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INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the 13th day of March, 1997 by and between Xxxxxx Series
Trust, a Delaware business trust (the "Trust"), and Xxxxxx Capital Management,
L.L.C., a Delaware limited liability corporation (the "Adviser"):
WHEREAS, the Trust intends to engage in business as an open-end,
non-diversified management investment company and is registered as such under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act"), and will engage in the
business of acting as an investment adviser; and
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory services for the sole investment portfolio of the Trust, Xxxxxx Value
Fund (the "Fund"), and to provide certain other services to the Trust in the
manner and on the terms and conditions hereinafter set forth; and
WHEREAS, the Adviser desires to be retained to perform such services on
said terms and conditions:
NOW, THEREFORE, this Agreement
W I T N E S S E T H:
that in consideration of the premises and the mutual covenants hereinafter
contained, the Trust and the Adviser agree as follows:
1. The Trust hereby retains the Adviser to act as investment adviser to the
Fund and, subject to the supervision of the Board of Trustees of the Trust, to
manage the investment activities of the Fund and to provide certain other
services to the Trust as hereinafter set forth. Without limiting the
generality of the foregoing, the Adviser shall: obtain and evaluate such
information and advice relating to the economy, securities markets, and
securities as it deems necessary or useful to discharge its duties hereunder;
continuously manage the assets of the Fund in a manner consistent with the
investment objectives, policies and restrictions of the Fund and applicable
laws and regulations; determine the securities to be purchased, sold or
otherwise disposed of by the Fund and the timing of such purchases, sales and
dispositions; and take such further action, including the placing of purchase
and sale orders and the voting of securities on behalf of the Fund, as the
Adviser shall deem necessary or appropriate. The Adviser shall furnish to or
place at the disposal of the Trust such of the information, evaluations,
analyses and opinions formulated or obtained by the Adviser in the discharge of
its duties as the Trust may, from time to time, reasonably request.
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2. The Adviser shall assist in the selection of and the negotiation of
agreements with, and monitor the quality of services provided by, the Trust's
administrator, custodian, transfer agent, and other organizations which may
provide services to the Trust (but the Trust shall pay the fees and expenses of
the administrator, custodian and transfer agent and such other organizations
and the Adviser shall not be responsible for the acts or omissions of such
service providers). The Adviser shall also provide such additional management
and administrative services as may be required in connection with the business
affairs and operations of the Trust beyond those furnished by the Trust's
administrator.
3. The Adviser shall, at its own expense, maintain such staff and employ or
retain such personnel and consult with such other persons as may be necessary
to render the services required to be provided by the Adviser or furnished to
the Trust under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Adviser shall be deemed to include
persons employed or otherwise retained by the Adviser to furnish statistical
and other factual data, advice regarding economic factors and trends,
information with respect to technical and scientific developments, and such
other information, advice and assistance as the Adviser may desire.
4. The Trust will, from time to time, furnish or otherwise make available
to the Adviser such financial reports, proxy statements, policies and
procedures and other information relating to the business and affairs of the
Fund and the Trust as the Adviser may reasonably require in order to discharge
its duties and obligations hereunder.
5. The Adviser shall bear the cost of rendering the services to be
performed by it under this Agreement, and shall provide the Trust with such
office space, facilities, equipment, clerical help, and other personnel and
services as the Trust shall reasonably require in the conduct of its business.
The Adviser shall also bear the cost of telephone service, heat, light, power
and other utilities provided to the Trust. The salaries of officers of the
Trust, and the fees and expenses of Trustees of the Trust, who are also
directors, officers or employees of the Adviser, or who are officers or
employees of any company affiliated with the Adviser, shall be paid and borne
by the Adviser or such affiliated company.
6. The Trust assumes and shall pay or cause to be paid all expenses of the
Trust not expressly assumed by the Adviser under this Agreement, including
without limitation: any payments pursuant to any plan of distribution adopted
by the Trust; the fees, charges and expenses of any registrar, custodian,
accounting agent, administrator, stock transfer and dividend disbursing agent;
brokerage commissions; taxes; registration costs of the Trust and its shares
under federal and state securities laws; the costs and expenses of engraving
and printing stock certificates; the costs and expenses of preparing, printing,
including typesetting, and distributing prospectuses and statements of
additional information of the Trust and the Fund and supplements thereto to the
Trust's shareholders; all expenses of shareholders' and Trustees' meetings and
of preparing, printing and mailing proxy statements and reports to
shareholders; fees and travel expenses of Trustees and members of any advisory
board or committee who are not also officers, directors or employees of the
Adviser or who are not officers or employees of any company affiliated with the
Adviser; all expenses incident to any dividend, withdrawal or redemption
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options; charges and expenses of any outside service used for pricing of the
Fund's shares; fees and expenses of legal counsel to the Trust and its
Trustees; fees and expenses of the Trust's independent accountants; membership
dues of industry associations; interest payable on borrowings; postage;
insurance premiums on property or personnel (including officers and Trustees)
of the Trust which inure to its benefit; and extraordinary expenses (including
but not limited to, legal claims and liabilities and litigation costs and any
indemnification related thereto).
7. As full compensation for the services and facilities furnished to the
Fund and the Trust and the expenses assumed by the Adviser under this
Agreement, the Trust shall pay to the Adviser a fee, as calculated in
accordance with Schedule A hereto. This fee shall be paid monthly. Subject to
the provisions of paragraph 8 hereof, payment of the Adviser's compensation for
the preceding month shall be made as promptly as possible after completion of
the necessary computations.
8. In the event the operating expenses of the Fund including amounts
payable to the Adviser pursuant to paragraph 7 hereof, for any fiscal year
ending on a date on which this Agreement is in effect, exceed any expense
limitation applicable to the Fund under any state securities laws or
regulations (as such limitations may be raised or lowered or waived upon
application of the Trust or the Adviser from time to time) and which are not
pre-empted by federal law, the Adviser shall reduce its fee to the extent of
such excess and, if required pursuant to any such laws or regulations, will
reimburse the Trust for annual operating expenses of the Fund in excess of such
expense limitation; provided, however, that there shall be excluded from
expenses the amount of any interest, taxes, brokerage commissions, distribution
fees and extraordinary expenses (including but not limited to legal claims and
liabilities and litigation costs and any indemnification relating thereto) paid
or payable by the Fund to the extent permissible under applicable laws and
regulations. The amount of any such reduction in fee or reimbursement of
expenses shall be calculated and accrued daily and settled on a monthly basis,
based upon the expense limitation applicable to the Fund as at the end of the
last business day of the month. Should two or more such expense limitations be
applicable as at the end of the last business day of the month, that expense
limitation which results in the largest reduction in the Adviser's fee shall be
applicable.
For purposes of this provision, should any applicable expense
limitation be based upon the gross income of the Fund, such gross income shall
include, but not be limited to, interest on debt securities held by the Fund
accrued to and including the last day of the Fund's fiscal year, and dividends
declared on equity securities held by the Fund, the record dates for which fall
on or prior to the last day of such fiscal year, but shall not include gains
from the sale of securities.
9. The Adviser will use its best efforts in the supervision and
management of the investment activities of the Trust and in providing services
hereunder, but in the absence of willful misfeasance, bad faith, negligence or
reckless disregard of its obligations hereunder, the Adviser shall not be
liable to the Trust or the Fund for any error of judgment for any mistake of
law or for any act or omission by the Adviser.
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10. Nothing contained in this Agreement shall prevent the Adviser or any
affiliated person of the Adviser from acting as investment adviser or manager
for any other person, firm or corporation and shall not in any way bind or
restrict the Adviser or any such affiliated person from buying, selling or
trading any securities or commodities for their own accounts or for the account
of others for whom they may be acting. Nothing in this Agreement shall limit
or restrict the right of any director, officer or employee of the Adviser 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 or
dissimilar nature.
11. The Trust acknowledges and agrees, in accordance with the provisions of
Article VIII, Section 9 of the Trust's Declaration of Trust dated December 19,
1996 (the "Declaration of Trust"), that the name "Xxxxxx" and the Xxxxxx logo
and all rights to the use of such name or logo as part of the name of the Trust
and the Fund belong to Granite Capital International Group L.P.
12. This Agreement shall remain in effect until February 28, 1999, and
shall continue in effect from year to year thereafter provided such continuance
is approved at least annually by the vote of a majority of the outstanding
voting securities of the Fund, as defined by the 1940 Act and the rules
thereunder, or by the Board of Trustees of the Trust; provided that in either
event such continuance is also approved by 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 (the "Independent Trustees"), by vote cast
in person at a meeting called for the purpose of voting on such approval; and
provided, however, that (a) the Trust may at any time, without payment of any
penalty, terminate this Agreement upon sixty days' written notice to the
Adviser, either by majority vote of the Trustees of the Trust or by the vote of
a majority of the outstanding voting securities of the Trust (as defined in the
1940 Act and the rules thereunder); (b) this Agreement shall immediately
terminate in the event of its assignment (to the extent required by the 1940
Act and the rules thereunder) unless such automatic termination shall be
prevented by an exemptive order of the Securities and Exchange Commission; and
(c) the Adviser may terminate this Agreement without payment of penalty on
sixty days' written notice to the Trust.
13. Any notice under this Agreement shall be given in writing and shall be
deemed to have been duly given when delivered by hand or facsimile or five days
after mailed by certified mail, post-paid, by return receipt requested to the
other party at the principal office of such party.
14. This Agreement may be amended only by the written agreement of the
parties. Any amendment shall be required to be approved by the Trustees of the
Trust and by a majority of the Independent Trustees in accordance with the
provisions of Section 15(c) of the 1940 Act and the rules thereunder. Any
amendment shall also be required to be approved by a vote of shareholders of
the Trust as, and to the extent, required by the 1940 Act and the rules
thereunder, except that an amendment may be effected without the vote of
shareholders: to reduce the fees payable hereunder; to supply any omission; to
cure, correct or supplement any ambiguous, defective of inconsistent provision
hereof; or if necessary, to conform this Agreement to the requirements of
applicable laws or regulations, but neither the Trust nor the Adviser shall be
liable for failing to do so. This Agreement may be amended to make it
applicable to any
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investment portfolio of the Trust which is hereafter formed and such amendment
need not be approved by the vote of the holders of shares of the Fund or of any
other portfolio.
15. This Agreement shall be construed in accordance with the laws of the
state of New York and the applicable provisions of the 1940 Act. To the extent
the applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
16. The Trust represents that this Agreement has been duly approved by the
Trustees, including a majority of the Independent Trustees, and shareholders of
the Trust in accordance with the requirements of the 1940 Act and the rules
thereunder.
17. The Declaration of Trust states and notice is hereby given that this
Agreement is not executed on behalf of the Trustees of the Trust as
individuals, and the obligations of the Trust under this Agreement are not
binding upon any of the Trustees, officers or shareholders of the Trust
individually, but are binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
XXXXXX SERIES TRUST
By: /s/ Xxxxx X. Xxxxxxxxx
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Attest:
/s/ Xxxxx X. Xxxxxx
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XXXXXX CAPITAL MANAGEMENT, L.L.C.
By: /s/ Xxxxx X. Xxxxxxxxx
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Attest:
/s/ Xxxxx X. Xxxxxx
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SCHEDULE A
In consideration of the services provided by the Adviser, the Trust shall
pay to the Adviser monthly compensation computed daily at the annual rate of
1.25% of the Fund's net assets (the "Basic Fee"), which rate shall be adjusted
monthly, as described below (the "Monthly Performance Adjustment"), depending
on the investment performance of the Fund relative to the investment
performance of the S&P 500 Index. (The Basic Fee as so adjusted is the "Total
Advisory Fee.")
The Total Advisory Fee applicable each calendar month shall be determined
by: (1) adding (a) 1/12th of the Basic Fee plus (b) 1/12th of the Monthly
Performance Adjustment (as specified below); (2) multiplying the result thereof
by the net assets of the Fund; and (3) dividing the amount so determined by the
number of days in the month. The Monthly Performance Adjustment for each month
shall be a percentage rate determined by: (a) subtracting from the cumulative
percentage performance of the Fund (net of all expenses, including the fees
payable pursuant to this Agreement) over the 12 calendar months preceding, the
percentage change in the S&P 500 Index over the same period (including the
value of dividends paid during the measurement period on stocks included in the
Index); and (b) multiplying the result by 0.15; provided, however, that the
maximum Monthly Performance Adjustment shall not exceed +.75% or -.75%. Until
such time as the Fund has completed 12 full calendar months of operations, the
performance of the Fund and the S&P 500 Index shall be measured from the date
of commencement of the Fund's operations. The Monthly Performance Adjustment
shall become applicable only after the Fund has completed three full calendar
months of operations.
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