INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 1st day of October, 1999 between Xxxxxxxx Funds,
Inc., a Maryland corporation (the "Company"), and Xxxxxxxx Capital Management
(the "Adviser").
W I T N E S S E T H:
WHEREAS, the Company is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 (the "Act") as an open-end
management investment company comprising a series of five mutual funds, the
Xxxxxxxx Blue Chip Growth Fund, the Xxxxxxxx Opportunity Fund, the Xxxxxxxx U.S.
Government Bond Fund, and the Xxxxxxxx Money Market Fund, and the Xxxxxxxx Fund;
and
WHEREAS, the Company desires to retain the Adviser, which is an
investment adviser registered under the Investment Advisers Act of 1940, as the
investment adviser for the Xxxxxxxx Fund.
NOW, THEREFORE, the Company and the Adviser do mutually promise and agree
as follows:
1. Employment. The Company hereby employs the Adviser to manage the
investment and reinvestment of the assets of the Xxxxxxxx Fund for the period
and on the terms set forth in this Agreement. The Adviser hereby accepts such
employment for the compensation herein provided and agrees during such period to
render the services and to assume the obligations herein set forth.
2. Authority of the Adviser. The Adviser shall supervise and manage the
investment portfolio of the Xxxxxxxx Fund, and, subject to such policies as the
board of directors of the Company may determine, direct the purchase and sale of
investment securities in the day to day management of the Xxxxxxxx Fund. The
Adviser shall for all purposes herein be deemed to be an independent contractor
and shall, unless otherwise expressly provided or authorized, have no authority
to act for or represent the Company in any way or otherwise be deemed an agent
of the Company. However, one or more shareholders, officers, directors or
employees of the Adviser may serve as directors and/or officers of the Company,
but without compensation or reimbursement of expenses for such services from the
Company. Nothing herein contained shall be deemed to require the Company to take
any action contrary to its Articles of Incorporation, as amended or
supplemented, or any applicable statute or regulation, or to relieve or deprive
the board of directors of the Company of its responsibility for and control of
the affairs of the Company.
3. Expenses. The Adviser, at its own expense and without reimbursement
from the Company, shall furnish office space, and all necessary office
facilities, equipment and executive personnel for managing the investments of
the
Xxxxxxxx Fund. The Adviser shall not be required to pay any expenses of the
Xxxxxxxx Fund except as provided herein if the total expenses borne by the
Xxxxxxxx Fund, including the Adviser's fee and the fees paid to the Xxxxxxxx
Fund's Administrator but excluding all federal, state and local taxes, interest,
reimbursement payments to securities lenders for dividend and interest payments
on securities sold short, brokerage commissions and extraordinary items, in any
year exceed that percentage of the average net asset value of the Xxxxxxxx Fund
for such year, as determined by valuations made as of the close of each business
day, which is the most restrictive percentage provided by the state laws of the
various states in which the Xxxxxxxx Fund's shares are qualified for sale or, if
the states in which the Xxxxxxxx Fund's shares are qualified for sale impose no
such restrictions, 1.95%. The expenses of the Xxxxxxxx Fund's operations borne
by the Xxxxxxxx Fund include by way of illustration and not limitation,
directors fees paid to those directors who are not officers of the Company, the
costs of preparing and printing registration statements required under the
Securities Act of 1933 and the Act (and amendments thereto), the expense of
registering its shares with the Securities and Exchange Commission and in the
various states, payments made pursuant to the Xxxxxxxx Funds 12b-1 Plan, the
printing and distribution cost of prospectuses mailed to existing shareholders,
the cost of stock certificates (if any), director and officer liability
insurance, reports to shareholders, reports to government authorities and proxy
statements, interest charges, reimbursement payments to securities lenders for
dividend and interest payments on securities sold short, taxes, legal expenses,
salaries of administrative and clerical personnel, association membership dues,
auditing and accounting services, insurance premiums, brokerage and other
expenses connected with the execution of portfolio securities transactions, fees
and expenses of the custodian of the Xxxxxxxx Fund's assets, expenses of
calculating the net asset value and repurchasing and redeeming shares, printing
and mailing expenses, charges and expenses of dividend disbursing agents,
registrars and stock transfer agents and the cost of keeping all necessary
shareholder records and accounts.
The Xxxxxxxx Fund shall monitor its expense ratio on a monthly basis. If
the accrued amount of the expenses of the Xxxxxxxx Fund exceeds the expense
limitation established herein, the Xxxxxxxx Fund shall create an account
receivable from the Adviser in the amount of such excess. In such a situation
the monthly payment of the Adviser's fee will be reduced by the amount of such
excess, subject to adjustment month by month during the balance of the Xxxxxxxx
Fund's fiscal year if accrued expenses thereafter fall below the expense
limitation.
4. Compensation of the Adviser. For the services to be rendered by the
Adviser hereunder, the Company through the Xxxxxxxx Fund shall pay to the
Adviser an advisory fee, paid monthly, based on the average net asset value of
the Xxxxxxxx Fund, as determined by valuations made as of the close of each
business day of the month. The advisory fee shall be 1/12 of 1.00% of such net
asset value. For any month in which this Agreement is not in effect for the
entire month, such fee shall be reduced proportionately on the basis of the
number of calendar days during which it
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is in effect and the fee computed upon the average net asset value of the
business days during which it is so in effect.
5. Ownership of Shares of the Xxxxxxxx Fund. The Adviser shall not take
an ownership position in the Xxxxxxxx Fund, and shall not permit any of its
shareholders, officers, directors or employees to take a long or short position
in the shares of the Xxxxxxxx Fund, except for the purchase of shares of the
Xxxxxxxx Fund for investment purposes at the same price as that available to the
public at the time of purchase or in connection with the initial capitalization
of the Company.
6. Exclusivity. The services of the Adviser to the Xxxxxxxx Fund
hereunder are not to be deemed exclusive and the Adviser shall be free to
furnish similar services to others as long as the services hereunder are not
impaired thereby. Although the Adviser has agreed to permit the Company to use
the name "Xxxxxxxx", if it so desires, it is understood and agreed that the
Adviser reserves the right to use and permit other persons, firms or
corporations, including investment companies, to use such name. During the
period that this Agreement is in effect, the Adviser shall be the Xxxxxxxx
Fund's sole investment adviser.
7. Liability. In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the part
of the Adviser, the Adviser shall not be subject to liability to the Xxxxxxxx
Fund or to any shareholder of the Xxxxxxxx Fund for any act or omission in the
course of, or connected with, rendering services hereunder, or for any losses
that may be sustained in the purchase, holding or sale of any security.
8. Brokerage Commissions. The Adviser may cause the Xxxxxxxx Fund to pay
a broker-dealer which provides brokerage and research services, as such services
are defined in Section 28(e) of the Securities Exchange Act of 1934 (the
"Exchange Act"), to the Adviser a commission for effecting a securities
transaction in excess of the amount another broker-dealer would have charged for
effecting such transaction, if the Adviser determines in good faith that such
amount of commission is reasonable in relation to the value of brokerage and
research services provided by the executing broker-dealer viewed in terms of
either that particular transaction or his overall responsibilities with respect
to the accounts as to which he exercises investment discretion (as defined in
Section 3(a)(35) of the Exchange Act).
9. Amendments. This Agreement may be amended by the mutual consent of the
parties; provided, however, that in no event may it be amended without the
approval of the board of directors of the Company in the manner required by the
Act, and, if required by the Act, by the vote of the majority of the outstanding
voting securities of the Xxxxxxxx Fund, as defined in the Act.
10. Termination. This Agreement may be terminated at any time, without
the payment of any penalty, by the board of directors of the Company or by a
vote of the majority of the outstanding voting securities of the Xxxxxxxx Fund,
as
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defined in the Act, upon giving sixty (60) days' written notice to the Adviser.
This Agreement may be terminated by the Adviser at any time upon the giving of
sixty (60) days' written notice to the Company. This Agreement shall terminate
automatically in the event of its assignment (as defined in Section 2(a)(4) of
the Act). Subject to prior termination as hereinbefore provided, this Agreement
shall continue in effect for an initial period beginning as of the date hereof
and ending September 30, 2001 and indefinitely thereafter, but only so long as
the continuance after such initial period is specifically approved annually by
(i) the board of directors of the Company or by the vote of the majority of the
outstanding voting securities of the Xxxxxxxx Fund, as defined in the Act, and
(ii) the board of directors of the Company in the manner required by the Act,
provided that any such approval may be made effective not more than sixty (60)
days thereafter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day first above written.
XXXXXXXX CAPITAL MANAGEMENT
(the "Adviser")
By:
Sole Proprietor
XXXXXXXX FUNDS, INC.
(the "Company")
By: _________________________
President
By:________________________________
Secretary
