FORM OF INVESTMENT ADVISORY AGREEMENT OF
THE XXXXXXXX FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of October 28, 2015 between The Xxxxxxxx
Funds, Inc., a Maryland corporation (the "Fund"), and Sterling
Capital Management LLC, a North Carolina limited liability
company (the "Adviser").
WHEREAS, the Adviser serves as investment adviser to the
Fund pursuant to an interim investment advisory agreement
between the Fund and the Adviser dated as of August 1, 2015 (the
"Current Agreement");
WHEREAS, the Current Agreement will automatically terminate
upon the approval of this agreement (the "Agreement") by the
Fund's shareholders or approval of the reorganization of the
Fund into Sterling Capital Xxxxxxxx Small Cap Value Fund by the
Fund's shareholders; and
WHEREAS, the Fund and the Adviser wish to enter into this
Agreement to replace the Current Agreement upon termination of
the Current Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, and intending to be legally bound
hereby, it is agreed among the parties hereto as follows:
SECTION 1. Investment Advisory Services.
The Fund hereby engages the Adviser to act as its
investment adviser subject to the terms and conditions herein
set forth. The Adviser shall use its staff and other facilities
to conduct and maintain a continuous review of the Fund's
portfolio of securities and investments, and shall from time to
time recommend to the Fund what securities, in the Adviser's
opinion, should be purchased or sold by the Fund, what portion
of the assets of the Fund should remain uninvested, and the
extent to which the Fund should otherwise use its investment
powers. In conducting such review and making such
recommendations, the Adviser shall be guided by the Fund's
investment policies as delineated and limited by the statements
contained in documents filed with the Securities and Exchange
Commission as amended from time to time, by policies adopted by
the Fund's Board of Directors (the "Board"), and by the
provisions of the Investment Company Act of 1940 and the rules
promulgated thereunder, so that at all times the Fund shall be
in compliance with its policies and the Investment Company Act
of 1940. The Fund agrees to supply the Adviser with copies of
all such documents and to notify the Adviser of any changes in
the Fund's investment policies and restrictions.
In rendering such investment advisory services to the Fund
pursuant to this Agreement, the Adviser may at its own expense
employ, retain or otherwise avail itself of the services or
facilities of other persons or organizations, for the purpose of
providing the Adviser or the Fund with such statistical and
other factual information, such advice regarding economic
factors and trends, such advice as to occasional transactions in
specific securities and such other information, advice or
assistance as the Adviser may deem necessary, appropriate or
convenient for the discharge of the Adviser's obligations
hereunder or otherwise helpful to the Fund.
The Adviser and any person performing executive,
administrative or trading functions for the Fund whose services
were made available to the Fund by the Adviser is authorized to
recommend that the Fund pay, or cause the Fund to pay, brokerage
commissions to any member of a securities exchange or securities
broker or dealer which may be in excess of the amount which
another member of such an exchange or broker or dealer would
have charged for effecting such transaction, if the Adviser or
such officer or employee determines in good faith that such
amount of commission is reasonable in relation to the value of
the brokerage and research services (as such term is defined in
Section 28(e) (3) of the Securities Exchange Act of 1934 and the
rules, regulations and releases of the Securities and Exchange
Commission thereunder) provided by such member or broker or
dealer with respect to the Adviser's services hereunder, viewed
in terms of either that particular transaction or the Adviser's
overall responsibilities with respect to the Fund.
SECTION 2. Resumes and Reports, Etc.
The Adviser should maintain a continuous record of all the
investments and securities which comprise the Fund's portfolio
and shall furnish to the Board, at any time it so requests, a
resume of such portfolio in the form prescribed by the Board.
The Adviser shall also render to the Board, at its regularly
scheduled meetings, and at such other times as the Board may
request, a report on all matters pertaining to the Adviser's
services hereunder, in the form prescribed by the Board. In
addition, the Adviser shall furnish the Fund with such reports
and other data as the Board shall request, including, without
limitation, industry surveys, news of recent developments,
statistical data, and such other information as may keep the
Board properly informed on developments relating to the Fund's
portfolio, or similar data relating to securities which the
Adviser recommends for inclusion in the portfolio of the Fund.
SECTION 3. Other Duties and Services.
The Adviser, or any other entity approved by the Fund's
Board, whether or not such entity is affiliated with the Adviser
and directors and officers of the Fund, shall keep the books and
financial records of the Fund, and on behalf of the Fund shall
compute the net asset value of the Fund's shares (in accordance
with any instructions of the Board) at such times as the Board
may direct. In compliance with the requirements of Rule 31a-3 of
the Rules and Regulations of the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended,
the Adviser hereby agrees it will surrender and will cause any
other entity that maintains the Fund's books and financial
records hereunder to surrender promptly to the Fund any of such
records upon the Fund's request, and the Adviser further agrees
to preserve for the periods prescribed by Rule 31a-2 of such
Rules any such records as are required to be maintained by Rule
31a-1 thereof. If requested to provide such services, the
Adviser or such other entity may obtain, at the Fund's expense,
pricing information from brokers, dealers or others to assist
the Adviser or such other entity in computing such net asset
value, and the Adviser or such other entity shall perform such
other services as are reasonably incidental to the foregoing
duties. The Adviser or such other entity shall furnish to the
Fund and to such other persons as the Fund may direct, any
statements with respect to the net asset value of the Fund and
the net asset value per share, at such times, and in such forms,
as the Fund may prescribe.
When and if the Board so requests, the Adviser or such
other entity shall furnish the Fund with the services of a
person or persons satisfactory to the Fund whose duties shall
include (except for the legal and auditing aspects thereof) the
supervision of the Fund's financial statements and reports, the
preparation of reports to shareholders and others, and any
statements or reports required by regulatory authorities of the
United States, or states thereof in which the Fund has
registered or qualified its shares for sale.
In addition, the Adviser shall furnish, or arrange and pay
for others to furnish to the Fund, such office space and
facilities, including, without limitation, stenographic,
telephone, telegraphic, mailing, and other facilities as the
Board shall request in connection with the operations of the
Fund. It is the intent of this Agreement that through the staff
of the Adviser or of another entity furnishing such services,
the Adviser or such other entity shall supply such services as
are deemed by the Board to be necessary or desirable and proper
for the continuous operation of the Fund. However, neither the
Adviser nor such other entity shall be required to perform
(a) those services customarily performed by members of the
Board; or (b) those services customarily performed by the
custodian, transfer agent, registrar, dividend disbursing agent,
independent accountants, brokers, dealers or legal counsel.
SECTION 4. Multiple Capacities.
The Fund understands that the Adviser may act in one or
more capacities on behalf of other investment companies and
customers. While information and recommendations supplied to the
Fund shall, in the Adviser's judgment, be appropriate under the
circumstances and in light of the investment objective of the
Fund, they may be different from the information and
recommendations supplied by the Adviser or such affiliate to
other investment companies and customers. The Adviser shall give
the Fund equitable treatment under the circumstances in
receiving information, recommendations and any other services
requested of the Adviser, but the Adviser shall not be required
to give preferential treatment to the Fund as compared with the
treatment given by the Adviser to any other investment company
or customer.
SECTION 5. Payment of Expenses.
The Adviser shall assume and pay all of its costs and
expenses incurred in performing its duties under this Agreement
except that the Fund shall reimburse the Adviser, or such other
entity approved by the Board, whether or not such entity is
affiliated with the Adviser and directors and officers of the
Fund, monthly for (i) the Adviser's or such other entity's costs
in providing any equipment used for the Fund's operations, and
(ii) to the extent the Adviser or such other entity are required
or requested by the Fund to provide such services and the
Adviser or such other entity so provides them, the costs of the
Adviser or charges of such other entity in providing
administrative and accounting services to the Fund including
costs or charges, as the case may be, without limitation, for
maintaining financial records and bookkeeping, in connection
with the daily computation of net asset value per share, in
connection with registering or qualifying the Fund or shares of
the Fund for sale under applicable federal or state securities
laws, in connection with any annual or special meeting of
stockholders, and the allocable portion of the compensation paid
to employees of the Adviser for furnishing the above-mentioned
services to the Fund; provided that, the reimbursement to the
Adviser for any such costs shall not exceed an amount which
would cause the Fund's ratio of net operating expenses to
average net assets during any fiscal year to exceed two percent
(2%). The operating expenses of the Fund shall be accrued daily
and an interim computation shall be made at the end of each
month with respect to such limitation of expenses for the
current fiscal year. If the expenses do not exceed the
limitation and the Adviser has previously made payments to the
Fund with respect to the current fiscal year, the Adviser shall
be entitled to the return of such payments up to the amount of
the difference between the limitation and the expenses. Any
final adjustment for the fiscal year shall be made promptly
following the completion of the Fund's annual audit for such
year. The Fund agrees to assume and pay, or reimburse the
Adviser or such other entity for, the Fund's operating expenses,
including, without limitation, taxes, interest charges, fees of
its attorneys, independent accountants, accounting services
agents, custodians, transfer agents and registrars, certain
directors' fees and costs incurred in producing shareholder
reports and proxy materials. The Fund will also pay brokerage
commissions on its portfolio transactions.
SECTION 6. Compensation for Services.
As compensation for the Adviser's services, the Fund will
pay to the Adviser, except as otherwise provided in Section 5
hereof, on the last day of each month, a fee at the annual rate
of 3/4 of 1% of the Fund's average daily net asset value. The
fee shall be prorated for any portion of a month during which
the fee is payable.
The net asset value of the Fund shall be defined as the
total assets of the Fund, less its liabilities, and shall be
determined in accordance with instructions of the Board.
SECTION 7. Liability of the Investment Adviser.
The Adviser shall be liable only for willful misfeasance,
bad faith or gross negligence in the performance of its duties
or reckless disregard of its obligations under this Agreement,
and nothing herein shall protect the Adviser against any such
liability to the Fund or its shareholders. The Adviser shall not
be liable for the acts and omissions of any agent (other than a
director, officer or employee of the Adviser) employed by the
Adviser, nor for those of any bank, trust company, broker or
other person with whom or into whose hands any moneys, shares of
the Fund or securities and investments may be deposited or come,
pursuant to the provisions of this Agreement. The Adviser shall
not be liable for any defects in title of any property acquired,
nor for any loss unless it shall occur through the Adviser's own
willful default.
SECTION 8. Duration and Termination of this Agreement.
This Agreement shall become effective upon (i) approval by
both (x) the Board of Directors of the Fund, including a
majority of those directors who are not parties to this
Agreement or interested persons of any party hereto, in the
manner provided in section 15(c) of the Investment Company Act
of 1940, as amended (the "1940 Act"), and (y) the holders of a
majority of the outstanding voting securities of the Fund and
(ii) upon completion of the Closing (the "Effective Date"), and
shall continue in effect for no more than two years after the
Effective Date. Thereafter, this Agreement may continue in
effect only if such continuance is approved at least annually by
(i) the Fund's Board of Directors, or (ii) the vote of a
majority of the outstanding voting securities of the Fund; and
in either event by a vote of a majority of those directors of
the Fund who are not parties to this Agreement or interested
persons of any such party in the manner provided in section
15(c) of the 1940 Act. This Agreement may be terminated by the
Fund at any time, without the payment of any penalty, by the
Board of Directors of the Fund or by vote of the holders of a
majority of the outstanding voting securities of the Fund on 60
days' written notice to the Adviser. This Agreement may be
terminated by the Adviser at any time, without the payment of
any penalty, upon 60 days' written notice to the Fund. This
Agreement will automatically terminate in the event of its
assignment. Any notice under this Agreement shall be given in
writing, addressed and delivered or mailed postpaid, to the
other party at the principal office of such party.
SECTION 9. Use of the Name "Xxxxxxxx" by the Fund.
The Adviser hereby consents to use by the Fund of the name
"Xxxxxxxx" in its corporate name. The Fund shall be entitled to
use such name so long as the Adviser acts as investment adviser
to the Fund. The Fund agrees that its use of the name "Xxxxxxxx"
in its corporate name shall not prevent the Adviser or any other
corporation affiliated with it, or its successors or assigns,
from using or permitting the use of the name "Xxxxxxxx," alone
or with any other word or words, for, by or in connection with
any other entity or business, whether or not the same directly
or indirectly competes or conflicts with the Fund or its
business.
In the event that the Adviser shall cease to act as
investment adviser to the Fund, the Fund shall cease to use the
name "Xxxxxxxx," and the Fund shall take all appropriate or
necessary steps to change its corporate name and to terminate
use of the name "Xxxxxxxx" in connection with its business;
provided, however, at the sole option of the Adviser, the Fund
may continue to use the name "Xxxxxxxx" so long as all
prospectuses and other material intended for investors is
appropriately marked to indicate that the Adviser is no longer
the Fund's investment adviser.
SECTION 10. Definitions.
When used in this Agreement, the terms "assignment,"
"interested person" and "vote of a majority of the outstanding
shares" shall have the meanings given such terms in Sections
2(a) (4), 2(a)(19) and 2(a) (42), respectively, of the
Investment Company Act of 1940, as amended.
SECTION 11. Notices.
Until further notice to the other party, it is agreed that
the address of the Fund and of the Adviser to which any notice
hereunder is to be delivered or mailed shall be 000 Xxxxx Xxxxxx
Xxxx, Xxxxx 000, Xxxx xx Xxxxxxx, XX 00000.
SECTION 12. Concerning Applicable Provisions of Law, Etc.
This Agreement shall be subject to all applicable
provisions of law, including, without limitation, the applicable
provisions of the Investment Company Act of 1940, as amended. To
the extent that any provisions herein contained conflict with
any such applicable provisions of law, the latter shall control.
The laws of the Commonwealth of Pennsylvania shall be
controlling and shall govern the construction, validity and
effect of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed as of the day and year first above
written.
THE XXXXXXXX FUNDS, INC.
Attest: By:
Secretary Xxxxxx X. Xxx Xxxx
President
STERLING CAPITAL MANAGEMENT LLC
Attest: By:
Secretary
