SECOND AMENDED AND RESTATED SERVICING AGREEMENT
THIS SECOND AMENDED AND RESTATED SERVICING AGREEMENT
(the "Agreement")is made and entered into as of the 10th day
of May, 2011 by and between Xxxxx Advisers LLC, a Delaware
limited liability company (the "Company") and Xxxxx Consulting
LLC, a New York limited liability company ("Xxxxx").
WHEREAS pursuant to an Acquisition Agreement (the
"Acquisition Agreement")by and among Xxxxx/Xxxxxx Advisers, a
New York general partnership, Xxxxx Advisors Inc., a Delaware
corporation and Xxxxx Total Return Advisors, Inc., a Delaware
corporation (collectively, the "Predecessor Company"), Phoenix
Investment Partners, Ltd., a Delaware corporation, now known
as Virtus Investment Partners, Inc., ("Virtus") and the other
parties thereto, Virtus acquired the Predecessor Company on
March 1, 1999 (initially capitalized terms defined in the
Acquisition Agreement and not otherwise defined herein are
used herein with such defined meanings);
WHEREAS prior to the Closing, Xxxxxx X. Xxxxx (the
"President") provided certain services to the Predecessor
Company, and Virtus and the Predecessor Company were desirous
of continuing to receive such services following the Closing,
and the President indicated to Virtus and the Predecessor
Company that he and his designated research associates (the
"Associates") would continue to provide the Predecessor
Company and its Affiliates with such services following the
Closing;
WHEREAS in connection with the foregoing, Xxxxx entered
into a Servicing Agreement (the "Servicing Agreement" and as
amended and restated hereby, this "Agreement") with the
Predecessor Company, dated as of March 1, 1999, which became
effective on the Closing Date for an initial three year term,
and thereafter continued by the agreement of Xxxxx and the
Company (which was the successor to the Predecessor Company on
or about December 31, 1999) with respect to such continuation;
WHEREAS the Servicing Agreement was subsequently amended
and restated on March 2, 2004 and amended on February 2, 2007;
WHEREAS since the Closing, the Predecessor Company or
the Company has
served as the investment adviser with respect to The Xxxxx
Fund, Inc. and The
Xxxxx Total Return Fund, Inc. (each, a "Fund" and collectively
"Funds"),
closed-end funds traded on the New York Stock Exchange, and
pursuant to the Servicing Agreement Xxxxx has provided
investment subadvisory services with respect to each Fund
(with the Servicing Agreement having at all relevant times
been approved by the board of directors of each Fund, and
having been initially approved by the shareholders of each
Fund, in each such case as an investment subadvisory agreement
with respect to such Fund in accordance with the requirements
of the Investment Company Act of 1940); and
WHEREAS the Company and Xxxxx desire to continue the
Servicing Agreement from and after the date hereof on the
terms set forth herein(and this amendment and restatement has
been approved by the board of directors of each Fund in
accordance with the requirements of the Investment Company Act
of 1940 insofar as this Agreement relates to such Fund).
NOW, THEREFORE, in consideration of the mutual promises
herein contained, the parties hereto, intending to be legally
bound, agree as follows (which amended and restated terms
shall supersede in their entirety the terms set forth in the
Servicing Agreement prior to this amendment and restatement):
1. SERVICES
1.1 During the Term, Xxxxx and the President
agree that the President and the Associates will devote their
skill and approximately one half of their full working time
consistent with the practices of Xxxxx prior to the Closing
Date, to (i) performing asset allocation research and analysis
and providing advice thereon to the Company at a level and in
a manner consistent with the practices of Xxxxx and the
Company prior to the Closing Date, including playing an active
role in collaborating with the Company's portfolio management
team on a frequent basis, participating in periodic meetings
(generally weekly), sharing of Xxxxx asset allocation
research(including various indicators and analysis) and
discussion of asset allocation with the portfolio managers
(ii) the President, together with such of the Associates as
any such board may request, meeting with the boards of
directors of the Funds (in person and/or telephonically) at
such times as they may request (including without limitation
attendance at meetings of such boards of directors, to the
extent so requested by such boards of directors), and
participating (in person and/or telephonically) at the annual
and any special meetings of shareholders of the Funds, and
(iii) collaborating with the Company on an active basis with
respect to strategic and other Fund-related matters, (the
"Services").
1.2 The Services will be provided to the
Company and its Affiliates during normal business hours at the
offices of the Company in New York City or at such other times
and places as Xxxxx and the Company may reasonably agree,
taking into account the nature, exigencies and reasons for the
assistance required.
1.3 For so long as this Agreement remains
in effect with respect to one or both of the Funds, (i) the
Company agrees that neither it nor any of its Affiliates
shall, directly or indirectly, employ or seek to employ any
employee of Xxxxx or any of its Affiliates, or any person who
was such an employee of Xxxxx or any of its Affiliates at any
time during the twelve months preceding such action by the
Company or its Affiliates, nor seek to persuade any such
employee or former employee to become employed by any direct
or indirect competitor of Xxxxx or any of its Affiliates, and
(ii) Xxxxx and the President agree that neither they nor any
of their respective Affiliates shall, directly or indirectly,
employ or seek to employ any employee of the Company or any of
its Affiliates, or any person who was such an employee of the
Company or any of its Affiliates at any time during the twelve
months preceding such action by Xxxxx, the President or their
respective Affiliates, nor seek to persuade any such employee
or former employee to become employed by any direct or
indirect competitor of the Company or any of its Affiliates;
PROVIDED that nothing contained in this Section 1.3 shall
prohibit employment advertisements in mass media (or similar
general solicitations available to the public at large and not
targeted at particular individuals); and PROVIDED, FURTHER,
that the restrictions set forth in this Section 1.3 shall not
apply in respect of secretaries or other persons holding
similar responsibilities that are primarily clerical in
nature.
2. TERM
2.1 Except as otherwise provided in Section
2.2, this Agreement shall remain effective until March 1,
2012 and from year to year thereafter (the "Term") unless the
Company or Xxxxx shall, upon not less than 60 days prior
writer notice, notify the other party that it has determined
not to renew this Agreement effective the next succeeding
March 1, in which case this Agreement shall terminate on the
next succeeding March 1; PROVIDED, HOWEVER, that, with respect
to a particular Fund (and Services being performed by Xxxxx
hereunder with respect to such Fund), this Agreement shall
terminate automatically on the first March 1 during the Term
(if any) at which the continuation of this Agreement with
respect to such Fund has not been specifically approved on or
prior to such March 1 in accordance with the requirements of
the Investment Company Act of 1940 by (i) a majority of such
Fund's outstanding voting securities or a majority of its
board of directors and (ii) a majority of the directors who
are not "interested persons", as defined in the Investment
Company Act of 1940, cast in person at a meeting called for
the purpose of voting on such approval; and PROVIDED, FURTHER,
that this Agreement shall terminate immediately in full at
such time (as any) as it has been terminated with respect to
both Funds.
2.2 The Company may terminate this Agreement
immediately in full (i) for Cause (as defined below) or (ii)
in the event of the President's death or Disability (as
defined below). With respect to a particular Fund, this
Agreement (and Services being performed by Xxxxx hereunder
with respect to such Fund) may be terminated at any time (with
or without Cause), without payment of any penalty, by (i)the
board of directors of that Fund, or (ii) by a vote of a
majority (as defined in the Investment Company Act of 1940) of
the outstanding voting securities of that Fund, in either such
case upon not less than sixty (60) day's written notice. This
Agreement shall automatically terminate in full in the event
of its assignment, within the meaning of the Investment
Company Act of 1940, unless such automatic termination shall
be prevented by an exemptive order of the Securities and
Exchange Commission, and shall automatically terminate with
respect to a particular Fund (and Services being performed by
Xxxxx hereunder with respect to such Fund) upon the
termination of such Fund's investment advisory agreement with
the Company.
2.3 Upon termination of this Agreement in
full pursuant to Section 2.2 hereof or Section 2.5 hereof, the
Company's payment to Xxxxx of fees earned by Xxxxx under this
Agreement to the date of such termination shall be in full
satisfaction of all claims against the Company under this
Agreement. Upon termination of this Agreement with respect to
a particular Fund pursuant to Section 2.2 hereof, the
Company's payment to Xxxxx of fees earned by Xxxxx under this
Agreement with respect to such Fund to the date of such
termination shall be in full satisfaction of all claims
against the Company under this Agreement relating to such
termination with respect to such Fund (provided that, if this
Agreement shall also terminate in full as a result of such
termination with respect to such particular Fund, then this
sentence shall not require a separate payment to Xxxxx, and
the first sentence of this Section 2.3 shall instead apply to
such termination of this Agreement in full).
2.4 (i) For purposes of this Agreement,
"Cause" shall mean a reasonable determination made by the
Chief Executive Officer of Virtus that: (a) Xxxxx has
willfully neglected its assigned duties with the Company,
which neglect has continued for a period of at least thirty
(30) days after a written notice of such neglect was delivered
to the President specifying the claimed neglect, (b) the
President has been enjoined (other than temporary suspensions
of not more than ninety-one (91) days) by the Securities and
Exchange Commission, the Financial Industry Regulatory
Authority ("FINRA") or any other industry regulatory authority
from working in the investment advisory or securities
industry, (c) the President has been convicted by a court of
competent jurisdiction of, or has pleaded guilty or NOLO
CONTENDRE to, any felony or misdemeanor involving an
investment or investment-related business, or (d) Xxxxx has
engaged in a continuing violation of a material provision of
this Agreement, which violation has continued for a period of
at least thirty (30) days after a written notice of such
violation was delivered to the President specifying the
claimed violation. ii) For purposes of this Agreement,
"Disability" shall mean the President's inability to perform
the Services he is required to perform under this Agreement by
reason of sickness, accident, injury, illness or any similar
event and which condition has existed for at least 180
consecutive days, or for such shorter periods aggregating 180
days during any twelve month period.
2.5 Xxxxx may terminate this Agreement
immediately in full if (a) the Company has been enjoined
(other than temporary suspensions of not more than ninety-one
(91) days) by the Securities and Exchange Commission, the
FINRA or any other industry regulatory authority from acting
as an investment adviser to the Funds or (b) the Company has
engaged in a continuing violation of a material provision of
this Agreement, which violation has continued for a period of
at least thirty (30) days after a written notice of such
violation was delivered to the Company specifying the claimed
violation, or (c) Xxxxx reasonably determines that, as a
result of new regulatory requirements or developments
applicable to persons or entities engaged (or affiliated with
those engaged) in the business of acting as investment
advisers to and/or sponsors of collective investment vehicles
that are exempt from registration under the Investment Company
Act of 1940, Xxxxx'x continued performance of its Services
under this Agreement would have a material adverse effect upon
the business of Xxxxx'x Affiliates.
3. COMPENSATION
3.1 For so long as this Agreement remains in
effect with respect to a Fund, for the Services to be provided
by Xxxxx under this Agreement with respect to such Fund the
Company will pay Xxxxx an annual fee (the "Fees") equal to
twenty percent (20.0%) of the investment advisory fees
actually received by the Company for such Fund in respect of
investment advisory services performed by the Company for such
Fund (which shall in no event be deemed to include
administration, servicing, distribution or other fees that may
be received by the Company from such Fund, but which shall be
calculated without regard to any investment advisory fee
waivers).
3.2 The Company shall provide or share with
Xxxxx research information, benefits and services, as defined
in Section 28(e) of the Securities Exchange Act of 1934, that
results, from brokerage transactions implemented by the
Company for the benefit of the Funds.
3.3 The Company shall not have any liability
with respect to the compensation of employees, contractors or
consultants retained by Xxxxx or by any affiliated entities.
3.4 Subject to the Company's compliance
with the provisions of Section 2.3 hereof, upon termination of
this Agreement for any reason, the Company shall have no
further obligations under this Agreement, but Xxxxx shall
continue to be bound by Section 4 and the Company shall
continue to be bound by Section 5 hereof.
4. CONFIDENTIALITY OF XXXXX
4.1 Xxxxx shall not at any time during the
period of its engagement with the Company hereunder or after
the termination thereof directly or indirectly divulge,
furnish, use, publish or make accessible to any person or
entity any Confidential Information (as hereinafter defined)
except in connection with the performance of its duties
hereunder. Any records of Confidential Information prepared by
Xxxxx or which come into its possession during the term of
this Agreement are and remain the property of the Company or
its Affiliates, as the case may be, and upon termination of
the engagement all such records and copies thereof shall be
either left with or returned to such entity. Confidential
Information may be shared among the President and Associates
or other employees of entities controlled by the President on
a need to know basis for purposes of providing the Services to
the Company and its Affiliates hereunder. Such Associates and
any other employees shall be informed of the confidential
nature of such Confidential Information, the President shall
direct such Associates and any other employees to treat such
information confidentially and the President
will be responsible for any breach of this Section 4.1 by
himself and by any
persons to whom the President provides any Confidential
Information.
Notwithstanding anything contained herein to the contrary, the
Company
acknowledges that services overlapping or similar to the
Services provided by
Xxxxx, the President and the Associates hereunder are also
performed on behalf of the Affiliates of Xxxxx and such
Services are often not exclusively performed by Xxxxx, the
President and the Associates for the Company. Consequently,
the work product resulting from the Services is often
generated on behalf of both the Company and its Affiliates and
the Affiliates of Xxxxx and is shared among the employees of
these entities (the "Shared Work Product"). The Company
further acknowledges that the Confidential Information that
generates such Shared Work Product may become known to the
employees of Xxxxx'x Affiliates. The Company hereby agrees
that the disclosure of Confidential Information to the
employees of the Xxxxx Affiliates who shall be deemed
employees covered by the fourth sentence of this Section 4.1,
to the extent such disclosure is necessary to generate any
Shared Work Product, and the use of Shared Work Product by the
employees of the Xxxxx Affiliates, shall in no event be deemed
a breach of this Agreement.
4.2 The term "Confidential Information"
includes, but is not limited to, the following items, whether
existing now or created in the future and whether or not
subject to trade secret or other statutory protection: (a) all
knowledge or information concerning the business, operations
and assets of the Company and its Affiliates which is not
readily available to the public, such as: internal operating
procedures; investment strategies; sales data and customer and
client lists; financial plans, projections and reports; and
investment company programs, plans and products; (b) all
property owned, licensed and/or developed for the Company
and/or its Affiliates or any of their respective clients and
not readily available to the public, such as computer systems,
programs and software devices, including information about the
design, methodology and documentation
therefor; (c) information about or personal to the Company's
and/or its
Affiliates' clients; (d) information, materials, products or
other tangible or intangible assets in the Company's and/or
its Affiliates' possession or under any of their control which
is proprietary to, or confidential to or about, any other
person or entity; and (e) records and repositories of all of
the foregoing, in whatever form maintained. The foregoing
notwithstanding, the following shall not be considered
Confidential Information: (aa) general skills and experience
gained by providing service to the Company; (bb) information
publicly available or generally known within the Company's
trade or industry; (cc) information independently developed by
the president or the Associates other than in the course of
the performance of their duties which are exclusive to the
Company hereunder; and (dd) information which becomes
available to the President or the Associates on a non-
confidential basis from sources other than the Company or its
Affiliates, PROVIDED, the President or the Associates do not
know or have reason to know that such sources are prohibited
by contractual, legal or fiduciary obligation from
transmitting the information. Failure to xxxx any material or
information "confidential" shall not affect the confidential
nature thereof. All the terms of this Section 4 shall survive
the termination of this Agreement. The obligations hereunder
shall be in addition to, and not in limitation of, any other
obligations of confidentiality the President or the Associates
may have to
the Company.
4.3 At any time when so requested, and upon
termination of the engagement under this Agreement for any
reason whatsoever and irrespective of whether such termination
is voluntary on Xxxxx'x part or not, Xxxxx will deliver to the
Company all information in its possession (whether or not
Confidential Information) pertaining exclusively to the
Company or any of its Affiliates and, to the extent any such
information is Shared Work Product, shall provide copies to
the Company with the understanding that Xxxxx and its
Affiliates shall also retain copies of such information.
5. CONFIDENTIALITY OF THE COMPANY
5.1 The Company and its Affiliates and
their respective employees shall not at any time during the
period of Xxxxx'x engagement with the Company hereunder or
after the termination thereof directly or indirectly divulge,
furnish, use, publish or make accessible to any person or
entity any Xxxxx Confidential Information (as hereinafter
defined). It is expressly understood that Shared Work Product
may be shared among the Company and its Affiliates and their
respective employees. The Company and its Affiliates and their
respective employees shall be informed of the confidential
nature of the Xxxxx Confidential Information, the Company
shall direct such employees to treat such information
confidentially and the Company will be responsible for any
breach of this Section 5.1 by its employees.
5.2 The term "Xxxxx Confidential
Information" includes, but is not limited to, the following
items, whether existing now or created in the future and
whether or not subject to trade secret or other statutory
protection: (a) all knowledge or information concerning the
business, operations and assets of Xxxxx and its Affiliates
which is not readily available to the public, such as:
internal operating procedures; investment strategies; sales
data and customer and client lists; financial plans,
projections and reports; and investment company programs,
plans and products; (b) all property owned, licensed and/or
developed for the Xxxxx and/or its Affiliates or any of their
respective clients and not readily available to the public,
such as computer systems, programs and software devices,
including information about the design, methodology and
documentation therefor; (c) information about or personal to
Xxxxx'x and/or its Affiliates' clients; (d) information,
materials, products or other tangible or intangible assets in
Xxxxx'x and/or its Affiliates' possession or under any of
their control which is proprietary to, confidential to or
about, any other person or entity; and (e) records and
repositories of all of the foregoing, in whatever form
maintained. The foregoing notwithstanding, the following
shall not be considered Xxxxx Confidential Information: (aa)
general skills and experience gained by providing service to
the Company and its Affiliates; (bb) information publicly
available, or generally known within Xxxxx'x trade or
industry, (cc) information independently developed by the
Company and its Affiliates and their respective employees;
(dd) information which becomes available to the Company and
its Affiliates and their respective employees on a non-
confidential basis from sources other than Xxxxx, and (ee)
information, materials, property or rights acquired by Virtus
or any Affiliate thereof pursuant to the Acquisition Agreement
or other written agreements contemplated thereby, PROVIDED the
Company and its Affiliates and their respective employees do
not know or have reason to
know that such sources are prohibited by contractual, legal or
fiduciary
obligation from transmitting the information. All the terms of
this Section 5
shall survive the termination of this Agreement,
6. OWNERSHIP OF DOCUMENTS
All memoranda, papers, letters, notes, notebooks and all
copies thereof
relating exclusively to the business or affairs of the Company
that are
generated by Xxxxx or that come into its possession, in each
case in connection with its performance of Services to the
Company under this Agreement, shall be held by Xxxxx as the
Company property and shall be delivered by Xxxxx to the
Company as the Company may request. To the extent any such
memoranda, papers, letters, notes and notebooks are the
product of Xxxxx Confidential Information or are Shared Work
Product, the Company understands and agrees that Xxxxx and its
Affiliates shall also retain copies of such documentation and
information.
7. PRIOR NEGOTIATIONS AND AGREEMENTS
This Agreement contains the complete agreement concerning
the servicing
arrangement between the parties. This Agreement may only be
altered, amended or rescinded by a duly executed written
agreement delivered by each of the parties hereto.
8. JURISDICTION
This Agreement shall be construed in accordance with and
governed by the
laws of the State of New York governing contracts entered into
and to be performed entirely within New York and both parties
consent to the jurisdiction of the courts of New York.
9. PERFORMANCE WAIVERS
Waiver of performance of any obligation by either party
shall not
constitute a waiver of performance of any other obligations or
constitute future waiver of the same obligation.
10. SEVERABILITY
If any section, subsection, clause or sentence of this
Agreement shall be deemed illegal, invalid or unenforceable
under any applicable law, actually applied by any court of
competent jurisdiction, such illegality, invalidity or
unenforceability shall not affect the legality, validity and
enforceability of this Agreement or any other section,
subsection, clause or sentence thereof. Where, however, the
provisions of any applicable law may be waived, they are
hereby waived by the parties to the full extent permitted by
such law to the end that this Agreement shall be a valid and
binding agreement enforceable in accordance with its terms.
11. ASSIGNMENT
This Agreement shall inure to the benefit of and be
binding upon the
Company and its successors (whether direct or indirect, by
purchase, merger,
consolidation or otherwise) and assigns, and upon Xxxxx and
its successors and assigns (whether direct or indirect, by
purchase, merger, consolidation or otherwise). Except as
provided in Section 2.2, this Agreement shall not be
assignable by Xxxxx other than with the express written
consent of the Company, which shall not be unreasonably
denied. The reorganization of Xxxxx and its affiliated
entities, such that the Services of the President and the
Associates are provided through an affiliated entity, shall
not constitute a breach, assignment or termination of this
Agreement by Xxxxx.
12. NOTICES
All notices under this Agreement shall be in writing and
shall be deemed to have been given at the time when mailed by
registered or certified mail,
addressed to (i) the address below stated, in the case of
notices to Xxxxx, or (ii) both of the addresses below stated,
in the case of notices to the Company, in either such case of
the party to which notice is given, or to such changed address
or addresses (as applicable) as such party may have fixed by
notice:
To the Company: Xxxxx Advisers LLC
c/o Virtus Investment Partners, Inc.
000 Xxxxx Xxxxxx Xxxxxxxx, XX 00000
Attention: President
With such notice also sent to:
Virtus Investment Partners, Inc.
000 Xxxxx Xxxxxx Xxxxxxxx, XX 00000
Attention: General Counsel
To Xxxxx: Xxxxx Consulting LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
With such notice also sent to:
Xxxxxx Xxxxxx Xxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
PROVIDED, HOWEVER, that any notice of change of address shall
be effective only upon receipt.
13. MISCELLANEOUS
The President hereby represents and warrants that this
Agreement (i) is
valid, binding and enforceable in accordance with its terms
and (ii) does not
conflict with any other agreement to which he is a party,
including any agreement with the Affiliated Investment
Partnership Management Companies and
the related investment partnerships and Watermark Securities,
Inc.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
XXXXX ADVISERS LLC
By:
Name: Xxxxxx X. Xxxxxxx
Title: President
XXXXX CONSULTING LLC
By:
Name: Xxxxxx X. Xxxxx
Title: President
