Exhibit (d)(1)
XXXXX VARIABLE ACCOUNT FUND, INC.
INVESTMENT ADVISORY AGREEMENT
_______, 1999
Xxxxx Selected Advisers, L.P.
000 X. Xxxxx Xx.
Xxxxx Xx, XX 00000
Dear Sirs:
We herewith confirm our agreement with you as follows:
1. Acting as an Investment Company, Xxxxx Selected Advisers, L.P. to
Serve as Investment Adviser. We desire to employ the capital of Xxxxx Variable
Account Fund, Inc. (the "Company") by investing and reinvesting the same in
securities of the type and in accordance with the limitations specified in the
registration statement under the Securities Act of 1933 and the Investment
Company Act of 1940 (the "1940 Act"), of which we enclose a copy, and in such
manner and to such extent as may from time to time be approved by our Board of
Directors. We desire to employ you to supervise and assist in the management of
this business for us. You shall for all purposes herein be deemed an
independent contractor, and shall, unless otherwise expressly provided for or
authorized, have no authority to act or represent us.
2. Employees, Officers, Directors. In this connection it is understood
that you will from time to time employ or associate with yourselves such person
or persons as you may believe to be particularly fitted to assist you in the
execution of this Agreement, it being understood that the compensation of such
person or persons shall be paid by you and that no obligation may be incurred
on our behalf in any such respect. This does not apply to such individuals as
we may in due course elect as officers of our corporation, except that no
officer, director, stockholder or employee of your firm shall receive
compensation from us for acting as director, officer or employee of our
corporation, and you agree to pay the compensation of all such persons. We
understand that, during the continuance of this agreement, officers of your
firm will, if elected, serve as directors of our corporation and as its
principal officers.
3. Exclusive Authority, Information. You are to have complete and
exclusive authority to develop and handle for us any business of the type above
mentioned which you may consider advantageous for us, subject to the direction
and control of our officers and directors. You will furnish us with such
statistical information with respect to the securities which we may hold or
contemplate purchasing as we may request. We wish to be kept in touch with
important developments affecting our Company and shall expect you on your own
initiative to furnish us from time to time with such information as you may
believe appropriate for this purpose, whether concerning the individual
companies whose securities are included in our portfolio or the industries in
which they are engaged.
We shall also expect you of your own motion to advise us whenever in your
opinion conditions are such as to make it desirable that a specific security be
eliminated from our portfolio.
4. Exercise of Best Judgement, Limitation on Liability. We shall
expect of you your best judgment in rendering these services to us, and we
agree as an inducement to your undertaking the same that you shall not be
liable hereunder for any mistake of judgment or in any other event whatsoever,
except for lack of good faith, provided that nothing herein shall be deemed to
protect or purport to protect you against any liability to us or to our
security holders to which you would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of your duties
hereunder, or by reason of your reckless disregard of your obligations and
duties hereunder.
5. Fee for Services. In consideration of such services, we shall pay
you a monthly fee as of the last day of each month in each year based upon the
average daily value of net assets during a month for which the monthly fee is
calculated, as follows:
a monthly rate of 1/12 of 0.75% of the value of average daily net assets during
the month.
provided, however, that such fee for any period which shall not be a full
monthly period shall be prorated according to the proportion which such period
bears to the full month and no payment of any fee shall be made before the
commencement of the public offering of any common stock. For this purpose, the
value of our net assets shall be computed in the same manner as the value of
such net assets are computed in connection with the determination of the net
asset value of our shares.
6. Clerical Services, Responsibility for Expenses. Except as otherwise
provided below in this paragraph, you will attend to, or arrange for the
performance, at your expense, of such clerical and accounting work related to
the investment and reinvestment of our capital for us as we may specify. We
shall, however, bear all costs and expenses of or attendant upon: (i)
preparation of our federal, state and local tax returns; (ii) preparation of
documents we must file with the Securities and Exchange Commission; (iii)
determination of the status and payment of dividends; (iv) reconciling and
reviewing output of our custodian bank, determining the adequacy of various
accruals, approving our expenses, authorizing our bank to receive and disburse
money and securities and verifications related thereto, and interfacing with
our auditors; (v) verification of our security ledger and preparation and
maintenance of other corporate books and records; (vi) brokerage commissions
and other transaction expenses; (vii) stockholders' and Directors' meetings;
(viii) corporate reports and proxy materials, including their preparation,
printing and distribution; (ix) fees of Directors not affiliated with you or
any other firm acting as an investment adviser to us; (x) taxes and interest
expenses; (xi) reports to government authorities including all expenses and
costs relating to such reports and to state securities law compliance; (xii)
custodian and transfer agent fees; (xiii) association membership dues; (xiv)
premiums on all insurance and bonds maintained for us or on our behalf; (xv)
retention of the transfer agent and registrar for our shares and the disbursing
agent for our stockholders, including costs and expenses attendant upon
shareholder servicing, purchase, repurchase and redemption of our shares; (xvi)
our counsel; and (xvii) our independent auditors. We may arrange for you to
provide some or all of the services relating to items (i) to (xvi) above, and
any other services not directly relating to investment and reinvestment of our
capital, upon such terms and conditions, including
compensation, as we may agree and subject to the approval and review of our
Board of Directors.
All of our expenses shall be paid by us except for those you
specifically agree to assume under this Agreement.
7. Portfolio Transactions (a) Best Execution. You are authorized to
place purchase and sale orders for our portfolio transactions with brokers
and/or dealers which, in your best judgment are able to achieve "best
execution" of such orders. "Best execution" shall mean prompt and reliable
execution at the most favorable security price obtainable, taking into account
research and other services available and the reasonableness of commission
charges. Purchases and sales of securities not listed or traded on a securities
exchange shall ordinarily be executed with primary market makers, acting as
principal, except where, in your judgment, better prices and execution may
otherwise be obtained.
(b) Brokerage and Research. You are authorized to allocate
brokerage and principal business to members of securities exchanges, brokers
and dealers (such members, brokers and dealers being hereinafter referred to as
"brokers") who have provided brokerage and research services, as such services
are defined in Section 28(e) of the Securities Exchange Act of 1934 (the "1934
Act") for us and/or other accounts, if any, for which you exercise investment
discretion (as defined in Section 3(a)(35) of the 1934 Act) and to cause us to
pay a commission for effecting a securities transaction in excess of the amount
another broker would have charged for effecting that transaction if you
determine in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker, viewed in terms of either that particular transaction or your overall
responsibilities with respect to us and the other accounts, if any, as to which
you exercise investment discretion. In reaching such determination, you will
not be required to place or attempt to place a specific dollar value on the
research or execution services of a broker or on the portion of any commission
reflecting either of said services.
(c) Sales of Shares. Portfolio transactions may be allocated
to any broker or dealer taking into account the sale by such broker or dealer
of our shares. Any such allocation shall be made in accordance with the
provisions of this agreement relating to obtaining "best execution."
8. Non-Exclusive Services, Use of Name. You may act as investment
adviser for any other person, firm or corporation. We recognize that you have
given us the right to use the name "Xxxxx" in our corporate title. If for any
reason you no longer act as our investment adviser, we shall remove the name
"Xxxxx" from our corporate title upon demand made by you.
9. Effective Date, Term, Termination. This Agreement shall become
effective for an initial period of not more than two years from its effective
date, and shall continue in full force and effect continuously thereafter, if
its continuance is approved at least annually as required by the 1940 Act. The
effective date of this Agreement shall be the later of (i) the effective date
of the initial registration statement covering the offer and sale of our shares
under the Securities Act of 1933, or (ii) the date this Agreement has been
approved as required by the 1940 Act. As of such effective date, this Agreement
shall supersede all prior investment advisory agreements between the parties.
This
Agreement may be terminated at any time, without the payment of any penalty, by
our Board of Directors or by vote of a majority of our outstanding voting
securities (as defined in the 1940 Act) on 60 days' written notice to you, or by
you on 60 days' written notice to us, and it shall be automatically terminated
in the event of its assignment (as defined in said Act).
10. Series Offered by the Company. As of the date of this Agreement,
the Company has three series of shares (the Xxxxx Value Portfolio, Xxxxx
Financial Portfolio, and Xxxxx Real Estate Portfolio) and this Agreement shall
apply to those series. In the event that the Company shall create future
series, this Agreement shall apply to and be effective as to each such series,
provided (i) that as to any additional series there may be a different fee
payable to you, and (ii) this Agreement, as amended to reflect any change in
fees, is approved as required by the 1940 Act. The effective date of this
Agreement as to each such series shall be the date that it is so approved or
any later date as shall be agreed to by you and the Company.
If the foregoing is in accordance with your understanding, will you so
kindly indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
XXXXX VARIABLE ACCOUNT FUND, INC.
By:________________________________
Its:____________________________
Accepted as of the day and year first above written.
XXXXX SELECTED ADVISERS, L.P.
By: VENTURE ADVISERS, INC., General Partner
By:___________________________________________
Its:_________________________________________
