INVESTMENT ADVISORY AGREEMENT
Agreement made this 5th day of February, 2002 between Xxxxx
Funds, Inc., a Maryland corporation (the "Company"), and Xxxxx Investment
Advisors, Inc., a Florida corporation (the "Advisor").
W I T N E S S E T H:
WHEREAS, the Company is in the process of registering with the
Securities and Exchange Commission under the Investment Company Act of 1940
(the "Act") as an open-end management investment company consisting of three
portfolios:
XXXXX TWENTY FUND'S investment objective is to gain capital appreciation
by investing in fifteen to twenty-five common stocks.
XXXXX LEVERAGED BOND FUND'S investment objective is to generate investment
income through investment in high quality corporate and government fixed
income securities.
XXXXX HEALTHCARE FUND'S investment objective is to seek capital appreciation
by investing in companies that are involved in the health care industry.
WHEREAS, the Company desires to retain the Advisor, which is an
investment advisor registered under the Investment Advisors Act of 1940, as the
investment advisor for the Fund.
NOW, THEREFORE, the Company and the Advisor do mutually promise
and agree as follows:
1. Employment. The Company hereby employs the Advisor to
manage the investment and reinvestment of the assets of the Fund for the period
and on the terms set forth in this Agreement. The Advisor 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 Advisor. The Advisor shall supervise and
manage the investment portfolio of the Fund, and, subject to such policies as
the directors of the Company may determine, direct the purchase and sale of
investment securities in the day-to-day management of the Fund. The Advisor
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 or the Fund in any way or otherwise be deemed
an agent of the Company or the Fund. However, one or more shareholders,
officers, directors or employees of the Advisor 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 or By-Laws or any applicable statute or regulation, or to relieve
or deprive the directors of the Company of their responsibility for, and
control of, the affairs of the Fund.
3. Expenses. The Advisor, at its own expense and without
reimbursement from the Company or the Fund, shall furnish office space, and all
necessary office facilities, equipment and executive personnel for managing the
investments of the Fund. The Fund shall bear all expenses initially incurred
by it, provided that the total expenses borne by the Funds, including the
Advisor's fee but excluding all federal, state and local taxes, interest,
brokerage commissions and extraordinary items, shall not in any year exceed
that percentage of the average net assets of the 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 Fund's shares are qualified for sale or, if the states in
which the Fund's shares are qualified for sale impose no such restrictions,
2.5%. The expenses of the Fund's operations borne by the Fund include by way
of illustration and not limitation, director's fees paid to those directors
who are not officers of the Company, the costs of preparing and printing its
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 Service and Distribution Plan, the printing and distribution
cost of prospectuses mailed to existing shareholders, the cost of share
certificates (if any), director and officer liability insurance, reports to
shareholders, reports to government authorities and proxy statements, interest
charges, 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 Fund's assets, expenses of calculating the net asset value and repurchasing
and redeeming shares, charges and expenses of dividend disbursing agents,
registrars and stock transfer agents and the cost of keeping all necessary
shareholder records and accounts.
The Company shall monitor the expense ratio of the Fund on a
monthly basis. If the accrued amount of the expenses of the Fund exceeds the
expense limitation established herein, the Company shall create an account
receivable from the Advisor for the amount of such excess. In such a situation
the monthly payment of the Advisor's fee will be reduced by the amount of such
excess, subject to adjustment month by month during the balance of the
Company's fiscal year if accrued expenses thereafter fall below the expense
limitation.
4. Compensation of the Advisor. For the services and facilities
to be rendered and the charges and expenses to be assumed by the Advisor
hereunder, the Company, through and on behalf of the Fund shall pay to the
Advisor an advisory fee, paid monthly, based on the average net assets of the
Fund, as determined by valuations made as of the close of each business day of
the month. The monthly advisory fee shall be Under the investment advisory
agreements with the Advisor, the Funds pay the Advisor a fee at an annualized
rate, based on the average daily net assets for each Fund, as set forth below:
FUND ANNUALIZED ADVISORY FEE
Twenty Fund 1.00%
Leveraged Bond Fund 0.75%
Health Care Fund 1.00%
1/12 of annualized fees will be paid on a monthly basis of average net assets.
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 is in effect and the fee computed upon the average net
assets of the business days during which it is so in effect.
5. Ownership of Shares of the Fund. Except in connection with
the initial capitalization of the Fund, the Advisor shall not take, and shall
not permit any of its shareholders, officers, directors or employees to take,
a long or short position in the shares of the Fund, except for the purchase of
shares of the Fund for investment purposes at the same price as that available
to the public at the time of purchase.
6. Exclusivity. The services of the Advisor to the Fund
hereunder are not to be deemed exclusive and the Advisor shall be free to
furnish similar services to others as long as the services hereunder are not
impaired thereby. Although the Advisor has permitted and is permitting the
Fund and the Company to use the name "Xxxxx," it is understood and agreed that
the Advisor reserves the right to use and to permit other persons, firms or
corporations, including investment companies, to use such name, and that the
Fund and the Company will not use such name if the Advisor ceases to be the
Fund's sole investment advisor. During the period that this Agreement is in
effect, the Advisor shall be the Fund's sole investment advisor.
7. Liability. In the absence of willful misfeasance, bad faith,
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
Fund or to any shareholder of the Fund for any act or omission in the course
of, or connected with, rendering services hereunder, or for any losses that
ay be sustained in the purchase, holding or sale of any security.
8. Brokerage Commissions. The Advisor may cause the 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 Advisr a commission for effecting a securities
transaction in excess of the amount another broker-dealer would have charged
for effecting such transaction, if the Advisor 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 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 Fund, as defined in the Act.
10. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by the directors of the Company or by a
vote of the majority of the outstanding voting securities of the Fund, as
defined in the Act, upon giving sixty (60) days' written notice to the Advisor.
This Agreement may be terminated by the Advisor 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 herein before provided,
this Agreement shall continue in effect for two (2) years from the date hereof
and indefinitely thereafter, but only so long as the continuance after such
two (2) year period is specifically approved annually by (i) the directors of
the Company or by the vote of the majority of the outstanding voting securities
of the Fund, as defined in the Act, and (ii) the 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.
XXXXX INVESTMENT ADVISORS, INC.. XXXXX FUNDS, INC...
(the "Advisor") (the "Company")
By: Xxxxxx X. Xxxxx By: Xxxxxx X. Xxxxx
President President
