(d)(5)
ADVISORY AGREEMENT
ADVISORY AGREEMENT, dated February 15, 2007, between Xxxxxxx, Xxxxxxx
Funds, Inc., a Maryland corporation (the "Fund"), and Xxxxxxx, Loevner
Management, L.P., a New Jersey limited partnership (the "Adviser").
In consideration of the mutual agreements herein made, the parties
hereto agree as follows:
1. ATTORNEY-IN-FACT. The Fund appoints the Adviser as its
attorney-in-fact to invest and reinvest the assets of the International Small
Companies Portfolio (the "Portfolio"), as fully as the Fund itself could do.
The Adviser hereby accepts this appointment.
2. DUTIES OF THE ADVISER. (a) The Adviser shall be responsible for
managing the investment portfolio of the Portfolio, including, without
limitation, providing investment research, advice and supervision, determining
which portfolio securities shall be purchased or sold by the Portfolio,
purchasing and selling securities on behalf of the Portfolio and determining
how voting and other rights with respect to portfolio securities of the
Portfolio shall be exercised, subject in each case to the control of the Board
of Directors of the Fund (the "Board") and in accordance with the objective,
policies and principles of the Portfolio set forth in the Registration
Statement, as amended, of the Fund, the requirements of the Investment Company
Act of 1940, as amended, (the "Act") and other applicable law. In performing
such duties, the Adviser shall provide such office space, and such executive
and other personnel as shall be necessary for the investment operations of the
Portfolio. In managing the Portfolio in accordance with the requirements set
forth in this paragraph 2, the Adviser shall be entitled to act upon advice of
counsel to the Fund or counsel to the Adviser.
(b) Subject to Section 36 of the Act, the Adviser shall not be liable
to the Fund 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
losses arising out of the Adviser's 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 under this Agreement. It is agreed that
the Adviser shall have no responsibility or liability for the accuracy or
completeness of the Fund's Registration Statement under the Act and the
Securities Act of 1933 except for information about the Adviser contained in
the Prospectus included as part of such Registration Statement supplied by the
Adviser for inclusion therein. The Fund agrees to indemnify and hold the
Adviser harmless from and against all claims, losses, costs, damages and
expenses, including reasonable fees and expenses for counsel, incurred by it
resulting from any claim, demand, action or suit in connection with or arising
out of any action or omission by the Adviser in the performance of this
Agreement except for those claims, losses, costs, damages and expenses
resulting from the Adviser's 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 under this Agreement.
(c) The Adviser and its officers may act and continue to act as
investment advisers and managers for others (including, without limitation,
other investment companies), and nothing in this Agreement will in any way be
deemed to restrict the right of the Adviser to perform investment management or
other services for any other person or entity, and the performance of such
services for others will not be deemed to violate or give rise to any duty or
obligation to the Fund.
(d) Except as provided in Section 5, nothing in this Agreement will
limit or restrict the Adviser or any of its officers, affiliates or employees
from buying, selling or trading in any securities for its or their own account
or accounts. The Fund acknowledges that the Adviser and its officers,
affiliates or employees, and its other clients may at any time have, acquire,
increase, decrease or dispose of positions in investments which are at the same
time being acquired or disposed of for the account of the Portfolio. The
Adviser will have no obligation to acquire for the Portfolio a position in any
investment which the Adviser, its officers, affiliates or employees may acquire
for its or their own accounts or for the account of another client, if in the
sole discretion of the Adviser, it is not feasible or desirable to acquire a
position in such investment for the account of the Portfolio, provided that the
Adviser shall have acted in good faith and in a manner deemed equitable to the
Portfolio. The Adviser represents that it has adopted a code of ethics
governing personal trading that complies in all material respects with the
recommendations contained in the Investment Company Institute "Report of the
Advisory Group on Personal Investing," dated May 9, 1994, and the Adviser
agrees to furnish a copy of such code of ethics to the Directors of the Fund.
(e) If the purchase or sale of securities consistent with the
investment policies of the Portfolio and one or more other clients serviced by
the Adviser is considered at or about the same time, transactions in such
securities will be allocated among the Portfolio and clients in a manner deemed
fair and reasonable by the Adviser. Although there is no specified formula for
allocating such transactions, the various allocation methods used by the
Adviser, and the results of such allocations, are subject to periodic review by
the Board.
3. EXPENSES. The Adviser shall pay all of its expenses arising from
the performance of its obligations under this Agreement. Except as provided
below, the Adviser shall not be required to pay any other expenses of the Fund
(including out-of-pocket expenses, but not including the Adviser's overhead or
employee costs), including without limitation, organization expenses of the
Fund; brokerage commissions; maintenance of books and records which are
required to be maintained by the Fund's custodian or other agents of the Fund;
telephone, telex, facsimile, postage and other communications expenses;
expenses relating to investor and public relations; freight, insurance and
other charges in connection with the shipment of the Fund's portfolio
securities; indemnification of Directors and officers of the Fund; travel
expenses (or an appropriate portion thereof) of Directors and officers of the
Fund to the extent that such expenses relate to attendance at meetings of the
Board of Directors of the Fund or any committee thereof or advisors thereto
held outside of Somerville, New Jersey; interest, fees and expenses of
independent attorneys, auditors, custodians, accounting agents, transfer
agents, dividend disbursing agents and registrars; payment for portfolio
pricing or valuation service to pricing agents, accountants, bankers and other
specialists, if any; taxes and government 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 of the Fund
under Federal and state laws and regulations; expenses of printing and
distributing reports, notices, dividends and proxy materials to existing
stockholders; expenses of printing and filing reports and other documents filed
with governmental agencies, expenses of printing and distributing prospectuses;
expenses of annual and special stockholders' meetings; costs of stationery,
fees and expenses (specifically including travel expenses relating to Fund
business) of Directors of the Fund who are not employees of the Adviser or its
affiliates; membership dues in the Investment Company Institute; insurance
premiums and extraordinary expenses such as litigation expenses.
4. COMPENSATION. (a) As compensation for the services performed and
the facilities and personnel provided by the Adviser pursuant to this
Agreement, the Fund will pay to the Adviser promptly at the end of each
calendar month, a fee, calculated on each day during such month, at an annual
rate of [1.25]% of the Portfolio's average daily net assets. The Adviser shall
be entitled to receive during any month such interim payments of its fee
hereunder as the Adviser shall request, provided that no such payment shall
exceed 50% of the amount of such fee then accrued on the books of the Portfolio
and unpaid.
(b) If the Adviser shall serve hereunder for less than the whole of
any month, the fee payable hereunder shall be prorated.
(c) For purposes of this Section 4, the "average daily net assets" of
the Portfolio shall mean the average of the values placed on the Portfolio's
net assets on each day pursuant to the applicable provisions of the Fund's
Registration Statement, as amended.
5. PURCHASE AND SALE OF SECURITIES. The Adviser shall purchase
securities from or through and sell securities to or through such persons,
brokers or dealers as the Adviser shall deem appropriate in order to carry out
the policy with respect to the allocation of portfolio transactions as set
forth in the Registration Statement of the Fund, as amended, or as the Board
may direct from time to time. The Adviser will use its reasonable efforts to
execute all purchases and sales with dealers and banks on a best net price
basis. The Adviser will consider the full range and quality of services offered
by the executing broker or dealer when making these determinations. Neither the
Adviser nor any of its officers, affiliates or employees will act as principal
or receive any compensation from the Portfolio in connection with the purchase
or sale of investments for the Portfolio other than the fee referred to in
Paragraph 4 hereof.
6. TERM OF AGREEMENT. This Agreement shall continue in full force and
effect until two years from the date hereof, and will continue in effect from
year to year thereafter if such continuance is approved in the manner required
by the Act, provided that this Agreement is not otherwise terminated. The
Adviser may terminate this Agreement at any time, without the payment of any
penalty, upon 60 days' written notice to the Fund. The Fund may terminate this
Agreement with respect to the Portfolio at any time, without the payment of any
penalty, on 60 days' written notice to the Adviser by vote of either the
majority of the non-interested members of the Board or a majority of the
outstanding voting securities (as defined in Section 2(a)(42) of the Act) of
the Portfolio. This Agreement will automatically terminate in the event of its
assignment (the term "assignment" for this purpose having the meaning defined
in Section 2(a)(4) of the Act).
7. CHANGES IN MEMBERSHIP. The Adviser is a limited partnership and,
pursuant to the New Jersey Uniform Securities Law and the Investment Advisers
Act of 1940, shall notify the Fund of any change in the membership of such
partnership within a reasonable time after the change.
8. NOTICES. Any notice or other communication authorized or required
hereunder shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. Notice shall be addressed to the Fund at 00 Xxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxx Xxxxxx 00000, Attention: President; and to
Investors Bank & Trust Company, 000 Xxxxxxxxx Xxxxxx, XXX00, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Rainer X.X. Xxxxx. Either party may designate a
different address by notice to the other party. Any such notice or other
communication shall be deemed given when actually received.
9. AMENDMENT. This Agreement may be amended by the parties hereto with
respect to the Portfolio only if such amendment is specifically approved (i) by
the Board of Directors of the Fund or by the vote of a majority of outstanding
shares of the Portfolio ("Shares"), and (ii) by the Director(s) who are not
interested persons (the term "non interested" for this purpose having the
meaning defined in section 2 (a) (19) of the Act) of the Fund ("Non-Interested
Director(s)"), which vote must be cast in person at a meeting called for the
purpose of voting on such approval.
10. RIGHT OF ADVISER IN CORPORATE NAME. The Adviser and the Fund each
agree that the phrase "HLM," which comprises a component of the Portfolio's
corporate name, is a property right of the Adviser. The Fund agrees and
consents that (i) it will only use the phrase "HLM" 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 phrase "HLM" for any purpose; (iii) the
Adviser or any corporate affiliate of the Adviser may use or grant to others
the right to use the phrase "HLM" 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 Adviser, the Fund will take such action as may be
required to provide its consent to such use or grant; and (iv) upon the
termination of any investment advisory agreement into which the Adviser and the
Fund may enter, the Fund shall, upon request by the Adviser, promptly take such
action, at its own expense, as may be necessary to change the Portfolio's
corporate name to one not containing the phrase "HLM" and following such a
change, shall not use the phrase "HLM" or any combination thereof, as part of
the Portfolio's corporate name or for any other commercial purpose, and shall
use its reasonable efforts to cause its officers, directors and stockholders to
take any and all actions which the Adviser may request to effect the foregoing
and recovery to the Adviser any and all rights to such phrase.
11. MISCELLANEOUS. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey. 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.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this
Agreement to be executed by their duly authorized officers as of the date first
written above.
ATTEST XXXXXXX, XXXXXXX FUNDS, INC.
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxx X. Xxxxxxx
----------------------- ---------------------------
Xxxxx X. Xxxxxxx, President
ATTEST XXXXXXX, XXXXXXX MANAGEMENT, L.P.
BY: HLM HOLDINGS, INC., GENERAL PARTNER
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxx X. Xxxxxxx
----------------------- ---------------------------
Xxxxx X. Xxxxxxx, President
