Exhibit (d)(2)
ADVISORY AGREEMENT
between
XXXXXX XXXXXX SELECT FUND, INC.
and
XXXXXX ASSET MANAGEMENT, INC.
ADVISORY AGREEMENT made this 1st day of September 2005 (the "Agreement"), by
and between Xxxxxx Xxxxxx Select Fund, Inc., a Maryland corporation (the
"Company"), and Xxxxxx Asset Management, Inc., a corporation organized under the
laws of the State of Tennessee ("Adviser").
WHEREAS, the Company is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company, and
offers for sale a series of shares of common stock designated as Regions Xxxxxx
Xxxxxx Select LEADER Short Term Bond Fund (the "Fund") and
WHEREAS, the Company desires to avail itself of the services, information,
advice, assistance and facilities of an investment adviser on behalf of the
Fund, and to have that investment adviser provide or perform for the Fund
certain research, statistical and investment services;
NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained, it is agreed between the parties as follows:
1. EMPLOYMENT OF THE ADVISER. The Company hereby employs the Adviser to
invest and reinvest the assets of the Fund in the manner set forth in Section 2
of this Agreement subject to the direction of the Board of Directors (the
"Board") and the officers of the Company, for the period, in the manner, and on
the terms set forth hereinafter. The Adviser hereby accepts such employment and
agrees during such period to render the services and to assume the obligations
herein set forth. The Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, except as expressly provided or authorized
(whether herein or otherwise), have no authority to act for or represent the
Company in any way or otherwise be deemed an agent of the Company.
2. OBLIGATIONS OF, AND SERVICES TO BE PROVIDED BY, THE ADVISER. The Adviser
undertakes to provide the services set forth hereinafter and to assume the
following obligations:
A. INVESTMENT ADVISORY SERVICES.
(i) The Adviser shall direct the investments of the Fund, subject to
and in accordance with the Fund's investment objective, policies and limitations
as provided in its Prospectus and Statement of Additional Information and other
governing instruments, as amended from time to time, and any other directions
and policies which the Board may issue to the Adviser from time to time.
(ii) The Adviser is authorized, in its discretion and without prior
consultation with the Company, to purchase and sell securities and other
investments for the Fund.
B. CORPORATE MANAGEMENT SERVICES.
(i) The Adviser shall furnish for the use of the Company, office
space and all necessary office facilities, equipment and personnel for servicing
the investments of the Fund.
(ii) The Adviser shall pay the salaries of all personnel of the
Adviser, performing services relating to research, statistical and investment
activities of the Fund.
C. PROVISION OF INFORMATION NECESSARY FOR PREPARATION OF REGISTRATION
STATEMENT, AMENDMENTS AND OTHER MATERIALS. The Adviser will make available and
provide such information as the Company or the Company administrator reasonably
may request for use in the preparation of the Company's registration statement,
reports and other documents required by any applicable federal, foreign or state
statutes or regulations.
D. CODE OF ETHICS. The Adviser will adopt a written code of ethics
complying with the requirements of Rule 17j-1 under the 1940 Act and Section
204A of the Investment Advisers Act of 1940 and will provide the Company and its
administrator with a copy of such code of ethics and evidence of its adoption.
Within forty-five (45) days after the end of the last calendar quarter of each
year that this Agreement is in effect, an executive officer of the Adviser shall
certify to the Board that the Adviser has complied with the requirements of Rule
17j-1 and Section 204A during the previous year and that there has been no
violation of the Adviser's code of ethics or, if such a violation has occurred,
that appropriate action was taken in response to such violation. Upon the
written request of the Company or its administrator, the Adviser shall permit
the Company or its administrator to examine the reports required to be made to
the Adviser by Rule 17j-l(c)(l).
E. DISQUALIFICATION. The Adviser immediately shall notify the Board of
the occurrence of any event which would disqualify the Adviser from serving as
an investment adviser of an investment company pursuant to Section 9 of the 1940
Act or any other applicable statute or regulation.
F. OTHER OBLIGATIONS AND SERVICES. The Adviser shall make its officers
and employees available to the Board and officers of the Company for
consultation and discussion regarding the management of the Fund and its
investment activities.
3. EXECUTION AND ALLOCATION OF FUND BROKERAGE.
A. The Adviser, subject to the control and direction of the Board, shall
have authority and discretion to select brokers and dealers to execute
transactions for the Fund, and for the selection of the markets on or in which
the transactions will be executed.
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B. In acting pursuant to the foregoing Section 3.A, the Adviser will
place orders through such brokers or dealers in conformity with the policies
with respect to transactions for the Fund set forth in the Company's
registration statement.
C. Neither the Fund nor the Adviser will adopt a formula for allocation
of the Fund's brokerage.
D. The Adviser may, to the extent permitted by applicable laws and
regulations, aggregate securities to be sold or purchased for the Fund and for
other clients in order to obtain the most favorable price and efficient
execution. In that event, the Adviser may allocate the securities purchased or
sold, as well as expenses incurred in the transaction, in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Company and to the Adviser's other clients.
E. The Adviser may, in its discretion, use brokers who provide the Fund
with research, analysis, advice and similar services to execute transactions on
behalf of the Fund, and the Adviser may pay to those brokers in return for
brokerage and research services a higher commission than may be charged by other
brokers, subject to the Adviser determining in good faith that such commission
is reasonable in terms either of the particular transaction or of the overall
responsibility of the Adviser to the Fund and its other clients and that the
total commissions paid by the Fund will be reasonable in relation to the
benefits to the Fund's shareholders over the long term.
F. The Adviser may use brokers who are affiliated with the Adviser
provided that no such broker will be utilized in any transaction in which such
broker acts as principal; and the commissions, fees or other remuneration
received by such brokers is reasonable and fair compared to the commissions,
fees or other remuneration paid to other brokers in connection with comparable
transactions involving similar securities being purchased or sold during a
comparable period of time.
G. The Adviser shall provide such reports as the Board may reasonably
request with respect to the Fund's total brokerage and transaction activities
and the manner in which that business was allocated.
4. EXPENSES OF THE COMPANY. During the term of this Agreement, the Fund will
bear all expenses, not specifically assumed by the Adviser, incurred in its
operations and the offering of its shares. Expenses borne by the Fund will
include but not be limited to the following (or the Fund's proportionate share
of the following): legal and audit expenses, organizational expenses; interest;
taxes; governmental fees; fees, voluntary assessments and other expenses
incurred in connection with membership in investment company organizations; the
cost (including brokerage commissions or charges, if any) of securities
purchased or sold by the Fund and any losses incurred in connection therewith;
fees of custodians, transfer agents, registrars or other agents; distribution
fees; expenses of preparing share certificates; expenses relating to the
redemption or repurchase of shares; expenses of registering and qualifying
shares for sale under applicable federal and state law and maintaining such
registrations and qualifications; expenses of preparing, setting in print,
printing and distributing prospectuses, statements of additional information,
proxy statements, reports, notices and dividends to shareholders; cost of
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stationery; costs of stockholders' and other meetings of the Company;
compensation and expenses of the independent directors of the Company; and the
Company's pro rata portion of premiums of any fidelity bond and other insurance
covering the Company and its officers and directors.
5. COMPENSATION OF THE ADVISER. For the services and facilities to be
furnished and expenses assumed hereunder, the Adviser shall receive from the
Fund an advisory fee at the annual rate listed along with the Fund's name in
Schedule A attached hereto. This advisory fee shall be payable monthly as soon
as practicable after the last day of each month based on the average of the
daily values of the net assets of the Fund as determined at the close of
business on each day throughout the month. The assets of the Fund will be valued
separately as of the close of regular trading on the New York Stock Exchange
(currently 4:00 p.m., Eastern time) on each business day throughout the month
or, if the Company lawfully determines the value of the net assets of the Fund
as of some other time on each business day, as of such time with respect to the
Fund. The first payment of such fee shall be made as promptly as possible at the
end of the month next succeeding the effective date of this Agreement. In the
event that the Adviser's right to such fee commences on a date other than the
last day of the month, the fee for such month shall be based on the average
daily assets of the Fund in that period from the date of commencement to the
last day of the month. If the Company determines the value of the net assets of
the Fund more than once on any business day, the last such determination on that
day shall be deemed to be the sole determination on that day. The value of net
assets shall be determined pursuant to the applicable provisions of the
Company's Articles of Incorporation, its By-Laws and the 1940 Act. If, pursuant
to such provisions, the determination of the net asset value of the Fund is
suspended for any particular business day, then the value of the net assets of
the Fund on such day shall be deemed to be the value of its net assets as
determined on the preceding business day. If the determination of the net asset
value of the Fund has been suspended for more than one month, the Adviser's
compensation payable at the end of that month shall be computed on the basis of
the value of the net assets of the Fund as last determined (whether during or
prior to such month).
6. ACTIVITIES AND AFFILIATES OF THE ADVISER.
A. Nothing in this Agreement shall limit or restrict the right of any
director, officer, or employee of the Adviser who may also be a director,
officer, or employee of the Company, 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 Adviser 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.
B. The Company acknowledges that the Adviser or one or more of its
"affiliated persons" may have investment responsibilities or render investment
advice to or perform other investment advisory services for other individuals or
entities and that the Adviser, its "affiliated persons" or any of its or their
directors, officers, agents or employees may buy, sell or trade in securities
for its or their respective accounts ("Affiliated Accounts"). Subject to the
provisions of paragraph 3, the Company agrees that the Adviser or its
"affiliated persons" may give advice or exercise investment responsibility and
take such other action with respect to Affiliated Accounts which may differ from
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the advice given or the timing or nature of action with respect to the Fund,
provided that the Adviser acts in good faith. The Company acknowledges that one
or more of the Affiliated Accounts may at any time hold, acquire, increase,
decrease, dispose of or otherwise deal with positions in investments in which
the Fund may have an interest. The Adviser shall have no obligation to recommend
for the Fund a position in any investment which an Affiliated Account may
acquire, and the Company shall have no first refusal, co-investment or other
rights in respect of any such investment, either for the Fund or otherwise.
C. Subject to and in accordance with the Articles of Incorporation and
By-Laws of the Company as currently in effect and the 1940 Act and the rules
thereunder, it is understood that it is understood that certain Directors,
officers, agents and shareholders of the Company are or may be interested in the
Adviser or its "affiliated persons," or that directors, officers, agents and
shareholders of the Adviser or its "affiliated persons" are or may be interested
in the Company; and that the effect of any such interests shall be governed by
said Articles of Incorporation, By-Laws and the 1940 Act and the rules
thereunder.
7. LIABILITIES OF THE ADVISER.
A. Except as provided below, in the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Company or to any shareholder of the Company or the Fund for
any act or omission in the course of, or in connection with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security or the making of any investment for or on behalf of the
Company.
B. No provision of this Agreement shall be construed to protect any
Director or officer of the Company, or the Adviser, from liability in violation
of Sections 17(h), 17(i), 36(a) or 36(b) of the 1940 Act.
8. EFFECTIVE DATE; TERM. The term of this Agreement shall begin on the date
first written above and, unless sooner terminated as provided herein, shall
continue in effect through August 31, 2006 and from year to year thereafter only
so long as specifically approved annually by (i) vote of a majority of the
directors of the Company who are not parties to this Agreement or interested
persons of such parties, cast in person at a meeting called for that purpose,
and (ii) by the Board, or with respect to the Fund, by a vote of a majority of
the outstanding voting securities of the Fund.
9. ASSIGNMENT. No "assignment" of this Agreement shall be made by the
Adviser, and this Agreement shall terminate automatically in the event of any
such assignment. The Adviser shall notify the Company in writing in advance of
any proposed change of "control" to enable the Company to take the steps
necessary to enter into a new advisory agreement, if necessary.
10. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between the Adviser and the Company, which amendment is
subject to the approval of the Board and, where required by the 1940 Act, the
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shareholders of the Fund in the manner required by the 1940 Act and the rules
thereunder.
11. TERMINATION. This Agreement: (i) may at any time be terminated without
payment of any penalty by the Company with respect to the Fund (by vote of the
Board or by "vote of a majority of the outstanding voting securities") on sixty
(60) days' written notice to the Adviser; (ii) shall immediately terminate in
the event of its "assignment"; and (iii) may be terminated with respect to the
Fund by the Adviser on sixty (60) days' written notice to the Company.
12. NAME. In the event this Agreement is terminated by either party or upon
written notice from the Adviser at any time, the Company hereby agrees that it
will eliminate from its corporate name any reference to the name "Xxxxxx Xxxxxx"
or "LEADER." The Company shall have the non-exclusive use of the name "Xxxxxx
Xxxxxx" or "LEADER" in whole or in part so long as this Agreement is effective
or until such notice is given.
13. DEFINITIONS. As used in this Agreement, the terms "affiliated person,"
"assignment," "control," "interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the 1940 Act
and the rules and regulations thereunder, subject to any applicable orders of
exemption issued by the Securities and Exchange Commission.
14. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postage prepaid to the other party to this
Agreement at its principal place of business.
15. SEVERABILITY. 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.
16. GOVERNING LAW. To the extent that state law has not been preempted by
the provisions of any law of the United States, this Agreement shall be
administered, construed and enforced according to the laws of the State of
Maryland.
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IN WITNESS WHEREOF the parties have caused this Agreement to be signed on
their behalf by their respective officers thereunto duly authorized, all as of
the date first written above.
XXXXXX XXXXXX SELECT FUND, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Secretary and Assistant Treasurer
XXXXXX ASSET MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Secretary and Treasurer
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SCHEDULE A
XXXXXX XXXXXX SELECT FUND, INC.
REVISED FEE SCHEDULE AS OF SEPTEMBER 1, 2005
Fund Percentage of Average
---- Daily Net Assets
----------------
Regions Xxxxxx Xxxxxx Select LEADER 0.35%
Short Term Bond Fund
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