SUB-ADVISORY AGREEMENT
XXXXXXX CAPITAL MANAGEMENT, INC.
World Trade Center-Baltimore
28th Floor
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
[ ], 1998
(nameaddress)
Ladies and Gentlemen:
This will confirm the agreement between XXXXXXX CAPITAL MANAGEMENT,
INC. (the "Investment Adviser") and you as follows:
1. GENERAL. The Xxxxxxx Funds, Inc., a Maryland corporation (the
"Corporation") is an open-end management investment company which has multiple
investment portfolios including, the DEM Multi-Manager Equity Fund (the
"Fund"),. The Corporation proposes to engage in the business of investing and
reinvesting the assets of the Fund in the manner and in accordance with the
investment objectives, policies and limitations specified in the Corporation's
Prospectus and Statement of Additional Information (the "Prospectus") included
in the Corporation's Registration Statement pertaining to the Fund, as amended
and/or supplemented from time to time (the "Registration Statement"), filed
under the Investment Company Act of 1940, as amended (the "1940 Act"), and the
Securities Act of 1933, as amended. Copies of the Prospectus have been
furnished to you. Any amendments to the Prospectus shall be furnished to you
promptly.
2. SUB-ADVISORY SERVICES. Subject to the supervision and approval
of the Corporation's Board of Directors and the Investment Adviser you will
provide investment management of that portion of the Fund's portfolio allocated
to you by the Investment Adviser in accordance with the Fund's investment
objectives, policies and limitations as stated in the Prospectus as from time to
time in effect. In connection therewith, you will obtain and provide investment
research and will supervise the Fund's investments and conduct a continuous
program of investment, evaluation and, if appropriate, sale and reinvestment of
the Fund's assets. You will place orders for the purchase and sale of portfolio
securities and will solicit brokers to execute transactions,
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including The Xxxxxxx Co. or a broker that may be affiliated with you or another
sub-adviser of the Fund, in accordance with the policies and restrictions
regarding brokerage allocations of the Fund and the Corporation. You will
furnish to the Corporation and/or the Investment Adviser such statistical
information with respect to the investments which the Fund may hold or
contemplate purchasing as the Corporation or the Investment Adviser may
reasonably request. You acknowledge that this agreement does not require the
Corporation or the Investment Adviser to allocate any specific percentage of the
Fund's assets to you at any time or for any specific period. You further
acknowledge that the Corporation or the Investment Adviser may at any time or
from time to time allocate you no assets at all.
3. ASSISTANCE. You may employ or contract with other persons to
assist you in the performance of this Agreement. The fees or other compensation
of such persons shall be paid by you and no obligation may be incurred on behalf
of the Corporation or the Investment Adviser to any such person.
4. RECORD KEEPING AND OTHER INFORMATION. You will create and
maintain all records required of you pursuant to your duties hereunder in
accordance with all applicable laws, rules and regulations, including records
required by Section 31(a) of the 1940 Act. All such records will be the
property of the Corporation and will be available upon request of the
Corporation for inspection, copying and use by the Corporation and will be
surrendered to the Corporation upon demand of the Corporation. Where
applicable, such records will be maintained by you for the periods and in the
places required by Rule 31a-2 under the 1940 Act. Upon termination of this
Agreement, you will promptly surrender all such records to the Corporation or
such person as the Corporation may designate.
5. FEES. In consideration of the sub-advisory services rendered
pursuant to this Agreement, the Investment Adviser will pay you on the first
business day of each month a fee at the annual rate of .35 of 1% of the value of
that portion of the Fund's average weekly net assets that is allocated to you by
the Investment Adviser during the preceding month. Net asset value shall be
computed in the manner, on such days and at such time or times as described in
the Prospectus from time to time. The fee for the period from the date of the
allocation of a portion of the Fund's portfolio to you to the end of the first
month thereafter shall be pro-rated according to the proportion which such
period bears to the full monthly period, and upon any termination of this
Agreement or if your allocation of the Fund's portfolio is reduced to nothing
before the end of any
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month, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period.
6. EXPENSES:
You will bear all expenses in connection with the performance of your
services under this Agreement.
7. LIABILITY. You shall exercise your best judgment in rendering
the services to be provided to the Fund. The Investment Advisor agrees as an
inducement to you and to others who may assist you in providing services to the
Fund that you and such other persons shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Investment Advisor,
the Fund or the Corporation, and the Investment Advisor agrees to indemnify and
hold harmless you and such other persons against and from any claims,
liabilities, actions, suits, proceedings, judgments or damages (and expenses
incurred in connection therewith, including the reasonable cost of investigating
or defending same, including, but not limited to attorneys' fees) arising out of
any such error of judgment or mistake of law or loss; provided, however, that
the Investment Advisor's obligation with respect to such claims, liabilities,
actions, suits, proceedings, judgments or damages (and expenses incurred in
connection therewith, including the reasonable cost of investigating or
defending same, including, but not limited to attorneys' fees) arising out of
any such error of judgment or mistake of law or loss shall be limited to the
amount of "assets belonging to" (as such expression is defined in the
Corporation's charter) the Fund and further provided that nothing herein shall
be deemed to protect or purport to protect you or any other such person against
any liability to the Corporation, its security holders or the Investment Advisor
to which you or they would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder, or by reason of reckless disregard of the obligations and duties
hereunder.
8. OTHER ACCOUNTS. The Corporation and the Investment Advisor
understand that you and other persons with whom you contract to provide the
services hereunder may from time to time act as investment adviser to one or
more other investment companies and fiduciary or other managed accounts, and
the Corporation and the Investment Advisor have no objection to your or their
so acting. When purchase or sale of securities of the same issuer is
suitable for the investment objectives of two or more companies or accounts
managed by you or such other persons which have available
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funds for investment, the available securities will be allocated in a manner
believed by you and such other persons to be equitable to the Fund and any other
account. It is recognized that in some cases this procedure may adversely
affect the price paid or received by the Fund or the size of the position
obtainable for or disposed of by the Fund.
In addition, it is understood that you and the persons with whom you
contract to assist in the performance of your duties hereunder will not devote
their full time to such service and nothing contained herein shall be deemed to
limit or restrict your or their right to engage in and devote time and attention
to similar or other businesses.
9. TERM. This Agreement shall continue until December 29, 1999 and
thereafter shall continue automatically for successive annual periods ending on
the anniversary of such date, provided such continuance is specifically approved
at least annually by the Corporation's Board of Directors or a vote of the
lesser of (a) 67% of the shares of the Fund represented at a meeting if holders
of more than 50% of the outstanding shares of the Fund are present in person or
by proxy or (b) more than 50% of the outstanding shares of the Fund, provided
that in either event its continuance also is approved by a majority of the
Corporation's Directors who are not "interested persons" (as defined in the 0000
Xxx) 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' notice, by the Investment Adviser, by you, by the
Corporation's Board of Directors or by vote of the lesser of (a) 67% of the
shares of the Fund represented at a meeting if holders of more than 50% of the
outstanding shares of the Fund are present in person or by proxy or (b) more
than 50% of the outstanding shares of the Fund. This Agreement will terminate
automatically in the event of its assignment (as defined in the 1940 Act).
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If the foregoing is in accordance with your understanding, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
XXXXXXX CAPITAL MANAGEMENT, INC.
By:
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Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President
Accepted:
By:
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Name:
Title:
BA3DOCS1/0095847.01
