INVESTMENT ADVISORY AGREEMENT
Lakeview Securities Corporation
000 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Ladies and Gentlemen:
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, 1993, 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 hereafter 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
recommend and 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.
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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 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 Codes 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 (1) 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 by three (3) directors of the Fund who are not affiliated persons of
you.
It is recognized that you are permitted no direct control over most of the
operating expenses of the Fund. However, anything herein to the contrary
withstanding, it is agreed that you shall be responsible for the portion of the
net expenses of the Fund (except taxes, brokerage, distribution service fees
paid in accordance with an effective plan pursuant to Rule 12b-1 under the act,
expenditures which are capitalized in accordance with generally accepted
accounting principles, and extraordinary expenses, all to the extent permitted
by applicable state law and regulation) incurred by the Fund during each of its
fiscal years or portions thereof that this Agreement is in effect which, as to
the Fund in any such year, exceeds the limits applicable to the Fund under the
laws or regulations of any state in which Fund shares are qualified for sale
(reduce pro rata for any portion of less than a year).
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8. We shall expect of you, and you will give us the benefit of your best
judgement and effort in rendering services to the Fund, and 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 judgement, 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 materials 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 interest 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 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 has been terminated, without payment of any penalty, by the board of
directors of the Fund effective within sixty (60) days of notice of termination.
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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 surrender 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.
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 that 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. It is recognized that the competence and general reputation of Xxxxxxx
X. Arms, Jr., within the securities field are matters of substantial inducement
to the Fund in entering into this agreement. Therefore, in the event of any
proposed or accomplished termination or other significant change in Mr. Arms'
employment arrangement by or with you, you will promptly notify the Fund of such
prospective or accomplished changes. If possible, such notification will be
given to us no later than ten (10) days prior to the effective date of the
proposed changed.
17. 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.
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18. 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.
19. 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:________/S/________________
Title: President
Accepted this 27 day of December, 1993
LAKEVIEW SECURITIES CORPORATION
By:________/S/_________________
Title: President
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