INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made effective as of the 1st day of January, 2008, between
XXXXXXXXX FUNDS (hereinafter referred to as the "Trust"), on behalf of Xxxxxxxxx
Foreign Fund ("Foreign Fund"), and XXXXXXXXX GLOBAL ADVISORS LIMITED, a U.S.
registered investment adviser and a Bahamian corporation (hereinafter referred
to as the "Manager").
In consideration of the mutual agreements herein made, the Trust, on behalf
of Foreign Fund, and the Manager understand and agree as follows:
(1) The Manager agrees, during the life of this Agreement, to manage the
investment and reinvestment of Foreign Fund's assets consistent with
the provisions of the Trust Instrument of the Trust and the investment
policies adopted and declared by the Trust's Board of Trustees. In
pursuance of the foregoing, the Manager shall make all determinations
with respect to the investment of Foreign Fund's assets and the
purchase and sale of its investment securities, and shall take such
steps as may be necessary to implement those determinations. Such
determinations and services shall include determining the manner in
which any voting rights, rights to consent to corporate action and any
other rights pertaining to Foreign Fund's investment securities shall
be exercised, subject to guidelines adopted by the Board of Trustees.
It is understood that all acts of the Manager in performing this
Agreement are performed by it outside the United States.
(2) The Manager is not required to furnish any personnel, overhead items or
facilities for Foreign Fund, including trading desk facilities or
daily pricing of Foreign Fund's portfolio.
(3) The Manager shall be responsible for selecting members of securities
exchanges, brokers and dealers (such members, brokers and dealers
being hereinafter referred to as "brokers") for the execution of
Foreign Fund's portfolio transactions consistent with the Trust's
brokerage policies and, when applicable, the negotiation of
commissions in connection therewith.
All decisions and placements shall be made in accordance with the following
principles:
A. Purchase and sale orders will usually be placed with brokers which
are selected by the Manager as able to achieve "best execution"
of such orders. "Best execution" shall mean prompt and reliable
execution at the most favorable security price, taking into
account the other provisions hereinafter set forth. The
determination of what may constitute best execution and price in
the execution of a securities transaction by a broker involves a
number of considerations, including, without limitation, the
overall direct net economic result to Foreign Fund (involving
both price paid or received and any commissions and other costs
paid), the efficiency with which the transaction is effected, the
ability to effect the transaction at all where a large block is
involved, availability of the broker to stand ready to execute
possibly difficult transactions in the future, and the financial
strength and stability of the broker. Such considerations are
judgmental and are weighed by the Manager in determining the
overall reasonableness of brokerage commissions.
B. In selecting brokers for portfolio transactions, the Manager shall
take into account its past experience as to brokers qualified to
achieve "best execution," including brokers who specialize in any
foreign securities held by Foreign Fund.
C. The Manager is authorized to allocate brokerage business to brokers
who have provided brokerage and research services, as such
services are defined in Section 28(e) of the Securities Exchange
Act of 1934 (the "1934 Act"), for Foreign Fund and/or other
accounts, if any, for which the Manager exercises investment
discretion (as defined in Section 3(a)(35) of the 0000 Xxx) and,
as to transactions for which fixed minimum commission rates are
not applicable, to cause Foreign Fund to pay a commission for
effecting a securities transaction in excess of the amount
another broker would have charged for effecting that transaction,
if the Manager determines in good faith that such amount of
commission is reasonable in relation to the value of the
brokerage and research services provided by such broker, viewed
in terms of either that particular transaction or the Manager's
overall responsibilities with respect to Foreign Fund and the
other accounts, if any, as to which it exercises investment
discretion. In reaching such determination, the Manager will not
be required to place or attempt to place a specific dollar value
on the research or execution services of a broker or on the
portion of any commission reflecting either of said services. In
demonstrating that such determinations were made in good faith,
the Manager shall be prepared to show that all commissions were
allocated and paid for purposes contemplated by the Trust's
brokerage policy; that the research services provide lawful and
appropriate assistance to the Manager in the performance of its
investment decision-making responsibilities; and that the
commissions paid were within a reasonable range. Whether
commissions were within a reasonable range shall be based on any
available information as to the level of commission known to be
charged by other brokers on comparable transactions, but there
shall be taken into account the Trust's policies that (i)
obtaining a low commission is deemed secondary to obtaining a
favorable securities price, since it is recognized that usually
it is more beneficial to Foreign Fund to obtain a favorable price
than to pay the lowest commission; and (ii) the quality,
comprehensiveness and frequency of research studies that are
provided for the Manager are useful to the Manager in performing
its advisory services under this Agreement. Research services
provided by brokers to the Manager are considered to be in
addition to, and not in lieu of, services required to be
performed by the Manager under this Agreement. Research furnished
by brokers through which Foreign Fund effects securities
transactions may be used by the Manager for any of its accounts,
and not all research may be used by the Manager for Foreign Fund.
When execution of portfolio transactions is allocated to brokers
trading on exchanges with fixed brokerage commission rates,
account may be taken of various services provided by the broker.
D. Purchases and sales of portfolio securities within the United
States other than on a securities exchange shall be executed with
primary market makers acting as principal, except where, in the
judgment of the Manager, better prices and execution may be
obtained on a commission basis or from other sources.
(4) Foreign Fund agrees to pay to the Manager a monthly fee in dollars at
an annual rate of 0.630% of the first $1 billion of the daily net
assets of Foreign Fund during the month preceding each payment,
reduced as follows: on such net assets in excess of $1 billion up to
and including $5 billion, a monthly fee equal on an annual basis to
0.615%; on such net assets in excess of $5 billion up to and including
$10 billion, a monthly fee equal on an annual basis to 0.600%; on such
net assets in excess of $10 billion up to and including $15 billion, a
monthly fee equal on an annual basis to 0.580%; on such net assets in
excess of $15 billion up to and including $20 billion, a monthly fee
equal on an annual basis to 0.560%; on such net assets in excess of
$20 billion up to and including $25 billion, a monthly fee equal on an
annual basis to 0.540%; on such net assets in excess of $25 billion up
to and including $30 billion, a monthly fee equal on an annual basis
to 0.530%; on such net assets in excess of $30 billion up to and
including $35 billion, a monthly fee equal on an annual basis to
0.520%; on such assets in excess of $35 billion, a monthly fee equal
on an annual basis to 0.510%, payable at the end of each calendar
month. The Manager may waive all or a portion of its fees provided for
hereunder and such waiver shall be treated as a reduction in purchase
price of its services. The Manager shall be contractually bound
hereunder by the terms of any publicly announced waiver of its fee, or
any limitation of Foreign Fund's expenses, as if such waiver or
limitation were fully set forth herein.
Notwithstanding the foregoing, if the total expenses of Foreign Fund
(including the fee to the Manager) in any fiscal year of the Trust
exceed any expense limitation imposed by applicable State law, the
Manager shall reimburse Foreign Fund for such excess in the manner and
to the extent required by applicable State law. The term "total
expenses," as used in this paragraph, does not include interest,
taxes, litigation expenses, distribution expenses, brokerage
commissions or other costs of acquiring or disposing of any of Foreign
Fund's portfolio securities or any costs or expenses incurred or
arising other than in the ordinary and necessary course of Foreign
Fund's business. When the accrued amount of such expenses exceeds this
limit, the monthly payment of the Manager's fee will be reduced by the
amount of such excess, subject to adjustment month by month during the
balance of the Trust's fiscal year if accrued expenses thereafter fall
below the limit.
(5) This Agreement shall be effective as of the date first written above
and shall continue in effect until December 31, 2009. If not sooner
terminated, this Agreement shall continue in effect for successive
periods of 12 months each thereafter, provided that each such
continuance shall be specifically approved annually by the vote of a
majority of the Trust's Board of Trustees who are not parties to this
Agreement or "interested persons" (as defined in the Investment
Company Act of 1940 (the "1940 Act")) of any such party, cast in
person at a meeting called for the purpose of voting on such approval
and either the vote of (a) a majority of the outstanding voting
securities of Foreign Fund, as defined in the 1940 Act, or (b) a
majority of the Trust's Board of Trustees as a whole.
(6) Notwithstanding the foregoing, this Agreement may be terminated by
either party at any time, without the payment of any penalty, on sixty
(60) days' written notice to the other party, provided that
termination by the Trust is approved by vote of a majority of the
Trust's Board of Trustees in office at the time or by vote of a
majority of the outstanding voting securities of Foreign Fund (as
defined by the 1940 Act).
(7) This Agreement will terminate automatically and immediately in the
event of its assignment (as defined in the 1940 Act).
(8) In the event this Agreement is terminated and the Manager no longer
acts as Manager to Foreign Fund, the Manager reserves the right to
withdraw from Foreign Fund the use of the name "Xxxxxxxxx" or any name
misleadingly implying a continuing relationship between Foreign Fund
and the Manager or any of its affiliates.
(9) Except as may otherwise be provided by the 1940 Act, neither the
Manager nor its officers, directors, employees or agents shall be
subject to any liability for any error of judgment, mistake of law, or
any loss arising out of any investment or other act or omission in the
performance by the Manager of its duties under the Agreement or for
any loss or damage resulting from the imposition by any government of
exchange control restrictions which might affect the liquidity of
Foreign Fund's assets, or from acts or omissions of custodians, or
securities depositories, or from any war or political act of any
foreign government to which such assets might be exposed, or for
failure, on the part of the custodian or otherwise, timely to collect
payments, except for any liability, loss or damage resulting from
willful misfeasance, bad faith or gross negligence on the Manager's
part or by reason of reckless disregard of the Manager's duties under
this Agreement. It is hereby understood and acknowledged by the Trust
that the value of the investments made for Foreign Fund may increase
as well as decrease and are not guaranteed by the Manager. It is
further understood and acknowledged by the Trust that investment
decisions made on behalf of Foreign Fund by the Manager are subject to
a variety of factors that may affect the values and income generated
by Foreign Fund's portfolio securities, including general economic
conditions, market factors and currency exchange rates, and that
investment decisions made by the Manager will not always be profitable
or prove to have been correct.
(10) It is understood that the services of the Manager are not deemed to be
exclusive, and nothing in this Agreement shall prevent the Manager, or
any affiliate thereof, from providing similar services to other
investment companies and other clients, including clients that may
invest in the same types of securities as Foreign Fund, or, in
providing such services, from using information furnished by others.
When the Manager determines to buy or sell the same security for
Foreign Fund that the Manager or one or more of its affiliates has
selected for clients of the Manager or its affiliates, the orders for
all such security transactions shall be placed for execution by
methods determined by the Manager, with approval by the Trust's Board
of Trustees, to be impartial and fair.
(11) Pursuant to Section 6.2 of the Code of Conduct for Persons Registered
with the Securities and Futures Commission (the "SFC"), the following
information is included in this Agreement:
UNDERTAKINGS. Each party undertakes to notify the other party in the
event of any material change to the information provided in this
Agreement.
CERTAIN INFORMATION ABOUT THE MANAGER.
(i) The Manager's full name and address is:
Xxxxxxxxx Global Advisors Limited
P.O. N-7759, Xxxxxx Xxx
Nassau, Bahamas
(ii) The Manager's registration status with the SFC is active.
CERTAIN INFORMATION ABOUT THE TRUST. The Trust's full name and
verified address is:
Xxxxxxxxx Funds
000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000-0000
(12) This Agreement shall be construed in accordance with the laws of the
State of Delaware, PROVIDED that nothing herein shall be construed as
being inconsistent with applicable Federal and State securities laws
and any rules, regulations and orders thereunder.
(13) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby and, to this extent, the
provisions of this Agreement shall be deemed to be severable.
(14) Nothing herein shall be construed as constituting the Manager an agent
of the Trust.
(15) It is understood and expressly stipulated that neither the holders of
shares of Foreign Fund, nor any Trustee, officer, agent or employee of
the Trust shall be personally liable hereunder, nor shall any resort
be had to other private property for the satisfaction of any claim or
obligation hereunder, but the Trust only shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers as of the date first written
above.
XXXXXXXXX FUNDS
By:/s/XXXXX X. XXXX
-----------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President and Assistant Secretary
XXXXXXXXX GLOBAL ADVISORS LIMITED
By:/s/XXXXXXX X. XXXXXXXX
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Name: Xxxxxxx X. Xxxxxxxx
Title: President
