INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
XXXX XXXXX TAX-EXEMPT TRUST, INC.
This INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT ("Agreement") is made
this 1st day of June, 2000, by and between Xxxx Xxxxx Tax-Exempt Trust, Inc., a
Maryland corporation (the "Fund"), and Xxxx Xxxxx Fund Adviser, Inc., a Maryland
corporation (the "Manager").
WHEREAS, the Fund is registered as a diversified open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and has registered its shares of common stock for sale to the
public under the Securities Act of 1933, as amended (the "1933 Act") and various
state securities laws; and
WHEREAS, the Fund wishes to retain the Manager to provide investment
advisory, management, and administrative services to the Fund; and
WHEREAS, the Manager is willing to furnish such services on the terms
and conditions hereinafter set forth; and
WHEREAS, the Fund has established one portfolio of securities and may
establish one or more additional portfolios in the future with distinct and
separate investment goals and policies ("Portfolios"), interests in each of
which are represented by a distinct class of shares of the Fund
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. The Fund shall at all times keep the Manager fully informed with
regard to the securities owned by it, its funds available, or to become
available, for investment, and generally as to the condition of its affairs. It
shall furnish the Manager with such other documents and information with regard
to its affairs as the Manager may from time to time reasonably request.
2. (a) Subject to the direction and control of the Fund's Board of
Directors, the Manager shall regularly provide the Fund with investment
research, advice, management and supervision and shall furnish a continuous
investment program for the Fund consistent with each Portfolio's investment
goals and policies. The Manager shall determine from time to time what
securities will be purchased, retained or sold by each Portfolio, and shall
implement those decisions, all subject to the provisions of the Fund's Articles
of Incorporation and By-Laws, the 1940 Act, the applicable rules and regulations
of the Securities and Exchange Commission, and other applicable federal and
state law, as well as the investment goals and policies of the Fund and each
Portfolio. The Manager shall also provide advice and recommendations with
respect to other aspects of the business and affairs of the Fund, and shall
perform such other functions of management and supervision as may be directed by
the Board of Directors of the Fund. The Manager shall furnish to the Fund such
information with respect to the investments of the Fund and their manner of
execution as the Fund's Board of Directors may reasonably request and is
responsible for the supervision, but not the expense, of the maintenance of the
Fund's financial books and records. The Manager may delegate some or all of the
functions specified in this subparagraph to another appropriate person.
(b) The Fund hereby authorizes any entity or person associated with the
Manager which is a member of a national securities exchange to effect any
transaction on the exchange for the account of the Fund which is permitted by
Section 11(a) of the Securities Exchange Act of 1934 or Rule 11a2-2(T)
thereunder, and the Fund hereby consents to the retention by such person
associated with the Manager of all permissible compensation for such
transactions, including compensation in accordance with Rule
11a2-2(T)(a)(2)(iv).
3. (a) The Manager, at its expense, shall supply the Board of Directors
and officers of the Fund with all statistical information and reports reasonably
required by them and reasonably available to the Manager and shall furnish the
Fund with office facilities, including space, furniture and equipment and all
personnel reasonably necessary for the operation of the Fund. The Manager may
delegate some or all of the functions specified above in this subparagraph to
another appropriate person. The Manager shall authorize and permit any of its
directors, officers and employees, who may be elected as directors or officers
of the Fund, to serve in the capacities in which they are elected.
(b) The Manager, at its own expense, shall provide a system whereby
information is supplied to shareholders and their brokers concerning their
accounts and the operation of the Fund. The Manager shall also provide, at its
own expense, a system whereby orders for purchases and redemption of Fund shares
which are received by the Fund's distributor, Xxxx Xxxxx Xxxx Xxxxxx,
Incorporated, are promptly processed and transmitted to the Fund's transfer
agent. The Manager may delegate some or all of the functions specified in this
subparagraph to another appropriate person. The Manager shall have the right to
use any list of shareholders of the Fund or any other list of investors which it
obtains in connection with its provision of services under this Agreement;
provided, however, that the Manager shall not sell or knowingly provide such
list or lists to any unaffiliated person.
(c) Other than as herein specifically indicated, the Manager shall
not be responsible for the Fund's expenses. Specifically, the Manager will not
be responsible, except to the extent of the reasonable compensation of employees
of the Fund whose services may be used by the Manager hereunder, for any of the
following expenses of the Fund, which expenses shall be borne by the Fund: legal
expenses; auditing and accounting expenses; advisory fees; interest, taxes, and
governmental fees and membership dues; brokerage commissions and charges, if
any; distribution fees, if any; fees of custodians, transfer agents, registrars
or other agents; expenses of preparing share certificates; the expenses for
maintenance of the Fund's financial books and records, including computation of
the Fund's daily net asset value per share and dividends; expenses of
registering and qualifying the Fund's shares for sale under applicable federal
and state law; expenses of preparing, setting in print, printing and
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distributing prospectuses, reports, notices and dividends to the Fund's
shareholders; costs of stationery; costs of stockholders and other meetings of
the Fund; travel expenses of officers, directors and employees of the Fund, if
any; fees of the Fund's independent directors and salaries of any officers or
employees who are not affiliated with the Manager; the organizational expenses
of the Fund; and the Fund's pro rata portion of premium on any fidelity bond and
other insurance covering the Fund and its officers and directors.
4. No director, officer or employee of the Fund shall receive from the
Fund any salary or other compensation as such director, officer or employee
while he or she is at the same time a director, officer, or employee of the
Manager or any affiliated company of the Manager. This paragraph shall not apply
to directors, executive committee members, consultants and other persons who are
not regular members of the Manager's or any affiliated company's staff.
5. As compensation for the services performed and the facilities
furnished and expenses assumed by the Manager, including the services of any
consultants retained by the Manager, the Fund shall pay the Manager, as promptly
as possible after the last day of each month, a fee, computed daily at an annual
rate of 0.50% of the average daily net assets of the Fund. The first payment of
the fee shall be made as promptly as possible at the end of the month succeeding
the effective date of this Agreement and shall constitute a full payment of the
fee due the Manager for all services prior to that date. If this Agreement is
terminated as of any date not the last day of a month, such fee shall be paid as
promptly as possible after such date of termination, shall be based on the
average daily net assets of the Fund in that period from the beginning of such
month to such date of termination, and shall be prorated by the ratio that the
number of business days in such period bears to the number of business days in
such month. The average daily net assets of the Fund shall in all cases be
computed as of such time as may be determined by the Board of Directors of the
Fund. The manner of calculating the Fund's average daily net assets for the
purpose of this Agreement shall be determined by the Fund's Board of Directors
and shall be binding on the parties. Each such payment shall be accompanied by a
report prepared either by the Fund or by a reputable firm of independent
accountants which shall show the amount properly payable to the Manager under
this Agreement and the detailed computation thereof. The Manager shall reimburse
the Fund monthly for all expenses, excluding brokerage, taxes, interest,
extraordinary items, and distribution fees, if any, incurred by the Fund
exceeding an annual rate of 1.50% of the Fund's average daily net assets.
6. The Manager assumes no responsibility under this Agreement other
than to render the services called for hereunder, in good faith, and shall not
be responsible for any action of the Board of Directors of the Fund in following
or declining to follow any advice or recommendations of the Manager and the
Manager shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with matters to which this Agreement
relates; provided, that nothing in this Agreement shall protect the Manager
against any liability to the Fund or its shareholders to which it would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties hereunder.
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7. Nothing in this Agreement shall limit or restrict the right of any
director, officer, or employee of the Manager who may also be a director,
officer, or employee of the Fund, to engage in any other business or to devote
his time and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature, nor to limit or
restrict the right of the Manager to engage in any other business or to render
services of any kind, including investment advisory and management services, to
any other corporation, firm, individual or association.
8. The Fund acknowledges that the Manager may make payments from the
fees paid to it under this Agreement, from past profits or from any other source
available to it, to other persons, including but not limited to Xxxx Xxxxx Xxxx
Xxxxxx, Incorporated, for shareholder, administrative, advisory, record keeping
and distribution services provided by such persons in connection with the Fund's
shares.
9. As used in this Agreement, the terms "assignment," "interested
persons," and "majority of the outstanding voting securities" shall have the
meanings given to them by Section 2(a) of the 1940 Act, subject to such
exemptions as may be granted by the Securities and Exchange Commission by any
rule, regulation or order.
10. Subject to the provision of paragraphs 11 and 12 below, this
Agreement will remain in effect from year to year, provided that (i) its
continuance is specifically approved annually in the manner required pursuant to
Section 15(a) and (c) of the 1940 Act and (ii) the Manager does not notify the
Fund in writing at least sixty (60) days prior to the expiration date in any
year that it does not wish continuance of the Agreement for an additional year.
11. This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Fund or by the Manager on sixty (60) days' written notice to the other
party. The Fund may effect such termination by a vote of (i) a majority of the
Board of Directors of the Fund, (ii) a majority of the directors who are not
parties to this Agreement or "interested persons," as defined by the 1940 Act,
of any such party ("Disinterested Directors"), or (iii) with respect to any
given Portfolio, by a majority of the outstanding voting securities of such
Portfolio.
12. This Agreement shall be submitted for approval to the Board of
Directors of the Fund annually and shall continue in effect only so long as
specifically approved annually (i) by a majority vote of the Fund's Board of
Directors or, with respect to any given Portfolio, by a majority of the
outstanding voting securities of such Portfolio, and (ii) by the vote of a
majority of the Disinterested Directors of the Fund, cast in person at a meeting
called for the purpose of voting on such approval.
13. In the event this Agreement is terminated by either party or upon
written notice from the Manager at any time, the Fund hereby agrees that it will
eliminate from its corporate name any reference to the name of "Xxxx Xxxxx." The
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Fund shall have the non-exclusive use of the name "Xxxx Xxxxx" in whole or in
part so long as this Agreement is effective or until such notice is given.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
Attest: XXXX XXXXX TAX-EXEMPT TRUST, INC.
By: /s/ Xxxxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxxxxx
------------------------- -------------------------------------
Title: Vice President and Treasurer
Name: Xxxxx X. Xxxxxxxxx
Attest: XXXX XXXXX FUND ADVISER, INC.
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxxxx X. Xxxxxx
------------------------- -------------------------------------
Title:
Name:
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