MANAGEMENT AGREEMENT
XXXXXXXXX XXXXXX INCOME FUNDS
This Agreement is made as of November 3, 2003, between Xxxxxxxxx Xxxxxx Income
Funds, a Delaware statutory trust ("Trust"), and Xxxxxxxxx Xxxxxx Management
Inc., a New York corporation ("Manager").
WITNESSETH:
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WHEREAS, Trust is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as an open-end, diversified management investment company
and has established several separate series of shares ("Series") with each
Series having one or more classes and with each Series having its own assets and
investment policies; and
WHEREAS, Trust desires to retain the Manager as investment adviser to furnish
investment advisory and portfolio management services to each Series listed in
Schedule A attached hereto, to such other Series of Trust hereinafter
established as agreed to from time to time by the parties, evidenced by an
addendum to Schedule A (hereinafter "Series" shall refer to each Series which is
subject to this Agreement and all agreements and actions described herein to be
made or taken by Trust on behalf of the Series), and the Manager is willing to
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. SERVICES OF THE MANAGER
1.1 INVESTMENT MANAGEMENT SERVICES. The Manager shall act as the investment
adviser to the Series and, as such, shall (1) obtain and evaluate such
information relating to the economy, industries, businesses, securities markets
and securities as it may deem necessary or useful in discharging its
responsibilities hereunder, (ii) formulate a continuing program for the
investment of the assets of the Series in a manner consistent with its
investment objectives, policies and restrictions, and (iii) determine from time
to time securities to be purchased, sold, retained or lent by the Series, and
implement those decisions, including the selection of entities with or through
which such purchases, sales or loans are to be effected; provided, that the
Manager will place orders pursuant to its investment determinations either
directly with the issuer or with a broker or dealer, and if with a broker or
dealer, (a) will attempt to obtain the best net price and most favorable
execution of its orders, and (b) may nevertheless in its discretion purchase and
sell portfolio securities from and to brokers and dealers who provide the
Manager with research, analysis, advice and similar services and pay such
brokers and dealers in return a higher commission or spread than may be charged
by other brokers or dealers.
The Series hereby authorizes any entity or person associated with the Manager
which is a member of a national securities exchange to effect or execute any
transaction on the exchange for the account of the Series which is permitted by
Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder, and the Series hereby consents to the retention of compensation for
such transactions in accordance with Rule 11a-2(T)(a)(iv).
The Manager shall carry out its duties with respect to the Series' investments
in accordance with applicable law and the investment objectives, policies and
restrictions of the Series adopted by the trustees of Trust ("Trustees"), and
subject to such further limitations as the Series may from time to time impose
by written notice to the Manager.
1.2 ADMINISTRATIVE SERVICES. The Manager shall supervise the Series' business
and affairs and shall provide such services required for effective
administration of the Series as are not provided by employees or other agents
engaged by the Series; provided, that the Manager shall not have any obligation
to provide under this Agreement any direct or indirect services to the holders
of interests in the Series ("Interestholders"), any services related to the sale
of interests in the Series, or any other services which are the subject of a
separate agreement or arrangement between the Series and the Manager. Subject to
the foregoing, in providing administrative services hereunder, the Manager
shall:
1.2.1 OFFICE SPACE, EQUIPMENT AND FACILITIES. Furnish without cost to
the Series, or pay the cost of, such office space, office equipment and office
facilities as are adequate for the Series' needs.
1.2.2 PERSONNEL. Provide, without remuneration from or other cost to
Trust or the Series, the services of individuals competent to perform all of the
Series' executive, administrative and clerical functions which are not performed
by employees or other agents engaged by the Series or by the Manager acting in
some other capacity pursuant to a separate agreement or arrangement with the
Series.
1.2.3 AGENTS. Assist the Series in selecting and coordinating the
activities of the other agents engaged by the Series, including the Series'
custodian, independent auditors and legal counsel.
1.2.4 TRUSTEES AND OFFICERS. Authorize and permit the Manager's
directors, officers and employees who may be elected or appointed as trustees or
officers of Trust to serve in such capacities, without remuneration from or
other cost to Trust or the Series.
1.2.5 BOOKS AND RECORDS. Assure that all financial, accounting and
other records required to be maintained and preserved by Trust and/or the Series
are maintained and preserved by it or on its behalf in accordance with
applicable laws and regulations.
1.2.6 REPORTS AND FILINGS. Assist in the preparation of (but not pay
for) all periodic reports by Trust or the Series to Interestholders of the
Series and all reports and filings required to maintain the registration and
qualification of the Series, or to meet other regulatory or tax requirements
applicable to the Series, under federal and state securities and tax laws.
1.3 The Manager can use any of the officers and employees of Xxxxxxxxx Xxxxxx,
LLC to provide any of the non-investment advisory services described herein, and
can subcontract to third parties, provided the Manager remains as fully
responsible to the Trust or Series, as applicable, under this contract as if the
Manager had provided the services directly.
2. EXPENSES OF THE SERIES
2.1 EXPENSES TO BE PAID BY THE MANAGER. The Manager shall pay all salaries,
expenses and fees of the officers, trustees and employees of the Trust who are
officers, directors or employees of the Manager.
In the event that the Manager pays or assumes any expenses of Trust or a Series
not required to be paid or assumed by the Manager under this Agreement, the
Manager shall not be obligated hereby to pay or assume the same or any similar
expense in the future; provided, that nothing herein contained shall be deemed
to relieve the Manager of any obligation to Trust or to a Series under any
separate agreement or arrangement between the parties.
2.2 EXPENSES TO BE PAID BY THE SERIES. Each Series shall bear the expenses of
its operation, except those specifically allocated to the Manager under this
Agreement or under any separate agreement between a Series and the Manager.
Expenses to be borne by a Series shall include both expenses directly
attributable to the operation of the Series and the placement of interests
therein, as well as the portion of any expenses of Trust that is properly
allocable to the Series in a manner approved by the trustees of Trust. Subject
to any separate agreement or arrangement between Trust or a Series and the
Manager, the expenses hereby allocated to each Series, and not to the Manager,
include, but are not limited to:
2.2.1 CUSTODY. All charges of depositories, custodians, and other
agents for the transfer, receipt, safekeeping, and servicing of its cash,
securities, and other property.
2.2.2 INTERESTHOLDER SERVICING. All expenses of maintaining and
servicing Interestholder accounts, including but not limited to the charges of
any Interestholder servicing agent, dividend disbursing agent or other agent
engaged by a Series to service Interestholder accounts.
2.2.3 INTERESTHOLDER REPORTS. All expenses of preparing, setting in
type, printing and distributing reports and other communications to
Interestholders of a Series.
2.2.4 PRICING AND PORTFOLIO VALUATION. All expenses of computing a
Series' net asset value per share, including any equipment or services obtained
for the purpose of pricing shares or valuing the Series' investment portfolio.
2.2.5 COMMUNICATIONS. All charges for equipment or services used for
communications between the Manager or the Series and any custodian,
Interestholder servicing agent, portfolio accounting services agent, or other
agent engaged by a Series.
2.2.6 LEGAL AND ACCOUNTING FEES. All charges for services and expenses
of a Series' legal counsel and independent auditors.
2.2.7 TRUSTEES' FEES AND EXPENSES. With respect to each Series, all
compensation of Trustees other than those affiliated with the Manager, all
expenses incurred in connection with such unaffiliated Trustees' services as
Trustees, and all other expenses of meetings of the Trustees or committees
thereof.
2.2.8 INTERESTHOLDER MEETINGS. All expenses incidental to holding
meetings of Interestholders, including the printing of notices and proxy
materials, and proxy solicitation therefor.
2.2.9 BONDING AND INSURANCE. All expenses of bond, liability, and
other insurance coverage required by law or regulation or deemed advisable by
the Trustees, including, without limitation, such bond, liability and other
insurance expense that may from time to time be allocated to the Series in a
manner approved by the Trustees.
2.2.10 BROKERAGE COMMISSIONS. All brokers' commissions and other
charges incident to the purchase, sale or lending of a Series' portfolio
securities.
2.2.11 TAXES. All taxes or governmental fees payable by or with
respect to a Series to federal, state or other governmental agencies, domestic
or foreign, including stamp or other transfer taxes.
2.2.12 TRADE ASSOCIATION FEES. All fees, dues and other expenses
incurred in connection with a Series' membership in any trade association or
other investment organization.
2.2.13 NONRECURRING AND EXTRAORDINARY EXPENSES. Such nonrecurring and
extraordinary expenses as may arise, including the costs of actions, suits, or
proceedings to which the Series is a party and the expenses a Series may incur
as a result of its legal obligation to provide indemnification to Trust's
officers, Trustees and agents.
2.2.14 ORGANIZATIONAL EXPENSES. Any and all organizational expenses of
a Series paid by the Manager shall be reimbursed by such Series at such time or
times agreed by such Series and the Manager.
3. ADVISORY FEE
3.1 FEE. As compensation for all services rendered, facilities provided and
expenses paid or assumed by the Manager under this Agreement, each Series shall
pay the Manager an annual fee as set out in Schedule B to this Agreement.
3.2 COMPUTATION AND PAYMENT OF FEE. The advisory fee shall accrue on each
calendar day, and shall be payable monthly on the first business day of the next
succeeding calendar month. The daily fee accruals shall be computed by
multiplying the fraction of one divided by the number of days in the calendar
year by the applicable annual advisory fee rate (as set forth in Schedule B
hereto), and multiplying this product by the net assets of the Series,
determined in the manner established by the Trustees, as of the close of
business on the last preceding business day on which the Series' net asset value
was determined.
3.3 STATE EXPENSE LIMITATION. If in any fiscal year the operating expenses of
any Series ("Aggregate Operating Expenses," which includes any fees or expense
reimbursements payable to the Manager pursuant to this Agreement and any
compensation payable to the Manager pursuant to (i) the Administration Agreement
between such Series and the Manager or (ii) any other Agreement or arrangement
with Trust with respect to that Series, but excludes interest, taxes, brokerage
commissions, litigation and indemnification expenses, and other extraordinary
expenses not incurred in the ordinary course of business) exceed the lowest
applicable percentage expense limitation imposed under the securities law and
regulations of any state in which such Series's shares are qualified for sale
(the "State Expense Limitation"), then the Manager shall pay such Series the
amount of such excess, less the amount of any reduction of the administration
fee referred to below; provided, that the Manager shall have no obligation
hereunder to pay such Series for any such expenses which exceed the pro rata
portion of such advisory fee attributable to such Series.
No payment shall be made to such Series hereunder unless and until the
administration fee payable by such Series under a similar State Expense
Limitation of its Administration Agreement with the Manager has been reduced to
zero. Any payment to a Series hereunder shall be made monthly, by annualizing
the Aggregate Operating Expenses for each month as of the last day of such
month. An adjustment shall be made on or before the last day of the first month
of the next succeeding fiscal year if Aggregate Operating Expenses for such
fiscal year do not exceed the State Expense Limitation or if for such fiscal
year there is no applicable State Expense Limitation.
4. OWNERSHIP OF RECORDS
All records required to be maintained and preserved by the Series pursuant to
the provisions or rules or regulations of the Securities and Exchange Commission
under Section 31(a) of the 1940 Act and maintained and preserved by the Manager
on behalf of the Series are the property of the Series and shall be surrendered
by the Manager promptly on request by the Series; provided, that the Manager may
at its own expense make and retain copies of any such records.
5. REPORTS TO MANAGER
The Series shall furnish or otherwise make available to the Manager such copies
of that Series' financial statements, proxy statements, reports, and other
information relating to its business and affairs as the Manager may, at any time
or from time to time, reasonably require in order to discharge its obligations
under this Agreement.
6. REPORTS TO THE SERIES
The Manager shall prepare and furnish to the Series such reports, statistical
data and other information in such form and at such intervals as the Series may
reasonably request.
7. RETENTION OF SUB-ADVISER
Subject to a Series obtaining the initial and periodic approvals required under
Section 15 of the 1940 Act, the Manager may retain a sub-adviser, at the
Manager's own cost and expense, for the purpose of making investment
recommendations and research information available to the Manager. Retention of
a sub-adviser shall in no way reduce the responsibilities or obligations of the
Manager under this Agreement and the Manager shall be responsible to Trust and
the Series for all acts or omissions of the sub-adviser in connection with the
performance of the Manager's duties hereunder.
8. SERVICES TO OTHER CLIENTS
Nothing herein contained shall limit the freedom of the Manager or any
affiliated person of the Manager to render investment management and
administrative services to other investment companies, to act as investment
adviser or investment counselor to other persons, firms or corporations, or to
engage in other business activities.
9. LIMITATION OF LIABILITY OF MANAGER AND ITS PERSONNEL
Neither the Manager nor any director, officer or employee of the Manager
performing services for the Series at the direction or request of the Manager in
connection with the Manager's discharge of its obligations hereunder shall be
liable for any error of judgment or mistake of law or for any loss suffered by a
Series in connection with any matter to which this Agreement relates; provided,
that nothing herein contained shall be construed (i) to protect the Manager
against any liability to Trust or a Series or its Interestholders to which the
Manager would otherwise be subject by reason of the Manager's willful
misfeasance, bad faith, or gross negligence in the performance of the Manager's
duties, or by reason of the Manager's reckless disregard of its obligations and
duties under this Agreement, or (ii) to protect any director, officer or
employee of the Manager who is or was a Trustee or officer of Trust against any
liability to Trust or a Series or its Interestholders to which such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
person's office with Trust.
10. NO LIABILITY OF OTHER SERIES
This Agreement is made by each Series pursuant to authority granted by the
Trustees, and the obligations created hereby are not binding on any of the
Trustees or Interestholders of the Series individually, but bind only the
property of that Series and no other.
11. EFFECT OF AGREEMENT
Nothing herein contained shall be deemed to require the Series to take any
action contrary to the Declaration of Trust or By-Laws of Trust, any actions of
the Trustees binding upon the Series, or any applicable law, regulation or order
to which the Series is subject or by which it is bound, or to relieve or deprive
the Trustees of their responsibility for and control of the conduct of the
business and affairs of the Series or Trust.
12. TERM OF AGREEMENT
The term of this Agreement shall begin on the date first above written with
respect to each Series listed in Schedule A on the date hereof and, unless
sooner terminated as hereinafter provided, this Agreement shall remain in effect
through October 31, 2005. With respect to each Series added by execution of an
Addendum to Schedule A, the term of this Agreement shall begin on the date of
such execution and, unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect to October 31 of the year following the year of
execution. Thereafter, in each case, this Agreement shall continue in effect
with respect to each Series from year to year, subject to the termination
provisions and all other terms and conditions hereof, provided, such continuance
with respect to a Series is approved at least annually by vote of the holders of
a majority of the outstanding voting securities of the Series or by the
Trustees, provided, that in either event such continuance is also approved
annually by the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the Trustees who are not parties to
this Agreement or interested persons of either party hereto; and provided
further that the Manager shall not have notified a Series in writing at least
sixty (60) days prior to the first expiration date hereof or at least sixty (60)
days prior to any expiration date hereof of any year thereafter that it does not
desire such continuation. The Manager shall furnish to Trust and the Series,
promptly upon their request, such information as may reasonably be necessary to
evaluate the terms of this Agreement or any extension, renewal or amendment
thereof.
13. AMENDMENT OR ASSIGNMENT OF AGREEMENT
Any amendment to this Agreement shall be in writing signed by the parties
hereto; provided, that no such amendment shall be effective unless authorized on
behalf of any Series (i) by resolution of the Trustees, including the vote or
written consent of a majority of the Trustees who are not parties to this
Agreement or interested persons of either party hereto, and (ii) by vote of a
majority of the outstanding voting securities of the Series. This Agreement
shall terminate automatically and immediately in the event of its assignment.
14. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time by either party hereto, without the
payment of any penalty, upon sixty (60) days' prior written notice to the other
party; provided, that in the case of termination by any Series, such action
shall have been authorized (i) by resolution of the Trustees, including the vote
or written consent of a majority of Trustees who are not parties to this
Agreement or interested persons' of either party hereto, or (ii) by vote of a
majority of the outstanding voting securities of the Series.
15. NAME OF THE SERIES
Each Series hereby agrees that if the Manager shall at any time for any reason
cease to serve as investment adviser to a Series, the Series shall, if and when
requested by the Manager, eliminate from the Series' name the name "Xxxxxxxxx
Xxxxxx" and thereafter refrain from using the name "Xxxxxxxxx Xxxxxx" or the
initials "NB" in connection with its business or activities, and the foregoing
agreement of a Series shall survive any termination of this Agreement and any
extension or renewal thereof.
16. INTERPRETATION AND DEFINITION OF TERMS
Any question of interpretation of any term or provision of this Agreement having
a counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretation thereof, if any, by the United States courts or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission validly issued pursuant to the 1940
Act. Specifically, the terms "vote of a majority of the outstanding voting
securities," "interested person," "assignment" and "affiliated person," as used
in this Agreement shall have the meanings assigned to them by Section 2(a) of
the 1940 Act. In addition, when the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is modified, interpreted or relaxed
by a rule, regulation or order of the Securities and Exchange Commission,
whether of special or of general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
17. CHOICE OF LAW
This Agreement is made and to be principally performed in the State of New York
and except insofar as the 1940 Act or other federal laws and regulations may be
controlling, this Agreement shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of New York.
18. CAPTIONS
The captions in this Agreement are included for convenience of reference only
and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
19. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective officers thereunto duly authorized and their respective
seals to be hereunto affixed, as of the day and year first above written.
XXXXXXXXX XXXXXX INCOME FUNDS
/s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Chairman and CEO
XXXXXXXXX XXXXXX MANAGEMENT INC.
/s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
Title: Senior Vice President
Date: November 3, 2003
SCHEDULE A
SERIES OF XXXXXXXXX XXXXXX INCOME FUNDS
Xxxxxxxxx Xxxxxx Cash Reserves
Xxxxxxxxx Xxxxxx Government Money Fund
Xxxxxxxxx Xxxxxx High Income Bond Fund
Xxxxxxxxx Xxxxxx Institutional Cash Fund
Xxxxxxxxx Xxxxxx Limited Maturity Bond Fund
Xxxxxxxxx Xxxxxx Municipal Money Fund
Xxxxxxxxx Xxxxxx Municipal Securities Trust
Xxxxxxxxx Xxxxxx Strategic Income Fund
Date: November 3, 2003
SCHEDULE B
RATE OF COMPENSATION
FUND RATE OF COMPENSATION BASED ON EACH
FUND'S AVERAGE DAILY NET ASSETS
Xxxxxxxxx Xxxxxx Cash Reserves 0.250% of first $500 million
Xxxxxxxxx Xxxxxx Government Money Fund 0.225% of next $500 million
Xxxxxxxxx Xxxxxx Limited Maturity Bond Fund 0.200% of next $500 million
Xxxxxxxxx Xxxxxx Municipal Money Fund 0.175% of next $500 million
Xxxxxxxxx Xxxxxx Municipal Securities Trust 0.150% in excess of $2 billion
Xxxxxxxxx Xxxxxx High Income Bond Fund 0.480%
Xxxxxxxxx Xxxxxx Institutional Cash Fund 0.100%
Xxxxxxxxx Xxxxxx Strategic Income Fund 0.600%
Date: November 3, 2003
