INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT (this "Agreement"), dated as of
_________ __, 1999, between XXXXXXXX XXXXX RESEARCH TRUST, a Delaware
business trust (the "Trust"), on behalf of the Senbanc Fund, a series of the
Trust (the "Fund"), and XXXXXXXX XXXXX RESEARCH ADVISORS (the "Advisor"), a
division of J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc., a Kentucky corporation.
WHEREAS, the Advisor has agreed to furnish investment advisory services to
the Trust, an open-end investment company registered under the Investment
Company Act of 1940, as amended (the "Act"); and
WHEREAS, this Agreement has been approved in accordance with the provisions
of the Act, and the Advisor is willing to furnish such services upon the terms
and conditions herein set forth;
NOW THEREFORE, in consideration of the mutual premises and covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is agreed by and between the parties hereto as follows:
1. IN GENERAL. The Advisor agrees, all as more fully set forth herein,
to act as investment advisor to the Fund with respect to the investment of the
Fund's assets and to supervise and arrange the purchase of securities for and
the sale of securities held in the investment portfolio of the Fund.
2. DUTIES AND OBLIGATIONS OF THE ADVISOR WITH RESPECT TO INVESTMENTS OF
ASSETS OF THE FUND.
(a) Subject to the succeeding provisions of this section and subject
to the direction and control of the Trust's Board of Trustees, the Advisor shall
(i) act as investment advisor for and supervise and manage the investment and
reinvestment of the Fund's assets and in connection therewith have complete
discretion in purchasing and selling securities and other assets for the Fund
and in voting, exercising consents and exercising all other rights appertaining
to such securities and other assets on behalf of the Fund; (ii) supervise
continuously the investment program of the Fund and the composition of its
investment portfolio; and (iii) arrange, subject to the provisions of paragraph
3 hereof, for the purchase and sale of securities and other assets held in the
investment portfolio of the Fund;
(b) The Advisor shall give the Fund the benefit of its best judgment
and effort in rendering services hereunder, but the Advisor shall not be liable
for any act or omission or for any loss sustained by the Fund in connection with
the matters to which this Agreement relates, except
a loss resulting from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement; and
(c) Nothing in this Agreement shall prevent the Advisor or any
officer, employee or other affiliate thereof from acting as investment advisor
for any other person, firm or corporation, or from engaging in any other lawful
activity, and shall not in any way limit or restrict the Advisor or any of its
officers, employees or agents from buying, selling or trading any securities for
its or their own accounts or for the accounts of others for whom it or they may
be acting; provided, however, that the Advisor will undertake no activities
which, in its judgment, will adversely affect the performance of its obligations
under this Agreement.
3. COVENANTS.
(a) In the performance of its duties under this Agreement, the
Advisor shall at all times conform to, and act in accordance with, any
requirements imposed by (i) the provisions of the Act and the Investment
Advisers Act of 1940, as amended, and all applicable Rules and Regulations of
the Securities and Exchange Commission (the "SEC"); (ii) any other applicable
provision of law; (iii) the provisions of the Declaration of Trust and By-Laws
of the Trust, as such documents are amended from time to time; (iv) the
investment objective and policies of the Fund as set forth in its Registration
Statement on Form N-1A; and (v) any policies and determinations of the Trust's
Board of Trustees;
(b) The Advisor will place orders either directly with the issuer or
with any broker or dealer. Subject to the other provisions of this paragraph, in
placing orders with brokers and dealers, the Advisor will attempt to obtain the
best price and the most favorable execution of its orders. In placing orders,
the Advisor will consider the experience and skill of the firm's securities
traders as well as the firm's financial responsibility and administrative
efficiency. Consistent with this obligation, the Advisor may, subject to the
approval of the Trust's Board of Trustees, select brokers on the basis of the
research services they provide to the Fund and other clients of the Advisor.
Information and research received from such brokers will be in addition to, and
not in lieu of, the services required to be performed by the Advisor hereunder.
A commission paid to such brokers may be higher than that which another
qualified broker would have charged for effecting the same transaction, provided
that the Advisor determines in good faith that such commission is reasonable in
terms either of the transaction or the overall responsibility of the Advisor to
the Fund and that the total commissions paid by the Fund will be reasonable in
relation to the benefits to the Fund over the long-term. In addition, subject
to the direction and control of the Trust's Board of Trustees, the Advisor is
authorized to take into account the sale of shares of the Fund in allocating
purchase and sale orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the Advisor), provided
that the Advisor believes that the quality of the transaction and the commission
are comparable to what they would be with other qualified firms. In no
instance, however, will the Fund's securities be purchased from or sold to the
Advisor, or any affiliated person thereof, except to the extent permitted by the
SEC or by applicable law;
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(c) The Advisor will maintain books and records with respect to the
Fund's securities transactions and will render to the Trust's Board of Trustees
such periodic and special reports as they may request;
(d) The Advisor will maintain a policy and practice of conducting its
investment advisory services hereunder independently of the commercial banking
operations of its affiliates. When the Advisor makes investment recommendations
for the Fund, its investment advisory personnel will not inquire or take into
consideration whether the issuer of securities proposed for purchase or sale for
the Fund's account are customers of the commercial department of its affiliates;
and
(e) The Advisor will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
and the Fund's prior, current or potential shareholders, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where the Advisor may be exposed to civil or
criminal contempt proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities, or when so requested by the
Fund.
4. EXPENSES PAID BY THE ADVISOR. Subject to the provisions of
Section 4(c) hereof, the Advisor shall pay the following expenses relating to
the management and operation of the Fund:
(a) All reasonable fees, charges, costs and expenses (collectively,
"Costs") and all reasonable compensation of all officers and trustees of the
Fund relating to the performance of their duties to the Fund; provided, however,
that the Advisor shall not pay any such amounts to any Outside Trustees
(for-purposes of this Agreement, an "Outside Trustee" is any trustee of the Fund
who is not an "Interested Person," within the meaning of Section 2(a)(19) of the
Act);
(b) All Costs of office equipment and personnel necessary for the
performance of the obligations of the Advisor hereunder; and
(c) Except as provided in this Section 4 hereof, nothing contained in
this Agreement shall be deemed or construed to impose upon the Advisor any
obligation to incur, pay, or reimburse the Fund for any other Costs of or
relating to the Fund.
5. EXPENSES PAID BY THE FUND. Except as provided in Section 4 hereof,
the Fund hereby assumes and shall pay all fees, costs and expenses incurred by,
or on behalf, or for the benefit of the Fund, including without limitation:
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(a) All Costs of any custodian or depository;
(b) All Costs for bookkeeping, accounting and auditors' services;
(c) All Costs of any transfer agent and registrar of shares of the
Fund ("Shares");
(d) All Costs incurred by any Outside Trustee of the Trust in
connection with the performance of his duties relating to the affairs of the
Fund in such capacity as an Outside Trustee of the Trust;
(e) All brokers' commissions and other Costs incurred in connection
with the execution of Fund portfolio transactions;
(f) All taxes and other Costs payable by or on behalf of the Fund to
federal, state or other governmental agencies;
(g) All Costs of printing, recording and transferring certificates
representing Shares;
(h) All Costs in connection with the registration of the Fund and the
Shares with the Securities and Exchange Commission ("SEC"), and the continuous
maintenance of the effectiveness of such registrations, and the registration and
qualification of shares of the Fund under state or other securities laws,
including, without limitation, the preparation and printing of registration
statements, prospectuses and statements of additional information for filing
with the SEC and other authorities;
(i) All Costs of preparing, printing and mailing prospectuses,
statements of additional information and reports to holders of Shares;
(j) All Costs of shareholders' and Trustees' meetings and of
preparing, printing and mailing all information and documents, including without
limitation all notices, financial reports and proxy materials, to holders of
Shares;
(k) All Costs of legal counsel for the Fund and for Trustees of the
Trust in connection with the rendering of legal advice to or on behalf of the
Fund, including, without limitation, legal services rendered in connection with
the Fund's existence, corporate and financial structure and relations with its
shareholders, registrations and qualifications of securities under federal,
state and other laws, issues of securities, expenses which the Fund has herein
assumed whether customary or not, and extraordinary matters, including, without
limitation, any litigation involving the Fund, Trustees, or officers of the
Trust relating to the affairs of the Fund, employees or agents of the Fund; and
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(l) All Costs of filing annual and other reports with the SEC and
other regulatory authorities.
In the event that the Advisor provides any of the foregoing services
or pays any of these expenses, the Fund promptly shall reimburse the Advisor
therefor.
6. COMPENSATION OF THE ADVISOR.
(a) The Fund agrees to pay to the Advisor and the Advisor agrees to
accept as full compensation for all services rendered by the Advisor as such, a
monthly fee in arrears at an annual rate equal to 0.60% of the average daily
value of the Fund's Managed Assets. "Managed Assets" means the total assets of
the Fund minus the sum of accrued liabilities (other than the aggregate
indebtedness constituting financial leverage). For any period less than a month
during which this Agreement is in effect, the fee shall be prorated according to
the proportion which such period bears to a full month of 28, 29, 30 or 31 days,
as the case may be.
(b) For purposes of this Agreement, the net assets of the Fund shall
be calculated pursuant to the procedures adopted by resolutions of the Trustees
of the Trust for calculating the net asset value of the Fund's shares or
delegating such calculations to third parties.
7. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the Act, the Advisor hereby agrees that all records which it
maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any such records upon the Fund's request. The
Advisor further agrees to preserve for the periods prescribed by Rule 31a-2
under the Act the records required to be maintained by Rule 31a-1 under the
Act.
8. INDEMNITY.
(a) The Fund hereby agrees to indemnify the Advisor, and each of the
Advisor's directors, officers, employees, agents, associates and controlling
persons and the directors, officers, employees and agents thereof (including any
individual who serves at the Advisor's request as director, officer, partner,
member, trustee or the like of another entity) (each such person being an
"Indemnitee") against any liabilities and expenses, including amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees (all as provided in accordance with applicable corporate law) reasonably
incurred by such Indemnitee in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any court or
administrative or investigative body in which such Indemnitee may be or may have
been involved as a party or otherwise or with which such Indemnitee may be or
may have been threatened,
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while acting in any capacity set forth herein or thereafter by reason of such
Indemnitee having acted in any such capacity, except with respect to any matter
as to which such Indemnitee shall have been adjudicated not to have acted in
good faith in the reasonable belief that such Indemnitee's action was in the
best interest of the Fund and furthermore, in the case of any criminal
proceeding, so long as such Indemnitee had no reasonable cause to believe that
the conduct was unlawful; provided, however, that (1) no Indemnitee shall be
indemnified hereunder against any liability to the Fund or its shareholders or
any expense of such Indemnitee arising by reason of (i) willful misfeasance,
(ii) bad faith, (iii) gross negligence or (iv) reckless disregard of the duties
involved in the conduct of such Indemnitee's position (the conduct referred to
in such clauses (i) through (iv) being sometimes referred to herein as
"disabling conduct"), (2) as to any matter disposed of by settlement or a
compromise payment by such Indemnitee, pursuant to a consent decree or
otherwise, no indemnification either for said payment or for any other expenses
shall be provided unless there has been a determination that such settlement or
compromise is in the best interests of the Fund and that such Indemnitee appears
to have acted in good faith in the reasonable belief that such Indemnitee's
action was in the best interest of the Fund and did not involve disabling
conduct by such Indemnitee and (3) with respect to any action, suit or other
proceeding voluntarily prosecuted by any Indemnitee as plaintiff,
indemnification shall be mandatory only if the prosecution of such action, suit
or other proceeding by such Indemnitee was authorized by a majority of the full
Board of Trustees of the Trust.
(b) The Fund shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification might be
sought hereunder if the Fund receives a written affirmation of the Indemnitee's
good faith belief that the standard of conduct necessary for indemnification has
been met and a written undertaking to reimburse the Fund unless it is
subsequently determined that such Indemnitee is entitled to such indemnification
and if the Trustees of the Trust determine that the facts then known to them
would not preclude indemnification. In addition, at least one of the following
conditions must be met: (A) the Indemnitee shall provide a security for such
Indemnitee undertaking, (B) the Fund shall be insured against losses arising by
reason of any lawful advance, or (C) a majority of a quorum consisting of
Trustees of the Trust who are neither "interested persons" of the Fund (as
defined in Section 2(a)(19) of the Act) nor parties to the proceeding
("Disinterested Non-Party Trustees") or an independent legal counsel in a
written opinion, shall determine, based on a review of readily available facts
(as opposed to a full trial-type inquiry), that there is reason to believe that
the Indemnitee ultimately will be found entitled to indemnification.
(c) All determinations with respect to indemnification hereunder
shall be made (1) by a final decision on the merits by a court or other body
before whom the proceeding was brought that such Indemnitee is not liable by
reason of disabling conduct, or (2) in the absence of such a decision, by (i) a
majority vote of a quorum of the Disinterested Non-Party Trustees of the Trust,
or (ii) if such a quorum is not obtainable or even, if obtainable, if a majority
vote of such quorum so directs, independent legal counsel in a written opinion.
All determinations that advance payments in connection with the expense of
defending any proceeding shall be made in accordance with the immediately
preceding clause (2) above.
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The rights accruing to any Indemnitee under these provisions shall not
exclude any other right to which such Indemnitee may be lawfully entitled.
9. LIMITATION ON LIABILITY. The Advisor will not be liable for any error
of judgment or mistake of law or for any loss suffered by Advisor or by the Fund
in connection with the performance of this Agreement, except a loss resulting
from a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations or duties under this Agreement.
10. DURATION AND TERMINATION. This Agreement shall become effective as of
the date hereof, unless sooner terminated with respect to the Fund as provided
herein, and shall continue in effect for a period of two years. Thereafter, if
not terminated, this Agreement shall continue in effect with respect to the Fund
for successive annual periods, provided such continuance is specifically
approved at least annually (a) by the vote of a majority of those members of the
Fund's Board of Trustees who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, or (b) by a vote of a majority of the outstanding voting securities of
the Fund. Notwithstanding the foregoing, this Agreement may be terminated by
the Fund at any time, without the payment of any penalty, upon giving the
Advisor 60 days' notice (which notice may be waived by the Advisor), provided
that such termination by the Fund shall be directed or approved by the vote of a
majority of the Trustees of the Fund in office at the time or by the vote of the
holders of a "majority" (as defined in the Act) of the voting securities of the
Fund at the time outstanding and entitled to vote, or by the Advisor on 60 days'
written notice (which notice may be waived by the Fund). This Agreement will
also immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meanings of such terms
in the Act.)
11. NOTICES. Any notice under this Agreement shall be in writing to the
other party at such address as the other party may designate from time to time
for the receipt of such notice and shall be deemed to be received on the earlier
of the date actually received or on the fourth day after the postmark if such
notice is mailed first class postage prepaid.
12. 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. Any amendment of this Agreement shall be
subject to the Act.
13. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Kentucky for contracts to be performed entirely
therein without reference to choice of law principles thereof and in accordance
with the applicable provisions of the Act.
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14. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. 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. This Agreement shall be binding on, and shall inure to the
benefit of the parties hereto and their respective successors.
15. COUNTERPARTS. This Agreement may be executed in counterparts by the
parties hereto, each of which shall constitute an original counterpart, and all
of which, together, shall constitute one Agreement.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument
to be executed by their duly authorized officers, all as of the day and the year
first above written.
XXXXXXXX XXXXX RESEARCH TRUST,
on behalf of the Senbanc Fund
By:
--------------------- --------
Name: Date
Title:
XXXXXXXX XXXXX RESEARCH ADVISORS
By:
--------------------- --------
Name: Date
Title:
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Xxxxxxxx Xxxxx Research Advisors
Xxxxxxxx Xxxxx Center
Xxxxxxxxxx, Xxxxxxxx 00000
________ __, 0000
Xxxxxxxx Xxxxx Research Trust
Xxxxxxxx Xxxxx Center
Xxxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
We are writing to confirm our understanding that Xxxxxxxx Xxxxx Research
Trust (the "Trust") has a nonexclusive, revocable license to use the word
"Xxxxxxxx Xxxxx" in its name and that if Xxxxxxxx Xxxxx Research Advisors (the
"Advisor") ceases to be an investment advisor to the Trust, the Trust will cease
using such name as promptly as practicable, making all reasonable efforts to
remove "Xxxxxxxx Xxxxx" from its name including calling a special meeting of
stockholders.
Execution of this letter agreement on behalf of the Fund will signify that
the Trust understands that it has a nonexclusive, revocable license to the use
of the name "Xxxxxxxx Xxxxx."
XXXXXXXX XXXXX RESEARCH ADVISORS
By:
--------------------- --------
Name: Date
Title:
XXXXXXXX XXXXX RESEARCH TRUST
By:
--------------------- --------
Name: Date
Title:
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