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BA3DOCS1\0024993.01
ADVISORY AND ADMINISTRATIVE SERVICES AGREEMENT
CUSTOM FOOTER !!!
DEM, INC.
The World Trade Center - Baltimore
000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
November 30, 1995
Xxxxxxx Capital Management, Inc.
The World Trade Center - Baltimore
000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
This will confirm the agreement between the
undersigned (the "Company") and you as follows:
1. General. The Company is a closed-end non-
diversified management investment company registered under
the Investment Company Act of 1940, as amended (the "1940
Act"). The Company proposes to engage in the business of
investing and reinvesting its assets in the manner and in
accordance with the investment objectives, policies and
limitations specified in the Company's Prospectus and
Statement of Additional Information (collectively, the
"Prospectus"), included in the Company's Registration
Statement, as amended or supplemented from time to time (the
"Registration Statement"), filed under the 1940 Act, and the
Securities Act of 1933, as amended. Copies of the
Prospectus have been furnished to you. Any amendments or
supplements to the Prospectus shall be furnished to you
promptly.
2. Advisory Services. Subject to the
supervision and approval of the Company's Board of
Directors, you will provide investment management of the
Company's portfolio in accordance with the Company's
investment objectives, policies and limitations as stated in
the Prospectus as from time to time in effect. In
connection therewith, you will obtain and provide investment
research and will supervise the Company's investments and
conduct a continuous program of investment, evaluation and,
if appropriate, sale and reinvestment of the Company's
assets. You will place orders for the purchase and sale of
portfolio securities and will solicit brokers to execute
transactions, including The Xxxxxxx Co., in accordance with
the Company's policies and restrictions regarding brokerage
allocations. You will furnish to the Company such
statistical information with respect to the investments
which the Company may hold or contemplate purchasing as the
Company may reasonably request.
3. Administrative Services. You will supply
office facilities, data processing services, clerical,
accounting and bookkeeping services, internal auditing
services, executive and other administrative services;
provide stationery and office supplies; prepare reports to
the Company's stockholders, tax returns and reports to and
filings with the Securities and Exchange Commission and
state Blue Sky authorities; calculate the net asset value of
the Company's shares; provide persons to serve as the
Company's officers and generally assist in all aspects of
the Company's operations.
4. Assistance. You may employ or contract with
other persons to assist you in the performance of this
Agreement. Such persons may include Axe-Houghton
Management, Inc. or other investment advisory or management
firms and officers or employees who are employed by both you
and the Company. The fees or other compensation of such
persons shall be paid by you and no obligation may be
incurred on the Company's behalf to any such person.
5. Fees. In consideration of the advisory
services rendered pursuant to this Agreement, the Company
will pay you on the first business day of each month a fee
at the annual rate of .90 % of the value of the Company's
average weekly net assets during the preceding month. In
consideration of the administrative services rendered
pursuant to this Agreement, the Company will pay you on the
first business day of each month a fee at the annual rate of
.15% of the value of the Company's average weekly net assets
during the preceding month. Net asset value shall be
computed in the manner, on such days and at such time or
times as described in the Company's Prospectus from time to
time. The fee for the period from the effective date of the
Registration Statement to the end of the first month
thereafter shall be pro-rated according to the proportion
which such period bears to the full monthly period, and upon
any termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-rated
according to the proportion which such period bears to the
full monthly period and shall be payable upon the date of
termination of this Agreement.
6. Expenses.
(a) You will bear all expenses in connection
with the performance of your services under this Agreement.
All other expenses to be incurred in the operation of the
Company will be borne by the Company, except to the extent
specifically assumed by you. The expenses to be borne by
the Company include, without limitation, the following:
organizational costs, taxes, interest, brokerage fees and
commissions and other expenses in any way related to the
execution, recording and settlement of portfolio security
transactions, fees of Directors who are not also your
officers, Securities and Exchange Commission fees, state
Blue Sky qualification fees, charges of custodians, transfer
and dividend paying agents' premiums for directors and
officers liability insurance, costs of fidelity bonds,
industry association fees, outside auditing and legal
expenses, costs of maintaining corporate existence, costs of
maintaining required books and accounts, costs attributable
to investor services
(including, without limitation, telephone and personnel
expenses), costs of shareholders' reports and meetings,
costs of preparing, printing and mailing share certificates,
proxy statements and prospectuses, and any extraordinary
expenses.
(b) If in any fiscal year the aggregate
expenses of the Company (including fees paid to you pursuant
to this Agreement, but excluding interest on borrowings,
taxes, brokerage and, with the prior written consent of the
necessary state securities commissions, extraordinary
expenses) exceed the expense limitation of any state having
jurisdiction over the Company, the Company may deduct from
the payment to be made to you under this Agreement, or you
will bear, such excess expense to the extent required by
state law. Your obligation pursuant hereto will be limited
to the amount of your fees hereunder. Such deduction or
payment, if any, will be estimated, reconciled and effected
or paid, as the case may be, on a monthly basis.
7. Liability. You shall exercise your best
judgment in rendering the services to be provided to the
Company. The Company agrees as an inducement to you and to
others who may assist you in providing services to the
Company that you and such other persons shall not be liable
for any error of judgment or mistake of law or for any loss
suffered by the Company and the Company agrees to indemnify
and hold harmless you and such other persons against and
from any claims, liabilities, actions, suits, proceedings,
judgments or money damages (and expenses incurred in
connection therewith, including the reasonable cost of
investigating or defending same, including, but not limited
to attorneys' fees) arising out of any such error of
judgment or mistake of law or loss; provided that nothing
herein shall be deemed to protect or purport to protect you
or any other such person against any liability to the
Company or to its security holders to which you or they
would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties
hereunder, or by reason of reckless disregard of the
obligations and duties hereunder.
8. Other Accounts. The Company understands that
you and other persons with whom you contract to provide the
services hereunder may from time to time act as investment
adviser to one or more other investment companies and
fiduciary or other managed accounts, and the Company has no
objection to your or their so acting. When purchase or sale
of securities of the same issuer is suitable for the
investment objectives of two or more companies or accounts
managed by you or such other persons which have available
funds for investment, the available securities will be
allocated in a manner believed by you and such other persons
to be equitable to each company or account. It is
recognized that in some cases this procedure may adversely
affect the price paid or received by the Company or the size
of the position obtainable for or disposed of by the
Company.
In addition, it is understood that you and the
persons with whom you contract to assist in the performance
of your duties hereunder will not devote their full
time to such service and nothing contained herein shall be
deemed to limit or restrict your or their right to engage in
and devote time and attention to similar or other
businesses.
9. Term. This Agreement shall continue with
respect to the Company until the expiration of two years
from the date of this Agreement and thereafter shall
continue automatically for successive annual periods ending
on the anniversary of the date of this Agreement, provided
such continuance with respect to the Company is specifically
approved at least annually by the Company's Board of
Directors or vote of the lesser of (a) 67% of the shares of
the Company represented at a meeting if holders of more than
50% of the outstanding shares of the Company are present in
person or by proxy or (b) more than 50% of the outstanding
shares of the Company, provided that in either event its
continuance also is approved by a majority of the Company's
Directors who are not "interested persons" (as defined in
the 0000 Xxx) of any party to this Agreement, by vote cast
in person at a meeting called for the purpose of voting on
such approval. This Agreement is terminable with respect to
the Company without penalty, on 60 days' notice, by you or
by the Company's Board of Directors or by vote of the lesser
of (a) 67% of the shares of the Company represented at a
meeting if holders of more than 50% of the outstanding
shares of the Company are present in person or by proxy or
(b) more than 50% of the outstanding shares of the Company.
This Agreement will terminate automatically in the event of
its assignment (as defined in the 1940 Act).
10. "Xxxxxxx" Name. The Company recognizes that
from time to time your directors, officers and employees may
serve as directors, trustees, partners, officers and
employees of other corporations, business trusts,
partnerships or other entities (including other investment
companies) and that such other entities may include the name
"Xxxxxxx" as part of their name. You or your affiliates may
enter into investment advisory or other agreements with such
other entities. If you cease to act as the Company's
investment adviser, the Company agrees that, at your
request, the Company will take all necessary action to
ensure that the name of the Company does not include
"Xxxxxxx" in any form or combination of words.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
DEM, INC.
By: /s/ XXXXXX X.
XXXXXXX, XX.
Xxxxxx X. Xxxxxxx,
Xx.,
Chairman and
President
Accepted:
XXXXXXX CAPITAL MANAGEMENT, INC.
By: /s/ XXXXXX X. XXXXXXX, XX.
Xxxxxx X. Xxxxxxx, Xx.,
President
