XXXX FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is entered into as of the 1st day
of October, 1997, between Xxxx Funds, Inc.
("Corporation") and Xxxx Investment Advisors, Inc.
("Advisor"), each a Minnesota corporation.
W I T N E S S E T H
WHEREAS, the Corporation is an open-end investment
company registered under the Investment Company Act of
1940, as amended ("1940 Act"). The Corporation is
authorized to create separate series and classes
thereof, each with its own separate investment
portfolio ("Funds"), and the beneficial interest in
each such series and class thereof will be represented
by a separate series, and class, of shares ("Shares").
WHEREAS, the Advisor is a registered investment
advisor, engaged in the business of rendering
investment advisory services.
WHEREAS, in managing the Corporation's assets, as
well as in the conduct of certain of its affairs, the
Corporation seeks the benefit of the Advisor's services
and its assistance in performing certain managerial
functions. The Advisor desires to furnish such
services and to perform the functions assigned to it
under this Agreement for the consideration provided for
herein.
NOW THEREFORE, the parties mutually agree as
follows:
1. Appointment of the Advisor. The Corporation
hereby appoints the Advisor as investment advisor for
each of the Funds of the Corporation on whose behalf
the Corporation executes an Exhibit to this Agreement,
and the Advisor, by execution of each such Exhibit,
accepts the appointment. Subject to the direction of
the Board of Directors ("Directors") of the
Corporation, the Advisor shall manage the investment
and reinvestment of the assets of each Fund in
accordance with the Fund's investment objective and
policies and limitations, for the period and upon the
terms herein set forth. The investment of funds shall
also be subject to all applicable restrictions of the
Articles of Incorporation and Bylaws of the Corporation
as may from time to time be in force.
2. Expenses Paid by the Advisor. In addition to
the expenses which the Advisor may incur in the
performance of its responsibilities under this
Agreement, and the expenses which it may expressly
undertake to incur and pay, the Advisor shall incur and
pay all reasonable compensation, fees and related
expenses of the Corporation's officers and its
Directors, except for such Directors who are not
interested persons (as that term is defined in Section
2(a)(19) of the 0000 Xxx) of the Advisor, and all
expenses related to the rental and maintenance of the
principal offices of the Corporation.
3. Investment Advisory Functions. In its
capacity as investment advisor, the Advisor shall have
the following responsibilities:
(a) To furnish continuous advice and
recommendations to the Funds, as to the acquisition,
holding or disposition of any or all of the securities
or other assets which the Funds may own or contemplate
acquiring from time to time;
(b) To cause its officers to attend meetings
and furnish oral or written reports, as the Corporation
may reasonably require, in order to keep the Directors
and officers of the Corporation fully informed as to
the condition of the investments of the Funds, the
investment recommendations of the Advisor, and the
investment considerations which have given rise to
those recommendations; and
(c) To supervise the purchase and sale of
securities or other assets as directed by the
appropriate officers of the Corporation.
The services of the Advisor are not to be deemed
exclusive and the Advisor shall be free to render
similar services to others as long as its services for
others does not in any way hinder, preclude or prevent
the Advisor from performing its duties and obligations
under this Agreement. In the absence of willful
misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the
part of the Advisor, the Advisor shall not be subject
to liability to the Corporation, the Funds, or to any
shareholder for any act or omission in the course of,
or in connection with, rendering services hereunder or
for any losses that may be sustained in the purchase,
holding or sale of any security.
4. Obligations of the Corporation. The
Corporation shall have the following obligations under
this Agreement:
(a) To keep the Advisor continuously and
fully informed as to the composition of the Funds'
investments and the nature of all of their respective
assets and liabilities;
(b) To furnish the Advisor with a copy of
any financial statement or report prepared for it by
certified or independent public accountants, and with
copies of any financial statements or reports made to
the Funds' shareholders or to any governmental body or
securities exchange;
(c) To furnish the Advisor with any further
materials or information which the Advisor may
reasonably request to enable it to perform its
functions under this Agreement; and
(d) To compensate the Advisor for its
services in accordance with the provisions of paragraph
5 hereof.
5. Compensation. The Corporation will pay the
Advisor a fee for its services with respect to each
Fund ("Advisory Fee") at the annual rate set forth on
the Exhibits hereto. The Advisory Fee shall be accrued
each calendar day during the term of this Agreement and
the sum of the daily fee accruals shall be paid monthly
as soon as practicable following the last day of each
month. The daily fee accruals will be computed by
multiplying 1/365 by the annual rate and multiplying
the product by the net asset value of the Fund as
determined in accordance with the Corporation's
registration statement as of the close of business on
the previous day on which the Fund was open for
business, or in such other manner as the parties agree.
The Advisor may from time to time and for such periods
as it deems appropriate voluntarily reduce its
compensation hereunder (and/or voluntarily assume
expenses) for one or more of the Funds. The Advisor
may, at any later date, recoup such amounts after such
time as the Advisor is no longer reducing its
compensation and/or assuming expenses for one or more
of the Funds.
6. Expenses Paid by Corporation.
(a) Except as provided in this paragraph,
nothing in this Agreement shall be construed to impose
upon the Advisor the obligation to incur, pay, or
reimburse the Corporation for any expenses not
specifically assumed by the Advisor under paragraph 2
above. Each Fund shall pay or cause to be paid all of
its expenses and the Fund's allocable share of the
Corporation's expenses, including, but not limited to,
investment advisor fees; any compensation, fees, or
reimbursements which the Corporation pays to its
Directors who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 0000 Xxx)
of the Advisor; fees and expenses of the custodian,
transfer agent, registrar or dividend disbursing agent;
current legal, accounting and printing expenses;
administrative, clerical, recordkeeping and bookkeeping
expenses; brokerage commissions and all other expenses
in connection with the execution of Fund transactions;
interest; all federal, state and local taxes (including
stamp, excise, income and franchise taxes); expenses of
shareholders' meetings and of preparing, printing and
distributing proxy statements, notices and reports to
shareholders; expenses of preparing and filing reports
and tax returns with federal and state regulatory
authorities; and all expenses incurred in complying
with all federal and state laws and the laws of any
foreign country applicable to the issue, offer, or sale
of Shares of the Funds, including but not limited to,
all costs involved in the registration or qualification
of Shares of the Funds for sale in any jurisdiction and
all costs involved in preparing, printing and
distributing prospectuses and statements of additional
information to existing shareholders of the Funds.
(b) If expenses borne by a Fund in any
fiscal year exceed those set forth in any statutory or
regulatory formula applicable to the Fund, the Advisor
will reimburse the Fund for any excess in accordance
with the applicable statutory or regulatory formula.
7. Brokerage Commissions. For purposes of this
Agreement, brokerage commissions paid by a Fund upon
the purchase or sale of securities shall be considered
a cost of the securities of the Fund and shall be paid
by the respective Fund. The Advisor is authorized and
directed to place Fund transactions only with brokers
and dealers who render satisfactory service in the
execution of orders at the most favorable prices and at
reasonable commission rates; provided, however, that
the Advisor may pay a broker or dealer an amount of
commission for effecting a securities transaction in
excess of the amount of commission another broker or
dealer would have charged for effecting that
transaction, if the Advisor determines in good faith
that such amount of commission was reasonable in
relation to the value of the brokerage and research
services provided by such broker or dealer viewed in
terms of either that particular transaction or the
overall responsibilities of the Advisor, and, in the
opinion of the Advisor, the total commissions paid by a
Fund is reasonable in relation to the benefits to the
Fund over the long term. In placing Fund business with
such broker or dealers, the Advisor shall seek the best
execution of each transaction, and all such brokerage
placement shall be made in compliance with Section
28(e) of the Securities Exchange Act of 1934, as
amended, and other applicable state and federal laws.
Notwithstanding the foregoing, the Corporation shall
retain the right to direct the placement of all Fund
transactions, and the Directors may establish policies
or guidelines to be followed by the Advisor in placing
transactions for the Funds pursuant to the foregoing
provisions. The Advisor may consider sales of Fund
shares as a factor in the selection of brokers or
dealers to execute Fund portfolio transactions, subject
to the requirements of best execution.
8. Proprietary Rights. The Advisor has
proprietary rights in each Fund's name and the
Corporation's name. The Advisor may withdraw the use
of such names from the Funds or the Corporation.
9. Termination. This Agreement may be
terminated at any time, without penalty, by the
Directors of the Corporation or by the shareholders of
a Fund acting by the vote of at least a majority of its
outstanding voting securities (as that phrase is
defined in Section 2(a)(42) of the 1940 Act), provided
in either case that 60 days' written notice of
termination be given to the Advisor at its principal
place of business. This Agreement may also be
terminated by the Advisor at any time by giving 60
days' written notice of termination to the Corporation,
addressed to its principal place of business.
10. Assignment. This Agreement shall terminate
automatically in the event of any assignment (as the
term is defined in Section 2(a)(4) of the 0000 Xxx) of
this Agreement.
11. Term. This Agreement shall begin for each
Fund as of the date of execution of the applicable
Exhibit and shall continue in effect with respect to
each Fund (and any subsequent Funds added pursuant to
an Exhibit during the initial term of this Agreement)
for two years from the date of this Agreement and
thereafter for successive periods of one year, subject
to the provisions for termination and all of the other
terms and conditions hereof, if such continuation shall
be specifically approved at least annually (i) by the
vote of a majority of the Directors of the Corporation,
including a majority of the Directors who are not
parties to this Agreement or "interested persons" of
any such party (as defined in the 1940 Act), cast in
person at a meeting called for that purpose or (ii) by
the vote of a majority of the outstanding voting
securities (as that phrase is defined in Section
2(a)(42) of the 0000 Xxx) of each Fund. If a Fund is
added after the first approval as described above, this
Agreement will be effective as to that Fund upon
execution of the applicable Exhibit and will continue
in effect until the next annual approval of this
Agreement by the Directors or Fund shareholders and
thereafter for successive periods of one year, subject
to approval as described above.
12. Amendments. This Agreement may be amended by
the mutual consent of the parties, provided that the
terms of each such amendment shall be approved by the
Directors or by the affirmative vote of a majority of
the outstanding voting securities (as that phrase is
defined in Section 2(a)(42) of the 0000 Xxx) of each
Fund.
13. Governing Law. This Agreement shall be
governed by and construed in accordance with the
internal laws of the State of Minnesota; provided,
however that nothing herein shall be construed in a
manner that is inconsistent with the 1940 Act, the
Investment Advisers Act of 1940, as amended, or the
rules and regulations promulgated with respect to such
respective Acts.
This Agreement will become binding on the parties
hereto upon their execution of the Exhibit(s) to this
Agreement.
EXHIBIT A
to the
Investment Advisory Agreement
XXXX EMERGING GROWTH FUND
For all services rendered by the Advisor
hereunder, the Corporation shall pay the Advisor, on
behalf of the above-named Fund, and the Advisor agrees
to accept as full compensation for all services
rendered hereunder, an annual investment advisory fee
equal to 1.00% of the average daily net assets of the
Fund.
The annual investment advisory fee shall be
accrued daily at the rate of 1/365th of 1.00% applied
to the daily net assets of the Fund. The advisory fee
so accrued shall be paid by the Corporation to the
Advisor monthly.
Executed as of this 1st day of October, 1997.
The Advisor:
XXXX INVESTMENT ADVISORS, INC.
By: /s/ XxXxx X. Xxxx
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XxXxx X. Xxxx, President
The Corporation:
XXXX FUNDS, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxxxx X. Xxxxxxxxx, Secretary
