INVESTMENT ADVISORY AGREEMENT
AGREEMENT ("Agreement"), made this twenty sixth day of
September, 2008, between Xxx Xxxxxxx Funds, Inc., a Maryland
corporation (the "Company"), and Xxx Xxxxxxx Capital Management,
Inc., a Delaware corporation (the "Adviser").
W I T N E S S E T H :
WHEREAS, the Company is currently registered with the
Securities and Exchange Commission under the Investment Company
Act of 1940 (the "Act") as an open-end management investment
company. The Company's authorized shares are divided into
series, including the Small-Cap Growth Fund (the "Fund");
WHEREAS, the Adviser, which is an investment adviser
registered under the Investment Advisers Act of 1940, provides
investment advisory services to the Fund, pursuant to a separate
investment advisory agreement; and
WHEREAS, the Company and the Adviser desire to enter
into a new investment advisory agreement with respect to 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 and to administer its business and administrative
operations, subject to the direction of the Board of Directors
of the Company (the "Board of Directors") and the officers of
the Company, 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 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, as
amended, restated or supplemented, or any applicable statute or
regulation, or to relieve or deprive the Board of Directors of
its responsibility for and control of the affairs of the Fund.
3. Obligations of and Services to be Provided by the
Adviser. The Adviser undertakes to provide the services
hereinafter set forth and to assume the following obligations:
A. Management and Administrative Services.
(1) The Adviser shall furnish to the Company adequate
office space, which may be space within the offices of
the Adviser or in such other place as may be agreed
upon from time to time, and all office furnishings,
facilities and equipment as may be reasonably required
for performing services relating to advisory,
research, asset allocation, portfolio manager
selection and evaluation activities and otherwise
managing and administering the business and operations
of the Fund.
(2) The Adviser shall employ or provide and
compensate the executive, administrative, secretarial
and clerical personnel necessary to supervise the
provision of the services set forth in sub-paragraph
3(A)(1) and shall bear the expense of providing such
services, except as provided in Section 4 of this
Agreement. The Adviser shall also compensate all
officers and employees of the Company who are officers
or employees of the Adviser or its affiliated
companies.
B. Investment Management Services.
(1) The Adviser shall, subject to and in accordance
with the investment objective and policies of the Fund
and any directions which the Board of Directors may
issue to the Adviser, have overall responsibility for
the general management and investment of the assets
and securities portfolios of the Fund.
(2) The Adviser may delegate its investment
responsibilities under sub-paragraph 3(B)(1) with
respect to the Fund or segments thereof to one or more
persons or companies ("Portfolio Manager[s]") pursuant
to an agreement between the Adviser, the Company and
each such Portfolio Manager ("Sub-Advisory
Agreement"). Each Sub-Advisory Agreement may provide
that the Portfolio Manager, subject to the control and
supervision of the Board of Directors and the Adviser,
shall have full investment discretion for the Fund and
shall make all determinations with respect to the
investment of the Fund's assets assigned to the
Portfolio Manager and the purchase and sale of
portfolio securities with those assets, and such steps
as may be necessary to implement its decision. Any
delegation of duties pursuant to this paragraph shall
comply with all applicable provisions of Section 15 of
the Act, except to the extent permitted by any
exemptive order of the Securities and Exchange
Commission or similar relief. Adviser shall not be
responsible or liable for the investment merits of any
decision by a Portfolio Manager to purchase, hold or
sell a security for the Fund's portfolio.
(3) The Adviser shall develop overall investment
programs and strategies for the Fund, or segments
thereof, shall revise such programs as necessary, and
shall monitor and report periodically to the Board of
Directors concerning the implementation of the
programs.
(4) The Adviser shall research and evaluate Portfolio
Managers and shall advise the Board of Directors of
the Company of the Portfolio Managers which the
Adviser believes are best-suited to invest the assets
of the Fund; shall monitor and evaluate the investment
performance of each Portfolio Manager; shall determine
the portion of the Fund's assets to be managed by each
Portfolio Manager; shall recommend changes or
additions of Portfolio Managers when appropriate; and
shall coordinate the investment activities of the
Portfolio Managers.
(5) The Adviser shall be solely responsible for
paying the fees of each Portfolio Manager.
(6) The Adviser shall render to the Board of
Directors such periodic reports concerning the
business and investments of the Fund as the Board of
Directors shall reasonably request.
C. Provision of Information Necessary for Preparation
of Securities Registration Statements, Amendments and Other
Materials.
The Adviser will make available and provide financial,
accounting and statistical information required by the Fund for
the preparation of registration statements, reports and other
documents required by federal and state securities laws, and
with such information as the Fund may reasonably request for use
in the preparation of such documents or of other materials
necessary or helpful for the underwriting and distribution of
the Fund's shares.
D. Provision of Personnel.
The Adviser shall make available its officers and
employees to the Board of Directors and officers of the Company
for consultation and discussions regarding the administration
and management of the Company and its investment activities.
4. Expenses. The Adviser shall not be required to
pay any expenses of the Fund. 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 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.
5. 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 the close of each business
day of the month. The advisory fee shall be 1.25% of such
average 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 assets of the business days during which it
is so in effect.
6. Ownership of Shares of the Fund. The Adviser
shall not take an ownership position in the Fund, 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.
7. 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 "Xxx Xxxxxxx", it is understood and agreed that
the Adviser reserves the right to use and has permitted and may
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
an investment adviser for the Fund. During the period that this
Agreement is in effect, and except as herein provided, the
Adviser shall be the Fund's sole investment adviser.
8. 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.
9. Brokerage Commissions. The Adviser, subject to
the control and direction of the Board of Directors, and any
Portfolio Managers, subject to the control and direction of the
Board of Directors and the Adviser, 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
or the Portfolio Managers 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 or the
Portfolio Managers 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 or
the Portfolio Manager 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 Board of Directors may
reasonably request with respect to each Fund's total brokerage
and the manner in which that brokerage was allocated.
10. 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 the reports required to be made by the
Adviser pursuant to Rule 17j-1(c)(1).
11. 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 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.
12. Termination. This Agreement may be terminated at
any time, without the payment of any penalty, by the Board of
Directors 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 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 Board of Directors or by the vote of the majority of
the outstanding voting securities of the Company, as defined in
the Act, and (ii) the Board of Directors 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.
XXX XXXXXXX CAPITAL MANAGEMENT, INC.
(the "Adviser")
By:______________________________
Xxxxxxx Xxx Xxxxxxx, President
XXX XXXXXXX FUNDS, INC.
(the "Company")
By:_______________________________
Xxx Xxxxxx, President
