INVESTMENT ADVISORY AGREEMENT
AGREEMENT ("Agreement"), made this 26th day of October,
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 Alternative Strategies 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 .50% 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
