EXHIBIT 23(d)(2)
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT
between
XXXXXX XXXXXX SELECT FUND, INC.
and
XXXXXX ASSET MANAGEMENT, INC.
ADVISORY AGREEMENT made this 25th day of June, 2001 (the "Agreement"),
by and between Xxxxxx Xxxxxx Select Fund, Inc., a Maryland corporation ("Xxxxxx
Xxxxxx Select"), and Xxxxxx Asset Management, Inc., a Tennessee corporation
("Adviser").
WHEREAS, Xxxxxx Xxxxxx Select is registered under the Investment
Company Act of 1940, as amended ("1940 Act") as an open-end management
investment company, and offers for sale the series of shares of common stock
designated Xxxxxx Xxxxxx Select Financial Fund ("Fund"); and
WHEREAS, Xxxxxx Xxxxxx Select desires on behalf of the Fund to avail
itself of the services, information, advice, assistance and facilities of an
investment adviser, and to have that investment adviser provide or perform for
the Fund various research, statistical and investment services;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, it is agreed between the parties as follows:
1. EMPLOYMENT OF THE ADVISER. Xxxxxx Xxxxxx Select hereby employs the
Adviser to invest and reinvest the assets of the Fund in the manner set forth in
Section 2 of this Agreement subject to the direction of the Board of Directors
(the "Board") and the officers of Xxxxxx Xxxxxx Select, for the period, in the
manner, and on the terms set forth hereinafter. The Adviser hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth. The Adviser shall for all purposes herein be
deemed to be an independent contractor and shall, except as expressly provided
or authorized (whether herein or otherwise), have no authority to act for or
represent Xxxxxx Xxxxxx Select in any way or otherwise be deemed an agent of
Xxxxxx Xxxxxx Select.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY THE ADVISER. The
Adviser undertakes to provide the services hereinafter set forth and to assume
the following obligations:
A. INVESTMENT ADVISORY SERVICES.
(i) The Adviser shall direct the investments of the
Fund, subject to and in accordance with the Fund's investment objective,
policies and limitations as provided in its Prospectus and Statement of
Additional Information (the "Prospectus") and other governing instruments, as
amended from time to time, and any other directions and policies which the Board
may issue to the Adviser from time to time.
(ii) The Adviser is authorized, in its discretion and
without prior consultation with Xxxxxx Xxxxxx Select, to purchase and sell
securities and other investments for the Fund.
B. ADMINISTRATION SERVICES.
(i) The Adviser will supervise all aspects of the
operations of the Fund, including the oversight of transfer agency and custodial
services, except as hereinafter set forth; provided, however, that nothing
herein contained shall be deemed to relieve or deprive the Board of its
responsibility for control of the conduct of the affairs of the Fund.
(ii) The Adviser shall furnish for the use of Xxxxxx
Xxxxxx Select, office space and all necessary office facilities, equipment and
personnel for servicing the investments of Xxxxxx Xxxxxx Select.
(iii) The Adviser will arrange, but not pay, for the
periodic preparation, updating, filing and dissemination (as applicable) of the
Fund's proxy material, tax returns and required reports with or to the Fund's
shareholders, the Securities and Exchange Commission and other appropriate
federal or state regulatory authorities.
(iv) The Adviser shall pay the salaries of all
personnel of Xxxxxx Xxxxxx Select or the Adviser performing services relating to
research, statistical and investment activities.
C. PROVISION OF INFORMATION NECESSARY FOR PREPARATION OF
REGISTRATION STATEMENT, AMENDMENTS AND OTHER MATERIALS. The Adviser will make
available and provide such information as Xxxxxx Xxxxxx Select may reasonably
request for use in the preparation of its registration statement, reports and
other documents required by any applicable federal, foreign or state statutes or
regulations.
D. CODE OF ETHICS. The Adviser will adopt a written code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act and
Section 204A of the Investment Advisers Act of 1940 and will provide Xxxxxx
Xxxxxx Select with a copy of the code of ethics and evidence of its adoption.
Within forty-five (45) days of the end of the last calendar quarter of each year
while this Agreement is in effect, an executive officer of the Adviser shall
certify to the Board that the Adviser has complied with the requirements of Rule
17j-1 and Section 204A during the previous year and that there has been no
violation of the Adviser's code of ethics or, if such a violation has occurred,
that appropriate action was taken in response to such violation. Upon the
written request of Xxxxxx Xxxxxx Select or its administrator, the Adviser shall
permit Xxxxxx Xxxxxx Select to examine the reports required to be made to the
Adviser by Rule 17j-l(c)(l) and all other records relevant to the Adviser's code
of ethics.
2
E. DISQUALIFICATION. The Adviser shall immediately notify the
Board of the occurrence of any event which would disqualify the Adviser from
serving as an investment adviser of an investment company pursuant to Section 9
of the 1940 Act or any other applicable statute or regulation.
F. OTHER OBLIGATIONS AND SERVICES. The Adviser shall make its
officers and employees available to the Board and officers of Xxxxxx Xxxxxx
Select for consultation and discussion regarding the management of the Fund and
its investment activities.
3. EXECUTION AND ALLOCATION OF FUND BROKERAGE.
A. The Adviser, subject to the control and direction of the
Board, shall have authority and discretion to select brokers and dealers to
execute transactions for the Fund, and for the selection of the markets on or in
which the transactions will be executed.
B. In acting pursuant to Section 3A, the Adviser will place
orders through such brokers or dealers in conformity with the policies with
respect to transactions for the Fund set forth in Xxxxxx Xxxxxx Select's
registration statement. In no instance will securities of the Fund be purchased
from or sold to the Adviser, or any affiliated person thereof, except in
accordance with the federal securities laws and the rules and regulations
thereunder.
C. It is understood that the Adviser may, to the extent
permitted by applicable laws and regulations, aggregate securities to be sold or
purchased for the Fund and for other clients in order to obtain the most
favorable price and efficient execution. In that event, allocation of the
securities purchased or sold, as well as expenses incurred in the transaction,
will be made by the Adviser in the manner it considers to be the most equitable
and consistent with its fiduciary obligations to Xxxxxx Xxxxxx Select and to its
other clients. Xxxxxx Xxxxxx Select recognizes that in some cases this procedure
may adversely affect the results obtained for the Fund.
D. It is understood that the Adviser may, in its discretion,
use brokers (including brokers that may be affiliates of the Adviser to the
extent permitted by section 3(E) hereof) who provide the Fund with research,
analysis, advice and similar services to execute transactions on behalf of the
Fund, and the Adviser may pay to those brokers in return for brokerage and
research services a higher commission than may be charged by other brokers,
subject to the Adviser determining in good faith that such commission is
reasonable in terms either of the particular transaction or of the overall
responsibility of the Adviser to such Fund and its other clients and that the
total commissions paid by such Fund will be reasonable in relation to the
benefits to the Fund over the long term.
E. It is understood that the Adviser may use brokers who (i)
are affiliated with the Adviser provided that no such broker will be utilized in
any transaction in which such broker acts as principal; and (ii) the
commissions, fees or other remuneration received by such brokers is reasonable
and fair compared to the commissions, fees or other remuneration paid to other
3
brokers in connection with comparable transactions involving similar securities
being purchased or sold during a comparable period of time.
F. The Adviser will maintain all books and records required to
be maintained pursuant to the 1940 Act and the rules and regulations promulgated
thereunder with respect to actions by the Adviser on behalf of the Fund, and
will furnish the Board with such periodic and special reports as the Board
reasonably may request. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Adviser hereby agrees that all records that it maintains for
the Fund are the property of Xxxxxx Xxxxxx Select, agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act any records that it
maintains for Xxxxxx Xxxxxx Select and that are required to be maintained by
Rule 31a-1 under the 1940 Act, and further agrees to surrender promptly to
Xxxxxx Xxxxxx Select any records that it maintains for the Fund upon request by
Xxxxxx Xxxxxx Select.
4. DELEGATION OF ADVISER'S DUTIES. With respect to Xxxxxx Xxxxxx Select
and the Fund, Adviser may enter into one or more contracts ("Sub-Advisory
Contracts" or "Sub-Administration Contracts") with a sub-adviser or
sub-administrator in which Adviser delegates to such sub-adviser or
sub-administrator the performance of any or all of the services specified in
Paragraphs 2 of this Contract, provided that: (i) each Sub-Advisory Contract and
Sub-Administration Contract imposes on the sub-adviser or sub-administrator
bound thereby all the corresponding duties and conditions to which Adviser is
subject with respect to the delegated services under Paragraphs 2 and 3 of this
Contract; (ii) each Sub-Advisory Contract and Sub-Administration Contract meets
all requirements of the 1940 Act and rules thereunder, and (iii) Adviser shall
not enter into a Sub-Advisory Contract or Sub-Administration Contract unless it
is approved by the Board prior to implementation.
5. EXPENSES. During the term of this Agreement, the Fund will bear all
expenses, not specifically assumed by the Adviser, incurred in its operations
and the offering of its shares. Expenses borne by the Fund will include but not
be limited to the following: legal and audit expenses, organizational expenses;
interest; taxes; governmental fees; fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; the cost (including brokerage commissions or charges, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therewith; fees of custodians, transfer agents, registrars or other agents;
distribution fee; expenses of preparing share certificates; expenses relating to
the redemption or repurchase of shares; expenses of registering and qualifying
shares for sale under applicable federal and state law and maintaining such
registrations and qualifications; expenses of preparing, setting in print,
printing and distributing prospectuses, proxy statements, reports, notices and
dividends to shareholders; cost of stationery; costs of stockholders and other
meetings of Xxxxxx Xxxxxx Select; compensation and expenses of the independent
directors of Xxxxxx Xxxxxx Select; and Xxxxxx Xxxxxx Select's pro rata portion
of premiums of any fidelity bond and other insurance covering Xxxxxx Xxxxxx
Select and its officers and directors.
4
6. COMPENSATION OF THE ADVISER. For the services and facilities to be
furnished and expenses assumed hereunder, the Adviser shall receive from the
Fund an advisory fee at the annual rate listed in Schedule A attached hereto.
7. ACTIVITIES AND AFFILIATES OF THE ADVISER.
A. Nothing in this Agreement shall limit or restrict the right
of any director, officer, or employee of the Adviser who may also be a director,
officer, or employee of Xxxxxx Xxxxxx Select, 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 nature or a dissimilar nature, nor to
limit or restrict the right of the Adviser to engage in any other business or to
render services of any kind, including investment advisory and management
services, to any other corporation, firm, individual or association.
B. Xxxxxx Xxxxxx Select acknowledges that the Adviser or one
or more of its "affiliated persons" may have investment responsibilities or
render investment advice to or perform other investment advisory services for
other individuals or entities and that the Adviser, its "affiliated persons" or
any of its or their directors, officers, agents or employees may buy, sell or
trade in securities for its or their respective accounts ("Affiliated
Accounts"). Subject to the provisions of paragraph 3, Xxxxxx Xxxxxx Select
agrees that the Adviser or its "affiliated persons" may give advice or exercise
investment responsibility and take such other action with respect to Affiliated
Accounts which may differ from the advice given or the timing or nature of
action with respect to the Fund, provided that the Adviser acts in good faith.
Xxxxxx Xxxxxx Select acknowledges that one or more of the Affiliated Accounts
may at any time hold, acquire, increase, decrease, dispose of or otherwise deal
with positions in investments in which the Fund may have an interest. The
Adviser shall have no obligation to recommend for the Fund a position in any
investment which an Affiliated Account may acquire, and Xxxxxx Xxxxxx Select
shall have no first refusal, co-investment or other rights in respect of any
such investment, either for its Fund or otherwise.
C. Subject to and in accordance with the Articles of
Incorporation and By-Laws of Xxxxxx Xxxxxx Select as currently in effect and the
1940 Act and the rules thereunder, it is understood that directors, officers and
agents of Xxxxxx Xxxxxx Select and shareholders of Xxxxxx Xxxxxx Select are or
may be interested in the Adviser or its "affiliated persons," or that directors,
officers, agents and shareholders of the Adviser or its "affiliated persons" are
or may be interested in Xxxxxx Xxxxxx Select; and that the effect of any such
interests shall be governed by said Articles of Incorporation, By-Laws and the
1940 Act and the rules thereunder.
8. LIABILITIES OF THE ADVISER.
A. Except as provided below, in the absence of willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to Xxxxxx Xxxxxx Select or to any shareholder of Xxxxxx Xxxxxx
Select or its Fund for any error of judgment or mistake of law in the course of,
or connected with, rendering services hereunder or for any losses that may be
sustained by the Fund, Xxxxxx Xxxxxx Select, or its shareholders in connection
with the matters to which this Agreement relates.
5
B. Nothing in this paragraph shall be deemed a limitation or
waiver of any obligation or duty that may not by law be limited or waived.
9. EFFECTIVE DATE; TERM. This Agreement shall continue in effect for
two years and from year to year thereafter only so long as specifically approved
annually by (i) vote of a majority of the directors of Xxxxxx Xxxxxx Select who
are not parties to this Agreement or interested persons of such parties, cast in
person at a meeting called for that purpose, and (ii) by the Board or by a vote
of a majority of the outstanding voting securities of the Fund.
10. ASSIGNMENT. No "assignment" of this Agreement shall be made by the
Adviser, and this Agreement shall terminate automatically in event of such
assignment. The Adviser will notify Xxxxxx Xxxxxx Select of any change of
control of the Adviser, including any change of its controlling persons or 25%
shareholders, as applicable, and any changes in the key personnel who are either
the portfolio manager(s) of the Fund or senior management of the Adviser, in
each case prior to, or promptly after, such change. The Adviser agrees to bear
all reasonable expenses of the Fund, if any, arising out of such change in
control.
11. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between the Adviser and Xxxxxx Xxxxxx Select, which amendment
is subject to the approval of the Board and, where required by the 1940 Act, the
shareholders of the Fund in the manner required by the 1940 Act and the rules
thereunder.
12. TERMINATION. This Agreement:
A. may at any time be terminated without payment of any
penalty by Xxxxxx Xxxxxx Select (by vote of the Board
or by "vote of a majority of the outstanding voting
securities") on sixty (60) days' written notice to
the Adviser;
B. shall immediately terminate in the event of its
"assignment"; and
C. may be terminated by the Adviser on sixty (60) days'
written notice to Xxxxxx Xxxxxx Select.
13. NAME. In the event this Agreement is terminated by either party or
upon written notice from the Adviser at any time, Xxxxxx Xxxxxx Select hereby
agrees that it will eliminate from its corporate name any reference to the name
"Xxxxxx Xxxxxx." Xxxxxx Xxxxxx Select shall have the non-exclusive use of the
name "Xxxxxx Xxxxxx" in whole or in part so long as this Agreement is effective
or until such notice is given.
14. DEFINITIONS. As used in this Agreement, the terms "affiliated
person," "assignment," "broker," "control," "interested person," "investment
adviser," "net assets," "sale," "security," "sell" and "vote of a majority of
the outstanding voting securities" shall have the meanings set forth in the 1940
Act and the rules and regulations thereunder, subject to any applicable orders
of exemption issued by the Securities and Exchange Commission.
6
15. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postage prepaid to the other party to this
Agreement at its principal place of business.
16. SEVERABILITY. 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.
17. GOVERNING LAW. To the extent that state law has not been preempted
by the provisions of any law of the United States, this Agreement shall be
administered, construed and enforced according to the laws of the State of
Maryland.
18. MISCELLANEOUS. 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. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors. Where the effect of a requirement of the
federal securities laws reflected in any provision of this Agreement is made
less restrictive by a rule, regulation or order of the SEC, whether of special
or general application, such provision shall be deemed to incorporate the effect
of such rule, regulation or order. This Agreement and the Schedule(s) attached
hereto embody the entire agreement and understanding among the parties. This
Agreement may be signed in counterparts.
IN WITNESS WHEREOF the parties have caused this instrument to be signed
on their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date first written
above.
XXXXXX XXXXXX SELECT FUND, INC.
(SEAL) By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Secretary
XXXXXX ASSET MANAGEMENT, INC.
(SEAL) By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Treasurer
7
SCHEDULE A
XXXXXX XXXXXX SELECT FUND, INC.
FEE SCHEDULE
Fund Annualized % of average
---- daily net assets
----------------
Xxxxxx Xxxxxx Select Financial Fund 1.00%
This advisory fee shall be payable quarterly as soon as practicable
after the last day of each quarter based on the average of the daily values
placed on the net assets of the Xxxxxx Xxxxxx Select Financial Fund ("Fund") as
determined at the close of business on each day throughout the quarter. The
assets of the Fund will be valued separately as of the close of regular trading
on the New York Stock Exchange (currently 4:00 p.m., Eastern time) on each
business day throughout the quarter or, if Xxxxxx Xxxxxx Select Fund, Inc.
("Xxxxxx Xxxxxx Select") lawfully determines the value of the net assets of the
Fund as of some other time on each business day, as of such time. The first
payment of such fee shall be made as promptly as possible at the end of the
quarter next succeeding the effective date of this Agreement. In the event that
Xxxxxx Asset Management, Inc.'s ("Adviser") right to such fee commences on a
date other than the last day of the quarter, the fee for such quarter shall be
based on the average daily assets of the Fund in that period from the date of
commencement to the last day of the quarter. If Xxxxxx Xxxxxx Select determines
the value of the net assets of the Fund more than once on any business day, the
last such determination on that day shall be deemed to be the sole determination
on that day. The value of net assets shall be determined pursuant to the
applicable provisions of Xxxxxx Xxxxxx Select's Articles of Incorporation, its
By-Laws and the 1940 Act. If, pursuant to such provisions, the determination of
the net asset value of the Fund is suspended for any particular business day,
then the value of the net assets of the Fund on that day shall be deemed to be
the value of its net assets as determined on the preceding business day. If the
determination of the net asset value of the Fund has been suspended for more
than one quarter, the Adviser's compensation payable at the end of that quarter
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such quarter).
8
