Exhibit 5(c)
ADVISORY AGREEMENT
AGREEMENT made as of the 28th day of February, 1997, between XXXXX,
XXXXXXX & ASSOCIATES INVESTMENT ADVISORS, INC., a corporation organized
under the laws of the State of Texas and having its principal place of
business in Houston, Texas (the "Advisor"), and XXXXX FUNDS, a
Massachusetts business trust having its principal place of business in
Houston, Texas (the "Trust").
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of
1940 (the "1940 Act"); and
WHEREAS, the Advisor is engaged principally in the business of
rendering investment management services and is registered under the
Investment Advisors Act of 1940; and
WHEREAS, the Advisor, together with the initial administrative service
provider, caused the Trust to be organized in late 1993 and, upon
resignation of the initial administrative service provider in February
1996, assumed many of the administrative responsibilities of that entity;
and
WHEREAS, the Trust and Advisor have a continuing investment advisory
arrangement under the Advisory Agreement last approved by shareholders in
December 1995 and May 1996, which Agreement shall not be affected hereby
unless approved by shareholders of the existing series of the Trust; and
WHEREAS, the Trust intends to offer shares in the Xxxxx Tombstone
Fund [such series (the "Initial Fund") together with all other series
established by the Trust with respect to which the Trust desires to retain
the Advisor to render investment advisory services hereunder and the
Advisor is willing so to do (collectively referred to as the "Funds")];
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. APPOINTMENT OF ADVISOR
(a) Initial Fund. The Trust hereby appoints the Advisor to act as
Advisor and investment advisor to the Initial Fund for the period and on
the terms herein set forth. The Advisor accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
(b) Additional Funds. In the event that the Trust establishes one or
more series of shares other than the Initial Fund with respect to which it
desires to retain the Advisor to render management and investment advisory
services hereunder, it shall so notify the Advisor in writing, indicating
the advisory fee which will be payable with respect to the additional
series of shares. If the Advisor is willing to render such services, it
shall so notify the Trust in writing, whereupon such series of shares shall
become a Fund hereunder.
2. DUTIES OF ADVISOR
The Advisor, at its own expense, shall furnish the following services
and facilities to the Trust:
(a) Investment Program. The Advisor will (i) furnish continuously an
investment program of each Fund, (ii) determine (subject to the overall
supervision and review of the Board of Trustees of the Trust) what
investments shall be purchased, held sold or exchanged by each Fund and
what portion, if any, of the assets of each Fund shall be held uninvested,
and (iii) make changes on behalf of the Trust in the investments of each
Fund. The Advisor will also manage, supervise and conduct the other
affairs and business of the Trust of each Fund thereof and matters
incidental thereto, subject always to the control of the Board of Trustees
of the Trust and to the provisions of the Declaration of Trust and By-laws
and the 1940 Act.
(b) Office Space and Facilities. The Advisor shall furnish the Trust
office space in the offices of the Advisor, or in such other place or
places as may be agreed upon from time to time, and all necessary office
facilities, simple business equipment, supplies, utilities, and telephone
service for managing the affairs and investments of the Trust. These
services are exclusive of the necessary services and records of any
administrative service provider, dividend disbursing agent, transfer agent,
registrar or custodian, and accounting and bookkeeping services to provided
by the Trust's transfer agent, record keeping service or custodian.
(c) Personnel. The Advisor shall provide all necessary executive and
clerical personnel for administering the affairs of the Trust, and shall
compensate all personnel, officers and Trustees of the Trust if such
persons are also employees of the Advisor or its affiliates, except as
provided in Paragraph 3(f) hereof.
(d) Distribution Expenses. Except as may be provided in any
underwriting agreements or distribution expense plans as contemplated by
Rule 12b-1 under the 1940 Act, the Advisor shall bear all sales, promotions
or distribution expenses in connection with the distribution of shares of
any Fund and shall be the sole judge of the extent to which sales or
promotion expenses shall be incurred; provided however, that the Advisor
shall not be obligated to pay for any portion of the cost of prospectuses
or periodic reports provided to shareholders. Expenses incurred in
complying with laws regulating the issue or sale of securities shall not be
deemed to be sales, promotion or distribution expenses.
(e) Portfolio Transactions. The Advisor shall place all orders for
the purchase and sale of portfolio securities for the account of each
Fund with brokers or dealers selected by the Advisor, although the Trust
will pay the actual brokerage commissions on portfolio transactions in
accordance with Paragraph 3(c). In executing portfolio transactions and
selecting brokers or dealers, the Advisor will at all times seek for the
Funds the best qualitative execution, taking into account such factors
as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and
responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer. You should generally seek
favorable prices and commission rates that are reasonable in relation to
the benefits received. In seeking best qualitative execution and in
selecting the broker or dealer to execute a particular transaction, the
Advisor may also consider the brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of
1934) provided to any Fund and/or other accounts over which the Advisor
or an affiliate of the Advisor exercises investment discretion. The
Advisor is authorized to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for any fund which is in excess of the amount of commission
another broker or dealer would have charged for effecting that
transaction if, but only if, the Advisor determines in good faith that
such commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer, viewed in terms
of that particular transaction or in terms of all of the accounts over
which investment discretion is so exercised.
(f) Use of Affiliated Broker or Dealer. In connection with placing
orders for the purchase and sale of portfolio securities the Advisor may
utilize the services of an affiliated broker or dealer provided the
transactions are effected and reported in accordance with Trust procedures
adopted pursuant to Section 17(e) of the 1940 Act and Rule 17e-1
thereunder.
3. ALLOCATION OF EXPENSES.
Except for the services and facilities to be provided by the Advisor as
set forth in Paragraph 2 above, the Trust assumes and shall pay all
expenses for all other Trust operations and activities and shall reimburse
the Advisor for any such expenses incurred by the Advisor. The expenses to
be borne by the Trust shall include, without limitation:
(a) The charges and expenses of any registrar, stock transfer or
dividend disbursing agent, administrative service provider, custodian, or
depository appointed by the Trust for the safekeeping of its cash,
portfolio securities and other property;
(b) the charges and expenses of auditors;
(c) brokerage commissions for transactions in the portfolio securities
of the Trust;
(d) all taxes, including issuance and transfer taxes, and corporate
fees payable by the Trust to Federal, state or other governmental agencies;
(e) the cost of stock certificates (if any) representing shares of the
Trust;
(f) expenses involved in registering and maintaining registrations of
the Trust and of its shares with the Securities and Exchange Commission and
various states and other jurisdictions, including reimbursement of actual
expenses incurred by the Advisor in performing such functions for the
Trust, and including compensation of persons who are Advisor employees in
proportion to the relative time spent on such matters;
(g) all expenses of shareholders' and Trustees' meetings, including
meetings of committees, and of preparing, printing and mailing proxy
statements, quarterly reports, semi-annual reports, annual reports and
other communications to shareholders;
(h) all expenses of preparing and setting in type prospectuses, and
expenses of printing and mailing the same to shareholders [but not expenses
of printing and mailing of prospectuses and literature used for promotional
purposes in accordance with Paragraph 2(d) above];
(i) compensation and travel expenses of Trustees who are not "interested
persons" within the meaning of the 1940 Act;
(j) the expense of furnishing, or causing to be furnished, to each
shareholder a statement of his account, including the expense of mailing;
(k) charges and expenses of legal counsel and internal audit/compliance
personnel in connection with matters relating to the Trust, including,
without limitations, legal services rendered in connection with the Trust's
corporate and financial structure and relations with its shareholders,
issuance of Trust shares, and registration and qualification of securities
under Federal, state and other laws;
(l) the expenses of attendance at professional meetings of
organizations such as the Investment Company Institute, the No Load Mutual
Fund Association, or Commerce Clearing House by officers and Trustees of
the Trust, and the membership or association dues of such organizations;
(m) the cost and expense of maintaining the books and records of the
Trust, including general ledger accounting;
(n) the expense of obtaining and maintaining a fidelity bond as
required by Section 17(g) of the 1940 Act;
(o) interest payable on Trust borrowings; and
(p) postage.
4. ADVISORY FEE.
(a) For the services and facilities to be provided to the Fund by the
Advisor as provided in Paragraph 2 hereof and the licensing agreement
attachment attached hereto and incorporated herein by reference, the Trust
shall pay the Advisor a monthly fee with respect to the Fund as soon as
practical after the last day of each calendar month, which fee shall be
paid at the rate set forth below based upon the Monthly Average Net Assets
[as defined in subparagraph (c) below] of such Fund for such calendar
month:
ADVISORY FEE SCHEDULE
Monthly Fee Rate
----------------
Xxxxx Tombstone Index Fund 1/12 of 0.38%
(b) In the case of termination of this Agreement with respect to any
Fund during any calendar month, the fee with respect to such Fund for that
month shall be reduced proportionately based upon the number of calendar
days during which it is in effect and the fee shall be computed upon the
average net assets of such Fund for the business days which it is so in
effect.
(c) The "Monthly Average Net Assets" of any Fund of the Trust for any
calendar month shall be equal to the quotient produced by dividing (i) the
sum of the net assets of such Fund, determined in accordance with
procedures established from time to time by or under the direction of the
Board of Trustees of the Trust in accordance with the Declaration of Trust
of the Trust, as of the close of business on each day during such month
that such Fund was open for business, by (ii) the number of such days.
5. TRUST TRANSACTIONS.
This Agreement shall not prevent the purchase of shares of the Trust by
the Advisor or any of its officers or Directors for their account and for
investment at the price at which such shares are available to the public at
the time of purchase or as part of the initial capital of the Trust.
6. RELATIONS WITH TRUST.
Subject to and in accordance with the Declaration of Trust and By-laws
of the Trust and the Articles of Incorporation and By-laws of the Advisor,
respectively, it is understood that Trustees, officers, agents and
shareholders of the Trust are or may be interested in the Advisor (or any
successor thereof) as directors, officers, or otherwise; that directors,
officers, agents and shareholders of the Advisor are or may be interested
in the Trust as Trustees, officers, shareholders, or otherwise; that the
Advisor (or any such successor) is or may be interested in the Trust as a
shareholder or otherwise; and that the effect of any such adverse interests
shall be governed by said Declaration of Trust, Articles of Incorporation
and By-laws.
7. LIABILITY OF ADVISOR AND OFFICERS AND TRUSTEES OF THE TRUST.
No provision of this Agreement shall be deemed to protect the Advisor
against any liability to the Trust or its shareholders to which it might
otherwise be subject by reason of any willful misfeasance, bad faith or
gross negligence in the performance of its duties or the reckless disregard
of its obligations and duties under this Agreement. Nor shall any
provision hereof be deemed to protect any Trustee or officer of the Trust
against any such liability to which he might otherwise be subject by reason
of any willful misfeasance, bad faith or gross negligence in the
performance of his duties or the reckless disregard of his obligations and
duties. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
8. DURATION AND TERMINATION OF THIS AGREEMENTS.
(a) Duration. This Agreement shall become effective with respect to
each Initial Fund on the date hereof and, with respect to any additional
Fund, on the date of receipt by the Trust of notice from the Advisor in
accordance with Paragraph 1(b) hereof that the Manager is willing to serve
as Advisor with respect to such Fund. Unless terminated as herein
provided, this Agreement shall remain in full force for a period of two
years from the date hereof with respect to the Initial Fund and, with
respect to each additional Fund, until one year following the date on which
such Fund becomes a Fund hereunder, and shall continue in full force and
effect for period on one year thereafter with respect to each Fund so long
as such continuance with respect to any such Fund is approved at least
annually (i) by either the Trustees of the Trust or by vote of a majority
of the outstanding voting shares (as defined in the 0000 Xxx) of such Fund,
and (ii) in either event by the vote of a majority of the Trustees of the
Trust who are not parties to this Agreement or "interested persons" (as
defined in the 0000 Xxx) of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
Any approval of this Agreement by the holders of a majority of the
outstanding shares (as defined in the 0000 Xxx) of any Fund shall be
effective to continue this Agreement with respect to any such Fund
notwithstanding (i) that this Agreement has not been approved by the
holders of a majority of the outstanding shares of any other Fund affected
thereby, and (ii) that this Agreement has not been approved by the vote of
a majority of the outstanding shares of the Trust, unless approval shall be
required by any other applicable law or otherwise.
(b) Termination. This Agreement may be terminated at any time, without
payment of any penalty, by vote of the Trustees of the Trust or by vote of
a majority of the outstanding shares (as defined in the 1940 Act), or by
the Advisor on sixty (60) days' written notice to the other party.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment.
9. SERVICES NOT EXCLUSIVE.
The services of the Advisor to the Trust hereunder are not to be deemed
exclusive, and the Advisor shall be free to render similar services to
others so long as its services hereunder are not impaired thereby.
10. LIMITATION OF LIABILITY.
(a) The Trust. The term "Xxxxx Funds" means and refers to the Trustees
from time to time serving under the Amended and Restated Master Trust
Agreement of the Trust dated February 13, 1996, as the same may
subsequently thereto have been, or subsequently hereto be amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents
or employees of the Trust, personally, but bind only the assets and
property of the Trust, as provided in the Master Trust Agreement of the
Trust. The execution and delivery of this Agreement have been authorized
by the Trustees and shareholders of the Trust and signed by an authorized
officer of the Trust, acting as such, and neither such authorization by
such Trustees and shareholders nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the
assets and property of the Trust as provided in its Master Trust Agreement.
(b) The Advisor. It is expressly agreed that the obligations of the
Advisor hereunder shall not be binding upon any of the shareholders,
nominees, officers, agents or employees of the Advisor, personally, but
bind only the assets and property of the Advisor, respectively. The
execution and delivery of the Agreement have been authorized by the
directors and officers of the Advisor and signed by an authorized officer
of the Advisor, acting as such, and neither such authorization by such
directors and officers nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose
any liability on any of them personally, but shall bind only the assets and
property of the Advisor, respectively. This limitation of liability shall
not be deemed to protect the shareholders, nominees, officers, agents or
employees of the Advisor against any liability to the Trust or its
shareholders to which they might otherwise be subject by reason of any
willful misfeasance, bad faith or gross negligence in the performance of
their duties or the reckless disregard of their obligations and duties
under this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
(including the attached licensing agreement) to be executed as of the date
first set forth above.
XXXXX FUNDS XXXXX XXXXXXX & ASSOCIATES
INVESTMENT ADVISORS, INC.
By /s/ XXXXXX X. XXXXX By /s/ XXXXXX X. XXXXX
---------------------------------- ------------------------------
Xxxxxx X. Xxxxx, President Xxxxxx X. Xxxxx, President
Attest: Attest:
Secretary Secretary
ATTACHMENT TO ADVISORY AGREEMENT
LICENSING AGREEMENT BY AND BETWEEN
XXXXX XXXXXXX CAPITAL MANAGEMENT CO.(tm) AND XXXXX FUNDS(tm).
WHEREAS, Xxxxx Xxxxxxx Capital Management Co.(tm) is an Investment
Advisory firm registered with the Securities Exchange Commission, with its
principal offices located in Houston, Texas (the "Advisor"), and
WHEREAS, Xxxxx Funds(tm) is an Open End Investment Management Co.,
organized as a Massachusetts business trust pursuant to the Investment
Company Act of 1940, with its principal offices located at 00000 Xxxxxx
Xxxxx Xxxx., Xxxxxxx, Xxxxx 00000 (the "Trust" ), and
WHEREAS, the Advisor owns the trademarks, "Xxxxx Tombstone Common Stock
Index(tm)" and "Xxxxx Tombstone Fund(tm)", and owns the copyright to the work
product comprising the Xxxxx Tombstone Common Stock Index(tm), and
WHEREAS, the Trust has filed a registration statement with the
Securities Exchange Commission to register and offer a new series fund and
desires to market the Fund under the name, Xxxxx Tombstone Fund(tm) (the
"Fund"), and
WHEREAS, the Trust periodically desires to refer to and compare the
performance of the Fund to the Xxxxx Tombstone Common Stock Index(tm), and
WHEREAS, the Advisor has agreed to allow the Trust to use the names,
Xxxxx Tombstone Common Stock Index(tm) and Xxxxx Tombstone Fund(tm) in the
manner described above, pursuant to the terms and conditions as hereinafter
set forth,
NOW, THEREFORE, as material inducements to and for the execution of
this Licensing Agreement (the "Agreement"), and in consideration of the
mutual promises set forth herein and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Advisor
and the Trust hereby, contract, covenant and agree as follows:
1. Subject only to the terms, limitations and conditions of this
Agreement, the Advisor grants a license to the Trust to use the name, Xxxxx
Tombstone Fund(tm) as the identifying name of the Fund (the "Fund License"),
and to use the name, Xxxxx Tombstone Fund(tm) as the identifying xxxx of the
Fund in any sales, marketing, advertising, performance or other
publication, of any nature whatsoever, whether print media or otherwise,
produced by or on behalf of the Fund. The Fund License granted pursuant to
this Paragraph shall be exclusive to the Trust for so long as this
Agreement remains in effect.
2. The Advisor further grants a license to the Trust to use, advertise,
incorporate, refer to or compare the performance of the Tombstone Common
Stock Index(tm) in any sales, marketing, advertising, performance or other
publication, of any nature whatsoever, whether print media or otherwise,
produced by or on behalf of the Fund (the "Index License"). The Index
License granted to the Trust pursuant to this Paragraph shall not be
exclusive, and the parties to this Agreement expressly acknowledge and
agree that the Advisor may enter into any arrangement it desires with any
other party concerning the name, Tombstone Common Stock Index(tm).
3. The Advisor further grants a license to the Trust to use, advertise,
incorporate, refer to or compare the performance of the copyrighted work
product comprising the Tombstone Common Stock Index(tm) in any sales,
marketing, advertising, performance or othe r publication, of any nature
whatsoever, whether print media or otherwise, produced by or on behalf of
the Fund (the "Copyright License"). The Copyright License granted to the
Trust pursuant to this Paragraph shall not be exclusive, and the parties to
this Agreement expressly acknowledge and agree that the Advisor may enter
into any arrangement it desires with any other party concerning the
copyrighted work product comprising the Tombstone Common Stock Index(tm).
4. Any party may terminate this Agreement at any time upon sixty days
written notice delivered in person or by registered mail to the other
party. This Agreement will terminate automatically upon its assignment by
the Trust. This Agreement will further terminate automatically upon the
termination of the Advisory Agreement between the Trust and the Advisor to
which this Agreement is attached. Notwithstanding any of the foregoing,
the Trust shall have a period of not less than sixty (60) days after the
termination of this Agreement during which time it may continue to exercise
its rights under the licenses granted herein, in order for the Trust to
make alternate arrangements as necessary.
6. The parties expressly acknowledge and agree that the obligations of
the Trust as set forth in this Agreement shall not be binding upon any of
the Trustees, shareholders, nominees, officers, agents or employees of the
Trust, but shall bind only the assets of the Trust as provided in the
Master Trust Agreement and/or this Agreement.
7. This Agreement as set forth above constitutes the entire agreement
and understanding of the parties herein as to the subject matter hereof,
and supersedes all previous discussions and agreements between the parties
as to the matters herein addressed. No party shall be bound by any
representation with respect to the subject matter of this Agreement other
than as expressly set forth herein. This Agreement may be amended or
modified only by a writing signed by all parties hereto.
8. This Agreement shall be governed and construed in accordance with
the laws of the State of Texas, except that any conflict of law rule of
that jurisdiction that may require reference to the laws of some other
jurisdiction shall be disregarded.
9. If any provision of this Agreement is or may be held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless survive and continue in full force and effect
without being impaired or hampered in any way.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto to be effective as of the 21st day of April, 1997.
XXXXX FUNDS(tm)
/s/ XXXXXX X. XXXXX
-------------------------------------
By: Xxxxxx X. Xxxxx
Its: President
XXXXX XXXXXXX CAPITAL MANAGEMENT CO.(tm)
/s/ XXXXXX X. XXXXX
-------------------------------------
By: Xxxxxx X. Xxxxx
Its: President
