INVESTMENT ADVISORY AGREEMENT
Between
XXXXX XXXXXXX TRUST
and
XXXXX XXXXXXX ASSOCIATES, INC.
INVESTMENT ADVISORY AGREEMENT dated October 1, 1997
between XXXXX XXXXXXX TRUST, a Massachusetts trust
("the Trust"), on behalf of its Xxxxx Xxxxxxx Financial
Services Fund series (the "Portfolio"), and XXXXX
XXXXXXX ASSOCIATES, INC., a corporation organized and
existing under the laws of the State of Kansas
(hereinafter called the "Manager").
WITNESSETH:
Whereas, the Portfolio is engaged in business as an
open-end management investment company and has
registered as such under the federal Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, the Manager is engaged principally in the
business of rendering investment management and
administrative services and is registered as an
investment adviser under the federal investment
Advisers Act of 1940, as amended: and
WHEREAS, the Portfolio wishes to engage the Manager to
provide certain investment management and
administrative services, and the Manager is
willing to provide such services, all on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and
the mutual promises hereinafter set forth, the
parties hereto agree as follows:
1. Duties and Responsibilities of Manager.
A. Investment Advisory Services. The
Manager shall act as investment adviser
to and shall supervise and direct the
investments of the Portfolio in
accordance with the Portfolio's
investment objectives, program and
restrictions as provided in the
Portfolio's then current Registration
Statement under the Act, and such other
directions or limitations as the
Portfolio may impose by notice in
writing to the Manager. The Manager
shall obtain and evaluate such
information relating to the economy,
industries, businesses, securities
markets and securities as it may deem
necessary or useful in the discharge of
its obligations hereunder and shall
formulate and implement a continuing
program for the management of the
assets and resources of the Portfolio
in a manner consistent with its
investment objective. The Manager
shall for all purposes be deemed to be
an independent contractor and shall,
except as expressly provided or
authorized (whether herein or
otherwise), have no authority to act
for or represent the Portfolio in any
way or otherwise be deemed an agent of
the Portfolio.
In furtherance of its duties hereunder,
the Manager is authorized, in its
discretion and without prior
consultation with the Portfolio, to:
(i) buy, sell, exchange, convert,
lend, and otherwise trade in
any stocks, bonds, and other
securities; financial, stock,
and stock index futures and
options; swap contracts or
other assets; and
(ii) directly place orders and
negotiate the commissions (if
any) for the execution of
transactions in securities,
financial futures, swap
contracts or other assets with
or through such brokers,
dealers, underwriters or
issuers as the Manager may
select.
B. Administrative Services. Subject to
the overall authority of the Board of
Trustees of the Portfolio, the Manager
shall provide general administrative
services and oversee the operation of
the Portfolio ("Administrative
Services"). Such Administrative
Services shall not include investment
advisory, custodial, underwriting and
distribution, transfer agency,
shareholder or accounting services, or
the preparation and filing of the
Portfolio's tax returns, but shall
include, without limitation:
(i) the provision of office space
and equipment necessary in
connection with the maintenance
of the headquarters of the
Portfolio;
(ii) the maintenance of the books
and records of the Portfolio,
and making arrangements for the
meetings of the Trustees of the
Portfolio including the
preparation of agendas and
supporting materials therefor;
(iii) the preparation of
communications and reports to
investors in the Portfolio and
making arrangements for
meetings of such investors;
(iv) the preparation and filing of
all required reports and all
updating and other amendments
to the Portfolio's registration
statement under the Act and the
rules and regulations
thereunder;
(v) the periodic computation and,
as necessary, reporting to the
Trustees of the Portfolio of
the Portfolio's compliance with
its investment objective and
policies with the Portfolio
diversification and other
Portfolio requirements of the
Act and, to the extent
required, the Internal Revenue
Code; and
(vi) the negotiation of agreements
or other arrangements with,
and general oversight and
coordination of the activities
of, agents and others retained
by the Portfolio to provide
custodial, net asset value
computation, Portfolio
accounting, legal, tax and
accounting services.
It is understood that the Manager may,
in its discretion and at its expense,
delegate some or all of its
administrative duties and
responsibilities under this paragraph
1.B to any person provided that the
Manager gives prior notice to the
Portfolio.
C. Reports to Portfolio. The Manager shall
furnish to or place at the disposal of
the Portfolio such information, reports,
evaluations, analyses and opinions
relating to the Manager and its
investment management of the
Portfolio's portfolio securities as the
Portfolio may, at any time or from time
to time, reasonably request or as the
Manager may deem helpful.
D. Reports and Other Communications to
Investors. The Manager shall assist
the Portfolio in providing
communications to investors as may
reasonably be necessary.
E. Portfolio Personnel. The Manager will
permit individuals who are officers or
employees of the Manager to serve (if
duly elected or appointed) as officers,
trustees, members of any committee of
trustees, members of any advisory
board, or members of any other
committee of the Portfolio, without
remuneration or other cost to the
Portfolio.
F. Personnel, Office Space, and Facilities
of Manager. The Manager at its own
expense shall furnish or provide and
pay the cost of such office space,
office equipment, office personnel, and
office services as the Manager requires
in the performance of its investment
advisory, administrative and other
obligations under this Agreement.
2. Allocation of Expenses.
A. Expenses Paid by Manager.
(i) Expenses Paid by Manager.
The Manager shall pay all
salaries, expenses, and fees of
the officers and trustees of
the Portfolio who are employees
of the Manager. The Manager is
not obligated to bear any other
expenses incidental to the
operations and business of the
Portfolio.
(ii) Assumption of Expenses by
Manager. The payment or
assumption by the Manager of
any expense of the Portfolio
that the Manager is not
required by this Agreement to
pay or assume shall not
obligate the Manager to pay or
assume the same or any similar
expense on any subsequent
occasion.
B. Expenses Paid by Portfolio. The
Portfolio shall bear all expenses of
its organization, operations, and
business not specifically assumed or
agreed to be paid by the Manager as
provided in this Agreement. In
particular, but without limiting the
generality of the foregoing, the
Portfolio shall pay:
(i) Management Fees. The fees of
the Manager as provided
in paragraph 3 below;
(ii) Custody and Accounting Services.
All expenses of the transfer,
receipt, safekeeping, servicing
and accounting for the cash,
securities, and other property
of the Portfolio, including all
charges of depositories,
custodians, and other agents,
if any;
(iii) Investor Servicing. All
expenses of establishing,
maintaining and servicing
investor accounts, including
all charges of agents for
account transfers, account
record keeping, and account
distribution or disbursement;
(iv) Distribution and Service Fees.
The fees, if any, payable
pursuant to any plan heretofore
or hereafter adopted by the
Portfolio pursuant to Rule
12b-1 under the Act.
(v) Investor Meetings. All
expenses incidental to holding
meetings of the Portfolio's
investors;
(vi) Pricing. All expenses of
computing the Portfolio's net
asset value, including the cost
of any equipment or services
used for obtaining price
quotations and the fees of any
independent pricing service
authorized by the Trustees of
the Portfolio;
(vii) Communication Equipment. All
charges for equipment or
services used for communication
between the Manager or the
Portfolio and the custodian,
transfer agent or any other
agent selected by the
Portfolio;
(viii) Legal, Accounting, and Tax
Preparation Fees and Expenses.
All charges for services and
expenses of the Portfolio's
legal counsel and independent
auditors;
(ix) Trustees' Fees and Expenses.
All compensation of Trustees of
the Portfolio, other than those
who are interested persons of
the Portfolio, and all expenses
(including fees and
disbursements of their legal
counsel) incurred in connection
with their service;
(x) Federal Registration Fees. All
fees and expenses of registering
and maintaining the registration
of the Portfolio under the Act,
including all fees and expenses
incurred in connection with the
preparation and filing of any
registration statement under the
Act, and any amendments or
supplements that may be made
from time to time;
(xi) Bonding and Insurance. All
expenses of bond, liability,
and other insurance coverage
required by law or deemed
advisable by the Trustees of the
Portfolio;
(xii) Brokerage Commissions. All
brokers' commissions and other
charges incident to the
purchase, sale, or lending of
the Portfolio's portfolio
securities.
(xiii) Interest and Taxes. Interest on
borrowed money and all taxes or
governmental fees payable by or
with respect to the Portfolio to
federal, state, or other
governmental agencies, domestic
or foreign, including stamp or
other transfer taxes;
(xiv) Trade Association Fees. All
fees, dues, and other expenses
incurred in connection with the
membership of the Portfolio in
the Investment Company
Institute or any other trade
association or other investment
organization; and
(xv) Nonrecurring and Extraordinary
Expenses. Such nonrecurring
expenses as may arise, including
the costs of actions, suits, or
proceedings to which the
Portfolio is a party and the
expenses that the Portfolio may
incur as a result of its legal
obligation to provide
indemnification to its officers,
trustees, employees and agents.
3. Management Fees. The Portfolio shall pay the
Manager a fee at an annual rate computed as
follows based on the value of the net assets
of the Portfolio.
A. Method of Computation. The fee shall
be accrued for each calendar day and
the sum of the daily fee accruals shall
be paid monthly to the Manager on the
first business day of the next
succeeding calendar month. The daily
fee accruals will be computed by
multiplying the fraction of one over
the number of calendar days in the year
by 1.50%, and multiplying the resulting
product by the net assets of the
Portfolio as determined in accordance
with the Portfolio's Registration
Statement under the Act as of the close
of business on the previous business day
on which the Portfolio was open for
business.
B. Proration of Fee. If this Agreement
becomes effective or terminates before
the end of any calendar month, the fee
for the period from the effective date
to the end of such calendar month or
from the beginning of such calendar
month to the date of termination, as
the case may be, shall be prorated
according to the proportion which such
period bears to the full month in which
such effectiveness or termination
occurs.
4. Limitation of Portfolio's Normal Business
Expenses. In the event that expenses of the
Portfolio for any fiscal year (not including
any distribution expenses paid by the Portfolio
pursuant to any distribution plan) should exceed
the expense limitation on investment company
expenses enforced by any statute or regulatory
authority of any jurisdiction in which shares of
the Trust are qualified for offer and sale, the
compensation due the Manager for such fiscal
year shall be reduced by the amount of such
excess by a reduction or refund thereof. In the
event that the expenses of the Portfolio exceed
any expense limitation which the Manager may, by
written notice to the Trust, voluntarily declare
to be effective with respect to the Portfolio,
subject to such terms and conditions as the
Manager may prescribe in such notice, the
compensation due the Manager shall be reduced,
and, if necessary, the Manager shall bear the
Portfolio's expenses to the extent required by
such expense limitation.
5. Brokerage. In the selection of brokers or
dealers and the placing of orders for the
purchase and sale of portfolio investments for
the Portfolio, the Manager shall seek to obtain
the most favorable price and execution
available, except to the extent it may be
permitted to pay higher brokerage commissions
for brokerage and research services as
described below. In using its best efforts to
obtain for the Portfolio the most favorable
price and execution available, the Manager,
bearing in mind the Portfolio 's best interests
at all times, shall consider all factors it
deems relevant, including, by way of
illustration, price, the size of the
transaction, the nature of the market for the
security, the amount of the commission, the
timing of the transaction taking into account
market prices and trends, the reputation,
experience and financial stability of the broker
or dealer involved and the quality of service
rendered by the broker or dealer in other
transactions. Subject to such policies as the
Trustees may determine, the Manager shall not
be deemed to have acted unlawfully or to have
breached any duty created by this Contract or
otherwise solely by reason of its having caused
the Trust to pay, on behalf of the Portfolio, a
broker or dealer that provides brokerage and
research services to the Manager an amount of
commission for effecting a portfolio investment
transaction in excess of the amount of
commission another broker or dealer would have
charged for effecting that transaction, if the
Manager determines in good faith that such
amount of commission was 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 Manager's overall
responsibilities with respect to the Portfolio
and to other clients of the Manager as to which
the Manager exercises investment discretion.
The Trust hereby agrees with the Manager that
any entity or person associated with the Manager
which is a member of a nationalsecurities
exchange is authorized to effect any transaction
on such exchange for the account of the
Portfolio which is permitted by Section 11(a)
of the Securities Exchange Act of 1934 and Rule
11a-2-2(T) thereunder, and the Trust hereby
consents to the retention of compensation for
such transactions in accordance with Rule
11a2-2(T)(2)(iv).
6. Manager's Use of the Services of Others. The
Manager may (at its cost except as contemplated
by Paragraph 5 of this Agreement) employ, retain
or otherwise avail itself of the services or
facilities of other persons or organizations for
the purpose of providing the Manager or the
Portfolio with such statistical and other
factual information, such advice regarding
economic factors and trends, such advice as to
occasional transactions in specific securities
or such other information, advise or assistance
as the Manager may deem necessary, appropriate
or convenient for the discharge of its
obligations hereunder or otherwise helpful to
the Portfolio or in the discharge of the
Manager's overall responsibility with respect to
other accounts which it serves as investment
adviser or manager.
7. Ownership of Records. All records required to
be maintained and preserved by the Portfolio
pursuant to the rules or regulations of the
Securities and Exchange Commission under
Section 31(a) of the Act and maintained and
preserved by the manager on behalf of the
Portfolio are the property of the Portfolio and
will be surrendered by the Manager promptly on
request by the Portfolio. The Manager may
retain, for itself, copies of all such records.
8. Reports to Manager. The Portfolio shall furnish
or otherwise make available to the Manager such
prospectuses, financial statements, proxy
statements, reports, and other information
relating to the business and affairs of the
Portfolio as the Manager may, at any time or
from time to time, reasonably require in order
to discharge its obligations under this
Agreement.
9. Other Agreements, Etc. It is understood that
any of the shareholders, Trustees, officers and
employees of the Trust may be a shareholder,
director, officer or employee of, or be
otherwise interested in, the Manager, and in
any person controlled by or under common control
with the Manager, and that the Manager and any
person controlled by or under common control
with the Manager may have an interest in the
Trust. It is also understood that the Manager
and persons controlled by or under common
control with the Manager have and may have
advisory, management service, distribution or
other contracts with other organizations and
persons, and may have other interests and
businesses.
10. Limitation of Liability of Manager. Neither the
Manager nor any of its officers, directors,
stockholders (or partners of stockholders),
agents or employees, nor any person performing
executive, administrative, trading, or other
functions for the Portfolio (at the direction
or request of the manager) or the Manager in
connection with the Manager's discharge of its
obligation undertaken or reasonably assumed with
respect to this Agreement, shall be liable for
any error of judgment or mistake of law or for
any loss suffered by the Portfolio in connection
with the matters to which this Agreement
relates, except for loss resulting from willful
misfeasance, bad faith, or gross negligence in
the performance of its or his duties on behalf
of the Portfolio or from reckless disregard by
the Manager or any such person of the duties of
the Manager under this Agreement.
11. Limitation of Liability of Portfolio. The term
"Xxxxx Xxxxxxx Trust" means and refers to the
trustees from time to time serving under the
Declaration of Trust of the Trust dated
December 18, 1991, as the same may subsequently
thereto have been, or subsequently hereto be,
amended (the "Declaration of Trust"). It is
expressly agreed that the obligations of the
Portfolio hereunder shall not be binding upon
any of the trustees, shareholders, nominees,
officers, agents or employees of the Portfolio
personally, but shall bind only the trust
property of the Portfolio, as provided in the
Declaration of Trust of the Portfolio. The
execution and delivery of this Agreement
have been authorized by the trustees and
shareholders of the Portfolio and this Agreement
has been signed by an authorized officer of the
Portfolio, acting as such, and neither such
authorization by such trustees and shareholders
nor such execution and delivery by such officer
shall be deemed to have been made by any of
them but shall bind only the trust property of
the Portfolio as provided in its Declaration of
Trust.
12. Use of Name. The Manager owns the name "Xxxxx
Xxxxxxx," which may be used by the Trust only
with the consent of the Manager. The Manager
consents to the use by the Trust of the name
"Xxxxx Xxxxxxx Funds" or any other name
embodying the name "Xxxxx Xxxxxxx," but only on
the condition and so long as (i) this Agreement
shall remain in full force, (ii) the Trust shall
fully perform, fulfill and comply with all
provisions of this Agreement expressed herein to
be performed, fulfilled or complied with by it,
and (iii) Xxxxx Xxxxxxx Associates, Inc. is the
Manager of the Trust. No such name shall be used
by the Trust at any time or in any place or for
any purposes or under any conditions except as
in this section provided. The foregoing
authorization by the Manager to the Trust to use
the name "Xxxxx Xxxxxxx" as a part of a business
or name is not exclusive of the right of the
Manager itself to use, or to authorize others
to use, the same; the Trust acknowledges and
agrees that as between the Manager and the
Trust, the Manager has the exclusive right so
to use, or authorize others to use, said name,
and the Trust agrees to take such action as may
reasonably be requested by the Manager to give
full effect to the provisions of this section
(including, without limitation, consenting to
such use of said name). Without limiting the
generality of the foregoing, the Trust agrees
that, upon (i) any termination of this Agreement
by either party, (ii) the violation of any of
its provisions by the Trust or (iii) termination
of this Investment Advisory Agreement between
Xxxxx Xxxxxxx Associates, Inc. and the Trust,
the Trust will, at the request of the Manager
made within six months after such termination or
violation, use its best efforts to change the
name of the Trust so as to eliminate all
reference, if any, to the name "Xxxxx Xxxxxxx"
and will not thereafter transact any business in
a name containing the name "Xxxxx Xxxxxxx" in
any form or combination whatsoever, or designate
itself as the same entity as or successor
an entity of such name, or otherwise use the
name "Xxxxx Xxxxxxx" or any other reference to
the Manager. Such covenants on the part of the
Trust shall be binding upon it, its Trustees,
officers, stockholders, creditors and all other
persons claiming under or through it.
13. Term of Agreement. The term of this Agreement
shall begin on the date first above written, and
unless sooner terminated as hereinafter
provided, this Agreement shall remain in effect
until July 31, 1999. Thereafter, this Agreement
shall continue in effect from year to year,
subject to the termination provisions and all
other terms and conditions hereof, so long as
such continuation shall be specifically approved
at least annually (a) by either the Board of
Trustees of the Portfolio, or by vote of a
majority of the outstanding voting securities of
the Portfolio, and (b) in either event by the
vote, cast in person at a meeting called for the
purpose of voting on such approval, of a
majority of the Trustees of the Portfolio who
are not interested persons of the Trust or the
Manager; provided, however, that if the
continuance of this Agreement is submitted to
the shareholders of the Portfolio for their
approval and such shareholders fail to approve
such continuance of this Contract as provided
herein, the Manager may continue to serve
hereunder in a manner consistent with the
Investment Company Act of 1940 and the rules and
regulations thereunder. The Manager shall
furnish to the Portfolio, promptly upon its
request, such information as may reasonably be
necessary to evaluate the terms of this
Agreement or any extension, renewal or amendment
hereof.
14. Amendment and Assignment of Agreement. This
Agreement may not be amended in any material
respect or assigned without the affirmative vote
of a majority of the outstanding voting
securities of the Portfolio, and this Agreement
shall automatically and immediately terminate
in the event of its assignment.
15. Termination of Agreement. This Agreement may
be terminated by either party hereto, without
the payment of any penalty, upon 60 days' prior
notice in writing to the other party; provided,
that in the case of termination by the
Portfolio, such action shall have been
authorized by resolution of a majority of the
Trustees of the Portfolio who are not parties
to this Agreement or interested persons of any
such party, or by vote of a majority of the
outstanding voting securities of the Portfolio.
16. Miscellaneous.
A. Captions. The captions in this
Agreement are included for convenience
of reference only and in no way define
or delineate any of the provisions
hereof or otherwise affect their
construction or effect.
B. Interpretation. Nothing herein
contained shall be deemed to require the
Portfolio to take any action contrary to
its Declaration of Trust or By-Laws, or
any applicable statutory or regulatory
requirement to which it is subject or by
which it is bound, or to relieve or
deprive the Board of Trustees of the
Portfolio of its responsibility for and
control of the conduct of the affairs of
the Portfolio. This Agreement shall be
construed and enforced in accordance
with and governed by the laws of The
Commonwealth of Massachusetts.
C. Definitions. For the purposes of this
Agreement, the "affirmative vote of a
majority of the outstanding shares" of
the Portfolio means the affirmative
vote, at a duly called and held meeting
of shareholders, (a) of the holders of
67% or more of the shares of the
Portfolio present (in person or by
proxy) and entitled to vote as such
meeting, if the holders of more than 50%
of the outstanding shares of the
Portfolio entitled to vote at such
meeting are present in person or by
proxy, or (b) of the holders of more
than 50% of the outstanding shares of
the Portfolio entitled to vote at such
meeting, whichever is less.
For the purposes of this Agreement, the
terms "affiliated person," "interested
person" and "assignment" shall have
their respective meanings defined in the
Investment Company Act of 1940 and the
rules and regulations thereunder,
subject, however, to such exemptions as
may be granted by the Securities and
Exchange Commission under said Act; the
term "specifically approve at least
annually" shall be construed in a manner
consistent with the Investment Company
Act of 1940 and the rules and
regulations thereunder; and the term
"brokerage and research services" shall
have the meaning given in the Securities
Exchange Act of 1934 and the rules and
regulations thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective
officers thereunto duly authorized and their
respective corporate seals to be hereunto
affixed, as of the date and year first above
written.
XXXXX XXXXXXX TRUST
(on behalf of Xxxxx Xxxxxxx Financial Services Fund)
Attest: ______________ By:_________________________
XXXXX XXXXXXX ASSOCIATES, INC.
Attest: _____________ By:_________________________