ADVISORY AGREEMENT
AGREEMENT made as of the 30th day of July, 1985 between XXX XXX ASSOCIATES
CORPORATION, a corporation organized under the laws of the State of Delaware and
having its principal place of business in New York, New York (the "Advisor"),
and XXX XXX FUNDS, a Massachusetts business trust having its principal place of
business in New York, New York (the "Trust").
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of 1940
(the "1940 Act"); and
WHEREAS, the Advisor is engaged principally in the business of rendering
investment management services and is so registered under the Investment
Advisers Act of 1940; and
WHEREAS, the Trust is authorized to issue shares of beneficial interest in
separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust intends to initially offer shares in one series, the
World Trends Fund [such series (being referred to herein as the "Initial Fund")
together with all other series subsequently established by the Trust with
respect to which the Trust desires to retain the Advisor to render investment
advisory services hereunder and with respect to which the Advisor is willing so
to do, being herein collectively referred to as the "Funds"];
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF ADVISOR.
(a) Initial Fund. The Trust hereby appoints the Advisor to act as
manager and investment adviser to the Initial Fund for the period
and on the terms herein set forth. The Advisor accepts such
appointment and agrees to render the services herein set forth,
for the compensation herein provided.
(b) Additional Funds. In the event that the Trust establishes one or
more series of shares other than the Initial Fund with respect to
which it desires to retain the Advisor to render management and
investment advisory services hereunder, it shall so notify the
Advisor in writing, indicating the advisory fee which will be
payable with respect to
the additional series of shares. If the Advisor is willing to
render such services, it shall so notify the Trust in writing,
whereupon such series of shares shall become a Fund hereunder.
2. DUTIES OF ADVISOR.
The Advisor, at its own expense, shall furnish the following services and
facilities to the Trust:
(a) Investment Program. The Advisor will (i) furnish continuously an
investment program for each Fund, (ii) determine (subject to the
overall supervision and review of the Board of Trustees of the
Trust) what investments shall be purchased, held, sold or
exchanged by each Fund and what portion, if any, of the assets of
each Fund shall be held uninvested, and (iii) make changes on
behalf of the Trust in the investments of each Fund. The Advisor
will also manage, supervise and conduct such other affairs and
business of the Trust and each Fund thereof and matters
incidental thereto, as the Advisor and the Trust agree, subject
always to the control of the Board of Trustees of the Trust and
to the provisions of the Declaration of Trust and By-laws and the
1940 Act.
(b) Office Space and Facilities. The Advisor will arrange to furnish
the Trust office space in the offices of the Advisor, or in such
other place or places as may be agreed upon from time to time,
and all necessary office facilities, simple business equipment,
supplies, utilities, and telephone service for managing the
affairs and investments of the Trust. These services are
exclusive of the necessary services and records of any dividend
disbursing agent, transfer agent, registrar or custodian, and
accounting and bookkeeping services which may be provided by the
custodian.
(c) Personnel. The Advisor shall provide executive and clerical
personnel for administering the affairs of the Trust, and shall
compensate officers and Trustees of the Trust if such persons are
also employees of the Advisor or its affiliates, except as
provided in Paragraphs 3(f), 3(j) and 3(m) hereof.
(d) Portfolio Transactions. The Advisor shall place all orders for
the purchase and sale of portfolio securities for the account of
each Fund with brokers or dealers selected by the Advisor,
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although the Trust will pay the actual brokerage commissions on
portfolio transactions in accordance with Paragraph 3(c). In
executing portfolio transactions and selecting brokers or
dealers, the Advisor will use its best efforts to seek on behalf
of the Trust or any Fund thereof the best overall terms
available. In assessing the best overall terms available for any
transaction, the Advisor shall consider all factors it deems
relevant, including, without limitation, the breadth of the
market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and
the reasonableness of the commission, if any (for the specific
transaction and on a continuing basis). In evaluating the best
overall terms available, and in selecting the broker or dealer to
execute a particular transaction, the Advisor may also consider
the brokerage and research services (as those terms are defined
in Section 28(e) of the Securities Exchange Act of 1934) provided
to any Fund and/or other accounts over which the Advisor or an
affiliate of the Advisor exercises investment discretion. The
Advisor is authorized to pay to a broker or dealer who provides
such brokerage and research services a commission for executing a
portfolio transaction for any Fund which is in excess of the
amount of commission another broker or dealer would have charged
for effecting that transaction if the Advisor determines in good
faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such
broker or dealer, viewed in terms of that particular transaction
or in terms of all of the accounts over which investment
discretion is so exercised by the Advisor or its affiliates.
Nothing in this Agreement shall preclude the combining of orders
for the sale or purchase of securities or other investments with
other accounts managed by the Advisor or its affiliates provided
that the Advisor does not favor any account over any other
account and provided that any purchase or sale orders executed
contemporaneously shall be allocated in a manner the Advisor
deems equitable among the accounts involved. Consistent with the
Rules of Fair Practice of the National Association of Securities
Dealers, Inc. and subject to seeking the most favorable price and
execution available and such other policies as the Board of
Trustees of the Trust may determine, the Advisor may consider
sales of shares of a Fund as a factor in the
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selection of broker-dealers to execute portfolio transactions for
a Fund.
3. ALLOCATION OF EXPENSES.
Except for the services and facilities to be provided by the Advisor as set
forth in Paragraph 2 above, the Trust assumes and shall pay all expenses
for all other Trust operations and activities and shall reimburse the
Advisor for any such expenses incurred by the Advisor. The expenses to be
borne by the Trust shall include, without limitation:
(a) The charges and expenses of any registrar, stock transfer or
dividend disbursing agent, custodian, depository or other agent
appointed by the Trust for the safekeeping of its cash, portfolio
securities and other property;
(b) the charges and expenses of auditors and outside accountants;
(c) brokerage commissions for transactions in the portfolio
securities of the Trust;
(d) all taxes, including issuance and transfer taxes, and corporate
fees payable by the Trust to Federal, state or other U.S. or
foreign governmental agencies;
(e) the cost of stock certificates representing shares of the Trust;
(f) expenses involved in registering and maintaining registrations of
the Trust and of its shares with the Securities and Exchange
Commission and various states and other jurisdictions, including
reimbursement of actual expenses incurred by the Advisor in
performing such functions for the Trust, and including
compensation of persons who are Advisor employees in proportion
to the relative time spent on such matters;
(g) all expenses of shareholders' and Trustees' meetings, including
meetings of committees, and of preparing, setting in type,
printing and mailing proxy statements, quarterly reports, semi-
annual reports, annual reports and other communications to
shareholders;
(h) all expenses of preparing and setting in type prospectuses, and
expenses of printing and mailing the same to shareholders (but
not expenses of
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printing and mailing of prospectuses and literature used for
promotional purposes);
(i) compensation and travel expenses of Trustees who are not
"interested persons" of the Advisor within the meaning of the
1940 Act;
(j) the expense of furnishing, or causing to be furnished, to each
shareholder statements of his account, including the expense of
mailing, and any charges and expenses for services performed by
the Advisor or by Xxx Xxx Securities Corporation in connection
with servicing shareholder accounts, including accounting and
bookkeeping services not otherwise provided by a custodian or
dividend and transfer agent;
(k) charges and expenses of legal counsel in connection with matters
relating to the Trust, including, without limitation, legal
services rendered in connection with the Trust's corporate and
financial structure, day to day legal affairs of the Trust and
relations with its shareholders, issuance of Trust shares, and
registration and qualification of securities under Federal, state
and other laws;
(l) the expenses of attendance at professional meetings of
organizations such as the Investment Company Institute by
officers and Trustees of the Trust, and the membership or
association dues of such organizations;
(m) upon the net assets of a Fund exceeding $10 million, the cost and
expense of maintaining the books and records of the Trust,
including general ledger and daily net asset value accounting,
including compensation of persons who are Advisor employees in
proportion to the relative time spent on such matters;
(n) the expense of obtaining and maintaining a fidelity bond as
required by Section 17(g) of the 1940 Act and the expense of
obtaining and maintaining an errors and omissions policy;
(o) interest payable on Trust borrowings;
(p) postage; and
(q) any other costs and expenses incurred by the Advisor for Trust
operations and activities,
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including but not limited to the organizational costs of a Fund
which will initially be paid by the Advisor and reimbursed by the
Trust to the Advisor.
4. ADVISORY FEE.
(a) For the services and facilities to be provided to each of the
Funds by the Advisor as provided in Paragraph 2 hereof, the Trust
shall pay the Advisor a fee payable monthly with respect to each
of the Funds, which fee shall be paid at the annual rate set
forth in the advisory fee schedule below as amended from time to
time to reflect changes with respect to the establishment of new
Funds. The Fee is based upon the daily average net assets of a
Fund, determined in accordance with procedures established from
time to time by.or under the direction of the Board of Trustees
of the Trust:
ADVISORY FEE SCHEDULE
Daily Average Annual
Net Assets Fee Rate
---------- --------
World Trends Fund
-----------------
Up to and including $500
million .75%
Over $500 million up to
and including $750 million .65%
Over $750 million .50%
5. EXPENSE LIMITATION.
The Advisor agrees that for any fiscal year of the Trust during which the
total of all expenses of the Trust (including investment advisory fees
under this agreement, but excluding interest, portfolio brokerage
commissions and expenses, taxes and extraordinary items) exceeds the lowest
expense limitation imposed in any state in which the Trust is then making
sales of its shares or in which its shares are then qualified for sale, the
Advisor will reimburse the Trust for such expenses not otherwise excluded
from reimbursement by this Paragraph 5 to the extent that they exceed such
expense limitation.
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6. TRUST TRANSACTIONS.
The Advisor agrees that neither it nor any of its officers, directors,
employees or agents will take any long or short term position in the shares
of the Trust; provided, however, that such prohibition shall not prevent
the purchase of shares of the Trust by any of the persons above described
for their account and for investment at the price (net asset value) at
which such shares are available to the public at the time of purchase or as
part of the initial capital of the Funds.
7. RELATIONS WITH TRUST.
Subject to and in accordance with the Declaration of Trust and By-laws of
the Trust and the Articles of Incorporation and By-laws of the Advisor,
respectively, it is understood (i) that Trustees, officers, agents and
shareholders of the Trust are or may be interested in the Advisor (or any
successor thereof) as directors, officers, or otherwise; (ii) that
directors, officers, agents and shareholders of the Advisor are or may be
interested in the Trust as Trustees, officers, shareholders, or otherwise;
and (iii) that the Advisor (or any such successor) is or may be interested
in the Trust as a shareholder or otherwise and that the effect of any such
adverse interests shall be governed by said Declaration of Trust, Articles
of Incorporation and By-laws.
8. LIABILITY OF ADVISOR AND OFFICERS AND TRUSTEES OF THE TRUST.
Neither the Advisor nor its officers, directors, employees, agents or
controlling persons or assigns shall be liable for any error of judgment or
of law, or for any loss suffered by the Trust or its shareholders in
connection with the matters to which this Agreement relates, except that no
provision of this Agreement shall be deemed to protect the Advisor or such
persons against any liability to the Trust or its shareholders to which the
Advisor might otherwise be subject by reason of any willful misfeasance,
bad faith or gross negligence in the performance of its duties or the
reckless disregard of its obligations and duties under this Agreement.
9. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to
the Initial Fund on the date hereof and, with respect to any
additional Fund, on the date of receipt by the Trust of notice
from the Advisor in accordance with Paragraph 1(b) hereof that
the Advisor is willing to serve as
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Advisor with respect to such Fund. Unless terminated as herein
provided, this Agreement shall remain in full force and effect
until April 30, 1987 with respect to the Initial Fund and shall
continue in full force and effect for periods of one year
thereafter with respect to each Fund so long as such continuance
with respect to any such Fund is approved at least annually (i)
by either the Trustees of the Trust or by vote of a majority of
the outstanding voting shares (as defined in the 0000 Xxx) of
such Fund, and (ii) in either event by the vote of a majority of
the Trustees of the Trust who are not parties to this Agreement
or "interested persons" (as defined in the 0000 Xxx) of any such
party, cast in person at a meeting called for the purpose of
voting on such approval. However, the continuance of this
Agreement with respect to any Fund other than the Initial Fund is
subject to the approval of this Agreement by a majority of the
outstanding voting shares of such Fund within twelve (12) months
following the date on which such Fund becomes a Fund hereunder.
Any approval of this Agreement by the holders of a majority of
the outstanding shares (as defined in the 0000 Xxx) of any Fund
shall be effective to continue this Agreement with respect to any
such Fund notwithstanding (i) that this Agreement has not been
approved by the holders of a majority of the outstanding shares
of any other Fund affected thereby, and (ii) that this Agreement
has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless such approval shall be
required by any other applicable law or otherwise.
(b) Termination. This Agreement may be terminated at any time,
without payment of any penalty, by vote of the Trustees of the
Trust or by vote of a majority of the outstanding shares (as
defined in the 1940 Act), or by the Advisor on sixty (60) days'
written notice to the other party.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment.
10. NAME OF TRUST.
It is understood that the name "Xxx Xxx" is the valuable property of Xxx
Xxx Associates corporation, and that the Trust has the right to include
"Xxx Xxx" as a part of its
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name only so long as this Agreement shall continue. Upon termination of
this Agreement the Trust shall forthwith cease to use the "Xxx Xxx" name
and shall submit to its shareholders an amendment to its Declaration of
Trust to change the Trust's name.
11. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties.
12. SERVICES NOT EXCLUSIVE.
The services of the Advisor to the Trust hereunder are not to be deemed
exclusive, and the Advisor shall be free to render similar services to
others so long as its services hereunder are not impaired thereby.
13. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
(b) 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.
14. LIMITATION OF LIABILITY.
The term "Xxx Xxx Funds" means and refers to the Trustees from time to time
serving under the Declaration of Trust of the Trust dated April 3, 1985, as
the same may subsequently thereto have been, or subsequently hereto be
amended. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the
assets and property of the Trust, as provided in the Declaration of Trust
of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees and shareholders of the Trust and signed by an
authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees and shareholders nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as provided in its
Declaration of Trust.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first set forth above.
XXX XXX FUNDS XXX XXX ASSOCIATES CORPORATION
By______________________________ By____________________________
President President
Attest: Attest:
_______________________________ _______________________________
Secretary Secretary
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