XXXXXXX INTERNATIONAL TRUST
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this day of , 1996, by and between XXXXXXX
INTERNATIONAL TRUST (the "Trust"), a trust organized under the laws of the State
of Delaware, and XXXXXXX INVESTMENT PARTNERS, INC. (the "Advisor"), a California
corporation.
WITNESSETH:
Whereas, there is in existence an Investment Advisory Agreement by
and between the Trust and the Advisor, which Agreement was designed to cover
only the series of the Trust now named the Xxxxxxx International Fund (the
"International Fund"); and
Whereas, a new series of the Trust having separate assets and
liabilities has been created entitled the "Xxxxxxx International Small Cap Fund"
(hereafter the "Small Cap Fund"); and
Whereas, it is therefore desirable to have a new investment advisory
agreement (i.e., this Agreement) relating to the Small Cap Fund so that said
existing Investment Advisory Agreement will apply only to the International
Fund; this Agreement will apply only to the Small Cap Fund;
In consideration of the mutual promises and agreements herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is hereby agreed by and between the parties hereto as
follows:
l. In General
The Trust hereby appoints the Advisor to act as investment adviser to
the Trust with respect to the Small Cap Fund. The Advisor agrees, all as more
fully set forth herein, to provide professional investment management with
respect to the investment of the assets of the Trust held in the portfolio of
the Small Cap Fund and to supervise and arrange the purchase and sale of
securities held in the portfolio of the Small Cap Fund.
2. Duties and Obligations of the Advisor with respect to
Management of the Assets of the Small Cap Fund.
(a) Subject to the succeeding provisions of this section
and subject to the direction and control of the Board of Trustees of
the Trust, the Advisor shall:
(i) Decide what securities shall be purchased or
sold by the Small Cap Fund and when; and
(ii) Arrange for the purchase and the sale of
securities held in the portfolio of the Small Cap Fund by
placing purchase and sale orders for the Small Cap Fund.
(b) Any investment purchases or sales made by the Advisor
shall at all times conform to, and be in accordance with, any
requirements imposed by: (l) the provisions of the Investment Company
Act of 1940 (the "Act") and of any rules or regulations in force
thereunder; (2) any other applicable provisions of law; (3) the
provisions of the Declaration of Trust and By-Laws of the Trust as
amended from time to time; (4) any policies and determinations of the
Board of Trustees of the Trust; and (5) the fundamental policies of
the Small Cap Fund, as reflected in the Trust's registration
statement under the Act, or as amended by the shareholders of the
Trust.
(c) The Advisor shall give the Trust the benefit of its
best judgment and effort in rendering services hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties ("disabling conduct")
hereunder on the part of the Advisor (and its officers, directors,
agents, employees, controlling persons, shareholders and any other
person or entity affiliated with the Advisor) the Advisor shall not
be subject to liability to the Trust or to any shareholder of the
Trust for any act or omission in the course of, or connected with
rendering services hereunder, including without limitation, any error
of judgment or mistake of law or for any loss suffered by any of them
in connection with the matters to which this Agreement related,
except to the extent specified in Section 36(b) of the Act concerning
loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services. Except for such disabling
conduct, the Trust shall indemnify the Advisor (and its officers,
directors, agents, employees, controlling persons, shareholders and
any other person or entity affiliated with the Advisor) from any
liability arising from the Advisor's conduct under this Agreement to
the extent permitted by the Declaration of Trust and applicable law.
(d) Nothing in this Agreement shall prevent the Advisor or
any affiliated person (as defined in the Act) of the Advisor from
acting as investment adviser or manager and/or principal underwriter
for any other person, firm or corporation and shall not in any way
limit or restrict the Advisor or any such affiliated person from
buying, selling or trading any securities for its or their own
accounts or the accounts of others for whom it or they may be acting,
provided, however, that the Advisor expressly represents that it will
undertake no activities which, in its judgment, will adversely affect
the performance of its obligations to the Trust under this Agreement.
(e) It is agreed that the Advisor shall have no
responsibility or liability for the accuracy or completeness of the
Trust's Registration Statement under the Act except for information
supplied by the Advisor for inclusion therein.
3. Broker-Dealer Relationships
In connection with its duties set forth in Section 2(a)(ii) of this
Agreement to arrange for the purchase and the sale of securities held by the
Small Cap Fund by placing purchase and sale orders for the Small Cap Fund, the
Advisor shall select such broker-dealers ("brokers") as shall, in the Advisor's
judgment, implement the policy of the Trust to achieve "best execution", i.e.,
prompt and efficient execution at the most favorable securities price. In making
such selection, the Advisor is authorized to consider the reliability, integrity
and financial condition of the broker. The Advisor is also authorized to
consider whether the broker provides brokerage and/or research services to the
Trust and/or other accounts of the Advisor. The commissions paid to such brokers
may be higher than another broker would have charged if a good faith
determination is made by the Advisor that the commission is reasonable in
relation to the services provided, viewed in terms of either that particular
transaction or the Advisor's overall responsibilities as to the accounts as to
which it exercises investment discretion. The Advisor shall use its judgment in
determining that the amount of commissions paid are reasonable in relation to
the value of brokerage and research services provided and need not place or
attempt to place a specific dollar value on such services or on the portion of
commission rates reflecting such services. To demonstrate that such
determinations were in good faith, and to show the overall reasonableness of
commissions paid, the Advisor shall be prepared to show that commissions paid
(i) were for purposes contemplated by this Agreement; (ii) provide lawful and
appropriate assistance to the Advisor in the performance of its decision-making
responsibilities; and (iii) were within a reasonable range as compared to the
rates charged by qualified brokers to other institutional investors as such
rates may become known from available information. The Trust recognizes that, on
any particular transaction, a higher than usual commission may be paid due to
the difficulty of the transaction in question. The Advisor also is authorized to
consider sales of shares of the Trust as a factor in the selection of brokers to
execute brokerage and principal transactions, subject to the requirements of
"best execution", as defined above.
4. Allocation of Expenses
The Advisor agrees that it will furnish the Trust, at the Advisor's
expense, with all office space and facilities, and equipment and clerical
personnel necessary for carrying out its duties under this Agreement. The
Advisor will also pay all compensation of all Trustees, officers and employees
of the Trust who are affiliated persons of the Advisor. All costs and expenses
not expressly assumed by the Advisor under this Agreement shall be paid by the
Trust, including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation and expenses of its
Trustees other than those affiliated with the Advisor or the Administrator; (v)
legal and audit expenses; (vi) fees and expenses of the Trust's custodian,
transfer agent and accounting services agent; (vii) expenses incident to the
issuance of its shares, including stock certificates and issuance of shares on
the payment of, or reinvestment of, dividends; (viii) fees and expenses incident
to the registration under Federal or state securities laws of the Trust or its
shares; (ix) expenses of preparing, printing and mailing reports, notices, proxy
material and prospectuses to shareholders of the Trust; (x) all other expenses
incidental to holding meetings of the Trust's shareholders; (xi) dues or
assessments of or contributions to the Investment Company Institute or any
successor or other industry association; (xii) such non-recurring expenses as
may arise, including litigation affecting the Trust and the legal obligations
which the Trust may have to indemnify its officers and Trustees with respect
thereto; (xiii) fees of the Trust's Administrator and (xiii) the organization
costs of the Trust.
5. Compensation of the Advisor
(a) The Trust agrees to pay the Advisor and the Advisor agrees to accept as
full compensation for all services rendered by the Advisor as such, an annual
management fee, payable monthly and computed on the value of the net assets of
the Small Cap Fund as of the close of business each business day at the annual
rate of 1% of such net assets of the Trust.
(b) In the event the expenses of the Small Cap Fund (including the fees of
the Advisor and the Administrator and amortization of organization expenses but
excluding interest, taxes, brokerage commissions, extraordinary expenses and
sales charges and distribution fees) for any fiscal year exceed the limits set
by applicable regulations of state securities commissions in states where the
shares of the Small Cap Fund are registered or qualified for sale, the Advisor
will reduce its fee by the amount of such excess. Any such reductions are
subject to readjustment during the year. The payment of the management fee at
the end of any month will be reduced or postponed or, if necessary, a refund
will be made to the Trust so that at no time will there be any accrued but
unpaid liability under this expense limitation.
6. Duration and Termination
(a) This Agreement shall go into effect on the date set forth above
and shall, unless terminated as hereinafter provided, continue in effect until
the earlier of , 1997 or the next meeting of shareholders of the Trust and, if
approved at that meeting, until the next after that meeting and thereafter from
year to year, but only so long as such continuance is specifically approved at
least annually by the Trust's Board of Trustees, including the vote of a
majority of the Trustees who are not parties to this Agreement or "interested
persons" (as defined in the Act) of any such party cast in person at a meeting
called for the purpose of voting on such approval, or by the vote of the holders
of a "majority" (as so defined) of the outstanding voting securities of the
Trust.
(b) This Agreement may be terminated by the Advisor at any time
without penalty upon giving the Trust sixty (60) days' written notice (which
notice may be waived by the Trust) and may be terminated by the Trust at any
time without penalty upon giving the Advisor sixty (60) days' written notice
(which notice may be waived by the Advisor), provided that such termination by
the Trust shall be directed or approved by the vote of a majority of all of its
Trustees in office at the time or by the vote of the holders of a majority (as
defined in the Act) of the voting securities of the Trust. This Agreement shall
automatically terminate in the event of its assignment (as so defined).
7. General
The Advisor represents and warrants to the Trust that it is duly
qualified to conduct its business under the laws of the State of California and
is a registered investment adviser under the Investment Advisers Act of 1940 and
applicable state laws. This Agreement constitutes the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof. This Agreement shall
be governed and construed in accordance with the laws of the State of California
(without regard to conflicts of law).
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by duly authorized persons and their seals to be
hereunto affixed, all as of the day and year first above written.
XXXXXXX INTERNATIONAL TRUST
By
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ATTEST:
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XXXXXXX INVESTMENT PARTNERS, INC.
By
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ATTEST:
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