INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 20th day of November, 1997 by and between
THE XXXXXXXX XXXXXX TRUST, a Delaware business trust (the "Trust"), on behalf of
its series THE XXXXXXXX XXXXXX VALUE PLUS FUND (the "Fund") and XXXXXXXX XXXXXX
CAPITAL MANAGEMENT, INC., a Delaware corporation (the "Investment Adviser");
W I T N E S S E T H
WHEREAS, the Trust is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the rules and regulations promulgated thereunder;
and
WHEREAS, the Investment Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Investment Advisers
Act"), and engages in the business of acting as an investment adviser; and
WHEREAS, the Trust and the Investment Adviser desire to enter into an
agreement to provide for the management of the assets of the Fund on the terms
and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Management. The Investment Adviser shall act as investment adviser
for the Trust and shall, in such capacity, supervise the investment and
reinvestment of the cash, securities or other properties comprising the Trust's
assets, subject at all times to the policies and control of the Trust's Board of
Trustees. The Investment Adviser shall give the Trust the benefit of its best
judgment, efforts and facilities in rendering its services as investment
adviser. The Investment Adviser shall, for all purposes herein, be deemed an
independent contractor and shall have, unless otherwise expressly provided or
authorized, no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
2. Duties of Investment Advisor. In carrying out its obligation under
paragraph 1 hereof, the Investment Adviser shall:
(a) supervise and manage all aspects of the Fund's operations;
(b) provide the Fund or obtain for it, and thereafter supervise,
such executive, administrative, clerical and shareholder servicing services as
are deemed advisable by the Trust's Board of Trustees;
(c) arrange, but not pay for, the periodic updating of
prospectuses and supplements thereto, proxy material, tax returns, reports to
the Fund's shareholders and reports to and filings with the Securities and
Exchange Commission, state Blue Sky authorities;
(d) provide the Fund with, or obtain for it, adequate office
space and all necessary office equipment and services, including telephone
service, heat, utilities, stationery supplies and similar items for the Fund's
principal office;
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(e) provide the Board of Trustees of the Trust on a regular basis
with financial reports and analyses on the Fund's operations and the operations
of comparable investment companies;
(f) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the Fund, and whether
concerning the individual issuers whose securities are included in the Fund or
the activities in which they engage, or with respect to securities which the
Investment Adviser considers desirable for inclusion in the Fund;
(g) determine what issuers and securities shall be represented in
the Fund's portfolio and regularly report them to the Board of Trustees of the
Trust;
(h) formulate and implement continuing programs for the purchases
and sales of the securities of such issuers and regularly report thereon to the
Board of Trustees of the Trust; and
(i) take, on behalf of the Fund, all actions which appear to the
Fund necessary to carry into effect such purchase and sale programs and
supervisory functions as aforesaid, including the placing of orders for the
purchase and sale of portfolio securities.
3. Broker-Dealer Relationships. The Investment Adviser is responsible
for decisions to buy and sell securities for the Fund, broker-dealer selection,
and negotiation of brokerage commission rates. The Investment Adviser may select
Xxxxxxxx Xxxxxx & Company, Inc. or any other affiliated person of the Trust or
the Investment Adviser to the extent permitted pursuant to the Trust's
procedures for securities transactions with affiliated
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brokers pursuant to Section 17(e)(2) and Rule 17e-1 under the Investment Company
Act. Adviser's primary consideration in effecting a security transaction will be
execution at a price that is reasonable and fair compared to the commission, fee
or other remuneration received or to be received by other brokers in connection
with comparable transactions, including similar securities being purchased or
sold on a securities exchange during a comparable period of time.
In selecting a broker-dealer to execute each particular transaction,
the Investment Adviser will take the following into consideration: the best net
price available; the reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the order; and the value
of the expected contribution of the broker-dealer to the investment performance
of the Fund on a continuing basis. Accordingly, the price to the Fund in any
transaction may be less favorable than that available from another broker-dealer
if the difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies and procedures as the Board
of Trustees may determine, the Investment Adviser shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides brokerage and research services to the Investment Adviser
for the Fund's use an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Investment 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
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transaction or the Investment Adviser's overall responsibilities with respect to
the Fund. The Investment Adviser is further authorized to allocate the orders
placed by it on behalf of the Fund to such brokers and dealers who also provide
research or statistical material, or other services to the Fund or the
Investment Adviser for the Fund's use. Such allocation shall be in such amounts
and proportions as the Investment Adviser shall determine and the Investment
Adviser will report on said allocations regularly to the Board of Trustees of
the Trust indicating the brokers to whom such allocations have been made and the
basis therefor.
4. Control by Board of Trustees. Any investment program undertaken by
the Investment Adviser pursuant to this Agreement, as well as any other
activities undertaken by the Investment Adviser on behalf of the Fund pursuant
thereto, shall at all times be subject to any directives of the Board of
Trustees of the Trust.
5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Investment Adviser shall at all times
conform to:
(a) all applicable provisions of the Investment Company Act and
the Investment Advisers Act and any rules and regulations adopted thereunder as
amended; and
(b) the provisions of the Registration Statements of the Fund
under the Securities Act of 1933, as amended, and the Investment Company Act;
and
(c) the provisions of the Trust Instrument of the Trust, as
amended; and
(d) the provisions of the By-laws of the Trust, as amended; and
(e) any other applicable provisions of state and federal law.
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6. Expenses. The expenses connected with the Fund shall be allocable
between the Fund and the Investment Adviser as follows:
(a) The Investment Adviser shall furnish, at its expense and
without cost to the Trust, the services of a President, Secretary and one or
more Vice Presidents of the Fund, to the extent that such additional officers
may be required by the Fund for the proper conduct of its affairs.
(b) The Investment Adviser shall further maintain, at its expense
and without cost to the Fund, a trading function in order to carry out its
obligations under subparagraph (i) of paragraph 2 hereof to place orders for the
purchase and sale of portfolio securities for the Fund.
(c) Nothing in subparagraph (a) hereof shall be construed to
require the Investment Adviser to bear:
(i) any of the costs (including applicable office
space, facilities and equipment) of the services of a
principal financial officer of the Fund whose normal duties
consist of maintaining the financial accounts and books and
records of the Fund; including the reviewing of calculations
of net asset value and preparing tax returns; or
(ii) any of the costs (including applicable office
space, facilities and equipment) of the services of any of
the personnel operating under the direction of such
principal financial officer. Notwithstanding the obligation
of the Fund to bear the expense of the functions referred to
in clauses (i) and (ii) of this subparagraph (c), the
Investment Adviser may pay the salaries,
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including any applicable employment or payroll taxes and
other salary costs, of the principal financial officer and
other personnel carrying out such functions and the Fund
shall reimburse the Investment Adviser therefor upon proper
accounting.
(d) All of the ordinary business expenses incurred in the
operations of the Fund and the offering of its shares shall be borne by the Fund
unless specifically provided otherwise in this paragraph 6. These expenses
include but are not limited to brokerage commissions, legal, auditing, taxes or
governmental fees, networking servicing costs, fund accounting servicing costs,
administrative servicing costs, fulfillment servicing costs, the cost of
preparing share certificates, custodian, depository, transfer and shareholder
service agent costs, expenses of issue, sale, redemption and repurchase of
shares, expenses of registering and qualifying shares for sale, insurance
premiums on property or personnel (including officers and trustees if available)
of the Fund which inure to its benefit, expenses relating to trustee and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Fund in connection
with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to
shareholders.
7. Delegation of Responsibilities. The Investment Adviser may delegate
the performance of certain investment advisory services to a subadvisor.
8. Compensation. The Fund shall pay the Investment Adviser in full
compensation for services rendered hereunder an annual investment advisory fee,
payable
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monthly, of 1.00% of the Fund's average daily net assets. The average daily net
asset value of the Fund shall be determined in the manner set forth in the
Registration Statement of the Fund.
The Investment Adviser may from time to time and for such periods as it
deems appropriate voluntarily reduce its compensation hereunder (and/or
voluntarily assume expenses) for the Fund. The Investment Adviser may, at any
later date, recoup such amounts after such time as the Investment Adviser is no
longer reducing its compensation and/or assuming expenses for the Fund provided
that the aggregate expenses in the year such amounts are recouped do not exceed
any limitation to which the Investment Adviser has agreed.
9. Non-Exclusivity. The services of the Investment Adviser to the Fund
are not to be deemed to be exclusive, and the Investment Adviser shall be free
to render investment advisory and corporate administrative or other services to
others (including other investment companies) and to engage in other activities.
It is understood and agreed that officers or Partners of the Investment Adviser
may serve as officers or trustees of the Trust, and that officers or trustees of
the Trust may serve as officers or partners of the Investment Adviser to the
extent permitted by law; and that the officers and partners of the Investment
Adviser are not prohibited from engaging in any other business activity or from
rendering services to any other person, or from serving as partners, officers or
partners of any other firm or corporation, including other investment companies.
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10. Term and Approval. This Agreement shall become effective at the
close of business on the date hereof and shall remain in force and effect for
two years and thereafter from year to year, provided that such continuance is
specifically approved at least annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the vote of a
majority of the Fund's outstanding voting securities (as defined in Section
2(a)(42) of the Investment Company Act); and
(b) by the affirmative vote of a majority of the Trustees who are
not parties to this Agreement or interested persons of a party to this Agreement
(other than as Trust trustees), by votes cast in person at a meeting
specifically called for such purpose.
11. Termination. This Agreement may be terminated at any time, without
the payment of any penalty, by vote of the Trust's Board of Trustees or by vote
of a majority of the Fund's outstanding voting securities, or by the Investment
Adviser, on sixty (60) days' written notice to the other party. The notice
provided for herein may be waived by either party. This Agreement shall
automatically terminate in the event of its assignment, the term "assignment"
for the purpose having the meaning defined in Section 2(a)(4) of the Investment
Company Act.
12. Liability of Investment Adviser and Indemnification. In the absence
of willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Investment Adviser or any of
its officers, trustees or employees, it shall not be subject to liability to the
Trust or to any shareholder of the Trust for any
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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.
13. Liability of Trustees and Shareholders. A copy of the Certificate
of Trust of the Trust is on file with the Secretary of State of Delaware, and
notice is hereby given that this instrument is executed on behalf of the
trustees of the Trust as trustees and not individually and that the obligations
of this instrument are not binding upon any of the trustees or shareholders
individually but are binding only upon the assets and property of the Fund.
14. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
and that of the Investment Adviser shall be 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000.
15. Questions of Interpretation. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the Investment Company Act shall be resolved by
reference to such term or provision of the Act and to interpretations thereof,
if any, by the United States Courts or in the absence of any controlling
decision of any such court, by rules, regulations or orders of the Securities
and Exchange
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Commission issued pursuant to said Act. In addition, where the effect of a
requirement of the Investment Company Act reflected in any provision of this
Agreement is released by rules, regulation or order of the Securities and
Exchange Commission, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
THE XXXXXXXX XXXXXX TRUST, on
behalf of the Xxxxxxxx Xxxxxx Value
Fund
Attest: By:/s/Xxxxxx Xxxxxx
--------------------------------
/s/Xxxx Xxxxxxx Chairman
--------------------
XXXXXXXX XXXXXX CAPITAL
MANAGEMENT, INC.
Attest:
By:/s/Xxxxxx Xxxxxx
/s/Xxxx Xxxxxxx --------------------------------
-------------------- Chairman
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