXHIBIT C of this Agreement. Capitalized terms not otherwise defined in this
Exhibit shall have the meaning given to them in this Agreement of which this
Exhibit is a part. Nuveen's responsibilities with respect to the Municipal
Accounts are as follows:
1. assist Xxxx in connection with the modification of Xxxx'x investment
management and account administration systems to accurately track and generate
account statements for the Municipal Securities and Liquidity Assets comprising
each Principal's Portfolio Assets. Such assistance may include, but not be
limited to, information relating to the following:
(a) the operation of the municipal market, including organizational
structure, participants and general practices;
(b) the general features, characteristics, trading and pricing of
Municipal Securities; and
(c) the applicable regulatory and accounting guidelines affecting issuers
of and investors in Municipal Securities;
2. maintain the Procedures and Guidelines for the Purchase and Sale of
Municipal Securities, as may be amended from time to time (the "Procedures"),
describing the procedures and guidelines for the purchase and sale of Municipal
Securities for each Principal's account;
3. assist Xxxx in connection with the incorporation of the Procedures into
Xxxx'x investment management and account administration systems;
4. establish and administer a securities operation to facilitate the purchase
and sale of Municipal Securities for each Principal's account;
5. maintain Nuveen's portfolio management and municipal securities trading
systems as necessary to accommodate the Procedures and to permit Nuveen to
perform on-going analysis, evaluation and surveillance of the Municipal
Securities held in a Principal's account;
6. develop (with cooperation and assistance from Xxxx) a Portfolio Management
Planning Questionnaire to permit Nuveen to evaluate each Principal's investment
objectives and risk/return tolerance in connection with the determination of an
appropriate Portfolio Investment Strategy for the Principal's Portfolio Assets;
7. manage the Municipal Accounts in accordance with Nuveen's established
investment policies with respect to Municipal Securities, the Portfolio
Investment Strategy selected for a Principal's account, as
23
described in Portfolio Investment Strategies for Municipal Accounts, and any
investment restrictions imposed by the Principal, as described in the Portfolio
Management Planning Questionnaire;
8. compare the Portfolio Management Planning Questionnaire as completed by the
Principal with the Portfolio Investment Strategy selected by Principal to
confirm that the investment objectives and risk return tolerance of each are
consistent;
9. provide such information and in such detail as Xxxx may reasonably request
in order to establish new client accounts on Xxxx'x account administration
computer systems, based upon the information provided by the Principal in the
Investment Advisory Agreement executed between Nuveen and the Principal;
10. develop a municipal section for the Market and Financial Digest commentary
and a brief current summary to be included in the quarterly account performance
reports produced and distributed by Xxxx to each Principal;
11. negotiate commissions and/or markups for the purchase and sale of Municipal
Securities and select broker-dealers for execution of such purchases and sales
pursuant to Nuveen's normal policies and procedures, as such may be amended
from time to time, and consistent with the rules, regulations and publicly
available interpretations of the Advisers Act;
12. if requested by Principals, assist Principals in establishing commission
rates for directed brokerage transactions; and
13. arrange for the clearing of purchases and sales of Municipal Securities
through a Clearing Agent (which Clearing Agent may be an affiliate of Nuveen)
in a manner which is consistent with its obligation to obtain on behalf of each
Principal the best execution of each trade.
24
EXHIBIT F
SCHEDULE OF INVESTMENT MANAGEMENT FEES
DIRECT COMMISSION ACCOUNTS
INDIVIDUAL ACCOUNT FEE SCHEDULE
Tax-Advantaged Tax-Advantaged Balanced Municipal
Balanced Accounts Accounts-Select Sponsor Acounts
----------------- ----------------------- -------
Investment Investment Investment
Management Admin. Fee Management Admin. Fee Management Admin. Fee
Breakpoint Fee Reallowance Fee Reallowance Fee Reallowance
---------- -------------------- ----------- -------------------- ----------- -------------------- -----------
First $2 million 1.00% 0.200% 0.75% 0.150% 0.60% 0.120%
Next $1 million 0.70% 0.140% 0.75% 0.150% 0.50% 0.100%
Next $2 million 0.50% 0.100% 0.50% 0.100% 0.40% 0.080%
Next $5 million 0.40% 0.080% 0.40% 0.080% 0.35% 0.070%
Amounts Above $10 0.35% 0.070% 0.35% 0.070% 0.30% 0.060%
million
Split of Investment Management Fees Net of Administration Fee
Reallowance
Tax-Advantaged
Tax-Advantaged Balanced: Tax-Advantaged
Balanced: Capital Appreciation Balanced: Municipal
Capital Appreciation and Income Income Accounts
-------------------- -------------------- -------------------- --------
XXXX 50% 50% 50% 0%
NUVEEN 50% 50% 50% 100%
Xxxx will distribute invoices with respect to both Tax-Advantaged
Balanced Accounts and Municipal Accounts. Xxxx will receive the
Investment Management Fee paid by Principals on both Tax-Advantaged
Balanced Accounts and Municipal Accounts. Upon receipt, Xxxx shall
remit to Nuveen, on a net basis and within 15 days of the end of each
month, that portion of such fees due Nuveen according to the foregoing
schedule. Xxxx shall provide Nuveen and its representatives and
advisers, including its independent auditors, with any information and
access to its books and records as may be reasonably requested by Nuveen
and its representatives and advisers, including its independent
auditors, in order to verify the accuracy of the payments made to it.
