INVESTMENT ADVISORY AGREEMENT
Xxxxxx Xxxx Investment Funds (the "Trust"), a business trust
organized under the law of The Commonwealth of Massachusetts, entered into an
investment advisory agreement with Bank Xxxxxx Xxxx & Co., Ltd., New York
Branch (the "Adviser"), a corporation organized under the laws of the state of
Delaware, as of July 1, 1998. The Trust herewith confirms its agreement with
the Adviser regarding investment advisory services to be provided by the
Adviser in connection with the Trust's Xxxxxx Xxxx Global Income Fund (the
"Fund") as follows:
1. Investment Description; Appointment
The Trust desires to employ the Fund's capital by investing and
reinvesting in investments of the kind and in accordance with the limitations
specified in the Trust's Master Trust Agreement, as the same may from time to
time be amended, and in its Registration Statement as from time to time in
effect, and in such manner and to such extent as may from time to time be
approved by the Board of Trustees of the Trust. Copies of the Trust's
Registration Statement and Master Trust Agreement have been or will be
submitted to the Adviser. The Trust agrees to provide copies of all amendments
to the Trust's Registration Statement and Master Trust Agreement to the
Adviser on an on-going basis. The Trust desires to employ and hereby appoints
the Adviser to act as investment adviser to the Fund. The Adviser accepts the
appointment and agrees to furnish the services described herein for the
compensation set forth below.
2. Services as Investment Adviser
Subject to the supervision and direction of the Board of Trustees of
the Trust, the Adviser will (a) act in accordance with the Trust's Master
Trust Agreement, the Investment Company Act of 1940 and the Investment
Advisors Act of 1940, as the same from time to time be amended, (b) manage the
Fund's assets in accordance with its investment objective and policies as
stated in the Trust's Registration Statement as from time to time in effect,
(c) make investment decisions and exercise voting rights in respect of
portfolio securities for the Fund and (d) place purchase and sale orders on
behalf of the Fund. In providing these services, the Adviser will provide
investment research and supervision of the Fund's investments and conduct a
continual program of investment, evaluation and, if appropriate, sale and
reinvestment of the Fund's assets. In addition, the Adviser will furnish the
Fund with whatever statistical information the Fund may reasonably request
with respect to the securities that the Fund may hold or contemplate
purchasing.
In addition, Subject to the supervision and direction of the Board of
Trustees of the Trust, the Adviser undertakes to perform the following
administrative and shareholder services to the extent that no other party is
obligated to perform them on behalf of the Fund: (1) furnishing certain
internal executive and administrative services; responding to shareholder
inquiries; and providing stationery and office supplies in connection with
the foregoing; (2) providing the Fund with office space (which may be the
Adviser's own offices); (3) furnishing certain corporate secretarial services,
including assisting in the preparation of materials for meetings of the Board
of Trustees; (4) coordinating and preparation of proxy statements and annual
and semi-annual reports to the Fund's shareholders; (5) assisting in the
preparation of the Fund's tax returns; (6) assisting in monitoring and
developing compliance procedures for the Fund which will include, among other
matters, procedures for monitoring compliance with the Fund's investment
objective, policies, restrictions, tax matters and applicable laws and
regulations; (7) acting as liaison between the Fund and the Fund's independent
public accountants, counsel, custodian or custodians, administrator and
transfer and dividend-paying agent and registrar, and taking all reasonable
action in the performance of its obligations under this Agreement to assure
that all necessary information is made available to each of them; and (8)
furnishing to the Board of Trustees quarterly written reports which set out
the amounts expended under the Distribution and Shareholder Services Plans and
the purposes for which those expenditures were made.
In performing all services under this Agreement, the Adviser shall
act in conformity with applicable law, the Trust's Master Trust Agreement and
By-Laws, and all amendments thereto, and the Trust's Registration Statement,
as amended from time to time.
3. Brokerage
In executing transactions for the Fund and selecting brokers or
dealers, the Adviser will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any Fund
transaction, the Adviser will consider all factors it deems relevant
including, but not limited to, breadth of the market in the security, the
price of the security, the financial condition and execution capability of the
broker or dealer and the reasonableness of any commission for the specific
transaction on a continuing basis. In selecting brokers or dealers to execute
a particular transaction and in evaluating the best overall terms available,
the Adviser may consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) provided
to the Trust and/or other accounts over which the Adviser or an affiliate
exercises investment discretion.
4. Information Provided to the Trust
The Adviser will use its best efforts to keep the Trust informed of
developments materially affecting the Fund, and will, on its own initiative,
furnish the Trust from time to time whatever information the Adviser believes
is appropriate for this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in rendering the
services described in paragraphs 2, 3 and 4 above. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in
- 2 -
connection with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect the Adviser
against any liability to the Fund or its shareholders to which the Adviser
would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence on its part in the performance of its duties from reckless
disregard by it of its obligations and duties under this Agreement ("disabling
conduct"). The Fund will indemnify the Adviser against, and hold it harmless
from, any and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand, action
or suit not resulting from disabling conduct by the Adviser. Indemnification
shall be made only following: (i) a final decision on the merits by a court or
other body before whom the proceeding was brought that the person to be
indemnified was not liable by reason of disabling conduct or (ii) in the
absence of such a decision, a reasonable determination, based upon a review of
the facts, that the person to be indemnified was not liable by reason of
disabling conduct by (a) the vote of a majority of a quorum of non-party
trustees who are not "interested persons" of the Trust or (b) an independent
legal counsel in a written opinion.
6. Compensation
(a) In consideration of the services rendered pursuant to this
Agreement, the Fund will pay the Adviser after the end of each calendar
quarter a fee for the previous quarter calculated at an annual rate of .65 of
1.00% of the Fund's average daily net assets.
(b) Upon any termination of this Agreement before the end of a
quarter, the fee for such part of that quarter shall be prorated according to
the proportion that such period bears to the full quarterly period and shall
be payable upon the date of termination of this Agreement. For the purpose of
determining fees payable to the Adviser, the value of the Fund's net assets
shall be computed at the times and in the manner specified in the Trust's
Registration Statement as from time to time in effect.
7. Expenses
The Adviser will bear all expenses in connection with the performance
of its services under this Agreement, including compensation of and office
space for its officers and employees connected with investment and economic
research, trading and investment management and administration of the Fund, as
well as the fees of all Trustees of the Trust who are affiliated with the
Adviser or any of its affiliates. The Fund will bear certain other expenses to
be incurred in its operation, including: organizational expenses; taxes,
interest, brokerage costs and commissions; fees of Trustees of the Trust who
are not officers, directors, or employees of the Adviser, the Fund's
distributor or administrator or any of their affiliates; Securities and
Exchange Commission fees; state Blue Sky qualification fees; charges of the
custodian, any subcustodians, and transfer and dividend-paying agents;
insurance premiums; outside auditing, pricing and legal expenses; costs of
maintenance of the Trust's existence; costs attributable to investor services,
including without limitation, telephone and personnel expenses; costs of
printing stock certificates; costs of preparing and printing prospectuses and
statements of
- 3 -
additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meeting of the
shareholders of the Fund and of the officers or Board of Trustees of the
Trust, membership fees in trade associations; litigation and other
extraordinary or non-recurring expenses. In addition, the Fund will pay
distribution fees pursuant to a Distribution Plan adopted under Rule 12b-1 of
the Investment Company Act of 1940, as amended, and pursuant to a Shareholder
Services Plan.
7. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund (including
fees pursuant to this Agreement and the Fund's sub-advisory agreement, but
excluding distribution fees, interest, taxes, brokerage and, if permitted by
state securities commissions, extraordinary expenses) exceed the expense
limitation of any state having jurisdiction over the Fund, the Adviser will
reimburse the Fund for such excess expenses in the same proportion as its fees
under this Agreement bear to the combined fees for investment advice and
sub-investment advice. The Adviser's expense reimbursement obligation will be
limited to the amount of its fees received pursuant to this Agreement. Such
expense reimbursement, if any, will be estimated, reconciled and paid on a
monthly basis.
8. Services to Other Companies or Accounts
The Trust understands that the Adviser now acts, will continue to
act, or may in the future act, as investment adviser to fiduciary and other
managed accounts or as investment adviser to one or more other investment
companies, and the Trust has no objection to the Adviser so acting, provided
that whenever the Fund and one or more other accounts or investment companies
advised by the Adviser have available funds for investment, investments
suitable and appropriate for each will be allocated in accordance with
procedures believed to be equitable to each entity. Similarly, opportunities
to sell securities will be allocated in an equitable manner. The Trust
recognizes that in some cases this procedure may adversely affect the size of
the position that may be acquired or disposed of for the Fund. In addition,
the Trust understands that the persons employed by the Adviser to assist in
the performance of the Adviser's duties hereunder will not devote their full
time to such service and nothing contained herein shall be deemed to limit or
restrict the right of the Adviser or any affiliate of the Adviser to engage in
and devote time and attention to other businesses or to render services of
whatever kind of nature.
9. Term of Agreement
This Agreement shall become effective as of the date first written
above and shall continue for an initial two-year term and shall continue
thereafter so long as such continuance is specifically approved at least
annually by (i) the Board of Trustees of the Trust or (ii) a vote of a
"majority" (as defined in the Investment Company Act of 1940, as amended) of
the Fund's outstanding voting securities, provided that in either event the
continuance is also approved by a majority of the Board of Trustees who are not
- 4 -
"interested persons" (as defined in said Act) of any party to this Agreement,
by vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, on 60 days' written
notice, by the Board of Trustees of the Trust or by vote of holders of a
majority of the Fund's shares, or upon 60 days' written notice, by the
Adviser. This Agreement will also terminate automatically in the event of its
assignment (as defined in said Act).
10. Representation by the Trust
The Trust represents that copy of its Master Trust Agreement, dated
April 30, 1992 together with all amendments thereto, is on file in the office
of the Secretary of The Commonwealth of Massachusetts.
11. Limitation of Liability
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the
trust property of the Fund, as provided in the Master Trust Agreement of the
Trust. The execution and delivery of this Agreement have been authorized by
the Trustees and the sole shareholder of Fund shares and signed by an
authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees and shareholder nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually
or to impose any liability on any of them personally, but shall bind only the
trust property of the Fund as provided in its Master Trust Agreement. The
obligations of this Agreement shall be binding only upon the assets and
property of the Fund and not upon the assets and property of any other
sub-trust of the Trust.
12. Miscellaneous
If both the Adviser and the Sub-Adviser and Servicing Agent cease to
act as investment advisers to the Fund, the Trust agrees that, at the request
of either of them, the Trust's license to use "BJB" or any variation thereof
indicating a connection to either of those entities will terminate and that
the Trust will take all necessary action to change the names of the Trust and
the Fund to names that do not include "BJB" or any such variation.
13. Entire Agreement
This Agreement constitutes the entire agreement between the parties
hereto.
14. Governing Law
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the state of New York without giving effect to the
conflicts of laws principles thereof.
* * * * *
- 5 -
If the foregoing accurately sets forth our agreement, kindly indicate
your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
XXXXXX XXXX INVESTMENT FUNDS
By: /s/ Xxxxxxx X. Xxxxx
-------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
Accepted:
BANK XXXXXX XXXX & CO., LTD., NEW YORK BRANCH
By: /s/ Xxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxx Xxxxxx
Title: Branch Manager and
Senior Vice President
- 6 -
