Exhibit 5(a)
XXXXXXX MUTUAL FUNDS, INC.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
August 22, 1988
Xxxxxxx, Xxxxxxx & Xxxxx, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Investment Advisory Agreement
Dear Sirs:
Xxxxxxx Mutual Funds, Inc. (the "Company") has been organized under the
laws of Maryland to engage in the business of an investment company. The shares
of capital stock of the Company are of a single class; however, there has been
established a series of stock of the Company comprised of 100,000,000 shares
(the "Shares") known as the "Xxxxxxx Gold Fund" (the "Fund"), and shares may be
divided into additional series of the Company that may be established from time
to time by action of the Directors. The Company has selected you to act as the
sole investment adviser of the Fund and to provide certain other services, as
more fully set forth below, and you are willing to act as such investment
adviser and to perform such services under the terms and conditions hereinafter
set forth. Accordingly, the Company agrees with you as follows:
1. Delivery of Company Documents. The Company has furnished you with copies
properly certified or authenticated of each of the following:
(a) Articles of Incorporation of the Company dated March 18, 1988, as
amended from time to time (the "Articles").
(b) By-Laws of the Company as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Directors selecting you as investment adviser and
approving the form of this Agreement.
The Company will furnish you from time to time with copies, properly certified
or authenticated, of all amendments of or supplements to the foregoing, if any.
2. Name of Company. The Company may use the name "Xxxxxxx Mutual Funds,
Inc." or "Xxxxxxx Gold Fund" or any name derived from the name "Xxxxxxx, Xxxxxxx
& Xxxxx" for itself or for any of its series of shares only for so long as this
Agreement or any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to your business as investment adviser. At such time as such an agreement shall
no longer be in effect, the Company will (to the extent that it lawfully can)
cease to use such names or any other name indicating that it, the Fund or any
other series of the Company's shares is advised by or otherwise connected with
you or any organization which shall have so succeeded to your business.
3. Advisory Services. You will regularly provide the Fund with investment
research, advice and supervision and will furnish continuously an investment
program for the Fund consistent with the investment objectives and policies of
the Fund. You will determine what securities and other investments shall be
purchased for the Fund, what securities and other investments shall be held or
sold by the Fund, and what portion of the Fund's assets shall be held
uninvested, subject always to the provisions of the Company's Articles and
By-Laws and of the Investment Company Act of 1940, as amended, and to the
investment objectives, policies and restrictions of the Fund, as each of the
same shall be from time to time in effect, and subject, further, to such
policies and instructions as the Board of Directors may from time to time
establish. You shall advise and assist the officers of the Company in taking
such steps as are necessary or appropriate to carry out the decisions of the
Board of Directors and the appropriate committees of the Board of Directors
regarding the conduct of the business of the Company.
4. Allocation of Charges and Expenses. You will pay the compensation and
expenses of all officers and executive employees of the Company and will make
available, without expense to the Company, the services of such of your
directors, officers and employees as may duly be elected officers or directors
of the Company, subject to their individual consent to serve and to any
limitations imposed by law. You will pay
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the Company's office rent and will provide investment advisory, research and
statistical facilities and all clerical services relating to research,
statistical and investment work relating to the Fund. You will not be required
to pay any expenses of the Company other than those specifically allocated to
you in this paragraph 4. In particular, but without limiting the generality of
the foregoing, you will not be required to pay: organization expenses of the
Company; clerical salaries; fees and expenses incurred by the Company in
connection with membership in investment company organizations; brokers'
commissions; payment for portfolio pricing services to a pricing agent, if any;
legal, auditing or accounting expenses; taxes or governmental fees; the fees and
expenses of the transfer agent of the Company; the cost of preparing share
certificates or any other expenses, including clerical expenses of issue,
redemption or repurchase of shares of the Company; the expenses of and fees for
registering or qualifying securities for sale; the fees and expenses of
directors of the Company who are not affiliated with you; the cost of preparing
and distributing reports and notices to shareholders; or the fees or
disbursements of custodians of the Company's assets, including expenses incurred
in the performance of any obligations enumerated by the Articles or By-Laws of
the Company insofar as they govern agreements with any such custodian. You shall
not be required to pay expenses of activities which are primarily intended to
result in sales of shares of the Company if and to the extent that (i) such
expenses are required to be borne by a principal underwriter which acts as the
distributor of the Company's shares pursuant to an underwriting agreement which
provides that the underwriter shall assume some or all of such expenses, or (ii)
the Company shall have adopted a plan in conformity with Rule 12b-l under the
Investment Company Act of 1940, as amended, providing that the Company (or some
other party) shall assume some or all of such expenses. You shall be required to
pay such of the foregoing expenses relating to the Shares as are not required to
be paid by the principal underwriter of the Shares pursuant to the underwriting
agreement or are not permitted to be paid by the Company (or some other party)
pursuant to such a plan.
5. Compensation of the Adviser. For all services to be rendered and
payments made as provided in paragraphs 3 and 4 hereof, the Company will pay you
on the last day of each month a fee equal to the sum of 1/12 of 1.0% of the
average daily net assets of the Fund. The "average daily net assets" of the Fund
are defined as the average of the values placed on the net assets as of 4:00
p.m. (New York time), on each day on which the net asset value of the Fund's
portfolio is determined consistent with the provisions of Rule 22c-l under the
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Investment Company Act of 1940, as amended, or, if the Fund lawfully determines
the value of the net assets of its portfolio as of some other time on each
business day, as of such time. The value of net assets of the Fund shall be
determined pursuant to the applicable provisions of the Prospectus and Statement
of Additional Information of the Company. If, pursuant to such provisions, the
determination of net asset value is suspended for any particular business day,
then for the purposes of this paragraph 5, the value of the net assets of the
Fund as last determined shall be deemed to be the value of the net assets as of
the close of the New York Stock Exchange, or as of such other time as the value
of the net assets of the Fund's portfolio may lawfully be determined, on that
day. If the determination of the net asset value of the Shares has been
suspended pursuant to the Prospectus and Statement of Additional Information of
the Company for a period including such month, your compensation payable at the
end of such month shall be computed on the basis of the value of the net assets
of the Fund as last determined (whether during or prior to such month). If the
Fund determines the value of the net assets of its portfolio more than once on
any day, the last such determination thereof on that day shall be deemed to be
the sole determination thereof on that day for the purposes of this paragraph 5.
You agree that your compensation for any fiscal year shall be reduced by the
amount, if any, by which the expenses of the Fund for such fiscal year exceed
the lowest applicable expense limitation established pursuant to the statutes or
regulations of any jurisdiction in which the Shares may be qualified for offer
and sale (the "State Expense Limit"). You shall refund to the Company the amount
of any reduction of your compensation pursuant to this paragraph 5 as promptly
as practicable after the end of such fiscal year, provided that you will not be
required to pay the Company an amount greater than the fee paid to you in
respect of such year pursuant to this Agreement. As used in this paragraph 5,
"expenses" shall mean those expenses included in the applicable expense
limitation having the broadest specifications thereof, and "expense limitation"
means a limit on the maximum annual expenses which may be incurred by an
investment company determined (i) by multiplying a fixed percentage by the
average, or by multiplying more than one such percentage by different specified
amounts of the average, of the values of an investment company's net assets for
a fiscal year or (ii) by multiplying a fixed percentage by an investment
company's net investment income for a fiscal year. The words "lowest applicable
expense limitation" shall be construed to result in the largest reduction of
your compensation for any fiscal year of the Company; provided, however, that
nothing in this Agreement shall require you to reduce your fees if not required
by an applicable statute or regulation referred to above in this paragraph 5.
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6. Avoidance of Inconsistent Position. In connection with purchases or
sales of portfolio securities and investments for the account of the Fund,
neither you nor any of your directors, officers or employees will act as a
principal or agent or receive any commission. You or your agent shall arrange
for the placing of all orders for the purchase and sale of portfolio securities
for the Fund's account with brokers or dealers selected by you. In the selection
of such brokers or dealers and the placing of such orders, you are directed at
all times to seek for the Fund the most favorable execution and net price
available. If any occasion should arise in which you give any advice to clients
of yours concerning the Shares, you will act solely as investment counsel for
such clients and not in any way on behalf of the Fund. Your services to the
Company pursuant to this Agreement are not to be deemed to be exclusive and it
is understood that you may render investment advice, management and other
services to others.
7. Limitation of Liability of Adviser. You shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Company, the
Fund or its shareholders in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on your part in the performance of your duties or from reckless
disregard by you of your obligations and duties under this Agreement. Any
person, even though also employed by you, who may be or become an employee of
and paid by the Company shall be deemed, when acting within the scope of his
employment by the Company, to be acting in such employment solely for the
Company and not as your employee or agent.
8. Duration and Termination of this Agreement, This Agreement shall remain
in force until August 22, 1990 and from year to year thereafter, but only so
long as such continuance is specifically approved at least annually by the vote
of a majority of the directors who are not interested persons of you or of the
Company cast in person at a meeting called for the purpose of voting on such
approval and by a vote of the Board of Directors or of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder. This Agreement may, on 60
days' written notice, be terminated at any time without the payment of any
penalty, by the Board of Directors, by vote of a majority of the outstanding
voting securities of the Fund, or by you. This Agreement shall automatically
terminate in the event of its assignment. In interpreting the provisions of this
Agreement, the definitions contained in Section 2(a) of
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the Investment Company Act of 1940 (particularly the definitions of "interested
person, assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such exemption
as may be granted by the Securities and Exchange Commission by any rule,
regulation or order.
9. Amendment of this Agreement. No Provisions 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 outstanding
voting securities of the Fund and by the Board of Directors, including a
majority of the directors who are not interested persons of you or of the
Company, cast in person at a meeting called for the purpose of voting on such
approval.
10. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Company, whereupon this letter shall become a binding
contract.
Yours very truly,
XXXXXXX MUTUAL FUNDS, INC.
By /s/ Xxxxxx Xxxxxx
---------------------------------
President
The foregoing Agreement is hereby accepted as of the date thereof.
XXXXXXX, XXXXXXX & XXXXX, INC.
By /s/ Xxxxx X. Xxx
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Managing Director
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