ADVISORY AGREEMENT
between
XXXXXX XXXXXX SELECT FUND, INC.
and
XXXXXX ASSET MANAGEMENT, INC.
ADVISORY AGREEMENT made this ___ day of February, 2005 (the "Agreement"),
by and between Xxxxxx Xxxxxx Select Fund, Inc., a Maryland corporation ("Xxxxxx
Xxxxxx Select"), and Xxxxxx Asset Management, Inc., a corporation organized
under the laws of the State of Tennessee ("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 a series of shares of common stock designated as
Regions Xxxxxx Xxxxxx Select LEADER Short Term Bond Fund (the "Fund") and
WHEREAS, Xxxxxx Xxxxxx Select desires to avail itself of the services,
information, advice, assistance and facilities of an investment adviser on
behalf of the Fund, 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 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. CORPORATE MANAGEMENT SERVICES.
(i) 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 the Fund.
(ii) 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 of the Fund.
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 or its
administrator 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 and its administrator 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 or its
administrator to examine the reports required to be made to the Adviser by Rule
17j-l(c)(l).
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.
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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 3.A, 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.
C. It is understood that neither the Fund nor the Adviser will adopt
a formula for allocation of the Fund's brokerage.
D. 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 Fund and to its other clients.
E. It is understood that the Adviser may, in its discretion, use
brokers 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
the Fund and its other clients and that the total commissions paid by the Fund
will be reasonable in relation to the benefits to the Fund over the long term.
F. 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 brokers in
connection with comparable transactions involving similar securities being
purchased or sold during a comparable period of time.
G. The Adviser shall provide such reports as the Board may
reasonably request with respect to the Fund's total brokerage and transaction
activities and the manner in which that business was allocated.
4. EXPENSES OF XXXXXX XXXXXX SELECT. 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 (or the Fund's
proportionate share of 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
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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 fees; 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, statements of
additional information, 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.
5. 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 along with the Fund's name in
Schedule A attached hereto. This advisory fee shall be payable monthly as soon
as practicable after the last day of each month based on the average of the
daily values placed on the net assets of the Fund as determined at the close of
business on each day throughout the month. 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 month
or, if 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 with
respect to the Fund. The first payment of such fee shall be made as promptly as
possible at the end of the month next succeeding the effective date of this
Agreement. In the event that the Adviser's right to such fee commences on a date
other than the last day of the month, the fee for such month 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 month. 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 month, the Adviser's compensation payable at the end of that month
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 month).
6. 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.
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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 the 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.
7. 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 the Fund for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security or the making of any investment for or
on behalf of Xxxxxx Xxxxxx Select.
B. No provision of this Agreement shall be construed to protect any
Director or officer of Xxxxxx Xxxxxx Select, or the Adviser, from liability in
violation of Sections 17(h), 17(i), 36(a) or 36(b) of the 1940 Act.
8. EFFECTIVE DATE; TERM. This Agreement shall continue in effect for one
year 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 with
respect to the Fund, by a vote of a majority of the outstanding voting
securities of the Fund.
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9. 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 shall notify Xxxxxx Xxxxxx Select in writing in advance
of any proposed change of "control" to enable Xxxxxx Xxxxxx Select to take the
steps necessary to enter into a new advisory agreement, if necessary.
10. 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.
11. TERMINATION. This Agreement:
A. may at any time be terminated without payment of any penalty by
Xxxxxx Xxxxxx Select with respect to the Fund (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 with respect to the Fund by the Adviser on
sixty (60) days' written notice to Xxxxxx Xxxxxx Select.
12. 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.
13. DEFINITIONS. As used in this Agreement, the terms "affiliated person,"
"assignment," "control," "interested person" 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.
13. 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.
14. 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.
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15. 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.
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:_________________________________________
Name:
Title:
XXXXXX ASSET MANAGEMENT, INC.
(SEAL) By:_________________________________________
Name:
Title:
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SCHEDULE A
XXXXXX XXXXXX SELECT FUND, INC.
FEE SCHEDULE
% of average
Fund daily net assets
---- ----------------
Regions Xxxxxx Xxxxxx Select LEADER 0.55%
Short Term Bond Fund
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