FORM OF INVESTMENT ADVISORY AGREEMENT
This Investment Advisory Agreement is made as of this 1st day of March,
1999 between XXXXXX XXXX MUTUAL FUNDS, a Delaware business trust (herein called
the "Company"), and WILSHIRE ASSOCIATES INCORPORATED, a California corporation
(herein called the "Advisor").
WHEREAS, the Company is registered as an open-end management investment
company under the Investment Company Act of 1940 (the " 1940 Act"); and
WHEREAS, the Company wishes to retain the Advisor under this Agreement
to render investment advisory services to the portfolios of the Company known as
the Xxxxxx Xxxx Growth Fund, Balanced Fund, Income Fund, Short-Term-Investment
Fund, Small Cap Growth Fund, International Equity Fund and Socially Responsible
Fund (the "Initial Fund(s)", together with any other Company portfolios which
may be established later and served by the Advisor hereunder, being herein
referred to collectively as the "Funds" and each individually as a "Fund"), and
Advisor wishes to render such services;
NOW THEREFORE, in consideration of the
premises and mutual covenants set forth herein, the parties hereto agree as
follows:
1 . APPOINTMENT OF ADVISOR.
(A) The Company hereby appoints the Advisor as the investment adviser
of each Fund on the terms and for the period set forth in this Agreement
and the Advisor hereby accepts such appointment and agrees to perform the
services and duties set forth herein on the terms herein provided. The
Advisor may, in its discretion, provide such services through its own
employees or the employees of one or more affiliated companies that are
qualified to provide such services to the Trust under applicable law and
are under common control with the Advisor provided (i) that all persons,
when providing services hereunder, are functioning as part of an organized
group of persons, and (ii) that such organized group of persons is managed
at all times by authorized officers of the Advisor.
(B) In the event that the Company establishes one or more portfolios
other than the Initial Fund(s) with respect to which it desires to retain
the Advisor to render investment advisory services hereunder, it shall
notify the Advisor in writing. If the Advisor is willing to render such
services, it shall notify the Company in writing whereupon such portfolio
or portfolios shall become a Fund or Funds hereunder.
2. INVESTMENT SERVICES AND DUTIES. The Advisor may recommend to the Board
of Trustees one or more investment advisers who are not affiliated with the
Advisor (herein referred to collectively as the "Sub-Advisors" and each
individually as a "Sub-Advisor") to provide
a continuous investment program for each Fund or a portion thereof designated
from time to time by the Advisor, including investment, research, and management
with respect to all securities and investments and cash equivalents for the Fund
or designated portion thereof. Upon approval of a Sub-Advisor by the Board of
Trustees, the Advisor shall enter into an agreement with such Sub Advisor, in a
form approved by the Board of Trustees, for the provision of such services,
subject to the supervision of the Board of Trustees and the Advisor.
(A) The Advisor shall review, monitor and report to the Board of
Trustees regarding the performance and investment procedures of each
Sub-Advisor and shall assist and consult with each Sub-Advisor in
connection with the Fund's continuous investment program. The Advisor shall
provide its services under this Section 2 in accordance with the Funds'
investment objectives, policies and restrictions as stated in the Funds'
then current registration statement and resolutions of the Company's Board
of Trustees.
(B) Each Sub-Advisor shall determine from time to time what securities
and other investments will be purchased, retained or sold by the Company
with respect to the Fund or portion thereof served by such Sub-Advisor. The
Company acknowledges and agrees that, subject to the provisions of
paragraph (A) hereof, the Advisor shall not be responsible for any such
determinations by any Sub-Advisor. Each Sub-Advisor shall provide services
to the Funds in accordance with the Funds' investment objectives, policies
and restrictions as stated in the Funds' then current registration
statement and resolutions of the Company's Board of Trustees.
(C) Each Sub-Adviser shall select brokers or dealers that will execute
the purchases and sales of portfolio securities for the Fund or portion
thereof managed by such Sub Adviser. In making such selection, each
Sub-Adviser shall use its best efforts to obtain best execution, which
includes most favorable net results and execution of such Sub-Adviser's
orders, taking into account all appropriate factors, including price,
dealer spread or commission, size and difficulty of the transaction and
research or other services provided. It is understood that no Sub Adviser
will be deemed to have acted unlawfully, or to have breached a fiduciary
duty to the Fund or in respect of Fund assets, solely by reason of its
having caused the Fund to pay a member of a securities exchange, a broker
or a dealer a commission for effecting a securities transaction of the Fund
in excess of the amount of commission another member of an exchange, broker
or dealer would have charged, if such Sub-Adviser determined in good faith
that the commission paid was reasonable in relation to the brokerage and
research services provided by such member, broker or dealer, viewed in
terms of that particular transaction or the Sub-Adviser's overall
responsibilities with respect to its accounts, including the Fund, as to
which it exercises investment discretion.
Each Sub-Advisor is authorized to consider for investment by the Fund
or portion thereof managed by such Sub-Advisor securities that may also be
appropriate for other funds and/or clients serviced by such Sub-Advisor. To
assure fair treatment of the Funds and all other clients of a Sub-Advisor
in situations in which two or more clients' accounts participate
simultaneously in a buy or sell program involving the same security, such
transactions shall be allocated among the Fund and other clients in a
manner deemed equitable by the Sub-Advisor.
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Notwithstanding the previous paragraph, to the extent directed by
management of the Fund in writing, the Adviser shall direct one or more of
the Sub-Advisers to execute purchases and sales of portfolio securities for
the Fund through brokers or dealers designated by management of the Fund to
Adviser for the purpose of providing direct benefits to the Fund, provided
that such Sub-Adviser determines that such brokers or dealers will provide
reasonable execution in view of such other benefits. The Fund understands
that the brokerage commissions or transaction costs in such transactions
may be higher, and that the Fund may receive less favorable prices, than
those which any such Sub-Adviser could obtain from another broker or
dealer, in order to obtain such benefits for the Fund.
(D) With respect to any assets of a Fund not being managed by a
Sub-Advisor, the Advisor shall determine from time to time what securities
and other investments will be purchased, retained or sold by the Company
with respect to the Fund or portion thereof not served by a Sub-Advisor
such assets. The Advisor shall provide services to the Funds in accordance
with the Funds' investment objectives, policies and restrictions as stated
in the Funds' then current registration statement and resolutions of the
Company's Board of Trustees. This shall be subject to paragraph(c) hereof
in the same manner as a Sub-Advisor
(E) The Advisor shall maintain books and records with respect to its
services hereunder and furnish the Company's Board of Trustees such
periodic special reports as the Board may request. The Company acknowledges
and agrees that the Sub-Advisors will be responsible for maintenance of
books and records with respect to the securities transactions of the Funds
managed by them.
3. COMPLIANCE WITH GOVERNING INSTRUMENTS AND LAWS. In performing its duties
as Advisor for the Funds, the Advisor shall act in conformity with the Company's
Declaration of Trust, Bylaws, prospectuses and statements of additional
information, and the instructions and directions of the Board of Trustees of the
Company. In addition, the Advisor shall conform to and comply with the
requirements of the 1940 Act, the Rules and Regulations of the Commission, the
requirements of subchapter M and Section 817(h) of the Internal Revenue Code of
1986, as amended (with respect to assets not managed by a Sub-Advisor), and all
other applicable federal or state laws and regulations.
4. SERVICES NOT EXCLUSIVE. The Advisor shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Board of Trustees from time to time, have
no authority to act for or represent the Company in any way or otherwise be
deemed its agent. The services furnished by the Advisor hereunder are not deemed
exclusive, and the Advisor shall be free to furnish similar services to others
so long as its services under this Agreement are not impaired thereby.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Advisor hereby agrees that all records which it
maintains for the Company are the property of the Company and further agrees to
surrender promptly to the Company any such
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records upon the Company's request. The Advisor further agrees to preserve for
the periods prescribed by Rule 3la-2 under the 1940 Act the records required to
be maintained by it in connection with its services hereunder by Rule 31a-1
under the 1940 Act.
6. EXPENSES ASSUMED AS ADVISOR. Except as otherwise stated in this
Agreement, the Advisor shall pay all expenses incurred by it in performing its
services and duties hereunder as Advisor (including without limitation all
compensation of Sub-Advisors to the Funds pursuant to its agreements with such
Sub-Advisors). The Company shall bear all other expenses incurred in the
operation of the Funds, including without limitation taxes, interest, brokerage
fees and commissions, if any, fees of trustees who are not officers, directors,
partners, employees or holders of 5 percent or more of the outstanding voting
securities of the Advisor or any Sub Advisor or any of their affiliates,
Securities and Exchange Commission ("Commission") fees and state blue sky
registration and qualification fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, outside auditing
and legal expenses, costs of maintaining trust existence, costs of preparing and
printing prospectuses or any supplements or amendments thereto necessary for the
continued effective registration of the Funds' shares ("Shares") under federal
or state securities laws, costs of printing and distributing any prospectus,
supplement or amendment thereto for existing shareholders of the Funds, costs of
shareholders' reports and meetings, and any extraordinary expenses. It is
understood that certain advertising, marketing, shareholder servicing,
administration and/or distribution expenses to be incurred in connection with
the Shares may be paid by the Company as provided in any plan which may in the
sole discretion of the Company be adopted in accordance with Rule 12b-1 under
the 1940 Act, and that such expenses shall be paid apart from any fees paid
under this Agreement.
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Company shall pay the Advisor a fee, computed
daily and payable monthly, at the annual rate as set forth in the attached fee
schedule based on the average daily net assets of each Fund determined as set
forth in the current prospectus and statement of additional information of the
Company with respect to the Fund as amended from time to time. Such fee as is
attributable to each Fund shall be a separate (and not joint or joint and
several) obligation of each such Fund. The Company shall reduce the advisory fee
to be paid by each Fund to the Advisor by the amount of any advisory fees paid
indirectly by such Fund to other investment companies as a result of the Fund's
investment in such investment companies' securities
8. AFFILIATED BROKER. The Advisor or an affiliated person of the Advisor
may act as broker for the Funds or any portion thereof in connection with the
purchase or sale of securities or other investments for the Fund or any
portfolio thereof, subject to: (a) the requirement that the Advisor or
Sub-Advisor seek to obtain best execution as set forth above; (b) the provisions
of the Investment Advisers Act of 1940, as amended; (c) the provisions of the
Securities Exchange Act of 1934, as amended; and (d) other applicable provisions
of the law. Such brokerage services are not within the scope of duties obligated
to be performed by the Advisor under this Agreement. Subject to the requirements
of applicable law and any procedures adopted by the Company's Board of Trustees,
the Advisor or its affiliated persons may receive brokerage commissions, fees
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or other remuneration from the Funds for such services in addition to the
Advisor's fees for services under this Agreement.
9. CONFIDENTIALITY. The Advisor shall treat confidentially and as
proprietary information of the Company all records and other information
relative to the Company and prior or present shareholders or those persons or
entities who respond to the Distributor's inquiries concerning investment in the
Company, and shall not use such records and information for any purpose other
than performance of its responsibilities and duties hereunder or under any other
agreement with the Company except after prior notification to and approval in
writing by the Company, which approval shall not be unreasonably withheld and
may not be withheld where the Advisor may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the
Company. Nothing contained herein, however, shall prohibit the Advisor from
advertising to or soliciting the public generally with respect to other products
or services, including, but not limited to, any advertising or marketing via
radio, television, newspapers, magazines or direct mail solicitation, regardless
of whether such advertisement or solicitation may coincidentally include prior
or present Company shareholders or those persons or entities who have responded
to inquiries with respect to the Funds.
10. LIMITATIONS OF LIABILITY; INDEMNIFICATION.
(A) The Advisor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Company or by any Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from a breach of the Advisor's fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from the Advisor's
willful misfeasance, bad faith or negligence on its part in the performance
of its duties or from reckless disregard by it of its obligations and
duties under this Agreement. Any person, even though also an officer,
director, employee or agent of the Advisor, who may be or become an
officer, director, employee or agent of the Company, shall be deemed when
rendering services to the Company or to any Fund, or acting on any business
of the Company or of any Fund (other than services or business in
connection with the Advisor's duties as Advisor hereunder or under any
other agreement with the Company), to be rendering such services to or
acting solely for the Company or Fund and not as an officer, director,
employee or agent or one under the control or direction of the Advisor even
though paid by the Advisor.
(B) The Company shall indemnify and hold harmless the Advisor from and
against all liabilities, damages, costs and expenses that the Advisor may
incur in connection with any action, suit, investigation or proceeding
arising out of or otherwise based on any action actually or allegedly taken
or omitted to be taken by the Advisor with respect to the performance of
its duties or obligation hereunder or otherwise as an investment adviser of
the Company and the Funds; provided, however, that the Advisor will not be
entitled to indemnification with respect to any liability to the Company or
its shareholders by reason of the Advisor's breach of fiduciary duty with
respect to the receipt of compensation for services or the willful
misfeasance,
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bad faith or negligence on the part of the Advisor in the performance of
its duties, or by reason of the Advisor's reckless disregard of its
obligations and duties under this Agreement.
(C) The Advisor acknowledges and agrees that the Declaration of Trust
of the Company provides that the Trustees of the Company and the officers
of the Company executing this Agreement on behalf of the Company shall not
be personally bound hereby or liable hereunder, nor shall resort be had to
their private property or the private property of the shareholders of the
Company for the satisfaction of any claim or obligation under this
Agreement.
11. DURATION OR TERMINATION. This Agreement shall become effective as of
the date first written above and, unless sooner terminated as provided herein,
shall continue until October 31, 2000. Thereafter, this Agreement will be
extended with respect to each Fund for successive one-year periods ending on
October 31st of each year PROVIDED each such extension is specifically approved
at least annually (a) by vote of a majority of those members of the Company's
Board of Trustees who are not interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Company's Board of Trustees or by vote of a majority of the
outstanding voting securities of such Fund. This Agreement may be terminated by
the Company at any time with respect to any Fund, without the payment of any
penalty, by vote of a majority of the entire Board of Trustees of the Company or
by a vote of a majority of the outstanding voting securities of such Fund on 60
days' written notice to the Advisor, or by the Advisor at any time, without
payment of penalty, on 60 days' written notice to the Company. This Agreement
will immediately terminate in the event of its assignment. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meanings as such terms
have in the 1940 Act.
12. REPRESENTATIONS AND WARRANTIES.
(A) The Company represents and warrants to the Advisor that: (i) it is
a business trust duly organized and existing and in good standing under the
laws of the State of Delaware and is duly qualified to conduct its business
in the State of Delaware and in such other jurisdictions wherein the nature
of its activities or its properties owned or leased makes such
qualification necessary; (ii) it is a registered open-end management
investment company under the 1940 Act; (iii) a registration statement on
Form N-1A under the Securities Act of 1933, as amended, on behalf of the
Funds is currently effective and will remain effective, and appropriate
state securities law filings have been made and will continue to be made,
with respect to all Shares of the Funds being offered for sale; (iv) it is
empowered under applicable laws and by its Declaration of Trust and Bylaws
to enter into and perform this Agreement; and (iv) all requisite trust
proceedings have been taken to authorize it to enter into and perform this
Agreement.
(B) The Advisor represents and warrants to the Company that: (i) it is
a corporation duly organized and existing and in good standing under the
laws of the State of California and is duly qualified to conduct its
business in the State of California and in such other
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jurisdictions wherein the nature of its activities or its properties owned
or leased makes such qualification necessary; (ii) it is a registered
investment adviser under the Investment Advisers Act of 1940; (iii) it is
empowered under applicable laws to enter into and perform this Agreement;
and (iv) all requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
13. ARBITRATION OF DISPUTES. Any claim or controversy arising out of or
relating to this Agreement which is not settled by agreement of the parties
shall be settled by arbitration in Santa Monica, California before a panel of
three arbitrators in accordance with the commercial arbitration rules of the
American Arbitration Association then in effect. The parties agree that such
arbitration shall be the exclusive remedy hereunder, and each party expressly
waives any right it may have to seek redress in any other forum. Any arbitrator
acting hereunder shall be empowered to assess no remedy other than payment of
fees and out-of-pocket damages. Each party shall bear its own expenses of
arbitration, and the expenses of the arbitrators and of a transcript of any
arbitration proceeding shall be divided equally between the parties. Any
decision and award of the arbitrators shall be binding upon the parties, and
judgment thereon may be entered in the Superior Court of the State of California
or any other court having jurisdiction. If litigation is commenced to enforce
any such award, the prevailing party will be entitled to recover reasonable
attorneys' fees and costs.
14. NAMES. The name "Xxxxxx Xxxx Mutual Funds" refers to the trust created
and the trustees, as trustees but not individually or personally, acting from
time to time under a Declaration of Trust dated November 7, 1996, as amended,
which is hereby referred to and a copy of which is on file at the principal
office of the Company. The trustees, officers, employees and agents of the
Company shall not personally be bound by or liable under any written obligation,
contract, instrument, certificate or other interest or undertaking of the
Company made by the trustees or by any officer, employee or agent of the
Company, in his or her capacity as such, nor shall resort be had to their
private property for the satisfaction of any obligation or claim thereunder. All
persons dealing with any series or class of shares of the Company may enforce
claims against the Company only against the assets belonging to such series or
class.
15. NOTICES. Notices of any kind to be given to the Company hereunder by
the Advisor shall be in writing and shall be duly given if mailed or delivered
to the Company at the following:
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With a copy to:
Xxxxx X. X'Xxxxx, Esq.
Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
or at such other address or to such individual as shall be so specified by the
Company to the Advisor. Notices of any kind to be given to the Advisor hereunder
by the Company shall be in writing and shall be duly given if mailed or
delivered to the Advisor at:
Wilshire Associates Incorporated
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx
or at such other address or to the attention of such other individual as shall
be so specified by the Advisor to the Company.
16. MISCELLANEOUS. This Agreement sets forth the entire understanding of
the parties with respect to the subject matter hereof and may be amended only by
written consent of both parties. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit 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 this Agreement shall not be
affected thereby. Subject to the provisions of Section 11 hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by Delaware law (without
regard to principles of conflicts of law); provide, however, that nothing herein
shall be construed in a manner inconsistent with the 1940 Act or any rule or
regulation of the Commission thereunder.
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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.
XXXXXX XXXX MUTUAL FUNDS
By: ________________________________
(title) ____________________________
Attest: ____________________________
(name) _____________________________
(title) ____________________________
WILSHIRE ASSOCIATES INCORPORATED
By: _______________________________
(name) ____________________________
(title) ___________________________
Attest: ____________________________
(name) _____________________________
(title) ____________________________
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FEE SCHEDULE
The Company shall pay Adviser, with respect to each Fund each calendar month
during the term of this Agreement, a fee based on the average daily net assets
of each Fund, at the following annual rate:
GROWTH FUND 0.40% OF NET ASSETS
BALANCED FUND 0.40% OF NET ASSETS
INCOME FUND 0.40% OF NET ASSETS
SHORT TERM FUND 0.125% OF NET ASSETS
SMALL CAP GROWTH FUND 1.15% OF NET ASSETS
INTERNATIONAL EQUITY FUND 0.85% OF NET ASSETS
SOCIALLY RESPONSIBLE FUND 0.70 % OF NET ASSETS
Adviser's fee shall be accrued daily at 1/365th of the annual rate set forth
above. For the purpose of accruing compensation, the net assets of each Fund
will be determined in the manner and on the dates set forth in the current
prospectus of the Fund with respect to each Fund and, on days on which the net
assets are not so determined, the net asset value computation to be used will
be as determined on the immediately preceding day on which the net assets
were determined. Upon the termination of this Agreement, all compensation due
through the date of termination will be calculated on a pro-rata basis through
the date of termination and paid within thirty business days of the date of
termination.
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