INVESTMENT ADVISORY AGREEMENT
between
Virginia Management Investment Corporation
and
The London Company of Virginia
INVESTMENT ADVISORY AGREEMENT (the "Agreement") made this 21st day of
September, 1998, by and between Virginia Management Investment Corporation
(hereinafter referred to as the "Manager") and The London Company of Virginia
(hereinafter referred to as the "Investment Advisor"), which Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute but one instrument.
WITNESSETH
WHEREAS, the Board of Directors (the "Directors") of the Manager wishes
to enter into a contract with the Investment Advisor to render the following
services to the Manager:
To furnish research, analysis, advice and recommendations with respect
to the purchase and sale of securities and the making of investment commitments;
to place at the disposal of the Manager such statistical information and reports
as may be required and, in general, to superintend such portions of the
investments of the New Market Fund series (hereinafter the "Fund") of The World
Funds, Inc. (hereinafter "TWF") as may be made subject to the oversight of the
Investment Advisor by the Manager.
NOW THEREFORE, in consideration of the mutual agreements herein
contained, and intending to be bound, the parties agree as follows:
1. During the term of this Agreement, or any extension thereof, the
Investment Advisor will, to the best of its ability, furnish the foregoing
services.
2. As compensation, the Manager will pay the Investment Advisor for its
services an annual fee, which fee shall be payable monthly in accordance with
the following formula:
The amount of such fee shall be one half of the investment
management fee received by the Manager on the assets which are subject to the
supervision of the Investment Advisor (the "Base Fee") less one half the sum of
any reduction in such Base Fee resulting from:
a. Any reduction of the fee paid by the Fund on such assets
pursuant to any agreement relating to the reimbursement of organizational
expenses of the Fund initially advanced by and repayable to the Investment
Advisor; or
b. Any voluntary reduction of the fee paid by the Fund on such
assets, if the voluntary reduction is agreed to by the Investment Advisor in
writing in advance of such reduction.
3. This Agreement shall become effective concurrently with the
Investment Management Agreement between the Manager and the Fund, pursuant to
the approval of the shareholders of the Fund according to the provisions of the
Investment Company Act of 1940 (the "Act").
4. This Agreement shall continue for a two year period ending [ ],
2000. It may be renewed thereafter for successive periods not exceeding one year
only so long as such renewal and continuance is specially approved at least
annually by the Director's of TWF or by a vote of the majority of the
outstanding voting securities of the Fund as prescribed by the Act and provided
further that such continuance is approved at least annually thereafter by a vote
of a majority of TWF's Directors, who are not parties to such Agreement or
interested persons of such a party, cast in person at a meeting called for the
purpose of voting on such approval. The Investment Advisor shall provide the
Manager such information as reasonably may be necessary to assist the Directors
of TWF to evaluate the terms of this Agreement. This Agreement will terminate
automatically without the payment of any penalty upon termination of the
Investment Management Agreement or upon sixty days' written notice by the Fund
to the Investment Advisor that the Directors of TWF or the shareholders, by vote
of a majority of the outstanding voting securities of the Fund, as provided by
the act, has terminated the Investment Management Agreement. This Agreement may
also be terminated by the Investment Advisor without penalty upon sixty days'
written notice to the Fund.
This Agreement shall automatically terminate in the event of
its assignment or the assignment of the Investment Management Agreement unless
its continuation thereafter is approved by the Directors of TWF or the
Shareholders of the Fund as hereinbefore provided or as otherwise permitted
under applicable laws or regulations unless an exemption is obtained from the
U.S. Securities and Exchange Commission from the provisions of the Act
pertaining to the subject matter of this paragraph.
5. Subject to the supervision of TWF's Board of Directors and the
Manager, the Investment Advisor will provide a continuous investment program for
assets of the Fund under its supervision, including investment research and
management with respect to all securities and investments and cash and cash
equivalents. The Investment Advisor will determine from time to time what
securities and other investments will be purchased, retained or sold by the
Fund. The Investment Advisor will provide the services under this Agreement in
accordance with the Fund's investment objective, policies and restrictions as
stated in the Prospectus. The Investment Advisor further agrees that it:
(a) will conform with all applicable Rules and Regulations of
the SEC and will, in addition, conduct its activities under
this Agreement in accordance with regulations of any other
Federal and State agencies which may now or it the future
have jurisdiction over its activities;
(b) will place orders pursuant to its investment determinations
for the Fund either directly with the issuer or with any
broker or dealer. In placing orders with brokers or dealers,
the Investment Advisor will attempt to obtain the best net
price and the most favorable execution of its orders.
Consistent with this obligation, when the execution and
price offered by two or more brokers or dealers are
comparable, the Investment Advisor may, in its discretion,
purchase and sell portfolio securities to and from brokers
and dealers who provide the Fund with research advice and
other services, or who sell Fund shares. In no instance will
portfolio securities be purchased from or sold to the
Investment Advisor or any affiliated person of the
Investment Advisor as principal. Notwithstanding the
foregoing sentence, the Investment Advisor may arrange for
the execution of brokered transactions through an affiliated
broker dealer in conformity with policies and procedures for
such purpose if, when, and as established by the Board of
TWF;
(c) will provide, at its own cost, all office space and
facilities necessary to furnish the foregoing services to
the Fund.
6. It is expressly understood and agreed that the services to be
rendered by the Investment Advisor to the Manager under the provisions of this
Agreement are not to be deemed exclusive, and the Investment Advisor shall be
free to render similar or different services to others so long as its ability to
render the services provided for in this Agreement shall not be impaired
thereby, and provided further that the services to be rendered by the Investment
Advisor to the Manager under this Agreement and the compensation provided for in
Paragraph 2 hereof shall be limited solely to services with reference to the
Fund.
7. The Manager agrees that it will furnish currently to the Investment
Advisor all information reasonably necessary to permit the Investment Advisor to
give the advice called for under this Agreement and such information with
reference to the Fund that is reasonably necessary to permit the Investment
Advisor to carry out its responsibilities under this Agreement, and the parties
agreed that they will from time to time consult and make appropriate
arrangements as to specific information that is required under this paragraph
and frequency and manner with which it shall be supplied.
8. The Investment Advisor shall not be liable for any error of
judgement or mistake at law or for any loss suffered by the Manager or the Fund
in connection with any matters to which this Agreement relates except that
nothing herein contained shall be construed to protect the Investment Advisor
against any liability by reason of willful misfeasance, bad faith, or gross
negligence in the performance of duties or by reckless disregard of its
obligations or duties under this Agreement.
9. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Maryland.
10. Any notice to be given hereunder may be given by personal
notification or by first class mail, postage prepaid, to the party specified at
the address stated below:
a. To the Manager at:
Virginia Management Investment Corporation
Xxxx Xxxxxx Xxx 0000
Xxxxxxxx, Xxxxxxxx 00000-0000
b. To the Investment Advisor:
The London Company of Virginia
Riverfront Plaza, West Tower
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
c. To the Fund:
0000 Xxxxxx Xxx., Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
VIRGINIA MANAGEMENT INVESTMENT CORPORATION
BY: /s/ Xxxxxxxx X. Xxxxx, III
Xxxxxxxx X. Xxxxx, III
President
THE LONDON COMPANY OF VIRGINIA
BY: /s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
President
Solely for the purpose of evidencing the approval of the effectiveness of this
Agreement by the Fund in accordance with Section 15 of the Investment Company
Act of 1940, as amended, the Fund has caused this instrument to be executed by
the officer designated below as of the day and year first above written.
THE WORLD FUNDS, INC.
BY: /s/ Xxxx Xxxxx, III
Xxxx Xxxxx, III
Chairman
