EXHIBIT 5
XXXXXXXX SERIES TRUST II
INVESTMENT ADVISORY AGREEMENT
Agreement, dated and effective as of December 9, 1997, between Xxxxxxxx
Series Trust II, a Delaware business trust (the "Trust") and Xxxxxxxx Capital
Management International Inc., a New York corporation (the "Adviser").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Investment
Company Act");
WHEREAS, the Adviser provides investment advice and is registered with
the Securities and Exchange Commission (the "SEC") as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Advisers Act") and
is registered with the United Kingdom Investment Management Regulatory
Organisation ("IMRO");
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory services to the Trust on behalf of Xxxxxxxx All-Asia Fund (the "Fund")
in the manner and on the terms hereinafter set forth; and
WHEREAS, the Adviser is willing to render such investment advisory
services to the Trust;
NOW THEREFORE, in consideration of the promises and covenants
hereinafter contained, the Trust and the Adviser hereby agree as follows:
1. ENGAGEMENT OF THE ADVISER. The Trust hereby employs the Adviser to
act as the Fund's investment adviser and to provide the investment advisory
services described below, subject to the supervision of the Board of Trustees of
the Trust, for the period and on the terms and conditions set forth in this
Agreement. The Adviser hereby accepts such employment and agrees during such
period to render such services and to assume the obligations herein set forth
for the compensation provided for herein. The Adviser shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority hereunder to act for or
represent the Trust in any way or otherwise be deemed an agent of the Trust.
2. INVESTMENT ADVISORY SERVICES. Subject always to the Trust's Trust
Instrument, any Bylaws, and its registration statement filed on Form N-1A with
the SEC, as such registration statement may be amended from time to time (the
"Registration Statement"), the Adviser shall act as investment adviser to the
Trust and as such shall furnish continuously an investment program for the Fund
consistent with the Fund's investment objective, policies and restrictions. In
the performance of its duties hereunder, the Adviser shall:
a. determine from time to time which securities shall be
purchased, sold or exchanged and what portion of the assets of the Fund
shall be held in various securities and assets in which the Trust
invests or in cash;
b. make decisions for the Fund with respect to foreign
currency matters and foreign exchange contracts, having regard to
foreign exchange controls, if any;
c. advise the Fund in connection with policy decisions to be
made by the Trust's Board of Trustees or any committee thereof with
respect to its investments and, as requested, furnish the Trust with
research, economic and statistical data in connection with the Fund's
investments and investment policies;
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d. submit such reports relating to the valuation of the
Fund's securities as the Trust's Board of Trustees or the Trust's
administrator or subadministrator may reasonably request;
e. place orders for the purchase, sale or exchange of
portfolio assets for the Fund's accounts with brokers or dealers
selected by the Adviser; provided, however, that in connection with the
placing of such orders and the selection of such brokers or dealers the
Adviser shall seek to obtain execution and pricing within the policy
guidelines established by the Trust's Board of Trustees and set forth
in the Registration Statement of the Trust as in effect from time to
time;
f. provide information in the Adviser's possession to
the Trust's administrator or subadministrator as the Trust's
administrator or subadministrator may request to maintain and preserve
the records required by the Investment Company Act;
g. obtain and evaluate such information relating to
economics, industries, businesses, securities markets and securities
as the Adviser may deem necessary or useful in the discharge of its
duties hereunder; and
h. from time to time, or at any time requested by the Trust's
Board of Trustees, make reports to the Trust concerning the Adviser's
performance of the foregoing services and furnish advice and
recommendations with respect to other aspects of the business and
affairs of the Trust or the Fund.
3. ALLOCATION OF CHARGES AND EXPENSES.
a. The Adviser shall pay for maintaining its staff and
personnel necessary to perform its obligations under this Agreement and
shall, at its own expense, maintain the office space, facilities,
equipment and personnel that are reasonably necessary to carry out its
obligations hereunder. In addition, the Adviser shall pay the
reasonable salaries, fees and expenses of such of the Trust's officers
and employees (including the Trust's share of payroll taxes) and any
fees and expenses of such of the Trust's Trustees as are directors,
officers or employees of the Adviser or of Forum Financial Group, LLC
("Forum") or their affiliates; provided, however, that the Trust, and
not the Adviser, shall bear out-of-pocket travel expenses of Trustees
and officers of the Trust or of Forum who are directors, officers or
employees of the Adviser or Forum to the extent that such expenses
relate to attendance at meetings of the Board of Trustees of the Trust
or any committees thereof.
b. The Trust assumes on the Fund's behalf and shall pay or
cause to be paid fees to the Adviser, administrator, subadministrator
and all other expenses of the Fund including, without limitation: (1)
charges and expenses of any custodian, subcustodian or depository
appointed by the Board of Trustees for the safekeeping of the Fund's
cash, securities or property and fees and expenses of any transfer
agent, dividend paying agent and registrar for the Fund; (2) charges
and expenses of accounting and auditing; (3) expenses and fees
associated with registering and qualifying securities issued by the
Fund for sale with the SEC and in various states and foreign
jurisdictions and expenses of preparing any share certificates and
other expenses in connection with the issuance, offering or
underwriting of such securities, including any stock exchange listing
fees and freight insurance and other charges in connection with the
shipment of the Fund's portfolio securities; (4) expenses of
stationery, preparing, printing and distributing reports, notices and
dividends and other documents to the Fund's shareholders, including,
without limitation, expenses of the administrator or subadministrator;
(5) interest on any indebtedness of the Fund; (6) governmental fees and
taxes of the Fund, including any stock transfer tax payable on a
portfolio security of the Fund; (7) brokerage commissions and other
expenses incurred in acquiring or disposing of the Fund's portfolio
securities; (8) costs of Trustee's and officers' insurance and fidelity
bonds; (9) compensation and expenses of the Trustees who are not
interested persons of the Adviser, including out-of-pocket travel
expenses; (10) costs and expenses incidental to holding meetings of the
Board of Trustees, or any committees thereof, or meetings of
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shareholders including out-of-pocket travel expenses of the Trustees
and officers of the Trust or Forum who are directors, officers or
employees of the Adviser or Forum to the extent that such expenses
relate to attendance at such meetings; (11) fees for legal, auditing
and consulting services and litigation expenses, including settlement
or arbitration costs; (12) dues and expenses incurred in connection
with membership in investment company organizations and expenses
relating to investor and public relations; and (13) costs, expenses and
fees incurred in connection with obtaining, maintaining, refinancing or
repaying indebtedness. It is understood that the organization, offering
and marketing expenses, including accounting, legal and printing
expenses and registration fees incurred by the Adviser or Forum on
behalf of the Trust in connection with the initial public offering of
the Trust's securities will be reimbursed to the Adviser or Forum by
the Trust.
4. COMPENSATION OF THE INVESTMENT ADVISER.
a. FEES.
(i). In consideration of the foregoing, the Trust
shall pay the Adviser a fee at an annual rate of 0.90% of the average
daily net assets of that portion of the assets of the Fund that are not
invested in another registered open-end management investment company,
or separate series thereof, in accordance with Section 12(d)(1)(G) of
the Investment Company Act of 1940, the rules thereunder or an
applicable order of the Securities and Exchange Commission, granting an
exemption from the prohibitions of Rule 12(d)(1) of that Act. No fee
shall be payable under this subparagraph (i) during any period in which
the Trust invests all (or substantially all) of its investment assets
in a registered, open-end management investment company, or a separate
series thereof, in accordance with Section 12(d)(1)(E) of the
Investment Company Act.
(ii). In the event that investment assets of the
Trust are invested in another registered open-end management investment
company, or separate series thereof, the Trust shall pay the Adviser a
fee on such assets at an annual rate of 0.20% of the average daily net
assets of the Trust. Such fees shall be accrued daily and shall be
payable monthly in arrears on the first day of each calendar month for
services performed hereunder during any prior calendar month.
b. EXPENSE LIMITATIONS. In the event the operating expenses of
the Fund, including amounts payable to the Adviser pursuant to
subsection (a) hereof, for any fiscal year of the Trust ending on a
date on which this Agreement is in effect, exceed the expense
limitations applicable to the Trust imposed by applicable state
securities laws or regulations thereunder, as such limitations may be
raised or lowered from time to time, the Adviser shall reduce its
management fee by the extent of such excess and, if required pursuant
to any such laws or regulations, will reimburse the Fund in the amount
of such excess; provided, however, to the extent permitted by law,
there shall be excluded from such expenses the amount of any interest,
taxes, brokerage commissions and extraordinary expenses (including, but
not limited to, legal claims and liabilities and litigation costs,
including settlement or arbitration costs, and any indemnification
related thereto) paid or payable by the Trust. Whenever the expenses of
the Fund exceed a pro rata portion of the applicable annual expense
limitations, the estimated amount of reimbursement under such
limitations shall be applicable as an offset against the monthly
payment of the management fee due to the Adviser. Should two or more
expense limitations be applicable as of the end of the last business
day of the month, that expense limitation which results in the largest
reduction in the Adviser's fee shall be applicable.
5. LIMITATION OF LIABILITY OF THE ADVISER.
a. The Adviser shall not be liable for any error of judgment
or mistake of law or for any loss arising out of any investment or for
any act or omission in the execution and management of the Fund, except
for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder. As used in this Section 5, the term
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"Adviser" shall include any affiliates of the Adviser performing
services for the Fund contemplated hereby and directors, officers and
employees of the Adviser as well as that corporation itself.
b. The Adviser shall not be liable for any losses caused by
disturbances of its operations by virtue of force majeure, war, riot or
damage caused by nature or due to other events for which it is not
responsible (e.g., strike, lock-out or losses caused by the imposition
of foreign exchange controls, expropriation of assets or other acts of
domestic or foreign authorities).
c. The presence of exculpatory language in this Agreement
shall not be deemed by the Trust, the Adviser or any other party
appointed pursuant to this Agreement, including, without limitation,
any custodian, as in any way limiting causes of action and remedies
that, notwithstanding such language, may be available to the Trust or
Fund either under common law or statutory law principles applicable to
fiduciary relationships or under the federal securities laws.
6. OTHER ACTIVITIES OF THE ADVISER AND ITS AFFILIATES.
a. Nothing herein contained shall prevent the Adviser or any
of its affiliates from engaging in any other business or from acting as
investment adviser or investment manager for any other person or
entity, whether or not having investment policies or portfolios similar
to that of the Fund or Trust; and it is specifically understood that
officers, directors and employees of the Adviser and its affiliates may
continue to engage in providing portfolio management services and
advice to other investment companies whether or not registered, and to
other investment advisory clients. When other investment companies or
clients of the Adviser desire to purchase or sell a security at the
same time such security is purchased or sold for the Fund, such
purchases and sales will, to the extent feasible, be allocated among
the Fund and such other investment companies or clients in a manner
believed by the Adviser to be equitable to the Trust and such other
investment companies clients.
b. The Adviser reserves the right to grant the use of the name
"XXXXXXXX" or any derivative thereof to any other investment company or
business enterprise. The Adviser reserves the right to withdraw from
the Trust the use of the name "XXXXXXXX" and the use of its registered
service xxxx; at such time of withdrawal of the right to use the name
"XXXXXXXX," the Adviser agrees that the question of continuing this
Agreement may be submitted to a vote of the Fund's shareholders. In the
event of such withdrawal or the termination of this Agreement, for any
reason, the Trust will, on the written request of the Adviser, take
such action as may be necessary to change its name and eliminate all
reference to the word "XXXXXXXX" in any form, and will no longer use
such registered service xxxx.
7. LIMITATION OF LIABILITY OF THE TRUST'S TRUSTEES. The Trustees of the
Trust and the shareholders of the Trust shall not be liable for any obligations
of the Fund or Trust under this Agreement, and the Adviser agrees that, in
asserting any rights or claims under this Agreement, it shall look only to the
assets and property of the Trust to which the Adviser's rights or claims relate
in settlement of such rights or claims, and not to the Trustees of the Trust or
the shareholders of the Trust.
8. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
remain in force until the second anniversary of the effective date of this
Agreement first set forth above and from year to year thereafter, but only so
long as such continuance is approved at least annually by: (1) the vote of a
majority of the Trustees of the Trust who are not parties to the Agreement or
interested persons of the Adviser or interested persons of any such party (other
than as Trustees of the Trust), cast in person at a meeting called for the
purpose of voting on such approval; and (2) the vote of either: (a) the Board of
Trustees of the Trust, or (b) a majority of the outstanding voting securities of
the Fund. This Agreement may be terminated at any time, without payment of any
penalty, by the Trust either by the vote of the Board of Trustees of the Trust
or by the vote of a majority of the outstanding voting securities of the Fund on
sixty (60) days' written notice to the Adviser, and by the Adviser on sixty (60)
days' written notice to the Trust. This Agreement shall automatically terminate
in the event of its assignment by
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either party. In interpreting the provisions of this Section 8, the definitions
contained in Section 2(a) of the Investment Company Act (particularly the
definitions of "assignments," "interested person" and "voting security") shall
be applied.
9. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment, transfer, assignment,
sale, hypothecation or pledge of this Agreement shall be effective until
approved by the vote of: (1) the Board of Trustees of the Trust, including a
majority of the Trustees who are not parties to this Agreement or interested
persons of the Adviser or interested persons of any such party (other than as
Trustees of the Trust), cast in person at a meeting called for the purpose of
voting on such approval; and (2) a majority of the outstanding voting securities
of the Fund.
10. NOTICE. Any notice or other communication required to be given to
this Agreement shall be in writing or by fax, with hard copy to follow, and
shall be effective upon receipt. Notices and communications shall be given to:
(1) the Trust at Xxx Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx 00000; and (2) the Adviser
at c/x Xxxxxxxx Capital Management International Inc., 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxxx.
11. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Delaware and the applicable provisions of the
Investment Company Act. To the extent applicable laws of the State of Delaware,
or any of the provisions herein, conflict with the applicable provisions of the
Investment Company Act, the latter shall control.
12. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
The Investment Adviser confirms that the Trust is a Non-private
Customer as defined in the rules of IMRO and is being treated with the same
standard of care as an employee benefit plan subject to regulation under the
Employee Retirement Income Security Act of 1974, as amended.
The Trust confirms that it has been provided with independent legal
advice on this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
XXXXXXXX SERIES TRUST II
By: /S/ XXXXXXXXX X. XXXXX
----------------------------
Xxxxxxxxx X. Xxxxx
Vice President
XXXXXXXX CAPITAL MANAGEMENT
INTERNATIONAL INC.
By: /S/ XXXXXX X. XXXXX
-----------------------------
Xxxxxx X. Xxxxx
Chairman and Director
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