Exhibit 4(a)
MANAGEMENT AGREEMENT
AGREEMENT made this 1st day of November, 2002 by and between XXXXXXX XXXXX
PRINCIPAL PROTECTED TRUST (the "Trust"), a Delaware statutory trust, on behalf
of its series, XXXXXXX XXXXX FUNDAMENTAL GROWTH PRINCIPAL PROTECTED FUND (the
"Fund"), and XXXXXXX XXXXX INVESTMENT MANAGERS, L.P., a Delaware limited
partnership (hereinafter referred to as the "Manager").
W I T N E S S E T H :
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940, as amended
(hereinafter referred to as the "Investment Company Act"); and
WHEREAS, the Manager is engaged principally in rendering management and
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940; and
WHEREAS, the Trust desires to retain the Manager to render management and
investment advisory services to the Fund in the manner and on the terms
hereinafter set forth; and
WHEREAS, the Manager is willing to provide management and investment
advisory services to the Fund on the terms and conditions hereinafter set forth;
and
WHEREAS, during the Fund's Guarantee Period (as defined in the
Registration Statement (as defined below)) the Manager is required to manage the
Fund's portfolio in accordance with certain agreed-upon investment parameters as
set forth in that certain Financial Warranty Agreement, dated November 1, 2002,
by and among the Trust, the Manager and Main Place Funding, LLC (the "Warranty
Agreement"); and
WHEREAS, during the Fund's Guarantee Period the Manager will allocate the
Fund's assets between a Fundamental Growth Component and a Protection Component
(as each term is defined in the Registration Statement) based on a proprietary
mathematical formula.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Manager hereby agree as follows:
ARTICLE I
Duties of the Manager
The Trust hereby employs the Manager to act as an investment manager and
investment adviser of the Fund and to furnish or arrange for affiliates to
furnish, the management and investment advisory services described below,
subject to policies of, review by and overall control of the Board of Trustees
of the Trust (the "Trustees"), for the period and on the terms and conditions
set forth in this Agreement. The Manager hereby accepts such employment and
agrees during such period, at its own expense, to render, or arrange for the
rendering of, such
services and to assume the obligations herein set forth for the compensation
provided for herein. The Manager and its affiliates shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority to act for or represent the
Trust or the Fund in any way or otherwise be deemed an agent of the Trust or the
Fund.
(a) Management Services. The Manager shall perform, or arrange for the
performance by affiliates of, the management and administrative services
necessary for the operation of the Trust and the Fund, including administering
shareholder accounts and handling shareholder relations. The Manager shall
provide the Fund with office space, equipment and facilities and such other
services as the Manager, subject to review by the Trustees, shall from time to
time determine to be necessary or useful to perform its obligations under this
Agreement. The Manager shall also, on behalf of the Trust and the Fund, conduct
relations with custodians, depositories, transfer agents, dividend disbursing
agents, other shareholder service agents, accountants, attorneys, underwriters,
brokers and dealers, corporate fiduciaries, insurers, banks and such other
persons in any such other capacity deemed to be necessary or desirable. The
Manager shall generally monitor the Trust's and the Fund's compliance with
investment policies and restrictions as set forth in the current registration
statement relating to the Trust under the Investment Company Act (the
"Registration Statement"). The Manager shall make reports to the Trustees of its
performance of obligations hereunder and furnish advice and recommendations with
respect to such other aspects of the business and affairs of the Fund as it
shall determine to be desirable.
(b) Investment Advisory Services. The Manager shall provide (or arrange
for affiliates to provide) the Fund with such investment research, advice and
supervision as the latter may from time to time consider necessary for the
proper supervision of the assets of the Fund, shall furnish continuously an
investment program for the Fund and shall determine from time to time which
securities shall be purchased, sold or exchanged and what portion of the assets
of the Fund shall be held in the various securities in which the Fund invests,
options, futures, options on futures or cash, subject always to the restrictions
set forth in the Declaration of Trust and By-Laws of the Trust, as amended from
time to time, the provisions of the Investment Company Act and the statements
relating to the Fund's investment objective, investment policies and investment
restrictions as the same are set forth in the Prospectus and Statement of
Additional Information. The Manager shall also make decisions for the Trust as
to the manner in which voting rights, rights to consent to corporate action and
any other rights pertaining to the Fund's portfolio securities shall be
exercised. Should the Trustees at any time, however, make any definite
determination as to investment policy and notify the Manager thereof in writing,
the Manager shall be bound by such determination for the period, if any,
specified in such notice or until similarly notified that such determination has
been revoked. The Manager shall take, on behalf of the Fund, all actions that it
deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
portfolio securities for the Fund's account with brokers or dealers selected by
it, and to that end, the Manager is authorized as the agent of the Trust to give
instructions to the custodian of the Fund as to deliveries of securities and
payments of cash for the account of the Fund. In connection with the selection
of such brokers or dealers and the placing of such orders with respect to assets
of the Trust, the Manager is directed at all times to seek to obtain execution
and price within the policy guidelines determined by the Trustees as set forth
in the Prospectus and
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Statement of Additional Information. Subject to this requirement and the
provisions of the Investment Company Act, the Securities Exchange Act of 1934,
as amended, and other applicable provisions of law, the Manager may select
brokers or dealers with which it or the Trust is affiliated.
(c) Affiliated Sub-Advisers. In carrying out its responsibilities
hereunder, the Manager may employ, retain or otherwise avail itself of the
services of other persons or entities, including, without limitation, affiliates
of the Manager, on such terms as the Manager shall determine to be necessary,
desirable or appropriate. However, if the Manager chooses to retain or avail
itself of the services of another person or entity to manage assets of the Fund,
such other person or entity must be (i) an affiliate of the Manager, (ii)
retained at the Manager's own cost and expense, and (iii) retained subject to
the requirements of Section 15 of the Investment Company Act. Retention of one
or more affiliated sub-advisers, or the employment or retention of other persons
or entities to perform services, shall in no way reduce the responsibilities or
obligations of the Manager under this Agreement, and the Manager shall be
responsible for all acts and omissions of such affiliated sub-advisers, or other
persons or entities, in connection with the performance of the Manager's duties
hereunder.
(d) Notice Upon Change in Partners of Manager. The Manager is a limited
partnership and its limited partner is Xxxxxxx Xxxxx & Co., Inc. and its general
partner is Princeton Services, Inc. The Manager will notify the Trust and the
Fund of any change in the membership of the partnership within a reasonable time
after such change.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
(a) The Manager. The Manager assumes and shall pay for maintaining the
staff and personnel necessary to perform its obligations under this Agreement,
and shall at its own expense, provide the office space, equipment and facilities
which it is obligated to provide under Article I hereof, and shall pay all
compensation of officers of the Trust and all Trustees who are affiliated
persons of the Manager.
(b) The Fund. The Fund assumes and shall pay or cause to be paid all other
expenses of the Fund (except for the expenses paid by FAM Distributors, Inc.
(the "Distributor")), including, without limitation: organizational cost, the
financial warranty fee, redemption expenses, expenses of portfolio transactions,
expenses of registering shares under federal and state securities laws, pricing
costs (including the daily calculation of net asset value), expenses of printing
shareholder reports, stock certificates (if any), prospectuses and statements of
additional information, Securities and Exchange Commission fees, interest,
taxes, custodian and transfer agency fees, fees and actual out-of-pocket
expenses of Trustees who are not affiliated persons of the Manager, fees for
legal and auditing services, litigation expenses, costs of printing proxies and
other expenses related to shareholder meetings, and other expenses properly
payable by the Trust or the Fund. It is also understood that the Fund shall
reimburse the Manager for its costs, if any, in providing accounting services to
the Fund. The Distributor will pay certain of the expenses of the Fund incurred
in connection with the continuous offering of Fund shares.
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ARTICLE III
COMPENSATION OF THE MANAGER
(a) Investment Management Fee. Unless reduced as set forth below, for the
services rendered, the facilities furnished and expenses assumed by the Manager,
the Fund shall pay to the Manager at the end of each calendar month a fee at the
annual rate of 0.65% of the average daily net assets of the Fund commencing on
the day following effectiveness hereof, as determined and computed in accordance
with the description of the determination of net asset value contained in the
Registration Statement. 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 fee as set forth
above. In the event that all of the Fund's assets become completely and
irreversibly allocated to the Protection Component under the terms of the
Warranty Agreement, the Manager agrees to reduce its fee to 0.25% per annum of
the average daily net assets of the Fund. This reduction in fee shall be
effective on the day following the complete and irreversible allocation of the
Fund's assets to the Protection Component (a "Complete Allocation"). If the
Complete Allocation occurs subsequent to the first day of a month, compensation
for that part of the month the reduced fee is in effect shall be prorated in a
manner consistent with the calculation of the fee as set forth above.
(b) Fee Payment. Payment of the Manager's compensation for the preceding
month shall be made as promptly as possible after completion of the computations
contemplated by Article III(a) above. During any period when the determination
of net asset value is suspended by the Board of Trustees, the average net asset
value of a share for the last business day prior to such suspension shall for
this purpose be deemed to be the net asset value at the close of each succeeding
business day until it is again determined.
(c) Expense Limitations. In the event the operating expenses of the Fund,
including amounts payable to the Manager pursuant to subsection (a) 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 applicable state
securities laws or regulations thereunder, as such limitations may be raised or
lowered from time to time, the Manager shall reduce its management fee by the
extent of such excess and, if required pursuant to any such laws or regulations,
will reimburse the Fund in the amount of such excess; provided, however, to the
extent permitted by law, 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 the Fund. Whenever the expenses of the Fund exceed a pro rata
portion of the applicable annual expense limitations, the estimated amount of
reimbursement under such limitations shall be applicable as an offset against
the monthly payment of the management fee due to the Manager. 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
Manager's fee shall be applicable.
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ARTICLE IV
LIMITATION OF LIABILITY OF THE MANAGER
The Manager shall not be liable 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 Trust or the Fund, 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 hereunder. As used in this
Article IV, the term "Manager" shall include any affiliates of the manager
performing services for the Trust or the Fund contemplated hereby and the
partners, shareholders, directors, officers and employees of the Manager and
such affiliates.
ARTICLE V
ACTIVITIES OF THE MANAGER
The services of the Manager to the Trust and the Fund are not to be deemed
to be exclusive, and the Manager and any person controlled by or under common
control with the Manager (for purposes of Article V referred to as "affiliates")
is free to render services to others. It is understood that Trustees, officers,
employees and shareholders of the Trust and the Fund are or may become
interested in the Manager and its affiliates, as directors, officers, employees,
partners and shareholders or otherwise and that the Manager and the directors,
officers, employees, partners and shareholders of the Manager and its affiliates
are or may become similarly interested in the Trust or the Fund as shareholders
or otherwise.
ARTICLE VI
DURATION AND TERMINATION OF THIS CONTRACT
This Agreement shall become effective as of the date first written above
and shall remain in force for a period of two years thereafter and thereafter
continue from year to year, but only so long as such continuance is specifically
approved at least annually by (i) the Trustees, or by the vote of a majority of
the outstanding voting securities of the Fund, and (ii) a majority of those
Trustees who are not parties to this Agreement or interested persons of any such
party cast in person at a meeting called for the purpose of voting on such
approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Trustees or by vote of a majority of the outstanding voting
securities of the Fund, or by the Manager, on sixty days' written notice to the
other party. This Agreement shall automatically terminate in the event of its
assignment.
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ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the vote of a majority of outstanding voting
securities of the Fund, and (ii) a majority of those Trustees who are not
parties to this Agreement or interested persons of any such party cast in person
at a meeting called for the purpose of voting on such approval.
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
The terms "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person" and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act and the rules and regulations thereunder, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission under the
Investment Company Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with laws of the State of
New York and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE X
LIMITATION OF OBLIGATIONS OF THE FUND
The obligations of the Fund shall be limited to the assets of the Fund,
shall be separate from the obligations of any other series of the Trust, and the
Fund shall not be liable for the obligations of any other series of the Trust.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
XXXXXXX XXXXX PRINCIPAL PROTECTED
TRUST, on behalf of its series, XXXXXXX XXXXX
FUNDAMENTAL GROWTH PRINCIPAL PROTECTED FUND
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: President
XXXXXXX XXXXX INVESTMENT MANAGERS, L.P.
By: PRINCETON SERVICES, INC.,
its General Partner
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Executive Vice President
