EXHIBIT 5(h)
ADVISORY AGREEMENT
(Xxxxxxx High-Yield Bond Fund)
This ADVISORY AGREEMENT (the "Agreement") is made as of April 6,
1998, by and between XXXXXXX INVESTMENTS, a Massachusetts business trust
(the "Trust"), and XXXXXX MANAGEMENT CORPORATION, a Michigan corporation
(the "Adviser").
WHEREAS, the Trust is an open-end management investment company,
registered under the Investment Company Act of 1940 (the "1940 Act"), and
has created a series of shares having its own investment objective, policies
and limitations known as the "Xxxxxxx High-Yield Bond Fund" (the "Fund");
WHEREAS, the Trust desires to retain the Advisor to render
investment advisory and management services for the Fund under the terms
hereof; and
WHEREAS, the Adviser has been organized to operate as an investment
adviser and desires to provide investment advisory services to the Trust
with respect to the Fund, and is registered as an Investment Adviser under
the Investment Advisers Act of 1940, as amended;
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. Employment of the Adviser. The Trust hereby employs the
Adviser to act as investment adviser for, and to manage the investment and
reinvestment of the assets of, the Fund in accordance with the investment
objective and policies and limitations for the Fund, and to administer its
affairs to the extent requested by and subject to the supervision of the
Trustees of the Trust for the period and upon the terms herein set forth.
The investment of monies shall be subject to all applicable restrictions of
the Declaration of Trust and Bylaws of the Trust as may from time to time be
in force.
The Adviser accepts such employment and agrees during such period to
render such services and to assume the obligations herein set forth for the
compensation herein provided. Subject to the supervision and direction of
the Trustees, to the restrictions of the Declaration of Trust and Bylaws of
the Trust, as amended from time to time, to the provisions of the 1940 Act
and to the statements relating to the Fund's investment objectives,
investment policies and investment restrictions as the same are set forth in
the currently effective Prospectus and Statement of Additional Information
relating to the shares of the beneficial interest of the Fund under the
Securities Act of 1933, as amended (the "Prospectus"), the services provided
by the Adviser include, but are not to be limited to: furnishing
continuously an investment program and determining from time to time which
securities shall be purchased, sold or exchanged and what portion of the
assets of the Fund shall be held in authorized securities or cash; making
decisions for the Fund as to the manner in which voting rights, rights to
consent to action and any other rights pertaining to the Fund's portfolio
securities shall be exercised; implementing investment policies and
strategies; and taking, on behalf of the Fund, all action which the Adviser
deems necessary to implement the investment policies determined as provided
above, and in particular placing all orders for the purchase or sale of
portfolio securities for the Fund's account with brokers or dealers selected
by it, and to that end, giving instructions to the Custodian of the Fund as
to deliveries of securities and payments of cash for the account of the
Fund. The Adviser shall for all purposes herein provided be deemed to be an
independent contractor and, unless otherwise expressly provided or
authorized, shall have no authority to act for or represent the Fund in any
way or otherwise be deemed an agent of the Fund. It is understood and
agreed that the Adviser, by separate agreements with the Trust, may also
serve the Fund in other capacities.
2. Compensation of the Adviser. For the services and
facilities described in Section 1, the Fund will pay to the Adviser at the
end of each calendar month, an investment advisory and management fee,
computed daily and payable monthly, at an annual rate of 0.80% of the
average net assets of the Fund. For the month and year in which this
Agreement become effective or terminates, there shall be an appropriate
proration on the basis of the number of days that the Agreement is in effect
during the month and year, respectively. The services of the Adviser to the
Fund under this Agreement are not to be deemed exclusive, and the Adviser
shall be free to render similar services or other services to others.
3. Expenses Borne by Fund. In addition to the fee of the
Adviser, the Fund shall assume and pay any expenses for services rendered by
its Custodian, Transfer Agent, Dividend Disbursing Agent and Administrator
for the safekeeping of the Fund's securities or other property, for keeping
its books of account, and for any other charges of such entities. The
Adviser shall not be required to pay, and the Fund shall assume and pay, the
charges and expenses of the Fund's operations, including any compensation of
the Trustees, an administrator or a distributor, charges and expenses of
independent auditors, of legal counsel, any registrar of the Fund, costs of
acquiring and disposing of portfolio securities, interest, if any, on
obligations incurred by the Fund, cost of share certificates, if any, and of
reports, membership dues in the Investment Company Institute or any similar
organization, reports and notices to shareholders, other like miscellaneous
expenses and all taxes, costs and fees payable to federal, state or other
governmental agencies or others on account of the registration of securities
issued by the Trust, filing of corporate documents or otherwise. The Fund
shall not pay or incur any obligation for any expenses for which the Fund
intends to seek reimbursement from the Adviser or adjustment of the
Adviser's fee as herein provided without first obtaining the written
approval of the Adviser.
4. Allocation of Brokerage; Calculation of Net Asset Value;
Sub-Adviser. (a) The Adviser shall place all orders for the purchase or
sale of portfolio securities for the accounts of the Fund with brokers or
dealers selected by the Adviser, and to that end the Adviser is authorized
as the agent of the Fund to give instructions to the Custodians of each Fund
as to deliveries of securities and payment of cash for the account of the
Fund. In connection with the selection of such brokers or dealers and the
placing of such orders, the Adviser shall use its best efforts to seek to
execute security transactions at prices that are advantageous to the Fund
and (when a disclosed commission is being charged) at reasonably competitive
commission rates. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934) to the Adviser and the Adviser is
expressly authorized to pay any broker or dealer who provides such brokerage
and research services a commission for executing a security transaction
which is in excess of the amount of commission another broker or dealer
would have shared for effecting that transaction if the Adviser determines
in good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such broker or
dealer, viewed in terms of either that particular transaction or the overall
responsibilities that the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. Subject to the
requirement set forth in the second sentence of this paragraph, the Adviser
is authorized to consider, as a factor in the selection of any broker or
dealer with whom purchase or sale orders may be placed, the fact that such
broker or dealer has sold or is selling shares of the Fund, or any other
series of the Fund, or of other investment companies sponsored by the
Adviser or its affiliates.
(b) The net asset value for each class of the Fund's shares
shall be calculated as of the close of business of the New York Stock
Exchange on each day that such exchange is open for business, and as of such
other time or times as the Trustees may determine in accordance with the
provisions of the 1940 Act and the policies and procedures established from
time to time by the Board of Trustees of the Trust. On each day when net
asset value is not calculated, the net asset value of a share of any class
of the Fund's shares shall be deemed to be the net asset value of such a
share as of the last day on which such calculation was made for the purpose
of the foregoing computations.
(c) The Adviser is authorized to employ one or more
organizations or entities to act as a subadviser to the Fund, provided that
any such organization or entity shall be registered as an investment adviser
under the federal Investment Advisers Act of 1940, as amended, and any
applicable state laws, or shall be exempt from such registration in all
respects. If such a subadviser is employed by the Adviser, the Adviser
shall be responsible for insuring that such subadviser adequately performs
all functions and responsibilities of the Adviser which are delegated by the
Adviser to the subadviser, the Adviser shall be permitted to terminate any
agreement for subadvisory services at any time, and to employ another such
subadviser at any time, without prior notice to, or consent or approval by,
the Trust.
5. Permissible Investments. Subject to applicable statutes and
regulations, it is understood that Trustees, officers or agents of the Trust
are or may be interested in the Adviser as officers, directors, agents,
shareholders or otherwise, and that the officers, directors, shareholders
and agents of the Adviser may be interested in the Trust otherwise than as a
director, officer or agent.
6. Limitation on Adviser Liability. The Adviser shall use its
best judgment and knowledge in rendering the services to be provided by it
hereunder, and the Fund agrees and acknowledges that the Adviser shall not
be liable for any loss suffered by the Fund as a result of the investment
decisions made by the Adviser in managing the assets of the Fund.
7. Term; Termination. This Agreement shall become effective
with respect to the Fund on the date hereof and shall remain in full force
until April 1, 2000, unless sooner terminated as hereinafter provided. This
Agreement shall continue in force from year to year thereafter with respect
to the Fund, but only as long as such continuance is specifically approved
for the Fund at least annually in the manner required by the 1940 Act and
the rules and regulations thereunder; provided, however, that if the
continuation of this Agreement is not approved for the Fund, the Adviser may
continue to serve in such capacity for the Fund in the manner and to the
extent permitted by the 1940 Act and the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its
assignment by the Adviser, and may be terminated by the Board of Trustees of
the Trust, by vote of a majority of the outstanding voting securities of the
Trust, or by the Adviser, at any time without cause and without the payment
of any penalty on sixty (60) days' written notice by one party to the other
party. This Agreement may also be terminated immediately, upon delivery of
notice of termination and without the payment of any penalty, by the Trust
in the event that the Board of Trustees determines that Cause for
termination exists. The term "Cause" shall include, without limitation, (i)
a material breach of this Agreement or other action or omission by the
Adviser which has or is likely to have a material and imminent adverse
effect on the Fund or its shareholders, (ii) any other breach of this
Agreement by the Adviser which is not cured within twenty (20) business days
after written notice of such breach from the Board, (iii) the insolvency or
the filing of bankruptcy or reorganization proceedings by or against the
Adviser, or (iv) the conviction of the Adviser or any director or executive
officer of the Adviser of a felony. The terms "assignment" and "majority of
the outstanding voting securities" have the meanings set forth in the 1940
Act and the rules and regulations thereunder. Termination of this Agreement
shall not affect the right of the Adviser to receive payments on any unpaid
balance of the compensation described in Section 2 earned prior to the
effective date of such termination.
8. Severability. If any provision of this Agreement shall be
held or made invalid or unenforceable by a court decision, statute, rule or
otherwise, the remainder shall not be thereby affected.
9. Notices. Any notice under this Agreement shall be in
writing, addressed and delivered or mailed, postage prepaid, to the other
party at such address as such other party may designate for the receipt of
such notice.
10. Limitation of Trust Liability. The Declaration of Trust
establishing Xxxxxxx Investments, dated July 19, 1993, a copy of which,
together with all amendments thereto (the "Declaration"), is on file in the
office of the Secretary of the Commonwealth of Massachusetts, provides that
the name "Xxxxxxx Investments" refers to the Trustees under the Declaration
collectively as Trustees, but not as individuals or personally; and no
Trustee, shareholder, officer, employee or agent of Xxxxxxx Investments,
shall be held to any personal liability, nor shall result be had to their
private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of said Xxxxxxx Investments, but
the Trust Estate only shall be liable.
11. Defined Terms. Terms not defined herein shall have the same
meaning as such terms are used in the currently effective prospectus with
respect to shares of the Fund.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this
Agreement to be executed on the day and year first above written.
XXXXXXX INVESTMENTS, on behalf of the Xxxxxxx High-Yield Bond Fund
By: /S/ XXXX X. XXXXXXXX
Xxxx X. Xxxxxxxx, Chairman
XXXXXX MANAGEMENT CORPORATION
By: /S/ XXXX X. XXXXXX
Xxxx X. Xxxxxx, President
