INVESTMENT ADVISORY AGREEMENT
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This Investment Advisory Agreement is made as of this 23rd
day of November, 1993, between XXXXXXXX EQUITY INCOME FUND, INC.,
a Maryland corporation (the "Fund"), and XXXXXXXX COMPANY, INC.,
a Wisconsin corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Fund is an open-end, diversified management
investment company registered under the Investment Company Act of
1940, as amended ("1940 Act"); and
WHEREAS, the Fund desires to retain the Adviser to render
investment advisory services to the Fund and the Adviser is
willing to render such services;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter set forth, the parties hereto agree
as follows:
1. Employment of Adviser. The Fund hereby employs the
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Adviser to manage the investment and reinvestment of the assets
of the Fund for the period and on the terms set forth in this
Agreement. The Adviser hereby accepts such employment for the
compensation herein provided and agrees, during such period, to
render the services and to assume the obligations herein set
forth.
2. Duties of Adviser. Subject to the general supervision
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of the Board of Directors of the Fund, the Adviser shall manage
the investment operations of the Fund and the composition of the
Fund's assets, including the purchase, retention and disposition
thereof. In this regard, the Adviser
(i) shall provide supervision of the Fund's
assets, furnish a continuous investment program for the
Fund, determine from time to time what investments or
securities will be purchased, retained or sold by the
Fund, and what portion of the assets will be invested
or held uninvested as cash;
(ii) shall place orders pursuant to its
determinations either directly with the issuer or with
any broker and/or dealer who deals in the securities in
which the Fund is active. In placing orders, the
Adviser shall be entitled to rely upon the provisions
of Section 28(e) of the Securities Exchange Act of
1934, as amended; and
(iii) may, on occasions when it deems the
purchase or sale of a security to be in the best
interests of the Fund as well as its other customers
(including any other investment company or advisory
account for which the Adviser acts as adviser),
aggregate, to the extent permitted by applicable laws
and regulations, the securities to be sold or purchased
in order to obtain a more favorable net price or
execution. In such event, allocation of the securities
so purchased or sold, as well as the 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 the Fund
and to such other customers.
In addition, subject to the general supervision of the
Board of Directors of the Fund, the Adviser shall arrange for the
administration of all other affairs of the Fund. In this regard,
the Adviser
(i) giving due recognition to the fact that
certain of such operations are performed by others
pursuant to a Custodian Agreement and a Transfer Agent
Agreement, and may be performed by others pursuant to a
shareholder servicing agreement, an accounting services
agreement, an administrative servicing agreement or any
similar agreement (collectively, "Other Agreements"),
shall provide supervision of all aspects of the Fund's
operations;
(ii) shall, to the extent not provided
pursuant to the Other Agreements, provide the Fund with
personnel to perform such executive, administrative and
clerical services as are reasonably necessary to
provide effective administration of the Fund;
(iii) shall, to the extent not provided
pursuant to the Other Agreements, arrange for (A) the
preparation for the Fund of all required tax returns,
(B) the preparation and submission of reports to
existing shareholders, and (C) the periodic updating of
the Prospectus and Statement of Additional Information
and the preparation of reports filed with the
Securities and Exchange Commission and other regulatory
authorities;
(iv) shall, to the extent not provided
pursuant to the Other Agreements, provide the Fund with
adequate office space and all necessary office
equipment and services including telephone service,
heat, utilities, stationary supplies and similar items;
and
(v) shall have full power and authority in
the name and on behalf of the Fund, to attend, act and
vote at any meeting of shareholders of any company in
which the Fund may own shares of stock of record or
beneficially, and to give voting directions to the
record shareholder of any such stock beneficially
owned.
Any of such services listed above in subsections (ii),
(iii) or (iv) that are provided to the Fund by the Adviser may be
billed to the Fund at the Adviser's cost. The Adviser, in the
performance of its duties hereunder, shall act in conformity with
the Articles of Incorporation, By-Laws, Prospectus, Statement of
Additional Information and the Registration Statement on Form N-
1A and with the instructions and directions of the Board of
Directors of the Fund, and will comply with and conform to the
requirements of the 1940 Act, the Investment Advisers Act of
1940, as amended, and all other applicable federal and state
laws, regulations and rulings.
The Adviser shall render to the Board of Directors of
the Fund such periodic and special reports as the Board may
reasonably request.
The services of the Adviser hereunder are not deemed
exclusive and the Adviser shall be free to render similar
services to others so long as its services under this Agreement
are not impaired thereby.
3. Status of Adviser as Independent Contractor. The
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Adviser, for all purposes herein, shall be deemed to be an
independent contractor and, unless otherwise expressly provided
or authorized, shall have no authority to act for or represent
the Fund in any way or otherwise be deemed an agent of the Fund.
However, one or more shareholders, officers, directors or
employees of the Adviser may serve as directors and/or officers
of the Fund, but without compensation or reimbursement of
expenses for such services from the Fund. Nothing herein
contained shall be deemed to require the Fund to take any action
contrary to its Articles of Incorporation or any applicable
statute or regulation, or to relieve or deprive the Board of
Directors of the Fund of its responsibility for and control of
the affairs of the Fund.
4. Expenses. The Adviser, subject to any reimbursement as
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provided in Section 2 hereof, shall furnish office space, office
facilities and executive officers and executive expenses (such as
health insurance premiums) for managing the assets of the Fund.
The Adviser also shall bear all sales and promotional expenses of
the Fund, including the cost of prospectuses delivered to
prospective investors, other than those sent to existing
shareholders and those who have made unsolicited requests for
information from the Fund. In addition, the Adviser shall pay
all expenses incurred in connection with the organization of the
Fund and the initial public offering and sale of its shares to
the public pursuant to such offering, and only in such event, the
Fund shall become liable for, and to the extent requested
reimburse the Adviser for, registration fees payable to the
Securities and Exchange Commission and for an additional amount
not exceeding $75,000 as its agreed share of such expenses (which
includes Blue Sky fees and expenses). The Fund generally shall
bear the expenses incurred in complying with laws regulating the
offer, issuance or sale of securities. Fees paid for attendance
at meetings of the Fund's Board of Directors to directors of the
Fund who are not interested persons of the Adviser, as defined in
the 1940 Act, or officers or employees of the Fund, shall be
borne by the Fund. The Fund shall bear all other expenses of its
operations, or shall reimburse the Adviser for such other
expenses initially incurred by it, provided that the total
expenses borne by the Fund, including the Adviser's fee but
excluding all Federal, state and local taxes, interest and
brokerage charges, shall not in any year exceed that percentage
of average net asset value of the Fund for such year, as
determined by appraisals made as of the close of each business
day, which is the most restrictive percentage provided by the
state laws of the various states in which the Fund's common stock
is qualified for sale. The expenses of the Fund's operation
borne by the Fund include, by way of illustration and not
limitation, the costs of preparing and printing its Registration
Statements required under the Securities Act of 1933, as amended,
and the 1940 Act, (and amendments thereto), the expenses of
registering its shares with the Securities and Exchange
Commission and in the various states, the cost of prospectuses,
the cost of stock certificates, reports to shareholders, interest
charges, taxes, legal expenses, non-interested directors' fees,
salaries of administrative and clerical personnel, association
membership dues, auditing and accounting services, fees and
expenses of the custodian of the Fund's assets, postage, charges
and expenses of dividend disbursing agents, registrars and stock
transfer agents, the cost of keeping all necessary shareholder
records and accounts, and any other costs related to the
aforementioned items. The Adviser shall not be obligated to pay
any expenses of or for the Fund not expressly assumed by the
Adviser pursuant to this Section 4.
The Fund shall monitor its expense ratio on a regular basis.
The Adviser shall reimburse the Fund to the extent that the
aggregate annual operating expenses, including the investment
advisory fee but excluding interest, taxes, brokerage
commissions, litigation and extraordinary expenses, exceed the
lowest (i.e., most restrictive) percentage of the Fund's average
net assets established by the laws of the states in which the
Fund's shares are registered for sale, as determined by
valuations made as of the close of each business day of the year.
The Adviser shall reimburse the Fund at the end of any fiscal
year in which the aggregate annual operating expenses exceed such
restrictive percentage.
In addition to the foregoing, the Adviser may from time to
time at its option (but shall be under no obligation to)
voluntarily assume or undertake to reimburse the Fund for all or
a portion of its expenses not otherwise required to be borne or
reimbursed by the Adviser. Any such voluntary assumption or
undertaking may be discontinued or modified at any time by the
Adviser.
5. Adviser Compensation. For the services to be rendered
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hereunder, the Fund shall pay to the Adviser an annual fee, paid
monthly, based on the average net asset value of the Fund, as
determined by appraisals made as of the close of each business
day of the month. The annual fee shall be .70% of the average
net asset value of the Fund up to and including $50.0 million,
and .60% of the average net asset value of the Fund in excess of
$50.0 million. Such fee shall be prorated in any month in which
this Agreement is not in effect for the entire month. Such fee
shall commence accruing as of the date of the initial
effectiveness of the Fund's Registration Statement on Form N-1A
filed with the Securities and Exchange Commission.
6. Books and Records. The Adviser shall maintain all of
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the Fund's records (other than those maintained pursuant to the
Other Agreements). The Adviser agrees that all records which it
maintains for the Fund are the property of the Fund and it will
surrender promptly to the Fund any of such records upon the
Fund's request. The Adviser further agrees to preserve for the
periods prescribed by Rule 31a-2 of the Securities and Exchange
Commission under the 1940 Act, any such records as are required
to be maintained by Rule 31a-1 of the Securities and Exchange
Commission under the 1940 Act.
7. Fund Investment Restrictions. The Adviser shall not
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take, and shall not permit any of its shareholders, officers,
directors or employees to take, a long or short position in the
shares of the Fund, except for the purchase of shares of the Fund
for investment purposes at the same price as that available to
the public at the time of purchase, or in connection with the
original capitalization of the Fund.
8. Name of the Fund. The services of the Adviser to the
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Fund hereunder are not to be deemed exclusive and the Adviser
shall be free to furnish similar services to others so long as
the services hereunder are not impaired thereby. Although the
Adviser has permitted and is permitting the Fund to use the name
"Xxxxxxxx," it is understood and agreed that the Adviser reserves
the right to use and permit other persons, firms or corporations,
including investment companies, to use such name. At such time
as this Agreement or any extension, renewal or amendment hereof,
or such other similar agreement shall no longer be in effect, the
Fund will (by corporate action if necessary) cease to use any
name derived from the name "Xxxxxxxx," any name similar thereto
or any other name indicating that it is advised by or otherwise
connected with the Adviser or with any organization which shall
have succeeded to the Adviser's business as investment adviser.
9. Amendment of Agreement. This Agreement may not be
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amended without the approval of the Board of Directors of the
Fund, including a majority of the disinterested directors, in the
manner required by the 1940 Act, and if such amendment is
material, by the affirmative vote of a majority of the
outstanding voting securities of the Fund, as defined in the 1940
Act.
10. Duration and Termination. This Agreement may be
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terminated at any time, without the payment of any penalty, by
the Fund (by vote of either a majority of the Board of Directors
of the Fund or by the affirmative vote of the majority of the
outstanding voting securities of the Fund, as defined in the 1940
Act), upon giving 60 days' written notice to the Adviser. This
Agreement may be terminated by the Adviser at any time upon the
giving of 60 days' written notice to the Fund. This Agreement
shall terminate automatically in the event of its assignment (as
defined in Section 2(a)(4) of the 1940 Act). Until terminated as
hereinbefore provided, this Agreement shall continue in effect
for successive annual periods so long as such continuance is
specifically approved annually by (i) the Board of Directors of
the Fund or by the affirmative vote of a majority of the
outstanding voting securities of the Fund, as defined in the 1940
Act, and (ii) by vote of a majority of the disinterested members
of the Board of Directors of the Fund cast in person at a meeting
called for the purpose of voting on such approval, or otherwise
in the manner required by the 1940 Act, provided that any such
approvals may be made effective not more than 90 days thereafter.
11. Indemnification. The Fund hereby agrees to indemnify
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and hold harmless the Adviser, its directors, officers and
employees and each person, if any, who controls the Adviser
(collectively, the "Indemnified Parties") against any and all
losses, claims, damages or liabilities, joint or several, to
which any such Indemnified Party may become subject under the
Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, the 1940 Act, or other federal or state
statutory law or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon
(i) Any untrue statement or alleged untrue statement
of a material fact or any omission or alleged omission to
state a material fact required to be stated or necessary to
make the statements made not misleading in (x) the
Prospectus, the Statement of Additional Information or the
Registration Statement on Form N-1A, (y) any advertisement
or sales literature authorized by the Fund for use in the
offer and sale of its shares of common stock, or (z) any
application or other document filed in connection with the
qualification of the Fund or its shares of common stock
under the Blue Sky or securities laws of any jurisdiction,
except insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon any such untrue statement or omission or
alleged untrue statement or omission either pertaining to a
failure to disclose a breach of the Adviser's duties in
connection with this Agreement or made in reliance upon and
in conformity with information furnished to the Fund by or
on behalf of the Adviser for use in connection with any
document referred to in clauses (x), (y), or (z), or
(ii) subject in each case to clause (i) above, the
Adviser acting hereunder;
and the Fund will reimburse each Indemnified Party for any
legal or other expenses incurred by such Indemnified Party
in connection with investigating or defending any such loss,
claim, damages, liability or action.
If the indemnification provided for in this paragraph 11 is
available in accordance with the terms of such paragraph but is
for any reason held by a court to be unavailable from the Fund,
then the Fund shall contribute to the aggregate amount paid or
payable by the Fund and the Indemnified Parties as a result of
such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect
(i) the relative benefits received by the Fund and such
Indemnified Parties in connection with the operations of the
Fund, (ii) the relative fault of the Fund and such Indemnified
Parties, and (iii) any other relevant equitable considerations.
The Fund and the Adviser agree that it would not be just and
equitable if contribution pursuant to this subparagraph were
determined by pro rata allocation or any other method of
allocation which does not take into account the equitable
considerations referred to above in this subparagraph. The
aggregate amount paid or payable as a result of the losses,
claims, damages or liabilities (or actions in respect thereof)
referred to above in this subparagraph shall be deemed to include
any legal or other expenses incurred by the Fund and the
Indemnified Parties in connection with investigating or defending
any such loss, claim, damage, liability or action. No person
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act of 1933, as amended) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
It is understood, however, that nothing in this paragraph 11
shall protect any Indemnified Party against, or entitle any
Indemnified Party to indemnification against or contribution with
respect to, any liability to the Fund or its shareholders to
which such Indemnified Party is subject, by reason of its willful
misfeasance, bad faith or gross negligence in the performance of
its duties, or by reason of any reckless disregard of its
obligations and duties, under this Agreement, or otherwise to an
extent or in a manner inconsistent with Section 17(i) or Section
36 of the 1940 Act.
12. Certain Definitions. For purposes of this Agreement,
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the "affirmative vote of a majority of the outstanding voting
securities of the Fund" means the affirmative vote, at a duly
called and held meeting of shareholders of the Fund, (a) of the
holders of 67% or more of the shares of the Fund present (in
person or by proxy) and entitled to vote at such meeting, if the
holders of more than 50% of the outstanding shares of the Fund
entitled to vote at such meeting are present in person or by
proxy, or (b) of the holders of more than 50% of the outstanding
shares of the Fund entitled to vote at such meeting, whichever is
less.
For purposes of this Agreement, the terms "affiliated
person," "control," "interested person" and "assignment" shall
have their respective meanings defined in the 1940 Act and the
Rules and Regulations thereunder, subject, however, to such
exemptions as may be granted by the Securities and Exchange
Commission under the 1940 Act; the term "specifically approve at
least annually" shall be construed in a manner consistent with
the 1940 Act and the Rules and Regulations thereunder; and the
term "brokerage and research services" shall have the meaning
given in the Securities Exchange Act of 1934 and the Rules and
Regulations thereunder.
13. Miscellaneous. The captions in this Agreement are
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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 this Agreement shall not be affected
thereby. This Agreement shall be construed in accordance with
applicable federal laws and the laws of the State of Wisconsin
and shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors, subject to
paragraph 10 hereof. Anything herein to the contrary
notwithstanding, this Agreement shall not be construed to
require, or to impose any duty upon, either of the parties to do
anything in violation of any applicable laws or regulations.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day first written.
XXXXXXXX COMPANY, INC. XXXXXXXX EQUITY INCOME FUND, INC.
By: \s\ Xxxxxx X. Xxxxxxxx By: \s\ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx, President Xxxxxx X. Xxxxxxxx, President
Attest: \s\ Xxxxxx X. Xxxxxx Attest: \s\ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx,
Executive Vice President Executive Vice President
and Assistant Secretary and Secretary
