Exhibit 5(q)
INVESTMENT ADVISORY AGREEMENT
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Xxxxxxxxx Small Cap Value Fund
AGREEMENT made as of September 1, 1998 between THE RBB FUND, INC., a Maryland
corporation (herein called the "Fund"), and Xxxxxxxxx Capital Management
Company, a Pennsylvania corporation (herein called the "Investment Adviser").
WHEREAS, the Fund is registered as an open-end, management investment company
under the Investment Company Act of 1940 (the "1940 Act") and currently offers
or proposes to offer shares representing interests in separate investment
portfolios; and
WHEREAS, the Fund desires to retain the Investment Adviser to render certain
investment advisory services to the Fund with respect to the Fund's Xxxxxxxxx
Small Cap Value Fund (the "Portfolio"), and the Investment Adviser is willing to
so render such services.
NOW, THEREFORE, in consideration of the promises and mutual covenants herein
contained, and intending to be legally bound hereby, it is agreed between the
parties hereto as follows:
1. Appointment. The Fund hereby appoints the Investment Adviser to act as
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investment adviser for the Portfolio for the period and on the terms set forth
in this Agreement. The Investment Adviser accepts such appointment and agrees
to render the services herein set forth, for the compensation herein provided.
2. Delivery of Documents. The Fund has furnished the Investment Adviser with
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copies properly certified or authenticated of each of the following:
(a) Resolutions of the Board of Directors of the Fund authorizing the
appointment of the Investment Adviser and the execution and delivery of this
Agreement;
(b) Each prospectus and statement of additional information relating to
any class of Shares representing interests in the Portfolio of the Fund in
effect under the 1933 Act (such prospectus and statement of additional
information, as presently in effect and as they shall from time to time be
amended and supplemented, are herein collectively called the "Prospectus" and
"Statement of Additional Information," respectively).
The Fund will promptly furnish the Investment Adviser from time to time with
copies, properly certified or
authenticated, of all amendments of or supplements to the foregoing, if any.
In addition to the foregoing, the Fund will also provide the Investment
Adviser with copies of the Fund's Charter and By-laws, and any registration
statement or service contracts related to the Portfolio, and will promptly
furnish the Investment Adviser with any amendments of or supplements to such
documents.
3. Management of the Portfolio. Subject to the supervision of the Board of
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Directors of the Fund, the Investment Adviser will provide for the overall
management of the Portfolio including (i) the provision of a continuous
investment program for the Portfolio, including investment research and
management with respect to all securities, investments, cash and cash
equivalents in the Portfolio, (ii) the determination from time to time of what
securities and other investments will be purchased, retained, or sold by the
Fund for the Portfolio, and (iii) the placement from time to time of orders for
all purchases and sales made for the Portfolio. The Investment Adviser will
provide the services rendered by it hereunder in accordance with the Portfolio's
investment objectives, restrictions and policies as stated in the applicable
Prospectus and the Statement of Additional Information. The Investment Adviser
further agrees that it will render to the Fund's Board of Directors such
periodic and special reports regarding the performance of its duties under this
Agreement as the Board may reasonably request. The Investment Adviser agrees to
provide to the Fund (or its agents and service providers) prompt and accurate
data with respect to the Portfolio's transactions and, where not otherwise
available, the daily valuation of securities in the Portfolio.
4. Brokerage. Subject to the Investment Adviser's obligation to obtain best
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price and execution, the Investment Adviser shall have full discretion to select
brokers or dealers to effect the purchase and sale of securities. When the
Investment Adviser places orders for the purchase or sale of securities for the
Portfolio, in selecting brokers or dealers to execute such orders, the
Investment Adviser is expressly authorized to consider the fact that a broker or
dealer has furnished statistical, research or other information or services for
the benefit of the Portfolio directly or indirectly. Without limiting the
generality of the foregoing, the Investment Adviser is authorized to cause the
Portfolio to pay brokerage commissions which may be in excess of the lowest
rates available to brokers who execute transactions for the Portfolio or who
otherwise provide brokerage and research services utilized by the Investment
Adviser, provided that the Investment Adviser determines in good faith that the
amount of each such commission paid to a broker is reasonable in relation to the
value of the
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brokerage and research services provided by such broker viewed in terms of
either the particular transaction to which the commission relates or the
Investment Adviser's overall responsibilities with respect to accounts as to
which the Investment Adviser exercises investment discretion. The Investment
Adviser may aggregate securities orders so long as the Investment Adviser
adheres to a policy of allocating investment opportunities to the Portfolio over
a period of time on a fair and equitable basis relative to other clients. In no
instance will the Portfolio's securities be purchased from or sold to the Fund's
principal underwriter, the Investment Adviser, or any affiliated person thereof,
except to the extent permitted by SEC exemptive order or by applicable law.
The Investment Adviser shall report to the Board of Directors of the Fund at
least quarterly with respect to brokerage transactions that were entered into by
the Investment Adviser pursuant to the foregoing paragraph, and shall certify to
the Board that the commissions paid were reasonable in terms either of that
transaction or the overall responsibilities of the Adviser to the Fund and the
Investment Adviser's other clients, that the total commissions paid by the Fund
were reasonable in relation to the benefits to the Fund over the long term, and
that such commissions were paid in compliance with Section 28(e) of the
Securities Exchange Act of 1934.
5. Conformity with Law; Confidentiality. The Investment Adviser further
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agrees that it will comply with all applicable rules and regulations of all
federal regulatory agencies having jurisdiction over the Investment Adviser in
the performance of its duties hereunder. The Investment Adviser will treat
confidentially and as proprietary information of the Fund all records and other
information relating to the Fund and will not use such records and information
for any purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing by the
Fund, which approval shall not be unreasonably withheld and may not be withheld
where the Investment Adviser may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Fund.
6. Services Not Exclusive. The Investment Adviser and its officers may act
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and continue to act as investment managers for others, and nothing in this
Agreement shall in any way be deemed to restrict the right of the Investment
Adviser to perform investment management or other services for any other person
or entity, and the performance of such services for others shall not be deemed
to violate or give rise to any duty or obligation to the Portfolio or the Fund.
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7. Books and Records. In compliance with the requirements of Rule 31a-3
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under the 1940 Act, the Investment Adviser hereby agrees that all records which
it maintains for the Portfolio are the property of the Fund and further agrees
to surrender promptly to the Fund any of such records upon the Fund's request.
The Investment Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by Rule 31a-
1 under the 1940 Act.
8. Expenses. During the term of this Agreement, the Investment Adviser will
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pay all expenses incurred by it in connection with its activities under this
Agreement. The Portfolio shall bear all of its own expenses not specifically
assumed by the Investment Adviser. General expenses of the Fund not readily
identifiable as belonging to a portfolio of the Fund shall be allocated among
all investment portfolios by or under the direction of the Fund's Board of
Directors in such manner as the Board determines to be fair and equitable.
Expenses borne by the Portfolio shall include, but are not limited to, the
following (or the Portfolio's share of the following): (a) the cost (including
brokerage commissions) of securities purchased or sold by the Portfolio and any
losses incurred in connection therewith; (b) fees payable to and expenses
incurred on behalf of the Portfolio by the Investment Adviser; (c) filing fees
and expenses relating to the registration and qualification of the Fund and the
Portfolio's shares under federal and/or state securities laws and maintaining
such registrations and qualifications; (d) fees and salaries payable to the
Fund's directors and officers; (e) taxes (including any income or franchise
taxes) and governmental fees; (f) costs of any liability and other insurance or
fidelity bonds; (g) any costs, expenses or losses arising out a liability of or
claim for damages or other relief asserted against the Fund or the Portfolio for
violation of any law; (h) legal, accounting and auditing expenses, including
legal fees of special counsel for the independent directors; (i) charges of
custodians and other agents; (j) expenses of setting in type and printing
prospectuses, statements of additional information and supplements thereto for
existing shareholders, reports, statements, and confirmations to shareholders
and proxy material that are not attributable to a class; (k) costs of mailing
prospectuses, statements of additional information and supplements thereto to
existing shareholders, as well as reports to shareholders and proxy material
that are not attributable to a class; (1) any extraordinary expenses; (m) fees,
voluntary assessments and other expenses incurred in connection with membership
in investment company organizations; (n) costs of mailing and tabulating proxies
and costs of shareholders' and directors' meetings; (o) costs of independent
pricing services to
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value portfolio securities; and (p) the costs of investment company literature
and other publications provided by the Fund to its directors and officers.
Distribution expenses, transfer agency expenses, expenses of preparation,
printing and mailing, prospectuses, statements of additional information, proxy
statements and reports to shareholders, and organizational expenses and
registration fees, identified as belonging to a particular class of the Fund are
allocated to such class.
If the expenses borne by the Portfolio in any fiscal year exceed the most
restrictive applicable expense limitations imposed by the securities regulations
of any state in which the Shares of the Portfolio are registered or qualified
for sale to the public, the Investment Adviser shall reimburse the Portfolio for
any excess up to the amount of the fees payable by the Portfolio to it during
such fiscal year pursuant to Paragraph 9 hereof in the same proportion that its
fees bear to the total fees paid by the Fund for investment advisory services in
respect of the Portfolio; provided, however, that notwithstanding the foregoing,
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the Investment Adviser shall reimburse the Portfolio for such excess expenses
regardless of the amount of such fees payable to it during such fiscal year to
the extent that the securities regulations of any state in which the Shares are
registered or qualified for sale so require.
9. Voting. The Investment Adviser shall have the authority to vote as agent
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for the Fund, either in person or by proxy, tender and take all actions incident
to the ownership of all securities in which Portfolio's assets may be invested
from time to time, subject to such policies and procedures as the Board of
Directors of the Fund may adopt from time to time.
10. Reservation of Name. The Investment Adviser shall at all times have all
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rights in and to the Portfolio's name and all investment models used by or on
behalf of the Portfolio. The Investment Adviser may use the Portfolio's name or
any portion thereof in connection with any other mutual fund or business
activity without the consent of any shareholder and the Fund shall execute and
deliver any and all documents required to indicate the consent of the Fund to
such use.
11. Compensation.
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(a) For the services provided and the expenses assumed pursuant to this
Agreement with respect to the Portfolio, the Fund will pay the Investment
Adviser from the assets of the Portfolio and the Investment Adviser will accept
as full compensation therefor a fee, computed daily and payable monthly, at the
annual rate of 1.00% of the Portfolio's average daily net assets.
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(b) The fee attributable to the Portfolio shall be satisfied only
against assets of the Portfolio and not against the assets of any other
investment portfolio of the Fund.
12. Limitation of Liability of the Investment Adviser. The Investment
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Adviser shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Investment
Adviser in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
The limitations on liability of this paragraph 12 shall not be applicable to
any losses, claims, damages, liabilities or expenses arising from the Fund's use
of the Portfolio's name. The Investment Adviser shall indemnify and hold
harmless the Fund and the Portfolio for any claims arising from the use of the
term "Xxxxxxxxx" in the name of the Portfolio.
13. Duration and Termination. This Agreement shall become effective with
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respect to the Portfolio upon approval of this Agreement by vote of a majority
of the outstanding voting securities of the Portfolio and, unless sooner
terminated as provided herein, shall continue with respect to the Portfolio
until August 16, 1999. Thereafter, if not terminated, this Agreement shall
continue with respect to the Portfolio for successive annual periods ending on
August 16 provided such continuance is specifically approved at least annually
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(a) by the vote of a majority of those members of the Board of Directors of the
Fund who are not parties to this Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Directors of the Fund or by vote of a majority
of the outstanding voting securities of the Portfolio; provided, however, that
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this Agreement may be terminated with respect to the Portfolio by the Fund at
any time, without the payment of any penalty, by the Board of Directors of the
Fund or by vote of a majority of the outstanding voting securities of the
Portfolio, on 60 days' prior written notice to the Investment Adviser, or by the
Investment Adviser at any time, without payment of any penalty, on 60 days'
prior written notice to the Fund. This Agreement will immediately terminate in
the event of its assignment. (As used in this Agreement, the terms "majority of
the outstanding voting securities," "interested person" and "assignment" shall
have the same meaning as such terms have in the 1940 Act).
14. Amendment of this Agreement. No provision of this Agreement may be
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changed, discharged or terminated orally, except
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by an instrument in writing signed by the party against which enforcement of the
change, discharge or termination is sought, and no amendment of this Agreement
affecting the Portfolio shall be effective until approved by vote of the holders
of a majority of the outstanding voting securities of the Portfolio.
15. Miscellaneous. The captions in this Agreement are included for
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convenience of reference only and in no way define or delimit any of the
provisions hereof 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 and shall be
governed by Delaware law.
16. Change in Membership. The Investment Adviser shall notify the Fund of
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any change in its membership within a reasonable time after such change.
17. Governing Law. This Agreement shall be governed by and construed and
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enforced in accordance with the laws of the State of Delaware without giving
effect to the conflicts of laws principles thereof.
18. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE RBB FUND, INC.
By: /s/Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
President & Treasurer
XXXXXXXXX CAPITAL MANAGEMENT COMPANY
By: /s/Xxxxxx X. Xxxxxxxxx, III
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Name: Xxxxxx X. Xxxxxxxxx, III
Title: President
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