INVESTMENT ADVISORY AGREEMENT
XXXXXX MUTUAL FUNDS, INC.
This Agreement is made and entered into as of the 30th day of November,
1999, by and between Xxxxxx Mutual Funds, Inc., a Maryland corporation (the
"Fund"), and Edgemoor Capital Management, Inc., a Maryland corporation
(hereinafter referred to as "Edgemoor").
WHEREAS, the Fund is an open-end management investment company, registered
under the Investment Company Act of 1940, as amended (the "Act"), and authorized
to issue shares representing interests in the Fund (the "Portfolio"); and
WHEREAS, Edgemoor is registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of asset
management; and
WHEREAS, the Fund desires to retain Edgemoor to render certain investment
management services to the Fund and Edgemoor is willing to render such services;
NOW THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows;
1. OBLIGATIONS OF INVESTMENT ADVISER
(a) SERVICES. Edgemoor agrees to perform the following services (the
"Services") for the Fund:
(1) manage the investment and reinvestment of the Portfolio's
assets;
(2) continuously review, supervise, and administer the
investment program of the Portfolio;
(3) determine, in its discretion, the securities to be
purchased, retained or sold (and implement those decisions);
(4) provide the Fund with records concerning Edgemoor's
activities which the Fund is required to maintain; and
(5) render regular reports to the Fund's officers and directors
concerning Edgemoor's discharge of the foregoing responsibilities.
Edgemoor shall discharge the foregoing responsibilities subject to the
control of the officers and the directors of the Fund and in compliance
with such policies as the directors may from time to time establish, and
in compliance with the objectives, policies, and limitations of the
Portfolio set forth in the Fund's prospectus, as amended from time to
time, and with all applicable laws and regulations. All Services to be
furnished by Edgemoor under this Agreement may be furnished through the
medium of any directors, officers or employees of Edgemoor or through such
other parties as Edgemoor may determine from time to time.
Edgemoor agrees, at its own expense or at the expense of one or more
of its affiliates, to render the Services and to provide the office space,
furnishings, equipment and personnel as may be reasonably required in the
judgment of the Board of Directors of the Fund to perform the Services on
the terms and for the compensation provided herein. Edgemoor shall
authorize and permit any of its officers, directors and employees, who may
be elected as directors or officers of the Fund, to serve in the
capacities in which they are elected.
Except to the extent expressly assumed by Edgemoor herein and except
to the extent required by law to be paid by Edgemoor, the Fund shall pay
all costs and expenses in connection with its operation and organization.
(b) BOOKS AND RECORDS. All books and records prepared and maintained
by Edgemoor for the Fund under this Agreement shall be the property of the
Fund and, upon request therefor, Edgemoor shall surrender to the Fund such
of the books and records so requested.
2. PORTFOLIO TRANSACTIONS. Edgemoor is authorized to select the brokers
or dealers that will execute the purchases and sales of portfolio securities for
the Portfolio and is directed to use its best efforts to obtain the best net
results as described in the Fund's prospectus from time to time. Edgemoor may,
in its discretion, purchase and sell portfolio securities from and to brokers
and dealers who provide the Portfolio with research, analysis, advice and
similar services, and Edgemoor may pay to these brokers and dealers, in return
for research and analysis, a higher commission or spread than may be charged by
other brokers and dealers, provided that Edgemoor determines in good faith that
such commission is reasonable in terms either of that particular transaction or
of the overall responsibility of Edgemoor to the Fund and its other clients and
that the total commission paid by the Fund will be reasonable in relation to the
benefits to the Portfolio over the long-term. Edgemoor will promptly communicate
to the officers and the directors of the Fund such information relating to
portfolio transactions as they may reasonably request.
3. COMPENSATION OF EDGEMOOR. The Fund will pay to Edgemoor on the last
day of each month an annual fee equal to 1.00% of average net asset value of the
Portfolio, such fee to be computed daily based upon the net asset value of the
Portfolio as determined by a valuation made in accordance with the Fund's
procedure for calculating Portfolio net asset value as described in the Fund's
Prospectus and/or Statement of Additional Information. During any period when
the determination of a Portfolio's net asset value is suspended by the directors
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of the Fund, the net asset value of a share of that Portfolio as of the last
business day prior to such suspension shall, for the purpose of this Paragraph
3, be deemed to be net asset value at the close of each succeeding business day
until it is again determined.
4. STATUS OF INVESTMENT ADVISER. The services of Edgemoor to the Fund are
not to be deemed exclusive, and Edgemoor shall be free to render similar
services to others so long as its services to the Fund are not impaired thereby.
Edgemoor shall be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund.
Nothing in this Agreement shall limit or restrict the right of any director,
officer or employee of Edgemoor, who may also be a director, officer, or
employee of the Fund, to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature.
5. PERMISSIBLE INTERESTS. Directors, agents, and stockholders of the Fund
are or may be interested in Edgemoor (or any successor thereof) as directors,
partners, officers, or stockholders, or otherwise; directors, partners,
officers, agents, and stockholders of Edgemoor are or may be interested in the
Fund as directors, stockholders or otherwise; and Edgemoor (or any successor) is
or may be interested in the Fund as a stockholder or otherwise.
6. LIABILITY OF INVESTMENT ADVISER. Edgemoor assumes no responsibility
under this Agreement other than to render the services called for hereunder in
good faith. Edgemoor shall not be liable for any error of judgment or for any
loss suffered by the Fund in connection with the matters to which this Agreement
relates, except a loss resulting from a breach of fiduciary duty with respect to
receipt of compensation for services (in which case any award of damages shall
be limited to the period and the amount set forth in Section 36(b)(3) of the
Investment Company Act of 1940) or a loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of, or from
reckless disregard by it of its obligations and duties under, this Agreement.
7. TERM. This Agreement shall remain in effect for two years from the
date of its execution, and from year to year thereafter provided such
continuance is approved at least annually by the vote of a majority of the
directors of the Fund who are not parties to this Agreement or "interested
persons" (as defined in the Act) of any such party, which vote must be cast in
person at meeting called for the purpose of voting on such approval; provided,
however, that;
(a) the Fund may, at any time and without the payment of any penalty,
terminate this Agreement upon 60 days written notice to Edgemoor;
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(b) the Agreement shall immediately terminate in the event of its
assignment (within the meaning of the Act and the Rules thereunder); and
(c) Edgemoor may terminate this Agreement without payment of penalty
on 60 days written notice to the Fund; and
(d) the terms of paragraph 6 of this Agreement shall survive the
termination of this Agreement.
9. AMENDMENTS. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by vote of the holders of a majority of the Fund's outstanding
voting securities.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and the year first written above.
XXXXXX MUTUAL FUNDS, INC. EDGEMOOR CAPITAL MANAGEMENT, INC.
By: /s/Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
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Title: President Title: President
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ATTEST: ATTEST:
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