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INVESTMENT ADVISORY AGREEMENT
OF
FFP NEW HORIZONS FUND, INC.
THIS AGREEMENT is made and entered into by and between FFP Advisory Services,
Inc., a Missouri corporation and FFP New Horizons Fund, Inc., a Maryland
corporation, on behalf of each of its Portfolios listed on the last page of
this Agreement, effective as of the 1st day of January, 1999.
W I T N E S S E T H
WHEREAS, FFP New Horizons Fund, Inc. is an open-end, diversified, management
investment company authorized to issue securities in series or portfolios;
and
WHEREAS, FFP New Horizons Fund, Inc. has authorized the issuance of the six
portfolios listed at the end of this Agreement, each of which has its own
distinct investment objectives and policies; and
WHEREAS, FFP New Horizons Fund, Inc. is registering with the Securities and
Exchange Commission as an investment company under the Investment Company Act
of 1940 and is registering interests in each of its portfolios with the
Commission under the Securities Act of 1933; and
WHEREAS, FFP Advisory Services, Inc. is registered with the Securities and
Exchange Commission as an investment adviser under the Investment Advisers
Act of 1940 and is in the business of acting as an investment adviser; and
WHEREAS, FFP New Horizons Fund, Inc. desires to appoint FFP Advisory
Services, Inc. as the investment adviser for each of its portfolios; and
WHEREAS, FFP Advisory Services, Inc. desires to serve as the investment
adviser for each of the portfolios of FFP New Horizons Fund, Inc.;
NOW THEREFORE, in consideration of the mutual agreements and promises
contained in this Agreement and other valuable consideration, FFP Advisory
Services, Inc. and FFP New Horizons Fund, Inc. agree as follows:
I. APPOINTMENT
FFP New Horizons Fund, Inc. (Fund) hereby appoints FFP Advisory Services,
Inc. (Adviser) as the investment adviser for each of the portfolios of the
Fund listed at the end of this Agreement (Portfolios). The Adviser agrees
that it will act as the investment adviser for each Portfolio of the Fund and
as such direct the investment of the assets of each of the Portfolios,
subject to the terms and conditions contained in this Agreement and to any
applicable provisions of the Investment Company Act of 1940 (1940 Act), the
Investment Advisers Act of 1940 (Advisers Act) and any rules and regulations
adopted by the Securities and Exchange Commission under
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such acts. The Adviser agrees that, except as required to carry out its
duties under this Agreement or otherwise expressly authorized, it is acting
as an independent contractor and not as an agent of the Fund or the
Portfolios and has no authority to act for or represent the Fund or the
Portfolios in any way.
II. DUTIES OF THE ADVISER
In carrying out the terms of this Agreement, the Adviser shall do the
following:
1. supervise all aspects of the operations of each Portfolio;
2. select the securities to be purchased, sold, exchanged, or
otherwise held by each Portfolio in accordance with the
investment objectives, policies and strategies adopted for each
Portfolio as described in the then effective registration
statement for the Fund and its Portfolios (Registration
Statement);
3. place orders with broker-dealers for all such securities and
transactions in securities on behalf of each Portfolio;
4. obtain, develop and evaluate financial, economic, statistical and
other data or pertinent information about or affecting the
securities held by or considered for each Portfolio, the issuers
of those securities and the economy in general;
5. provide economic research and securities analyses to the Board of
Directors of the Fund (Board) as the Board considers necessary or
advisable in connection with evaluating the Adviser's performance
of its duties hereunder;
6. obtain the services of, contract with, and provide instructions
to, custodians and/or subcustodians, transfer agents, dividend
disbursing agents, pricing services and other service providers
as are necessary to carry out the duties of the Adviser under
this Agreement and the terms of this Agreement;
7. prepare financial and performance reports, calculate and report
daily net asset values, and prepare any other financial data or
reports, as the Adviser from time to time, deems necessary or as
are requested by the Board;
8. provide regular reports, at least quarterly, on all of the above
to the Board in the form and to the extent requested by the
Board;
9. provide a written statement by a duly authorized officer, to be
delivered within seven (7) days after the close of each calendar
quarter, certifying that the Portfolios have been in compliance
with the provisions of Subchapter M of the Internal Revenue Code
(Code) and Section 817(h) of the Code; and
10. take any other actions, which appear to the Adviser and the Board
necessary to carry into effect the purposes of this Agreement.
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III. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF THE ADVISER
The Adviser hereby represents and warrants to the Fund and each
Portfolio as follows:
1. DUE INCORPORATION AND ORGANIZATION. The Adviser is duly
organized and is in good standing under the laws of the State of
Missouri and is fully authorized to enter into this Agreement and
carry out its duties and obligations hereunder.
2. REGISTRATION. The Adviser is registered as an investment adviser
with the Securities and Exchange Commission under the Advisers
Act, and is registered or licensed as an investment adviser under
the laws of all jurisdictions in which its activities require it
to be so registered or licensed. The Adviser shall maintain such
registration or licenses in effect at all times during the term
of this Agreement.
3. CODE OF ETHICS. The Adviser represents that it has adopted a
Code of Ethics under the provisions of Rule 17j-1 of the 1940
Act, a copy of which has been delivered to the Fund and the
Adviser agrees that, during the term of this Agreement, it shall
maintain such Code in force and that it shall notify the Board in
advance in the event the Adviser proposes to amend or replace
such Code of Ethics. FFP Advisory further certifies that
certification that it has adopted such procedures as are
reasonably necessary to prevent access persons from violating
such code of ethics.
4. INVESTMENT OF ASSETS. The Adviser will at all times invest the
assets of the Portfolios so that the Portfolios will comply with
Section 817(h) of the Code and Treasury Regulations Section
1.817-5 relating to the diversification requirements for variable
annuity or life insurance contracts and any amendments or other
modifications to such Section or Regulations; provided that the
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Adviser will be relieved of its obligations with respect to
compliance with the tax code provisions and shall be held
harmless if the noncompliance is the result of a written
direction from the Board of Directors of the Fund.
5. BEST EFFORTS. The Adviser at all times shall provide its best
judgment and effort to each Portfolio in carrying out its
obligations hereunder.
B. REPRESENTATIONS AND WARRANTIES OF EACH PORTFOLIO AND THE FUND
The Fund, on behalf of each Portfolio, hereby represents and warrants
to the Adviser as follows:
1. DUE INCORPORATION AND ORGANIZATION. The Fund has been duly
incorporated under the laws of the State of Maryland and it is
authorized to enter into this Agreement and carry out its
obligations hereunder.
2. REGISTRATION. The Fund is or will be registered as an investment
company with the Securities and Exchange Commission under the
1940 Act and shares of each Portfolio are or will be registered
or qualified for offer and sale to the public under the
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Securities Act of 1933, as amended (1933 Act) and under the
securities laws of all states where such registration is
required. Such registrations or qualifications will be kept in
effect during the term of this Agreement.
IV. DELEGATION OF RESPONSIBILITIES
A. APPOINTMENT OF SUBADVISER
Subject to the approval of the Board and the shareholders of each
Portfolio, the Adviser may enter into an agreement (Subadvisory
Agreement) with a third party, which party may or may not be affiliated
with the Adviser appointing such party as a subadviser to assist the
Adviser in carrying out its duties to each Portfolio under the terms of
this Agreement.
B. DUTIES OF SUBADVISER
Under a Subadvisory Agreement, the Adviser may delegate to a subadviser
some or all of the duties of the Adviser listed above, except that the
Adviser shall be responsible for all reporting to and interaction with
the Board.
C. DUTIES OF THE ADVISER
If the Adviser appoints a subadviser, the Adviser must:
1. monitor the investments made by the subadviser for each Portfolio
and the compliance program of the subadviser to ensure that the
assets of each Portfolio are invested in compliance with the
terms of the Advisory Agreement and the investment objectives,
policies and strategies of each Portfolio as adopted by the Board
and described in the Registration Statement;
2. Review all data and financial reports prepared by the subadviser
to assure that they are in compliance with applicable
requirements and meet the provisions of applicable laws and
regulations; and
3. oversee all matters relating to the offer and sale of each
Portfolio's shares, the Fund's corporate governance, reports to
the Board, contracts with all third parties on behalf of each
Portfolio for services to each Portfolio, reports to regulatory
authorities and compliance with all applicable rules and
regulations affecting the operations of each Portfolio.
V. RELATIONSHIPS WITH BROKER-DEALERS
A. PORTFOLIO TRADES
The Adviser shall place all orders for the purchase and sale of
portfolio securities for each Portfolio with brokers or dealers
selected by the Adviser, which may include brokers or dealers
affiliated with the Adviser. In selecting broker-dealers to execute a
particular transaction, the Adviser is authorized to select
broker-dealers that, in the Adviser's
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judgment provide best execution for the trades as determined by rules and
regulations of the Securities and Exchange Commission and as discussed
below.
B. BEST EXECUTION
The Adviser shall use its best efforts to seek to execute transactions
for a Portfolio at prices that are advantageous to the Portfolio and at
commission rates that are reasonable in relation to the benefits
received (best execution). In determining what constitutes best
execution, the Adviser is authorized to take into consideration
brokerage and research services that the broker-dealer may provide to
the Portfolio on whose behalf the trade is being made as well as to
other portfolios or accounts for which the Adviser acts as investment
adviser or over which the Adviser has investment discretion. The
Adviser may also select broker-dealers to effect transactions for a
Portfolio, which broker-dealers provide reimbursement for expenses of
the Portfolio. It is understood that under any of these circumstances,
the Adviser is authorized to place trades through broker-dealers who do
not charge the lowest rate for the trades, where those broker-dealers
also provide other services or reimbursements. The Adviser must
determine in good faith that the amount of commissions paid for
transactions is reasonable in relation to the value of the services
provided, or reimbursements made, by such broker-dealer as determined
by the rules and regulations of the Securities and Exchange Commission.
This determination shall be made based on either the services provided
to the particular Portfolio or the overall services that the
broker-dealer provides to the Adviser and its affiliates with respect
to all accounts over which they exercise investment discretion. The
Adviser shall provide the Board periodically with information relating
to the commissions paid by each Portfolio, the services and
reimbursements received and such other information as the Board
requests to evaluate whether the commissions paid appear to be in
compliance with the rules and regulations of the Securities and
Exchange Commission governing best execution.
VI. CONTROL BY THE BOARD
At all times during the term of this Agreement, it is understood that the Board
has the right to provide directives to the Adviser with respect to any duties or
obligations of the Adviser undertaken under this Agreement. Such directives
must be followed at all times, subject to the terms of the Registration
Statement and any applicable provisions of the 1940 Act, the 1933 Act, the
Advisers Act or the rules and regulations of the Securities and Exchange
Commission.
VII. COMPLIANCE WITH APPLICABLE REQUIREMENTS
In carrying out its obligations under this Agreement, the Adviser shall
at all times conform to:
1. all applicable provisions of the 1940 Act, the 1933 Act, the
Advisers Act, the Securities Exchange Act of 1934 and any
applicable rules and regulations of the Securities and Exchange
Commission;
2. all applicable provisions of the Internal Revenue Code and any
applicable rules or regulations of the Internal Revenue Service
or the Treasury Department relating to the Code;
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3. all policies and procedures of the Fund as adopted by the Board
and/or as described in the Registration Statement;
4. the provisions of the Articles of Incorporation for the Fund, as
they may be amended from time to time;
5. the provisions of the Bylaws of the Fund, as they may be amended
from time to time; and
6. any other applicable provisions of state or federal law.
VIII. COMPENSATION
Each Portfolio shall pay to the Adviser a fee equal to an annual rate of 1.5%
of the average daily net assets of each Portfolio for the services provided
by the Adviser under this Agreement. Compensation under this Agreement shall
be calculated and shall accrue daily at the rate of 1/365 of 1.5% of the
daily net assets of each Portfolio determined at the end of each day. If
this Agreement becomes effective subsequent to the first day of a month or
terminates before the last day of a month, compensation shall only accrue and
be paid for that part of the month during which this Agreement is in effect.
The fee shall be payable monthly as promptly as possible after the close of
the month for which the fee is earned. Each fee accrues for each Portfolio
separately and in no event shall any one Portfolio be responsible for the fee
payable by any other Portfolio.
IX. EXPENSES
The expenses in connection with the management of each Portfolio shall be
allocated between each Portfolio and the Adviser as follows:
A. EXPENSES OF THE ADVISER
The Adviser shall pay:
1. The salaries, employment benefits and other related costs and
expenses of those of its personnel engaged in providing
investment advice to each Portfolio, including without
limitation, office space, office equipment, telephone and postage
costs; provided, to the extent the Adviser provides
administrative services to the fund under the provisions of an
administrative services agreement, the Adviser may be reimbursed
for some of its overhead costs in providing such services as set
forth in such administrative services agreement;
2. all fees and expenses of all directors, officers and employees,
if any, of the Fund who are employees of the Adviser or an
affiliated entity, including any salaries and employment benefits
payable to those persons;
B. EXPENSES OF EACH PORTFOLIO
Each Portfolio shall pay:
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1. the fees payable by the Portfolio to the Adviser under Section
IX, A of this Agreement;
2. brokers' commissions, taxes or other transaction costs payable by
the Portfolio in connection with any transactions in securities
for the Portfolio, including portions of commissions that may be
paid to reflect brokerage research services provided to the
Adviser;
3. a proportionate share, based on net assets, of the fees and
expenses of legal counsel to the Fund, independent accountants
for the Fund and any legal counsel for the independent directors
of the Fund;
4. fees and expenses of any administrator, transfer agent,
custodian, dividend, accounting, pricing or disbursing agent
payable by the Portfolio;
5. interest and taxes payable by the Portfolio or a proportionate
share of interest and taxes payable by the Fund;
6. a proportionate share of any fees and expenses of membership in
the Investment Company Institute, the National Association of
Variable Annuities or any similar organization in which the Board
deems it advisable for the Fund to maintain membership;
7. a proportionate share of insurance premiums on property or
personnel (including officers and directors) of the Fund which
benefit the Portfolio;
8. a proportionate share of the fees and expenses of the members of
the Board, who are not interested persons as defined in the 1940
Act of the Fund or the Adviser;
9. a proportionate share of the expenses payable by the Fund of
preparing, printing and distributing proxies, proxy statements,
prospectuses, registration statements and reports to shareholders
or of holding shareholders' meetings;
10. all expenses of the Portfolio incurred in connection with the
payment of any dividend, distribution, withdrawal or redemption
by the Portfolio, whether in shares or in cash;
11. an allocable share of the costs and expenses of promoting the
sale of shares in the Portfolio, including costs of preparing
prospectuses and reports to shareholders of each Portfolio, to
the extent such costs are not charged to and paid by third
parties involved in the distribution and sale of Portfolio
shares;
12. fees payable by each Portfolio to the Securities and Exchange
Commission or to any state securities regulator or other
regulatory authority for the registration of shares of the
Portfolio;
13. a proportionate share of the costs attributable to investor
services, administering shareholder accounts and handling
shareholder relations, (including, without
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limitation telephone and personnel expenses), to the extent
such costs are not charged to third parties by the Adviser; and
14. any other ordinary, routine expenses incurred in the management
of the assets of the Portfolio, and an allocable share of any
nonrecurring or extraordinary expenses, including organizational
expenses, litigation affecting the Portfolio and any
indemnification by the Fund of its officers, directors or agents.
X. EXPENSE LIMITATION
If, for any fiscal year, the total of all ordinary business expenses payable
by each Portfolio, including all investment advisory fees but excluding
brokerage commissions, distribution fees, taxes, interest and extraordinary
expenses and certain other excludable expenses, would exceed the most
restrictive expense limits imposed by any statute or regulatory authority of
any jurisdiction in which shares of each Portfolio are offered for sale
(unless a waiver is obtained), the Adviser shall reduce its advisory fee to
the extent necessary to meet such expense limit. The Adviser will not be
required to reimburse any Portfolio for any expenses, which exceed the amount
of its advisory fee for such fiscal year. The amount of any such reduction
shall be borne by the Adviser and shall be deducted from the monthly advisory
fee otherwise payable to the Adviser during such fiscal year. For the
purposes of this paragraph, the term "fiscal year" shall exclude the portion
of the current fiscal year which shall have elapsed prior to the date hereof
and shall include the portion of the then current fiscal year which shall
have elapsed at the date of termination of this Agreement.
XI. ADDITIONAL SERVICES
Upon the request of the Board, the Adviser may perform any other accounting,
shareholder servicing or other administrative services for one or more
Portfolios or for the Fund, that are not specifically required by the terms
of this Agreement. Before such services are provided, the Adviser and the
Board must reach an agreement concerning the amount of reimbursement for
expenses and/or compensation the Adviser is entitled to receive from the
Portfolio or Portfolios for such services. The Board must make a
determination that the providing of such services by the Adviser is in the
best interests of each Portfolio and its shareholders. Payment or assumption
by the Adviser of any Portfolio expense that the Adviser is not otherwise
required to pay or assume under this Agreement shall not relieve the Adviser
of any of its obligations to each Portfolio nor obligate the Adviser to pay
or assume any similar Portfolio expense on any subsequent occasions. Such
services may include, but are not limited to, (a) the services of a principal
financial officer of the Fund (including applicable office space, facilities
and equipment) whose normal duties consist of maintaining the financial
accounts and books and records of the Fund and each Portfolio and the
services (including applicable office space, facilities and equipment) of any
of the personnel operating under the direction of such principal financial
officer; (b) the services of staff to respond to shareholder inquiries
concerning the status of their accounts, providing assistance to shareholders
in exchanges among the investment companies managed or advised by the
Adviser, changing account designations or changing addresses, assisting in
the purchase or redemption of shares; or otherwise providing services to
shareholders of each Portfolio; and (c) such other administrative services as
may be furnished from time to time by the Adviser to the Fund or each
Portfolio at the request of the Board.
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XII. NONEXCLUSIVITY
The services of the Adviser to each Portfolio are not to be deemed to be
exclusive, and the Adviser shall be free to act as an underwriter or
distributor of other securities and to provide shareholder and distribution
services to other parties, including other investment companies, and to
engage in other activities, so long as its services under this Agreement are
not impaired. It is understood and agreed that officers and directors of the
Adviser may serve as officers or directors of the Fund, and that officers or
directors of the Fund may serve as officers or directors of the Adviser or
affiliated entities to the extent permitted by law and the rules and
regulations of the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc. It is further understood that the
officers and directors of the Adviser are not prohibited from engaging in
any other business activity or from providing services to any other person,
or from serving as partners, officers, directors or trustees of any other
firm or trust, including other investment companies to the full extent
allowed by law.
XIII. TERM
This Agreement shall become effective on the date approved by the Board,
including a majority of the members of the Board who are not interested
persons of the Fund as defined by the 1940 Act, and shall remain in force and
effect through December 31, 2000, unless earlier terminated under the
provisions of Article XV.
XIV. RENEWAL
Following the expiration of its initial term, the Agreement shall
continue in force and effect from year to year, provided that the
continuance for each Portfolio is specifically approved at least
annually:
1. by the Board and by a majority of the directors of the Fund who
are not interested persons of the Fund as defined in the 1940
Act, by votes cast in person at a meeting specifically called for
the purpose of continuing this Agreement; or
2. by the vote of persons holding a majority of the outstanding
voting securities of the Portfolio as determined by rules and
regulations of the Securities and Exchange Commission; or
3. by such other provisions of the 1940 Act or rules and regulations
of the Securities and Exchange Commission as may hereafter be
adopted.
XV. TERMINATION
This Agreement may be terminated at any time, for any Portfolio,
without the payment of any penalty, on sixty (60) days' written notice
to the other party, by:
1. the vote of a majority of the Board; or
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2. by the vote of persons holding a majority of the outstanding
voting securities of the Portfolio as determined by rules and
regulations of the Securities and Exchange Commission; or
3. by the Adviser.
This Agreement shall automatically terminate in the event of its
"assignment," as that term is defined in the 1940 Act. The 60 days
notice required for termination may be waived, in writing, by the party
to be notified. The termination of this Agreement with respect to any
one Portfolio shall not affect the continuation of the Agreement with
respect to all other Portfolios.
XVI. AMENDMENT
This Agreement may be amended by a writing approved by the Board; provided,
however, all material amendments must be approved by a majority of the
directors of the Fund who are not interested persons of the Fund as defined
in the 1940 Act and by the vote of persons holding a majority of the
outstanding shares of the Fund or the applicable Portfolio as determined by
rules and regulations of the Securities and Exchange Commission.
XVII. LIABILITY
The Adviser shall be liable to each Portfolio and shall indemnify each
Portfolio for any losses incurred by each Portfolio, whether in the purchase,
holding or sale of any security or otherwise, to the extent that such losses
resulted from an act or omission on the part of the Adviser or its officers,
directors or employees, that is found to involve willful misfeasance, bad
faith or negligence, or reckless disregard by the Adviser of its duties, or
in connection with the services rendered by the Adviser, under this
Agreement.
XVIII. NOTICES
Any notices under this Agreement shall be in writing, addressed and
delivered, mailed postage paid, or sent by other delivery service, or by
facsimile transmission to each party at such address as each party may
designate for the receipt of notice. Until further notice, such addresses
shall be
THE ADVISER: THE PORTFOLIOS THE FUND:
FFP Advisory Services, Inc. c/o FFP New Horizons Fund, Inc. FFP New Horizons Fund Inc.
00000 Xxxxxx Xxxx 00000 Xxxxxx Xxxx 00000 Xxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000 Xxxxxxxxxxxx, XX 00000 Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx Attn: Xxxxx Xxxxxxxxx Attn: Xxxxx Xxxxxxxxx
Telephone: 000-000-0000 Telephone: 000-000-0000 Telephone: 000-000-0000
Fax: 000-000-0000 Fax: 000-000-0000 Fax: 000-000-0000
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XIX. INTERPRETATION
This Agreement shall be governed by the laws of the State of Missouri. Any
term or provision of this Agreement which is the same as or derived from a
term or provision included in the 1940 Act shall be interpreted by referring
to the 1940 Act and to interpretations of such Act by the United States
Courts or by rules, regulations or orders of the Securities and Exchange
Commission. In addition, any provision of this Agreement that is included
based on or as a result of a requirement of the 1940 Act, shall be deemed
amended or deleted to the extent that the requirement on which the provision
is based is amended or rescinded in the future by rule, regulation or order
of the Securities and Exchange Commission.
XX. SERVICE XXXX
The service xxxx of the Fund and each Portfolio and the name "FFP" have been
adopted by the Fund with the permission of First Financial Planners, Inc. and
their continued use is subject to the right of First Financial Planners, Inc.
to withdraw this permission in the event the Adviser or another subsidiary or
affiliated corporation of First Financial Planners, Inc. should not be the
investment adviser of any Portfolio.
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement as of the
date written in the first paragraph hereof.
FFP NEW HORIZONS FUND, INC. FOR ITSELF AND ON BEHALF OF ITS PORTFOLIOS:
FFP Odyssey Venus Portfolio
FFP Century Venus Portfolio
FFP Discovery Venus Portfolio
FFP Millennium Venus Portfolio
FFP Millennium Mercury Portfolio
FFP Discovery Mercury Portfolio
By: /s/ XXX X. XXXXX
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Xxx X. Xxxxx, President
Attest: /s/ XXXXX X. XXXXXXXXX
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Xxxxx X. Xxxxxxxxx, Secretary (SEAL)
FFP ADVISORY SERVICES, INC.
By: /s/ XXX X. XXXXX
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Xxx X. Xxxxx, President
Attest: /s/ XXXXXX X. XXXXXXXXX, XX.
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Xxxxxx X. Xxxxxxxxx, Xx., Secretary (SEAL)
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