INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
XXXX XXXXX FOCUS TRUST, INC.
This INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT ("Agreement") is made
this 30th 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 the 1940 Act, the Adviser hereby agrees that
any records 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
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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 a 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 of its
duties or by reason of its reckless disregard of its obligations and duties
hereunder.
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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 the 1940 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.
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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: /s/ Xxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxxxxx
Attest: XXXX XXXXX FUND ADVISER, INC.
By: /s/ Xxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxxxx
