February 10, 1998
Fox Asset Management, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxx Xxxxxx 00000-0000
INVESTMENT ADVISORY AGREEMENT
Investors Research Fund, Inc. (the "Fund") is an open- end, diversified
management investment company registered under the Investment Company Act of
1940, as amended (the "Act"). The Fund is engaged in the business of investing
and reinvesting its assets in securities of the type, and in accordance with the
limitations, specified in the Prospectus, Application and Statement of
Additional Information dated January 30, 1998, which is a part of its effective
Registration Statement filed with the U.S. Securities and Exchange Commission,
all in such manner and to such extent as may from time-to-time be authorized by
the board of directors of the Fund. The Fund hereby retains you as investment
adviser for the consideration and upon the terms and conditions hereinafter set
forth:
1. The Fund employs you to manage the investment and reinvestment of its
assets and, without limiting the generality of the foregoing, to
supervise the investment affairs of the Fund, to make reviews of its
investments, and to effect investment changes whenever such changes
appear to be desirable. In addition, you are to perform all
statistical, research and analysis services necessary to the
performance of your duties as investment adviser. Such services shall
be rendered directly to the Fund.
2. It is understood that you will from time-to-time employ or associate
with yourself such persons as you believe to be particularly fitted to
assist you in the execution of your duties hereunder, the cost of
performance of such duties to be borne and paid by you. You will
provide adequate and suitable office space for the performance of your
duties hereunder. You will provide to the Fund in writing, promptly
following request, such information regarding itself and the Fund's
investments as shall be necessary for the preparation of periodic
reports to the Fund's stockholders and such other documents and papers
as may be required to comply with applicable laws and the rules,
regulations and other requirements of the Securities and Exchange
Commission or other federal, state or local governmental agencies. You
agree to permit inspection by officers and directors of the Fund, upon
reasonable notice and at reasonable times, of all records, books,
correspondence, stockholder lists, and other papers and documents
maintained or prepared by you in connection with the Fund's business
and affairs. Furthermore, you agree to maintain, preserve and make
available all such records in accordance and compliance with Section
31 of the Act, Section 204 of the Investment Advisers Act of 1940 (as
amended) and all governmental regulations and requirements, as
applicable to you in your capacity as investment adviser to the Fund.
3. You will make decisions with respect to all purchases and sales of
securities for or on account of the Fund. To carry out such decisions,
you are hereby authorized, as the Fund's agent and attorney-in-fact,
for the Fund's account, at the Fund's investment risk, and in the
Fund's name, to place orders for the investment and reinvestment of
its assets. In all purchases, sales and other transactions in
securities for the Fund, you are authorized to exercise full
discretion and act for the Fund in the same manner and with the same
force and effect as the officers and directors might or could do with
respect to such purchases, sales or other transactions, as well as
with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
In this regard, however, it is understood that you will not be making
purchases and sales of securities on behalf of the Fund in your
capacity as a broker- dealer. Notwithstanding the foregoing, all
procedures for making changes in the Fund's portfolio of securities,
including procedures for the placing and confirmation of orders with
brokers and dealers, shall at all times be and remain under the
direction and control of the Fund's board of directors and officers.
You will, however, maintain such records and perform such duties in
connection with the Fund's portfolio of securities as may be
reasonably requested by the Fund, and as may be required by applicable
governmental laws and regulations.
4. The Fund shall provide you with all information under its control
which may be reasonably required for the performance of your duties
hereunder, and agrees to advise you promptly of any changes in the
Fund's policies which may affect any of your obligations hereunder.
Except as otherwise specifically provided hereinabove, you shall have
no obligation to provide supervisory or administrative services in
connection with the general business and affairs of the Fund, it being
expressly agreed and understood that the Fund shall employ other
persons to maintain its own books and records, prepare and file with
the Securities and Exchange Commission and applicable governmental and
quasi-governmental authorities periodic reports and amendments to the
Fund's Registration Statement, prepare notices of stockholders'
meetings, declarations of dividends and other communications from the
Fund to its stockholders, and to operate and conduct the general
business and administrative affairs of the Fund. If, however, you or
your affiliates shall render any such services at the request of the
officers or directors of the Fund, the Fund will pay to you or such of
your affiliates the fully burdened cost of such personnel for
rendering such services to the Fund at such rates as shall from
time-to-time be agreed upon between you and the Fund.
5. You will report to the board of directors of the Fund at each
regularly scheduled meeting thereof all changes in the Fund's
portfolio since the prior report, and will furnish to the Fund from
time-to-time such information as you may believe appropriate
concerning the Fund's portfolio, whether concerning the individual
companies whose securities are included in the Fund's portfolio, the
industries in which they are engaged, or the conditions prevailing in
the economy generally. You will also furnish to the Fund such
statistical and analytical information with respect to securities in
its portfolio as you may believe appropriate or as the board of
directors may reasonably request. In making purchases and sales of
securities, you will bear in mind the policies set from time-to-time
by the board of directors of the Fund as well as the limitations
imposed in the Fund's Registration Statement, the Act, and the
Internal Revenue Code of 1986, as amended, in respect of regulated
investment companies.
6. All expenses and charges incident to the operation of the Fund,
including, but not limited to, (a) payment of the fees payable to you
under Paragraph 7, (b) custody, transfer and dividend disbursing
expenses, (c) directors' fees and officers' compensation, (d) legal
and auditing expenses, (e) clerical, accounting and other office costs
of the Fund, (f) the cost of personnel providing services to the Fund,
as provided in Paragraph 4, (g) costs of printing the Fund's
prospectus and reports to the stockholders, (h) costs of maintenance
of the Fund's corporate existence and qualifications to do business,
(i) interest and bank charges, taxes, brokerage fees and commissions,
(j) costs of stationery and supplies, (k) expenses and fees relating
to registration and filing with the Securities and Exchange Commission
and state regulatory authorities, and (l) such promotional expenses as
may be contemplated by an effective plan pursuant to Rule 12b-1 under
the Act, providing, however, that payment by the Fund of such
promotional expenses shall be in an amount, and in accordance with the
procedures, set forth in such plan, and excepting those expenses to be
paid by you as an incidence of the investment advisory services to be
performed by you hereunder, shall be borne and paid by the Fund either
directly or by way of reimbursement to you for any such expenses you
have advanced pursuant to agreement with the Fund.
7. In consideration of the services to be rendered by you, the Fund
agrees to pay to you a quarterly fee equal to 0.125% of the net assets
of the Fund calculated as an average of the net assets of the Fund as
of the close of each month of the Fund's fiscal year; said fee not to
exceed 0.5% annually of the average net assets of the Fund calculated
as at the close of each month of the Fund's fiscal year. The value of
the Fund's assets shall be determined in accordance with Section
2(a)(41) of the Act as of the last business day of each month.
8. We shall expect of you, and you will give us the benefit of your best
judgment and effort in rendering services to the Fund. The Fund agrees
as an inducement to your undertaking these services that neither you,
nor your officers, directors, shareholders, employees or agents, or
any affiliates of the foregoing shall be liable for any mistake of
judgment, or opinion relating to portfolio and investment matters of
the Fund, except for lack of good faith, provided that nothing herein
shall be deemed to protect, or purport to protect, you against any
liability to the Fund or its stockholders to which you would otherwise
be subject by reason of willful misfeasance, bad faith or negligence
in the performance of your obligations and duties hereunder, or by
reason of your reckless disregard of your obligations and duties
hereunder.
9. The Fund hereby continuously represents that (a) the shares of the
Fund have been and will continue to be offered and sold in compliance
with all applicable federal and state securities laws including,
without limitation, the Act, the Securities Act of 1933, as amended
and the Securities Exchange Act of 1934, as amended, (b) the Fund is,
and at all times during the term of this Agreement will be, an
open-end diversified management investment company duly registered and
in good standing under all applicable federal and state laws,
including, without limitation, the Act, (c) the Registration Statement
and prospectus pursuant to which the shares of the Fund have been and
will be offered and sold will not contain any untrue statement of
material facts or omit to state a material fact required to be stated
therein or necessary to make the statements made therein not
misleading, provided, however, that this clause (d) shall not apply to
statements in or omissions from such Registration Statement or
prospectus made in reliance upon and in conformity with information
furnished to the Fund in writing by you which is incorporated
accurately into such Registration Statement or prospectus, and (e)
this Agreement has been approved by the board of directors of the
Fund, including a majority of the directors who are not interested
persons thereof. The Fund agrees to indemnify, defend and hold you,
and your officers, directors, shareholders, and employees, and their
respective affiliates, harmless from and against any and all loss,
cost, damage, liability and expense (including, without limitation,
reasonable attorneys' fees and costs) which you or any of them may
suffer, sustain or incur as a result of the Fund's breach of the
foregoing.
10. You are to have no authority to make, and agree not to make, any
representation on behalf of the Fund. You will not give advice or make
recommendations concerning the Fund to any of your other clients
except in your capacity as investment counsel for such other clients
and not on behalf of the Fund. All powers of control over the Fund's
investments shall at all times be and remain in the Fund's directors
and officers.
11. This Agreement shall become effective as of the date of approval of
this Agreement by the vote of a majority of the outstanding voting
securities of the Fund or upon termination of the current advisory
agreement, whichever is later, and shall continue in effect until the
first anniversary of such date, and thereafter for successive
twelve-month periods (computed from each anniversary date), provided
that such continuance is specifically approved at least annually by
the board of directors of the Fund or by vote of a majority of the
outstanding voting securities (as defined in Section 2(a)(42) of the
Act) of the Fund, and, in either case, by a majority of the board of
directors who are not parties to this Agreement or interested persons
(as defined in Section 2(a)(19) of the Act) of any such party (other
than as an officer or director of the Fund); provided, further,
however, that if the continuation of the Agreement is not approved,
you may continue to render to the Fund the services described herein
in a manner and to the extent permitted by the Act and the rules and
regulations thereunder. This Agreement may be terminated, without the
payment of any penalty, by a vote of a majority of the outstanding
voting securities (as defined in the Act) of the Fund, or by a vote of
a majority of the board of directors on sixty (60) days' written
notice to you, or by you on sixty (60) days' written notice to the
Fund. The Fund hereby agrees to promptly call a meeting of the
stockholders of the Fund to consider and vote upon the approval of
this Agreement; and to prepare and prosecute any amendments to the
Registration Statement necessitated by this Agreement. If, within
ninety (90) days after the date hereof, this Agreement shall not have
been approved by the holders of a majority of the shares of the Fund,
you will be entitled to terminate this Agreement upon notice to the
Fund and will be entitled to any Fees earned by you as provided in
Paragraph 7.
12. The Fund represents that the investment advisory contract with its
past adviser will be terminated, without payment of any penalty, by
the board of directors of the Fund effective within sixty (60) days of
notice of termination.
However, it is recognized that this contract must be approved by the
Fund's shareholders pursuant to Section 15 of the Investment Company
Act of 1940 before it can become effective. The Fund will proceed
promptly to solicit such approval upon signature of this agreement by
Fox Asset Management, Inc. ("Fox").
13. This Agreement may not be transferred, assigned, sold, or in any
manner hypothecated or pledged by you, and this Agreement shall
terminate automatically in the event of any such transfer, assignment,
sale, hypothecation or a pledge by you. The terms, "transfer",
"assignment" and "sale" as used in this paragraph shall have the
meanings ascribed to them by governing law and interpretations thereof
contained in rules or regulations promulgated by the Securities and
Exchange Commission thereunder. You may assign this Agreement in a
transaction in which you rely bona fide upon Rule 2a-6 under the Act
upon notice to the Fund.
14. In the event this Agreement is terminated for any reason and no
subsequent agreement is entered into between you and the Fund, all
fees and all other monies due to you hereunder shall be prorated as of
the effective date of termination and paid within five (5) business
days thereafter. Upon such termination, or within a reasonable time
thereafter, you shall make available to the Fund all books, records,
correspondence, stockholders' lists and other papers and documents
pertaining to the Fund which are in your possession or control. In the
event that the Fund shall request that copies of any relevant records
be delivered to it, the Fund shall pay for the copying of those
records. In this regard, it is understood that it is your present
practice to retain permanently all of your records without any
destruction of such records. You agree to notify the Fund immediately
of any change in that policy. The Fund hereby agrees that, during the
term of the Agreement and for a period of one (1) year following the
termination of this Agreement, it will not employ, solicit for
employment, or engage or solicit for engagement, directly or
indirectly, any person employed by you or any of your affiliates at
any time within one (1) year preceding the proposed date of employment
or engagement (or any firm with whom such a person is an associated
person) without your express written consent.
15. Except to the extent necessary to enable you to perform your
obligations hereunder, nothing herein shall be deemed to limit or
restrict your right, or the right of any of your officers, directors,
shareholders, or employees, or any affiliates thereof, to engage in
any other business or to devote time and attention to the management
or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other
corporation, firm, individual, trust or association.
16. The Fund acknowledges and agrees that you may obtain from
broker-dealers approved by the board of directors of the Fund
supplemental research, market and statistical information for use with
respect to the Fund. The term "research, market and statistical
information" includes, without limitation, advice as to the value of
securities, the advisability of investing, purchasing and selling
securities, and the availability of securities or purchasers or
sellers of securities, and furnishing analyses and reports concerning
issues, industries, securities, economic factors and trends, portfolio
strategy and performance of accounts. The Fund understands that such
information will be in addition to and not in lieu of the services
required to be performed by you under this Agreement and that your
expenses will not necessarily be reduced as a result of the receipt of
such information. The Fund also acknowledges that such information may
be useful to you and your affiliates in providing services to clients
other than the Fund and that not all such information will at all
times be used by you in connection with the Fund. Finally, the Fund
acknowledges that information provided to you and your affiliates by
brokers and dealers through whom other clients of yours effect
securities transactions may be useful to you in providing services to
the Fund. Accordingly, the Fund understands that investment decisions
for the Fund may not, at all times, be made independently from those
of other accounts managed by you and your affiliates. In furtherance
of the foregoing, the Fund agrees that, when the same securities are
purchased for or sold by the Fund and any such other accounts you
shall allocate such purchases and sales in a manner deemed by you to
be fair and equitable to all of the accounts, including the Fund, and,
subject to your obtaining the best price and execution for your
clients (which shall not necessarily mean the lowest commission
available), brokers and dealers providing research, market and
statistical information may be engaged to effect transactions on
behalf of the Fund.
17. Fox makes the following representations on both a present and
continuing basis:
X. Xxx currently has a Code of Ethics meeting the requirements of 17
CFR 270.17j-1. Fox is currently enforcing that code and will
continue to maintain and enforce the code in accordance with both
its letter and spirit.
X. Xxx will be in compliance with all requirements to have its
record-keeping and administrative systems capable of handling the
Year 2000 demands at the time such capability is required. Upon
meeting such requirements, Fox will provide written certification
to the Fund that it has the requisite capability in place.
X. Xxx has competent emergency procedures in place to assure
continuing competent management of the Fund's portfolio in the
event of an emergency.
X. Xxx will provide a prompt report to the Fund of any development
which does or might affect its ability to service the Fund in
accordance with this agreement, including any developments which
may be covered under Section 9 of the Investment Company Act, as
amended, or Rule 206(4)-4 under the Investment Advisers Act.
18. The Fund agrees that it will nominate to its shareholders for election
as directors of the Fund two (2) qualified persons recommended by Fox
as qualified and desirable to serve in such positions. In this
respect, Fox agrees that said persons will abstain from votes taken
with respect to selection, tenure and employment of the Fund's
investment adviser.
19. All notices and communications to be made hereunder shall be in
writing and shall be delivered to the Fund or to you, as the case may
be, by U.S. certified mail, return receipt requested, postage prepaid,
by commercial courier or by personal delivery, in each case to the
address set forth in this Agreement or to such other person or address
as shall be identified by written notice as provided herein. Any
notice or communication sent by mail as aforesaid, shall be deemed
delivered three (3) business days after deposit in the U.S. mail; any
notice sent personally or by commercial courier shall be deemed
delivered upon confirmation of receipt at such address.
20. This Agreement shall be governed by and construed in accordance with
the laws of the State of California. If any provision of this
Agreement shall be held or made invalid by a court decision, statute,
rule or otherwise, the remainder shall not be thereby affected.
If the foregoing is satisfactory to you, please indicate your acceptance by
signing below.
Very truly yours,
INVESTORS RESEARCH FUND, INC.
By: Xxxx X. Xxxxxxxxx
Title: President
ACCEPTED THIS 12th DAY OF February, 1998
FOX ASSET MANAGEMENT, INC.
By:J. Xxxxx Xxxxxxxxxx
Title: President
