INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 31st day of May, 1997, and amended as of May 1,
1998, by and between Xxxx Xxxxxx Value-Added Market Series, an unincorporated
business trust organized under the laws of the Commonwealth of Massachusetts
(hereinafter called the "Fund"), and Xxxx Xxxxxx InterCapital Inc., a Delaware
corporation (hereinafter called the "Investment Manager"):
WHEREAS, The Fund is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Act"); and
WHEREAS, The Investment Manager is registered as an investment adviser under
the Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser; and
WHEREAS, The Fund is authorized to issue shares of beneficial interest in
separate portfolios (the "Portfolios") with each such Portfolio representing
interests in a separate portfolio of securities and other assets; and
WHEREAS, The Fund presently offers shares in one Portfolio designated as the
Equity Portfolio, such Portfolio together with all other Portfolios subsequently
established by the Fund with respect to which the Fund desires to retain the
Investment Manager to render management and investment advisory services in the
manner and on the terms and conditions hereinafter set forth being collectively
referred to as the "Portfolios"; and
WHEREAS, The Investment Manager desires to be retained to perform services
on said terms and conditions:
Now, Therefore, this Agreement
W I T N E S S E T H:
that in consideration of the premises and the mutual covenants hereinafter
contained, the Fund and the Investment Manager agree as follows:
1. The Fund hereby retains the Investment Manager to act as investment
manager of the Portfolios and, subject to the supervision of the Trustees, to
supervise the investment activities of the Portfolios as hereinafter set
forth. Without limiting the generality of the foregoing, the Investment
Manager shall obtain and evaluate such information and advice relating to the
economy, securities and commodities markets and securities and commodities as
it deems necessary or useful to discharge its duties hereunder; shall
continuously manage the assets of the Portfolios in a manner consistent with
the investment objectives and policies of the Portfolios; shall determine the
securities and commodities to be purchased, sold or otherwise disposed of by
the Portfolios and the timing of such purchases, sales and dispositions; and
shall take such further action, including the placing of purchase and sale
orders on behalf of the Portfolios, as the Investment Manager shall deem
necessary or appropriate. The Investment Manager shall also furnish to or
place at the disposal of the Fund such of the information, evaluations,
analyses and opinions formulated or obtained by the Investment Manager in the
discharge of its duties as the Fund may, from time to time, reasonably
request.
In the event the Fund establishes one or more Portfolios other than the
Equity Portfolio with respect to which it desires to retain the Investment
Manager to render investment advisory services hereunder, it shall notify the
Investment Manager in writing. If the Investment Manager is willing to render
such services, it shall notify the Fund in writing, whereupon such Portfolio
shall become a Portfolio hereunder.
2. The Investment Manager shall, at its own expense, maintain such staff
and employ or retain such personnel and consult with such other persons as it
shall from time to time determine to be necessary or useful to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Investment
Manager shall be deemed to include persons employed or otherwise retained by
the Investment Manager to furnish statistical and other factual data, advice
regarding economic factors and trends, information with respect to technical
and scientific developments, and such other information, advice and
assistance as the Investment Manager may desire. The Investment Manager
shall, as agent for the Fund, maintain the Fund's records and books of
account (other than those
maintained by the Fund's transfer agent, registrar, custodian and other
agencies). All such books and records so maintained shall be the property of
the Fund and, upon request therefor, the Investment Manager shall surrender
to the Fund such of the books and records so requested.
3. The Fund will, from time to time, furnish or otherwise make available
to the Investment Manager such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as the
Investment Manager may reasonably require in order to discharge its duties
and obligations hereunder.
4. The Investment Manager shall bear the cost of rendering the investment
management and supervisory services to be performed by it under this
Agreement, and shall, at its own expense, pay the compensation of the
officers and employees, if any, of the Fund who are also directors, officers
or employees of the Investment Manager, and provide such office space,
facilities and equipment and such clerical help and bookkeeping services as
the Fund shall reasonably require in the conduct of its business. The
Investment Manager shall also bear the cost of telephone service, heat,
light, power and other utilities provided to the Fund.
5. The Fund assumes and shall pay or cause to be paid all other expenses
of the Fund, including without limitation: fees pursuant to any plan of
distribution that the Fund may adopt; the charges and expenses of any
registrar, any custodian or depository appointed by the Fund for the
safekeeping of its cash, portfolio securities or commodities and other
property, and any stock transfer or dividend agent or agents appointed by the
Fund; brokers' commissions chargeable to the Fund in connection with
portfolio transactions to which the Fund is a party; all taxes, including
securities or commodities issuance and transfer taxes, and fees payable by
the Fund to federal, state or other governmental agencies; the cost and
expense of engraving or printing certificates representing shares of the
Fund; all costs and expenses in connection with the registration and
maintenance of registration of the Fund and its shares with the Securities
and Exchange Commission and various states and other jurisdictions (including
filing fees and legal fees and disbursements of counsel); the cost and
expense of printing (including typesetting) and distributing prospectuses and
statements of additional information of the Fund and supplements thereto to
the Fund's shareholders; all expenses of shareholders' and Trustees' meetings
and of preparing, printing and mailing proxy statements and reports to
shareholders; fees and travel expenses of Trustees or members of any advisory
board or committee who are not employees of the Investment Manager or any
corporate affiliate of the Investment Manager; all expenses incident to the
payment of any dividend, distribution, withdrawal or redemption, whether in
shares or in cash; charges and expenses of any outside service used for
pricing of the Fund's shares; charges and expenses of legal counsel,
including counsel to the Trustees of the Fund who are not interested persons
(as defined in the Act) of the Fund or the Investment Manager, and of
independent accountants, in connection with any matter relating to the Fund;
membership dues of industry associations; interest payable on Fund
borrowings; postage; insurance premiums on property or personnel (including
officers and Trustees) of the Fund which inure to its benefit; extraordinary
expenses (including but not limited to legal claims and liabilities and
litigation costs and any indemnification related thereto); and all other
charges and costs of the Fund's operation unless otherwise explicitly
provided herein.
6. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Investment Manager, each Portfolio of the Fund
shall pay to the Investment Manager monthly compensation determined by applying
an annual rate or rates to the daily net assets of the respective Portfolios
determined as of the close of each business day; the rates so applied to the
Equity Portfolio shall be 0.50% of daily net assets up to $500 million; 0.45% of
the next $500 million; 0.425% of the next $1 billion; and 0.40% of daily net
assets over $2 billion. Except as hereinafter set forth, compensation under this
Agreement shall be calculated and accrued daily and the amounts of the daily
accruals shall be paid monthly. Such calculations shall be made by applying
1/365ths of the annual rates to the net assets of the respective Portfolios each
day determined as of the close of business on that day or the last previous
business day. If this Agreement becomes effective subsequent to the first day of
a month or shall terminate before the last day of a month, compensation for that
part of the month this Agreement is in effect shall be prorated in a manner
consistent with the calculation of the fees as set forth above.
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Subject to the provisions of paragraph 7 hereof, payment of the Investment
Manager's compensation for the preceding month shall be made as promptly as
possible after completion of the computations contemplated by paragraph 7
hereof.
7. In the event the operating expenses of a Portfolio, including amounts
payable to the Investment Manager pursuant to paragraph 6 hereof, for any
fiscal year ending on a date on which this Agreement is in effect, exceed the
expense limitations applicable to such Portfolio imposed by state securities
laws or regulations thereunder, as such limitations may be raised or lowered
from time to time, the Investment Manager shall reduce its management fee in
respect of such Portfolio to the extent of such excess and, if required,
pursuant to any such laws or regulations, will reimburse such Portfolio for
annual operating expenses in excess of any expense limitation that may be
applicable; provided, however, there shall be excluded from such expenses the
amount of any interest, taxes, brokerage commissions, distribution fees and
extraordinary expenses (including but not limited to legal claims and
liabilities and litigation costs and any indemnification related thereto) paid
or payable by such Portfolio. Such reduction, if any, shall be computed and
accrued daily, shall be settled on a monthly basis, and shall be based upon the
expense limitation applicable to such Portfolio as at the end of the last
business day of the month. Should two or more such expense limitations be
applicable as at the end of the last business day of the month, that expense
limitation which results in the largest reduction in the Investment Manager's
fee shall be applicable.
For purposes of this provision, should any applicable expense limitation be
based upon the gross income of the Portfolio, such gross income shall include,
but not be limited to, interest on debt securities in the portfolio of the
Portfolio accrued to and including the last day of the Fund's fiscal year, and
dividends declared on equity securities in the portfolio of the Portfolio, the
record dates for which fall on or prior to the last day of such fiscal year, but
shall not include gains from the sale of securities.
8. The Investment Manager will use its best efforts in the supervision and
management of the investment activities of the Fund, but in the absence
of willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations hereunder, the Investment Manager shall not be liable to the Fund or
any of its investors for any error of judgment or mistake of law or for any act
or omission by the Investment Manager or for any losses sustained by the Fund or
its investors.
9. Nothing contained in this Agreement shall prevent the Investment Manager
or any affiliated person of the Investment Manager from acting as
investment adviser or manager for any other person, firm or corporation and
shall not in any way bind or restrict the Investment Manager or any such
affiliated person from buying, selling or trading any securities or commodities
for their own accounts or for the account of others for whom they may be acting.
Nothing in this Agreement shall limit or restrict the right of any Trustee,
officer or employee of the Investment Manager to engage in any other business or
to devote his or her time and attention in part to the management or other
aspects of any other business whether of a similar or dissimilar nature.
10. This Agreement shall remain in effect until April 30, 1999 and from year
to year thereafter with respect to each Portfolio provided such
continuance with respect to a Portfolio is approved at least annually by the
vote of holders of a majority (as defined in the Act) of the outstanding voting
securities of such Portfolio or by the Trustees of the Fund; provided that in
either event such continuance is also approved annually by the vote of a
majority of the Trustees of the Fund who are not parties to this Agreement or
"interested persons" (as defined in the Act) of any such party, which vote must
be cast in person at a meeting called for the purpose of voting on such
approval; provided, however, that (a) the Fund may, at any time and without the
payment of any penalty, terminate this Agreement upon thirty days' written
notice to the Investment Manager, either by majority vote of the Trustees of the
Fund or, with respect to a Portfolio, by the vote of a majority of the
outstanding voting securities of such Portfolio; (b) this Agreement shall
immediately terminate in the event of its assignment (to the extent required by
the Act and the rules thereunder) unless such automatic terminations shall be
prevented by an exemptive order of the Securities and Exchange
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Commission; and (c) the Investment Manager may terminate this Agreement without
payment of penalty on thirty days' written notice to the Fund. Any notice under
this Agreement shall be given in writing, addressed and delivered, or mailed
post-paid, to the other party at the principal office of such party.
Any approval of this Agreement by the holders of a majority of the
outstanding voting securities of any Portfolio shall be effective to continue
this Agreement with respect to such Portfolio notwithstanding (a) that this
Agreement has not been approved by the holders of a majority of the outstanding
voting securities of any other Portfolio or (b) that this Agreement has not been
approved by the vote of a majority of the outstanding voting securities of the
Fund, unless such approval shall be required by any other applicable law or
otherwise.
11. This Agreement may be amended by the parties without the vote or consent
of the shareholders of the Fund to supply any omission, to cure, correct
or supplement any ambiguous, defective or inconsistent provision hereof, or if
they deem it necessary to conform this Agreement to the requirements of
applicable federal laws or regulations, but neither the Fund nor the Investment
Manager shall be liable for failing to do so.
12. This Agreement shall be construed in accordance with the laws of the
State of New York and the applicable provisions of the Act. To the extent
the applicable law of the State of New York, or any of the provisions herein,
conflicts with the applicable provisions of the Act, the latter shall control.
13. The Investment Manager and the Fund each agree that the name "Xxxx
Xxxxxx," which comprises a component of the Fund's name, is a property
right of Xxxx Xxxxxx Xxxxxxxx Inc. The Fund agrees and consents that (i) it will
only use the name "Xxxx Xxxxxx" as a component of its name and for no other
purpose, (ii) it will not purport to grant to any third party the right to use
the name "Xxxx Xxxxxx" for any purpose, (iii) the Investment Manager or its
parent, Xxxxxx Xxxxxxx Xxxx Xxxxxx & Co., or any corporate affiliate of the
Investment Manager's parent, may use or grant to others the right to use the
name "Xxxx Xxxxxx," or any combination or abbreviation thereof, as all or a
portion of a corporate or business name or for any commercial purpose, including
a grant of such right to any other investment company, (iv) at the request of
the Investment Manager or its parent, the Fund will take such action as may be
required to provide its consent to the use of the name "Xxxx Xxxxxx," or any
combination or abbreviation thereof, by the Investment Manager or its parent or
any corporate affiliate of the Investment Manager's parent, or by any person to
whom the Investment Manager or its parent or any corporate affiliate of the
Investment Manager's parent shall have granted the right to such use, and (v)
upon the termination of any investment advisory agreement into which the
Investment Manager and the Fund may enter, or upon termination of affiliation of
the Investment Manager with its parent, the Fund shall, upon request by the
Investment Manager or its parent, cease to use the name "Xxxx Xxxxxx" as a
component of its name, and shall not use the name, or any combination or
abbreviation thereof, as a part of its name or for any other commercial purpose,
and shall cause its officers, Trustees and shareholders to take any and all
actions which the Investment Manager or its parent may request to effect the
foregoing and to reconvey to the Investment Manager or its parent any and all
rights to such name.
14. The Declaration of Trust establishing Xxxx Xxxxxx Value-Added Market
Series, dated May 27, 1987, a copy of which, together with all amendments
thereto (the "Declaration"), is on file in the office of the Secretary of the
Commonwealth of Massachusetts, provides that the name Xxxx Xxxxxx Value-Added
Market Series refers to the Trustees under the Declaration collectively as
Trustees, but not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of Xxxx Xxxxxx Value-Added Market Series shall be
held to any personal liability, nor shall resort be had to their private
property for the satisfaction of any obligation or claim or otherwise, in
connection with the affairs of said Xxxx Xxxxxx Value-Added Market Series, but
the Trust Estate only shall be liable.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, as amended, on May 1, 1998 in New York, New York.
XXXX XXXXXX VALUE-ADDED MARKET SERIES
By:
.......................................
Attest:
.................................
XXXX XXXXXX INTERCAPITAL INC.
By:
.......................................
Attest:
.................................
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