EXHIBIT 99B.23(d)-11
INVESTMENT ADVISORY AGREEMENT
XXXXXX SMALL CAP VALUE FUND II
(A SERIES OF XXXXXX INVESTMENT PORTFOLIO TRUST)
This INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this 28th day
of March, 2002, between XXXXXX FINANCIAL GROUP LLC, a Nevada limited liability
company ("Xxxxxx"), and XXXXXX INVESTMENT PORTFOLIO TRUST, a Delaware business
trust (the "Trust"), with respect to the XXXXXX SMALL CAP VALUE FUND II, a
series of the Trust (the "Fund").
RECITALS
A. The Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and has
registered its shares for public offering under the Securities Act of 1933, as
amended (the "1933 Act").
B. The Trust is authorized to create separate series of shares, each with
its own separate investment portfolio, one of such series created by the Trust
being the Fund.
X. Xxxxxx is engaged in the business of rendering investment advisory
services and is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended (the "Advisers Act").
D. The Trust and Xxxxxx deem it mutually advantageous that Xxxxxx should
assist the Trustees and officers of the Trust in the management of the
securities portfolio of the Fund.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Appointment. The Trust hereby appoints Xxxxxx as investment adviser and
manager with respect to the Fund for the period and on the terms set forth in
this Agreement. Xxxxxx hereby accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. Investment Advisory Functions. In its capacity as investment adviser to
the Fund, Xxxxxx shall have the following duties and responsibilities:
(a) To manage the investment operations of the Fund and the composition of
its investment portfolio, and to determine without prior consultation
with the Trust, what securities and other assets of the Fund will be
acquired, held, disposed of or loaned, in conformity with the
investment objective, policies and restrictions and the other
-1-
statements concerning the Fund in the Trust's trust instrument, as
amended from time to time (the "Trust Instrument"), bylaws and
registration statements under the 1940 Act and the 1933 Act, the 1940
Act and the Advisers Act, the rules and regulations thereunder, and
all other applicable federal and state laws and regulations, and the
provisions of the Internal Revenue Code of 1986, as amended,
applicable to the Fund as a regulated investment company;
(b) To cause its officers to attend meetings and furnish oral or written
reports, as the Trust may reasonably require, in order to keep the
Trustees and appropriate officers of the Trust fully informed as to
the condition of the investment portfolio of the Fund, the investment
decisions of Xxxxxx, and the investment considerations which have
given rise to those decisions;
(c) To supervise the purchase and sale of securities for investments of
the Fund and for other related transactions as directed by the
appropriate officers of the Trust or any sub-adviser engaged by Xxxxxx
pursuant to the authority granted in this Agreement; to give
instructions to the custodian (including any subcustodian) of the Fund
as to deliveries of securities to and from such custodian and receipt
and payments of cash for the account of the Fund, and advise the Trust
on the same day such instructions are given; and to submit such
reports relating to the valuation of the Fund's assets and to
otherwise assist in the calculation of the net asset value of shares
of the Fund as may reasonably be requested;
(d) To maintain all books and records required to be maintained by Xxxxxx
pursuant to the 1940 Act and the rules and regulations promulgated
thereunder, as the same may be amended from time to time, with respect
to transactions on behalf of the Fund, and shall furnish the Trustees
with such periodic and special reports as the Trustees reasonably may
request. Xxxxxx agrees that all records which it maintains for the
Fund or the Trust are the property of the Trust, agrees to permit the
reasonable inspection thereof by the Trust or its designees and agrees
to preserve for the periods prescribed under the 1940 Act any records
which it maintains for the Trust and which are required to be
maintained under the 1940 Act, and further agrees to surrender
promptly to the Trust or its designees any records which it maintains
for the Trust upon request by the Trust; and
(e) At such times as shall be reasonably requested by the Trustees, to
provide the Trustees with economic, operational and investment data
and reports, including without limitation all information and
materials reasonably requested by or requested to be delivered to the
Trustees of the Trust pursuant to Section 15(c) of the 1940 Act, and
make available to the Trustees any economic, statistical and
investment services normally available to similar investment company
clients of Xxxxxx.
-2-
3. Further Obligations. In all matters relating to the performance of this
Agreement, Xxxxxx shall act in conformity with the Trust's Trust Instrument,
bylaws and currently effective registration statements under the 1940 Act and
the 1933 Act and any amendments or supplements thereto (the "Registration
Statements") and with the written policies, procedures and guidelines of the
Fund, and written instructions and directions of the Trustees of the Trust and
shall comply with the requirements of the 1940 Act, the Advisers Act, the rules
thereunder, and all other applicable federal and state laws and regulations. The
Trust agrees to provide Xxxxxx with copies of the Trust's Trust Instrument,
bylaws, Registration Statements, written policies, procedures and guidelines,
and written instructions and directions of the Trustees, and any amendments or
supplements to any of them at, or, if practicable, before the time such
materials become effective. Xxxxxx shall maintain errors and omissions insurance
in an amount at least equal to that disclosed to the Trustees in connection with
their approval of this Agreement.
4. Sub-Advisers. Xxxxxx may engage one or more sub-advisers in furtherance
of Xxxxxx'x duties and responsibilities under this Agreement, subject to the
approval of the Trustees of the Trust and, if required by law, the shareholders
of the Fund, pursuant in each case to a written agreement with a party that, if
applicable, meets the requirements of Section 15 of the 1940 Act and the rules
thereunder applicable to contracts for service as an investment adviser of a
registered investment company, subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission. The engagement of one or more
sub-advisers pursuant to this provision shall not diminish or relieve in any way
the liability of Xxxxxx for any of its duties and responsibilities under this
Agreement. Xxxxxx shall appropriately oversee, monitor and evaluate the
activities of any sub-adviser engaged hereunder.
5. Obligations of Trust. The Trust shall have the following obligations
under this Agreement:
(a) To keep Xxxxxx continuously and fully informed as to the composition
of the investment portfolio of the Fund and the nature of all of the
Fund's assets and liabilities from time to time;
(b) To furnish Xxxxxx with a certified copy of any financial statement or
report prepared for the Fund by certified or independent public
accountants and with copies of any financial statements or reports
made to the Fund's shareholders or to any governmental body,
securities exchange, national market, or other self-regulatory
organization;
(c) To furnish Xxxxxx with any further materials or information which
Xxxxxx may reasonably request to enable it to perform its function
under this Agreement; and
(d) To compensate Xxxxxx for its services in accordance with the
provisions of Section 6 hereof.
-3-
6. Compensation. The Trust shall pay to Xxxxxx for its services under this
Agreement a fee, payable in United States dollars, at an annual rate of 0.85% of
the first $500 million of average daily net assets of the Fund, 0.80% of the
next $500 million of average daily net assets of the Fund and 0.75% on any part
of the average daily net assets of the Fund in excess of $1 billion. This fee
shall be computed and accrued daily and payable monthly as of the last day of
each month during which or part of which this Agreement is in effect. For the
month during which this Agreement becomes effective and the month during which
it terminates, however, there shall be an appropriate proration of the fee
payable for such month based on the number of calendar days of such month during
which this Agreement is effective.
7. Expenses.
(a) Expenses Paid by the Trust. The Trust assumes and shall pay all
expenses incidental to its operations and business not specifically assumed or
agreed to be paid by Xxxxxx hereunder or otherwise, including, but not limited
to, any compensation, fees or reimbursements which the Trust pays to its
Trustees who are not interested persons of Xxxxxx; compensation of the Fund's
custodian, transfer agent, registrar and dividend disbursing agent and other
service providers; legal, accounting, audit and printing expenses;
administrative, clerical, recordkeeping and bookkeeping expenses; brokerage
commissions and all other expenses in connection with execution of portfolio
transactions (including any appropriate commissions paid to Xxxxxx or its
affiliates for effecting exchange listed, over-the-counter or other securities
transactions); interest; all federal, state and local taxes (including stamp,
excise, income and franchise taxes); costs of stock certificates and expenses of
delivering such certificates to the purchasers thereof; expenses of local
representation in Delaware; expenses of shareholders' meetings and of preparing,
printing and distributing proxy statements, notices, and reports to
shareholders; expenses of preparing and filing reports and tax returns with
federal and state regulatory authorities; all expenses incurred in complying
with all federal and state laws and the laws of any foreign country applicable
to the issue, offer or sale of shares of the Fund, including, but not limited
to, all costs involved in preparing, printing and mailing prospectuses and
statements of additional information to shareholders of the Fund; and all fees,
dues and other expenses incurred by the Trust in connection with the membership
of the Trust in any trade association or other investment company organization.
To the extent that Xxxxxx shall perform any of the above described
administrative and clerical functions, including transfer agency, registry,
dividend disbursing, recordkeeping, bookkeeping, accounting and blue sky
monitoring and registration functions, and the preparation of reports and
returns, the Trust shall pay to Xxxxxx compensation for, or reimburse Xxxxxx for
its expenses incurred in connection with, such services as Xxxxxx and the Trust
shall agree from time to time, any other provision of this Agreement
notwithstanding.
(b) Expenses Paid by Xxxxxx. Xxxxxx shall pay all its own costs and
expenses incurred in fulfilling its obligations under this Agreement. In
addition to such costs and expenses, Xxxxxx shall incur and pay the following
expenses relating to the Fund's operations:
(i) Reasonable compensation, fees and related expenses of the Trust's
officers and Trustees, except for such Trustees who are not interested persons
of Xxxxxx;
-4-
(ii) Rental of offices of the Trust; and
(iii) Fees of any sub-adviser engaged by Xxxxxx pursuant to the
authority granted in Section 4 hereof.
8. Brokerage Commissions. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. Absent instructions from the Trust to the contrary, Xxxxxx is
authorized and directed to place Fund portfolio transactions only with brokers
and dealers who render satisfactory service in the execution of orders at the
most favorable prices and at reasonable commission rates, provided, however,
that Xxxxxx may pay a broker an amount of commission for effecting a securities
transaction in excess of the amount of commission another broker would have
charged for effecting that transaction if Xxxxxx determines in good faith that
such amount of commission was 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 overall responsibilities of Xxxxxx.
Xxxxxx is also authorized to consider sales of Fund shares as a factor in
selecting broker-dealers to execute Fund portfolio transactions. In placing
portfolio business with such broker-dealers, Xxxxxx shall seek the best
execution of each transaction. Subject to the terms of this Agreement and the
applicable requirements and provisions of the law, including the 1940 Act and
the Securities Exchange Act of 1934, as amended, and in the event that Xxxxxx or
an affiliate is registered as a broker-dealer, Xxxxxx may select a broker with
which it or any of its affiliates or the Fund is affiliated. Xxxxxx or such
affiliated broker may effect or execute Fund portfolio transactions, whether on
a securities exchange or in the over-the-counter market, and receive separate
compensation from the Fund therefor. Notwithstanding the foregoing, the Trust
shall retain the right to direct the placement of all portfolio transactions,
and the Trustees of the Trust may establish policies or guidelines to be
followed by Xxxxxx in placing portfolio transactions for the Trust pursuant to
the foregoing provisions. Xxxxxx shall report on the placement of portfolio
transactions in the prior fiscal quarter at each quarterly meeting of such
Trustees. To the extent consistent with applicable law, purchase or sell orders
for the Fund may be aggregated with simultaneous purchase or sell orders for
other clients of Xxxxxx. Whenever Xxxxxx simultaneously places orders to
purchase or sell the same security on behalf of the Fund and one or more other
clients of Xxxxxx, such orders will be allocated as to price and amount among
all such clients in a manner reasonably believed by Xxxxxx to be fair and
equitable to each client. The Trust recognizes that in some cases, this
procedure may adversely affect the results obtained for the Fund.
9. Termination. This Agreement may be terminated at any time, without
penalty, by the Trustees of the Trust, or by the shareholders of the Fund acting
by vote of at least a majority of its outstanding voting securities, provided in
either case that sixty (60) days' advance written notice of termination be given
to Xxxxxx at its principal place of business. This Agreement may be terminated
by Xxxxxx at any time, without penalty, by giving sixty (60) days' advance
written notice of termination to the Trust, addressed to its principal place of
business. The Trust agrees that, consistent with the terms of the Trust's Trust
Instrument, the Trust shall cease to use the name "Xxxxxx" in connection with
the Fund as soon as reasonably practicable following any termination of this
-5-
Agreement if Xxxxxx does not continue to provide investment advice to the Fund
after such termination.
10. Assignment. This Agreement shall terminate automatically in the event
of any assignment of this Agreement.
11. Term. This Agreement shall continue in effect until April 30, 2003,
unless sooner terminated in accordance with its terms, and shall continue in
effect from year to year thereafter only so long as such continuance is
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on the
approval of the terms of such renewal, and by either the Trustees of the Trust
or the affirmative vote of a majority of the outstanding voting securities of
the Fund.
12. Amendments. This Agreement may be amended by the parties only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons of the Fund or Xxxxxx
and, (ii) if required by applicable law, by the affirmative vote of a majority
of the outstanding voting securities of the Fund.
13. Allocation of Expenses. The Trustees shall determine the basis for
making an appropriate allocation of the Trust's expenses (other than those
directly attributable to the Fund) between the Fund and any other series of the
Trust and between the Fund and other investment companies managed by Xxxxxx or
its affiliates.
14. Limitation on Personal Liability. NOTICE IS HEREBY GIVEN that the Trust
is a business trust organized under the Delaware Business Trust Act pursuant to
a Certificate of Trust filed in the office of the Secretary of State of the
State of Delaware. All parties to this Agreement acknowledge and agree that the
Trust is a series trust and all debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a particular
series shall be enforceable against the assets held with respect to such series
only, and not against the assets of the Trust generally or against the assets
held with respect to any other series and further that no Trustee, officer or
holder of shares of beneficial interest of the Trust shall be personally liable
for any of the foregoing.
15. Limitation of Liability of Xxxxxx. Xxxxxx 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 taken with respect to 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 and except to the extent otherwise provided by law. As used in this
Section 15, "Xxxxxx" shall include any affiliate of Xxxxxx performing services
for the Trust contemplated hereunder and managers, members, owners, officers and
employees of Xxxxxx and such affiliates.
16. Activities of Xxxxxx. The services of Xxxxxx to the Trust hereunder are
not to be deemed to be exclusive, and Xxxxxx and its affiliates are free to
render services to other parties, so
-6-
long as its services under this Agreement are not materially adversely affected
or otherwise impaired thereby. Nothing in this Agreement shall limit or restrict
the right of any manager, member, owner, officer or employee of Xxxxxx to engage
in any other business or to devote his or her time and attention in part to the
management or other aspects of any other business, whether of a similar nature
or a dissimilar nature. It is understood that Trustees, officers and
shareholders of the Trust are or may become interested in Xxxxxx as managers,
members, owners, officers and shareholders of Xxxxxx, that managers, members,
owners, officers, employees and shareholders of Xxxxxx are or may become
similarly interested in the Trust, and that Xxxxxx may become interested in the
Trust as a shareholder or otherwise.
17. Certain Definitions. The terms "vote of a majority of the outstanding
voting securities," "assignment," "approved at least annually" and "interested
persons" when used herein, shall have the respective meanings specified in the
1940 Act, as now in effect or hereafter amended, and the rules and regulations
thereunder, subject to such orders, exemptions and interpretations as may be
issued by the Securities and Exchange Commission under said Act and as may be
then in effect. Where the effect of a requirement of the federal securities laws
reflected in any provision of this Agreement is made less restrictive by a rule,
regulation, order, interpretation or other authority of the Securities and
Exchange Commission, whether of special or general application, such provision
shall be deemed to incorporate the effect of such rule, regulation, order,
interpretation or other authority.
18. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Colorado (without giving effect to the conflicts of laws
principles thereof) and the 1940 Act. To the extent that the applicable laws of
the State of Colorado conflict with the applicable provisions of the 1940 Act,
the latter shall control.
19. Miscellaneous. The headings in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions thereof or otherwise affect their construction or effect. 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. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
-7-
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Investment Advisory Agreement as of the date and year first
above written.
XXXXXX FINANCIAL GROUP LLC,
a Nevada Limited Liability Company
By:
-------------------------------------
Name: Xxxx X. Xxxxxxxx
-----------------------------------
Title: President
----------------------------------
XXXXXX INVESTMENT PORTFOLIO TRUST,
with respect to the series known as the
Xxxxxx Small Cap Value Fund II
By:
-------------------------------------
Name: Xxxx X. Xxxxxxxx
-----------------------------------
Title: President
----------------------------------
-8-
