INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement (the "Agreement") dated September 21,
1998 by and between THE WORLD FUNDS, INC., a Maryland corporation (herein called
the "Fund"), and THIRD MILLENNIUM INVESTMENT ADVISORS LLC, a Delaware Limited
Liability Company (the "Advisor") a registered investment adviser under the
Investment Advisers Act of 1940, as amended.
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
consisting of several series of shares, each having its own investment policies;
and
WHEREAS, the Fund desires to retain the Advisor to furnish investment
advisory and management services to certain portfolios of the Fund, subject to
the control of the Fund's Board of Directors, and the Advisor is willing to so
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be bound, it is agreed between the parties
hereto as follows:
1. Appointment. The Fund hereby appoints the Advisor to act as the
advisor to the THIRD MILLENNIUM RUSSIA FUND series of the Fund (the "Portfolio")
for the period and on the terms set forth in this Agreement. The Advisor accepts
such appointment and agrees to furnish the services herein set forth, for the
compensation herein provided.
2. Duties of the Advisor. The Fund employs the Advisor to manage the
investments and reinvestment of the assets of the Portfolio, and to continuously
review, supervise, and administer the investment program of the Portfolio, to
determine in its discretion the securities to be purchased or sold, to provide
the Fund and Commonwealth Shareholder Services, Inc. (the "Administrator") with
records concerning the Advisor's activities which the Fund is required to
maintain, and to render regular reports to the Fund's Officers and Board of
Directors and to the Administrator concerning the Advisor's discharge of the
foregoing responsibilities.
The Advisor shall discharge the foregoing responsibilities
subject to the control of the Fund's Board of Directors and in compliance with
such policies as the Board may from time to time establish, and in compliance
with the objectives, policies, and limitations for the Portfolio as set forth in
its Prospectus and Statement of Additional Information, as amended from time to
time, and applicable laws and regulations. The Fund will instruct each of its
agents and contractors to co-operate in the conduct of the business of the
Portfolio.
The Advisor accepts such employment and agrees, at its own
expense, to render the services and to provide the office space, furnishings,
and equipment and the personnel required by it to perform the services on the
terms and for the compensation provided herein.
3. Portfolio Transactions. The Advisor is authorized to select the
brokers and dealers that will execute the purchases and sales of portfolio
securities for the Portfolio and is directed to use its best efforts to obtain
the best price and execution for the Portfolio's transactions in accordance with
the policies of the Fund as set forth from time to time in the Portfolio's
Prospectus and Statement of Additional Information. The Advisor will promptly
communicate to the Fund and to the Administrator such information relating to
portfolio transactions as they may reasonably request.
It is understood that the Advisor will not be deemed to have
acted unlawfully, or to have breached a fiduciary duty to the Fund or be in
breach of any obligation owing to the Fund under this Agreement, or otherwise,
by reason of its having directed a securities transaction on behalf of the Fund
to an unaffiliated broker-dealer in compliance with the provisions of Section
28(e) of the Securities Exchange Act of 1934 or as described from time to time
by the Portfolio's Prospectus and Statement of Additional Information. Subject
to the foregoing, the Advisor may direct any transaction of the Portfolio to a
broker which is affiliated with the Advisor in accordance with, and subject to,
the policies and procedures approved by the Board of Directors of the Fund
pursuant to Rule 17e-1 under the 1940 Act. Such brokerage services are not
deemed to be provided under this Agreement.
4. Compensation of the Advisor. For the services to be rendered by the
Advisor under this Agreement, the Portfolio shall pay to the Advisor, and the
Advisor will accept as full compensation a fee, accrued daily and payable within
five (5) business days after the last business day of each month, at an annual
rate of 1.75% of the net assets of the portfolio.
All rights of compensation under this Agreement for services
performed as of the termination date shall survive the termination of this
Agreement.
5. Expenses. During the term of this Agreement, the Advisor will pay
all expenses incurred by it in connection with the management of the Fund.
Notwithstanding the foregoing, the Portfolio shall pay the expenses and costs of
the Portfolio for the following:
(1) Taxes;
(2) Brokerage fees and commissions with regard to
portfolio transactions;
(3) Interest charges, fees and expenses of the custodian of the
securities;
(4) Fees and expenses of the Fund's transfer agent and the
Administrator;
(5) Its proportionate share of auditing and legal expenses;
(6) Its proportionate share of the cost of maintenance of
corporate existence;
(7) Its proportionate share of compensation of directors of
the Fund who are not interested persons of the Advisor as
that term is defined by law;
(8) Its proportionate share of the costs of corporate meetings;
(9) Federal and State registration fees and expenses incident
to the sale of shares of the Portfolio;
(10) Costs of printing and mailing Prospectuses for the
Portfolio's shares, reports and notices to existing
shareholders;
(11) The Advisory fee payable to the Advisor, as provided in
paragraph 4 herein;
(12) Costs of recordkeeping (other than investment records
required to be maintained by the Advisor), and daily
pricing;
(13) Distribution expenses in accordance with any Distribution
Plan as and if approved by the shareholders of the
Portfolio; and
(14) Expenses and taxes incident to the failure of the
Portfolio to qualify as a regulated investment company
under the provisions of the Internal Revenue Code of 1986,
as amended, unless such expenses and/or taxes arise from
the negligence of another party.
6. Reports. The Fund and the Advisor agree to furnish to each other, if
applicable, current information required for the preparation by such parties of
prospectuses, statements of additional information, proxy statements, reports to
shareholders, certified copies of their financial statements, and to furnish to
each other such other information and documents with regard to their affairs as
each may reasonably request.
7. Status of the Advisor. The services of the Advisor to the Fund are
not to be deemed exclusive, and the Advisor shall be free to render similar
services to others so long as its services to the Fund are not impaired thereby.
Pursuant to comparable agreements, the Fund may also retain the services of the
Advisor to serve as the investment advisor of other series of the Fund.
8. Books and Records. In compliance with the requirements of the 1940
Act, the Advisor hereby agrees that all records which it maintains for the Fund
are the property of the Fund, and further agrees to surrender promptly to the
Fund any of such records upon the Fund's request. The Advisor further agrees to
preserve for the periods prescribed by the 1940 Act, and the rules or orders
thereunder, the records required to be maintained by the 1940 Act.
9. Limitation of Liability of Advisor. The duties of the Advisor shall
be confined to those expressly set forth herein, and no implied duties are
assumed by or may be asserted against the Advisor hereunder. The Advisor shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the performance of this Agreement,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or negligence on the part of the Advisor in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement. (As used in this Paragraph 9, the term
"Advisor" shall include directors, officers, employees and other corporate
agents of the Advisor as well as that corporation itself).
10. Permissible Interests. Directors, agents, and shareholders of the
Fund are or may be interested in the Advisor (or any successor thereof) as
directors, officers, or shareholders, or otherwise; directors, officers, agents,
and shareholders of the Advisor are or may be interested in the Fund as
directors, officers, shareholders or otherwise; and the Advisor (or any
successor) is or may be interested in the Fund as a shareholder or otherwise. In
addition, brokerage transactions for the Fund may be effected through affiliates
of the Advisor if approved by the Fund's Board of Directors, subject to the
rules and regulations of the Securities and Exchange Commission, and the
policies and procedures adopted by the Fund.
11. License of Advisor's Name. The Advisor hereby authorizes the Fund
to use the name "Third Millennium Russia Fund" for the Portfolio. The Fund
agrees that if this Agreement is terminated it will promptly redesignate the
name of the Portfolio to eliminate any reference to the name "Third Millennium
Russia Fund" or any derivation thereof unless the Advisor waives this
requirement in writing.
12. Duration and Termination. This Agreement shall become effective on
the date first above written subject to its approval by the shareholders of the
Portfolio and unless sooner terminated as provided herein, shall continue in
effect for two (2) years from that date. Thereafter, this Agreement shall be
renewable for successive periods of one year each, provided such continuance is
specifically approved annually (a) by the vote of a majority of those members of
the Fund's Board of Directors who are not parties to this Agreement or
interested persons of any such party (as that term is defined in the 1940 Act),
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by vote of either the Board of Directors or of a majority of the
outstanding voting securities (as that term is defined in the 0000 Xxx) of the
Portfolio. Notwithstanding the foregoing, this Agreement may be terminated by
the Portfolio or by the Fund at any time on sixty (60) days written notice,
without the payment of any penalty, provided that termination must be authorized
either by vote of the Fund's Board of Directors or by vote of a majority of the
outstanding voting securities of the Portfolio or by the Advisor on sixty (60)
days written notice. This Agreement will automatically terminate in the event of
its assignment (as that term is defined in the 1940 Act).
13. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of the
Portfolio's outstanding voting securities (as defined in the 1940 Act).
14. Notice. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other party
at the address stated below, or at such other address as either party may advise
in writing:
(a) To the Fund at:
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
(b) To the Advisor at:
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, X.X. 10022
15. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be affected
thereby. This Agreement shall be binding and shall inure to the benefit of the
parties hereto and their respective successors.
16. Applicable Law. This Agreement shall be construed in accordance
with, and governed by, the laws of the State of Maryland, and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the State
of Maryland, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
17. This Agreement may be executed in two or more counterparts, each of
which, when so executed, shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THIRD MILLENNIUM INVESTMENT ADVISORS LLC
By: /s/ Xxxx X. Xxxxxx, Xx.
Xxxx X. Xxxxxx, Xx.
Chairman
THE WORLD FUNDS, INC.
By: /s/ Xxxx Xxxxx, III
Xxxx Xxxxx, III
Chairman
