Exhibit Sub-Item 77Q1
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
XXXX XXXXX FOCUS TRUST, INC.
This INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT ("Agreement") is
made this ____ day of June, 1998, by and between Xxxx Xxxxx Focus Trust,
Inc., a Maryland corporation (the "Fund"), and Xxxx Xxxxx Fund Adviser,
Inc., a Maryland corporation (the "Adviser").
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act")
and has registered its shares of common stock for sale to the public under
the Securities Act of 1933 and various state securities laws; and
WHEREAS, the Fund wishes to retain the Adviser to provide investment
advisory, management, and administrative services to the Fund; and
WHEREAS, the Adviser is willing to furnish such services on the
terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. The Fund hereby appoints Xxxx Xxxxx Fund Adviser, Inc. as
Adviser of the Fund for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. The Fund shall at all times keep the Adviser fully informed
with regard to the securities owned by it, its funds available, or to
become available, for investment, and generally as to the condition of its
affairs. It shall furnish the Adviser with such other documents and
information with regard to its affairs as the Adviser may from time to
time reasonably request.
3. (a) Subject to the supervision of the Fund's Board of
Directors, the Adviser shall regularly provide the Fund with investment
research, advice, management and supervision and shall furnish a
continuous investment program for the Fund's portfolio of securities
consistent with the Fund's investment goals and policies. The Adviser
shall determine from time to time what securities will be purchased,
retained or sold by the Fund, and shall implement those decisions, all
subject to the provisions of the Fund's Articles of Incorporation and
Bylaws, the 1940 Act, the applicable rules and regulations of the
Securities and Exchange Commission, and other applicable federal and state
law, as well as the investment goals and policies of the Fund. The
Adviser will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or dealer. In
placing orders with brokers and dealers the Adviser will attempt to obtain
the best net price and the most favorable execution of its orders;
however, the Adviser may, in its discretion, purchase and sell portfolio
securities through brokers who provide the Fund with research, analysis,
advice and similar services, and the Adviser may pay to these brokers, in
return for research and analysis, a higher commission or spread than may
be charged by other brokers. The Adviser is authorized to combine orders
on behalf of the Fund with orders on behalf of other clients of the
Adviser, consistent with guidelines adopted by the Board of Directors of
the Fund. The Adviser shall also provide advice and recommendations with
respect to other aspects of the business and affairs of the Fund, and
shall perform such other functions of management and supervision as may be
directed by the Board of Directors of the Fund.
(b) The Fund hereby authorizes any entity or person associated
with the Adviser which is a member of a national securities exchange to
effect any transaction on the exchange for the account of the Fund which
is permitted by Section 11(a) of the Securities Exchange Act of 1934 and
Rule 11a2-2(T) thereunder, and the Fund hereby consents to the retention
by such person associated with the Adviser of compensation for such
transactions in accordance with Rule 11a2-2(T)(2)(iv).
4. The Adviser may enter into a contract ("Advisory Agreement")
with an investment adviser in which the Adviser delegates to such
investment adviser any or all its duties specified in Paragraph 3
hereunder, provided that such Advisory Agreement imposes on the investment
adviser bound thereby all duties and conditions to which the Adviser is
subject hereunder, and further provided that such Advisory Agreement meets
all requirements of the 1940 Act and rules thereunder.
5. (a) The Adviser, at its expense, shall supply the Board of
Directors and officers of the Fund with all statistical information and
reports reasonably required by them and reasonably available to the
Adviser and shall furnish the Fund with office facilities, including
space, furniture and equipment and all personnel reasonably necessary for
the operation of the Fund. The Adviser shall oversee the maintenance of
all books and records with respect to the Fund's securities transactions
and the keeping of the Fund's books of account in accordance with all
applicable federal and state laws and regulations. In compliance with
Rule 31a-3 under the1940 Act, the Adviser hereby agrees that any record
which it maintains for the Fund 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 Adviser further agrees to arrange for the
preservation of the records required to be maintained by Rule 31a-1 under
the 1940 Act for the periods prescribed by Rule 31a-2 under the 1940 Act.
The Adviser shall authorize and permit any of its directors, officers and
employees, who may be elected as directors or officers of the Fund, to
serve in the capacities in which they are elected.
(b) Other than as herein specifically indicated, the Adviser shall
not be responsible for the Fund's expenses. Specifically, the Adviser
will not be responsible, except to the extent of the reasonable
compensation of employees of the Fund whose services may be used by the
Adviser hereunder, for any of the following expenses of the Fund, which
expenses shall be borne by the Fund: advisory fees; distribution fees;
interest, taxes, governmental fees, fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; the cost (including brokerage commissions or charges, if
any) of securities purchased or sold by the Fund and any losses in
connection therewith; fees of custodians, transfer agents, registrars or
other agents; legal expenses; expenses relating to the redemption or
repurchase of the Fund's shares; expenses of registering and qualifying
shares of the Fund for sale under applicable federal and state law;
expenses of preparing, setting in print, printing and distributing
prospectuses, reports, notices and dividends to Fund shareholders; costs
of stationery; costs of stockholders' and other meetings of the Fund;
directors' fees; audit fees; travel expenses of officers, directors and
employees of the Fund, if any; and the Fund's pro rata portion of premiums
on any fidelity bond and other insurance covering the Fund and its
officers and directors.
6. No director, officer or employee of the Fund shall receive
from the Fund any salary or other compensation as such director, officer
or employee while he or she is at the same time a director, officer, or
employee of the Adviser or any affiliated company of the Adviser. This
paragraph shall not apply to directors, executive committee members,
consultants and other persons who are not regular members of the Adviser's
or any affiliated company's staff.
7. As compensation for the services performed and the facilities
furnished and expenses assumed by the Adviser, including the services of
any consultants or sub-advisers retained by the Adviser, the Fund shall
pay the Adviser, as promptly as possible after the last day of each month,
a fee, computed daily at an annual rate of 0.70% of the Fund's average
daily net assets. The first payment of the fee shall be made as promptly
as possible at the end of the month succeeding the effective date of this
Agreement. If this Agreement is terminated as of any date not the last
day of the month, such fee shall be paid as promptly as possible after
such date of termination, shall be based on the average daily net assets
of the Fund in that period from the beginning of such month to such date
of termination, and shall be based on that proportion of such average
daily net assets as the number of business days in such period bears to
the number of business days in such month. The average daily net assets
of the Fund shall in all cases be based only on business days and be
computed as of the time of the regular close of business of the New York
Stock Exchange, or such other time as may be determined by the Board of
Directors of the Fund. Each such payment shall be accompanied by a report
prepared either by the Fund or by a reputable firm of independent
accountants, which shall show the amount properly payable to the Adviser
under this Agreement and the detailed computation thereof.
8. The Adviser assumes no responsibility under this Agreement
other than to render the services called for hereunder, in good faith, and
shall not be responsible for any action of the Board of Directors of the
Fund in following or declining to follow any advice or recommendations of
the Adviser; provided, that nothing in this Agreement shall protect the
Adviser against any liability to the Fund or its shareholders to which it
would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance to its duties or by reason of its
reckless disregard of its obligations and duties hereunder.
9. Nothing in this Agreement shall limit or restrict the right of
any director, officer, or employee of the Adviser who may also be a
director, officer, or employee of the Fund, to engage in any other
business or to devote his time and attention in part to the management or
other aspects of any other business, whether of a similar nature or a
dissimilar nature, or to limit or restrict the right of the Adviser to
engage in any other business or to render services of any kind, including
investment advisory and management services, to any other corporation,
firm, individual or association.
10. As used in this Agreement, the terms "assignment," "interested
person," and "majority of the outstanding voting securities" shall have
the meanings given to them by Section 2(a) of the 1940 Act, subject to
such exemptions as may be granted by the Securities and Exchange
Commission by any rule, regulation or order.
11. This Agreement will become effective on the date first written
above, provided that it shall have been approved by the Fund's Board of
Directors and by the shareholders of the Fund in accordance with the
requirements of the 1940 Act and, unless sooner terminated as provided
herein, will continue in effect for two years from the above written date.
Thereafter, if not terminated, this Agreement shall continue in effect for
successive annual periods ending on the same date of each year, provided
that such continuance is specifically approved at least annually (i) by
the Fund's Board of Directors or (ii) by a vote of a majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act),
provided that in either event the continuance is also approved by a
majority of the Fund's Board of Directors who are not interested persons
(as defined in the 0000 Xxx) of any party to this Agreement, by vote cast
in person at a meeting called for the purpose of voting on such approval.
12. This Agreement is terminable without penalty by the Fund's
Board of Directors, by vote of a majority of the outstanding voting
securities of the Fund (as defined in the1940 Act), or by the Adviser, on
not less than 60 days' notice to the other party and will be terminated
upon the mutual written consent of the Adviser and the Fund. This
Agreement shall terminate automatically in the event of its assignment by
the Adviser and shall not be assignable by the Fund without the consent of
the Adviser.
13. In the event this Agreement is terminated by either party or
upon written notice from the Adviser at any time, the Fund hereby agrees
that it will eliminate from its corporate name any reference to the name
of "Xxxx Xxxxx." The Fund shall have the non-exclusive use of the name
"Xxxx Xxxxx" in whole or in part only so long as this Agreement is
effective or until such notice is given.
14. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of Maryland.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
Attest: XXXX XXXXX FOCUS TRUST, INC.
By:__________________________ By:______________________________
Attest: XXXX XXXXX FUND ADVISER, INC.
By:___________________________
By:________________________________
