INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 31st day of May, 1997, and amended as of April 30,
1998, May 1, 2001 and May 1, 2002, by and between Xxxxxx Xxxxxxx Liquid Asset
Fund Inc., a Maryland corporation (hereinafter called the "Fund"), and Xxxxxx
Xxxxxxx Investment Advisors 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 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; 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 Fund and, subject to the supervision of the Directors, to
supervise the investment activities of the Fund 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 markets and securities as it deems necessary or useful to discharge
its duties hereunder; shall continuously manage the assets of the Fund in a
manner consistent with the investment objectives and policies of the Fund; shall
determine the securities to be purchased, sold or otherwise disposed of by the
Fund 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 Fund, 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.
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 agents). 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 and equipment and such
clerical and bookkeeping
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services as the Fund shall reasonably require in the conduct of its business,
including the pricing of Fund shares, and preparation of prospectuses, proxy
statements and reports required to be filed with Federal and state securities
commissions (except insofar as the participation or assistance of independent
accountants and attorneys is, in the opinion of the Investment Manager,
necessary or desirable). The Investment Manager shall also bear the cost of
telephone service, heat, light, power and other utilities provided to the Fund,
and the cost of printing (in excess of costs borne by the Fund) and distributing
prospectuses and supplements thereto of the Fund used for sales purposes.
5. The Fund assumes and shall pay or cause to be paid all other expenses
of the Fund, including without limitation: the charges and expenses of any
registrar, any custodian or depository appointed by the Fund for the safekeeping
of its cash, portfolio securities 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 securities transactions to which the
Fund is a party; all taxes, including securities 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 stock 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 of the Fund
and supplements thereto to the Fund's shareholders; all expenses of
shareholders' and Directors' meetings and of preparing, printing and mailing
proxy statements and reports to shareholders and prospective shareholders; fees
and travel expenses of Directors 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 legal counsel and independent auditors in connection with any
matter relating to the Fund (not including compensation or expenses of attorneys
employed by the Investment Manager); membership dues of the Investment Company
Institute; interest payable on Fund borrowings; postage; insurance premiums on
property or personnel (including officers and Directors) 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, the Fund shall pay to the Investment
Manager monthly compensation determined by applying the following annual rates
to the Fund's daily net assets: 0.50% of the portion of the daily net assets not
exceeding $500 million; 0.425% of the portion of the daily net assets exceeding
$500 million but not exceeding $750 million; 0.375% of the portion of the daily
net assets exceeding $750 million but not exceeding $1 billion; 0.350% of the
portion of the daily net assets exceeding $1 billion but not exceeding
$1.35 billion; 0.325% of the portion of the daily net assets exceeding
$1.35 billion but not exceeding $1.75 billion; 0.30% of the portion of the daily
net assets exceeding $1.75 billion but not exceeding $2.15 billion; 0.275% of
the portion of the daily net assets exceeding $2.15 billion but not exceeding
$2.5 billion; 0.250% of the portion of the daily net assets exceeding
$2.5 billion but not exceeding $15 billion; 0.249% of the portion of the daily
net assets exceeding $15 billion but not exceeding $17.5 billion; 0.248% of the
portion of the daily net assets exceeding $17.5 billion but not exceeding
$25 billion; 0.247% of the portion of the daily net assets exceeding
$25 billion but not exceeding $30 billion; and 0.246% of the portion of the
daily net assets exceeding $30 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 Fund's net assets 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. 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
computation contemplated by paragraph 7 hereof.
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7. In the event the operating expenses of the Fund, 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 the Fund 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 to the extent of
such excess and, if required, pursuant to any such laws or regulations, will
reimburse the Fund 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 and
extraordinary expenses (to the extent permitted by state securities laws or
regulations thereunder) paid or payable by the Fund. 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 the Fund 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 Fund, such gross income shall include, but
not be limited to, interest on debt of fixed income securities in the Fund's
portfolio accrued to and including the last day of the Fund's fiscal year, and
dividends declared but not paid on any equity securities in the Fund's
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 sales 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 director,
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, 2003 and from
year to year thereafter provided such continuance is approved at least annually
by the vote of holders of a majority (as defined in the Act) of the outstanding
voting securities of the Fund or by the Board of Directors of the Fund; provided
that in either event such continuance is also approved annually by the vote of a
majority of the Directors 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 Board of
Directors of the Fund or by the vote of a majority of the outstanding voting
securities of the Fund; (b) this Agreement shall immediately terminate in the
event of its assignment (within the meaning of the Act) unless such automatic
termination shall be prevented by an exemptive order of the Securities and
Exchange 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.
11. This Agreement may be amended by the parties without the vote or
consent of 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.
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12. This Agreement shall be construed in accordance with the law 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 "Xxxxxx
Xxxxxxx," which comprises a component of the Fund's name, is a property right of
Xxxxxx Xxxxxxx Xxxx Xxxxxx & Co. ("MSDW"), the parent of the Investment Manager.
The Fund agrees and consents that (i) it will only use the name "Xxxxxx Xxxxxxx"
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 "Xxxxxx Xxxxxxx" for any
purpose, (iii) MSDW, or any corporate affiliate of MSDW, may use or grant to
others the right to use the name "Xxxxxx Xxxxxxx," 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 MSDW or any corporate affiliate of MSDW, the
Fund will take such action as may be required to provide its consent to the use
of the name "Xxxxxx Xxxxxxx," or any combination or abbreviation thereof, by
MSDW or any corporate affiliate of MSDW, or by any person to whom MSDW or a
corporate affiliate of MSDW shall have granted the right to such use, and (v)
upon the termination of any investment advisory agreement into which a corporate
affiliate of MSDW and the Fund may enter, or upon termination of affiliation of
the Investment Manager with its parent, the Fund shall, upon request of MSDW or
any corporate affiliate of MSDW, cease to use the name "Xxxxxx Xxxxxxx" as a
component of its name, and shall not use the name, or any combination or
abbreviation thereof, as part of its name or for any other commercial purpose,
and shall cause its officers, Directors and shareholders to take any and all
actions which MSDW or any corporate affiliate of MSDW may request to effect the
foregoing and to reconvey to MSDW any and all rights to such name.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, as amended, on May 1, 2002 in New York, New York.
XXXXXX XXXXXXX LIQUID ASSET FUND INC.
By: /s/ XXXXXXXX X. XXXXX
..............................................
Attest:
/s/ XXXXXX XXXXXX
.............................................
XXXXXX XXXXXXX INVESTMENT ADVISORS INC.
By: /s/ XXXXX XXXX
..............................................
Attest:
/s/ XXXXXXX X. XXXXXXX
.............................................
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