INVESTMENT ADVISORY AGREEMENT
Agreement made this 10th day of February, 1998 between Xxxxx
Funds, Inc., a Maryland corporation (the "Company"), and Xxxxx Investment
Advisors, Inc., a Florida corporation (the "Adviser").
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 initially
of one series Xxxxx Twenty 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 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 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 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 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 Fund shall bear all expenses initially incurred
by it, provided that the total expenses borne by the Fund, including the
Adviser'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,
2.75%. 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 Adviser for 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
Company's fiscal year if accrued expenses thereafter fall below the expense
limitation.
4. Compensation of the Adviser. For the services and facilities
to be rendered and the charges and expenses to be assumed 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 the close of each business day of
the month. The monthly advisory fee shall be 1/12 of 1% (1% per annum) of
such 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 Adviser 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 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 permitted and is permitting the
Fund and the Company to use the name "Xxxxx," 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 name, and that the
Fund and the Company will not use such name 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.
8. Brokerage Commissions. 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).
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 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 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 "Adviser") (the "Company")
By: Xxxxxx X. Xxxxx By: Xxxxxx X. Xxxxx
President President
