XXXX XXXXXXX CLASSIC VALUE FUND II
(a series of Xxxx Xxxxxxx Capital Series)
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
July 1, 2006
Xxxx Xxxxxxx Advisers, LLC
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Investment Management Contract
------------------------------
Ladies and Gentlemen:
Xxxx Xxxxxxx Capital Series (the "Trust"), of which Xxxx Xxxxxxx Classic
Value Fund II (the "Fund") is a series, has been organized as a business trust
under the laws of The Commonwealth of Massachusetts to engage in the business of
an investment company. The Trust's shares of beneficial interest, no par value,
may be divided into series, each series representing the entire undivided
interest in a separate portfolio of assets. This Agreement relates solely to the
Fund.
The Board of Trustees of the Trust (the "Trustees") has selected Xxxx
Xxxxxxx Advisers, LLC (the "Adviser") to provide overall investment advice and
management for the Fund, and to provide certain other services, as more fully
set forth below, and the Adviser is willing to provide such advice, management
and services under the terms and conditions hereinafter set forth.
Accordingly, the Adviser and the Trust, on behalf of the Fund, agree as
follows:
1. INVESTMENT AND MANAGEMENT SERVICES. The Adviser will use its best efforts
to provide to the Fund continuing and suitable investment programs with respect
to investments, consistent with the investment objectives, policies and
restrictions of the Fund. In the performance of the Adviser's duties hereunder,
subject to the Fund's organizational documents and the limitations set forth in
the Fund's then-current Prospectus and Statement of Additional Information
included in the registration statement of the Trust as in effect from time to
time under the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended (the "1940 Act"), the Adviser will, at its own expense:
(a) furnish the Fund with advice and recommendations, consistent with the
investment objectives, policies and restrictions of the Fund, with respect
to the purchase, holding and disposition of portfolio securities, alone or
in consultation with any subadviser or subadvisers appointed pursuant to
this Agreement and subject to the provisions of any sub-investment
management contract respecting the responsibilities of such subadviser or
subadvisers;
(b) advise the Fund in connection with policy decisions to be made by the
Trustees or any committee thereof with respect to the Fund's investments
and, as requested, furnish the Fund with research, economic and statistical
data in connection with the Fund's investments and investment policies;
(c) provide administration of the day-to-day investment operations of the
Fund;
(d) submit such reports relating to the valuation of the Fund's securities
as the Trustees may reasonably request;
(e) assist the Fund in any negotiations relating to the Fund's investments
with issuers, investment banking firms, securities brokers or dealers and
other institutions or investors;
(f) consistent with the provisions of Section 6 of this Agreement, place
orders for the purchase, sale or exchange of portfolio securities with
brokers or dealers selected by the Adviser, PROVIDED that in connection
with the placing of such orders and the selection of such brokers or
dealers the Adviser shall seek to obtain execution and pricing within the
policy guidelines determined by the Trustees and set forth in the
Prospectus and Statement of Additional Information of the Fund as in effect
from time to time;
(g) provide office space and office equipment and supplies, the use of
accounting equipment when required, and necessary executive, clerical and
secretarial personnel for the administration of the affairs of the Fund;
(h) from time to time or at any time requested by the Trustees, make
reports to the Fund of the Adviser's performance of the foregoing services
and furnish advice and recommendations with respect to other aspects of the
business and affairs of the Fund;
(i) maintain all books and records with respect to the Fund's securities
transactions required by the 1940 Act, including subparagraphs (b)(5), (6),
(9) and (10) and paragraph (f) of Rule 31a-1 thereunder (other than those
records being maintained by the Fund's custodian or transfer agent) and
preserve such records for the periods prescribed therefor by Rule 31a-2 of
the 1940 Act (the Adviser agrees that such records are the property of the
Fund and will be surrendered to the Fund promptly upon request therefor);
(j) obtain and evaluate such information relating to economies, industries,
businesses, securities markets and securities as the Adviser may deem
necessary or useful in the discharge of the Adviser's duties hereunder;
(k) oversee, and use the Adviser's best efforts to assure the performance
of the activities and services of the custodian, transfer agent or other
similar agents retained by the Fund;
(l) give instructions to the Fund's custodian as to deliveries of
securities to and from such custodian and transfer of payment of cash for
the account of the Fund; and
(m) appoint and employ one or more sub-advisors satisfactory to the Fund
under sub-investment management agreements.
2
2. EXPENSES PAID BY THE ADVISER. The Adviser will pay:
(a) the compensation and expenses of all officers and employees of the
Trust, except that the Fund is responsible for paying a portion of the
compensation of the Fund's Chief Compliance Officer;
(b) the expenses of office rent, telephone and other utilities, office
furniture, equipment, supplies and other expenses of the Fund; and
(c) any other expenses incurred by the Adviser in connection with the
performance of its duties hereunder.
3. EXPENSES OF THE FUND NOT PAID BY THE ADVISER. The Adviser will not be
required to pay any expenses which this Agreement does not expressly make
payable by it. In particular, and without limiting the generality of the
foregoing but subject to the provisions of Section 2, the Adviser will not be
required to pay under this Agreement:
(a) any and all expenses, taxes and governmental fees incurred by the Trust
or the Fund prior to the effective date of this Agreement;
(b) without limiting the generality of the foregoing clause (a), the
expenses of organizing the Trust and the Fund (including without
limitation, legal, accounting and auditing fees and expenses incurred in
connection with the matters referred to in this clause (b)), of initially
registering shares of the Trust under the Securities Act of 1933, as
amended, and of qualifying the shares for sale under state securities laws
for the initial offering and sale of shares;
(c) the compensation and expenses of Trustees who are not interested
persons (as used in this Agreement, such term shall have the meaning
specified in the 0000 Xxx) of the Adviser and of independent advisers,
independent contractors, consultants, managers and other unaffiliated
agents employed by the Fund other than through the Adviser;
(d) legal, accounting, financial management, tax and auditing fees and
expenses of the Fund (including an allocable portion of the cost of its
employees rendering such services to the Fund);
(e) the fees and disbursements of custodians and depositories of the Fund's
assets, transfer agents, disbursing agents, plan agents and registrars;
(f) taxes and governmental fees assessed against the Fund's assets and
payable by the Fund;
(g) the cost of preparing and mailing dividends, distributions, reports,
notices and proxy materials to shareholders of the Fund;
(h) brokers' commissions and underwriting fees;
(i) the expense of periodic calculations of the net asset value of the
shares of the Fund; and
3
(j) insurance premiums on fidelity, errors and omissions and other
coverages.
4. COMPENSATION OF THE ADVISER. For all services to be rendered, facilities
furnished and expenses paid or assumed by the Adviser as herein provided, the
Adviser shall be entitled to a fee, paid daily, at an annual rate equal to (i)
0.80% of the first $2,500,000,000 of the average daily net asset value of the
fund; (ii) 0.78% of the next $2,500,000,000 of the average daily net assets; and
(iii) 0.76% of the amount in excess of $5,000,000,000 of the average daily net
assets.
The "average daily net assets" of the Fund shall be determined on the basis
set forth in the Fund's Prospectus or otherwise consistent with the 1940 Act and
the regulations promulgated thereunder. On any day that the net asset value
calculation is suspended as specified in the Fund's Prospectus, the net asset
value for purposes of calculating the advisory fee shall be calculated as of the
date last determined.
In addition, the Adviser may agree not to impose all or a portion of its
fee (in advance of the time its fee would otherwise accrue) and/or undertake to
make any other payments or arrangements necessary to limit the Fund's expenses
to any level the Adviser may specify. Any fee reduction or undertaking shall
constitute a binding modification of this Agreement while it is in effect but
may be discontinued or modified prospectively by the Adviser at any time.
5. OTHER ACTIVITIES OF THE ADVISER AND ITS AFFILIATES. Nothing herein
contained shall prevent the Adviser or any affiliate or associate of the Adviser
from engaging in any other business or from acting as investment adviser or
investment manager for any other person or entity, whether or not having
investment policies or portfolios similar to the Fund's; and it is specifically
understood that officers, directors and employees of the Adviser and those of
its affiliates may continue to engage in providing portfolio management services
and advice to other investment companies, whether or not registered, to other
investment advisory clients of the Adviser or of its affiliates and to said
affiliates themselves.
The Adviser shall have no obligation to acquire with respect to the Fund a
position in any investment which the Adviser, its officers, affiliates or
employees may acquire for its or their own accounts or for the account of
another client, if, in the sole discretion of the Adviser, it is not feasible or
desirable to acquire a position in such investment on behalf of the Fund.
Nothing herein contained shall prevent the Adviser from purchasing or
recommending the purchase of a particular security for one or more funds or
clients while other funds or clients may be selling the same security.
6. AVOIDANCE OF INCONSISTENT POSITION. In connection with purchases or sales
of portfolio securities for the account of the Fund, neither the Adviser nor any
of its investment management subsidiaries, nor any of the Adviser's or such
investment management subsidiaries' directors, officers or employees will act as
principal or agent or receive any commission, except as may be permitted by the
1940 Act and rules and regulations promulgated thereunder. If any occasions
shall arise in which the Adviser advises persons concerning the shares of the
Fund, the Adviser will act solely on its own behalf and not in any way on behalf
of the Fund. Nothing herein contained shall limit or restrict the Adviser or any
of its officers, affiliates or employees from buying, selling or trading in any
securities for its or their own account or accounts.
4
7. NO PARTNERSHIP OR JOINT VENTURE. Neither the Trust, the Fund nor the
Adviser are partners of or joint venturers with each other and nothing herein
shall be construed so as to make them such partners or joint venturers or impose
any liability as such on any of them.
8. NAME OF THE TRUST AND THE FUND. The Trust and the Fund may use the name
"Xxxx Xxxxxxx" or any name or names derived from or similar to the names "Xxxx
Xxxxxxx Advisers, LLC", "Xxxx Xxxxxxx Life Insurance Company", or "Xxxx Xxxxxxx
Financial Services, Inc." only for so long as this Agreement remains in effect.
At such time as this Agreement shall no longer be in effect, the Trust and the
Fund will (to the extent that they lawfully can) cease to use such a name or any
other name indicating that the Fund is advised by or otherwise connected with
the Adviser. The Fund acknowledges that it has adopted the name Xxxx Xxxxxxx
Classic Value Fund II through permission of Xxxx Xxxxxxx Life Insurance Company,
a Massachusetts insurance company, and agrees that Xxxx Xxxxxxx Life Insurance
Company reserves to itself and any successor to its business the right to grant
the nonexclusive right to use the name "Xxxx Xxxxxxx" or any similar name or
names to any other corporation or entity, including but not limited to any
investment company of which Xxxx Xxxxxxx Life Insurance Company or any
subsidiary or affiliate thereof shall be the investment adviser.
9. LIMITATION OF LIABILITY OF THE ADVISER. The Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Adviser in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement. Any person, even though also
employed by the Adviser, who may be or become an employee of and paid by the
Trust shall be deemed, when acting within the scope of his employment by the
Fund, to be acting in such employment solely for the Trust and not as the
Adviser's employee or agent.
10. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall remain in
force until June 30, 2008, and from year to year thereafter, but only so long as
such continuance is specifically approved at least annually by (a) a majority of
the Trustees who are not interested persons of the Adviser or (other than as
Board members) of the Fund, cast in person at a meeting called for the purpose
of voting on such approval, and (b) either (i) the Trustees or (ii) a majority
of the outstanding voting securities of the Fund. This Agreement may, on 60
days' written notice, be terminated at any time without the payment of any
penalty by the vote of a majority of the outstanding voting securities of the
Fund, by the Trustees or by the Adviser. Termination of this Agreement shall not
be deemed to terminate or otherwise invalidate any provisions of any contract
between the Adviser and any other series of the Trust. This Agreement shall
automatically terminate in the event of its assignment. In interpreting the
provisions of this Section 10, the definitions contained in Section 2(a) of the
1940 Act (particularly the definitions of "assignment," "interested person" and
"voting security") shall be applied.
11. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought, and no amendment, transfer, assignment, sale,
hypothecation or pledge of this Agreement shall be effective until approved by
5
(a) the Trustees, including a majority of the Trustees who are not interested
persons of the Adviser or (other than as Trustees) of the Fund, cast in person
at a meeting called for the purpose of voting on such approval, and (b) a
majority of the outstanding voting securities of the Fund, as defined in the
1940 Act.
12. GOVERNING LAW. This Agreement shall be governed and construed in accordance
with the laws of The Commonwealth of Massachusetts.
13. SEVERABILITY. The provisions of this Agreement are independent of and
separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be deemed invalid or unenforceable in whole or in part.
14. MISCELLANEOUS. 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. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. The name Xxxx Xxxxxxx Classic Value Fund II is a series designation
of the Trustees under the Trust's Declaration of Trust. The Declaration of Trust
has been filed with the Secretary of State of The Commonwealth of Massachusetts.
The obligations of the Fund are not personally binding upon, nor shall resort be
had to the private property of, any of the Trustees, shareholders, officers,
employees or agents of the Trust, but only upon the Fund and its property. The
Fund shall not be liable for the obligations of any other series of the Trust
and no other series shall be liable for the Fund's obligations hereunder.
Yours very truly,
XXXX XXXXXXX CAPITAL SERIES,
On behalf of Xxxx Xxxxxxx Classic Value Fund II,
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------
Xxxxx X. Xxxxxxxxx
President and Chief Executive Officer
The foregoing contract is hereby agreed
to as of the date hereof.
XXXX XXXXXXX ADVISERS, LLC
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------
Xxxxxx X. Xxxxxxxxx
Assistant Secretary
