February 10, 1998
Fox Asset Management, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxx Xxxxxx 00000-0000
INVESTMENT ADVISORY AGREEMENT
Investors Research Fund, Inc. (the "Fund") is an open-end, diversified
management investment company registered under the Investment Company Act of
1940, as amended (the "Act"). The Fund is engaged in the business of investing
and reinvesting its assets in securities of the type, and in accordance
with the limitations, specified in the Prospectus, Application and Statement of
Additional Information dated January 30, 1998, which is a part of its
effective Registration Statement filed with the U.S. Securities and Exchange
Commission, all in such manner and to such extent as may from time-to-time
be authorized by the board of directors of the Fund. The Fund hereby retains
you as investment adviser for the consideration and upon the terms and
conditions hereinafter set forth:
1. The Fund employs you to manage the investment and reinvestment of its
assets and, without limiting the generality of the foregoing, to supervise the
investment affairs of the Fund, to make reviews of its investments, and to
effect investment changes whenever such changes appear to be desirable. In
addition, you are to perform all statistical, research and analysis services
necessary to the performance of your duties as investment adviser. Such
services shall be rendered directly to the Fund.
2. It is understood that you will from time-to-time employ or associate
with yourself such persons as you believe to be particularly fitted to assist
you in the execution of your duties hereunder, the cost of performance of
such duties to be borne and paid by you. You will provide adequate and
suitable office space for the performance of your duties hereunder. You will
provide to the Fund in writing, promptly following request, such information
regarding itself and the Fund's investments as shall be necessary for the
preparation of periodic reports to the Fund's stockholders and such other
documents and papers as may be required to comply with applicable laws and the
rules, regulations and other requirements of the Securities and Exchange
Commission or other federal, state or local governmental agencies. You agree
to permit inspection by officers and directors of the Fund, upon reasonable
notice and at reasonable times, of all records, books, correspondence, stock-
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holder lists, and other papers and documents maintained or prepared by you in
connection with the Fund's business and affairs. Furthermore, you agree to
maintain, preserve and make available all such records in accordance and
compliance with Section 31 of the Act, Section 204 of the Investment Advisers
Act of 1940 (as amended) and all governmental regulations and requirements, as
applicable to you in your capacity as investment adviser to the Fund.
3. You will make decisions with respect to all purchases and sales of
securities for or on account of the Fund. To carry out such decisions, you
are hereby authorized, as the Fund's agent and attorney-in-fact, for the Fund's
account, at the Fund's investment risk, and in the Fund's name, to place
orders for the investment and reinvestment of its assets. In all purchases,
sales and other transactions in securities for the Fund, you are authorized to
exercise full discretion and act for the Fund in the same manner and with the
same force and effect as the officers and directors might or could do with
respect to such purchase, sales or other transactions, as well as with respect
to all other things necessary or incidental to the furtherance or conduct of
such purchases, sales or other transactions. In this regard, however, it is
understood that you will not be making purchases and sales of securities on
behalf of the Fund in your capacity as a broker-dealer. Notwithstanding the
foregoing, all procedures for making changes in the Fund's portfolio of
securities, including procedures for the placing and confirmation of orders
with brokers and dealers, shall at all times be and remain under the direction
and control of the Fund's board of directors and officers. You will, however,
maintain such records and perform such duties in connection with the Fund's
portfolio of securities as may be reasonably requested by the Fund, and as may
be required by applicable governmental laws and regulations.
4. The Fund shall provide you with all information under its control which
may be reasonably required for the performance of your duties hereunder, and
agrees to advise you promptly of any changes in the Fund's policies which may
affect any of your obligations hereunder. Except as otherwise specifically
provided hereinabove, you shall have no obligation to provide supervisory or
administrative services in connection with the general business and affairs of
the Fund, it being expressly agreed and understood that the Fund shall employ
other persons to maintain its own books and records, prepare and file with the
Securities and Exchange Commission and applicable governmental and quasi-
governmental authorities periodic reports and amendments to the Fund's
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Registration Statement, prepare notices of stockholders' meetings, declarations
of dividends and other communications from the Fund to its stockholders, and to
operate and conduct the general business and administrative affairs of the
Fund. If, however, you or your affiliates shall render any such services at
the request of the officers or directors of the Fund, the Fund will pay to you
or such of your affiliates the fully burdened cost of such personnel for
rendering such services to the Fund at such rates as shall from time-to-time
be agreed upon between you and the Fund.
5. You will report to the board of directors of the Fund at each regularly
scheduled meeting thereof all changes in the Fund's portfolio since the prior
report, and will furnish to the Fund from time-to-time such information as you
may believe appropriate concerning the Fund's portfolio, whether concerning the
individual companies whose securities are included in the Fund's portfolio, the
industries in which they are engaged, or the conditions prevailing in the
economy generally. You will also furnish to the Fund such statistical and
analytical information with respect to securities in its portfolio as you may
believe appropriate or as the board of directors may reasonably request. In
making purchases and sales of securities, you will bear in mind the policies
set from time-to-time by the board of directors of the Fund as well as the
limitations imposed in the Fund's Registration Statement, the Act, and the
Internal Revenue Code of 1986, as amended, in respect of regulated investment
companies.
6. All expenses and charges incident to the operation of the Fund, include-
ing, but not limited to, (a) payment of the fees payable to you under Paragraph
7, (b) custody, transfer and dividend disbursing expenses, (c) directors' fees
and officers' compensation, (d) legal and auditing expenses, (e) clerical,
accounting and other office costs of the Fund, (f) the cost of personnel
providing services to the Fund, as provided in Paragraph 4, (g) costs
of printing the Fund's prospectus and reports to the stockholders, (h) costs of
maintenance of the Fund's corporate existence and qualifications to do
business, (i) interest and bank charges, taxes, brokerage fees and commissions,
(j) costs of stationery and supplies, (k) expenses and fees relating to
registration and filing with the Securities and Exchange Commission and state
regulatory authorities, and (l) such promotional expenses as may be contem-
plated by an effective plan pursuant to Rule 12b-1 under the Act, providing,
however, that payment by the Fund of such promotional expenses shall be in an
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amount, and in accordance with the procedures, set forth in such plan, and
excepting those expenses to be paid by you as an incidence of the investment
advisory services to be performed by you hereunder, shall be borne and paid by
the Fund either directly or by way of reimbursement to you for any such
expenses you have advanced pursuant to agreement with the Fund.
7. In consideration of the services to be rendered by you, the Fund agrees
to pay to you a quarterly fee equal to 0.125% of the net assets of the Fund
calculated as an average of the net assets of the Fund as of the close of each
month of the Fund's fiscal year; said fee not to exceed 0.5% annually of the
average net assets of the Fund calculated as at the close of each month of the
Fund's fiscal year. The value of the Fund's assets shall be determined in
accordance with Section 2(a)(41) of the Act as of the last business day of each
month.
8. We shall expect of you, and you will give us the benefit of your best
judgment and effort in rendering services to the Fund. The Fund agrees as an
inducement to your undertaking these services that neither you, nor your
officers, directors, shareholders, employees or agents, or any affiliates of
the foregoing shall be liable for any mistake of judgment, or opinion relating
to portfolio and investment matters of the Fund, except for lack of good faith,
provided that nothing herein shall be deemed to protect, or purport to protect,
you against any liability to the Fund or its stockholders to which you would
otherwise be subject by reason of willful misfeasance, bad faith or negligence
in the performance of your obligations and duties hereunder, or by reason of
your reckless disregard of your obligations and duties hereunder.
9. The Fund hereby continuously represents that (a) the shares of the Fund
have been and will continue to be offered and sold in compliance with all
applicable federal and state securities laws including, without limitation, the
Act, the Securities Act of 1933, as amended and the Securities Exchange Act of
1934, as amended, (b) the Fund is, and at all times during the term of this
Agreement will be, an open-end diversified management investment company duly
registered and in good standing under all applicable federal and state laws,
including, without limitation, the Act, (c) the Registration Statement and
prospectus pursuant to which the shares of the Fund have been and will be
offered and sold will not contain any untrue statement of material facts or
omit to state a material fact required to be stated therein or necessary to
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make the statements made therein not misleading, provided, however, that this
clause (d) shall not apply to statements in or omissionsfrom such Registration
Statement or prospectus made in reliance upon and in conformity with informa-
tion furnished to the Fund in writing by you which is incorporated accurately
into such Registration Statement or prospectus, and (e) this Agreement has
been approved by the board of directors of the Fund, including a majority of
the directors who are not interested persons thereof. The Fund agrees to
indemnify, defend and hold you, and your officers, directors, shareholders, and
employees, and their respective affiliates, harmless from and against any and
all loss, cost, damage, liability and expense (including, without limitation,
reasonable attorneys' fees and costs) which you or any of them may suffer,
sustain or incur as a result of the Fund's breach of the foregoing.
10. You are to have no authority to make, and agree not to make, any
representation on behalf of the Fund. You will not give advice or make
recommendations concerning the Fund to any of your other clients except in your
capacity as investment counsel for such other clients and not on behalf of the
Fund. All powers of control over the Fund's investments shall at all times be
and remain in the Fund's directors and officers.
11. This Agreement shall become effective as of the date of approval of
this Agreement by the vote of a majority of the outstanding voting securities
of the Fund or upon termination of the current advisory agreement, whichever is
later, and shall continue in effect until the first anniversary of such date,
and thereafter for successive twelve-month periods (computed from each
anniversary date), provided that such continuance is specifically approved at
least annually by the board of directors of the Fund or by vote of a majority
of the outstanding voting securities (as defined in Section 2(a)(42) of the
Act) of the Fund, and, in either case, by a majority of the board of directors
who are not parties to this Agreement or interested persons (as defined in
Section 2(a)(19) of the Act) of any such party (other than as an officer or
director of the Fund); provided, further, however, that if the continuation
of the Agreement is not approved, you may continue to render to the Fund the
services described herein in a manner and to the extent permitted by the Act
and the rules and regulations thereunder. This Agreement may be terminated,
without the payment of any penalty, by a vote of a majority of the outstanding
voting securities (as defined in the Act) of the Fund, or by a vote of a
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majority of the board of directors on sixty (60) days' written notice to you,
or by you on sixty (60) days' written notice to the Fund. The Fund hereby
agrees to promptly call a meeting of the stockholders of the Fund to consider
and vote upon the approval of this Agreement; and to prepare and prosecute any
amendments to the Registration Statement necessitated by this Agreement. If,
within ninety (90) days after the date hereof, this Agreement shall not have
been approved by the holders of a majority of the shares of the Fund, you will
be entitled to terminate this Agreement upon notice to the Fund and will be
entitled to any Fees earned by you as provided in Paragraph 7.
12. The Fund represents that the investment advisory contract with its
past adviser will be terminated, without payment of any penalty, by the board
of directors of the Fund effective within sixty (60) days of notice of
termination.
However, it is recognized that this contract must be approved by the
Fund's shareholders pursuant to Section 15 of the Investment Company Act of
1940 before it can become effective. The Fund will proceed promptly to solicit
such approval upon signature of this agreement by Fox Asset Management, Inc.
("Fox").
13. This Agreement may not be transferred, assigned, sold, or in any
manner hypothecated or pledged by you, and this Agreement shall terminate auto-
matically in the event of any such transfer, assignment, sale, hypothecation or
a pledge by you. The terms, "transfer", "assignment" and "sale" as used in
this paragraph shall have the meanings ascribed to them by governing law and
interpretations thereof contained in rules or regulations promulgated by the
Securities and Exchange Commission thereunder. You may assign this Agreement
in a transaction in which you rely bona fide upon Rule 2a-6 under the Act upon
notice to the Fund.
14. In the event this Agreement is terminated for any reason and no
subsequent agreement is entered into between you and the Fund, all fees and all
other monies due to you hereunder shall be prorated as of the effective date
of termination and paid within five (5) business days thereafter. Upon such
termination, or within a reasonable time thereafter, you shall make available
to the Fund all books, records, correspondence, stockholders' lists and other
papers and documents pertaining to the Fund which are in your possession or
control. In the event that the Fund shall request that copies of any relevant
records be delivered to it, the Fund shall pay for the copying of those
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records. In this regard, it is understood that it is your present practice to
retain permanently all of your records without any destruction of such records.
You agree to notify the Fund immediately of any change in that policy. The
Fund hereby agrees that, during the term of the Agreement and for a period of
one (1) year following the termination of this Agreement, it will not employ,
solicit for employment, or engage or solicit for engagement, directly or
indirectly, any person employed by you or any of your affiliates at any time
within one (1) year preceding the proposed date of employment or engagement
(or any firm with whom such a person is an associated person) without your
express written consent.
15. Except to the extent necessary to enable you to perform your
obligations hereunder, nothing herein shall be deemed to limit or restrict your
right, or the right of any of your officers, directors, shareholders, or
employees, or any affiliates thereof, to engage in any other business or to
devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, firm, individual, trust or association.
16. The Fund acknowledges and agrees that you may obtain from broker-
dealers approved by the board of directors of the Fund supplemental research,
market and statistical information for use with respect to the Fund. The term
"research, market and statistical information" includes, without limitation,
advice as to the value of securities, the advisability of investing, purchasing
and selling securities, and the availability of securities or purchasers or
sellers of securities, and furnishing analyses and reports concerning issues,
industries, securities, economic factors and trends, portfolio strategy and
performance of accounts. The Fund understands that such information will be in
addition to and not in lieu of the services required to be performed by you
under this Agreement and that your expenses will not necessarily be reduced as
a result of the receipt of such information. The Fund also acknowledges that
such information may be useful to you and your affiliates in providing
services to clients other than the Fund and that not all such information
will at all times be used by you in connection with the Fund. Finally, the
Fund acknowledges that information provided to you and your affiliates by
brokers and dealers through whom other clients of yours effect securities
transactions may be useful to you in providing services to the Fund.
Accordingly, the Fund understands that investment decisions for the Fund may
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not, at all times, be made independently from those of other accounts managed
by you and your affiliates. In furtherance of the foregoing, the Fund agrees
that, when the same securities are purchased for or sold by the Fund and any
such other accounts you shall allocate such purchases and sales in a manner
deemed by you to be fair and equitable to all of the accounts, including the
Fund, and, subject to your obtaining the best price and execution for your
clients (which shall not necessarily mean the lowest commission available),
brokers and dealers providing research, market and statistical information may
be engaged to effect transactions on behalf of the Fund.
17. Fox makes the following representations on both a present and continu-
ing basis:
X. Xxx currently has a Code of Ethics meeting the requirements of 17
CFR 270.17j-1. Fox is currently enforcing that code and will continue to
maintain and enforce the code in accordance with both its letter and spirit.
X. Xxx will be in compliance with all requirements to have its record-
keeping and administrative systems capable of handling the Year 2000 demands
at the time such capability is required. Upon meeting such requirements, Fox
will provide written certification to the Fund that it has the requisite
capability in place.
X. Xxx has competent emergency procedures in place to assure continu-
ing competent management of the Fund's portfolio in the event of an emergency.
X. Xxx will provide a prompt report to the Fund of any development
which does or might affect its ability to service the Fund in accordance with
this agreement, including any developments which may be covered under Section
9 of the Investment Company Act, as amended, or Rule 206(4)-4 under the
Investment Advisers Act.
18. The Fund agrees that it will nominate to its shareholders for election
as directors of the Fund two (2) qualified persons recommended by Fox as
qualified and desirable to serve in such positions. In this respect, Fox
agrees that said persons will abstain from votes taken with respect to
selection, tenure and employment of the Fund's investment adviser.
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19. All notices and communications to be made hereunder shall be in
writing and shall be delivered to the Fund or to you, as the case may be,
by U.S. certified mail, return receipt requested, postage prepaid, by
commercial courier or by personal delivery, in each case to the address set
forth in this Agreement or to such other person or address as shall be
identified by written notice as provided herein. Any notice or communication
sent by mail as aforesaid, shall be deemed delivered three (3) business days
after deposit in the U.S. mail; any notice sent personally or by commercial
courier shall be deemed delivered upon confirmation of receipt at such address.
20. This Agreement shall be governed by and construed in accordance with
the laws of the State of California. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
If the foregoing is satisfactory to you, please indicate your acceptance
by signing below.
Very truly yours,
INVESTORS RESEARCH FUND, INC.
By: /Xxxx X. Xxxxxxxxx/
Title: /President/
ACCEPTED THIS 11 DAY OF February, 1998
FOX ASSET MANAGEMENT, INC.
By: /J. Xxxxx Xxxxxxxxxx/
Title: /President/
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