XXXXXXX FUNDS
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is entered into as of the 15th day of April, 2002,
between the Xxxxxxx Funds, a Delaware Business Trust (the "Trust") and Advanced
Capital Advisers, Inc., a Minnesota corporation (the "Adviser").
WITNESSETH
WHEREAS, the Trust is an open-end investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"). The Trust is
authorized to create separate series, each with its own separate investment
portfolio (each a "Fund" and collectively, the "Funds"), and the beneficial
interest in each such series will be represented by a separate series of shares
of beneficial interest (the "Shares").
WHEREAS, the Adviser is a registered investment adviser, engaged in the
business of rendering investment advisory services.
WHEREAS, in managing the Trust's assets, as well as in the conduct of
certain of its affairs, the Trust seeks the benefit of the Adviser's services
and its assistance in performing certain managerial functions. The Adviser
desires to furnish such services and to perform the functions assigned to it
under this Agreement for the consideration provided for herein.
NOW THEREFORE, the parties mutually agree as follows:
1. Appointment of the Adviser. The Trust hereby appoints the Adviser as
investment adviser for each of the Funds of the Trust on whose behalf the Trust
executes an Exhibit to this Agreement, and the Adviser, by execution of each
such Exhibit, accepts the appointments. Subject to the direction of the Board of
Trustees (the "Trustees") of the Trust, the Adviser shall manage the investment
and reinvestment of the assets of each Fund in accordance with the Fund's
investment objective and policies and limitations, for the period and upon the
terms herein set forth. The investment of funds shall also be subject to all
applicable restrictions of the Trust's Agreement and Declaration of Trust and
Bylaws as may from time to time be in force.
2. Expenses Paid by the Adviser. In addition to the expenses which the
Adviser may incur in the performance of its responsibilities under this
Agreement, and the expenses which it may expressly undertake to incur and pay,
the Adviser shall incur and pay all reasonable compensation, fees and related
expenses of the Trust's officers and its Trustees, except for such Trustees who
are not interested persons (as that term is defined in Section 2(a)(19) of the
0000 Xxx) of the Adviser, and all expenses related to the rental and maintenance
of the principal offices of the Trust.
3. Investment Advisory Functions. In its capacity as investment adviser,
the Adviser shall have the following responsibilities:
(a) To furnish continuous advice and recommendations to the Funds, as
to the acquisition, holding or disposition of any or all of the securities
or other assets which the Funds may own or contemplate acquiring from time
to time;
(b) To cause its officers to attend meetings and furnish oral or
written reports, as the Trust may reasonably require, in order to keep the
Trustees and appropriate officers of the Trust fully informed as to the
condition of the investments of the Funds, the investment recommendations
of the Adviser, and the investment considerations which have given rise to
those recommendations;
(c) To supervise the purchase and sale of securities or other assets
as directed by the appropriate officers of the Trust; and
(d) To keep, maintain and preserve any records pursuant to the
provisions of Rule 31a-1 and Rule 31a-2 promulgated under the 1940 Act
which are prepared or maintained by the Adviser (or any sub-adviser) on
behalf of the Trust. Such records are the property of the Trust and will be
surrendered promptly to the Trust upon request. The Adviser further agrees
to preserve for periods prescribed in Rule 31a-2 under the 1940 Act the
records required to be maintained pursuant to Rule 31a-l under the 1940
Act.
The services of the Adviser are not to be deemed exclusive and the Adviser shall
be free to render similar services to others as long as its services for others
does not in any way hinder, preclude or prevent the Adviser from performing its
duties and obligations under this Agreement. In the absence of willful
misfeasance, bad faith, negligence or reckless disregard of obligations or
duties hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Trust, the Funds, or to any shareholder for any act or omission
in the course of, or in connection with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale of any security.
4. Obligations of the Trust. The Trust shall have the following obligations
under this Agreement:
(a) To keep the Adviser continuously and fully informed as to the
composition of the Funds' investments and the nature of all of their
respective assets and liabilities;
(b) To furnish the Adviser with a copy of any financial statement or
report prepared for it by certified or independent public accountants, and
with copies of any financial statements or reports made to the Funds'
shareholders or to any governmental body or securities exchange;
(c) To furnish the Adviser with any further materials or information
which the Adviser may reasonably request to enable it to perform its
functions under this Agreement; and
(d) To compensate the Adviser for its services in accordance with the
provisions of paragraph 5 hereof.
5. Compensation.
(a) The Trust will pay the Adviser a fee (the "Advisory Fee") for its
services with respect to each Fund at the annual rate set forth on the
Exhibit(s) hereto. The Advisory Fee shall be accrued each calendar day
during the term of this Agreement and the sum of the daily fee accruals
shall be paid monthly as soon as practicable following the last day of each
month. The daily fee accruals will be computed by multiplying 1/365 by the
annual rate and multiplying the product by the net asset value of the Fund
as determined in accordance with the Trust's registration statement as of
the close of business on the previous day on which the Fund was open for
business, or in such other manner as the parties agree. If this Agreement
is terminated prior to the end of any calendar month, the management fee
shall be prorated for the portion of any month in which this Agreement is
in effect, and shall be payable within 10 days after termination.
(b) The Adviser hereby agrees to waive any portion of the Advisory Fee
and reimburse operating expenses (not including interest, taxes and
extraordinary expenses) of the Xxxxxxx Growth Fund, a series of the Trust,
to the extent necessary to limit the Fund's total operating expenses to
2.25% of its average daily net assets for a period ending on April 30,
2003. Any such waiver or payment will be accrued by the Fund and estimated
daily. The Xxxxxxx Growth Fund shall reimburse the Adviser in the first,
second, or third (or any combination thereof) fiscal year next succeeding
the fiscal year of the withholding, reduction or payment to the extent
permitted by applicable law if the aggregate expenses for the next
succeeding fiscal year, second fiscal year or third succeeding fiscal year
do not exceed 2.25% of the Fund's average daily net assets.
(c) Any advisory fees which may be charged by sub-advisers hired by
the Adviser are the sole obligation of the Adviser, and not of the Trust
nor any Fund.
6. Expenses Paid by Trust. Except as provided in this Agreement, nothing in
this Agreement shall be construed to impose upon the Adviser the obligation to
incur, pay, or reimburse any Fund for any expenses not specifically assumed by
the Adviser under paragraph 5(b) above. Each Fund shall pay or cause to be paid
all of its expenses and the Fund's allocable share of the Trust's expenses,
including, but not limited to, investment adviser fees; any compensation, fees,
or reimbursements which the Trust pays to its Trustees who are not interested
persons (as that phrase is defined in Section 2(a)(19) of the 0000 Xxx) of the
Adviser; fees and expenses of the custodian, transfer agent, registrar or
dividend disbursing agent; current legal, accounting and printing expenses;
administrative, clerical, recordkeeping and bookkeeping expenses; brokerage
commissions and all other expenses in connection with the execution of Fund
transactions; interest; all federal, state and local taxes (including stamp,
excise, income and franchise taxes); expenses of shareholders' meetings and of
preparing, printing and distributing proxy statements, notices and reports to
shareholders; expenses of preparing and filing reports and tax returns with
federal and state regulatory authorities; and all expenses incurred in complying
with all federal and state laws and the laws of any foreign country applicable
to the issue, offer, or sale of Shares of the Funds, including but not limited
to, all costs involved in the registration or qualification of Shares of the
Funds for sale in any jurisdiction and all costs involved in preparing, printing
and distributing prospectuses and statements of additional information to
existing shareholders of the Funds.
7. Brokerage.
(a) For purposes of this Agreement, brokerage commissions paid by a
Fund upon the purchase or sale of securities shall be considered a cost of
the securities of the Fund and shall be paid by the respective Fund. The
Adviser is authorized and directed to place Fund transactions only with
brokers and dealers who render satisfactory service in the execution of
orders at the most favorable prices and at reasonable commission rates;
provided, however, that the Adviser may pay a broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount
of commission another broker or dealer would have charged for effecting
that transaction, if the Adviser determines in good faith that such amount
of commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer viewed in terms of
either that particular transaction or the overall responsibilities of the
Adviser. In placing Fund business with such broker or dealers, the Adviser
shall seek the best execution of each transaction, and all such brokerage
placement shall be made in compliance with Section 28(e) of the Securities
Exchange Act of 1934, as amended, and other applicable state and federal
laws.
(b) On occasions when the Adviser deems the purchase or sale of a
security to be in the best interest of the Fund(s) as well as other
clients, the Adviser, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be sold or purchased in order
to obtain the best execution and lower brokerage commissions, if any. 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 most equitable and consistent with its
fiduciary obligations to the Fund(s) and to such clients.
8. Proprietary Rights. The Adviser has proprietary rights in each Fund's
name and the Trust's name. The Adviser may withdraw the use of such names from
the Funds or the Trust.
9. Termination Rights. This Agreement may be terminated at any time,
without penalty, by the Trustees of the Trust or by the shareholders of a Fund
acting by the vote of at least a majority of its outstanding voting securities
(as that phrase is defined in Section 2(a)(42) of the 1940 Act), provided in
either case that 60 days' written notice of termination be given to the Adviser
at its principal place of business. This Agreement may also be terminated by the
Adviser at any time by giving 60 days' written notice of termination to the
Trust, addressed to its principal place of business.
10. Assignment. This Agreement shall terminate automatically in the event
of any assignment (as the term is defined in Section 2(a)(4) of the 0000 Xxx) of
this Agreement.
11. Term. This Agreement shall begin for each Fund as of the date of
execution of the applicable Exhibit and shall continue in effect with respect to
each Fund (and any subsequent Funds added pursuant to an Exhibit during the
initial term of this Agreement) for two years from the date of this Agreement.
Thereafter, in each case, this Agreement shall remain in effect, for successive
periods of one year, subject to the provisions for termination and all of the
other terms and conditions hereof if: (a) such continuation shall be
specifically approved at least annually by either (i) the affirmative vote of a
majority of the Board of Trustees of the Trust, including a majority of the
Trustees who are not parties to this Agreement or interested persons of any such
party (other than as Trustees), cast in person at a meeting called for that
purpose or (ii) by the affirmative vote of a majority of a Fund's outstanding
voting securities; and (b) Adviser shall not have notified a Fund in writing at
least sixty (60) days prior to the anniversary date of this Agreement in any
year thereafter that it does not desire such continuation with respect to that
Fund. Prior to voting on the renewal of this Agreement, the Board of Trustees
may request and evaluate, and the Adviser shall furnish, such information as may
reasonably be necessary to enable the Board of Trustees to evaluate the terms of
this Agreement.
12. Amendments. This Agreement may be amended by the mutual consent of the
parties, provided that the terms of each such amendment shall be approved by the
vote of a majority of the Board of Trustees, including a majority of the
Trustees who are not parties to this Agreement or interested persons of any such
party to this Agreement (other than as Trustees) cast in person at a meeting
called for that purpose, and, where required by Section 15(a)(2) of the 1940
Act, on behalf of a Fund by a majority of the outstanding voting securities (as
defined in Section 2(a)(42) of the 0000 Xxx) of such Fund. If such amendment is
proposed in order to comply with the recommendations or requirements of the
Securities and Exchange Commission or state regulatory bodies or other
governmental authority, or to obtain any advantage under state or federal laws,
the Trust shall notify the Adviser of the form of amendment which it deems
necessary or advisable and the reasons therefor, and if the Adviser declines to
assent to such amendment, the Trust may terminate this Agreement forthwith.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Minnesota, provided, however
that nothing herein shall be construed in a manner that is inconsistent with the
1940 Act, the Investment Advisers Act of 1940, as amended, or the rules and
regulations promulgated with respect to such respective Acts.
14. Notice. All communications or notices required or permitted by this
Agreement shall be in writing and shall be deemed to have been given at the
earlier of the date when actually delivered to an individual party or to an
officer of the Trust or Adviser by personal delivery or telephonic facsimile
transmission (receipt electronically confirmed) or when deposited in the United
States mail, certified or registered mail, postage prepaid, return receipt
requested, and addressed as follows:
The Trust: The Adviser:
Xxxxxxx Funds Advanced Capital Advisers, Inc.
x/x Xxxxxx X. Xxxxxxx XXX 0000 Xxxxxx Avenue South
0000 Xxxxxx Xxxxxx Xxxxx Xxxxx, XX 00000
Xxxxx, XX 00000 Attn: Xxxxxx X. Xxxxxxx III
Fax: (000) 000-0000 Fax: (000) 000-0000
15. 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.
16. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to this Agreement's subject matter. This Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original, but such counterparts shall, together, constitute only one
instrument.
17. Miscellaneous.
(a) A copy of the Certificate of Trust for the Trust is on file with
the Delaware Secretary of State, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust, and is not
binding upon any of the Trustees, officers, or shareholders of the Trust
individually but only upon the assets and property of the Trust.
(b) No series of the Trust shall be liable for the obligations of any
other series of the Trust. Without limiting the generality of the
foregoing, the Adviser shall look only to the assets of a particular Fund
for payment of fees for services rendered to that Fund.
This Agreement will become binding on the parties hereto upon their
execution of the Exhibit(s) to this Agreement.
EXHIBIT A
to the
Investment Advisory Agreement
XXXXXXX GROWTH FUND
For all services rendered by the Adviser hereunder, the Trust shall pay
the Adviser, on behalf of the above-named Fund, and the Adviser agrees to accept
as full compensation for all services rendered hereunder, an annual investment
advisory fee equal to 1.00% of the average daily net assets of the Fund.
The annual investment advisory fee shall be accrued daily at the rate
of 1/365th of 1.00% applied to the daily net assets of the Fund. The advisory
fee so accrued shall be paid by the Trust to the Adviser monthly.
Executed as of this 15th day of April, 2002.
The Adviser:
ADVANCED CAPITAL ADVISERS, INC.
By: __/s/___Arthur X. Xxxxxxx III___
_Arthur X. Xxxxxxx III_, President
The Trust:
XXXXXXX FUNDS
By:__/s/__Arthur X. Xxxxxxx III______
Xxxxxx X. Xxxxxxx III, President
