INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE XXXXX FUND, INC.
AND
XXXXX ADVISORS INC.
THIS AGREEMENT is made this 1st day of March, 1999 by and between THE
XXXXX FUND, INC., a Maryland corporation (the "Fund") and XXXXX ADVISORS INC., a
Delaware corporation (the "Investment Adviser"):
WITNESSETH
WHEREAS, the Fund is registered as a closed-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended (the "Act");
WHEREAS, the Investment Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Investment Advisers
Act"); and
WHEREAS, the Fund and the Investment Adviser desire to enter into an
agreement under which the Investment Adviser will provide investment advisory
and other services to the Fund, and/or retain others to perform some or all of
such services, on the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. Management. Subject to the supervision and control of the Board of
Directors of the Fund, the Investment Adviser shall manage all aspects of the
Fund's affairs and shall supervise all aspects of the Fund's operations,
including, but not limited to, the investment and reinvestment of the cash,
securities or other properties comprising the Fund's assets in accordance with
the investment objectives and policies set forth in the Fund's registration
statement, as such registration statement or objectives and policies may be
amended from time to time, and the Act. In rendering such services, the
Investment Adviser may employ, retain or otherwise avail itself of the services
or facilities of other persons or organizations for the purpose of providing it
or the Fund with any or all of the services that the Investment Adviser is
required to provide to the Fund hereunder. The Investment Adviser shall not be
liable to the Fund for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the management of
the Fund and the performance of its duties under this Agreement except for
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its duties and obligations under
this Agreement.
2. Investment Analysis and Implementation. In carrying out its
obligations under Paragraph 1 hereof, the Investment Adviser shall:
(a) supervise and manage all aspects of the Fund's operations
except to the extent that such operations are supervised and managed by
an administrator to the Fund under any administration agreement entered
into by the Fund;
(b) provide the Fund with such executive, administrative, data
processing, clerical, accounting and bookkeeping services and
statistical and research data as are deemed advisable by the Fund's
Board of Directors except to the extent that any of the foregoing
services are to be provided to the Fund under any administration
agreement entered into by the Fund;
(c) supervise, but not pay for, the periodic updating of
prospectuses and supplements thereto, proxy material, tax returns,
reports to the Fund's shareholders and reports to and filings with the
Securities and Exchange Commission and state Blue Sky authorities;
(d) formulate and implement continuing programs for the
purchases and sales of portfolio securities and regularly report
thereon to the Fund's Board of Directors;
(e) take, on behalf of the Fund, all actions which appear to
the Investment Adviser necessary or appropriate to carry into effect
such purchase and sale programs and supervisory functions as aforesaid,
including the placing of orders for the purchase and sale of portfolio
securities; and
(f) furnish, on behalf of the Fund, the Fund's administrator
and custodian with information on a daily basis with respect to the
Fund's portfolio transactions and with such other information as such
administrator may reasonably request from time to time.
3. Expenses. The Investment Adviser shall pay all of its expenses
arising from the performance of its obligations under Paragraphs 1 and 2 and
shall pay any salaries, fees and expenses of the directors of the Fund who are
employees of the Investment Adviser or its affiliates (except for such
directors' actual out-of-pocket expenses relating to attendance at meetings of
directors, which fees will be paid by the Fund). The Investment Adviser shall
not be required to pay any other expenses of the Fund, including, but not
limited to, direct charges relating to the purchase and sale of portfolio
securities, interest charges, fees and expenses of attorneys and independent
auditors, taxes and governmental fees, cost of stock certificates and any other
expenses (including clerical expenses) of issuance, sale or repurchase of shares
issued by the Fund, expenses in connection with the Fund's Distribution
Reinvestment and Cash Purchase Plan, membership fees in trade associations,
expenses of registering and qualifying shares of the Fund for sale under federal
and state securities laws, expenses of obtaining and maintaining any stock
exchange listings of the Fund's shares, expenses of printing and distributing
reports, prospectuses, notices and proxy materials to existing shareholders,
expenses of corporate data processing and related services, shareholder record
keeping and shareholder account services, expenses of auditors and escrow
agents, expenses of printing and filing reports and other documents filed with
governmental agencies, expenses of annual and special shareholders' meetings,
fees and disbursements of any administrator to the Fund and transfer agents,
custodians and sub-custodians, expenses of disbursing dividends and
distributions, fees,
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expenses and out-of-pocket costs of Directors of the Fund who are not employees
of the Investment Adviser or its affiliates, insurance premiums and litigation,
indemnification and other expenses not expressly provided for in this Agreement
or any administration agreement.
4. Compensation.
(a) As compensation for the services performed and the
facilities and personnel provided by the Investment Adviser pursuant to
Paragraphs 1 and 2, the Fund will pay to the Investment Adviser on the
first business day of each month a fee for the previous month, at an
annual rate of 0.85 of 1% of the Fund's average daily net assets during
the previous month.
(b) If the Investment Adviser shall serve hereunder for less
than an entire month, the fee hereunder shall be prorated.
5. Purchase and Sale of Securities. The Investment Adviser shall
purchase securities from or through and sell securities to or through such
persons, brokers or dealers (including any affiliate of the Investment Adviser
or the Fund's administrator) as the Investment Adviser shall deem appropriate in
order to carry out the policy with respect to allocation of portfolio
transactions as set forth in the Registration Statement and Prospectus of the
Fund, as each may be amended from time to time, or as the directors of the Fund
may require from time to time. When purchasing securities from or through, and
selling securities to or through, any such persons, brokers or dealers that may
be an affiliate of the Investment Adviser or the Fund's administrator, the
Investment Adviser shall comply with all applicable provisions of the Act,
including without limitation Section 17 thereof and the rules and regulations
thereunder, and Section 206 of the Investment Advisers Act and the rules and
regulations thereunder. In executing portfolio transactions and selecting
brokers or dealers, it is recognized that the primary responsibility of the
Investment Adviser is to seek the best combination of net price and execution
("best execution") for the Fund, and, consistent with such policy of seeking
best execution, the Investment Adviser is authorized to place orders with
brokers and dealers who provide brokerage and research services (as defined in
Section 28(e) of the Securities Exchange Act of 1934 as amended). It is further
recognized that there may be occasions where the transaction cost charged by a
broker or dealer may be greater than that which another broker or dealer may
have charged if the Investment Adviser determines in good faith that the amount
of such transaction cost is reasonable in relation to the value of the brokerage
and research services provided by the executing broker or dealer. It is
understood that such brokerage and research services may benefit the Investment
Adviser and its affiliates in connection with their services to other clients as
well as the Fund. The Investment Adviser acknowledges that it will comply with
all applicable provisions of the Act, Investment Advisers Act and the Securities
Exchange Act or 1934, as amended, including without limitation the provisions of
Section 28(e) thereof, with respect to the allocation of portfolio transactions.
Nothing herein shall prohibit the directors of the Fund from approving
the payment by the Fund of additional compensation to others for consulting
services, supplemental research and security and economic analysis.
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6. Term of Agreement. The Fund represents and warrants that this
Agreement has been approved by (a) a majority of the Fund's directors, including
a majority of the directors who are not "interested persons" (as defined by the
Act) and (b) the vote of a majority of the outstanding voting securities of the
Fund. This Agreement shall continue in full force and effect for a period of two
years from the date of its commencement and will continue in effect from year to
year thereafter if such continuance is approved in the manner required by the
Act. This Agreement may be terminated at any time, without payment of penalty by
either party, on not more than 60 days' written notice to the other party or by
vote of a majority of the outstanding voting securities of the Fund (as defined
by the Act). This Agreement will automatically terminate in the event of its
assignment (as defined by the Act).
7. Use of Word "Xxxxx" In Corporate Name. The Fund agrees and consents
that (a) it will only use the word "Xxxxx" as a component of its corporate name
and for no other purpose; (b) at will not purport to grant to any third party
the right to use the word "Xxxxx" for any purpose; (c) the Investment Adviser
and/or certain affiliates of the Investment Adviser may use or grant to other
investment companies the right to use the word "Xxxxx", or any combination or
abbreviation thereof, as all or a portion of a corporate or business name or for
any commercial purpose; and (d) upon the termination of any management agreement
into which the Investment Adviser and the Fund may enter, the Fund shall
promptly take such action, at its own expense, as may be necessary to change its
corporate name to one not containing the word "Xxxxx" and following such change,
shall not use the word "Xxxxx", or any combination thereof, as a part of its
corporate name or for any other commercial purpose, and shall use its best
efforts to cause its officers, directors and shareholders to take any and all
actions which may be necessary or desirable to effect the foregoing.
8. Services to Other Accounts. The Fund understands that the Investment
Adviser and its affiliates now act, will continue to act and may in the future
act as investment adviser to fiduciary and other managed accounts, and the Fund
has no objection to the Investment Adviser and its affiliates so acting,
provided that whenever the Fund and one or more other accounts advised by the
Investment Adviser or its affiliates are prepared to purchase, or desire to
sell, the same security, available investments or opportunities for sales will
be allocated in a manner the Investment Adviser believes to be equitable to each
entity. The Fund recognizes that in some cases this procedure may affect
adversely the price paid or received by the Fund or the size of the position
purchased or sold by the Fund, but understands that in other cases, coordination
with transactions for other accounts and the ability to participate in volume
transactions could benefit the Fund. In addition, the Fund understands that the
persons employed by the Investment Adviser to provide service to the Fund in
connection with the performance of the Investment Adviser's duties under this
Agreement will not devote their full time to that service. Moreover, nothing
contained in this Agreement will be deemed to limit or restrict the right of the
Investment Adviser or any affiliate of the Investment Adviser to engage in and
devote time and attention to other businesses or to render services of whatever
kind or nature, including serving as investment adviser to, or employee,
officer, director or trustee of, other investment companies.
9. Books and Records. The Investment Adviser shall maintain such books,
accounts, records and other documents as investment advisers are required to
maintain under Section 31 of the Act and Section 204 of the Investment Advisers
Act, except to the extent they are maintained by the Fund's administrator. The
Investment Adviser acknowledges that any such books,
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accounts, records and other documents that it is required to maintain under
Section 31 of the Act are the property of the Fund, and that both the Fund and
Securities and Exchange Commission (the "Commission") shall have, at all times
during business hours, free access to any books, accounts, records and other
documents that the Investment Adviser is required to maintain under Section 31
of the Act and Section 204 of the Investment Advisers Act.
10. Notices. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, to the Investment Adviser or to the Fund at
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: President with a copy to
Xxxxxx X. Xxxxx, Esq., of Rosenman & Colin LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000.
11. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon, either of the parties to do anything in violation of
any applicable laws or regulations.
IN WITNESS WHEREOF, the Fund and the Investment Adviser have caused
this Agreement to be executed by their duly authorized officers on the date
first above written.
ATTEST: THE XXXXX FUND, INC.
/s/ Xxxxxxx Xxxxx /s/ Xxxxxx X. Xxxxx
----------------- -----------------------------------
Xxxxxxx Xxxxx Xxxxxx X. Xxxxx, President
ATTEST: XXXXX ADVISERS INC.
/s/ Xxxxxxx Xxxxx /s/ Xxxxxxx X. XxXxxxxxxx
----------------- -----------------------------------
Xxxxxxx Xxxxx Xxxxxxx X. XxXxxxxxxx, President
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