AMENDED AND RESTATED
ADVISORY AGREEMENT
AGREEMENT made as of the 1st day of June, 1996, between XXXXX, XXXXXXX &
ASSOCIATES INVESTMENT ADVISORS, INC., d/b/a Xxxxx Xxxxxxx Capital Management
Co., a corporation organized under the laws of the State of Texas and having its
principal place of business in Houston, Texas (the "Portfolio Manager"), and
XXXXX FUNDS, a Massachusetts business trust having its principal place of
business in Houston, Texas (the "Trust").
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(the "1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest in
separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Portfolio Manager is the investment advisor to the Xxxxx U.S.
Government Total Return Bond Fund, a series of the Trust (the "Initial Fund")
and it is anticipated the Portfolio Manager will act as the investment advisor
to future series of the Trust (collectively, the "Funds"); and
WHEREAS, the Advisor, together with the initial administrative service
provider, caused the Trust to be organized in late 1993 and, upon resignation of
the initial administrative service provider in February 1996, assumed many of
the administrative responsibilities of that entity; and
WHEREAS, the Shareholders of the Initial Fund have approved a revised fee
schedule for this Advisory Agreement in recognition of certain additional
services being provided to the Trust by the Advisor;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1 APPOINTMENT OF PORTFOLIO MANAGER.
a) Initial Fund. The Trust hereby appoints the Portfolio Manager to
act as manager and investment adviser to the Initial Fund for the
period and on the terms herein set forth. The Portfolio Manager
accepts such appointment and agrees to render the services herein
set forth, for the compensation herein provided.
b) Additional Funds. In the event that the Trust establishes one or
more series of shares other than the Initial Fund with respect to
which it desires to retain the Portfolio Manager to render
management and investment advisory services hereunder, it shall
so notify the Portfolio Manager
in writing, indicating the advisory fee which will be payable
with respect to the additional series of shares. If the Portfolio
Manager is willing to render such services, it shall so notify
the Trust in writing, whereupon such series of shares shall
become a Fund hereunder and the fee schedule attached hereto
shall be amended accordingly.
2. DUTIES OF PORTFOLIO MANAGER.
The Portfolio Manager, at its own expense, shall furnish the following
services and facilities to the Trust:
a) Investment Program. The Portfolio Manager will (i) furnish
continuously an investment program of each Fund, (ii) determine
(subject to the overall supervision and review of the Board of
Trustees of the Trust) what investments shall be purchased, held,
sold or exchanged by each Fund and what portion, if any, of the
assets of each Fund shall be held uninvested, and (iii) make
changes on behalf of the Trust in the investments of each Fund.
b) The Portfolio Manager shall forward all instructions for the
purchase and sale of portfolio securities for the account of each
Fund to Declaration Service Company, the Trust's Administrator.
c) Additional Duties. The Portfolio Manager will plan and implement
the overall business strategies of the Trust and provide
administrative and managerial support to the Trust. The Portfolio
Manager will (i) establish new series and pay associated start-up
costs, (ii) promote the Funds through its ongoing efforts and
relationships with broker/dealers, potential clients and other
interested persons, (iii) sell shares of the Funds on behalf of
the distributor to qualified institutional and private investors,
and assist the distributor in developing sales organizations to
sell and distribute the Funds, (iv) provide strategic planning
for consideration by the Board, including the establishment of
new series and creation of additional classes of shares, and (v)
research and produce due diligence reports on the Trust's current
and potential service providers, including the administrator,
accountant, custodian, transfer agent and distributor, for the
Board. The Portfolio Manager will advise and assist the officers
of the Trust in taking such steps as are necessary and/or
appropriate to carry out the decisions of the Board and the
committees of the Board regarding the conduct of the business of
the Trust.
3. ALLOCATION OF EXPENSES.
Except for the services to be provided by the Portfolio Manager as set
forth in Paragraph 2 above, the Trust assumes and shall pay all expenses
for all other Trust operations and activities and shall reimburse the
Portfolio Manager for any such expenses incurred by the Portfolio Manager.
The expenses to be borne by the Trust shall include, without limitation:
a) the charges and expenses of any registrar, stock transfer or
dividend disbursing agent, administrator, accounting services
agent, transfer agent, shareholder servicing agent, custodian, or
depository appointed by the Trust for the safekeeping of its
cash, portfolio securities and other property;
b) the charges and expenses of auditors;
c) brokerage commissions for transactions in the portfolio
securities of the Trust;
d) all taxes, including issuance and transfer taxes, and corporate
fees payable by the Trust to Federal, state or other governmental
agencies;
e) the cost of stock certificates (if any) representing shares of
the Trust;
f) expenses involved in registering and maintaining registration of
the Trust and of its shares with the Securities and Exchange
Commission and various states and other jurisdictions, including
reimbursement of actual expenses incurred by the Portfolio
Manager in performing such functions for the Trust, and including
compensation of persons who are Portfolio Manager employees in
proportion to the relative time spend on such matters;
g) all expenses of shareholders' and Trustees' meetings, including
meetings of committees, and of preparing, printing and mailing
proxy statements, quarterly reports, semi-annual reports, annual
reports and other communications to shareholders;
h) all expenses of preparing and setting in type prospectuses, and
expenses of printing and mailing the same to shareholders [but
not expenses of printing and mailing of prospectuses and
literature used for promotional purposes in accordance with
Paragraph 2(d) above];
i) compensation and travel expenses of Trustees who are not
"interested persons" within the meaning to the 1940 Act;
j) the expense of furnishing, or causing to be furnished, to each
shareholder a statement of his account, including the expense of
mailing;
k) charges and expenses of legal counsel and internal
audit/compliance personnel in connection with matters relating to
the Trust, including, without limitations, legal services
rendered in connection with the Trust's corporate and financial
structure and relations with its shareholders, issuance of Trust
shares, and registration and qualification of securities under
Federal, state and other laws;
l) the expenses of attendance at professional meetings of
organizations such as the Investment Company Institute, the No
Load Mutual Fund Association, or Commerce Clearing House by
officers and Trustees of the Trust, and the membership or
association dues of such organizations;
m) all cost and expense of maintaining the books and records of the
Trust, including, but not limited to, general ledger accounting
and preparation of financial statements;
n) the expense of obtaining and maintaining a fidelity bond as
required by Section 17(g) of the 1940 Act;
o) interest payable on Trust borrowings; and
p) postage.
4. PORTFOLIO MANAGEMENT FEE.
a) For the services and facilities to be provided to each of the
Funds by the Portfolio Manager as provided in Paragraph 2 hereof,
the Trust shall pay the Portfolio Manager a monthly fee with
respect to each of the Funds as soon as practical after the last
day of each calendar month, which fee shall be paid at the rate
set forth in the attached fee schedule, based upon the Monthly
Average Net Assets [as defined in subparagraph (c) below] of such
Fund for such calendar month.
b) In the case of termination of this Agreement with respect to any
Fund during any calendar month, the fee with respect to such Fund
for that month shall be reduced proportionately based upon the
number of calendar days during which it is in effect and the fee
shall be computed upon the average net assets of such Fund for
the business days which it is so in effect.
c) The "Monthly Average Net Assets" of any Fund of the Trust for any
calendar month shall be equal to the quotient produced by
dividing i) the sum of the net assets of such Fund, determined in
accordance with procedures established from time to time by or
under the direction of the
Board of Trustees of the Trust in accordance with the Master
Trust Agreement of the Trust, as of the close of business on each
day during such month that such Fund was open for business, by
ii) the number of such days.
5. EXPENSE LIMITATION.
The Portfolio Manager agrees that for any fiscal year of the Trust during
which the total of all expenses of the Trust (including investment advisory
fees under this agreement, but excluding interest, portfolio brokerage
commissions and expenses, taxes and extraordinary items and any other item
excludable under the applicable state laws) exceeds the lowest expense
limitation imposed in any state in which the Trust is then making sales of
its shares or in which its shares are then qualified for sale, the
Portfolio Manager will reimburse the Trust (an amount not to exceed its
investment advisory fees) for such expenses not otherwise excluded from
reimbursement by this Paragraph 5 to the extent that they exceed such
expense limitation.
6. TRUST TRANSACTIONS.
The Portfolio Manager agrees that neither it nor any of its officers or
Directors will take any long or short term position in the shares of the
Trust; provided, however, that such prohibition:
a) shall not prevent the Portfolio Manager from purchasing shares of
the Trust if orders to purchase such shares are placed upon the
receipt by the Portfolio Manager of purchase orders for such
shares and are not in excess of such purchase orders received by
the Portfolio Manager; and
b) shall not prevent the purchase of shares of the Trust by any of
the persons above described for their account and for investment
at the price at which such shares are available to the public at
the time of purchase or as part of the initial capital of the
Trust.
7. RELATIONS WITH TRUST.
Subject to and in accordance with the Trust's Master Trust Agreement and
By-laws of the Trust and the Articles of Incorporation and By-laws of the
Portfolio Manager, respectively, it is understood that Trustees, officers,
agents and shareholders of the Trust are or may be interested in the
Portfolio Manager (or any successor thereof) as directors, officers, or
otherwise; that directors, officers, agents and shareholders of the
Portfolio Manager are or may be interested in the Trust as Trustees,
officers, shareholders, or otherwise; that the Portfolio Manager (or any
such successor) is or may be interested in the Trust as a shareholder or
otherwise; and that the effect of any such adverse interests shall be
governed by said Master Trust Agreement, Articles of Incorporation and
By-laws.
8. LIABILITY OF PORTFOLIO MANAGER AND OFFICERS AND TRUSTEES OF THE TRUST.
No provision of this Agreement shall be deemed to protect the Portfolio
Manager against any liability to the Trust or its shareholders to which it
might otherwise be subject by reason of any willful misfeasance, bad faith
or gross negligence in the performance of its duties or the reckless
disregard of its obligations and duties under this Agreement. Nor shall any
provision hereof be deemed to protect any Trustee or officer of the Trust
against any such liability to which he might otherwise be subject by reason
of any willful misfeasance, bad faith or gross negligence in the
performance of his duties or the reckless disregard of his obligations and
duties. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
9. DURATION AND TERMINATION OF THIS AGREEMENTS.
a) Duration. This Agreement shall become effective with respect to
the Initial Fund on the date hereof and, with respect to any
additional Fund, on the date of receipt by the Trust of notice
from the Portfolio Manager in accordance with Paragraph 1(b)
hereof that the Portfolio Manager is willing to serve as
Portfolio Manager with respect to such Fund. Unless terminated by
herein provided, this Agreement shall remain in full force and
effect for two years after initial approval by shareholders with
respect to the Initial Fund and, with respect to each additional
Fund, until the next date of the Initial Fund is subject to
review for continuance following the date on which such Fund
becomes a Fund hereunder, and shall continue in full force and
effect for a period of one year thereafter with respect to each
Fund so long as such continuance with respect to any such Fund is
approved at lease annually i) by either the Trustees of the Trust
or by vote of a majority of the outstanding voting shares (as
defined in the 0000 Xxx) of such Fund, and ii) in either event by
the vote of a majority of the Trustees of the Trust who are not
parties to this Agreement or "interested persons" (as defined in
the 0000 Xxx) of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
Any approval of this Agreement by the holders of a majority of
the outstanding shares (as defined in the 0000 Xxx) of any Fund
shall be effective to continue this Agreement with respect to any
such Fund notwithstanding i) that this Agreement has not been
approved by the holders of a majority of the outstanding shares
of any other Fund affected thereby, and ii) that this Agreement
has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless approval shall be
required by any other applicable law or otherwise.
b) Termination. This Agreement may be terminated at any time,
without payment of any penalty, by vote of the Trustees of the
Trust or by vote of a majority of the outstanding shares (as
defined in the 1940 Act), or by the Portfolio Manager on sixty
(60) days' written notice to the other party.
c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment.
10. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties.
11. NAME OF TRUST.
It is understood that the names "Xxxxx" and "Xxxxxxx" and any logo
associated with that name, is the valuable property of the Portfolio
Manager, and that the Trust has the right to include "Xxxxx" and "Xxxxxxx"
as a part of its name only so long as this Agreement shall continue. Upon
termination of this Agreement the Trust shall forthwith cease to use said
names and logos and shall submit to its shareholders an amendment to its
Master Trust Agreement to change the Trust's name.
12. SERVICES NOT EXCLUSIVE.
The services of the Portfolio Manager to the Trust hereunder are not to be
deemed exclusive, and the Portfolio Manager shall be free to render similar
services to others so long as its services hereunder are not impaired
thereby.
13. LIMITATION OF LIABILITY.
The term "Xxxxx Funds" means and refers to the Trustees from time to time
serving under the Master Trust Agreement of the Trust dated October 12,
1993, as the same may
subsequently thereto have been, or subsequently hereto be amended. 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 assets and
property of the Trust, as provided in the Master Trust Agreement of the
Trust. The execution and delivery of this Agreement have been authorized by
the Trustees and shareholders of the Trust and signed by an authorized
officer of the Trust, 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 individually or to
impose any liability on any of them personally, but shall bind only the
assets and property of the Trust as provided in its Master Trust Agreement.
The Master Trust Agreement is on file with the Secretary of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
XXXXX, XXXXXXX & ASSOCIATES
INVESTMENT ADVISORS, INC.
XXXXX FUNDS d/b/a Xxxxx Xxxxxxx Capital Management Co.
By Xxxxxx X. Xxxxx By Xxxxxx X. Xxxxx
-------------------- --------------------
President President
ATTEST: ATTEST:
Xxxxxxxx Xxxxxx Xxxxxxxx Xxxxxx
------------------------ -------------------------
Assistant Secretary Assistant Secretary
FEE SCHEDULE TO
AMENDED AND RESTATED
ADVISORY AGREEMENT DATED
JUNE 1, 1996
--------------------------------------------------------------------------------
XXXXX U.S. GOVERNMENT TOTAL RETURN BOND FUND
Up to $100 million 60 basis points (.0060)
From $100,000,001 to $250 million 50 basis points (.0050)
From $250,000,001 to $500 million 45 basis points (.0045)
In Excess of $500 million 40 basis points (.0040)
XXXXX U.S. GOVERNMENT
INTERMEDIATE TERM BOND FUND 50 basis points (.0050)
XXXXX U.S. GOVERNMENT
SHORT TERM BOND FUND 50 basis points (.0050)
