EXHIBIT (d)(ii)
INVESTMENT ADVISORY AGREEMENT
Agreement made the 24th day of April, 2000 and amended the 27th day of
January, 2004 between Xxxxxxxx Funds, Inc., a Maryland corporation (the
"Company"), and Xxxxxxxx Xxxxxx Capital Management, LLC., a Delaware limited
liability company (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 consisting of three series, including the Xxxxxxxx
Select Industries Fund (the "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 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 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 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 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 or the Fund in any way or otherwise be deemed
an agent of the Company or the Fund. However, one or more members, officers 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, restated or supplemented from time to
time, 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 Fund.
3. Expenses. The Adviser, 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 Adviser shall not be required to pay any expenses of the Fund
except as provided herein if the total expenses borne by the Fund, including the
Adviser's fee and the fees paid to the 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 ("excluded expenses"), 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, 1.95% (1.60%
effective February 1, 2004). The expenses of the Fund's operations borne by the
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, 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
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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 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 Company shall monitor the expense ratio of the Fund on a monthly basis.
If the accrued amount of the expenses of the Fund, less excluded expenses,
exceeds the expense limitation established herein, the Company 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 (and if the amount of such excess in any month is greater than
the monthly payment of the Adviser's fee, the Adviser will pay the Fund the
amount of such difference), subject to adjustment month by month during the
balance of the Company's fiscal year if accrued expenses, less excluded
expenses, thereafter fall below the expense limitation. If, in any of the three
fiscal years following any fiscal year in which the Adviser has reimbursed
(either by fee reduction or payment) the Fund for excess expenses, the Fund's
expenses, less excluded expenses, as a percentage of the Fund's average net
assets, are less than the expense limitation established herein, the Fund shall
repay to the Adviser the amount the Adviser reimbursed the Fund; provided,
however, that the Fund's expenses, less excluded expenses, as a percentage of
the Fund's average net assets, shall not exceed the limitation established
herein.
4. Compensation of the Adviser. For the services to be rendered by the
Adviser hereunder, the Company, through and on behalf of the Fund, shall pay to
the Adviser an advisory fee, paid monthly, based on the average net assets of
the Fund, as determined by valuations made as of
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the close of each business day of the month. The monthly advisory fee shall be
1/12 of 1.00% (1.00% per annum) on the average daily net assets of the Fund. 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 asset
value of the business days during which it is so in effect.
5. Ownership of Shares of the Fund. The Adviser shall not take an ownership
position in the Fund, and shall not permit any of its members, officers, 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 or in connection with the
initial capitalization of the Fund.
6. Exclusivity. The services of the Adviser to the 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 Fund and the Company to use the name
"Xxxxxxxx", if they so desire, it is understood and agreed that the Adviser
reserves the right to use and to permit other persons, firms or corporations,
including investment companies, to use such names, and that the Fund and the
Company will not use such names if the Adviser ceases to be the Fund's sole
investment adviser. During the period that this Agreement is in effect, the
Adviser shall be the 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 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 may be
sustained in the purchase, holding or sale of any security.
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8. Brokerage Commissions. The Adviser, subject to the control and direction
of the Company's Board of Directors, shall have authority and discretion to
select brokers and dealers to execute portfolio transactions for the Fund and
for the selection of the markets on or in which the transactions will be
executed. The Adviser 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 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). The Adviser shall provide such reports as the Company's Board of Directors
may reasonable request with respect to the Fund's total brokerage and the manner
in which that brokerage was allocated.
9. Code of Ethics. The Adviser has adopted a written code of ethics
complying with the requirements of Rule 17j-1 under the Act and has provided the
Company with a copy of the code of ethics and evidence of its adoption. Upon the
written request of the Company, the Adviser shall permit the Company to examine
any reports required to be made by the Adviser pursuant to Rule 17j-1(d) under
the Act.
10. 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 Fund, as defined in the Act.
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11. 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 Fund, as 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 April
24, 2002 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 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 FUNDS, INC. XXXXXXXX XXXXXX CAPITAL MANAGEMENT, LLC
(the "Company") (the "Adviser")
By: By:
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President President
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