Exhibit 23 (d)(1)
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of September 21, 2006, between XXXXXXXX
TARGETHORIZON ETF PORTFOLIOS, INC., a Maryland Corporation (the "Corporation"),
On Behalf of Xxxxxxxx TargETFund 2025, Xxxxxxxx TargETFund 2015, Xxxxxxxx
TargETFund Core, Xxxxxxxx TargETFund 2035 and Xxxxxxxx TargETFund 2045
(collectively, together with any future funds, the "Funds") AND J. & X.
XXXXXXXX & CO. INCORPORATED, a Delaware corporation (the "Manager").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
1. DUTIES OF THE MANAGER. The Manager shall manage the affairs of the
Corporation and the Funds including, but not limited to, continuously providing
the Corporation with investment management services, including investment
research, advice and supervision, determining which securities shall be
purchased or sold by the Funds (including determining in which exchange-traded
funds ("ETFs") or other securities the assets of the Corporation will be
invested and determining the percentage of the Funds' assets that will be
invested in each such ETF and other security) making purchases and sales of
securities on behalf of the Funds and determining how voting and other rights
with respect to securities of the Funds shall be exercised, subject in each
case to the control of the Board of Directors of the Corporation and in
accordance with the objectives, policies and principles set forth in the
Registration Statement of the Corporation and Prospectus of the Funds and the
requirements of the Investment Company Act of 1940 (the "1940 Act") and other
applicable law. In performing such duties, the Manager shall provide such
office space, such bookkeeping, accounting, internal legal, clerical,
secretarial and administrative services (exclusive of, and in addition to, any
such services provided by any others retained by the Corporation) and such
executive and other personnel as shall be necessary for the operations of the
Corporation or the Funds. The Corporation understands that the Manager also
acts as the manager of all of the investment companies in the Xxxxxxxx Group.
Subject to Section 36 of the 1940 Act, the Manager shall not be liable to
the Corporation or Funds for any error of judgment or mistake of law or for any
loss arising out of any investment or for any act or omission in the management
of the Funds and the performance of its duties under this Agreement except for
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties under
this Agreement.
2. EXPENSES. (a) The Manager shall pay all of its expenses arising from the
performance of its obligations under Section 1, and shall pay any salaries,
fees and expenses of the directors of the Corporation who are employees of the
Manager or its affiliates. Except as otherwise provided in Section paragraph
(b) of this Section 2, the Manager shall not be required to pay any other
expenses of the Corporation or the Funds ("Fund Expenses"), including, but not
limited to, direct charges relating to the purchase and sale of portfolio
securities, interest charges, credit commitment fees, fees and expenses of
independent
attorneys and auditors, taxes and governmental fees, cost of stock certificates
and any other expenses (including clerical expenses) of issue, sale, repurchase
or redemption of shares, expenses of registering and qualifying shares for
sale, expenses of printing and distributing reports, notices and proxy
materials to shareholders, expense of corporate data processing and related
services, shareholder recordkeeping and shareholder account services, expenses
of printing and filing reports and other documents filed with governmental
agencies, expenses of printing and distributing prospectuses, expenses of
annual and special shareholders' meetings, fees and disbursements of transfer
agents and custodians, expenses of disbursing dividends and distributions, fees
and expenses of directors of the Corporation who are not employees of the
Manager or its affiliates, membership dues in the Investment Company Institute,
insurance premiums and extraordinary expenses, as determined by the Board of
Directors and the Manager, such as litigation expenses and other expenses that
relate to events and transactions that are distinguished by their unusual
nature and by the infrequency of their occurrence ("Extraordinary Expenses").
(b) Notwithstanding anything to the contrary in paragraph (a) of this
Section 2, the Manager agrees that, during the term of this Agreement until
January 31, 2008, with respect to each Fund, if Fund Expenses (excluding any
Extraordinary Expenses and, for the avoidance of doubt, excluding any
compensation paid by the Funds to the Manager pursuant to Section 3, any
amounts paid by the Funds pursuant to a written plan adopted under Rule 12b-1
under the 1940 Act and interest on borrowings) exceeds 0.34% of such Fund's
average daily net assets (the "Excess Fund Expenses") in any fiscal year, the
Manager shall reimburse the Fund for Fund Expenses and/or waive all or any
portion of its compensation paid pursuant to Section 3 in an aggregate amount
equal to the Excess Fund Expenses.
3. COMPENSATION. (a) As compensation for the services performed and the
facilities and personnel provided by the Manager pursuant to Section 1, each
Fund will pay to the Manager promptly after the end of each month a fee,
calculated on each day during such month as indicated on the attached fee
schedule.
(b) If the Manager shall serve hereunder for less than the whole of any
month, the fee hereunder shall be prorated.
4. PURCHASE AND SALE OF SECURITIES. The Manager shall purchase securities
from or through and sell securities to or through such persons, brokers or
dealers (including the Manager or an affiliate of the Manager) as the Manager
shall deem appropriate in order to carry out the policy with respect to
portfolio transactions as set forth in the Registration Statement of the
Corporation and Prospectus(es) of the Funds or as the Board of Directors of the
Corporation may direct from time to time. In providing the Funds with
investment management and supervision, it is recognized that the Manager will
seek the most favorable price and execution, and, consistent with such policy,
may give consideration to the research, statistical and other services
furnished by brokers or dealers to the Manager for its use, to the general
attitude of brokers or dealers toward investment companies and their support of
them, and to such other considerations as the Board of Directors of the
Corporation may direct or authorize from time to time.
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Notwithstanding the above, it is understood that it is desirable for the
Funds that the Manager have access to supplemental investment and market
research and security and economic analysis provided by brokers who execute
brokerage transactions at a higher cost to the Funds than may result when
allocating brokerage to other brokers on the basis of seeking the most
favorable price and execution. Therefore, the Manager is authorized to place
orders for the purchase and sale of securities for the Funds with such brokers,
subject to review by the Corporation's Board of Directors from time to time
with respect to the extent and continuation of this practice. It is understood
that the services provided by such brokers may be useful to the Manager in
connection with its services to other clients as well as the Funds.
The placing of purchase and sale orders may be carried out by the Manager or
any wholly-owned subsidiary of the Manager.
If, in connection with purchases and sales of securities for the Funds, the
Manager or any subsidiary of the Manager may, without material risk, arrange to
receive a soliciting dealer's fee or other underwriter's or dealer's discount
or commission, the Manager shall, unless otherwise directed by the Board of
Directors of the Corporation, obtain such fee, discount or commission and the
amount thereof shall be applied to reduce the compensation to be received by
the Manager pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the Corporation from
approving the payment by the Funds of additional compensation to others for
consulting services, supplemental research and security and economic analysis.
5. TERM OF AGREEMENT. This Agreement shall continue in full force and effect
(a) with respect to Xxxxxxxx TargETFund 2025, Xxxxxxxx TargETFund 2015 and
Xxxxxxxx TargETFund Core, until December 31, 2006, and (b) with respect to
Xxxxxxxx TargETFund 2035 and Xxxxxxxx TargETFund 2045, until December 31, 2007,
and in each case from year to year thereafter if such continuance is approved
in the manner required by the 1940 Act if the Manager shall not have notified
the Funds in writing at least 60 days prior to such December 31 or prior to
December 31 of any year thereafter that it does not desire such continuance.
This Agreement may be terminated at any time in respect of any Fund, without
payment of penalty by the Fund, on 60 days' written notice to the Manager, by
vote of the Board of Directors of the Corporation or by vote of a majority of
the outstanding voting securities of such Fund (as defined by the 1940 Act).
The failure of the Board of Directors of the Corporation or holders of
securities of any Funds to approve the continuance of this Agreement with
respect to such Fund, shall be without prejudice to the effectiveness of this
Agreement with respect to any other Fund. This Agreement shall automatically
terminate in the event of its assignment (as defined by the 1940 Act).
6. RIGHT OF MANAGER IN CORPORATE NAME. The Manager and the Corporation each
agree that the word "Xxxxxxxx", which comprises a component of each Fund's
name, is a property right of the Manager. The Corporation (on behalf of each
Fund) agrees and consents that (i) it will only use the word "Xxxxxxxx" as a
component of its corporate name and for no other purpose, (ii) it will not
purport to grant to any third party the
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right to use the word "Xxxxxxxx" for any purpose, (iii) the Manager or any
corporate affiliate of the Manager may use or grant to others the right to use
the word "Xxxxxxxx", 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, and at the
request of the Manager, the Corporation and each Fund will take such action as
may be required to provide its consent to the use of the word "Xxxxxxxx", or
any combination or abbreviation thereof, by the Manager or any corporate
affiliate of the Manager, or by any person to whom the Manager or an affiliate
of the Manager shall have granted the right to such use; and (iv) upon the
termination of any management agreement into which the Manager and the
Corporation may enter, the applicable Fund shall, upon request by the Manager,
promptly take such action, at its own expense, as may be necessary to change
its corporate name to one not containing the word "Xxxxxxxx" and following such
change, shall not use the word "Xxxxxxxx", or any combination thereof, as a
part of its corporate name or for any other commercial purpose, and shall use
its best efforts to cause its officers, directors and stockholders to take any
and all actions which the Manager may request to effect the foregoing and to
reconvey to the Manager any and all rights to such word.
7. MISCELLANEOUS. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations.
IN WITNESS WHEREOF, the Corporation, on behalf of the Funds, and the Manager
have caused this Agreement to be executed by their duly authorized officers as
of the date first above written.
XXXXXXXX TARGETHORIZON ETF
PORTFOLIOS, INC.
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: President
J. & X. XXXXXXXX & CO. INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Chairman
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FEE SCHEDULE
Average Daily Annual Rate (as a % of
Fund Net Assets Average Daily Net Assets)
---- ------------- -------------------------
Xxxxxxxx TargETFund 2025 First $500 million 0.50%
Next $500 million 0.45%
Over $ 1 billion 0.40%
Xxxxxxxx TargETFund 2015 First $500 million 0.50%
Next $500 million 0.45%
Over $ 1 billion 0.40%
Xxxxxxxx TargETFund Core First $500 million 0.50%
Next $500 million 0.45%
Over $ 1 billion 0.40%
Xxxxxxxx TargETFund 2035 First $500 million 0.50%
Next $500 million 0.45%
Over $ 1 billion 0.40%
Xxxxxxxx TargETFund 2045 First $500 million 0.50%
Next $500 million 0.45%
Over $ 1 billion 0.40%
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