MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of March 19, 1998 between XXXXXXXX
PORTFOLIOS, INC., a Maryland corporation (the "Corporation"), on behalf of
Xxxxxxxx Large-Cap Value Portfolio and Xxxxxxxx Small-Cap Value Portfolio (the
"Portfolios"), and J. & X. XXXXXXXX & CO. INCORPORATED, a Delaware corporation
(the "Manager").
WHEREAS, the Corporation is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Corporation desires to retain the Manager to render or contract to
obtain as hereinafter provided investment management services to the
Corporation, and to administer the business and other affairs of the Corporation
and the Manager is willing to render such services;
Now, therefore, in consideration of the mutual agreements herein made, the
parties hereto agree as follows:
1. Duties of the Manager. The Manager shall, subject to the control
of the Board of Directors of the Corporation, manage the affairs of each
Portfolio as hereinafter defined, including, but not limited to, continuously
providing the Corporation with investment management, including investment
research, advice and supervision, determining which securities shall be
purchased or sold by each Portfolio, making purchases and sales of securities on
behalf of each Portfolio and determining how voting and other rights with
respect to securities of each Portfolio 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 and Prospectus(es) of the Corporation and the requirements of the 1940
Act and other applicable law. In connection with the performance of its duties
hereunder, 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 each Portfolio. The Corporation understands that
the Manager also acts as the manager of all of the investment companies in the
Xxxxxxxx Group.
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Subject to Section 36 of the 1940 Act, the Manager shall not be liable to
the Corporation 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 Portfolio 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. 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. The Manager shall not be required to pay any other
expenses of the Corporation or the Portfolios, including, but not limited to,
direct charges relating to the purchase and sale of portfolio securities,
interest charges, 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,
expenses 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 such as litigation expenses.
3. Compensation. (a) As compensation for the services performed and
the facilities and personnel provided by the Manager pursuant to Section 1, each
Portfolio 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 then 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
allocation of portfolio transactions as set forth in the Registration Statement
and Prospectus(es)
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of the Corporation or as the Board of Directors of the Corporation may direct
from time to time. In providing the Portfolios 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.
Notwithstanding the above, it is understood that it is desirable for
the Portfolios 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 Portfolios 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 Portfolios 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
Portfolios.
The placing of purchase and sale orders may be carried out by the
Manager or the Subadviser or any wholly-owned subsidiary of the Manager.
If, in connection with purchases and sales of securities for the
Portfolios, 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 Portfolios 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 until December 31, 1999, and 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 Portfolios 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
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such continuance. This Agreement may be terminated at any time with respect to
any Portfolio, without payment of any penalty by the Portfolios or the
Corporation, 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 Portfolio (as defined by the 1940 Act). The failure of the
Board of Directors of the Corporation or holders of securities of one Portfolio
to approve the continuance of this Agreement with respect to such Portfolio,
shall be without prejudice to the effectiveness of this Agreement with respect
to the other Portfolio. This Agreement will 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
the Corporation's and both Portfolios' names, is a property right of the
Manager. Each Portfolio 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 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 the Portfolio 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 Corporation and the
Portfolio 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,
trustees and shareholders 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.
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IN WITNESS WHEREOF, the Corporation on behalf of the Portfolios and
the Manager have caused this Agreement to be executed by their duly authorized
officers as of the date first above written.
XXXXXXXX PORTFOLIOS, INC.
By /s/Xxxxxxx X. Xxxxxx
------------------------------------------
J. & X. XXXXXXXX & CO. INCORPORATED
By /s/Xxxxx X. Xxxx
------------------------------------------
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FEE SCHEDULE
Portfolio Annual Rate
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Xxxxxxxx Large-Cap Value Portfolio .80% of the Portfolio's average
daily net assets on the first
$500 million of net assets, .70%
of the Portfolio's average daily
net assets on the next $500
million of net assets, and .60%
of the Portfolio's average daily
net assets in excess of $1
billion.
Xxxxxxxx Small-Cap Value Portfolio 1.00% of the Portfolio's average
daily net assets on the first
$500 million of net assets, .90%
of the Portfolio's average daily
net assets on the next $500
million of net assets, and .80%
of the Portfolio's average daily
net assets in excess of $1
billion.
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