EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
Agreement made this _____ day of December, 1995 between Xxx
Xxxxxxx Funds, Inc., a Maryland corporation (the "Company"), and Xxx
Xxxxxxx Capital Management, Inc., a California 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 three series, the Xxx Xxxxxxx Micro-Cap Fund, (the "Micro-Cap
Fund"), the Xxx Xxxxxxx Emerging Growth Fund (the "Emerging Growth Fund")
and the Xxx Xxxxxxx Mid-Cap Fund (the "Mid-Cap 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 Micro-Cap 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 Micro-Cap 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 Micro-Cap 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 Micro-Cap 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 Micro-Cap Fund in any way or otherwise be
deemed an agent of the Company or the Micro-Cap 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 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 Micro-Cap
Fund.
3. Expenses. The Adviser, at its own expense and without
reimbursement from the Company or the Micro-Cap Fund, shall furnish office
space, and all necessary office facilities, equipment and executive
personnel for managing the investments of the Micro-Cap Fund. The Adviser
shall not be required to pay any expenses of the Micro-Cap Fund except as
provided herein if the total expenses borne by the Micro-Cap Fund,
including the Adviser's fee and the fees paid to the Micro-Cap Fund's
Administrator but excluding all federal, state and local taxes, interest,
brokerage commissions and extraordinary items, in any year exceed that
percentage of the average net assets of the Micro-Cap 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 Micro-Cap Fund's shares are qualified for sale
or, if the states in which the Micro-Cap Fund's shares are qualified for
sale impose no such restrictions, 2%. The expenses of the Micro-Cap
Fund's operations borne by the Micro-Cap 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, 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 Micro-Cap 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 Micro-Cap
Fund on a monthly basis. If the accrued amount of the expenses of the
Micro-Cap Fund 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, 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 to be
rendered by the Adviser hereunder, the Company, through and on behalf of
the Micro-Cap Fund, shall pay to the Adviser an advisory fee, paid
monthly, based on the average net assets of the Micro-Cap 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 1.50% (1.50% per annum)
on the average daily net assets of the Micro-Cap 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 Micro-Cap Fund. The Adviser
shall not take an ownership position in the Micro-Cap 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 Micro-Cap Fund, except for the
purchase of shares of the Micro-Cap 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 Micro-Cap Fund.
6. Exclusivity. The services of the Adviser to the Micro-Cap
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 Micro-Cap Fund and the Company to use the name "Xxx Xxxxxxx",
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 name, and that the Micro-Cap
Fund and the Company will not use such name if the Adviser ceases to be
the Micro-Cap Fund's sole investment adviser. During the period that this
Agreement is in effect, the Adviser shall be the Micro-Cap 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 Micro-Cap Fund or to any shareholder of the Micro-Cap
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, 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 Micro-Cap Fund and for the selection of the markets
on or in which the transactions will be executed. The Adviser may cause
the Micro-Cap 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 Micro-Cap 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(c)(1) 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 by the vote of the majority of the
outstanding voting securities of the Micro-Cap Fund, as defined in the
Act.
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 Micro-Cap 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
December, 1997 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 Micro-Cap 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.
XXX XXXXXXX CAPITAL MANAGEMENT
(the "Adviser")
By: ___________________________
President
XXX XXXXXXX FUNDS, INC.
(the "Company")
By: __________________________
President
INVESTMENT ADVISORY AGREEMENT
Agreement made this _____ day of December, 1995 between Xxx
Xxxxxxx Funds, Inc., a Maryland corporation (the "Company"), and Xxx
Xxxxxxx Capital Management, Inc., a California 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 three series, the Xxx Xxxxxxx Micro-Cap Fund, (the "Micro-Cap
Fund"), the Xxx Xxxxxxx Emerging Growth Fund (the "Emerging Growth Fund")
and the Xxx Xxxxxxx Mid-Cap Fund (the "Mid-Cap 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 Emerging Growth 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 Emerging
Growth 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 Emerging Growth 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 Emerging Growth 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 Emerging Growth Fund in any way or
otherwise be deemed an agent of the Company or the Emerging Growth 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 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 Emerging
Growth Fund.
3. Expenses. The Adviser, at its own expense and without
reimbursement from the Company or the Emerging Growth Fund, shall furnish
office space, and all necessary office facilities, equipment and executive
personnel for managing the investments of the Emerging Growth Fund. The
Adviser shall not be required to pay any expenses of the Emerging Growth
Fund except as provided herein if the total expenses borne by the Emerging
Growth Fund, including the Adviser's fee and the fees paid to the Emerging
Growth Fund's Administrator but excluding all federal, state and local
taxes, interest, brokerage commissions and extraordinary items, in any
year exceed that percentage of the average net assets of the Emerging
Growth 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 Emerging
Growth Fund's shares are qualified for sale or, if the states in which the
Emerging Growth Fund's shares are qualified for sale impose no such
restrictions, 2%. The expenses of the Emerging Growth Fund's operations
borne by the Emerging Growth 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, 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 Emerging Growth
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 Emerging
Growth Fund on a monthly basis. If the accrued amount of the expenses of
the Emerging Growth Fund 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, 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 to be
rendered by the Adviser hereunder, the Company, through and on behalf of
the Emerging Growth Fund, shall pay to the Adviser an advisory fee, paid
monthly, based on the average net assets of the Emerging Growth 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 1.25% (1.25% per annum)
on the average daily net assets of the Emerging Growth 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 Emerging Growth Fund. The
Adviser shall not take an ownership position in the Emerging Growth 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 Emerging
Growth Fund, except for the purchase of shares of the Emerging Growth 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 Emerging Growth Fund.
6. Exclusivity. The services of the Adviser to the Emerging
Growth 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 Emerging Growth Fund and the Company to use the name "Xxx
Xxxxxxx", 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 name, and that
the Emerging Growth Fund and the Company will not use such name if the
Adviser ceases to be the Emerging Growth Fund's sole investment adviser.
During the period that this Agreement is in effect, the Adviser shall be
the Emerging Growth 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 Emerging Growth Fund or to any shareholder of the
Emerging Growth 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, 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 Emerging Growth Fund and for the selection of the
markets on or in which the transactions will be executed. The Adviser may
cause the Emerging Growth 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 Emerging Growth 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(c)(1) 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 by the vote of the majority of the
outstanding voting securities of the Emerging Growth Fund, as defined in
the Act.
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 Emerging Growth 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
December, 1997 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 Emerging Growth 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.
XXX XXXXXXX CAPITAL MANAGEMENT
(the "Adviser")
By: ___________________________
President
XXX XXXXXXX FUNDS, INC.
(the "Company")
By: __________________________
President
INVESTMENT ADVISORY AGREEMENT
Agreement made this _____ day of December, 1995 between Xxx
Xxxxxxx Funds, Inc., a Maryland corporation (the "Company"), and Xxx
Xxxxxxx Capital Management, Inc., a California 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 three series, the Xxx Xxxxxxx Micro-Cap Fund, (the "Micro-Cap
Fund"), the Xxx Xxxxxxx Emerging Growth Fund (the "Emerging Growth Fund")
and the Xxx Xxxxxxx Mid-Cap Fund (the "Mid-Cap 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 Mid-Cap 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 Mid-Cap 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 Mid-Cap 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 Mid-Cap 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 Mid-Cap Fund in any way or otherwise be
deemed an agent of the Company or the Mid-Cap 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 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 Mid-Cap Fund.
3. Expenses. The Adviser, at its own expense and without
reimbursement from the Company or the Mid-Cap Fund, shall furnish office
space, and all necessary office facilities, equipment and executive
personnel for managing the investments of the Mid-Cap Fund. The Adviser
shall not be required to pay any expenses of the Mid-Cap Fund except as
provided herein if the total expenses borne by the Mid-Cap Fund, including
the Adviser's fee and the fees paid to the Mid-Cap Fund's Administrator
but excluding all federal, state and local taxes, interest, brokerage
commissions and extraordinary items, in any year exceed that percentage of
the average net assets of the Mid-Cap 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 Mid-Cap Fund's shares are qualified for sale or, if the states
in which the Mid-Cap Fund's shares are qualified for sale impose no such
restrictions, 2%. The expenses of the Mid-Cap Fund's operations borne by
the Mid-Cap 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, 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 Mid-Cap 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 Mid-Cap Fund
on a monthly basis. If the accrued amount of the expenses of the Mid-Cap
Fund 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, 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 to be
rendered by the Adviser hereunder, the Company, through and on behalf of
the Mid-Cap Fund, shall pay to the Adviser an advisory fee, paid monthly,
based on the average net assets of the Mid-Cap 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 1.00% (1.00% per annum) on the
average daily net assets of the Mid-Cap 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 Mid-Cap Fund. The Adviser shall
not take an ownership position in the Mid-Cap 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 Mid-Cap Fund, except for the
purchase of shares of the Mid-Cap 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 Mid-Cap Fund.
6. Exclusivity. The services of the Adviser to the Mid-Cap
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 Mid-Cap Fund and the Company to use the name "Xxx Xxxxxxx", 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 name, and that the Mid-Cap Fund and the
Company will not use such name if the Adviser ceases to be the Mid-Cap
Fund's sole investment adviser. During the period that this Agreement is
in effect, the Adviser shall be the Mid-Cap 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 Mid-Cap Fund or to any shareholder of the Mid-Cap 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, 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 Mid-Cap Fund and for the selection of the markets on
or in which the transactions will be executed. The Adviser may cause the
Mid-Cap 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 Mid-Cap 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(c)(1) 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 by the vote of the majority of the
outstanding voting securities of the Mid-Cap Fund, as defined in the Act.
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 Mid-Cap 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
December, 1997 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 Mid-Cap 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.
XXX XXXXXXX CAPITAL MANAGEMENT
(the "Adviser")
By: ___________________________
President
XXX XXXXXXX FUNDS, INC.
(the "Company")
By: __________________________
President
