INVESTMENT ADVISORY AGREEMENT
May 3, 1999
XXXXXXX ASSET MANAGEMENT CORPORATION
0000 Xxxxxx xx xxx Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Gentlemen:
The undersigned, Xxxxxxx Investors Trust, a Delaware business trust
(the "Trust"), is an investment company registered under the Investment
Company Act of 1940, as amended ("1940 Act"). The Trust hereby engages you
to act as the investment adviser to each series of the Trust set forth on
Schedule I and any other series of the Trust as the parties may agree from
time to time (collectively, the "Funds"), subject to the terms and conditions
set forth below.
SECTION 1. INVESTMENT ADVISORY SERVICES.
a. You will regularly provide each Fund with investment research,
advice and supervision and will furnish continuously an investment program
for each Fund, consistent with the investment objectives and policies of each
Fund. You will from time to time recommend to each Fund what securities, in
your opinion, should be purchased or sold by the Fund and what portion of the
assets of the Fund should remain uninvested. In conducting such review and
making such recommendations, you will be guided by each Fund's investment
policies and restrictions as described in the Trust's registration statement
under the Securities Act of 1933, as amended, and the 1940 Act, as filed with
the Securities and Exchange Commission and as amended from time to time; by
policies adopted by the Board of Trustees; and by the provisions of the 1940
Act and the rules promulgated thereunder, so that at all times each Fund will
be in compliance with its investment policies and restrictions and with the
requirements of the 1940 Act. The Trust agrees to supply you with copies of
all such documents and to notify you of any changes in the Funds' investment
policies and restrictions.
b. In rendering such investment advisory services to the Fund
pursuant to this Agreement, you may employ, retain or otherwise avail
yourself of the services or facilities of other persons or organizations for
the purpose of providing you or the Fund with statistical and other factual
information, advice regarding economic factors and trends, advice as to
occasional transactions in specific securities or any other information,
advice or assistance that you may deem necessary, appropriate or convenient
for the discharge of your obligations hereunder or otherwise helpful to the
Fund or in the discharge of your overall responsibilities with respect to the
other accounts for which you or your affiliates serve as investment adviser.
c. You may employ one or more sub-investment advisers (each a
"Subadviser") to provide investment advisory services to one or more of the
Funds by entering into a written agreement with each Subadviser. However, any
agreement first will be approved in accordance
with the requirements of the 1940 Act as such requirements may be modified or
superseded by rule, regulation, order or interpretive position of the Securities
and Exchange Commission. The authority given to you in this Agreement may be
delegated by you under any such agreement; provided, that any Subadviser will be
subject to the same restrictions and limitations on investments and brokerage
discretion as you are. The Trust agrees that you will not be accountable to any
Fund or its shareholders for any loss or other liability relating to specific
investments directed by any Subadviser, even though you retain the right to
reverse any such investment, because, in the event a Subadviser is retained, you
and the Funds will rely almost exclusively on the expertise of such Subadviser
for the selection and monitoring of specific investments.
d. You and any person performing executive or trading functions for
a Fund, whose services were made available to the Fund by you, are
specifically authorized to allocate brokerage and principal business to firms
that provide such services or facilities and to cause a Fund to pay a member
of a securities exchange or any other securities broker or dealer an amount
of commission for effecting a securities transaction in excess of the amount
of commission another member of an exchange, broker or dealer would have
charged for effecting that transaction, if you or such person determine in
good faith that such amount of commission is reasonable in relation to the
value of the brokerage and research services (as such services are defined in
Section 28(e) of the Securities Exchange Act of 1934) provided by such
member, broker or dealer, viewed in terms of either that particular
transaction or your or such person's overall responsibilities with respect to
the accounts as to which you or such person exercise investment discretion
(as that term is defined in Section 3(a)(35) of the Securities Exchange Act
of 1934).
SECTION 2. BOOKS, RECORDS AND REPORTS, ETC.
a. You will maintain all books and records with respect to each
Fund's securities transactions required by sub-paragraphs (b)(5), (6), (9)
and (10) and paragraph (f) of Rule 31a-1 under the 1940 Act (other than those
records being maintained by the Trust's administrator, custodian or transfer
agent) and preserve such records for the periods prescribed therefor by Rule
31a-2 under the 1940 Act.
b. You will furnish to the Board of Trustees, at its regularly
scheduled meetings, and at such other times as the Board may reasonably
request, a resume of the portfolio and report on all matters pertaining to
your services as investment adviser. In addition, you will furnish the Trust
with such reports and other data as the Board may request, including, without
being limited to, industry surveys, news of recent developments, statistical
data, and such other information as may keep the Board properly informed on
developments relating to each Fund's portfolio, or similar data relating to
securities which you recommend for inclusion in the portfolio of each Fund.
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SECTION 3. MULTIPLE CAPACITIES.
a. Nothing contained in this Agreement will prohibit you from
acting, and being separately compensated for acting, in one or more
capacities on behalf of the Trust including, but not limited to, the
capacities of administrator, broker and distributor. The Trust understands
that you may act as investment adviser or in other capacities on behalf of
other investment companies and customers. While information and
recommendations you supply to the Funds will in your judgment be appropriate
under the circumstances and in light of the investment objectives of each
Fund, they may be different from the information and recommendations you
supply to other Funds, investment companies and customers. You will give the
Funds equitable treatment under the circumstances in supplying information,
recommendations and any other services requested of you, but you will not be
required to give preferential treatment to the Funds as compared with the
treatment given to any other investment company or customer. Whenever you
will act in multiple capacities on behalf of the Funds, you will maintain the
appropriate separate accounts and records for each such capacity. All
information and advice supplied by you to each Fund hereunder will be for its
own use exclusively.
b. Nothing in this Agreement will in any way limit or restrict you
or any of your officers, directors, or employees from buying, selling or
trading in any securities for your or their own accounts or other accounts.
c. When you deem the purchase or sale of a security to be in the
best interest of a Fund as well as other clients, you may, to the extent
permitted by applicable laws and regulations, aggregate the securities to be
sold or purchased in order to obtain the best execution and lower brokerage
commissions, if any. In such event, you will allocate the securities so
purchased or sold, as well as the expenses incurred in the transaction, in
the manner you consider to be the most equitable and consistent with your
fiduciary obligations to the Funds and to your other clients.
d. You are an independent contractor and not an employee of the
Trust for any purpose. If you ever give any advice to your clients
concerning the shares of the Trust, you will act solely as investment counsel
for such clients and not in any way on behalf of the Trust or any Fund.
SECTION 4. PAYMENT OF EXPENSES.
a. Except as otherwise provided herein, you will at your own expense
furnish to the Trust office space in your offices or in such other place as
may be agreed upon from time to time, and all necessary office facilities,
equipment and personnel for managing each Fund's investments, and you will
arrange, if desired by the Trust, for members of your organization to serve
as trustees, officers or agents of the Trust.
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b. You will pay directly or reimburse the Trust for the compensation
(if any) of the Trustees who are affiliated with, or "interested persons" (as
defined in the 0000 Xxx) of, you and all officers of the Trust.
c. The Trust, on behalf of each Fund to the extent allowable to that
Fund, will assume and will pay: (i) charges and expenses for fund
accounting, pricing and appraisal services and related overhead, including,
to the extent such services are performed by your personnel, or your
affiliates, office space and facilities and personnel compensation, training
and benefits; (ii) the charges and expenses of auditors; (iii) the charges
and expenses of any administrator, custodian, transfer agent, plan agent,
dividend disbursing agent and registrar appointed by the Trust; (iv) issue
and transfer taxes chargeable to a Fund in connection with securities
transactions to which the Fund is a party; (v) insurance premiums, interest
charges, dues and fees for membership in trade associations and all taxes and
corporate fees payable by the Trust to federal, state or other governmental
agencies; (vi) fees and expenses involved in registering and maintaining
registrations of the Trust and/or its shares with the Commission, state or
blue sky securities agencies and foreign countries, including the preparation
of prospectuses and statements of additional information for filing with the
Commission; (vii) all expenses of shareholders' and Trustees' meetings and of
preparing, printing and distributing prospectuses, notices, proxy statements,
and reports to shareholders and reports to governmental agencies;
(viii) charges and expenses of legal counsel to the Trust and the Trustees;
(ix) any distribution fees paid by a Fund in accordance with Rule 12b-1 under
the 1940 Act; (x) compensation of those Trustees of the Trust who are not
affiliated with or interested persons of you, the Trust (other than as
Trustees) or Xxxxxxx Securities, Inc.; (xi) the cost of preparing and
printing share certificates; and (xii) interest on borrowed money, if any.
d. In addition to the expenses described in Section 4(c) above, each
Fund will pay all brokers' and underwriting commissions chargeable to the
Fund in connection with securities transactions to which the Fund is a party.
SECTION 5. COMPENSATION FOR SERVICES.
a. Each Fund will pay you, as compensation for your services and
expenses assumed hereunder, a fee as set forth in Schedule II. Management
fees payable hereunder will be computed daily and paid monthly in arrears.
If this Agreement is effective subsequent to the first day of the month, or
if this Agreement is terminated, the fee provided in this section will be
computed on the basis of the number of days in the month for which this
Agreement is in effect, subject to a pro rata adjustment based on the number
of days elapsed in the current month as a percentage of the total number of
days in such month.
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b. You may from time to time agree not to impose all or a portion of
your fee otherwise payable hereunder (in advance of the time such fee or a
portion thereof would otherwise accrue) and/or undertake to pay or reimburse
the Trust for all or a portion of its expenses not otherwise required to be
borne or reimbursed by you. Any such fee reduction or undertaking may be
discontinued or modified by you at any time.
c. Nothing herein will preclude you or your affiliates from
executing brokerage transactions for the Funds, charging the Funds brokerage
commissions for these transactions and deriving a profit from these
transactions.
SECTION 6. LIABILITY OF THE INVESTMENT ADVISER AND TRUST.
a. You will be liable for your own acts and omissions caused by your
willful misfeasance, bad faith, or gross negligence in the performance of
your duties or by your reckless disregard of your obligations under this
Agreement, and nothing herein will protect you against any such liability to
the Trust or its shareholders. You will not be liable for the acts and
omissions of any agent employed by you, nor for those of any bank, trust
company, broker or other person with whom or into whose hands any moneys,
shares of the Trust or securities and investments may be deposited or come in
compliance with the provisions of this Agreement. You will not be liable for
any defect in title of any property acquired, nor for any loss unless it
occurs through your own willful default. Subject to the first sentence of
this section, you will not be liable for any action taken or omitted on
advice, obtained in good faith, of counsel, provided such counsel is
satisfactory to the Trust.
b. None of the trustees, officers, agents or shareholders of the
Trust will be personally liable hereunder or are assuming any liability for
obligations entered into on behalf of the Trust. All persons dealing with
the Trust must look solely to the property of the Trust for the enforcement
of any claims against the Trust. No Fund will be liable for any claims
against any other Fund of the Trust.
SECTION 7. USE OF THE NAME "XXXXXXX."
a. The Trust agrees that in the event that neither you nor any of
your affiliates acts as an investment adviser to the Trust or a Fund, the
name of the Trust or Fund will be changed to one that does not contain the
name "Xxxxxxx" or otherwise suggest an affiliation with you.
SECTION 8. TERMINATION OF AGREEMENT, ASSIGNMENT AND AMENDMENT.
a. This Agreement may be terminated at any time with respect to any
Fund without the payment of any penalty upon 60 days' written notice by the
terminating party to the other party, by you or by the Trust acting pursuant
to a resolution adopted by the Board, or by the vote of the holders of the
lesser of (1) 67% of the affected Fund's voting shares present at a meeting
if
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the holders of more than 50% of the outstanding shares of that Fund are present
in person or by proxy, or (2) more than 50% of the outstanding shares of that
Fund.
b. This Agreement will automatically terminate in the event of its
assignment. Termination will not affect rights of the parties which have
accrued prior thereto.
c. This Agreement contains the entire agreement of the parties
hereto, and is intended to be the complete and exclusive statement of the
terms hereof. It may not be added to or changed orally, and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with any applicable requirements of the 1940 Act as modified or
superseded by any rule, regulation, order or interpretive position of the
Commission.
SECTION 9. DURATION OF AGREEMENT.
a. Unless sooner terminated, this Agreement will continue in effect
until July 31, 2001, and from year to year thereafter until terminated,
provided that the continuation of the Agreement and the terms thereof are
approved annually in accordance with the requirements of the 1940 Act, as
modified or superseded by rule, regulation, order or interpretative position
of the Commission, subject to your right and the Trust's right to terminate
this Agreement as provided in Section 8 hereof.
SECTION 10. DEFINITIONS.
a. The terms "assignment" and interested person" when used in this
Agreement will have the meanings given such terms in the 1940 Act.
SECTION 11. CONCERNING APPLICABLE PROVISIONS OF LAW.
a. This Agreement will be subject to all applicable provisions of
law, including, without being limited to, the applicable provisions of the
1940 Act. To the extent that any provisions herein conflict with any
applicable provisions of law, the latter will control.
b. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
c. This Agreement will be governed by the substantive law of the
State of New York and the applicable provisions of the 1940 Act.
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d. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
SECTION 12. EFFECTIVE DATE.
a. This Agreement is effective May 3, 1999.
SECTION 13. MISCELLANEOUS.
a. The captions in this agreement are included for convenience of
reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
Very truly yours,
XXXXXXX INVESTORS TRUST
By:
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Name:
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Title:
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Attest:
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Xxxxxxx X. Xxxxx
Secretary
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Accepted:
XXXXXXX ASSET MANAGEMENT CORPORATION
By:
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Name:
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Title:
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Attest:
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Xxx X. Xxxxxxx
Chief Executive Officer
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SCHEDULE I
As of May 3, 1999:
Xxxxxxx Fund
Xxxxxxx Money Market Fund
Xxxxxxx Dow 30 Focused Fund
Xxxxxxx Financial Services Fund
Xxxxxxx Small Cap Value Fund
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SCHEDULE II
Annual Fee Rate as a Percentage Fund
of Average Daily Net Asset Value
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Xxxxxxx Fund 0.60
Xxxxxxx Money Market Fund 0.45
Xxxxxxx Dow 30 Focused Fund 0.60
Xxxxxxx Financial Services Fund 0.75
Xxxxxxx Small Cap Value Fund 1.00
The average net asset value for the month will be based on the net
asset value used in determining the price at which Fund shares are sold,
repurchased or redeemed on each day of the month.
If this Agreement becomes effective as to a Fund subsequent to the
first day of a month, or terminates before the last day of a month, your
compensation for such fraction of the month will be determined by applying
the foregoing percentages to the average daily net asset value of the Fund
during such fraction of a month and in the proportion that such fraction of a
month bears to the entire month.
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