ADVISORY AGREEMENT
AGREEMENT made as of the 1st day of November 1993, between XXXXX / XXXXXXX
& ASSOCIATES INVESTMENT ADVISORS, INC., a corporation organized under the laws
of the State of Texas and having its principal place of business in Houston,
Texas (the "Portfolio Manager"), and XXXXX / XXXXXXX UNITED SERVICES FUNDS, a
Massachusetts business trust having its principal place of business in San
Antonio, Texas (the "Trust").
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(the "1940 Act"); and
WHEREAS, the Portfolio Manager is engaged principally in the business of
rendering investment management services and is registered under the Investment
Advisers Act of 1940; and
WHEREAS, the Trust is authorized to issue shares of beneficial interest in
separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust intends to initially offer shares in the Xxxxx U.S
Government Total return Bond Fund (the "Initial Fund") together with all other
series subsequently established by the Trust with respect to which the Trust
desires to retain the Portfolio Manager to render investment advisory services
hereunder the Portfolio Manager is willing so to do (collectively referred to as
the "Funds");
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1. APPOINTMENT OF PORTFOLIO MANAGER.
(a) Initial Fund. The Trust hereby appoints the Portfolio Manager to
act as manager and investment adviser to the Initial Fund for the
period and on the terms set forth. The Portfolio Manager accepts
such appointment and agrees to render the services herein set
forth, for the compensation herein provided.
(b) Additional Funds. In the event that the Trust establishes one or
more series of shares other than the Initial Fund with respect to
which it desires to retain the Portfolio Manager to render
management and investment advisory services hereunder, it shall
so notify the Portfolio Manager in writing, indicating the
advisory fee which will be payable with respect to the additional
series of shares. If the Portfolio Manager is willing to render
such services, it shall so notify the Trust in writing, whereupon
such series of shares shall become a Fund hereunder.
2. DUTIES OF PORTFOLIO MANAGER.
The Portfolio Manager, at its own expense, shall furnish the following
services and facilitates to the Trust:
(a) Investment Program. The Portfolio Manager will (i) furnish
continuously an investment program of each Fund, (ii) determine
(subject to the overall supervision and review of the Board of
Trustees of the Trust) what investments shall be purchased, held,
sold or exchanged by the Fund and what portion, if any, of the
assets of the/each Fund shall be held uninvested, and (iii) make
changes on behalf of the Trust in the investments of each Fund.
(b) The Portfolio Manager shall forward all instructions for the
purchase and sale of portfolio securities for the account of each
Fund to United Services Advisors, Inc., the Trust's
Administrator.
3. ALLOCATION OF EXPENSES.
Except for the services to be provided by the Portfolio Manager as set
forth in paragraph 2 above, the Trust assumes and shall pay all expenses
for all other Trust operations and activities and shall reimburse the
Portfolio Manager for any such expenses incurred by the Portfolio Manager.
The expenses to be borne by the Trust shall include, without limitation:
(a) the charges and expenses of administering the Trust's affairs;
(b) the charges and expenses of any registrar, stock transfer or
dividend disbursing agent, custodian, or depository appointed by
the Trust for the safekeeping of its cash, portfolio securities
and other property;
(c) the charges and expenses of auditors;
(d) brokerage commissions for transactions in the portfolio
securities of the Trust;
(e) all taxes, including issuance and transfer taxes, and corporate
fees payable by the Trust to Federal, state or other governmental
agencies;
(f) the cost of stock certificates (if any) representing shares of
the Trust;
(g) expenses involved in registering and maintaining registrations of
the Trust and of its shares with the Securities and Exchange
Commission and various states and other jurisdictions, including
reimbursement of actual expenses incurred by the Portfolio
Manager in performing such functions for the Trust, and including
compensation of persons who are Portfolio Manager employees in
proportion to the relative time spent on such matters;
(h) all expenses of shareholders' and Trustees' meetings, including
meetings of committees, and of preparing, printing and mailing
proxy statements, quarterly reports, semi-annual reports, annual
reports and other communications to shareholders;
(i) all expenses of preparing and setting in type prospectuses, and
expenses of printing and mailing the same to shareholders [but
not expenses of printing and mailing of prospectuses and
literature used for promotional purposes in accordance with
paragraph 2(d) above];
(j) compensation and travel expenses of Trustees who are not
"interested persons" within the meaning of the 1940 Act;
(k) the expense of furnishing, or causing to be furnished, to each
shareholder a statement of his account, including the expense of
mailing;
(l) charges and expenses of legal counsel and internal
audit/compliance personnel in connection with matters relating to
the Trust, including, without limitations, legal services
rendered in connection with the Trust's corporate and financial
structure and relations with its shareholders, issuance of Trust
shares, and registration and qualification of securities under
Federal, state and other laws;
(m) the expenses of attendance at professional meetings of
organizations such as the Investment Company Institute, the No
Load Mutual Fund Association, or Commerce Clearing House by
officers and Trustees of the Trust, and the membership or
association dues of such organizations;
(n) all cost and expense of maintaining the books and records of the
Trust, including, but not limited to, general ledger accounting
and preparation of financial statements; (o) the expense of
obtaining and maintaining a fidelity bond as required by Section
17(g) of the 1940 Act;
(p) interest payable on Trust borrowings; and
(q) postage.
4. PORTFOLIO MANAGEMENT FEE.
(a) For the services and facilities to be provided to each of the
Funds by the Portfolio Manager as provided in Paragraph 2 hereof,
the Trust shall pay the Portfolio Manager a monthly fee with
respect to each of the Funds as soon as practical after the last
day of each calendar month, which fee shall be paid at the rate
set forth below based upon the Monthly Average Net Assets [as
defined in subparagraph (c) below] of such Fund for such calendar
month:
PORTFOLIO MANAGEMENT FEE SCHEDULE
Monthly
Fee Rate
Xxxxx U.S. Government Total Return Bond Fund
Up to and including $50 million 1/12 of .40%
Over $50 million 1/12 of .24%
(b) In the case of termination of this Agreement with respect to any
Fund during any calendar month, the fee with respect to such Fund
for that month shall be reduced proportionately based upon the
number of calendar days during which it is in effect and the fee
shall be computed upon the average net assets of such Fund for
the business days which it is so in effect.
(c) The "Monthly Average Net Assets" of any Fund of the Trust for any
calendar month shall be equal to the quotient produced by
dividing (i) the sum of the net assets of such Fund, determined
in accordance with procedures established from time to time by or
under the direction of the Board of Trustees of the Trust in
accordance with the Master Trust Agreement of the Trust, as of
the close of business on each day during such month that such
Fund was open for business, by (ii) the number of such days.
5. EXPENSE LIMITATION.
The Portfolio Manager agrees that for any fiscal year of the Trust during
which the total of all expenses of the Trust (including investment advisory
fees under this agreement, but excluding interest, portfolio brokerage
commissions and expenses, taxes and extraordinary items and any other item
excludable under the applicable state laws) exceeds the lowest expenses
limitation imposed in any state in which the Trust is then making sales of
its shares or in which its shares are then qualified for sale, the
Portfolio Manager will reimburse the Trust (an amount not to exceed its
investment advisory fees) for such expenses not otherwise excluded from
reimbursement by this Paragraph 5 to the extent that they exceed such
expense limitation.
6. TRUST TRANSACTIONS.
The Portfolio Manager agrees that neither it nor any of its officers or
Directors will take any long or short term position in the shares of the
Trust; provided, however, that such prohibition:
(a) shall not prevent the Portfolio Manager from purchasing shares of
the Trust if orders to purchase such shares are placed upon the
receipt by the Portfolio Manager of purchase orders for such
shares and are not in excess of such purchase orders received by
the Portfolio Manager; and
(b) shall not prevent the purchase of shares of the Trust by any of
the persons above described for their account and for investment
at the price at which such shares are available to the public at
the time of purchase or as part of the initial capital of the
Trust.
7. RELATIONS WITH TRUST.
Subject to and in accordance with the Trust's Master Trust Agreement and
By-Laws of the Trust and the Articles of Incorporation and By-Laws of the
Portfolio Manager, respectively, it is understood that Trustees, officers,
agents and shareholders of the Trust are or may be interested in the
Portfolio Manager (or any successor thereof) as directors, officers, or
otherwise; that directors, officers, agents and shareholders of the
Portfolio Manager are or may be interested in the Trust as Trustees,
officers, shareholders, or otherwise; that the Portfolio Manager (or any
such successor) is or may be interested in the Trust as a shareholder or
otherwise; and that the effect of any such adverse interests shall be
governed by said Master Trust Agreement, Articles of Incorporation and
By-Laws.
8. LIABILITY OF PORTFOLIO MANAGER AND OFFICERS AND TRUSTEES OF THE TRUST.
No provision of this Agreement shall be deemed to protect the Portfolio
Manager against any liability to the Trust or its shareholders to which it
might otherwise be subject by reason of any willful misfeasance, bad faith
or gross negligence in the performance of its duties or the reckless
disregard of its obligations and duties under this Agreement. Nor shall any
provision hereof be deemed to protect any Trustee or officer of the Trust
against any such liability to which he might otherwise be subject by reason
of any willful misfeasance, bad faith or gross negligence in the
performance of his duties or the reckless disregard of his obligations and
duties. 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.
9. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to
the Initial Fund on the date hereof and, with respect to any
additional Fund, on the date of receipt by the Trust of notice
from the Portfolio Manager in accordance with Paragraph 1(b)
hereof that the Portfolio Manager is willing to serve as
Portfolio Manager with respect to such Fund. Unless terminated as
herein provided, this Agreement shall remain in full force and
effect for two years after initial approval by shareholders with
respect to the Initial Fund and, with respect to each additional
Fund, until the next date of the Initial Fund is subject to
review for continuance following the date on which such Fund
becomes a Fund hereunder, and shall continue in full force and
effect for a period of one year thereafter with respect to each
Fund so long as such continuance with respect to any such Fund is
approved at least annually (i) by either the Trustees of the
Trust or by vote of a majority of the outstanding voting shares
(as defined in the 0000 Xxx) of such Fund, and (ii) in either
event by the vote of 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, cast in person at a
meeting called for the purpose of voting on such approval.
Any approval of this Agreement by the holders of a majority of
the outstanding shares (as defined in the 0000 Xxx) of any Fund
shall be effective to continue this Agreement with respect to any
such Fund notwithstanding (i) that this Agreement has not been
approved by the holders of a majority of the outstanding shares
of any other Fund affected thereby, and (ii) that this Agreement
has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless approval shall be
required by any other applicable law or otherwise.
(b) Termination. This Agreement may be terminated at any time,
without payment of any penalty, by vote of the Trustees of the
Trust or by vote of a majority of the outstanding shares (as
defined in the 1940 Act), or by the Portfolio Manager on sixty
(60) days' written notice to the other party.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment.
10. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties.
11. NAME OF TRUST.
It is understood that the names "Xxxxx" and "Xxxxxxx" and any logo
associated with that name, is valuable property of the Portfolio
Manager, and that the Trust has the right to include "Xxxxx / Xxxxxxx"
as a part of its name only so long as this Agreement shall continue.
Upon termination of this Agreement the Trust shall forthwith cease to
use said names and logos and shall submit to its shareholders an
amendment to its Master Trust Agreement to change the Trust's name.
12. SERVICES NOT EXCLUSIVE.
The services of the Portfolio Manager to the Trust hereunder are not
to be deemed exclusive, and the Portfolio Manager shall be free to
render similar services to others so long as its services hereunder
are not impaired thereby.
13. LIMITATION OF LIABILTY
The term "Xxxxx / Xxxxxxx United Services Funds" means and refers to
the Trustees from time to time serving under the Master Trust
Agreement of the Trust dated October 12, 1993, as the same may
subsequently thereto have been, or subsequently hereto be amended. It
is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only
the assets and property of the Trust, as provided in the Master Trust
Agreement of the Trust. The execution and delivery of this Agreement
have been authorized by the Trustees and shareholders of the Trust and
signed by an authorized officer of the Trust, acting as such, and
neither such authorization by such Trustees and shareholders nor such
execution and delivery by such officer shall be deemed to have been
made by any of them individually or to impose any liability on any of
them personally, but shall bind only the assets and property of the
Trust as provided in its Master Trust Agreement. The Master Trust
Agreement is on file with the Secretary of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
XXXXX / XXXXXXX XXXXX / XXXXXXX &
UNITED SERVICES FUNDS ASSOCIATES INVESTMENT
ADVISORS, INC.
By /s/ Xxxxxx Xxxxx By /s/ Xxxxxx Xxxxx
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President President
Attest: Attest:
/s/ Xxxx X. Xxxxx /s/ Xxxx X. Xxxxx
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Assistant Secretary Assistant Secretary
