Exhibit 5
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT, made this 1st day of
July, 1983, by and between Xxxx Xxxxx Tax-Exempt Trust, Inc., a Maryland
corporation ("Fund"), and Xxxx Xxxxx Fund Adviser, Inc., a Maryland corporation
(the "Adviser").
WHEREAS, the Fund is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940 ("1940 Act") and has
registered its shares of common stock for sale to the public under the
Securities Act of 1933 and various state securities laws; and
WHEREAS, the Fund wishes to retain the Adviser to provide investment
advisory, management, and administrative services to the Fund; and
WHEREAS, the Adviser is willing to furnish such services on the terms
and conditions hereinafter set forth; and
WHEREAS, the Fund intends to establish one or more portfolios of
securities with distinct and separate investment goals and policies, interests
in each of which will be represented by a distinct class of shares of the Fund
("Portfolios"); and
WHEREAS, this Agreement has been approved by a vote of the shareholders
and of the Fund's Board of Directors and certain disinterested directors in
conformity with the 1940 Act and the rules and regulations thereunder:
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NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. The Fund shall at all times keep the Adviser fully informed with
regard to the securities owned by it, its funds available, or to become
available, for investment, and generally as to the condition of its affairs. It
shall furnish the Adviser with such other documents and information with regard
to its affairs as the Adviser may from time to time reasonably request.
2. (a) Subject to the direction and control of the Fund's Board of
Directors, the Adviser shall regularly provide the Fund with investment
research, advice, management and supervision and shall furnish a continuous
investment program for each of the Portfolios consistent with each Portfolio's
investment goals and policies. The Adviser shall determine from time to time
what securities will be purchased, retained or sold by each Portfolio, and shall
implement those decisions, including the selection of brokers and dealers to
execute securities purchases and sales, all subject to the provisions of the
Fund's Articles of Incorporation and Bylaws, the 1940 Act, the applicable rules
and regulations of the Securities and Exchange Commission, and other applicable
federal and state law, as well as the investment goals and policies of the Fund
and each Portfolio. The Adviser shall also provide advice and recommendations
with respect to other aspects of the business and affairs of the Fund, and shall
perform such other functions of management and supervision as may be directed by
the Board of Directors of the Fund. The Adviser shall furnish to the Fund such
information with respect to the investments of the Fund and their manner of
execution as the Fund's Board of Directors may
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reasonably request and is responsible for the supervision, but not the expense,
of the maintenance of the Fund's financial books and records. The Adviser may
delegate some or all of the functions specified in this subparagraph to
Provident Institutional Management Corporation or another appropriate person.
(b) The Fund hereby authorizes any entity or person associated
with the Adviser which is a member of national securities exchange to effect any
transaction on the exchange for the account of the Fund which is permitted by
Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder, and the Fund hereby consents to the retention of compensation for
such transactions in accordance with Rule 11a2-2(T)(2)(iv).
3. (a) The Adviser, at its expense, shall supply the Board of Directors
and officers of the Fund with information and reports reasonably required by
them and reasonably available to the Adviser and shall furnish the Fund with
office facilities, including space, furniture and equipment and all personnel
reasonably necessary for the operation of the Fund. The Adviser may delegate
some or all of the functions specified above in this subparagraph to Provident
Institutional Management Corporation or another appropriate person. The Adviser
shall authorize and permit any of its directors, officers and employees, who may
be elected as directors or officers of the Fund, to serve in the capacities in
which they are elected.
(b) The Adviser, at its own expense, shall provide a system
whereby information is supplied to shareholders and their brokers concerning
their accounts and the operation of the Fund. The Adviser shall also provide, at
its own expense, a system whereby
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orders for purchases and redemption of Fund shares which are received by the
Fund's distributor, Xxxx Xxxxx Xxxx Xxxxxx, Incorporated, are promptly processed
and transmitted to the Fund's transfer agent. The Adviser may delegate some or
all of the functions specified in this subparagraph to Xxxx Xxxxx Xxxx Xxxxxx,
Incorporated or another appropriate person. The Adviser shall have the right to
use any list of shareholders of the Fund or any other list of investors which it
obtains in connection with its provisions of services under this Agreement;
provided, however, that the Adviser shall not sell or knowingly provide such
list or lists to any unaffiliated person.
(c) Other than as herein specifically indicated, the Adviser shall not
be responsible for the Fund's expenses. Specifically, the Adviser will not be
responsible, except to the extent of the reasonable compensation of employees of
the Fund whose services may be used by the Adviser hereunder, for any of the
following expenses of the Fund, which expenses shall be borne by the Fund: legal
expenses; auditing and accounting expenses; interest, taxes, governmental fees
and membership dues; brokerage commissions or charges, if any; distribution
fees, if any; fees of custodians, transfer agents, registrars or other agents;
expenses of preparing share certificates; the expenses for maintenance of the
Fund's financial books and records, including computation of the Fund's daily
net asset value per share and dividends; expenses of registering and qualifying
Fund shares for the sale under applicable federal and state law; expenses of
preparing, setting in print, printing and distributing prospectuses, reports,
notices and dividends to Fund shareholders; cost of stationary; costs of
stockholders and other meetings of the Fund;
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traveling expenses of officers, directors and employees of the Fund, if any;
fees of the Fund's independent directors and salaries of any officers or
employees who are not affiliated with the Adviser; the organizational expenses
of the Fund; and the Fund's pro rata portion of premiums on any fidelity bond
and other insurance covering the Fund and its officers and directors.
4. No director, officer or employee of the Fund shall receive from the
Fund any salary or other compensation as such director, officer or employee
while he is at the same time a director, officer, or employee of the Adviser or
any affiliated company of the Adviser. This paragraph shall not apply to
directors, executive committee members, consultants and other persons who are
not regular members of the Adviser's or any affiliated company's staff.
5. As compensation for the services performed and the facilities
furnished and expenses assumed by the Adviser, including the services of any
consultants or agents retained by the Adviser, the Fund shall pay the Adviser,
as promptly as possible after the last day of each month, a fee, calculated
daily, of 0.5% annually of the Fund's average daily net assets, provided that
the Adviser's right to such fee will commence only upon the earlier of (i)
October 1, 1983 or (ii) the first day on which the total net assets of the Fund
equal $50 million or more. In the event that the Adviser's right to such fee
commences on a date other than the last day of the month, the fee for such month
shall be based on the average daily assets of the Fund in that period from the
date of commencement to the last day of the month. If this Agreement is
terminated as of any date not the last day of a month, such fee shall be paid as
promptly as possible after such date of termination, and shall be based on the
average daily net assets of the Fund in that period from the beginning of such
month to such date of termination. The average daily net assets of the Fund
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shall in all cases be computed as of such time as may be determined by the Board
of Directors of the Fund. The manner of calculating the Fund's average daily net
assets for the purpose of this Agreement shall be determined by the Fund's Board
of Directors and shall be binding on the parties. Each such payment shall be
accompanied by a report of the Fund prepared either by the Fund or by a firm of
independent accountants which shall show the amount properly payable to the
Adviser under this Agreement and the detailed computation thereof.
6. The Adviser shall reimburse the Fund for all expenses, excluding
brokerage, taxes, interest, extraordinary items, and distribution fees, if any,
incurred by the Fund until the earlier of (i) October 1, 1983 or (ii) the first
day on which the total net assets of the Fund equal $50 million or more.
Thereafter, the Adviser shall reimburse the Fund monthly for all such expenses
exceeding an annual rate of 1.5% of the Fund's average daily net assets.
7. The Adviser assumes no responsibility under this Agreement other
than to render the services called for hereunder, in good faith, and shall not
be responsible for any action of the Board of Directors of the Fund in following
or declining to follow any advice or recommendations of the Adviser and the
Adviser shall not be liable for any error or judgement or mistake of law or for
any loss suffered by the Fund in connection with matters to which this contract
relates; provided, that nothing in this Agreement shall protect the Adviser
against any liability to the Fund or its stockholders to which it would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties hereunder.
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8. Nothing in this Agreement shall limit or restrict the right of any
director, officer, or employee of the Adviser who may also be a director,
officer, or employee of the Fund, to engage in any other business or to devote
his time and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature, nor to limit or
restrict the right of the Adviser to engage in any other business or to render
services of any kind, including investment advisory and management services, to
any other corporation, firm, individual or association.
9. The Fund acknowledges that the Adviser may make payments from the
fees paid to it under this Agreement, from past profits or from any other source
available to it to other persons, including but not limited to Provident
Institutional Management Corporation and Xxxx Xxxxx Xxxx Xxxxxx, Incorporated,
for shareholder, administrative, advisory, record keeping and distribution
services provided by such persons in connection with the Fund's shares.
10. As used in this Agreement, the terms "assignment", "interested
person", and "majority of the outstanding voting securities" shall have the
meanings given to them by Section 2(a) of the 1940 Act, subject to such
exemptions as may be granted by the Securities and Exchange Commission by any
rule, regulation or order.
11. Subject to the provision of paragraph 12 and 13 below, this
Agreement will remain in effect for two years from the date of its execution and
from year to year thereafter, provided that (i) its continuance is specifically
approved annually in the manner required pursuant to Section 15(a) and (c) of
the 1940 Act and (ii) the Adviser does not notify the Fund in
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writing at least sixty (60) days prior to the expiration date in any year that
it does not wish continuance of the Agreement for an additional year.
12. This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any without the payment of any penalty by
the Fund or by the Adviser on sixty (60) days' written notice to the other
party. The Fund may effect such termination by a vote of (i) a majority of the
Board of Directors of the Fund, (ii) a majority of the directors who are not
parties to this Agreement or "interested" persons, as defined by the 1940 Act,
of any such party ("Disinterested Directors"), or (iii) with respect to any
given Portfolio, by a majority of the outstanding voting securities of such
Portfolio.
13. This Agreement shall be submitted for approval to the Board of
Directors of the Fund annually and shall continue in effect only so long as
specifically approved annually (i) by a majority vote of the Fund's Board of
Directors or, with respect to any given Portfolio, by a majority of the
outstanding voting securities of such Portfolio, and (ii) by the vote of a
majority of the Disinterested Directors of the Fund, cast in person at a meeting
called for the purpose of voting on such approval.
14. In the event this Agreement is terminated by either party or upon
written notice from the Adviser at any time, the Fund hereby agrees that it will
eliminate from its corporate name any reference to the name of "Xxxx Xxxxx." The
Fund shall have the non-exclusive use of the name "Xxxx Xxxxx" in whole or in
part only so long as this Agreement is effective or until such notice is given.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
Attest: XXXX XXXXX TAX-EXEMPT TRUST, INC.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxx
_______________________ _____________________________
Attest: XXXX XXXXX FUND ADVISER, INC.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxx S.V.P.
_______________________ _____________________________
